TEX MESS
Northcott, Kaye
TEX MESS Austin finds its city limits BY KAYE NORTHCOTT The sad thing is that so many Aus-tinites detested boom towns. We were attracted to this city because it didn't exhibit the raw ambition of...
...The Texas bank-holding companies and their Austin affiliates were among the most enthusiastic lenders...
...Some of the projects now on the ground will be of lasting benefit to Austin...
...The city strictly regulates zoning, subdivisions, flood plains, landscaping, views of the State Capitol, sensitive watersheds, large trees, and building heights, all in an attempt to preserve the Austin "quality of life...
...Shipman gave the standard and devoutly held creed of Austin's controlled-growth faction...
...They wanted to explain to her their objections to a tough new watershed ordinance designed to protect the city's 162 miles of creeks from erosion and pollution...
...Problem is, they caught on to a good thing about a decade too late...
...What with the plunge in oil prices and the bust of the real-estate boom, they may never be able to pay off the pledge...
...I believe that clean water is critical to the quality of life in Austin," she told the glowering bankers...
...In a just world, the newest ventures, the ones that overloaded the system, would be the ones to go under...
...We think this ordinance is very, very financially dangerous...
...But even the skeptics sometimes deferred to the investors: Surely the people with the money had market research, expert opinions, something to justify their plunge into what appeared to be a saturated market...
...In early 1986, Federal and state regulators descended on Austin banks and began devaluing real-estate portfolios and requiring increased collateral for questionable loans...
...If you don't have clean water, you won't have a good quality of life...
...As of 1987, the developer has found financing to complete only one building, and it is not fully occupied...
...The most popular skit at the 1983 Gridiron Show put on by the city's press corps was "Bobby Ray, Superstar," a takeoff on the Broadway tribute to Jesus Christ...
...Vasquez's Tamale House was torn down to make room for one of a dozen new office towers rising to overpower the traditional Austin landmarks—the pink granite Capitol, the phallic University of Texas Tower...
...As if on cue, entered Bobby Ray In-man...
...We are watching the demise of established bookstores, restaurants, bars, hotels, all victims of the boom/ bust cycle...
...We had what Albert Camus described as the "spiritual snobbery that makes people think they can be happy without money...
...In some ways, Austin sold its soul and got nothing in exchange...
...After two years of off-the-charts growth, Austin took a nose dive in 1985 and 1986...
...He owned a 7,000-square-foot lot at the intersection of Congress Avenue (Austin's north-south "main street") and West First Street...
...Looking for a scapegoat, the bankers blame Austin's sagging economy on the city's land-use regulations...
...High-tech companies, in a serious slump, were no longer shopping for new locations...
...Since the major employers are state government and the University of Texas, many Austinites have never had to worry about a steady paycheck...
...If something looks too good to be true, it is probably false...
...Others are simply money down a rat hole...
...Austin's lesson is this: Act on your own vision...
...The Armadillo, unable to afford a new concert space, simply ceased to exist...
...Austin's new rich also found uses for Austin's still-considerable hippie subculture, many of whom had settled into careers as master carpenters or massage therapists...
...The white liberal middle class of Austin began debating the merits of growth in the early 1970s...
...Willie Nelson's band...
...MCC's choice of Austin was heralded in newspapers throughout the nation...
...The boom of 1983-1985 distorted the Austin economy instead of improving it...
...They wore pressed jeans, tweed sports jackets, and cowboy boots...
...Unemployment rarely rose above 4 per cent, while the population grew by an average of 3 per cent a year...
...Austin's hyper-growth ended as dramatically as it began...
...The price of raw land doubled, tripled, quadrupled, quintupled, soared higher and higher, and spawned a subculture of overnight millionaires...
...Who was supposed to buy them...
...A state district judge ordered a moratorium on new sewer taps in southwest Austin because the overloaded waste-water system was pouring millions of gallons of inadequately treated sewage into Barton Creek and the Colorado River...
...Meanwhile, Austin is left with unwanted and unneeded apartments, shopping centers, condominiums, and office buildings where once there was natural beauty...
