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380 agreement

TOP releases report on inefficiency of development tax subsidies

From the inbox:

[Thursday], the Texas Organizing Project and the Workers Defense Project released a report on the ineffectiveness of tax subsidies in cities across Texas, and proposed ways to increase requirements for such deals in Houston to offer benefits in the form of good paying jobs with community investment for Houstonians.

The report, compiled by the Workers Defense Project, looked at corporate tax subsidies throughout the state, including Houston, and found that Texas’ cities are giving away huge subsidies without enforceable community benefits agreements.

“Today, we are asking the hard, critical questions,” said Lola Garcia, a community leader with the Texas Organizing Project, “Economic development for whom? For out-of-state multi-billion dollar companies and wealthy developers? Or for neighborhoods and Houstonians in need?”

After analyzing Houston’s tax subsidy deals, contracts and compliance records, researchers found that Houston’s tax subsidy programs have failed to deliver on their promises of equitable development, specifically, they:

  • Failed to create good jobs that pay well;

  • Failed to incentivize affordable housing, and instead contributed to the gentrification of our neighborhoods; and

  • Failed to create a level playing field for small and local businesses to access these programs.

“It’s time to address the city’s long history of picking winners and losers through tax give-aways that fast-track gentrification and fail to provide any direct benefits to neighborhoods most in need of a lift,” said Tarsha Jackson, Harris County director for TOP. “The good news is that we have the opportunity to change this narrative, to redesign the programs, raise and clarify the city’s expectations and criteria for developers seeking multi-million dollar tax deals.

“We know Mayor Turner is committed to creating good jobs for Houstonians, and this research can help us set new standards on economic development projects.”

Get the full report here: The Failed Promise of the Texas Miracle: Corporate subsidies in the Lone Star state.

And here’s the executive summary:

Over the last year, researchers from the Workers Defense Project and the University of Texas at Austin have undertaken a study of tax subsidies and other economic incentives utilized at the state and local level to spur economic development in Texas. Researchers sought to understand the role economic incentives play in the Texas economy by examining how these programs have fulfilled or failed to fulfill their promise of creating high-quality, high-paying jobs and increasing local tax revenue. While there are over a dozen kinds of giveaways to businesses in the form of tax breaks, loans and grants in Texas, our research team conducted a thorough case study of one of the least transparent local programs: Chapter 380 (city) and Chapter 381 (county) agreements, which provide grants, tax breaks, and low-cost loans to corporations. To understand the impact of these economic programs, our research team combed through thousands of pages of contracts and compliance records from three Texas cities and county governments: Austin & Travis County, Houston & Harris County, and Dallas & Dallas County.

Researchers also examined data from over a dozen local, state and federal agencies including city and county governments, the U.S. Census Bureau, the U.S. Department of Education, the Bureau of Economic Analysis, and the State Auditor’s Office, among others. Additionally, researchers reviewed existing studies from numerous academic sources on the impact of economic incentives, as well as existing data on state incentive programs, including the state-level equivalent of Chapter 380/381 agreements: The Texas Enterprise Fund.

To provide context for the use and impact of Texas’ economic incentive programs, we have structured this report around the three pillars necessary to build a strong economy: good job creation, investment in education and training, and fair market competition. Researchers found that while the Lone Star State has made substantial investments to attract Fortune 500 companies to the state, it has failed to invest in Texas businesses and workers, and left many homeowners footing the bill for billions that have been doled out to big business. This study seeks to provide in-depth analysis to how these tax subsidy programs work, how they have failed or fulfilled their promise to Texans, and to provide robust solutions to ensure that our state builds a strong economy that puts Texas business, workers, and taxpayers first.

I’m not opposed to the idea of economic incentives. There does need to be a good, measurable return on the investment, there needs to be a way to enforce the agreements, and the benefits need to be distributed equitably among the population. There’s plenty of room to do all of these things better. The full report is here, and the Austin Chronicle, the Press, and KUHF have more.

Holmes Road

It kind of blows my mind that something like this could be the case in 2014 in Houston.

Holmes Road

Holmes Road in south Houston, for a stretch, feels less like a city street and more like a weathered country road in Central Texas, even though NRG Stadium and the Texas Medical Center shimmer in the distance.

On the surface, there is no reason this accessible area – over 1,400 acres – should be the city’s largest single mass of undeveloped land.

The problem lies underground. Neither the city nor private developers ever extended sewer service to the area, leading developers to skip it in favor of other sites with more infrastructure and lower up-front costs.

Houston and Harris County officials propose to remedy that by burying an $11 million sewer line along Holmes Road.

The project is still being negotiated but is scheduled for 2016, the same year Holmes is slated to be widened and rebuilt and when Buffalo Speedway is to be extended south through the area.

“A lot of migration in terms of development has moved south to the Pearland area, and I don’t think it’s because the developers desire to be in Pearland,” said Houston’s deputy director of development, Gwen Tillotson. “I just think it’s because we did not have the adequate infrastructure. The longer we delay moving forward on this project, the more opportunities for development we stand to lose.”

Linda Scurlock, president of the South Houston Concerned Citizens Coalition, has lived in the area for 37 years. Holmes Road, she said, has been an eyesore for many of those years, so isolated it invites illegal dumping.

“We’re close to the Medical Center, we’re close to Reliant (NRG) Stadium, we’re close to 610, we’re close to the Beltway, we’re close to 288,” Scurlock said. “We see those as pluses, and we can’t see why there has not been development out here. If you have the infrastructure there, then I think development will come.”

You know how I suggested we build more places to live proximate to the Medical Center as a way of coping with its mobility needs? This is exactly the sort of thing I was talking about. I had suggested it for the undeveloped land along Hiram Clark, but if you look at that Google maps image I provided with that post, you can see the gigantic plot of land south of Holmes Road mentioned in this story as well. I didn’t suggest it as a target for development in my post because I figured it had to be a park or something – it was just too big. You know that former KBR site in the East End that everyone was talking about awhile back? It’s 136 acres, which is to say one tenth the size of this plot. If this expanse of land south of Holmes Road were in the process of being developed right now, you think that might have an effect on Houston’s housing shortage? This is a smart move by the city, and I’m glad to see Harris County playing a role in it as well. I look forward to seeing what eventually comes out of this.

How to make the warehouse transition something to look forward to

I have four things to say about this.

Houston developers plan to build a mixed-use project, including upscale apartments and retail, on a 15-acre tract close to downtown, replacing a large produce warehouse that’s occupied the space for decades.

Capcor Partners and Kaplan Management bought the land this week from Grocers Supply, which has been at the corner of Studemont and Interstate 10 for 42 years.

[…]

Josh Aruh of Capcor, which specializes in retail developments, said it’s rare to find such a large piece of land in the Inner Loop and added that the project will make a “big footprint.”

“There is tremendous, continuous demand in this sub-market,” Aruh said. “We believe the scarcity of such a large, contiguous tract so close to downtown Houston, the Heights and entertainment districts is primed for a strong multifamily component. And with frontage near I-10, this property is ideally suited for retail. The size of the tract invites many possible other uses and users that we are currently exploring.”

Aruh said he has already discussed possibilities for the property with grocers, cinemas, restaurants and several big box retailers.

The developers are also working with the city to expand a street to split the property and reduce traffic, he said.

Michael Kaplan of Kaplan Management, which specializes in multifamily developments, said he hopes to build up to 400 high-end apartments, to go with the retail and commercial uses, to meet the demand for housing in the area.

“It’s just in the heart of this terrific growth corridor,” Kaplan said. “It is such a strong area.”

1. I admire their desire to have as small an impact on traffic as possible, because traffic on the stretch of Studemont between Washington and I-10 sucks thanks to the Kroger, the long light cycle at I-10, and the huge number of cars turning left to get onto I-10 and to get into the Kroger. Let me suggest that the first order of business would be to rebuild that piece of road, because it’s axle-breaking awful right now. Yeah, that’ll make traffic even worse for the duration, but the gain will be worth the pain. As for expanding a street – not sure which one they have in mind – let me suggest that what they really ought to consider is adding a street. I presume the entrance to this new development would be opposite the entrance to the Kroger where the traffic light is and where there’s already a left turn lane on northbound Studemont, which currently turns into a wall. Having that entrance street connect to Wichman on the west so that vehicles can access Hicks Street, which passes over Studemont and which connects to Heights via Harvard, will help.

2. If you really want to lessen the impact on traffic in the area, then it’s vital to ensure non-vehicular mobility into and out of this development and to the surrounding areas, by which I specifically mean Washington and White Oak. First and foremost, put in a sidewalk on the west side of Studemont, along the front of the development. There’s already a decent sidewalk on the east side of Studemont, but it terminates immediately north of I-10, where a well-worn path in the dirt connects you up with the bridge over the bayou and the continuation of the sidewalk at Stude Street. That new sidewalk could split at the underpass to give pedestrians the option of continuing on Studemont to Washington or ascending to Hicks and the overpass for better access to Arne’s and Kroger, and on to Sawyer Street if one is adventurous. I took the #50 bus home from work on Friday when this story was run, and I got off at Studemont to walk home from there. It took me 15 minutes to get from Washington to White Oak – I timed it – so having good pedestrian paths between these two streets will make the new development a lot more accessible. Given the traffic and the parking situation on either end, you’d be better off walking from whatever residence they build to Fitzgerald’s or BB’s or wherever you want to go.

