Thursday, August 17, 2017

#atxcouncil Approves $122 MILLION for office building....


"There is desirable treasure,
And oil in the dwelling of the wise,
But a foolish man squanders it.?
Proverbs 21:20

We signed up to testify in opposition to items 16 - 18 from today's council meeting:
16.

17.

18.
The theory behind the project is that one of the problems with the permitting process is that simply getting the permits requires one to traipse all over town.  Thus, putting all the offices in one physical location will "streamline the process" (Note: Why can't this be done online?!?) (Note II: A nine-figure fiscal note is a strange definition of "streamlining.")

We had to leave before they got to this item, but if we'd testified we would have hit the following five points:
  • Cost - First things first, dadgum $122 MILLION is a LOT of money.  For an office building.  According to the city's documents, they want to build 264,000 square feet of office space.

    $122,500,000/264,000 square feet = $464.02 per square foot.

    According to any number of commercial real estate sites we checked, the average rate to rent existing office  space in Austin ranges from $23.00 to $50.74 depending on the neighborhood; new construction maxes out at $150 per square foot..

    Two weeks ago, Mayor Adler told this author to bring it to his attention when we think the city is spending money irresponsibly; this is a pretty good place to start.
  • Financing Mechanism - As item #18 makes clear, they're financing this through "certificates of obligation."  The beautiful thing about certificates of obligations for governmental entities is that they don't require voter approval.  While c of o's can have a legitimate cash management function, to use them for this sort of capital expenditure of a horrible abuse of the process.

    On a semi-related note, we fully intended to bring this one up with the legislature whenever we get new leadership in the Texas House.
  • Housing Costs - The city claims that the C of O's will be repaid by "development fees" instead of property tax revenue.  Of course, in order to raise the revenue needed to cover $122 million in obligations, you would need to shoot the development fees through the roof.  And that means every single piece of new construction from here to eternity will have to include those fees in the final cost to the end user.

    Translation: Higher housing costs.
  • Highland Mall Redevelopment - There's widespread agreement across the political spectrum that mixed use development is the best function of the highland mall tract.  Creating a five-acre city office complex on that property will mean the surrounding area is DEAD after 6pm.  Dead zones like that are kryptonite for vibrant neighborhoods.
  • Wrong Mindset - Everyone agrees that the permitting process is too bureaucratic.  But instead of eliminating bureaucracy...we're just going to build the bureaucrats a beautiful new building.  Does anyone actually believe that's going to "streamline" anything?!?

    Again, on a semi-related note, this is why Konni Burton's permitting bill is so desperately needed.
Following passage of the item, Mayor Adler released the following video to Facebook:

So he's arguing that he saved taxpayers $45 million...but the project is still going to cost $122 million?!?

Bottom Line: Never, ever, ever forget that, once you get past the headlines, politics at every level in the state of Texas is mostly about good ol' boys putting together shady real estate deals...and someone's getting paid on this one.

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