...Property taxes and leases are so high inside the city that seat-of-the-pants ventures simply cannot make ends meet...
...Usually they win...
...In 1984, he sold it for $1.6 million...
...But the song concluded, "Time will tell what the price will be...
...Indeed, the institutions are so tapped out that the Texas Legislature last year repealed a century-old prohibition of interstate bank mergers in hopes that bank sales will attract new capital...
...A couple of years ago, the Austin Chamber of Commerce decided to promote Austin music as part of the city's "amenity package...
...Property values are going down, not up...
...By one measure, this city of 400,000 has the highest per-capita bonded indebtedness in the country...
...In 1984, the number was 13,500...
...Interiors were done in gray, mauve, and mint green...
...Unfortunately, some who were excessively generous four years ago are now reluctant to lend money for Austin projects, period...
...Many Austin business leaders are still trying to blame the recession on land-use regulations...
...their construction projects as long as someone was willing to finance them...
...Between 1982 and 1986, the amount of office space in Austin doubled...
...Now a postboom depression has set in...
...If there is anything for other progressive cities to learn from Austin's experience, it is to look every gift horse in the mouth...
...And the complex and sometimes conflicting ordinances have added to the costs of development projects in Austin...
...But Austin, like so many other American cities in the 1980s, was devastated by a real-estate boom...
...Their "Estates Above Lost Creek" subdivision was the location of the 1984 Parade of Homes...
...The city's land-use ordinances need fine-tuning, not repeal...
...Real-estate values imploded...
...The houses, costing between $400,000 and $ 1 million, were immense...
...The culprit: overdevelopment in the upper watershed, according to city water engineers...
...Up sprang stair-stepped granite hulks, reflective glass buildings in all the colors of the rainbow, and off-angle multi-use hotel-retail-office centers with names that all sounded the same...
...Suffice it to say that no other city or state could top this bid...
...In many cases, investors could shelter two dollars for every dollar invested in apartment projects...
...Alumnus of the University of Texas, retired Navy admiral, former deputy director of the Central Intelligence Agency, Inman was chairman of the newly created Microelectronics and Computer Technology Corporation (MCC), a consortium of major high-technology companies whose goal was to beat the Japanese to the next generation of "thinking" machines...
...UT agreed to build a laboratory for MCC on school land...
...The developers who had already overbuilt Houston and Dallas were doing the same to Austin...
...Before the boom, Austin had the lowest cost of living of any major city in the United States...
...Junior Leaguers would pull their Jaguar sedans up to the delivery door and haul in armloads of slightly worn Adolfos and Albert Nipons...
...Inadequate water lines prompted strict water rationing...
...Did it bankrupt anybody...
...There's one less view of the Capitol and one more Marriott Hotel in town...
...Thanks to successive real-estate booms in Houston, Dallas, and finally Austin, nonperforming real-estate and development loans are now more of a problem in Texas than are nonperforming energy loans...
...They loomed ostentatiously over the undulating limestone hillscape like mutated tract homes...
...We were attracted to this city because it didn't exhibit the raw ambition of Houston or the smug success of Dallas...
...Many local institutions invested 50 to 75 per cent of their portfolios in land and construction...
...No building was complete without an atrium...
...Allied with the neighborhoods are the environmentalists who, every few years, orKaye Northcott is a free-lance writer in Austin...
...Many of the complexes built here and elsewhere in the 1980s owe their existence not to housing demand but to the tax writeoffs available to investors in real-estate syndicates...
...In 1982, John Naisbitt pronounced Austin one of ten "megatrend cities" of the 1980s, cities of great opportunity that would lead the nation toward a new hightech economy...
...The clothing in the Junior League Thrift Shop took a dramatic turn toward designer labels...
...Very quickly, projects can become slums...
...If they say the sky is yellow and you can see for yourself that it is blue, trust what you see...
...There were twice as many bankruptcies in 1986 as in 1984...
...Now that Congress has revamped the tax laws, apartments are no longer desirable tax shelters...
...They speak darkly of "total economic disorientation" and "job erosion...
...A dump on Barton Springs, a co-ed in jeans...