3. At least as important as facilitating pedestrians is connecting this development to the existing bike paths and bike lanes nearby. You could take Hicks to Heights and from there get on the Heights Bike Trail, but that’s a mighty big detour if you’re heading towards downtown. And Lord knows, no one in their right mind would want to bike on Studemont to get anywhere. Look at a map of the area. Isn’t the solution to all this obvious?

GrocerSupplyMap1

This just screams for a new trail along the bayou to get past I-10 and eventually hook up with the existing trails. This picture shows how that would be possible:

GrocerSupplyMap2

Pass under Studemont, and pave that truck path to get to the Heights trail. You’d need to build a bridge over the bayou to connect to the new trail adjacent to Stude Park, which you can’t see in this old Google satellite image, but that shouldn’t be a big deal. I have no idea how much this all might cost, but for something like this that enhances mobility there may be federal grant money available. Or, you know, maybe the developers can kick in on this, since it would greatly enhance the value of their property. This might in fact be an excellent candidate for 380 agreement, one that would offer a clear benefit to all involved. I’m sure there’s a way to make this work.

Ed Wulfe, chairman and CEO of retail development and brokerage firm Wulfe & Co., said as Houston becomes more dense and urban, more warehouses will be converted into residential and commercial properties.

“We are changing land-use patterns,” Wulfe said. “Now the need is greater and the market is stronger. Warehouses can only command so much economic benefit.”

4. Density with transit >>> density without transit. The good people of Super Neighborhood 22 have that comprehensive transportation plan for their area that includes various rail and streetcar options for the Washington Avenue corridor. Moving forward on that would be a huge boon to mobility in the area, and to projects like this one and the ones that will inevitably follow. Look, I know people get skeptical whenever non-car modes of transportation are discussed. Most people don’t want to give up their cars, even a little bit. I get that, but in a city this size that still leaves a whole lot of folks who do want alternatives, and these are the people who will be seeking out dense development. We can do it right and make the whole experience a hell of a lot better, which includes the drivers since they’ll have fewer competitors for road space, or we can do it wrong and make a huge mess of it all. You tell me what the right answer is. Swamplot has more.

On getting to walkable urbanism

This story about neighborhood opposition to the Kroger 380 agreement doesn’t quite get at what I think are the key issues that need to be discussed.

[O]pponents of both the Wal-Mart and Kroger deals say suburban-style big-box stores don’t fit a widely-held urban vision for Washington Avenue Corridor. They’d like to see more incentives offered for development by small businesses or in more needy neighborhoods.

“It’s a lost opportunity for how we should be developing our urban space,” said Tom Dornbusch, who lives in Woodcrest. “Why don’t we incentivize something appropriate for these sites rather than just servicing the frontage roads on I-10?”

That five members of Houston City Council opposed the Kroger deal at least shows that neighborhood activists have “raised the consciousness” of some council members since the Ainbinder agreement was approved, Dornbusch said.

Dornbusch is an officer in the Washington Avenue Coalition/Memorial Park Super Neighborhood Council, a coalition of homeowner groups well-versed on planning and quality of life issues in this redeveloping area west of downtown. These groups helped raise matching funds for a Liveable Centers Study of the Washington Avenue Corridor.

Former City Councilman Peter Brown, an architect and urban planner with nonprofit Better Houston, has aided their planning efforts.

Like Dornbusch, he thinks the area is well-suited to become a teeming urban landscape that accommodates both pedestrians and transit, either rail or streetcar, which the neighborhoods have embraced.

But right now, economic development favors “the lands, Pearland, Sugar Land and the Woodlands,” Brown said, and that brings big-box stores to the fore.

“These are the kinds of things that city policy needs to consider, and it is evolving. It is evolving toward smaller urban growth. We’re just not there yet,” Brown said.

The issues here, at least as I see them, are whether it’s a good idea for the city to pursue 380 agreements of any kind in areas where development is likely to occur naturally, and whether the developments that are being pursued in these two 380 locations are suitable and desirable from an urbanist perspective. I can’t quite tell from the story whether Dornbusch and Brown are evaluating these deals separately or lumping them together. As I see it, the two sites are fundamentally different. There’s no reason why the Ainbinder/Washington Heights property couldn’t or shouldn’t be connected to and a key part of the walkable urban vision for the Washington corridor. It abuts a neighborhood to the west and apartments to the south – there used to be apartments to the east as well, but they were torn down to make room for more suburban-style development – and is certainly close enough to be reachable from a future Inner Katy rail line stop or streetcar stop at Heights Boulevard. With the West End Multipurpose Center and some townhome development already there, and who knows what to come in where the Center Street recycling center currently is, the Ainbinder location could be an epicenter of a real urban neighborhood. Instead, it’s going to be more like a sinkhole, separating places that should be connected, and that’s just a shame and a wasted opportunity.

The Kroger location, on the other hand, seems to me to be a much better fit for a supermarket or other car-oriented shopping center. Its neighbors are things like Arne’s, the Sawyer Heights Target center, Party Boy, and a truck depot. Where Yale and Heights have sidewalks that can connect the Washington Heights site to either side of I-10 if you ensure there’s a safe pedestrian crossing there, Studemont has no sidewalk from I-10 north to Stude Street, and from Hicks south to Center there’s only a very narrow sidewalk on the east side of the street. The eventual connection of Summer Street ought to be walkable, but Studemont will still serve as a dead end for anyone on foot. Otherwise, it’s basically cut off from Washington to the south and the Heights to the north. Who would ever walk there? With a long-term plan and control of most of the property between I-10 and Center, and Studemont and Sawyer, you could build something urban, but how likely is that to happen on its own? Washington Heights is close to that, or at least it was before Ainbinder screwed it up. Sawyer Heights isn’t.

Because of that, I don’t have any philosophical objections to a grocery store going in at that location, even though I know it’s going to mess up traffic. The question about 380 agreements is going to be more in the forefront – litigation will do that – but I don’t want to lose sight of the suitability question. I think it’s the more important discussion to have.

More thoughts on the Mayoral election

I think there are two key things to keep in mind when contemplating Tuesday’s election results in Houston and what they may mean for 2013. First and foremost, I believe you have to see the Mayor’s percentage of the vote, which everyone would agree was underwhelming, as a reflection on her level of support and nothing else. To put it another way, this was her “generic” re-elect number, given that she wasn’t running against any one opponent but against a mostly interchangeable slate of “not Annise Parker” candidates. That’s bad, because some 49% of the people who bothered to vote said they wanted someone else, but it’s not necessarily as bad as it looks. Many incumbents do worse in polls against a generic opponent. Look at President Obama for a clear example of that. The flipside of this, which is also crystal clear with the President, is that it means they generally do better, sometimes much better, against actual named opponents. Every single person who might run against Annise Parker in 2013 has his or her own strengths and weaknesses, and many of them have their own record in public service that can be examined and critiqued. Change the choice from “I’d like somebody else to be Mayor” to “I’d like this specific person to be Mayor” – Paul Bettencourt, Ben Hall, Bill King, whoever – and some people who maybe aren’t too happy with Parker will decide she’s the preferable option. (Or not – it can certainly go either way.) Give the Mayor a single named opponent whose flaws and policy ideas she can attack, and the dynamic of the race changes, because it’s no longer all about her. Like I said, that may or may not ultimately work in her favor, but it will be different than this race was. We can’t know how that will go until someone actually decides to run against her. Further, while it’s easy enough to imagine Parker getting squeezed between a white Republican and an African-American Democrat, what happens if more than one of either or both decides to jump in? This is what I mean when I say it’s far too early to make any grand pronunciations about 2013. There are too many variables in play. I still believe, as I said before the election and before anyone else, that an underperformance by the Mayor would make it more likely she will draw a serious opponent in 2013. That’s not the same as saying I believe she’ll lose, or even that she’s more likely to lose. It’s far too early to tell about that.

