A Golden Opportunity
SB1704's Repeal Gives Austin a Turn at the Helm
By John Spong, Fri., Aug. 29, 1997
What was that dark cloud hanging over the S.O.S. revellers? After all, the group had everything to celebrate -- the fifth-year anniversary of the passage of S.O.S., the recent placement of a supposedly all-green city council, the listing of the Barton Springs Salamander on the Endangered Species list, and the discovery, just days before the party, that Senate Bill 1704, the Austin-bashing legislation that had helped developers bypass the S.O.S. water quality ordinance, was accidentally repealed last session. The developers' big umbrella handed to them by the Lege looked to have a rip in it the size of Texas.
At the party, S.O.S. Alliance executive director and former councilmember Brigid Shea announced a special award and thank-you presented in absentia to developers' lawyer and lobbyist Richard Suttle, one of the environmentalists' foremost adversaries, "for missing the repeal of SB 1704." Everyone laughed, but they all either cut their laughter off too short or kept it up too long; it sounded uncomfortable.
No doubt that somewhere the initial news of the demise of SB 1704 set off the kind of intense, end-zone style celebration one might have hoped to find at a big anniversary party. Passed at the height of the Green Scare, the 1995 Texas Legislature's anti-Austin craze, the grandfathering law brought by Senator Florence Shapiro
(R-Plano) prevented Austin from enforcing the S.O.S. ordinance against construction projects filed with the city pre-S.O.S. But during this past session, 1704 was accidentally repealed during the transformation of the Department of Commerce to the new Department of Economic Development, meaning that come September 1, all construction projects in Austin are controlled not by the ordinances in effect when the projects were initially filed, but by current ordinances, including S.O.S. But if environmentalists seemed uncertain how to react to the repeal by the time of the party, it was understandable given the recent history between the legislature and the city. Said Senator Shapiro, "Austin knows I understand the permitting process and that I will look at Austin's plan over the next year and a half. If it's not fair, I will come back with a bill identical to 1704."
Mayor Kirk Watson does not want to see that happen, and so rather than subject all development projects to current ordinances, he has been working since the repeal to find a plan for Austin development that will not stir up more trouble next session. "There's an opportunity here to regain local control, provide greater environmental protection, and manage growth -- and do it in a way that is appropriate governance and is fair to those people already in the process who have relied upon certain laws," Watson said. "We need to treat the repeal of 1704 as a chance to act responsibly."
Or as Mayor Pro Tem Gus Garcia said more plainly, "The last thing we want to do is act in such a way that it will create a reaction in the next session of the legislature."
Watson, whose lawyerly background could benefit the city in a situation like this, has made all the right moves so far. He's keeping the legislature involved through steady communication with Senators Shapiro and David Sibley, the Waco Republican who inadvertently passed the repeal, as well as with Austin-area legislators. He has conferred with local media and written an editorial that ran in the Statesman in an effort to build public support and encourage community feedback. And substantively, he has had city staffers research the development processes used by other communities in hopes of finding a proven process for Austin to incorporate.
"We surveyed major cities in Texas, and other central Texas cities," said the Mayor in a meeting with Chronicle writers and editors, "in part because you always hear, `You're driving people to Cedar Park.' So we wanted to know what Cedar Park and other cities were doing."
The look is paying off. "What we find is that [other cities] say you have to get your deal done within, for example, two years, or you get to start over. And if a new ordinance has passed, then you're under the new ordinance," Watson said. "Austin's never had that." Rather, Austin's open-ended permit process is what made 1704 so tough on the city, since projects that had been planned for 20 years were able by 1704 to grandfather their way back to whatever ordinances were in effect at the time of the initial filing. That did not happen in cities whose permits carried expiration dates. In other words, Austin, which has some of the most environmentally sensitive and precious lands in the state, also has, with its lack of development deadlines, the least restrictive set of expiration rules. How did that happen? "Good question," replied assistant City Manager Toby Futrell. "That's difficult to determine."
Had Austin defined a life span for project plans, after which time the project would have to be resubmitted subject to whatever new or changed ordinances were in effect, the city could have avoided all this. But in the late Seventies, when these issues first arose, Austin chose to allow developers to freeze applicable regulations after submitting just a preliminary plan and a final plat of a portion of that plan. "That language was put in at the developers' request," explained Austin environmentalist Mary Arnold. "It was Austin's generosity that got them in trouble."
