Upscale Riverside development a test case for lakeside high-rises

Houston developer offers to pony up for affordable housing - but is it enough?

By Marty Toohey
AMERICAN-STATESMAN STAFF
Thursday, September 24, 2009

As part of a special zoning agreement, a developer who wants to build an upscale East Riverside Drive apartment complex has offered almost $4 million for low-income housing in Austin. But as the City Council prepares for a possible vote today on the plan, a last-minute question has emerged: Is $4 million enough?

Grayco Partners says it's giving the city a generous contribution to offset the loss of 600 relatively low-cost units, in addition to enhancing public waterfront access and numerous other concessions.

But critics of the project say that, based on an opinion issued late Tuesday by the city's legal department, Grayco should have to pony up closer to $8 million — an amount Grayco says would kill the project.

The $200 million project — which pits a Houston developer, Grayco, and advocates of a denser urban core against neighborhood activists who oppose high-rise development near Lady Bird Lake — was postponed by the council a month ago and has become a test case for new city zoning rules and priorities.

Differing interpretations of those rules have bogged down the project and may further delay a final council vote.

Grayco and city officials were working frantically Wednesday to resolve those differing interpretations.

Council members said some significant questions remain unresolved going into today's council meeting.

"Clearly there's some confusion in all this," said Council Member Randi Shade, who added that she thinks a final vote is unlikely today.

The developer wants to build four buildings, with 1,200 apartments and 97,000 square feet of street-level retail space, on about 30 acres bounded by Riverside, South Lakeshore Boulevard and Tinnin Ford Road.

Grayco wants permission for one building to be up to 120 feet tall and two others to be up to 90 feet tall.

But the area's zoning rules cap heights at 40 feet.

So Grayco is asking for special status as a "planned unit development" — a designation that allows the City Council to waive height limits and other zoning regulations.

The over-arching idea is that a development can be higher, denser or otherwise different than zoning normally allows if its builders can prove the changes make it "superior."

That judgment is at the discretion of the City Council.

Previously, debate had centered on whether Grayco's buildings were too tall and whether the development would give the city enough other goodies to be worth the extra height.

Grayco's proponents said the project's height is fine given what the developer is offering in exchange: more people living in the city center, increased waterfront access, $25,000 for renovation of the historic Norwood House nearby, and a retention pond that will capture about 22,000 pounds of pollutants that wash into Lady Bird Lake every year, among other concessions.

But critics said the project violates the spirit of new height limits established along the lake earlier this year. Neighborhood activists pushing for those limits said they feared high-rise projects could spoil vistas of the lake and block public access.

Late Tuesday, the city's legal staff threw a curveball.

Earlier this year, the council passed guidelines to set criteria for a "superior" development worthy of special zoning status.

Among those criteria was a donation to build low-income housing or pay property owners to provide it. In this case, low-income means a household income of $58,650 for a family of four.

Grayco figured that amount was about $3.7 million to help replace elsewhere the 600 units that would be torn down to make way for the project.

But the city's legal department, interpreting the guidelines differently, calculated Grayco would need to contribute $7.8 million, according to a memo sent Wednesday afternoon to council members.

Steve Drenner, Grayco's attorney, said the requirement is "beyond the pale."

"We can't get anywhere near it," he said.

The council has discretion to deviate from that, or any other, criteria.

Council members reached this week said they generally wanted to follow the rules, but some were considering whether to make an exception. Council Members Bill Spelman and Chris Riley said they were still trying to determine the proper trade-off for 600 units.

"I'm pleased to see this kind of redevelopment in such a crime-filled area," Council Member Sheryl Cole said. "From what I can see, it meets our criteria and should be approved."

Council Member Laura Morrison, a Grayco critic, said the council should require the entire $7.8 million. Morrison said that's one of a number of problems she has with the project.

"At this point," Morrison said, "I'm not inclined to support it."