The Mayor’s first term was affected by several factors that were beyond her control – things like the economy, the red light camera referendum, various Council hijinx. I believe she is likely to derive some benefit from there being fewer of these external factors over the next two years – I mean, how much more can there be? If it turns out I’m wrong about that, she may well decide this job is a curse and gladly hand it off to someone else. Be that as it may, there’s no shortage of things well within her control where she can and must do better. The Mayor’s biggest political liability isn’t the caprices of fate but the fact that she has done very little to expand her base of support, and quite a bit to antagonize and depress it. I think of the Mayor’s base primarily as people like me – urban progressives. As far as I can tell – I’ll have a better grasp on this when I get the vote canvass, but I don’t need numbers to see the basic problem outline – there’s a lot of discontent among people in my neck of the woods with the Mayor’s actions. First and foremost among them is the 380 agreement situation, which begins but now doesn’t end with Ainbinder and Washington Heights. The fact that Ainbinder chose Wal-Mart as its anchor tenant is another example of uncontrollable bad luck for the Mayor – if they had announced a deal with HEB, no one would have cared enough to kick up a fuss about it – but the decision to offer Ainbinder a 380 agreement in return for what appear to be minor, almost trivial, infrastructure improvements, along with still-unresolved questions about traffic, bridge safety, noise, drainage, and so forth, that was all on the Mayor and her unhelpful department heads. Pursuing historic preservation – which, one must admit, was something she campaigned on – won her more enemies than friends, as support for preservation is broad but shallow, while opposition to it is narrow but deep and fierce and activism-inspiring. However you feel about these things, the fact remains that there are fewer people in neighborhoods that should be her strongholds that are on her side, and more than aren’t. That’s not a good position to be in. I don’t know what she and her advisers have been discussing since Tuesday night, but if I were in on those conversations, I’d strongly recommend they spend less time worrying about who may or may not decide to run against her, and more time figuring out how to do something about this. And if they can’t come up with a good strategy for that, they’d best start working on their oppo research, because they’re going to need plenty of it.

Anyway. I’ll have some analysis of the other results tomorrow, and once I get my hands on canvass data, I’ll start bringing the numbers. In the meantime, here are some more overviews of the election results, from PDiddie, Stace, Greg, BOR, and EoW.

UPDATE: Here’s the Chron analysis, which covers much of the same ground as I did.

Kroger gets its 380

Despite neighborhood opposition, City Council has approved a 380 agreement for the proposed Kroger on Studemont at I-10.

District H Councilman Ed Gonzalez, who represents the area around the proposed store and who championed the 380 agreement, insisted the deal was less an incentive to Kroger than it was a way for the city to extract benefits from a market-driven project. The deal gives the city two blocks of road, sidewalks and traffic lights more than a decade early, and also hands over to the city a third of an acre that it would someday need to extend Summer Street from Studemont to Sawyer.

Mayor Annise Parker said Houston’s strategy differs from that of cities that build infrastructure first and then try to recruit businesses to move in.

“We have not chosen to use that sort of what I would call ‘corporate welfare.’ We have said, ‘Business, if you want to open and you need the street, you pay for the street. We’ll pay you back, but if you really want to be there, you use your dollars upfront,'” Parker said.

The city will pay a premium on that upfront money. The deal calls for the city to pay Kroger back with 5.17 percent interest. The city’s rate on bonds through which it finances public works projects ranges from 2.55 percent to 4.06 percent, according to information that Councilwoman Anne Clutterbuck got from the city’s Finance Department.

“What do you make on your IRA? I would love to make a 5.17 percent return,” Clutterbuck said. “The taxpayer, in my opinion, should not be on the hook for that.”

The rationale given by Mayor Parker for the use of 380 agreements is sensible. It’s certainly a less risky approach than “build it and hope they come”. Aside from the premium interest rate, whether it’s good policy to use a 380 in this particular location is another matter. The outline of the deal here sounds better than what was struck for Ainbinder on Yale Street, but I’m dubious about the wisdom of a supermarket there. I’ve seen traffic at the light back up all the way to Center Street during the afternoon rush hour, thanks in large part to the many people wanting to enter I-10 West from Studemont. The thought of adding in grocery store traffic, not to mention another traffic light, makes my head hurt. Having said that, I’m not sure what kind of development could have been built there that would be both low impact on traffic and profitable to the developer. Long term, I may have to think about using Sawyer/Watson as an alternate route, though if the rumored plans of an Alamo Drafthouse come to fruition, it may not be much better.

RUDH files suit over 380 agreements

From the inbox:

RUDH has filed a petition in Harris County District Court challenging the legality of a six million dollar tax reimbursement deal between the City of Houston and Ainbinder Heights, LLC, the developer of the Houston Heights area Walmart Supercenter strip mall development. RUDH alleges that the deal violates section 380 of the Texas Local Government Code because the developer was committed to building the project with or without public funds.

Section 380 of the Texas Local Government Code broadly allows municipalities to provide various forms of public assistance to private developers so long as the public funds are used to promote economic development. The City of Houston’s 380 agreement with Ainbinder Heights, LLC provides over six million dollars in sales and property tax reimbursements for various infrastructure upgrades needed for the Walmart Supercenter strip mall development. RUDH alleges that the principals of Ainbinder Heights, LLC , the Mayor and members of Houston City Council all stated that Ainbinder Heights, LLC will build the development with or without the assistance of public funds. RUDH alleges that a 380 agreement cannot promote economic development when the developer can build with or without the assistance.

RUDH also alleges that the City of Houston’s program for awarding 380 assistance agreements violates the Texas Constitution because the program gives the City absolute discretion to ignore standards for awarding assistance in favor of agreements the City believes are “otherwise meritorious”. In the case of the Ainbinder Heights, LLC 380 agreement, RUDH alleges that the City completely ignored its own standards and application procedures and simply gave Ainbinder Heights, LLC over six million dollars to support the development of a Walmart Supercenter strip mall development.

RUDH believes that legal action is necessary because the City of Houston is using section 380 agreements to spend money out of future city budgets without doing anything to promote economic development. If a developer does not need public funds, then scarce tax revenues should not be sacrificed to pad a developer’s profit margin.

You can see a copy of the lawsuit here; one of my blog posts is listed among the footnotes on page 7. Note that the suit asks for a “permanent injunction restraining the City from giving any effect to or complying with the 380 Agreement and from proposing any further 380 agreements” under its 1999 ordinance that created the 380 program. One presumes that would have an effect on the Studemont Kroger, for which a separate 380 agreement was voted on by Council yesterday.

Under the deal headed to City Council on Wednesday, the city would reimburse Kroger as much as $2.5 million for extension of a street, landscaping, traffic lights, sidewalks and other infrastructure improvements surrounding the store. In exchange, Kroger guarantees it will create 170 full- and part-time jobs at the 8.6-acre site.

[…]

In addition to the job-creation requirements, the deal calls for Kroger to donate $40,000 to the nearby Olivewood Cemetery. However, that, too, will be reimbursed by the city under the deal, [Mayoral spokesperson Janice] Evans acknowledged.

Evans said City Hall had no plans to extend Summer Street or do the other improvements for 12 years, so the deal buys the city an accelerated schedule. City officials see that as an economic booster shot that puts people to work sooner and clears the way for other businesses to open on the new street.

[Kroger spokesperson Rebecca] King described the improvements as “above and beyond” what would be required without the 380, but it is not clear how much more the city gets by agreeing to rebate to Kroger some of the property and sales taxes generated at the site over the next 13 years.

I’m pretty sure there will be a motion for a temporary injunction to come, so we’ll see if either of these projects are put on hold. Swamplot and Hair Balls have more.

UPDATE: The Kroger deal is on hold for now.

District H Councilman Ed Gonzalez championed the Krogerdeal as a contributor to economic development and one supported by the local civic associations he consulted.

Other members, who did not get many details of the deal until Tuesday, asked why the city was not offering incentives to grocers to set up shop in the Third Ward, Fifth Ward, Sunnyside, Independence Heights and Acres Homes.

“I hope we revisit our use of 380 agreements and use them in the parts of this city where we most need it, and I would respectfully submit to you we’re not doing that now,” Councilwoman Jolanda Jones said.

Councilman Jarvis Johnson said the city needs to do more outreach to urge companies to locate in low-income neighborhoods.

“We can’t have a city of haves and have-nots, we need to balance the city out to where there’s economic development all across the board,” Johnson said.

According to the Council agenda, the proposed ordinance was tagged by CMs Jones, Rodriguez, Noriega, Johnson, Sullivan, and Bradford

Studemont Kroger update

The Heights Life brings news about the proposed Kroger at Studemont and I-10. Of particular interest is this bit:

The property on which Kroger plans to build lies on the east side of Studemont north of Arne’s. The store will be at the south end of the property, facing the main customer parking lot to the north of the store. A fuel center will be placed at the north end of the property together with a small, secondary parking lot needed to fulfill code requirements.

Delivery docks will be located on the east and west faces of an extension on the south side of the store. The three main delivery dock doors will face east toward an industrial area. A small dock door will face west toward Studemont.

Hicks will be cut through to meet Summer Street on the east side of the property. The City’s intent is that this will become a through street, but there are some unspecified impediments. The portion of the block that is now Hicks will be improved to current City standards, and the whole block will be built like a City CIP project. Kroger will eventually dedicate that property to the City as street Right-of-Way in exchange for a smaller area of water/sewer ROW that the City will dedicate to Kroger. Access to the delivery docks will be from Hicks/Summer. An employee parking lot will occupy the portion of the lot south of Hicks/Summer next to Arne’s; Kroger expects that Arne’s will also use this lot at some point (possibly for its employees).

