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Keep Domain Subsidies

Whenever I hear this guy talk about how bad the Domain is, I wonder which ones of the strip centers filled with locally-owned businesses he owns. Because I haven't seen one strip mall with local businesses in it that isn't a pedestrian-hostile disaster.

Sign me up for MORE DOMAIN SUBSIDIES if it means that we encourage pedestrian use, even if it's only inside the project. Too many of these awful strip malls inhabited by the local businesses who are fighting this fight are like the ones on Anderson Lane where even a confirmed car-hater like me is tempted to start the car and move it farther down the road rather than walk a quarter-mile. It's just that awful.

When locally owned businesses do things that hurt us, they don't deserve a pass. When Terra Toys reacts to higher rent by leaving a good urban environment and moving somewhere where nobody will walk to, and very few will walk around in, why on earth am I supposed to support them against Wal-Mart or the Domain, when those guys are at least trying to make things a little better?

Also, for extra credit, remember City Comforts' primary rule of urbanism: it starts with the location of the parking lot.

versus

Any questions?

This entry was posted in the following categories: Austin , Urban Design , Walking in Austin (Pedestrian Issues) , When Neighborhoods Go Bad

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I believe you got a photo of my neighbor, who is immediate past president of my neighborhood association.

One question. If no one walks in an around NC now, why do you believe the addition of a big box, which draws lots of cars and is predicated on people buying more than they can carry while walking, will result in more people walking? This seems to be one outcome you either expect or hope to see, but it isnt an outcome that seems reasonable to me, so I am hoping you might walk through your reasoning. If you've already done so and I missed it, just a link is fine.

Also - seems to me that if our city wants pedestrian-friendly, we just shape ordinances and policies to get it. Rather than subsidize one developer or a single business, the city should spend money on things that have a broader benefit. Like rail and bus, for example, so that people could go sans car to any number of pedestrian friendly developments (developed that way because the city requires it). Or perhaps subsidize housing so that people can live in or near mixed use developments, thereby (ideally) cutting the need for a car.

Hope, what we have with the Domain is somebody who invested a lot of money taking a gamble that people would want to live in and shop at a big VMU project on a brownfield site. That gamble wouldn't have happened without the subsidies.

The Wal-Mart makes Northcross a bit more pedestrian-friendly than it is today. Ignore the yammering about big versus little box; most of the time when I go to Target, I come back with a small enough load to carry on foot (and I would have gladly walked to the Urban Target originally proposed for near 12th/West Lynn). A big box CAN result in you buying a ton of stuff all at once. It can also be a shorter trip for stuff you used to drive all over town for; or it can be a place where you know you can find that one thing you need.

Also remember that pedestrian-hostile is ALSO transit-hostile, since every transit trip includes a pedestrian trip at the end. Although the Wal-Mart isn't close to the Domain, the walk from the bus center will be better than to the strip malls on the north side of Anderson.

Finally, again, for the record, the VMU 'vision' for Northcross pushed by your group was a joke bordering on a lie - given the activities of your supporting neighborhoods on other projects in the meantime (opting out of VMU essentially everywhere, for instance). I don't believe for a second that your group's membership supported VMU at Northcross as anything but a red herring.

I admit to being a little confused. Does a place like the Domain really encourage pedestrian use use if one must drive to it to take advantage of its pedestrian-friendliness? I know I won't be walking or biking down Burnet Road to get the the Domain (should I ever want to go). It's location and facing clearly make it targeted for access via Mopac.

Seems to me that projects like this -- despite their being internally pedestrian friendly -- will only encourage more sprawl and more traffic.

Stuart,

That's one way to look at it. That Burnet/Gateway plan for the area has the Domain at the middle of a ton more VMU development - which would still have the big barrier of 183 between us and it, but there'd certainly be a lot of other people nearby who could walk/bike in the eventual build-out.

There's also a lot of people living there now, even today - the apartments look full.

