City doles out millions to developers


by TERRI GRUCA / KVUE News and photojournalist ROBERT MCMURREY and TONY PLOHETSKI / Austin American-Statesman

Bio | Email | Follow: @tplohetski

Posted on June 11, 2012 at 10:00 PM

Updated Wednesday, Jun 13 at 9:55 AM

AUSTIN -- The City of Austin has offered corporations incentives to bring jobs to our area. Earlier this spring, Austin City Council approved $8.6 million dollars in incentives to help Apple double its Austin offices. But the city also makes deals with developers. One particular contract now has the city looking at whether you’re getting your money's worth. KVUE worked with the Austin American Statesman on this joint investigation.

Developer Deals

Formula 1 is one of 70 developments to ink deals with the city during the last decade.

The City sees these deals as a way to encourage growth and generate tax revenue. In return, those developers build things like water and sewer pipes.

For example, the City paid nearly $14 million to F1 contractors for water and sewer lines.

The City also paid nearly $6.5 million for work at property along Highways 290 and 130 in Northeast Austin.

The promise -- a model community called Wild Horse Ranch with thousands of homes, restaurants, shops, even an elementary school. Yet 12 years later, there's nothing there.

"The City shouldn't be making these kinds of deals," said Bill Aleshire, an Austin attorney and government watchdog. Aleshire has lobbied against these kinds of projects.

“Growth really ought to pay for itself, and in the case of Wild Horse, it isn't going to pay for itself,” said Aleshire.

Greg Meszaros is the Director of Austin Water Utility. “We often take a regional view of infrastructure, so we can serve not only that development but the area around that,” he said.

Meszaros said the City agreed to help develop Wild Horse Ranch in 1999. The benefit was the City could tap into those water lines to help existing development and collect additional tax revenue generated by the homes and businesses built on the 1,900 acres.

The problem is the property has been bought and sold a few times. That, along with the economic downturn, pretty much stalled construction, but the City said it hasn't completely lost out.

“You have to complete the project or a portion of the project before we reimburse for that work,” said Meszaros.

The City did get 24,000 feet of water and waste water pipes in the ground., but right now those pipes, which Austin taxpayers are paying for, only connect to a portion of the city of Manor.

“It's a bridge to nowhere; it's a pipeline to nowhere,” argued Aleshire.

City crews are currently working to connect solar panel maker Applied Materials to those lines, and by the end of the year thousands of people living in the Harris Branch community will also be hooked into that new system.

KVUE and the Statesman asked Meszaros if taxpayers got their money's worth. He said, “Yes.”

Aleshire disagreed. "The public did not get its fair return on the investment the City made," he said.

The City argues this is how development sometimes works. You build it; they will come. But should it take more than 12 years?

“When you're in a large real estate market like Austin, and it’s one of the more attractive areas to invest in the nation, you get projects that sometimes start and stop or are delayed and come back later,” said Meszaros. “The sense that Austin customers on the water and waste water side have been caught holding the bag on this, I just fundamentally disagree with that.” 

“It's an example of not only wasting tax payer dollars but opportunity. There's some other project that could have been done that would have been helpful,” said Aleshire.

Pete Dwyer is currently overseeing the Wild Horse Ranch project.

“We’re hoping to start work on extending Parmer Lane this fall and then have houses ready to move into by summer 2013,” said Dwyer.

Since 1990, the City of Austin has spent $200 million on these kinds of deals with developers. It’s helped speed up dozens of projects but left some to question the pace at which these deals are made.

Austin city leaders have already begun responding to KVUE and the Stateman's report. Monday, Mayor Lee Leffingwell and several city council members said they want to study whether taxpayers have gotten their money's worth from these reimbursements.

You can read more about this story in the Austin American Statesman.

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