Couple things here. First, there may be “unspecified impediments” to extending Summer Street, but that doesn’t mean they are unknown. Behold, the view from where Summer dead ends heading eastbound at Oliver Street:

Presidential Heads Rear View

Yes, it’s the Giant Presidential Heads. And in what may be fortuitous timing or a harbinger of their doom, there’s this:

Now a source says that the [Alamo Drafthouse] plans to open a new central Houston location in the Sculpturworx compound. The 78,175-square-foot former studio of artist David Adickes (the man behind the giant president heads) was sold to Bartlett Lofts developers Phil Arnett and Chap Chapman in 2010, according to Swamplot, with plans for artists’ studios as well as significant commercial space.

That report may be a bit premature, but never mind that for now. Having an Alamo Drafthouse in there would greatly increase the need for and the value of a connected Summer Street. It also nearly guarantees a traffic light at the Studemont intersection, which I predicted in February. If nothing else, having Arne’s employees, and possibly its customers, park there will necessitate a stoplight, as the pedestrian crossing at I-10 isn’t really safe due to the right turn from the service road onto Studemont, which isn’t controlled by the light. Given what a mess that area can be during the evening rush hour, I’d hold out for a pedestrian crossing bridge as an alternative, but I don’t expect anyone to listen to me on that.

Anyway. As both Swamplot and Houston Politics note, the development is up for a 380 agreement this week. If that happens, and if the extension of Koehler Street to 2nd at the Heights Wal-Mart happens, you will be able to travel directly from one 380 agreement location to another, without using I-10 or Washington to get there. Just take 2nd to Harvard and turn on Hicks, then follow it along – see this Google map for the details. Note that Hicks passes over Studemont – it’s what on top of that underpass you pass under – and voila, there you are. Keep that in your back pocket for when you might need it.

The Midtown arts deal

I have three things to say about this.

A nonprofit group plans to build a community arts complex in Midtown with the help of up to $6 million in reimbursements from the city.

The Houston City Council this week approved a tax reimbursement deal and the $2.5 million sale of 3400 Main, currently a parking lot, to the Independent Arts Collaborative, a group created to run the facility.

The 90,000-square-foot facility will include a performance theater, rehearsal spaces, offices and classrooms, as well as make it easier for various arts groups to work together, said Emily Todd, a board member of the collaborative.

[…]

The Independent Arts Collaborative has raised $250,000 for a down payment and has financed the rest through the International Bank of Commerce. Ensemble/HCC Partners, a partnership that owns two adjacent blocks and of which developer Bob Schultz is a managing partner, is guaranteeing the loan.

The collaborative must now raise the estimated $22 million it will cost to build the project, on the block bounded by Francis, Travis, Holman and Main.

The group’s deal with the city, also known as a 380 agreement, requires the collaborative to raise at least $10 million for design and construction of the project. At least 25 full-time workers must also be employed by the building’s tenants.

[…]

The collaborative intends to deed the finished building to the city. It would then be maintained by the collaborative and managed by Houston First — recently created by the merger of the city’s Convention and Entertainment Facilities Department and the existing government corporation that runs the city-owned Hilton Americas.

According to the agreement, the city believes the project, along with new retail and parking garages on two adjacent blocks, will attract tourism and more development to the area.

Bob Schultz, who developed some of 3600 Main and the site of four businesses on 3700 Main, plans to build office space, retail and some residential units on 3500 Main and the rest of the 3600 block of Main.

1. Now this is what I call a good use of a 380 agreement. It’s helping to facilitate a deal that wouldn’t have happened otherwise, in a location where the development in question will fit with and benefit existing and future neighbors. More like this, please.

2. Clearly, Houston First is going to be about more than just managing the Convention Center. I wonder where else it will turn up. I also wonder if it was essential to this deal, or if it could have happened with the old setup.

3. Revenue from the sale of 3400 Main was part of the fiscal year 2011 budget. Good to see they got it done before the June 30 deadline. Swamplot has more.

The Wayside Wal-Mart

For what it’s worth, I don’t have an opinion about the new Wal-Mart at I-45 and Wayside, whether it’s a Super Center or not. Other than a few comments at Swamplot and on the Stop Heights Wal-Mart Facebook page, I haven’t seen any evidence of an uproar from the nearby Idylwood neighborhood. If there is one, I’m sure I’ll be sympathetic; if not, then there’s nothing at issue.

While there are concerns about traffic on Wayside, that location seems more suitable on its face – direct access from a major freeway, and no residences immediately adjacent to the side, as far as I know. There’s also not much in the way of grocery stores or other major retail nearby, at least according to the maps in the preliminary impact review that was put together by RUDH last August. That map says there’s a grocery store right there at Wayside and I-45, but I can’t tell what it is. There is a Kroger and a Fiesta farther east on Wayside, but nothing else within about five miles. This is the part of town for which you’d expect to see a 380 agreement deployed; I have no idea if that may be in the cards here.

Speaking of such things, there was one very interesting tidbit that I picked up at the recent RUDH meeting that discussed the Ainbinder-sponsored traffic impact analysis (TIA). We know that in addition to the Ainbinder site, which is primarily on the west side of Yale and which will include other retail besides the Wal-Mart, there’s another retail development on the east side of Yale, right across the street. The Ainbinder TIA doesn’t take into account any additional traffic that may some day be generated by this other development. It’s not required to do so. This is sensible enough in that many proposed projects never come to fruition – Sonoma, anyone? – or eventually get done as something else, and so any traffic projections you might make that included other unfinished developments would be just wild guesses. But on the reasonable assumption that something is going to be built there, it means that Ainbinder’s TIA numbers are lower, perhaps much lower, than what we’ll really see. The other guy will have to account for Ainbinder’s site when he does his TIA, but that won’t affect Ainbinder. Just so you know. For more about the Ainbinder TIA, see the RUDH presentation from that meeting.

Email counts, too

I have one thing to say about this.

City officials involved in negotiating a tax reimbursement deal with the developer of a controversial Walmart-anchored retail project near Washington Avenue made dismissive, and sometimes derisive, references to citizens opposed to the development, according to e-mails released to the Houston Chronicle.

For example, in response to a subordinate’s e-mail regarding potential fallout from a July 2 Chronicle report about Wal-Mart’s interest in the site, the city’s chief development officer, Andy Icken, wrote, “In that neighborhood I assume there are some who feel they have access to unique info that makes those folks uniquely qualified to decide what is good for everyone else. … Walmart deals with folks like this everywhere.”

Three weeks later, as neighborhood opposition intensified, Icken responded to a colleague’s comment about Wal-Mart’s growth in the Houston market by writing, “We have had 4 new ones built in the last 2 years without a community comment until they touched the effete in the heights!”

[…]

Councilman Ed Gonzalez, whose District H includes the area in which the Walmart is planned, also was discussed by staff in the e-mails.

As opposition to the project from community groups grew in late July, Icken asked Deputy Finance Director Tim Douglass, the city’s lead negotiator on the 380 agreement, to describe Gonzalez’s stance.

Douglass replied, “Ed is getting a little squishy. Says he’s getting bombarded with complaints. … Ed needs a little hand holding from MAP (Mayor Annise Parker) … he feels like he’s carrying the load on this.”

[…]

Icken said city officials met numerous times with community leaders to address their concerns, including two large meetings called by Parker. Those meetings better represent the city than remarks made in e-mails, he said.

“E-mails just have a way of capturing a thought at the moment, and I think I would simply say that the actions we took in terms of meeting with people and meeting with the community at large best speak to the overall attitude the city had,” Icken said. “And, obviously, in the end, the decision on whether that agreement was passed is one made by City Council and not by staff.”

Hey, Andy and Tim, I just sent an email to all of my effete neighbors saying that you’re a couple of jerks who are clearly too immature to be allowed to interact with the public. But don’t worry, that was just a thought captured at that moment. I’m sure it won’t affect your perception of the overall attitude we have about how the city handled this situation. Swamplot, Campos, and Nonsequiteuse have more.

Council approves the Wal-Mart 380 agreement

No surprise.

Over strong neighborhood objections, City Council this morning passed a package of economic development incentives worth more than $6 million for the developer of a future Walmart store near the Heights.

City Councilwoman Anne Clutterbuck offered two amendments to the agreement with Ainbinder Co., strictly limiting the potential taxpayer reimbursements to the company to $6,050,000 for public improvements that include landscaping, a bike trail, and widening, repaving and improving drainage on many of the streets that will surround the Walmart.

Four Council members – Noriega, Jones, Rodriguez, and Gonzalez – voted against the 380, while everyone voted for Clutterbuck’s sensible amendments. Given that Ed Gonzalez represents the district the Wal-Mart is in, I’m a bit surprised that there weren’t more No votes, but the Mayor’s influence is always strong in these matters.

More from CultureMap:

Mayor Annise Parker said that the city is in separate negotiations with Walmart to try to establish an operating agreement that would address additional community concerns not covered by the 380.

