Five Good Reasons Las Manitas Deserves a City Loan

Widespread ranting has been flying thick in the Austin air as council approaches its Thursday vote on the proposed $750,000 city loan to the owners of Las Manitas. The loan, a pilot effort in an innovative new city program that could help preserve numerous locally owned businesses, will allow Las Manitas’ owners to retrofit another building they own on the block with a commercial kitchen, thus making it financially feasible for the restaurant to move and to remain in business. The loan balance is forgivable after five years if exacting conditions are met.

A Wednesday, June 6, editorial in the Austin American-Statesman attacked the loan as bad city policy. But the opinions expressed demonstrated a shaky grasp of the loan program, supporting facts, and related issues. The following considerations demonstrate that the loan program is sound and that the loan to Las Manitas merits the support of council.

1) Las Manitas may be a tiny taco joint, but as an economic development engine for Austin, it packs an outsized wallop. The “iconic” restaurant has been nationally celebrated as funky, authentic, and uniquely Austin; it has produced a grassroots PR gold mine that no paid ad campaign could ever achieve. After 25 years, Las Manitas provides a unique piece of the “character-rich cachet” so vital to Austin’s coolness as a city – and thus to its tourism and convention industry, its national draw for music and arts festivals, its ability to attract and retain companies considering quality of life, and its economic health. People come here, and spend here, because Austin has character and soul. The extensive media coverage of Las Manitas (regional and national, including articles by yours truly) is framed and hung on its walls; it objectively documents the joint’s value in lending our city competitive cachet. Saving a goose that lays golden eggs is good city policy.

2) The loan program is self-financing. The project forcing Las Manitas to make its expensive move – a $185 million Marriott hotel complex being developed by White Lodging Co. – will generate the lion’s share of the loan funds. The developer is forcing the move; it’s a neat bit of social justice that its fees should help mitigate the costs. Overall, monies for the loan fund established by the city’s 24-month pilot Business Retention and Enhancement Program will come from fees and payments assessed on developers and projects within the program’s geographic area, on Congress and East Sixth. According to city staff, these developer payments include fees for 1) temporary use of public right-of-way, 2) licensing agreements, and 3) payments for alley vacation. Basically, the city is charging developers for inconveniencing the citizens and taking away our communal property, then choosing to reinvest the revenue in threatened small local businesses in the same area – and that’s good city policy.

3) The new program’s use of standard development fees, while innovative, is consistent with established City Council policy and historical precedents. Some critics have claimed the BRE Program shorts the city’s general fund. This argument ignores council’s long history of waiving such development fees entirely, especially Downtown, as an incentive for desirable development that is consistent with council policy (on urban design, the environment, and community benefits). If “good guy” developers get a break on fees, it’s consistent that “bad guy” developers should be charged every penny due, with the monies used to mitigate the ill effects of their projects. In this case, developer White Lodging Co. condescendingly refused to do what council members had asked, which was to redesign their project to preserve all of the existing storefront buildings and their tenants. You refuse to play, you pay.

City staff provided numerous examples of hefty incentive packages paid to Downtown developers. These Smart Growth incentives included, in part, the waivers of the very same fees being directed into the BRE fund. (A clear answer on how state-mandated alley-vacation payments historically had been used was not available at press time, but staff said they had been factored into past development incentives.) Examples of the city’s Downtown developer incentives: $2.1 million to Austin Market Place in 1998, more than $1.2 million to the CarrAmerica Building in 2000, $730,000 in waivers to AMLI Lofts (Block 20) in 2001, more than $646,000 in waivers to the Convention Center Hotel in 2002. Requiring developers to be good corporate citizens is good city policy.

4) The loan isn’t favoritism, and it’s supported by economic-development research. While the plight of beloved Las Manitas inspired council to take action, the program was constructed to benefit other small businesses, as well. In Austin, it always takes a particular crisis to motivate positive changes in wider policy – a call to action isn’t necessarily favoritism. What makes Las Manitas special is not just that it’s a watering hole for influential “elites and politicos”; it’s that mover and shakers mingle at an affordable dive with thousands of people from all walks of life each month. Significantly as well, it represents a rare outpost for the Hispanic community Downtown. Owned by feminist Chicanas who advocate for Hispanic causes and culture, Las Manitas employs and assists many immigrants and Spanish speakers.

The proposed loan to Las Manitas is the first pilot loan in a new 24-month pilot Business Retention and Enhancement Program. (Those expressing opinions publicly might take the time to first read the program details online at Austin City Connection. The program includes many safeguards on the public investment.) Locally owned, minority-owned, and women-owned businesses receive preference for the need-based loans.

In addition, Sue Edwards, director of Economic Growth and Development Services, points to the numerous studies conducted Downtown that have shown an economic benefit to retaining and attracting retail Downtown. The BRE Program finally puts some funding in place to act on that solid data. Edwards said that when the Austonian condo tower develops, for example, its fees would go into the BRE Program to fund other loans. A creative pilot program to assist local small businesses is good city policy.

5) Consider the alternatives. The loan program averts a PR and goodwill crisis. Council responded to a public outcry in creating it – the job of elected officials. Consider the damage to Austin’s “cool” reputation and to citizen goodwill if the city did allow Las Manitas to be forced out of business, to make way for developers and a bland Marriott hotel complex. Does anyone want to hear again that “Austin has lost its soul” and that the city’s character is being lost to developer profiteering? No. Instead, Austin can be proud of its council for holding a developer's feet to the fire and requiring community benefits. That’s good city policy.

City Council has placed the loan to Las Manitas on its Thursday agenda for a vote. To contact council members, visit www.ci.austin.tx.us/council.