Real estate prospecting on the Eastside
For years, East Austin residents have decried gentrification. As Austin property values appreciate exponentially, developers have descended upon the city to capitalize on the hot real estate market. But the positive impact of renewal and the rebuilding of deteriorating neighborhoods is having a corrosive side effect on longtime, lower-income residents, in many cases forcing their displacement from neighborhoods they've long called home.
The lower Eastside is increasingly dotted with high-end restaurants and chic bars where homes once stood. Many residents seem surprised at the brisk pace of new development. Long seen as home to a largely Latino working class, the area is quickly being transformed to appeal to an affluent customer base.
"I was born and raised here for the past 35 years, and I am heartbroken," said Bertha Delgado, president of the East Town Lake Citizens Neighborhood Association. "I'm also angry. All of our minority-owned businesses that we valued are gone. It's more of a devastation to see everything rapidly go without anything slowing down."
The transformation has taken place over the course of several years, dating to the early Aughts when property values began to blow up, but the February demolition of a longtime Latino-owned piñata shop arrived as a resounding riptide. In their rush to capitalize on SXSW by staging a party on the land, F&F Real Estate Ventures – co-owned by Darius Fisher and Jordan French – simply demolished the Jumpolin party supplies store at 1401 E. Cesar Chavez, with no effective notice to Sergio and Monica Lejarazu, the Mexico-born couple who had operated the store for the last eight years. The demolition is seen by community leaders as a clear illustration of developer greed and insensitivity to established neighborhoods from which they now seek to profit. Subsequent comments by French in an interview with CultureMap – comparing the Lejarazus to roaches and implying Jumpolin may have actually been a front for illicit activity – had an unsavory undertone of bigotry.
Along the way, the Eastside has emerged as ground zero in the reignited gentrification debate. "I think that community was a little slow in recognizing where this whole thing was going to go," said Mercedes Lynn de Uriarte, associate professor at the UT-Austin School of Journalism, who led a three-year study on the sector's gentrification with her graduate students. She pinpoints bolstered commercial development in the area as more recent: "They started gentrifying there in 2008, and there were early warning signs with spikes in property taxes."
De Uriarte said gentrification-fueled displacement of residents often disproportionately affects minorities. Moreover, Austin's history of segregation concentrated Latinos and African-Americans on the Eastside via the 1928 Austin Master Plan. "It has to do with class more than anything," de Uriarte said. "But because class falls along racial and ethnic lines, minorities are often the first victims." According to Neighborhood Scout – a data-rich portal detailing neighborhood statistics – the East Cesar Chavez neighborhood is not only predominantly Hispanic, but one of the most Mexican enclaves in the country, with 58.9% of residents with Mexican ancestry.
Academic studies reinforce the conclusion. In February, the University of Toronto's Martin Prosperity Institute named the Austin/Round Rock area as the most economically segregated large metro area in the U.S. The gap between rich and poor is growing nationwide, according to the report, but it's more dramatically seen in Austin, with its high population density.
What's striking about the report is that the division is primarily between the east and the west – but if West Austin and its accompanying suburbs have long been out of the question for lower-income families, the Eastside is becoming unaffordable as well. Neighborhood Scout weighs in with its statistics to illustrate this widening chasm: the East Cesar Chavez "median real estate price is $314,236, which is more expensive than 91.7% of the neighborhoods in Texas and 76.3% of the neighborhoods in the U.S."
An earlier study by UT-Austin's Institute for Urban Policy Research and Analysis showed a 5.4% decline in the city's African-American population between 2000 and 2010 – a trend partially attributable to gentrification. Austin earned the distinction of being the only fast-growing city in America losing African-Americans.
In the Neighborhood, but Not of It
Cody Symington, a co-owner of the popular Cenote cafe at 1010 E. Cesar Chavez, acknowledges his own role in adding to the neighborhood's gentrification. But in arriving to the neighborhood with a new eatery, he said he tries to be sensitive to the community – an attribute likely informed from spending his formative years on the Eastside. He reached out to the owners of Jumpolin shortly after their business was demolished to offer his space for a fundraiser for rebuilding costs. On March 28, the Lejarazus raised nearly $2,000 in sales of diminutive keepsake piñatas and cascarones. A concurrent fundraiser on GoFundMe has raised more than $5,000. The couple hopes to find a new site for their business and is currently operating at a borrowed site at 4926 E. Cesar Chavez.
"We were, for lack of a better term, gentrifiers when we moved into East Cesar Chavez," Symington said. "But we knew we were moving into a community that was already there." Rather than razing a building to suit his needs, Symington set out to preserve the older building where Cenote is now located, once a private home. He quickly learned the city's rules – particularly those related to parking – make preservation difficult. "We moved here in 2010, but opened in 2012," he said, attributing the gap between move-in and opening to back-and-forth discussions related to parking issues. "Unfortunately," he said, "the city does make it extremely difficult to preserve a building. It boils down to parking."