“We are going to continue to negotiate with Walmart,” Parker said in a post-Council Meeting press conference. “It’s not the end of the process; it’s the end of the 380 agreement.”

Negotiations between the Walmart developers and the city will continue over lighting, access and security. Parker said it should take 60 days to conclude those negotiations.

“We want to set a standard with Walmart about what we expect,” she said. Still, Parker admitted, “We don’t have any leverage, we don’t have an ordinance … These are voluntary things we’re negotiating with someone who wants to be a good corporate citizen.”

Here’s the memo the Mayor wrote regarding the 380 and the separate negotiations with Wal-Mart, and here’s the attachment referenced in the memo. Some of these things I know are things Wal-Mart already does elsewhere, but the ones that are specific to drainage and “tree islands” are both welcome and were requested by RUDH. I think if you can work in an agreement for the store to not have 24-hour operating hours and some more pedestrian and bike-friendly pieces, you may have the basis for something most people can live with. I still think it’s the wrong location for a Wal-Mart, and I’m certainly not the only person to think that.

In terms of vision, Washington Heights shopping center remains regrettably lacking in ideas. It is a suburban box and strip clad in slightly better materials than the typical Walmart, which seem to be the building’s only acknowledgment that it occupies a significant site. The disconnection of the architecture from its context comes through strongly in the developer’s renderings, which seem to portray a project in the middle of the Katy Prairie, rather than Houston’s inner-loop. The site plan reveals a tolerance for waste that serves as a painful reminder as to how little land close to the center of the city is valued.

[…]

Ultimately, Washington Heights is suburban-style development on an urban site, which over the long term will be another dysfunctional patch in the urban fabric of Houston. Is it better than an abandoned steel fabrication site? Probably. Does it improve Houston in any way beyond expanding the tax base, providing a few more jobs and additional (arguably redundant) retail? Probably not. Could this development have been planned in such a way as to yield a much more progressive product—one that Houstonians could feel good about contributing their tax dollars to? Absolutely.

I clearly haven’t spent enough time looking at the site renderings, because my reaction to the one in that Offcite post was to guffaw. Go ahead, try to guess where I-10 is in that design, never mind Yale Street.

I think with the points the Mayor has outlined, especially if there is continued feedback from RUDH and Super Neighborhood 22 and other stakeholders, the potential is there for it to be a lot less wrong. The main concern here is that I don’t know what actual leverage the city has with Wal-Mart. They’re not party to the 380 agreement, and it’s not clear to me that you can get anything from them other than their word of honor that they’ll do their best to try to accommodate, for what that’s worth. I should also note that RUDH is not happy with the vote on the 380 agreement, which they thought was “rushed” and which “[put] the developer’s interests above those of the public’s”. They plan to remain engaged, though, so maybe that will help put some pressure on Wal-Mart to agree to what is now being asked of them. It may not be that much, but it’s what we’ve got. Hair Balls has more.

RUDH recommendations to the city

Whether you think the Stop Heights Wal-Mart effort is a righteous cause or the annoying whine of a bunch of fancypants elitists, I recommend you go check out this post to read the recommendations made by Responsible Urban Development for Houston to the city for how they would like to see the site get developed. Here, from there overall recommendations, are their specific goals:

• A more groundbreaking, innovative site design, which is original and productive and does not set a dangerous policy precedent with regard to “very ordinary” private developments within the City of Houston.
• A significantly better utilization of the site, and thus, a correction of the current potential major financial opportunity loss and neutral or negative Economic Impact.
• A development plan which addresses the concerns of area residents, home owners and local business owners.
• A revised 380 agreement which meets the requests of the public and provides a responsible compromise in order to promote achieving goals for all parties.

Seems pretty reasonable to me. If you read through it all carefully, you might even conclude that it’s quite possible to build a Wal-Mart as the anchor to this development and still meet these goals. That would require Ainbinder and Wal-Mart to think a little differently, but I don’t see anything wrong with that.

A Chron story about these recommendations, which were presented to the city on Wednesday, is here. Nick Urbano describes the meeting they had with Mayor Parker, Andy Icken, Council Member Gonzalez, and Mayor Parker’s deputy chief of staff Adam Harris. It sounds like things went pretty well for them, but we won’t really know until the next Council meeting. On a related note, Urbano, who lives right there on Koehler Street, responds to Lisa Falkenberg, and Andrew Burleson responds to a troll. Enjoy!

What could be done with the Wal-Mart site instead

If you read through my previous post, you may be wondering “if not Wal-Mart there, then what?” For that, I turn to Andrew Burleson, wearing his President of the Houston Chapter of the Congress for the New Urbanism hat, who makes a proposal to the Mayor and Council about what should be built at the Koehler Street site.

1. The proposed development is in no way ground-breaking or innovative, and apparently the developer has said that if he does not receive the 380 agreement from the City that “he’ll build it anyway.” As I understand it, the purpose of a 380 agreement is to enable the development of projects that offer a significant public good which could not otherwise be completed due to some financial or regulatory constraint.

I am concerned that if the City of Houston offers a 380 agreement to a very ordinary project that could arguably be built without it, then a precedent will be set where developers begin to expect financial aid from the city for the construction of any kind of infrastructure in any kind of project. This would certainly not be a desirable outcome for the city.

2. The proposed development is extremely low density, and I believe it is a gross underutilization of the site. That site is an absolutely incomparable infill tract, and it could easily support moderate-density mixed-use development. Such a development could be reasonably expected to produce $70-$100 million dollars of ad-valorem tax value, versus $15-20 million for the proposed development. Further, a mixed-use development would include a significant retail and entertainment component which would likely produce as much or nearly as much sales tax revenue as this very low-density retail center. Lastly, a mixed-use project could include significant amounts of metered parking, which would result in a third source of revenue for the city.

Those are good points that I haven’t seen raised anywhere else. Burleson goes so far as to say that if the city did a thorough financial analysis on this property, it would be best served by buying it outright and developing it itself. He also details his proposal for a different development at that location. Check it out.

I hope City Council members read through that proposal, because it makes much more sense than what Ainbinder wants to be compensated to build. Unfortunately, the Chron’s editorial board has decided that Lisa Falkenberg’s lazy logic is good enough for them. In doing so, they make an interesting observation:

Opponents of the project have patterned their campaign tactics after those of a group fighting the construction of a high-rise on Ashby Street in the Rice University area. In that case the issue was clear-cut. Development of the residential tower would have severely crowded narrow streets, and the city used a traffic control ordinance to impose limits on the project’s size and to knock out a commercial component. Those strictures may effectively kill it. Developers of the high-rise have taken the city to court, seeking $40 million in damages.

The circumstances are very different for the Walmart project, sited on former industrial acreage that has been a wasteland for years. Adjacent to railroad tracks and just south of I-10, the site is strikingly similar to that of the Target in nearby Sawyer Heights. Target’s construction in 2006 provoked little community protest, despite the fact that it is also situated directly across the freeway from the Heights. Sawyer, a narrow street running through an industrial area to Washington, has far less traffic-carrying capacity than Yale and Heights near the Walmart location.

Actually, the Ashby situation is just about perfectly on point here. The argument of the anti-Ashby folks was “This is not an appropriate location for a high-rise”. The argument of the anti-Wal-Mart folks is “This is not an appropriate location for a suburban big-box store like Wal-Mart”. In each case, residents who were alarmed by the prospect of that development taking place learned to their chagrin that there was essentially nothing they could do about it procedurally. Unless you’ve already gone through the arduous deed restriction process – which is block by block and thus would not have been an option for the Wal-Mart site anyway – there no ordinances, no tools, basically no nothing to allow a neighborhood to push back against a development they don’t like. The only option open to them is to raise hell, become a general pain in the ass to the city, and hope for the best. The only difference that I can see between the two situations is that the city bent over backwards to accommodate the anti-Ashby folks, and it has done nothing of the sort for the anti-Wal-Mart forces. So far, anyway.

Falkenberg’s Wal-Mart strawman

Where to even begin with this bizarre Lisa Falkenberg column?

I’ll probably get banned from my favorite Heights coffee house for saying so, and it’s not that I’m a fan of Walmart. Some of their business practices led me years ago to avoid shopping there if I can avoid it. I’m fortunate enough to have that luxury.

But the campaign to stop developers from building the Walmart-anchored shopping center at Koehler and Yale seems more out of touch the louder it gets.

We keep hearing from the folks waving the “Stop Heights Wal-Mart!” signs that the development doesn’t jibe with the Heights vibe. I’m not entirely sure what this means anyway in the context of a our zoning-free, free-market-free-for-all crazy quilt of an urban landscape.

But I’m almost certain that some of the other structures nearby — that looker of a climate-controlled self storage facility, for instance — don’t meet the definition, either. And the site in its current state certainly doesn’t: it’s an overgrown lot enclosed in a razor wire-rimmed fence sprouting with a fringe of runaway weeds.