I'm the last guy to be sold on the "second downtown" thing for a lot of reasons - poor rail access being primary among them, but I also like to give credit for good urban design when I see it, and it IS good. They did as good a job as any brownfield-in-the-middle-of-suburban-sprawl project I've ever seen.

PS: The Burnet/Gateway plan has Burnet being redone as a better transportation corridor, but I'm dubious they'll be able to get buy-in from TXDOT. But there are other ways in - the city has full control over Braker Lane, for instance, and Metric is already a fairly good bike corridor.

I suppose I'd grade this stuff on several scales to be fair - but in no universe are those strip malls on Anderson anything like pedestrian-friendly development on ANY of those scales, and RG4N should be ashamed of themselves for claiming otherwise.

Our VMU idea isn't for everyone, I know. But lots of us really believe in it, the leadership of the group did and does, and so do most of our supporters. There are others who oppose the NC redevelopment and dont like VMU but made common cause with us as we had the same immediate goal. That's the way politics works. People with one thing in common work together for it, even if they have other disagreements.

I don't agree that more people will walk around NC or walk to shop at WM, but I appreciate you explaining your view of it.

I also dont agree that subsidies of the sort promised the Domain are the best way to get ped-friendly VMU development. If subsidies are to be given, I would prefer we give them to things that result in a borader benefit than just a single project.

broader

A comment on internal vs. external pedestrian friendliness:

A typical shopping trip includes multiple stores. In typical suburban retail development, you have to park once for every store. Thus, a trip to 3 stores means 4 car trips.

If an internally pedestrian-friendly development has those 3 stores in it, you can make two trips to do the same shopping, and you've reduced both your environmental impact and your impact on traffic.

(And yes, that also means that buying your groceries, your clothing, and your lawn chair at one Walmart Supercenter rather than driving to three strip mall stores is better for the environment, though it;s still much worse than walking to three neighborhood stores.)

There's also a less tangible benefit to places that are internally pedestrian-friendly, even if most of the users arrive by car: they change attitudes. If people enjoy walking from store to store, they'll be more interested in living someplace they can walk and more likely to tell their elected officials that, yes, Texans will walk.

Regarding the claim that "most of (RG4N's) supporters" want VMU: This is not true. Absolutely not true! And Hope surely knows it. We could dig up and quote from the various neighborhood meetings (not to mention RG4N talking points!) yet another time, but who needs another round of "feign ignorance and move on to a different false claim?"

Thanks, Christof, you explained it better than I did. That's exactly why the Domain (and even the Wal-Mart) is a step forward compared to the nightmare on Anderson Lane.

Hope, it's dishonest to keep trotting out that analogy - because RG4N didn't just say "don't redevelop the mall"; they said "we have a better way to redevelop the mall" and expected the public and the city council to take that at face value (since "leave the mall an empty decaying husk" wouldn't win many converts, obviously).

This wasn't an aside - it was a core message; and the only way you could get any traction with the PR battle, since nobody in the city would listen to the "keep the husk!" argument.

I do not know the details of the Domain deal, but I seriously doubt that the development would not have happened without the subsidies. A subsidy for Samsung's chip plant, I understand. But when you are talking about a retail project, I just don't see how a subsidy makes any difference in the decision to build - either the local consumer demand is there or it is not. I agree with Hope - there are better, more cost efficient ways to achieve the same density goals. City Council apparently also agreed, since they will no longer subsidize these types of projects.

On a semi-related note, check out who is receiving the Governor's Enterprise Fund Grants - WalMart and other mega-retailers have received a bunch! I do not see the logic of giving WalMart $500,000 to build a supercenter in Leander - that is their business model, that is what they do - with or without subsidies.

PS Look at the Arboretum - very similar to the Domain, but built without subsidies. This whole tax incentive thing has gotten WAY out of hand. They are justified when attracting manufacturing or similar facilities that have a national or international customer base and can choose from doxens of locations (Samsung and Toyota plants), but they are completely unjustified when the customers are primarily local.