Watson said he sees the repeal as an "opportunity" to rectify the city's speculative approach to development. It's the perfect time, he said, to set up development expiration dates that are in line with other cities such as, say, Plano, Senator Shapiro's home district.
The real innovation in Watson's approach comes in the group he assembled to work on treating the repeal. Earlier this month, the Mayor set up a "focus group" comprised of 12 "stakeholders" -- six representatives each from the development and environmental communities -- to brainstorm over a "conceptual framework" for addressing the repeal submitted by Watson. The focus group meets with and makes suggestions to a council "task force," consisting of the Mayor and Councilmembers Garcia and Slusher, which in turn will make recommendations to the full council on how best to proceed. Council action, initially planned to be enacted by the September 1 effective date of the repeal, is now expected by early October.
Watson asked the focus group to consider two basic questions:
- What should the city do with existing, already-filed projects which, absent some move by the city, will be subject to current ordinances as of September 1, and;
- How can the city change its development process for future projects, so that the process is more fair, and the city is less open to attack from the legislature again?
The Mayor's conceptual framework featured a one-year grace period from the date of repeal for existing projects to begin construction. Determined to hear all sides on the matter, the Mayor and discussion "facilitator" Michael Curry have received widely differing ideas on how closely an appropriate plan would resemble the framework. But as Watson has emphasized throughout, the focus group's goal is to "give the debate a jumping-off point," not "necessarily to reach an agreement on what to do." That will be left to the task force and full council.
As the joint meetings between the focus group and task force got underway, Watson's willingness to let the members disagree looked more like a prediction than a parameter for discussion. Curry opened the first meeting on August 14 with a period of information exchange, intended to precede the discussion of possible plan terms, and designed at least in part to allow group members to get their griping out of their systems early. This discussion stretched to all but the last 15 minutes of the three-hour session, when Curry finally coaxed the members into offering concrete life spans for the various permits, plans, and plats currently part of the construction process.
At its best, the opening exchange considered examples of permitting schemes from other cities, and a chronology compiled by residential builder/stakeholder Terry Mitchell showing the time taken to complete various Austin subdivisions over the past four years. In less productive moments, more extreme stakeholders bickered over the merits of 1704. "What will happen if a preliminary plan is approved and ordinances change? Will the project have to comply with the new ordinances?" asked developer attorney/stakeholder Suttle. On the other side, S.O.S. Alliance general counsel/stakeholder Bill Bunch argued, "We've been talking about this from the standpoint of what it means to your side, but what about our side? Why should we protect a strip center in 1996 if the market wasn't ready for it in 1991?" It began to appear as if the only alternatives were to enact 1704 locally or enforce S.O.S. against all projects, regardless of when they were filed or where they are located.
Similarly inflammatory comments came with the developer-intensive testimony at a public hearing the following Saturday afternoon at Parque Zaragosa. Suddenly, the Mayor's conceptual framework looked poised for adoption by default, and the ultimate function of the focus group appeared to be merely to prevent the various members from complaining later that the city had acted without their input. But at the following day's joint meeting, on Sunday, August 17, focus group members came with draft suggestions in hand, and Curry politely marshaled the group through a three-hour session that stayed on track. Here, without the previous sessions' extreme rhetoric, it became clear just how far apart the two sides truly are.
Developer attorney/stakeholder Henry Gilmore outlined a sliding scale for developments already in progress, whereby small projects of 50 acres or less would have four years from September 1 to begin construction under their grandfathered ordinances, projects between 50 and 500 acres would have seven years, and projects over 500 acres would have 10, with every project also having a chance to qualify for certain hardship extensions. At the other end of the spectrum was environmental engineer/stakeholder Lauren Ross, who suggested one year from September 1 to begin construction on all projects, regardless of size, or five years from the date they were platted, whichever period is shorter. The other stakeholders' ideas fell in between these. On prospective projects -- those not already in the works -- the plans were equally divided, with a couple of developers implying that no expiration dates were acceptable, and most environmentalists opting for the two-year life span used in Sen. Shapiro's hometown of Plano. The meeting ended with the Mayor promising a draft ordinance at Wednesday's meeting.
