Council Watch

Walking the Ethical Tightrope

Ex-Neighborhood Housing Direc-tor and current developer Gene Watkins is roaming the corridors of City Hall more and more these days, and raising ethical questions since he's not registered as a lobbyist. His latest affordable-housing proposal, under Gene Watkins Development, Inc., is a plan to turn the historic Stephen F. Austin Hotel, located at Sixth and Congress, into 105 apartments and two floors of commercial space. To do so, he wants a
$6 million, low-interest city loan and a 100%, seven-year tax abatement on improvements.

Considering his familiarity with the city's affordable housing program and the council's desire to revamp the hotel, which now serves only as an outlet for the angst of window-smashers, it could be an easy sell. Council-member Max Nofziger, the head of the Downtown Subcommittee, loves the idea. Watkins, the housing director between 1988 and 1993, hopes he can get other councilmembers to fall in line.

Representing the current hotel owner, Raleigh Enterprises, and nine other investors including himself, Watkins is asking the city to cash out a CD account and lend the proceeds, which would total close to $6 million, to the investors. The CD is currently held by the Austin Housing Finance Corporation (AHFC), a city-created entity. The city council, which makes up the board of the AHFC, created the account with money from a 1980s bond issuance for affordable housing that was never used. It is currently bringing in a 4.5% interest rate, and could go to 5% by the end of the decade.

The interest goes to the little-known Down Payment Assistance Program, helping low-income homeowners get affordable mortgages. Watkins helped design the program in the 1980s. Now, he promises to give the city the same 4.5% interest rate over a period of 30 years and to build two-bedroom apartments that will rent for an estimated $510 a month.

Watkins is also an investor and council "briefer" in two other recently approved affordable housing projects that will receive upwards of $2.2 million in Housing and Urban Development funds from the city. (The Meadows at Walnut Creek and Scattered Cooperative Infill Housing Project, aka SCIP II). Yet, he is not even registered as a lobbyist. He says he doesn't need to be, since he's only representing himself. "I'm representing yours truly... hustling as a developer."

He also says his intricate knowledge of the housing department - some at city hall say he knows more than anyone else in town - does not create any problems, since he has been off the city payroll for a year and a half. "There's no intimate knowledge that I'm taking advantage of. The city's funds are all made public. I would encourage anyone who's interested in affordable housing to come and utilize the city's programs, because without the city's help it's impossible to produce affordable housing."

Last Thursday, council approved the final phase of the Balcones Canyonlands Conservation Plan. The vote was 5-1-1, with Council-members Eric Mitchell opposed and Ronney Reynolds abstaining. The plan allows developers to pay a mitigation fee (between $1,500 and $5,500 per acre) that would go for the purchase of 9,501 privately owned acres in western Travis County over the next 30 years. The land will be combined with 21,000 previously acquired acres to create an endangered species habitat preserve. In exchange, developers could build on what would otherwise be protected habitat, under a blanket 10(A) permit granted to the city and the county from the U.S. Fish and Wildlife Service.

The cost for both the city and county to acquire and maintain the habitat is estimated at $153 mil-lion for the next 30 years, according to staff figures. A large portion of the funding will come from the mitigation fees. Some will also come from an oft-disputed fiscal tool called an incremental tax plan, which will allow Travis County to redirect the increase in property taxes from the developed land to purchase more preserves.

Reynolds says he abstained because a proposed $12 million for the plan would come from the Drainage Utility Fund. Reynolds has consistently opposed using the fund for environmental projects. Mitchell, explaining his "no" vote, said he doesn't like spending tens of millions of dollars to protect "bats and lizards" in the Hill Country while East Austin is full of crime and drugs.

Members of Save Austin From Extravagance (SAFE) held their first meeting Thursday - a public press conference attended by about 22 people. The group, led by ex-Councilmember Bob Larson, sprang up after city council authorized the issuance of $8 mil-lion in "certificates of obligation" (which are the same as bonds, but don't require a public vote) for a new baseball stadium. Larson says the authorization violates the spirit of the city charter, since it was not approved by voters. (The city charter allows debt without voter approval only in cases of emergency. Since other cities were allegedly vying for the Phoenix Firebirds baseball team, city staff deemed the need for a stadium an emergency.)

SAFE, which has about 20 members, is considering trying to gather 25,000 signatures on a petition calling for a city charter amendment that would require that all debt be voter approved, unless it's a public health or safety emergency. Larson says the "emergency" loophole in spending must be closed to prevent an ever-escalating city debt. Including interest, the city's total debt currently stands at $5.4 billion, or about $11,228 for every Austinite.

According to Larson, the councilmembers who have been responsive to the SAFE message are Jackie Goodman and Brigid Shea, but not Reynolds, Mitchell, or Mayor Bruce Todd, all of whom ran last year on the theme of fiscal conservatism.

On Thursday, environmentalists, fiscal conservatives, and East Austin representatives spoke in favor of putting the proposed $100 million city hall in East Austin, instead of the four-and-a-half city-owned blocks currently occupied by the council chambers and Liberty Lunch, a site suggested by the three members of the Downtown Subcommittee - Todd, Nofziger, and Gus Garcia.

East Austin residents and environmentalists say an East Austin locale for the building, which would house approximately 9,500 employees, would bring new business into the area. Fiscal conservatives say that if a new city hall must be built, then an East Austin location is preferable; it would allow the city to profit by renting or selling the lucrative four and a half blocks, which abut Town Lake. After more than 20 speakers, the council accepted a Nofziger motion to put off site selection for a month.

This week in council: The city will vote on providing wastewater service for the Northwest Travis County MUD #1, which Austin may not be able to annex under legislation that just passed the Texas Senate and is currently being considered by the House.

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