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Then There's This: Victory at Last?

After a string of losses, the city wins fight over Downtown block

By Amy Smith, Fri., Sept. 7, 2012

The Austin Convention Center parking garage
The Austin Convention Center parking garage
Photo by John Anderson

Twelve and a half years seems an extraordinarily long time for the city of Austin to spend on an eminent domain case, even as it racked up a losing scorecard and hundreds of thousands of dollars in legal fees. But last Friday, Aug. 31, the gods of Hail-Mary appeals delivered a victory for the city with a favorable ruling from the Texas Supreme Court, where Austin had made its final play in the long-running battle.

In its ruling, the court determined that the city did not act capriciously, fraudulently, or in bad faith when it took control of a Down­town block to build a public parking garage and cooling plant.

The property, at Red River between Fourth and Fifth streets, was owned by prominent lawyer and landowner Harry Whittington, whose family acquired the site in 1981. When the city came calling in 1999 with an offer to pay him a few million for the block in order to build the Austin Convention Center garage, Whit­tington rejected it outright, thus setting off a lengthy, complex legal fight.

Last week's ruling could be the final chapter in the case, but Whit­tington still has one more shot, and is considering whether to ask the Supremes to re-hear the arguments. He has until the end of September to decide.

Had the court ruled in his favor, Whittington could have retained possession of the property and collected the revenues from the Convention Center parking garage and Austin Energy's cooling system, which chills water to provide cool air to nearby buildings. Income from both operations help fill the city's coffers, so the loss would have created financial worries for the city in the long term.

Win or lose, Whittington still walks away with a tidy bundle: A 2007 jury awarded his family $10.5 million for the block, and that figure still stands. "I haven't lost my ability to understand how much that is – at my age that's pretty good," Whittington said by phone a few hours after last week's ruling. Even after a bruising defeat, he sounded as genteel and unflappable as usual.

Sweetening the $10.5 million jury award is the rather generous interest it's been drawing while sitting in a registry. "The interest meter has been running at 8.25% for five years," Whittington said, explaining that a "pre-judgment" interest is established once damages are awarded and appealed, as an incentive to both parties not to drag out the case too long.

At 85, Whittington, who is most widely known as the man former VP Dick Cheney shot and wounded during a 2006 hunting trip, still goes to his office every day. "People ask me why I still come to the office, and I say, 'because I can.' Most everybody else in my group is kind of retired or had to retire."

While disappointed with the court's ruling, Whittington said he was pleased that at least two of the nine justices – Nathan Hecht and Don Willett – wrote a dissenting opinion that agreed in part with Whit­ting­ton's claim that the "taking" benefitted a private developer of the Hilton Austin hotel.

As part of a public-private deal struck with the city in the late Nineties, the developer, Mark Schultz, had initially proposed building the hotel without city incentives and with sufficient underground parking to serve the demands of the Convention Center. The proposal turned out to be too good to be true. The developer ultimately required about $15 million in city subsidies and bailed on the underground parking because of high costs.

With the city's decision to relieve Schultz of his obligations to provide parking, Whit­ting­ton argued, the developer was able to save at least $10 million on the project. There are plenty among the Downtown crowd who are in Whittington's corner. They believe the city bungled the Hilton deal and then tried to salvage the situation by condemning Whittington's choice piece of property along Waller Creek for the parking garage and cooling plant – also a point of argument because AE's chillers are not regulated by the Public Utility Commission. (As parking garages go, though, this one is well-designed inside and out, which is more than you can say about some other structures in town.)

Additionally, developers are still chapped about the city giving the Hilton builder the OK on the last-minute addition of condos without having to pay the associated land costs. (The condos turned out to be a legal nightmare for the city, but that's another story.)

Whittington says he can't complain about the toll the eminent domain case has taken on him personally. "It's disappointing, of course, that we couldn't convince more of the judges, but it was a great challenge," he said. "And hopefully it will help in future condemnations so [government entities] will be a little more careful in how they handle them. The decision will certainly be applicable to a lot of future cases."

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