Watson may have made his only misstep by not producing a draft at Wednesday's session, and while Curry tried to spotlight common ground in previous suggestions, the discussion meandered. With the developers' concerns starting to dominate the debate, builder/stakeholder Pat Oles remarked on the need for consistency and objectivity in city actions so that developers can better manage their risks, and Bunch exploded. "You guys are taking risks but you're also getting big rewards. You make nice incomes for those risks, and when you talk about fairness and risks you need to consider that the adoption of Austin Tomorrow Plan, and the S.O.S. election, and the placing of the salamander on the Endangered Species list all gave you fair warning of what was going to happen. But you guys all said `Damn the torpedoes, I'm going to be rich!' And now you've been shot down by friendly fire, and damnit, you're talking about that not being fair. I'm goddamn tired of hearing about what's fair for the developers. The people of Austin..."
Perhaps embarrassed by Bunch's tirade, the group actually did some creative thinking at this point. Suttle suggested longer grace periods for developers wishing to comply with current ordinances, and environmentalist attorney/stakeholder Jim Cousar asked the city to consider reducing its parking space requirements for businesses in environmentally sensitive areas.
After the meeting, Bunch explained his frustration: "It's clear that the council is interested in appeasing the legislature by continuing to grandfather." Bunch is not as concerned about the Capitol. "For the last six years the legislature has beat us up, but that's because we had a mayor who invited them to do so every time he didn't get his way," he said. "I know we can't be punitive, we can't be unreasonable, but we have a voter mandate in S.O.S., and we have a federal mandate in the salamander's listing [as an endangered species], and that should impress the legislature."
But even Bunch acknowledges the need to compromise. "If there is grandfathering that allows a whole bunch of people to avoid (complying with) S.O.S., we'll raise some hell about it. If just a few people about to break ground get to develop outside S.O.S., we'll get upset, but we'll live with it. We can see the big picture." Bunch has indicated that he can also live with a one-year grace period to begin construction.
Agreeing on some form of grandfathering does not, however, equate with agreement. "Every real project could at least get the ball moving in one year," said Suttle, "but what constitutes getting the ball moving? If you have to final plat the whole thing in the next year, that's a difficult task. If you need site plans on every lot in the next year, that's harder. If you have site plans you've been sitting on and have to get building permits in the next year, you should be able to do that, but if you have to complete construction, that won't work."
Suttle has agreed, as have a number of stakeholders, with Save Barton Creek Association President/stakeholder Craig Smith's suggestion of a one-year window in which a project could show due diligence by moving to the next phase of development.
Other undetermined factors make it difficult to predict what effect the various hypothetical plans would have. The city still has not released the number of projects that will be affected by the repeal of 1704, and even those statistics might not help without a breakdown showing the number of projects in each phase of development. As for effect to individual projects, development attorney/stockholder Jay Hailey worries about the unlikelihood of approved industrial projects being built in time to stay locked into older ordinances. Real estate litigator Alan Haywood, not a focus group member, thinks that stiff requirements in a small grace period would prevent all but the smallest projects from being built. That developers would stand in line to sue the city seems a given.
City attorney Andrew Martin knows that litigation might ensue. "If developers are unhappy, several of them will probably get together, pool their resources to get the best attorney, find the best fact situation, and bring suit. But we're a long way from lawsuits right now," he says, noting that suggested hardship extensions could make the plan easier to swallow.
If there is any semblance of consensus at all, it is in respect and appreciation for the way Mayor Watson has handled the matter. "The mayor's done a great job of getting his arms around this thing," said Suttle, adding that "my firm supported Ronney Reynolds against the Mayor, and we were really glad he made me part of this."
Lauren Ross said, "The process the Mayor has set up with the facilitator has made this as successful as possible. It's very different from the processes used when environmentalists and developers came to the table before." The process is far removed from prior councils' tastes for pricey, out-of-state consulting firms and take-it-or-leave-it proposals. Even if the Mayor is somehow able to craft a plan for dealing with the repeal of SB 1704 that satisfied everyone involved, introducing this new method for tackling city problems might still be the bigger accomplishment.
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