Reflections on 2012 Bond Election Part II — Waller Creek Project

In a previous note, I discussed how the City redirected public
authorization for the construction of Town Lake Park.  With the
Waller Creek Project again on the bond ballot, we should reflect
on its history, too.

Support for the Waller Creek Tunnel Project was first solicited from
parks advocates with a vision of how it would revitalize the park
corridor along the creek.  Recreational improvements were packaged
with the civil engineering work to gain public support early in the
game.  Yet when the package was refined in 1998 for presentation to
voters as a $25 million project, all recreational amenities were
removed from the deal.
 
We now know that $25 million commitment was just to get voters’
buy-in, so officials could then stretch every financial limit to
upsize the project.  The actual cost of the tunnel construction alone
has ballooned to $147 million, an overrun comparable in Austin history
only to the South Texas Nuclear Project.  (In defense, Mayor
Leffingwell shrugs this off to inflation, but CPI inflation applied to
$25M in 1998 amounts to only $35.334M today.)

The City’s tax increment financing district has proven to be
hopelessly inadequate to finance the project.  Travis County is now
footing part of the bill.  To a greater extent, the cost has been
foisted onto all Austin taxpayers through a drainage fee surcharge, to
the tune of an additional $55 million.
(http://www.statesman.com/news/news/local/seeking-funding-for-waller-creek-tunnel-city-tur-1/nRXgw/)
This added tax alone is more than twice what the voters originally
authorized.  And surface amenities along the greenbelt are still not
included.
 
The upcoming bond authorization is for $13 million of surface improvements,
but that is only the beginning.  Staff is promising another $17 million
can be provided from existing and future resources (at what cost to
other needed programs?).  
http://www.statesman.com/news/news/local/with-tunnel-under-way-talk-turns-to-expensive-wall/nRNcx/

Those two chunks, as large as they are, will only fund half of the
anticipated total for landscaping.  The surface amenities alone are
projected to cost $60 million.  Recently submitted design concepts
solicited at a cost of $800,000 (half funded by the City) look as if
build-out could easily exceed that cost.

And for what?  The net effect of the project is to convert substandard
private property, acquired by developers at a depressed price because
of flood plain issues, into a gloriously appointed setting for their
high-dollar developments.  The public rehabilitates their land,
provides an ultra-chic setting, and then receives what benefit?
Not the benefit of the developments’ higher property taxes — those are
constrained to fund a modest portion of the City’s cost to enable
their existence.

The public increment financing approach does not even generate
economic development in the City.  PID financing never does.  These
offices, condos, hotels, and clubs, if they are ever built, do not
magically create new demand.  They only fill a demand that would have
been filled elsewhere in the City if the improvement district did not
exist.  The difference is that if the development had occurred
elsewhere, the City would reap the taxes that would benefit the
whole community rather than using all those revenues, and much
more, to to enable the PID developments.

The public made the overwhelming majority investment in all the Waller
Creek property, but the profits will go to City Hall insiders.  The
Waller project is giving developers Perry Lorenz and Robert Knight,
among others, an outlandish rate of return for their years of
political donations, cultivating and culminating in a City Council and
staff amenable to their land enhancement/development plans.  Let’s not
forget how they tried to sell a portion of their property to the the
Convention Center Department for five times its appraised value.
http://www.statesman.com/news/news/local/downtown-land-deal-scrapped-after-council-members-/nRs6R/
(Funny how that Convention Center Department keeps popping into these
deals.)

Surely we cannot leave the Waller landscape as a construction ruin.
Let the developers who are benefitting from $147 million of taxpayer
largesse pay for the landscaping their half-finished project left behind.

In the project’s scale and opulence, we have another instance City’s
Taj Mahal mentality whenever downtown is part of the discussion.
Consider the $120M library, the Great Streets Plan, the gilding of
Sixth Street, the Sabine Street promenade, the Second Street district,
etc., all to be funded from the public trough.  All this while library
hours and swimming pool hours are remain cut across the city.  The
Parks Department is begging for support for its deteriorating,
underfunded parks by offering naming rights to donors for underwriting
basic park maintenance.  Property tax bills are so onerous in the
Central City that residents are forced to rent out their own
residences to partying, transient visitors.  (But finish Town Lake
Park at Auditorium Shores/Butler, even though voters have already paid
the $20 million to do it?  No way!  Not if it means stepping on the
City Manager’s toes.)

In looking at the larger context of the bond ballot, why does the City
claim that the bond proposal will not result in any increase in
property taxes?  What is the baseline?  The City does not say that
taxes would be reduced if, for once, we paid off our outstanding debts
without incurring new ones.  Why does the City not explain what the
tax load would be with versus without the new bond program?

And are property taxes the only impact?  Will we be subjected again
to additional fees as a result of overruns in the planned projects,
as we have been with the Waller Creek Tunnel?  If that project is any
indication, the bond authorization is only the down payment.  The
Waller Creek landscaping points clearly to more of the same.

The City’s treatment of the Town Lake Park Community Events Center
Venue Project and the Waller Creek Tunnel project are not the kind
of standard bureaucratic mishaps that occur around the fringes of
expensive public works projects.  They are collossal fiscal abuses of
voter bond approvals consciously and covertly manipulated to exploit tax
resources for political and personal monetary gain.

So should the City be trusted with another round of bond funding?
Should we risk rewarding the public’s good faith with another round
of fiscal misdirection and redirection?