Austin @ Large: Wheels Down
The great big Mueller deal finally hits the runway
Of course, I'm kidding here, somewhat City Hall and Catellus have been negotiating the Mueller MDA for more than two whole years, including multitudinous Mueller items posted for the council in executive session. We shall see next Thursday if council members were dozing or doodling through those sessions, as they get briefed and hold a public hearing on the biggest real estate deal in Austin history, the conversion of the shuttered airport into a 700-acre mixed-use urban village with 10,000 residents and an equal number of new jobs, 100-plus acres of open space, more than 1,000 units of affordable housing, and other out-of-the-ordinary civic goals.
Should it be necessary, the council could instead wait to vote on the MDA until Dec. 16, its last meeting of 2004, or maybe even longer. One would think such a delay would be necessary, given the weight and girth of the project and the nature of Austin politics. But the city, its consultants, neighbors, and now Catellus have been working on the Mueller project now for nine years, and any concern that remains unaddressed is almost by definition of questionable relevance.
Even for the public, much of the heavy Mueller lifting has already been done, and is now simply memorialized within the MDA proper and its 26 exhibits. (They run from A to Z. No clear answer yet on whether this was intended, or whether an Exhibit AA could be added without rending the space-time continuum.) Mueller is already planned and zoned, and its design book outlines in fine detail the now-familiar NewUrb/NeoTrad/GreenBuilt vision for what's supposed to be the jewel of Austin's Smart Grown crown.
From A to Z to $$$
And although the execution of the MDA is theoretically the beginning of a long-term life partnership, City Hall and Catellus are already like an old married couple. The MDA's necessary and customary cautions and restrictions, and prescriptions of remedies in the event of default on either side, might as well each be prefaced by "We know this is never going to happen, but if it does ..." Right now, Catellus' walking away from Mueller would likely doom the project, even though technically it isn't their project yet.
It's also been clear at least since midsummer, when the City Council finally shot down the Keep the Land effort to retain Mueller's acres under long-term city ownership, how, in outline, the Mueller redevelopment would go down. What the MDA adds, basically, are numbers; for many observers, the most important part of the Great Big MDA is a two-page segment in the middle, Exhibit J, the pro forma. This financial projection envisions, roughly, that the Mueller land will sell, piece by piece, for $185 million, and that the city will pitch in $46 million in public financing; an additional $15 million in miscellaneous income (including $10 million for and from the children's hospital that now anchors Mueller's commercial component) rounds out the revenue side.
Out of that $256 million, $170 million will go to create infrastructure, from streets and sewers to parks and trees, on what is now basically a chunk of raw land. The remainder goes to pay the usual soft costs of a construction project (reimbursing both the city and Catellus), leaving an estimated $43 million as Catellus' take-away profit on the deal. (Note to wonks: The pro forma currently in the MDA, as I write, has a lower number for Catellus' profit margin; the MDA includes two different ways of calculating the developer's return depending on circumstances, including how much of its own money Catellus has to put at risk.) Current projections suggest that, over and above the tax revenue being reinvested in the project through public financing, the city should net about $60 million in new tax money during the 20-year-or-so term of the bonds. After that, it's all gravy, on a development expected upon build-out to be worth $1.3 billion.
Surely, some will compare the similar numbers $46 mil in public debt, $43 mil in Catellus profit and craft questions about the value the city is getting for its money. The short answer, or at least the conventional wisdom, is that the city is buying quality. Compare, instead, that $46 million to the $37 million the City Council gave the Domain, or the $25 million wrapped up in Computer Sciences Corporation, or the $17 million tied to the Home Depot data center, or on and on. For 140 acres of park, 1,000 affordable housing units, and so on, it seems a bargain.
Another Journey Begins
Of course, although the MDA does bind Catellus to meeting those "ambitious social goals," there's a limit to how well goodness can be either legislated or automated. Much will depend, in the long term, on the people handling the components of the grand Mueller project that are initiated, rather than defined, within the MDA for example, the charge that Catellus use its "best-faith efforts" to go broader and deeper with its affordable housing, or the architectural review committee that will take hold of both implementing and evolving the design book.
And the MDA takes what is effectively only a baby step beyond standard Texas models in its vision for the owners' association that will over time become most responsible for community governance. Once Mueller is built, the people who've made it happen so far the planning heads and the neighbors around the site will drop back, and the people who actually live and work there will take over. That transition, and its outcome, will have more influence over Mueller's long-term success than anything that can be written down in today's MDA. While Mueller as we've known it is finally touching down, after a very long-haul flight, that next leg of the journey is only just now being cleared for takeoff.