But he knew saving the old building was an important part of entering into the established neighborhood: "Our goal was not to be gentrifiers, but we knew that's what people would call us. I actually lived in the neighborhood in 2007. I can't now; I can't afford it."
That sensitivity – coupled with Cenote's goodwill toward their former neighbor, Jumpolin – has helped ingratiate the self-described gentrifiers into the neighborhood. But often, residents feel slighted at the tone-deafness of other recent arrivals clumsily trying to assimilate into the neighborhood culture.
Amy Thompson, a neighborhood advocate, recently contacted Cycleast to inquire about the fate of the landmark La Lotería mural, only to discover it had been painted over by an artist commissioned by SXSW organizers ahead of the music festival. The resulting artwork by Australian-based graphic artist Rone was culturally out of sync, she said. "According to Rone, he was told to paint something respectful of the neighborhood," Thompson wrote in an email. "So he chose a portrait of a local girl. He obviously meant well, but this is nothing more than tokenism and further insult to injury." The new mural was commissioned by POW! WOW! Hawaii, which partnered with SprATX and SXSW to create murals at four Austin locations for the SXSW Impos- sible Wall Project. According to the description of the project on the SXSW website, it "brings together local artists and international artists to transform ordinary walls throughout the downtown area into large public works of art for the Austin community."
Cycleast owner Russell Pickavance – who reopened his shop at 1619 E. Cesar Chavez last year – acknowledged that painting over the mural was his idea. While he understands residents' concerns about gentrification, he prefers to see the trend in a positive light given its tactics of renewal and refurbishment of older neighborhoods. "I am the one who requested it get painted over; it's all on my shoulders," Pickavance said, noting the idea was met with enthusiastic approval from his landlord, property owner Louis Joseph. "The mural had been there for a long time, and I wanted to revitalize this space and show people we were here. Murals naturally fade over time. You can touch it up, but if you touch it up, aren't you remaking it? I wanted to continue the heritage of the painted wall. My thought was to continue that tradition of a mural on a wall, but every year doing a new mural."
Now that the old, recognizable mural is gone, Pickavance also conceded he may have been too hasty in not fully considering its cultural currency: "Where I was shortsighted is that I didn't think about the fact the people who painted it might still be in the neighborhood. I definitely know part of me made a mistake. I'm aware I've hurt some people. But this is being in the middle of trying to maintain the cultural heritage of the community and have new art and have it continue to be vibrant. That was my intention."
Graffiti artist Armando "Lace" Martinez sees the increasing eradication of the neighborhood's artistic expressions as further evidence of a changing landscape in the neighborhood where he's spent his entire life. The mural "has nothing to do with Eastside culture," he said. "It looks nice and neat and real good, but it doesn't fit the neighborhood. We've had murals up but they've been painted over once the buildings are gone or they change owners."
He and other artists are now joining Delgado in an effort to save the community's remaining murals. For his part, Pickavance noted he has offered to bring in the original artists to paint a new mural in the rotating artwork plan. He also notes his commitment to his new neighborhood, pointing to the large community space he included in the shop – four times the size of his previous location at 501 Pedernales – as further evidence of his genuine respect.
French's own post-demolition theories about Jumpolin – positing it as a possible front for illegal activity – offer up yet another example, an extreme one, of not only tone-deafness but complete lack of understanding of minority enclaves. "Probably their livelihood was selling helium and stolen bicycles," French theorized in an interview with CultureMap. "They weren't making a living selling piñatas; they were selling something else. I don't want to speculate what that is. That's just my opinion, though."
But even as an outsider, French would've come to learn that such businesses are part and parcel of the Latino fabric had he done his due diligence on his tenants' livelihood. He would've learned that piñatas have a rich history dating to 14th century Spain where they were used primarily during the Lenten season. He would've learned how piñatas were later introduced into Mexico in the 16th century, and still remain popular in mostly Hispanic households for use at children's birthdays, quinceañeras marking a young woman's coming of age at turning 15, or during Las Posadas, a nine-day celebration running December 16-24.
But if such research were too much to handle, French could've resorted to Entrepreneur.com, which lists a piñata business as one of its lucrative start-up ideas: "What a great business and concept," the website reads. "Home based, unique, low overhead, minimal startup costs, virtually no competition and no limitations on business growth and expansion."
