Second Street Snafu Clarification

After repeated allegations from Second Street District retailers of mishandled utility billing by property managers Urban Partners, placing them in default of their leases (see "Second Street Retailers Take Stand Against Landlord," Nov. 2), the firm has said it is not trying to force stores out and remains committed to local shops in the district. "No one has been defaulted over chilled water bills," said Urban Partners President Robert Bagwell. "But there's a point at which you've got to pay rent."

Urban Partners manage the retail properties in the six-block development between Colorado and San Antonio for developers AMLI Austin Retail LP. Bagwell said problems had been caused by the newness of the development, and fluctuating bills were an unavoidable part of that process. Meters had been incorrectly installed and misread by contractors. After the city calculated the total bill for the district, Urban Partners split it by estimated use per tenant. The longer the meters are running, the more accurate those estimates can become. "It's going to be at our expense, more than the tenants," he said. "If anyone's going to eat chilled water, it's AMLI."

Bagwell denied that the landlords want to bring in big retailers and said a large number of smaller stores is essential to make the district attractive to shoppers. "We're big fans of local tenants, and we try to handpick the best operations we can find," he said, "but the truth is, not all of them are going to survive."

With more retail tenants signed up to move in over the next six months, "2008 will be a lot better," Bagwell said. He also noted that, rather than having one property manager based in Dallas running the project, there are now three staff members on-site, which should allow Urban Partners to be more responsive to tenants' concerns. "The key is to promote this district so these initial retailers don't go broke before the miracle happens," he said.

But for former tenant April Lohse, owner of DJ culture store Gomi, the miracle is already too late. She and husband John terminated their lease after receiving a default notice, saying AMLI and Urban Partners had been quicker to get rid of them than to negotiate a payment plan. "We just don't want to deal with them anymore," she said.