The Austin Chronicle

Austin at Large: The Showdown at the Batcave

Part I: What's all this we hear about a $277 million developer handout?

By Mike Clark-Madison, December 31, 2021, News

Even with everybody trying to power down and get out of City Hall in mid-December, there arose a disturbance in the Force, as City Council reconvened to address a last-minute issue prompted by the appeals of a big developer. For our old friends at the law firm of Bill, Bill, and Fred – Bunch, Aleshire, and Lewis, respectively – no more evidence was needed to frame up a scandal in the making, as Nick Barbaro reported last week in "Public Notice." In tandem with their friendly media outlet The Austin Bulldog, BB&F laid out how the creation of a tax increment reinvestment zone (TIRZ) for the South Central Waterfront district was an obvious boondoggle over which right-minded Austinites should be duly outraged.

As is often the case with Bill, Bill, and Fred, the incandescence of their own outrage, which is a valuable asset for organizing and political action, has kinda overcooked the grits here and overrun their own analytical headlights as public interest attorneys. (Their titular roles and organizations – Bunch at Save Our Springs and the Zilker Neighborhood Assoc­i­ation, Lewis at Community Not Commodity, Aleshire at his own practice – are tangential to the South Central Waterfront kerfuffle.) Is something in the TIRZ milk not clean? Maybe! Is it what they think or say it is? Maybe not! To really understand what's going on, you need to be aware that, as is so often the case in this town, this big new story has really been ongoing for more than 50 years – so long that I'm going to have to address it in installments in this space.

Midcentury Modern

Flash back to 1960, when Longhorn Dam was completed to cool the old Holly Power Plant and turn the river into a lake. The north shore of that lake was on high enough ground to be largely buildable from Austin's very beginning, and everything from Cesar Chavez (originally Water Avenue) on up is part of Edwin Waller's 1839 original city plan. So the dam changed things, but not that much at first.

The bottomlands on the south shore, however, had been ravaged repeatedly by floods in the decades prior, and today's 78704 neighborhoods were buffered by a bunch of low-density industrial uses that could function in an active floodplain – such as sand mining, and the National Guard armory that would later become the Armadillo World Headquarters, and the old Disch Field, home to the Austin Pioneers, Senators, and Braves of the Big State and Texas Leagues (that's baseball), which closed in 1967. Viewed through today's land use lens, it was like a cluster of Walmart Supercenters, without even the basic urban fabric applied to places like Tech Ridge and Southpark Meadows. No streets, just parking lots; no landscaping or green space; no utility service except what was dropped directly to these few structures.

Now, of course, Austin is very different. The stretch of the south shore west of South First became parkland and civic space in several waves of public investment; the expanded Congress Avenue Bridge made the waterfront more accessible to Down­town. Yet the first movers into the area maximized what they could get out of the existing land use pattern. One of these was the Austin American-Statesman, which escaped a drab warehouse in the old Warehouse District (the site of the current Hobby Building) in 1982 to build a big office building with room for the printing presses, and an even bigger parking lot, on 19 acres (again, about the size of a big Walmart location) on the corner opposite the new bridge, and its accidental but now iconic bat colony, which is why this newspaper used to refer to the daily as "the Batcave."

Fast-Forward to 2021

And we're back! As you may have heard, the Cox family of Atlanta (owners since 1976) recently sold the Statesman but kept the Batcave, which now has the potential value, given Austin's hotness, of a globally known urban infill property like Hudson Yards in New York or Canary Wharf in London. It's to be redeveloped into 19 acres of real city, with real urban fabric (streets, landscapes, utilities), which is expensive. It's the largest infill site among the 32 properties within the South Central Waterfront planning area – the stretch east of South First – for which the city and lotsa stakeholders tenderly and lovingly crafted a vision and regulating plan over the last decade. That planning effort identified $277 million in infrastructure improvements needed to get us from here to there.

Who has that money? One of the go-to routes for funding infill infrastructure is through tax increment financing (TIF). The concept is pretty obvious; until you build streets, landscapes, and utilities, the potential value of the Batcave and the other 30 private properties (one is the city-owned One Texas Center, at what was the Armadillo) will lie dormant, which means less city property tax revenue. To goose the market along, TIFs (a TIRZ is just the geographic layer of a TIF district) capture and set aside a portion of the tax revenue going forward to pay back the bonds or other debt used to pay for that $277 million.

That's a much easier sum for the city of Austin to borrow than it is for any private developer, because that's how public finance works. Even if that developer is Endeavor Real Estate Group, which brought you the Domain (and a number of Walmart Supercenters) and is overseeing the reboot of the Batcave. They're at the apex of the local developer food pyramid, and their interests as a participant in the South Central Waterfront TIRZ are being represented by Richard Suttle of Armbrust & Brown, a player in many of the sagas that have built Austin over the past 30 years. His antithesis, you could fairly say, is the law firm of Bill, Bill, and Fred. They and their non-attorney allies, and sometimes this newspaper, have clashed directly with Suttle over those decades. And that's why Council had to have a special called meeting the week before Christmas. Why and what next? Stay tuned.

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