In a previous interview, Sergio Lejarazu said there was more to it than that: "When you talk about a piñata store, people think there's no investment and they're produced like magic," he said in his native Spanish. "But a piñata store is not only maintained with sales of piñatas but party supply rentals. We offered a service for bounce houses, tents, tables, chairs, piñatas, margarita and popcorn machines, balloons. It gave us enough to live," he said of the business he and his wife, Monica, started eight years ago. "We saw an increase in sales before it fell to the ground."
Lack of Oversight
In identifying the gentrification wave, Bo McCarver was indirectly ahead of the curve. After spearheading fights against eastward annexation by UT in the Eighties, he helped create a nonprofit solely for the purpose of buying neighborhood homes and preserving them as affordable housing as a shield against commercial encroachment. Block by block, his nonprofit Blackland Community Development Corp. purchased at least one home – creating a homestead patchwork that served to complicate any future efforts by developers to buy entire swaths of real estate for commercial development. Today, that prescient tactic is tangible with the collection of dozens of little homes designated as affordable housing.
"You spread your bets," McCarver said of the piecemeal approach the nonprofit undertook 25 years ago – a move he calls the poisoned watermelon strategy. "If someone is stealing watermelons, you don't want to poison the whole field. It makes it very difficult for a developer who wants to have the whole block. We have 49 units now, some duplexes. We also have a little enclave with six cottages in Robert Shaw Village."
But he conceded this approach would be difficult to replicate today, given the inflated property values.
Delgado sees a similar buying pattern in the East Cesar Chavez neighborhood, but with a different aim. Instead of preserving homes as affordable housing, residential properties are increasingly being purchased by outside investors only to be torn down and converted into short-term rentals for out-of-town visitors, she said. The increased abundance of STRs in the neighborhoods' midst illustrates how Austin's music scene, and its attendant festivals, have actually helped spur gentrification in established neighborhoods.
"They're demolishing our homes and building two-story McMansions and turning them into short-term rentals," she said. "At least 10 homes have been demolished in the past month, and, so far, 51 have been demolished," she added, noting the most recent pair of felled homes were along Canterbury Street. While decrying the process, she also wonders why the city hasn't made any overtures in exerting control through historical preservation – particularly given the neighborhood's roots in municipally sanctioned segregation of minorities.
City officials say the cottage industry centered on development of STRs is difficult to regulate, with 1,200 such projects spread out throughout the city and just 65 code compliance officers to ensure the rules to develop them are being followed. Last year alone, the city had 19,000 complaints from residents related to STRs in their midst, said public information and marketing manager Candice Cooper.
"Within probably the last six months or so, we're starting to see our STR properties that are operating starting to take on a different form, if you will," Cooper said. And that form is not often in the best interests of established neighborhoods and runs contrary to the spirit of the STR experience.
F&F Ventures emerges yet again, as a case study of an unchecked STR cottage industry. A year or so before buying the property where Jumpolin once stood, along with an adjacent property at 95 Navasota, the would-be real estate tycoons also bought three small homes in the same neighborhood, which are now listed on Airbnb as STRs, and were heavily promoted during this year's SXSW. A pair of those homes are near where Jumpolin once stood: one at 93 Navasota directly behind the demolished site, and another at 206 San Marcos St.
After the Chronicle alerted city officials to the drastic transformation of those homes into STRs, they began investigating F&F Ventures' practices in that realm as well. "You, through your email to us on the San Marcos property, actually prompted us to open up a case," Cooper said. "Because of your sending information to us, we're opening a new case and starting to open a second."
The San Marcos Street property – somehow converted from its original 2-bedroom, 1-bath configuration into the 7-bedroom, 3-bath setup advertised on Airbnb – was particularly concerning, Cooper said. After the Chronicle's inquiry, city staffers read the Airbnb descriptions for themselves – not a traditional practice for them, she acknowledged – and learned each partition had its own lock, which only heightened their concerns.
"We have city codes and ordinances that the City Council has passed, and we have a responsibility to make sure residents are safe," Cooper said. "That's the big picture; that's the main goal. We want to maintain Austin as a livable city but also make sure residents are safe."
Senior public information specialist Jacqueline Ballone later confirmed that the city is also looking into possible violations at F&F Ventures' property at 93 Navasota, where an Airstream trailer was parked as further STR housing, in apparent violation of city rules. "Our neighborhood team and our STR enforcement team is working together to make sure this property comes into compliance," Ballone wrote in an April 2 update via email in reference to the San Marcos property. "We have discovered a number of violations at the property, one being for Work Without Permit, the other for Over Occupancy."
F&F Ventures listed its STR room rates during the recent SXSW, asking as much as $1,800 to rent out an entire structure. Among past complaints listed by tenants staying in the houses were ongoing construction, no hot water, dirty sheets, cramped quarters, no window covering, and a shared bathroom for up to eight people.
