This Thursday, our city council is being asked to vote to approve allowing a developer to renege on their land use restrictions and affordable housing commitments on Plaza Saltillo, harming the neighborhood, reducing drastically affordable housing, and undermining the integrity of our planning process.The developer now wants to provide 1/2 the lower-income affordable housing they committed to, despite our affordable housing crisis. Call Council and the Mayor now and tell them developers should not be allowed to make bid proposals to lease long-term Cap Metro’s land, and once they are accepted, turn around and attempt to renegotiate their proposal. This odious practice is called re-trading the deal. It is unfair, rewards gamesmanship, and undermines community benefits and the public interest.
Plaza Saltillo is an approximately 10-acre tract in near East Austin that is owned by Cap Metro. This incredibly valuable tract runs from I-35 east for 5 blocks between 4th and 5th Street. In 2009, after months of work, the neighborhood, city staff, and other stakeholders came up with a plan for development of the property, called the Plaza Saltillo Station Plan. Later, there also was a regulating plan. These plans are detailed, but basically for this 10-acre tract there were height restrictions of 40 feet, with a 60-foot density bonus option based on providing substantial affordable housing. These height restrictions were to protect the neighborhood from being beset with overly tall, incompatible development. The plan also required for this low-income affordable housing on the tract for the density bonus: 15% affordable rental housing at 50% MFI (Median Family Income) for 40 years based on the usable square footage of construction; and an additional 10% affordable housing by square footage if the city or other entity provided funding.
A dozen developers bid competitively to Cap Metro for the tract at the end of 2013. All had major, low-income affordable housing plans as part of their development proposals. Cap Metro narrowed down the bidders to four developers in Spring 2014 and later two developers. Most of these developers stated they would comply with much, but not all, of the neighborhood plan on height restrictions and would agree to the affordable housing requirements. The winning bidder, Endeavor, said it would commit to 25% affordable housing with no subsidies, request no variances and zoning changes (i.e., no height increases), and would provide a full-service grocery store for the East Austin. None of the other bidders matched these terms.
Now Endeavor is seeking to re-trade the deal and not deliver on its commitments. It now says it needs a 125-feet building along I-35 and around 60-75 feet of height on other buildings on the tract. It says it can provide only 17% affordable housing units out of all residential units, which is less than 25% and is based on a much smaller measure than the initial measure of square footage of construction. It is estimated that their new affordable housing “deal” would provide half the square footage of their initial commitment! The city also is apparently arranging for $1.5 million for part of the affordable housing on the site. Endeavor also says no grocery store is interested in the site. As a sophisticated developer, Endeavor should have known their initial bid was not feasible. In fact, the other developers have been saying publicly for months that Endeavor’s initial bid was not going to happen and Endeavor was going to re-trade it– which is exactly what happened.
Council should say no to Endeavor’s request now to change the tract’s height restriction and provision of affordable housing. If Council says no, and does not allow this re-trading, Cap Metro then will be forced to re-bid the matter, ensuring the process is fair and done properly. Otherwise, Council is rewarding unfair practices, selling out the neighborhood, and shorting affordable housing and the public interest.
Unfortunately, re-trading has become common practice on valuable government tracts in Austin. Developers have re-traded their deals, with Council’s blessing, on the very valuable Green Water Plant and Seaholm Utility Plant City properties on Cesar Chavez. This undermined the public interest, shorted the public, and rewarded gamesmanship. The public ended up with a terrible deal.
We need to start doing things right in Austin. Tell the Council to vote no on re-trading deals.