Austin among best performing U.S. metros

Tuesday, September 15, 2009

Austin Business Journal

Austin and San Antonio will be the first two U.S. cities to recover from the recession, according to a new national forecast from IHS Global Insight.

The forecast from the Lexington, Mass. economic research firm suggests the two Texas cities will bounce back to their pre-recession job levels sometime next year.

Eight other metropolitan areas are predicted to recover by 2011, a group that includes Texas’ two largest markets, Dallas-Fort Worth and Houston, along with Washington, D.C.

IHS Global Insight said most metros will start adding employment next year, but the increases are likely to be tepid. “Solid gains will not return for the majority of the country until 2011,” the report said.

Austin is also named one of the 20 best performing metropolitan areas in the second quarter of 2009, according to a study by the Brookings Institution.

The second quarter MetroMonitor report tracked nine metrics in 100 U.S. metro areas, and found Austin was a leader in many of those, from percent change in gross metropolitan product to percent change in housing prices.

Employment in Austin fell 0.5 percent from its pre-recession peak, that was the second-narrowest gap in the nation. The Texas Capital was also one of only three metro areas that surpassed their pre-recession peak output by the second quarter of 2009. Along with the other two cities, McAllen and Washington D.C., Austin was one of those least affected by the downturn.

The report’s authors said the figures reveal some stark differences in economic performance among metro areas.

“Signs at the national level that job and income losses are slowing continue to mask the highly variable performance of individual metropolitan economies,” said Alan Berube, co-author of the report. “While several metro areas may have reached a turning point, there are many others that still have not touched bottom, as well as a few that have almost fully recovered.”

Texas had the strongest showing, with six cities among the 20 strongest metro areas: Austin, Dallas, El Paso, Houston, McAllen and San Antonio. Florida dominated the list of the 20 weakest metro areas with eight, including Bradenton, Cape Coral, Lakeland, Miami, Orlando, Palm Bay and Tampa.

For the full report, click here.

Rehabbing? Value Added Repairs Are Crucial.

What repairs should you do when rehabbing a home?

When investing in rehab properties, you often run into homes that are in really bad condition. These are the homes I love that are in complete disrepair, ugly and unlivable. To many this is a turnoff and says headaches. To rehab investors it says profits and the evaluation process begins. When creating your rehab list and budget, it is crucial to focus on completing Value Added Repairs. Items that add value usually have to do with Kitchens, Bathrooms and Curb Appeal.

It is key to get people to fall in love with your property and get emotionally attached. They must imagine themselves living in the home and it starts with the property being inviting when they first lay eyes on it. The first impression must be “WOW.” The home is inviting with nice landscape, fresh paint and some pop in the colors used. Sometimes it is as easy as adding a little paint and cleaning up the landscaping. Putting about 2K into Curb Appeal can often increase value significantly.

Then they enter and find warm neutral colors and new or at least nice flooring. But the Kitchen is usually the place they head. Women love kitchens and this will be a huge part in the purchase decision. Don’t overdo it though, putting in a 40K kitchen into a 100K home does not make sense. Spending 5K could with nice appliances can already get the buyers thinking about cooking and enjoying dinner with family and guests.

The 3rd part of the home where significant value can be added is the Bathrooms, especially the bath in the Master bedroom, the one the buyers will be using. They will instantly imagine using the bath and what it will be like to sleep, live and spend time in this Master bedroom and bathroom. Adding a bathroom or converting a half bath to a full bath can also add significant value to buyers with children.

Finally, the mechanics, plumbing, electrical, roof, foundation, etc must not create red flags during the inspection period. That can kill a deal really quick. It is important to not go overboard on items such as finishing a basement, materials that overshoot what is common and expected in the neighborhood and doing any upgrades that will not add value. If you ask yourself, will the $ I am spending on this repair add value to the sales price? If not, save the money. Focus on Value Added Repairs with Kitchens Bathrooms and Curb Appeal.

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