Then there’s the fact that the site isn’t even in the Heights. It’s the West End, or what’s become the Washington Corridor, or Super Neighborhood 22, if you will, but not the Heights. We’re not talking about tree-lined streets of reborn bungalows and mom-and-pops. The area has been industrial for decades, at least according to long-timers like Sarah Hunt at San Jacinto Stone, across the street from the site.

She supports the Walmart, too, by the way. Finally, she says, someone to mow the grass regularly, in addition to all the other improvements developer Ainbinder Co. is proposing: a bike and pedestrian trial, widening and repaving streets, improving drainage, among others.

The refrains from the anti-Walmart folks seem to center around traffic, and trucks and crime and light pollution and China. And I’m sure there are some valid points in there somewhere, although I know the Target on Shearn Street has been known to draw a few cars, emit a little light and sell one or two products from China. Yet, a quick check of the Chronicle archives revealed hardly a blip of opposition when it was built several years ago.

I’ll stipulate that calling this area part of “the Heights” is silly. I’ve been saying that from the beginning. I’ll also agree that whatever ultimately gets developed on this site will have little to no actual impact on what we all agree really is “the Heights”. But look, if you’re going to call out “the Heights” for their hysteria over something that is not in fact in their back yard, you might also note that the developer has christened this location Washington Heights – they like that name so much they registered the domain – so it’s not just the protesters who want you to associate this with that part of town. If “Heights” is going to be a brand as much as it is a neighborhood, then you ought to expect the owners of that brand to be a little protective of it.

Falkenberg talks of the jobs a Wal-Mart would bring, and how much nicer it will be than the vacant, overgrown lot that sits there now. While we can debate about how much economic benefit the city might derive from a Wal-Mart, I will certainly agree that a Wal-Mart would provide a lot more jobs than the vacant lot currently does. If the only choices in this debate were between building a Wal-Mart and leaving the vacant lot as it is, I’d have to concede the economic argument in favor of the Wal-Mart. But, see, the Wal-Mart opponents aren’t advocating for the vacant lot. They want something other than a Wal-Mart, something that they think will be a better fit for the dense urban area immediately around it than a big box store with oceans of parking spaces. This is why the non-profit they’ve set up to raise money for their fight is called Responsible Urban Development for Houston, and not Snooty Heights Residents For The Preservation Of Unmowed Vacant Lots or something like that. It’s why the Stop Heights Wal-Mart group, which is one of the projects that RUDH is supporting, is now soliciting input about what development there should look like. It’s easy to argue that a Wal-Mart would be better than a vacant lot. It’s a lot harder to make the case that a Wal-Mart would be better than anything else that might reasonably and rationally be built there. When Falkenberg wants to make that argument, I’ll be happy to hear her out.

Oh, and let’s not forget the two other Wal-Marts that will be built within a five-mile radius of the Washington Heights location, one at I-10 and Silber and the other at I-45 and Crosstimbers. We will soon be awash in new Wal-Mart locations, not that Falkenberg bothered to mention that. Note that nobody is objecting to either of those locations, either. Perhaps the fact that they’re much more suitable for big box development has something to do with that.

Finally, Falkenberg brings up the comparison to the Target on Sawyer Street, and wonders why no one got their panties in a wad over that. Let me make three points about this:

1. First, as I said before, the two areas really aren’t comparable. The Wal-Mart site is surrounded by residences and residential streets. There was almost none of that for the Target. The residential lofts that are there now were built after the Target was completed. (Those lofts are called “Sawyer Heights”, by the way. See what I mean about branding?) As such, there was almost no one who was directly affected by the construction, so there was little hue and cry about it. In addition, the main access road to the Target, Sawyer Street, was lightly used as a route for passengers vehicles. A few people used it as a cut-through to downtown, but it was and it remains generally unattractive for that because 1) it’s only one lane each way once you get past the Target; 2) there are two active at-grade freight rail tracks that often block your way, and 3) the main vehicular traffic otherwise has always been 18-wheelers, as befitting the industrial area this is in, and if you don’t get stuck waiting for a train you might get stuck behind a semi backing into or pulling out of a loading dock. Yale Street, on the other hand, is already a busy thoroughfare, and unlike Sawyer the Wal-Mart location would also be dependent on smaller residential streets like Koehler and Bonner for access. Finally, as my wife reminds me, the Sawyer developer held open meetings about their proposed development early on without being prodded, and was a lot more receptive to feedback about things like what other retailers were desirable for the site. Nobody knew there was a Wal-Mart coming until it was reported in the Chronicle, and Ainbinder hasn’t exactly been a model of public engagement.

2. Falkenberg never once mentions the 380 agreement, which Council will take up (and surely tag) today. If approved, which I expect it to be, this will provide public reimbursement to developer Ainbinder for various agreed-upon infrastructure improvements. Perhaps if Falkenberg had spent a few minutes perusing the Stop Heights Wal-Mart Facebook page, she might have realized that it’s the idea of city tax dollars going into Ainbinder’s pockets for this that really has people pissed off. (A link to her column has been posted on that page, and several people have commented saying they sent her email pointing that out, so hopefully by now she is aware of this.) I’m one of those people who believes that Ainbinder and Wal-Mart cannot be stopped and that the best possible outcome is to wring as much out of them via the 380 as possible, but I certainly understand the anger over this, and for Falkenberg to not even mention it in her column borders on malpractice. This is another crucial difference between the Wal-Mart and the Target, which as far as I know – I’ve yet to see anyone report on it – was built without any kind of city incentives. That Sunday Chron story about Mayor Parker’s aggressive use of 380s certainly suggests that Target’s developers got no such deal. For sure, they did the absolute minimum in terms of infrastructure there, which is what Ainbinder has been threatening to do if we don’t fork over the cash. Again, I don’t oppose the concept of dangling a carrot like a 380 in front of a developer for something like this, but Ainbinder’s publicly expressed attitude, which can be summed up as “We’re going to build this thing you don’t like anyway, so give us everything we’re demanding or we’ll build something you’ll really hate”, almost makes one nostalgic for Weingarten Realty. Compare Ainbinder’s hands-out approach to that of HEB, the runner-up in the bidding process, which has expressed a willingness to spend its own money to make a proposed new development more agreeable to the neighbors, and the picture is complete.

3. I’ve already touched on this, but it bears repeating: What’s being opposed here is not development of that vacant lot, but a specific kind of development, one that opponents fear will not fit in with the surrounding neighborhood. The Super Neighborhood 22 folks have a vision and a plan for their neighborhood. How will a Wal-Mart at that location affect their vision? (I should note that as of this publication, SN22 has not taken an official stance on the Washington Heights development, and that I do not in any way speak for them.) As Andrew Burleson has shown, putting suburban-style big box development next to walkable urban development negatively affects the latter. Again, this wasn’t an issue at the Target site because it doesn’t abut any neighborhoods. Maybe in the future, when the old industrial stuff is cleared out and residential development moves (more) in, so that “Sawyer Heights” becomes connected to the Old Sixth Ward, we’ll regret the missed opportunity that the Target development represents, but who knows when or if that may happen. Washington Heights is happening now, and it’s in conflict with what many residents want for that area. In theory, the 380 agreement could be used to mitigate most or all of these concerns, but as it stands now it appears to do very little of that, which just adds to the frustration and resentment about it.

All right, I think I’ve run out of steam. The funny thing is, I do agree with Falkenberg that “the Heights” is playing an outsized role in this debate, and that we ought to be paying closer attention to what the folks who actually live near this development think about it. (Such as, you know, Nick Urbano.) I agree there’s an element of class in all of this – it’s not at all hard for me to imagine a Costco being treated much more deferentially, for instance; of course, it’s also not hard for me to imagine a Costco being much more sensitive to the community. I agree that this is an opportunity for the city to get some much-needed infrastructure improvements done, though to shoehorn in a point I couldn’t quite get to above, it sure seems like there’s plenty of room for them to have gotten more out of this. (See this, for example; I’ll have more on it later.) It would be nice if Falkenberg would agree to discuss the actual project at hand and not a bunch of irrelevancies. How about it, Lisa?

The 380 agreement

Here’s the proposed 380 agreement between the city and Ainbinder for the site now known as “Washington Heights”. It’s all fairly dense legalese, and I confess my eyes glazed over while reading it. If there’s something in here that’s unexpected or unusual, I’ll have to leave it to someone with greater fortitude than I have to find it.

On a related note, the Sunday Chron has a story about the proliferation of 380 agreements under the Parker administration.

Unlike her predecessor, Mayor Annise Parker has taken an aggressive approach to creating incentives for various kinds of business expansion.

Parker defends her administration’s approach to creating such incentives, saying it gives the city powerful leverage to control development in the nation’s largest metropolis without zoning.

“We have very few tools that bring a developer in and allow us to work on the front end on projects,” she said. “We’re always playing catch-up.”

For at least two of the projects, however, critics have abounded, especially in neighborhoods. Many question why a high-end home developer or a developer paving the way for a corporation with the resources and global power of Wal-Mart Stores would ever need help from the taxpayer, especially as the city continues to face great uncertainty amid a dour economic climate.

