A lawsuit could jeopardize Endeavor Real Estate Group LLC’s plan to transform the vacant former headquarters of the Austin American-Statesman into a huge mixed-use development, in addition to other prospective future projects on the south side of Lady Bird Lake, directly across from the Central Business District.
The case was filed April 24 in Travis County District Court by the Save Our Springs Alliance, Taxpayers Against Giveaways, former state Sen. Gonzalo Barrientos and former City Council Member Ora Houston. They argue that the city of Austin acted unlawfully in creating a financing mechanism expected to help pay for the region’s transformation.
Austin City Council voted in December to create the South Central Waterfront Tax Increment Reinvestment Zone. Like every TIRZ, the zone works by capturing increases in property values and funneling them toward infrastructure improvements.
The TIRZ covers 118 acres and 54 parcels but its first big project is expected to be the redevelopment of the 19-acre Statesman site at 305 S. Congress Ave., where Endeavor plans to over a decade erect six mixed-use towers and create new parkland.
Richard Suttle, an attorney with Armbrust & Brown PLLC who represents Endeavor, told Austin Business Journal that the lawsuit carries the potential to negatively impact development of an area expected to provide long-term benefits.
“We have not done a legal analysis of the lawsuit,” Suttle said. “We trust that the city has done the analysis and is comfortable in their position. In the event the plaintiffs prevail, it will cause a cascading effect on things like affordable housing and parks.”
The city has established a goal for the South Central Waterfront of making 20% of new housing affordable, although Endeavor opted to pay a $23 million fee to not include affordable housing in its project.
The lawsuit names as defendants all Council members as well as the interim city manager. The suit claims Council members violated the law when establishing the TIRZ because state code restricts the creation of such a zone to “unproductive, underdeveloped, or blighted” areas.
It argues that the zone would direct $354 million in property taxes over the next 19 years to an unlawful use, with the Statesman site and the rest of the South Central Waterfront being prime real estate that does not need a TIRZ.
Austin attorney Bill Aleshire, Texans Together President Fred Lewis and Bill Bunch, the executive director and attorney for Save Our Springs Alliance, are representing the plaintiffs.
“The old Statesman property is prime land in the heart of our city,” fomer Austin City Council Member Ora Houston said in an April 26 Twitter post. “The $354M is just more profit for Endeavor, taken from taxpayers’ wallets.”
The city of Austin “believes that Council’s December 2022 action regarding the South-Central Waterfront TIRZ complies with state law requirements,” a spokesperson told ABJ. “As with many policy decisions, there was ample discussion and community feedback on this topic.”