Several wrong assumptions there.

1. Domain is a brownfield site; Arboretum wasn't. Much riskier; much more expensive.

2. Arboretum stores are mid-range national chains. The stuff in the Domain is mostly stuff Austin never had before, and that you don't see in the malls here.

3. The subsidy is what got the Domain built - without it, those retailers would have not come to town, or would have gone to the two sites also trying to attract higher-end-retail (supposedly La Frontera and the Hill Country Galleria were pushing for them). If that had happened, we'd suffer most of the cost (as the largest donator to highways in the area) but get none of the revenue.

Domain was a brownfield, but as far as I know it did not require much remediation or have the hazards typically associated with those sites. I have no problem with the government subsidizing the extra costs associated with building on a brownfield. And I just don't buy that all the high end retailers at the Domain wouldn't have come to Austin otherwise, or that coming to Austin would even have been considered risky for them - look at Anthropologie at 6th and Lamar and Diesel which was formerly on the Drag, now at the Domain).

If the subsidy was the difference between the Domain locating within the city limits or outside the city limits, then I can understand the city trying to draw them in and get those sales tax revenues. But a possible $57 million just seems too high. I would rather spend that money on other city needs.

And Happy New Year, Mike! I hope your 2008 is as full of bile as 2007! Keep up the good work.

Trotting out what analogy?

How do the sales tax revenue projections look after you remove the subsidy amount?

EL, IBM paid for a lot of that remediation, but the new developer had to deal with the risk and uncertainty (which is why this hardly ever gets done without subsidy). And there was a lot of remediation needed (I worked at IBM until 1996; there was a lot of manufacturing on that side of the street and a lot of chemicals in the ponds).

Hope, I shouldn't have used the word "analogy". "excuse", rather. The "well, not all of us believed in VMU but we made common cause" argument doesn't hold any water with me because the VMU proposal you made was the core of your attempt at legitimacy (without it, again, it'd just be "keep the husk!").

Being pedestrian-friendly isn't a sufficient justification for subsidies. Barton Square Mall is pedestrian-friendly too. I wouldn't support subsidies for that or for VMU projects in the inner city (except possibly for the sidewalks, which are a public good).

That it's brownfield isn't a good enough reason, either. There are a gazillion different things that can make property expensive and risky to redevelop. The city can't step in every time someone says "My property is too risky to redevelop without a subsidy."

Yes, the subsidy may have been necessary to attract this high-end retail to Austin. But was it worth it? I don't know that it was. It's not as simple as, "No subsidy, no Domain." You've got to figure in the lost opportunity cost. The Domain might have set up somewhere else, but then the door would have been open to other retail projects (or other commercial projects) in this area. The deal with the Domain has essentially shut them out.

We'll have to agree to disagree on the retail issue - I found the argument very compelling that those retailers had never come here before, and were not interested in coming here for anything but a very special project. (No, Anthropologie and Diesel aren't the same class of outfit).

To me, it's all dollars and cents: did we make enough in additional sales taxes to pay for the subsidies? Remember in this case that the subsidies are just a percentage rebate, so there's zero chance of paying more than we actually get (especially considering that no additional investment in road infrastructure was required - unlike as with most suburban greenfield projects).

As for "the city can't step in every time somebody says ", again, in this case, the argument was compelling enough to me. Not that it needs to be a general rule, but to me, you run the city's tax operations as a business - if a tax break here will result in more money coming in overall than no tax break, and if nobody else seems to want the site, I think seriously about doing it. The Domain will end up paying far more taxes per store than will those strip malls on Anderson Lane even with a very deep subsidy, so I don't buy the fairness whining (I think the strip-mallers ought to be paying a surcharge for being so pedestrian-hostile, after all, since that creates additional costs for the city).

Even assuming it generates more tax revenue than the city pays back in a subsidy, it seems to me the question is whether that's the best (even fairest) use of tax dollars, not whether it generates a profit (so to speak) for the city.

