The Austin Chronicle

Wal-Mart or No, Council Defers to Endeavor's Domain

By Lauri Apple, May 23, 2003, News

Depending on what side they were on, observers of last week's City Council hearing on the Domain mixed-use retail project proposed in North Austin walked away with different impressions of the city's "new and improved" economic development policy. Supporters of the council's 6-1 vote to approve a projected $37 million in property and sales tax rebates to Domain developers Endeavor Real Estate Group regard the package as a bold, "no-risk" investment -- one that doesn't threaten the city's finances or the environment, but promises to reclaim sales tax lost to the suburbs while creating new jobs and affordable housing.

Foremost among this group were the yea-voting council members themselves -- including Betty Dunkerley, who seconded Mayor-elect Will Wynn's motion to approve the rebates. "I think overall I'd like to get away from the idea of an incentive," Dunkerley said. "I like to use the word ... 'investment.' And in business, when you make an investment, you expect a return over and above what you have invested. ... And this project will do that." Mayor Pro Tem Jackie Goodman provided her own positive spin: "If you were going to try to define Smart Growth in the very best of ways that it was ever supposed to be, this is it."

But Domain detractors came away with a different impression: that the council was forfeiting its bargaining power to approve "investments" for a project with little public discussion and no guarantees for success. "This is pathetic," remarked one local environmentalist after the council's strong show of support. Also disappointed with the vote was Council Member Daryl Slusher, whose firmly delivered "no" marked the end of the three-hour hearing on the proposed 42-acre, $130 million project at Braker Lane and MoPac. "This seems to me to be a step backward," Slusher said after the vote. "With a project like this, you'd want more public discussion."

The council only first heard about the Domain and its rebate request a month ago, and many last-minute Domain details were negotiated from the dais last Thursday. These included an amendment to make some of the project's 300 housing units (all supposed to be compliant with the city's SMART Housing program) more truly affordable to families making 65% or less of the local median family income. The council also secured a promise from Endeavor principal Kirk Rudy and other company execs to guarantee involvement for minority- and women-owned businesses and approved an amendment by Raul Alvarez to designate an additional 2% of the sales tax generated by the Domain toward the city's affordable housing trust fund. The final deal gives Endeavor an 80% sales tax rebate during the Domain's first five years and a 50% break for the following 15 years, as well as a 25% property tax rebate over the 20 years. A rebate of the Domain's county taxes is still being considered by the Travis Co. Commissioners Court.

With such large tax breaks in the Domain's future, the council and staff reiteration that the package posed "no risk" ultimately rung hollow -- in terms of both greenbacks and greenspace. On the money side, city staff couldn't provide evidence or a formula indicating that the Domain wouldn't simply cannibalize customers from existing businesses paying all of their taxes. Nor is it clear that the Domain can fulfill its primary role: capturing shoppers' dollars now being spent in retail centers beyond the city limits. Endeavor has yet to receive confirmation from any prospective tenants for their proposed 670,000 square feet of retail space; Endeavor principals, freshly inked deal in hand, attended the International Council of Shopping Centers spring convention in Las Vegas this week to recruit prospective retailers. Until those signed contracts come in, City Hall and Endeavor are basing their rosy scenario on "general characteristics" such as restaurants, attractive landscaping, small shops, and the 1,500 temporary and 1,100 permanent jobs the Domain is expected to create. "It is a very difficult thing to look at and determine any percentages," admitted city economic development officer Sue Edwards.

On the environmental side, the council let it be known that developers who help pave over the Edwards Aquifer can still get tax rebates -- a notion that Slusher and many others oppose. Slusher requested delaying the Domain vote until the council actually approved a new economic development policy, based on the recommendations of Mayor Gus Garcia's economic task force (now still in draft form, not to be finalized until at least next month). As Garcia's point person on the environment, Slusher has suggested that the new city policy include provisions to deny tax rebates and incentives to companies that don't comply with water-quality ordinances protecting the aquifer. Such a policy would exclude Endeavor, which is selling a 43-acre tract of land in the Barton Springs Recharge Zone to Wal-Mart for a new SuperCenter. Sited at the corner of Slaughter and MoPac, the SuperCenter could exceed impervious cover levels by three times the amount allowed by the Save Our Springs Ordinance. (The property, at least according to city staff, is grandfathered from SOS after a 1996 agreement between the city and the previous owner.) While Endeavor has agreed to spend about $720,000 to buy an estimated 100 acres of open space over the aquifer to attain SOS compliance, company principals have admitted that the water quality controls they've proposed on the property may be inadequate to manage pollutants.

Rudy agreed to help the city negotiate strong environmental protections with Wal-Mart, but also said Thursday that Endeavor's binding contract with Wal-Mart has already been executed and signed and wouldn't be affected by either an up or down vote on the Domain. Endeavor's contract with Wal-Mart requires the megaretailer to participate in the city's Green Building program, build a store less big-boxy than its standard big boxes, and take other eco-friendly steps, he noted. "We will obligate Wal-Mart to do these things," he promised.

Rudy's promises did not satisfy Slusher, who believes that Endeavor has not been as diligent in protecting the aquifer as other developers -- including Stratus Properties, with whom the city negotiated a controversial settlement last summer. By denouncing the Domain, Slusher found himself aligned with environmentalists and groups that had heavily criticized him for his vote on Stratus. Claiming "I've always been consistent," Slusher continued to defend his Stratus vote. "I've said for years that if developers comply with SOS, there will be peace," he said.

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