Point Austin: Bad Loan
Las Manitas vs. Marriott is an easy choice
That was my first reaction to the news that Cynthia and Lidia Perez, owners of the Las Manitas Avenue Cafe, in the end rejected the city's offer of a $750,000 loan to help re-establish their restaurant up the block before the arrival of Marriott's bulldozers. The sisters decided that the loan's terms, especially the city's proposed 20-year lien on the property, were too restrictive – the prospect of being tied financially and bureaucratically to the loan for that length of time was apparently a deal-breaker.
"For all practical purposes this was a 20-year loan," the sisters said in a statement, "because the five-year term was now conditioned upon the developers completing the convention hotel (over which we have no control), and, in any event, the reporting requirements and the first lien would continue for 20 years. ...
"We concluded that trying to operate a small business under these circumstances is not practical or consistent with how we have successfully run our business for over two decades. We feel we would lose a lot of our independence. And that isn't an acceptable option. Twenty years from now, both of us will be in our 70s."
The sisters haven't yet said what they intend to do, although they still hold rights to the alleyway that Marriott says it needs vacated in order to complete its project. Indeed, the city initially stepped in when the two sides couldn't come to terms over those alley rights. According to the sisters, "during the course of our negotiations last year with the developers, they offered to pay Las Manitas a total of roughly $72,000 to help us relocate – half in cash and half in the form of rent abatement. That was less than 10% of the relocation and building costs estimated by our architect." The city suggested resolving the impasse by using the projected development fees generated by the hotel project (primarily for alley and street closures) to create a Downtown "business retention loan fund" whose first client would be Las Manitas.
Whose Ox Needs Goring?
From those smug, condescending SOBs on the Statesman editorial board, we've learned that "the controversy wasn't about a cafe but about grossly unfair, preferential treatment for a particular business that enjoys the attentions of Austin's elite." (Meanwhile John Addlepated Kelso, who apparently missed that memo, provided an even more predictable sneer at the "braided armpit community.") What a crock – I suppose dining nearer the Batcave, say at Güero's, is the practice of those noble proletarians who roost in the Cox daily's boardroom.
It was largely the drumbeat of the Statesman, duly amplified by those government-subsidized libertarians at KLBJ-AM, that transformed the city's attempt to preserve creatively a landmark Downtown business into an extraordinary and insupportable raid on the taxpayers. The simple truth is the city makes economic development decisions like this all the time, particularly Downtown, although the usual beneficiaries are corporate giants like Marriott. As my colleague Katherine Gregor reported in June, recent examples of the city's Downtown developer incentives have included: $2.1 million to Marketplace Austin (1998), more than $1.2 million to the CarrAmerica Building (2000), $730,000 to AMLI lofts (2001), and more than $646,000 to the Hilton Convention Center hotel (2002). Most of these incentives were in the form of either city-provided infrastructure or waivers of fees like those that were to fund the Business Retention Program and that generally only apply to Downtown projects (e.g., street closures). It's certainly possible to object to any one of these particular subsidies (which the city defends as contributing to economic revitalization), but does anybody remember thundering Statesman editorials opposing "preferential treatment" for Hilton or AMLI? (No need to check the archives.)
There's a solipsistic purity in opposing any and all municipal incentives for economic development, but Austin lives on property taxes, and a City Council that attempted to enact such an absolutist policy would soon find itself declaring bankruptcy. In fact, we elect city officials precisely to evaluate such projects, take the temper of the community, and decide which sort of projects, in which neighborhoods, contribute to overall community goals and which are likely to disrupt or damage them, and then employ incentive tools in either direction. That doesn't mean we'll always agree; it means that melodramatic denunciation of all "giveaways" is little more than self-righteous posturing.
In the present instance, the city proposed to not waive development fees associated with Marriott's project in order to moderate the cultural and financial disruption to the neighborhood at Second and Congress, physically centered at Las Manitas. Because of the limitation of such financial tools, the city couldn't directly save the Las Manitas-sponsored day-care center, Escuelita del Alma – which has reportedly landed farther east, although no doubt still relying on the generosity of Lidia and Cynthia Perez, should they salvage their restaurant without the city's help, as I suspect they will.
I also suspect Marriott's triple-box hotel will survive this perturbation. Or if it does not, some equally faceless corporation will find a way to build a highly profitable monolith at Second and Congress, with the usual trickle-down benefits to the rest of us. Those are not negligible – but set against 25 years of tradition, neighborliness, community development, international activism, worker solidarity, and just down-home good food and hospitality, I'll raise a higher glass to Cynthia and Lidia Perez every single time.