Turning Back the Tide
District 3 Council Member Pio Renteria acknowledged the growing presence of STRs in a landscape that once was a largely Latino enclave comprising established homes. He conceded he, too, is an STR operator, converting one of two houses he owns with his wife to accommodate short-term rental guests. But unlike commercial STR operators, his is a Type 1 STR, granted a homestead exemption requiring that its owners live on-site at least 51% of the time. He and his wife are in compliance, given they now live in a converted garage apartment behind the property, which is located across from Martin Middle School. It's the Type 2 STR variety he labels as being run by "absentee owners" that's become a city scourge, he suggested.
"I saw that coming," he said of gentrification that prompted him to diversify his real estate holdings as an alternative stream of income. "So what I did was get a loan and buy a secondary unit because we were going to need some kind of revenue because taxes were starting to increase by the thousands. We rented it out as a SXSW vacation rental and made $3,000 on it, and now I had some kind of extra revenue."
Like other Eastside residents, the Council member and his family also have been touched by gentrification. Two years ago, his son sold his own house on Cesar Chavez – which had increased in value from $165,000 when he first bought it to $375,000 when he sold – to find a bigger replacement to house his growing family. He opted to move to the city's southwest side, where he bought a home for $214,000, Renteria said.
Those fluctuating values illustrate the demand for housing on the suddenly trendy Eastside, he noted. How times have changed: "Fifteen years ago, you couldn't even get a pizza delivered in that neighborhood," he observed.
Sometimes, Eastside residents feel the city itself has a bias toward developers' interests rather than theirs. The Jumpolin case to them exemplifies this bias, given that no steps were taken to ensure the business was vacant. In the city's protocol for demolition permits, making sure tenants have been properly notified of imminent demolition or eviction is not part of the process. "There's nothing in our applications that says this building is occupied," conceded historic preservation officer Steve Sadowsky. "That's the responsibility of the person applying for the demolition permit. I think that's a policy decision, and that's not mine to make."
The city's main area of focus as it relates to demolition permits is to ensure the property about to be demolished has no historical value. But even here, some Eastsiders wonder why greater effort wasn't made to prevent the demolition, given the building's early, circa-1936 manifestation as a Phillips 66 gas station that helped form part of the community's early fabric.
Given gentrification's seemingly inexorable advance, residents wonder if anything can be done to stop it, or at least to mitigate its most negative side effects. McCarver has suggested persuading some people (should they have no other heirs) to will their homesteads to a preservation-minded nonprofit, ensuring that even after death a piece of their neighborhood's history might survive. State Rep. Eddie Rodriguez suggests that an effort to freeze property rates for longtime residents could, in theory, become state legislation.
But the former prescription would, by its nature, have only limited application. The latter would require a constitutional amendment, and potentially mean broad revision of the residential property tax system – both formidable tasks. Instead, Rodriguez is hoping to reignite an idea he first espoused in 2005, centered on using Tax Increment Financing to create more affordable housing amidst rising property rates.
City Council approved such an ordinance in 2008, enabling the first tax increment reinvestment zone, East Austin's Homestead Preservation District. It would utilize TIFs, land trusts, and land banks to create an affordable housing buffer against gentrification. But the executing details, in particular of the TIF districts, have never been implemented, even as Eastside property values continue to climb. (Land trusts or land banks work by holding the land in trust, meaning the homeowner's cost is confined to the housing itself; TIFs reinvest incremental gains in property taxes into the defined district, directly for affordable units or other improvements.)
Renteria said he will reintroduce the idea during the next meeting of the Housing and Community Development Committee he heads, with hopes of city action to implement the measure. Rodriguez remains hopeful, but laments the time lost since the idea was first proposed, amid the continually changing landscape of the Eastside where he lives – four blocks from the former Jumpolin site. "I think it's [the Preservation District] always been a good idea, but the TIF component has never happened," he said. "Ten years later, [the city is] still debating it."
Next month marks the 16th anniversary of the East Cesar Chavez Neighborhood Plan's adoption by City Council. Its summary paints a neighborhood picture palpably celebrating the cultural richness of the working-class Latino enclave: "The Neighborhood wants to remain a place where people sit on their front porches and wave to their neighbors or lend a helping hand, and where working people, the elderly and young families can afford to live. It hopes to be a neighborhood that flourishes and supports all types of people, from artists to day laborers, from the elderly to newborns."
But that was then. Since its May 13, 1999 adoption, the idealism of that master plan seems increasingly anachronistic, a curious relic of days gone by. The gentrification wave is just too powerful, the prevailing market forces entirely too strong.