...Austin has everything the technology industry wanted—natural beauty, character, a major university, and an educated work force...
...Meanwhile, the cost of living has increased tremendously...
...Austin sold its soul and got nothing in exchange...
...That year, 1983, Austin experienced a cataclysmic growth rate of 9.6 per cent...
...Austin is now redlined in the capital markets of this nation...
...The consortium has lost some of its original corporate backers, and the business people who promised to raise $24 million to fund new research positions at the University of Texas have not come close to reaching their goal...
...The recently deregulated savings and loans were especially vulnerable to misplaced optimism...
...Reverent disciples carried the Bobby Ray character on their shoulders, singing: "Should we give him land...
...Wags began calling the development "The Mistakes Above Lost Creek...
...If occupancy rates remain low, maintenance budgets are also reduced...
...While many progressives fear the mergers will result in lending policies that are not responsive to local needs, others point out that non-native bankers can hardly do worse than the locals have in recent years...
...While the natives griped about traffic jams and the increasing cost of housing, the nation's banks, insurance companies, and retirement trusts continued to finance new construction...
...Fifty-seven cities in twenty-seven states vied for MCC, and Austin won...
...Take, for example, Austin's 19,000 unoccupied apartment units...
...Moses Vasquez was one of the city's most popular success stories...
...Proclaimed Town and Country in 1984: Texas' Quirky Capital Comes of Age...
...Take the highly touted music scene, which has been showcased on the Public Broadcasting System program Austin City Limits since the mid-1970s...
...Bankers have learned that land flips do not make a sound economy...
...He had purchased his sliver of downtown in 1969 for $80,000...
...The consensus is that Austin is losing its special qualities...
...Money was not the way we kept score in Austin...
...It added one more hoop through which a developer must jump before the city will issue a building permit in any one of the city's various watersheds...
...Having paid entirely too much for raw land in Austin, the developers had no choice but to proceed with As some developers searched out prime tracts of raw land for condos and strip malls, others transmogrified the downtown lakefront...
...Austin old-timers wondered...
...The Austin scene of the 1970s—a raucous array of nightclubs, bars, and honky-tonks by the dozen, where live music could be found seven nights a week—was dying...
...A multi-decked headline in The Wall Street Journal went into greater detail: Growing Pains/Austin, Texas, Keeps/Courting High Tech,/Irking Some Residents/ They Fear City's Expansion/Will Alter Its Character,/Making It Like Houston/Strong Economy Is Forecast...
...This was obviously overkill, but the upbeat publicity on the Austin phenomenon did not abate...
...But too many didn't...
...Quality of life is what attracted industry to Austin...
...Many local political activists were alarmed by the seemingly senseless pace of development...
...Austin has nurtured a healthy contingent of skeptics over the years...
...Do not defer to the so-called experts—the marketing consultants, the flood-plain engineers, the traffic consultants, the out-of-state bankers, the regional shopping-mall builders, or, for that matter, your own city council or planning department...
...Naisbitt didn't create the Austin boom, but he realized that Austin was no longer a secret kept by Texans...
...ganize opposition to a public-works project, usually the extension of sewer lines that penetrate the Edwards Aquifer and the ecologically fragile hills and lakes west of town...
...Developers flocked to Austin...
...But such is not the case...
...Hand-lettered For Sale signs appeared in the back windows of Jaguars...
...This one has learned the hard way that real-estate speculation is not necessarily healthy...
...Perhaps because of its intellectual bent, a significant percentage of the Austin electorate never bought into the belief that a fast buck equals progress...
...The boom was not without its trickle-down effect...
...Relatively untouched by the drop in oil prices, Austin banks and thrift institutions had plenty of money to squander on real estate...
...Actually, the regulations helped to brake the overdevelopment...
...Bankrupt developers who still had a sense of humor sported bumperstickers proclaiming, O Thank Heaven for Chapter Eleven...
...The clash of values was dramatically evident one day last year when I accompanied City Council member Sally Ship-man, a professionally trained city planner, to a meeting with some of the city's leading bankers...
...Two thousand new apartment units were built in 1983...