Jonathan C.C. Day, a lawyer who lives and works near the Walmart site, questioned whether the $6 million in infrastructure improvements the city will pay for in the development deal will pay for anything the community really needs.

“What are we getting for $6 million?” he asked. “At the end of the day, I think people recognize that Walmart can build a store there if they want. But how easy are we going to make it for people and trucks and traffic to get to their site?”

Mr. Day is the only critic named and quoted in the story – the other projects for which 380s have been used or contemplated are barely mentioned – so other than the Stop Heights Wal-Mart folks, it’s hard to say from whom Mayor Parker is defending her administration’s use of these things. It’s also hard to say how much of the pushback is specific to the fact that these incentives will be used to build something for which there is so much intense dislike, and how much is criticism of the concept of a 380 agreement as opposed to a TIRZ or some other development goodie.

The Chron also tells us that not everybody hates the idea of that Wal-Mart.

“On my block I have a lot of blue-collar workers,” [Patricia] Wunderlich said. “They’re very hard-working folks. Some of them would like the opportunity to have a second job at Wal-Mart.”

Wunderlich said she is sympathetic to the concerns of residents who live next door to the planned 24-acre retail development at Yale and Koehler streets, but said a Wal-Mart would benefit many in the Heights area. Others in the area share that view.

“I don’t think it’s the majority that are complaining about it,” said Sixth Ward resident Chris Greene. “I just think they’re the noisiest.”

Opponents of the project, Greene said, are basing their concerns on negative stereotypes of Wal-Mart, noting that there was little opposition when a Target was built at 2580 Shearn.

“If it’s going to be developed anyway, then I think that Wal-Mart is a good store to go in,” Greene said. “It’s going to provide a lot of jobs for people.”

Absent any detailed polling information, it’s hard to say for sure how supporters really stack up against opponents. But there is a reason why it’s the squeaky wheels that tend to get the grease. If you want people to believe that there are more supporters out there, you might consider getting some of them to show up on Facebook so they won’t be outnumbered three hundred to one by opponents. I’m just saying.

As for the comparison to Target, it’s really apples and oranges. The Wal-Mart site is surrounded on all four sides by residences, and the street that will be most used to get to it is already heavily trafficked. The Target site is bounded by I-10 on one side, which separates it from the closest neighborhood, and has almost no residences near it; the Sawyer Heights building was constructed after Target opened. And even with all that, there were and are people who didn’t want a suburban-style big box store in that urban area. The opposition was much less intense and much more muted because almost no one lived right next door to it. It’s as simple as that.

Anyway, the 380 agreement for this development is on the Council agenda for tomorrow, though it’s sure to be tagged for a week. And the anti-Wal-Mart forces haven’t given up.

The city has drafted a 13-page agreement now on paper between the city of Houston and those who want to develop the Washington Heights project. It spells out how, if approved, the city would use more than $6 million in economic development funds to reimburse the developer, Ainbinder Heights, for infrastructure improvements around the site at Yale and Koehler streets.

“Do that on your own dollar,” said Nicholas Urbano with Responsible Urban Development for Houston. “Don’t take the public money to do it.”

Even though those improvements could mean wider streets and sidewalks, upgraded landscaping, and a limestone walking path on Heights Boulevard, opponents say there are still significant issues of concern. Wal-Mart, they say, has historically not proven to be a good neighbor elsewhere.

“It’s going to create a number of problems which have already been discussed in press; traffic, crime, drainage, just all kinds of disruption to the neighborhood’s life,” said Eileen Crowley Reed, who is opposed to the agreement.

We know that the reaction of Ainbinder to sentiments like these has been to figuratively twirl their mustache and say “Okay, go ahead and don’t give us any reimbursements for this project you don’t like, we’ll just go ahead and build something you won’t like even more!” To some extent I believe them – they’re not going to plant trees or fix up that railroad overpass if they don’t have to – but to some extent I don’t. I mean, if the streets are too narrow and too prone to flooding after construction if they do the barest minimum, that’ll ultimately affect Wal-Mart’s bottom line, and I feel confident that they won’t want that to happen. The question to me is whether there’s an outcome that’s acceptable to the Wal-Mart opponents other than capitulation, and if so whether there’s a path to it or not. I don’t know that I’d have the guts to play chicken to the bitter end.

Finally, Mayor Parker, CMs Gonzalez and Costello, and various others paid a visit to the author of the They Are Building A Wal-Mart On My Street blog to discuss the status of the project.

SN22 public forum and panel discussion about the Wal-Mart

From the inbox:

OPPORTUNITIES AND INCENTIVES FOR RETAIL DEVELOPMENT IN THE URBAN CORE: A PUBLIC FORUM AND PANEL DISCUSSION PLANNED IN LIGHT OF MAYOR PARKER’S INTENT TO PROVIDE TAX INCENTIVES FOR A SHOPPING CENTER ON YALE STREET AT KOEHLER (HEIGHTS WALMART)

(Houston) – On Monday evening, September 13, 2010, the Washington Avenue-Memorial Park Super Neighborhood (SN 22) will host a public forum and panel discussion titled: Opportunities and Incentives for Retail Development in the Urban Core. This event will be held in lieu of SN 22’s regular monthly meeting from 6:00-8:00 p.m. at the Council on Alcohol and Drugs – Houston, 303 Jackson Hill, Houston, Texas 77007.

Mayor Parker has recently hosted two public meetings to address the Ainbinder Company’s plans to develop a retail center on Yale Street at Koehler anchored by a 24-hour Walmart Supercenter, and the city’s intent to facilitate the development by providing the Ainbinder Company a “380 Agreement.” The “380 Agreement” would allow the city to use tax revenues generated by the development to reimburse the Ainbinder Company for improvements to public infrastructure. The first public meeting was held on August 25th, and the second public meeting was held on September 1st. Mayor Parker expects to bring the proposed “380 Agreement” to City Council for a vote next week.

The City of Houston has established a website with links to the August 25th presentations: http://www.houstontx.gov/koehler/index.html

Walmart’s plans for the Supercenter and the Ainbinder Company’s plans for infrastructure improvements are also available at a website established by Ainbinder Company: http://www.washingtonheightsdistrict.com.

Community opposition to these plans and to the city’s intent to enter a “380 Agreement” with Ainbinder Company is being organized by a recently created non-profit organization, Responsible Urban Development for Houston (RUD): http://www.stopheightswalmart.org.

The goal of the public forum and panel discussion is to clarify how such developments can be planned and directed to produce positive results for all, including the developers, the retailers, the surrounding communities, and the city. The confirmed participants are:

Moderator: Keiji Asakura, Asakura Robinson Company, LLC

Panelists: Andrew Burleson—Congress for New Urbanism; Robin Holzer—Citizens Transportation Coalition; David Robinson—Neartown/Montrose Super Neighborhood (SN 14); Kevin Shanley and Kinder Baumgardner—SWA Group; Reid Wilson—Wilson, Cribbs & Goren, PC

Recorder: Ellen Morrison, Better Houston

What: Public Forum and Panel Discussion: Opportunities and Incentives for Retail Development in the Urban Core
When: Monday, September 13, 2010 from 6:00-8:00 PM
Where: Council on Alcohol and Drugs – Houston, 303 Jackson Hill, Houston, Texas 77007

Where SN 22 is located: SN 22 extends from the western edge of downtown on the east to Loop 610 on the west. Buffalo and White Oak Bayous create the north and south boundaries of the SN 22 group of neighborhoods: Camp Logan, Cottage Grove, Crestwood/Glen Cove, First Ward, Magnolia Grove, Memorial-Heights, Rice Military, Sixth Ward, West End, and Woodcrest.

Be there if you can.

Another Wal-Mart meeting

There was another meeting about the proposed Wal-Mart on Wednesday, this time for residents only.

[I]n the second public meeting in eight days addressing concerns over the Walmart-Ainbinder Company development, the city’s proposed 380 Agreement with the developers took center stage.

The 380 Agreement is a statewide compensation program, which would reimburse the developer building the Walmart (Ainbinder) up to $6 million through city tax money for infrastructure such as widening roads and increasing drainage.

“I’m not going to defend it,” Parker said to a troubled crowd. “I don’t shop at Walmart.”

During the Q&A portion of the meeting residents kept harping on traffic. One Heights resident asked why City Council would even consider talking about the project before all of the research on traffic is done.

Jeff Weatherford, deputy director of public works at the City of Houston, said, “If we’re wrong, we’re wrong. We’ll go back and make some adjustments.”

Hair Balls adds an interesting angle.

[Deputy Director of Public Works Andy] Icken stressed that the agreement is with developer Ainbinder and has nothing to do with Walmart. The money that is reimbursed comes from property taxes generated after the development, whether or not Walmart is a tenant, is up and running for one year.

The reimbursement money would be paid out during a ten-year period.

