The Austin Chronicle

Naked City

City Sued on Domain Deal

By Mike Clark-Madison, November 21, 2003, News

Once again, the city's rocky relationship with Endeavor Real Estate Group has led to the courthouse. Even as lawsuits are threatened and reputations besmirched over Endeavor's collapsed Wal-Mart deal at MoPac and Slaughter, local retailer and investor Brian Rodgers announced Tuesday he has filed a lawsuit to overturn the deal that started it all -- the city's $37 million tax rebate for Endeavor's Domain project in North Austin.

Rodgers -- who was reportedly out of the country when the deal went before the City Council in May, but who protested the Domain's subsequent (successful) subsidy pitch before the Travis Co. Commissioners Court -- says the city's deal is actually illegal under Chapter 380 of the Texas Local Government Code, which governs such economic development efforts. Chapter 380 -- a rather vague, sketchy law that's been used to justify many kinds of Texas municipal boondoggles -- suggests cities must have guidelines for such programs in place prior to whipping out their checkbooks. This "would allow all applicants to be treated equally, openly, and fairly, using the same criteria," says Rodgers in a press release. The Domain deal, of course, was approved pursuant to an economic policy that hadn't yet been written (and which, in detailed form, still hasn't been written) in response to claims of urgency from Endeavor. "Cutting a rush deal with a well-connected developer under scant public scrutiny in the absence of a program is nothing more than rank deal-making," Rodgers says.

While the actual lawsuit turns on the Domain deal's legality under Chapter 380, Rodgers has at least a dozen other problems with the project, which he details in Slusheresque fashion in his press release. These range from now-familiar arguments about independent businesses' superiority to the Domain's chain-store tenants, to the low quality (and quantity) of the retail jobs being created, to structural qualms about the financial agreement itself (which, according to Rodgers, is as poorly drawn and open-ended as was the Intel deal). He also notes that several other retail developers -- including America's largest, Simon Property Group -- are investing in the Arboretum area with projects that will compete with the Domain for tenants and customers and which have (so far) not asked for any city subsidy. "The Austin City Council should have never even considered this project for public money," Rodgers says.

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