The Making of an Endorsement

The Chronicle Endorsement goes to press Oct. 14

City of Austin, Proposition 2: NO

Shall the City Charter be amended to prohibit the City from entering into future agreements to provide financial incentives in connection with the development or redevelopment of property that includes one or more retail uses, and to stop the City from providing financial incentives under certain existing agreements in connection with the development or redevelopment of property that includes one or more retail uses?

An amendment to the City Charter – the municipal equivalent of the federal Constitution – is a serious decision that requires all the reflection and due diligence voters can muster. While we were not unanimous in our opposition, as an editorial board we're recommending a "no" vote on this broad amendment that rejects any and all retail development incentives. We're doing so because punishing the Domain – the North Austin mixed-use development that Proposition 2 targets – is not worthy of a charter amendment of unknown general consequences. Equally important, the potential damage to the city's reputation and the murky amendment language itself will likely generate negative consequences. This amendment is a risk we don't need to take.

Certainly we sympathize with the impulse to protect local businesses by forbidding the kind of subsidies provided to the Domain and reining in city largesse to commercial developers and national chain stores. In hindsight, the 2003 deal the city of Austin made with the Domain's original developer, Endeavor, gave away too much (up to $25 million in subsidies, in 2003 dollars) while asking for too little in return. But the city did get the benefits that council contractually demanded in exchange: a redesign as a mixed-use, New Urbanist project planned for mass transit, with some affordable housing and a complement of local businesses.

Voters need to clearly understand that this amendment will not affect only the Domain. With some exemptions, it would eliminate incentives – including, for example, affordable housing buy-down grants – for any project that includes a retail component. Used well, incentives of various kinds have been a valuable tool for positively shaping developer behavior and mixed-use projects. Yet the full amendment (not visible on the ballot) would broadly "restrict the use or expenditure of tax revenues or other resources of the city to provide subsidies, financial benefits or advantages for development of real property that includes one or more Retail Uses" (emphasis added) – whatever the extent or kind of those uses and regardless of the community goals the subsidy might achieve.

In particular, the amendment would affect the Mueller neighborhood, another project subsidized in part by its own sales taxes. The inability to make grants from the city's Afford­able Housing Fund could also negatively affect the Green Water Treatment Plant redevelopment, as well as mixed-use projects too small for tax-increment financing (exempted from the amendment) yet crucial to the redevelopment of inner-city neighborhoods.

The current council has already enacted a new policy that forbids future Domain-style subsidies. Unlike a charter amendment, that policy can be changed at will without waiting on another charter election. While we understand and respect the frustration of proponents who want to end large-scale retail subsidies and who don't trust City Hall to hold the line of its own accord, most of us believe this charter amendment is not the right solution.