The idea of using 380 agreements is fairly new and rarely implemented in Houston, and this Ainbinder project would be only the fifth to use one. The future HEB development at West Alabama and Dunlavy, for example, will not be built with a 380.

Icken said, however, that he would like to strike a separate deal specially for Walmart that would regulate things like which roads delivery trucks can use to enter and exit the property. Those details, of course, will have to be finalized in future contracts.

“I think it’s appropriate to have that agreement with Walmart,” Icken said. “Citizens here have made some good points.”

I like the sound of that. If you believe, as some do, that this is going to happen no matter what, then getting the best deal possible has to be the goal. I know some people don’t like to hear that, and I don’t blame them, but it surely can’t hurt to have an endgame strategy in mind. Be that as it may, the Chron has the counter argument to that:

They stand with Mayor Parker

Dropping the 380 agreement will not make Wal-Mart go away, she said; it would result in the Wal-Mart being built without community input and with fewer amenities around the site.

The negotiations, Parker said, have been used to secure improvements in the area in anticipation of new exit ramps off Interstate 10 onto Yale Street, as well as to address lighting in the Wal-Mart parking lot and traffic on Koehler Street, among other items.

“Those are the kinds of discussions that would be extremely helpful,” she said. “That’s why we’re here. You’re telling me, ‘We want Wal-Mart to go away.’ Tell me what to ask for.”

That argument didn’t persuade some residents, among them Nick Urbano of Responsible Urban Development for Houston, a nonprofit formed by residents opposed to the project.

“They’re bluffing,” Urbano said, referring to Ainbinder. “(The designs) they’ve thrown out there they’re going to build anyway, so why are we giving them money for it?”

Parker disagreed with that assessment.

“They’re not going to redo the bridge over White Oak Bayou. They’re not going to do the enhancements on Heights Boulevard,” she said. “Those are not part of the development. They have no requirement to do that. Why would they?”

I respect the “hell no” forces. I don’t think they’re going to prevail, however. I wonder what will happen when some of them start to conclude that.

Hair Balls also noted and made some fun of this study, done by Austin-based Civic Economics and commissioned by Responsible Urban Development for Houston, which disputes all of the justifications for giving incentives such as a 380 agreement for this development. I thought it was fascinating. One bit that stood out to me:

While a more complete market study would be necessary to making absolute statements in this regard, we cannot conclude that the Supercenter proposal would increase retail sales and sales tax revenues in Houston by any significant amount.

Wal-Mart projects $870,000 in sales taxes to be collected at the store, but it makes no attempt to quantify how much, if any, of that revenue would be new to the city rather than diverted from the abundance of competitors in the area. The same can be said of the 300 jobs projected. If sales are simply diverted from other stores in the market, a comparable number of jobs will be lost elsewhere. In fact, if those losses are incurred by locally-owned merchants, the net change in jobs in the city will likely be negative.

We therefore believe any development incentives provided would represent lost revenues, money the city would otherwise receive with or without this project.

This sounds an awful lot like what Andrew Zimbalist says about public financing for sports stadia – that they don’t really generate new economic activity, they just relocate it. I presume there are some conditions under which there is a net gain – the study suggests one such scenario, which is for a Wal-Mart to be located in “underserved and relatively poorer sections of the city”, such as “sites to the south and southeast of downtown”. Their maps make it clear that there’s a large area that is essentially free of large retailers and grocery stores. I don’t know that a 380 agreement, which isn’t often used in Houston, is the right tool for that, and just saying it doesn’t change the fact that Ainbinder has this land and intends to do something with it. The point they’re making is that we should be wary of claims about sales tax revenues, especially if we just consider revenues generated by Wal-Mart in a vacuum.

Of course, Ainbinder could be reimbursed by increased property values in the area, if sales taxes aren’t an appropriate measure. Some folks who currently live near the site are betting against that. Honestly, that’s what I’ll be watching for. The study didn’t discuss this at all, unfortunately.

Finally, there’s this:

Does this store address underserved markets?

It does not. Indeed, Maps 3 through 5 illustrate that west central Houston is well served by a wide variety of retailers.

As described above, the area already enjoys short drive times to discount stores, with two additional Wal-Mart proposals just outside Loop 610 to the north and west promising even greater convenience and competition in that sector. South central and southeast Houston may well be described as underserved by large-format discount stores, but this proposal does nothing to alleviate that condition.

I agree that while points south and east are truly underserved, though again that isn’t Ainbinder’s concern, these maps don’t really contradict the thesis that the area right around Yale and Washington has few options. Look at Map 5, for grocery stores. The nearest ones are the Kroger at 11th and Shepherd and the Fiesta at 14th and Studewood to the north, and the Randall’s at Westheimer and Shepherd and the Disco Kroger at Montrose and Hawthorne to the south. (For now, anyway. The eventual arrival of the Whole Foods on Waugh at West Dallas will change that, at least at the high end. You’re still out of luck if what you seek is toiletries and paper goods and low-to-moderate prices.) As someone who drives through this area every day, I sure wouldn’t claim any of them are five minutes from that site, certainly not in weekday traffic. It’s no mystery why many of the people who are opposing the Wal-Mart were especially disappointed to hear that HEB had lost out in the bidding. I’m one of those who’d have preferred an HEB to a Wal-Mart, and I think the point about relocating economic activity from other parts of the city rather than increasing economic activity overall is a strong one, but I suspect a lot of people will find it convenient to buy their groceries there.

The Wal-Mart meeting at the GRB

Lots of sound and fury, that’s for sure.

The city is negotiating a deal with the developer of Washington Heights — a proposed Walmart-anchored shopping center near Interstate 10 and Yale – that would reimburse the local builder for as much as $6 million in public infrastructure improvements.

If the agreement is approved, developer Ainbinder Co. would widen and repave streets surrounding the project, refurbish bridges near the site, develop a bike and pedestrian trail along a stretch of Heights Boulevard south of I-10 and improve underground drainage, among other upgrades.

The improvements are expected to ease traffic congestion as well as prime the area for other future developments, the developer said.

The deal being negotiated is part of a program authorized by the state called a 380 agreement. It allows the city to grant or loan local tax revenue for economic development purposes.

Once the project is built and has met certain performance requirements, Ainbinder would be reimbursed by the city from the increased property taxes or sales taxes created by the development.

Many Heights residents have opposed the plan since they learned of it in early July. On Wednesday night, they continued to voice their concerns about a development they feel is incompatible with their neighborhood.

Besides the nature of Wal-Mart itself, the 380 agreement is probably the least popular aspect of this, from what I’ve observed. It’s bad enough that a Wal-Mart is coming in, the sentiment is, it’s even worse that tax dollars will be used to help them. The city’s position is basically that the 380 is one of the few tools they have to get the developer to do something it wouldn’t otherwise do, which is to say make infrastructure improvements. CultureMap summed this up:

During the Q&A, one Heights resident brought up an interesting scenario. What if they city refused to give The Ainbinder Company the grants through the 380 Agreement and the resulting Houston taxpayer money? Would they still build it?

The answer from Michael Ainbinder was, “Yes.” Except, they wouldn’t have to play nice without the 380 Agreement. They wouldn’t have to make any improvements to the drainage, traffic or plant as many promised trees around the lot.

If that’s true, then the choice is over how they build it. I think too many people still have hope they can kill this to contemplate that choice, however.

My question is what happens if there isn’t any appreciable increase in sales taxes after this gets built, and property values decline as residents fear? In other words, what happens if this Wal-Mart location, which you may recall will have two others not far away as well, fails to generate any of the revenue that the city would use to reimburse it for those infrastructure improvements? Can the city be forced to recompense them anyway out of other revenues, or is it just tough luck for Ainbinder? I hope it’s the latter, but I fear it’s the former. Anybody know the answer?

Or maybe there’s a third choice. Nonsequiteuse, who earlier had a brief summary of the meeting, has a suggestion:

Here’s what I propose. The executive from WalMart who spoke touted the company’s philanthropic largesse. I’ve been raising money in Houston since 1993, and have yet to secure a gift from WalMart. I’ve known about others who’ve gotten $200 or $300 gift cards, or a box of some supply or another, but nothing on a grand scale.

Time for WalMart to go big and acknowledge that they don’t need corporate welfare to turn a profit.

I’d like to see WalMart donate the cost of the infrastructure improvements back to the city. In essence, the city would not have to pay for the reimbursement to Ainbinder. The city actually has mechanisms in place to accept a financial donation like this. It could then be earmarked for donations to various projects and nonprofits directly affected by development in the central city.

I suspect we can file that under “When pigs fly”, but it would at least end the griping about “my tax dollars” going to Wal-Mart/Ainbinder for this project. You never get if you don’t ask, that’s for sure. Maybe at the next meeting, which a poster on the Stop Heights Wal-Mart page who was there till the bitter end said there would be (location TBD), someone should bring that up. Swamplot and Hair Balls have more.

UPDATE: Here’s another drawing of the proposed site. And see Mike’s comment for the answer to my question about the 380 agreement.