The tax part of the city should be operated as a business - that's how we get enough money to be able to SPEND money on the causes you and I view as "good". Attempts to be overly 'fair' may just result in nothing left to run the libraries and parks and homeless shelters.

The cost to build the Domain was $130 million. The developers own estimate of value at completion of the improvements was $158 million. That yields a $28 million profit before the incentive package. Did they need more incentive?

It wasn't a brownfield, but a high value tract at the demographic center of Austin. Let's not pretend this was some pitiful piece of land rescued by an incentive package.


Uh, wrong - it absolutely WAS a brownfield - it was the side of the IBM plant where all the manufacturing took place, and yes, there were chemical issues and the like that IBM had to remediate before offering the tract up, making it a far riskier proposition for the seller and the buyer than a greenfield sprawl site would have been.

You said, "what we have with the Domain is somebody who invested a lot of money taking a gamble that people would want to live in and shop at a big VMU project on a brownfield site. That gamble wouldn't have happened without the subsidies"

The investors you speak of didn't pay to remediate the site so they didn't need subsidies for that. There was no gamble that people wouldn't come to a brownfield site. You are making stuff up. Read the developer's testimony before council in May 2003 by going to the council archives.

Did they need the subsidies with $28 million profit already slated?

One more thing. You said, "Whenever I hear this guy talk about how bad the Domain is..." I never said a word about "how bad the Domain is". I don't give a damn if they build 10 Domains that reach to the moon. Just don't use taxpayer money.

Brian, I'll state again: the site was a brownfield. The fact that the previous owner paid for the remediation does not remove the risks (for instance, that they didn't do a good job; leaving the current landowner liable to their tenants and/or customers).

I'm also curious why you're focusing so hard on that comment, when the thrust of my post was more about the pedestrian UNfriendliness of the strip malls full of local Austin businesses. Even if I were to take your position as correct regarding brownfield, and let me be perfectly clear that I do NOT, I'd STILL want to subsidize the Domain because it, unlike the other retail centers in Austin, is urban - generating positive externalities rather than the negative, pedestrian-hostile, ones of the existing strip malls.

Your blog is a running commentary of misinformation on the Domain – only partly on transportation. You have painted the picture of a large contaminated site whose risks survived any remediation and drove up the developer’s risk and costs which merited the subsidy. Simply not true on any account - not in the developers words or any city official.

You state, “The subsidy is what got the Domain built”. Unless you are clairvoyant, you have no way of knowing. The deal was $28 million in the black before the subsidies, and the $45 NNN percentage rents they are charging would lead one to believe that Simon is making money right now, if you can do the math.

Lastly, retail is a function of disposable income and demand. There is no way in hell those luxury chains would have located in Round Rock or the City of Bee Cave.

You should stick to transportation issues if that’s your bag, although I fail to see how a suburban Stepford village located on the side of a freeway and cut-off from neighborhoods justifies your hearty approval of $65 million in subsides.

That's a real laugh. Brian, in case you missed it the first time: I WORKED AT IBM (across the street); I know they had to do substantial remediation because it was a topic of conversation at my workplace at the time. The fact that a remediated brownfield site is more risky than a greenfield site is obvious - you're trying to parse words and win with a gotcha here rather than being honest.

As for where the luxury chains would have located - neither you or I know for sure; so we need to take the word of people who say that the Domain was competing against La Frontera and the HCG.

Now, since you've poisoned the tone, how about telling us how wonderful _your_ strip malls are? Care to tell me which ones they are, so I can see how they do or don't meet the city's goals for urbanism and density?

Sorry if I came across too harsh. From a developers point of view, a remediated site is no more risky than a greenfield. Stop by my center at 2310 S. Lamar and have a coffee at Irie Bean, a taco at La Casita, and sit in the back garden and chat with the neighbors.

That guy opened a can of whoopass on you.

Huh? I've let it drop because we're clearly never going to see eye-to-eye on this one - I haven't yieled the point at all.

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