...Plans for nineteen new hotels and expansions were announced in 1984 and 1985...
...I hate to think how many empty buildings there would be if the city had promiscuously embraced every developer who wanted to build a suburban high-rise or run a sewer line down the middle of a creekbed...
...And the projects are not located in the areas with the greatest need for affordable housing, nor can they accommodate large families...
...The beginning of the end came in 1980, the year Armadillo World Headquarters, Austin's best-known music club, was bulldozed to make room for a three-building project that was to include offices, parking, and a hotel...
...While prices may fall somewhat during the current recession, it is doubtful that Austin ever will return to its earlier, affordable lifestyle...
...in 1985, 9,500...
...By 1987, the city had 19,000 unoccupied apartment units...
...But the building continued long after the boom fizzled...
...They were investing millions on the basis of overblown headlines about Austin...
...Austin is victim to increasingly dangerous flash flooding...
...According to early 1986 figures, high-technology manufacturing accounted for between 6 and 8 per cent of Austin's employment...
...Now it is overbuilt, overpriced, and deeply in debt...
...The cash flow from a partially occupied building was better than no cash flow at all...
...Soon enough it was clear that nobody was going to buy them...
...Austin was high technology's new "Silicon Gulch" and Bobby Ray Inman was Austin's economic messiah...
...The Austin ecology is too fragile to be left to the mercy of unregulated growth, the results of which can be suicidal...
...As soon as the benefits to one set ot buyers were exhausted, the complex would be sold to other investors, who could start the process all over again...
...Since the mid-1970s, builders and developers have complained about excessive regulation by the Austin City Council, but they have been in the minority...
...But the good life is elusive...
...Bobby Ray Inman, the man who embodied Austin's dream of a new economy, resigned from MCC after only three years at the helm...
...Austin was hot...
...Hotel industry analysts were predicting a 35 per cent rise in rooms from 1986 to 1987...
...A bank executive who had been drumming his fingers on a broad expanse of polished wood leaned forward with grim intensity and told Shipman, "The people in this room represent the financial assets of this town...
...Sewage on wheels," a local magazine called it...
...Not to be daunted, home builders leased oil-tank trucks to ferry the sewage from one overloaded treatment plant to a less-burdened plant in another quadrant of the city...
...I take that back...
...And the press corps sang, "MCC, MCC—Your microchips will set us free...
...The people with the money rarely know more about a city's needs than does the average citizen...
...We cannot afford this ordinance, and I mean this sincerely...
...Thirteen people drowned in a single night when Shoal Creek flooded in 1981...
...Apartment rents may also plummet, but few have been built to satisfy the housing needs of the poor or lower middle class...
...There were other inducements too numerous to list...
...Former Texas Governor John Con-nally and former Lieutenant Governor Ben Barnes, who had gone into business together, embodied all that was wrong with the Austin boom...
...Probably not—with the possible exception of landowners wanting to build entirely within the 100-year flood plain...
...A recent poll revealed that no matter when people put down roots in Austin, they tend to consider the city to have been at its prime the year of their arrival...
...Rental income must now cover interest payments and maintenance expenses...
...Austin bankers are now in a state of subdued panic...
...The ordinance passed...
...No city is immune to the boom/bust cycle of real-estate development...
...The violet sunsets, the limestone creekbeds, the summer scent of cedar, the music, the beer gardens, the mellow ambience—whatever people like about Austin seems to produce instant nostalgia...
...We liked Austin's affordability, its un-pretentiousness...
...The Texas business community (working more closely with the Governor's office and the University of Texas than with the Austin City PHOTOGRAPHS BY ALAN POGUE Council) pledged to raise $23.5 million to support computer research and thirty new professorships in high-tech disciplines...
...They could be seen cruising the city's outskirts in their Jeep Cherokees or rented helicopters, looking for prime undeveloped tracts...
...Out of this debate emerged two factions: the neighborhoods—almost 200 neighborhood associations are registered with the city—and the developers...
...And, national publicity to the contrary, Austin had not yet become a significant high-technology center...
...We had pretensions, but they played against the Texas grain...
Vol. 51 • April 1987 • No. 4
