East Austin zoning mess fix moves forward, for now

A fix for a mistake made two years ago is headed to City Council, and nine east side properties once owned by the city hang in the balance, as does a deal struck for affordable housing as a condition of the 2014 sale of those properties.

City of Austin Planning and Zoning Department Manager Jerry Rusthoven explained that in February 2014, Council approved the sale of the properties to Butler Equity Holdings Ltd. through a Request for Proposal process. As a condition of the sale, a deed restriction requiring affordable housing was placed on the properties. Developers promised to build a vertical mixed-use project coming out of that process, but they do not have VMU zoning.

Rusthoven said that, at the time, staff was asked whether the project complied with city code.

“The erroneous answer was yes,” he said.

Now, the Butler family wants to move forward with the project but cannot, because they cannot build the number of units they had planned under the current zoning. Because of that, staff initiated a rezoning of the properties, which are located at 1120, 1322, 1324, 1326, 1328, 1330, 1332, 1334 and 1336 East 12th St.

Though staff is not recommending VMU zoning for the properties because that is recommended through a more intensive process, they are recommending that the city use the existing NCCD tool to modify the base zoning, which would allow the project to move forward as planned with 84 units.

Planning Commissioners voted 10-2 to initiate the rezoning, with a strong recommendation that the developers meet with neighbors and staff in the next two weeks. Commissioners Karen McGraw and Angela Pineyro De Hoyos voted in opposition, with both indicating they would prefer a one-month postponement to ensure those conversations took place.

As for how the mistake could have been made in the first place, Rusthoven explained that the RFP in this case went through the Office of Real Estate Services and that sometimes that department consults with the Planning and Zoning Department, but other times it works with a private consultant instead.

Drenner Group’s Amanda Swor, who was representing the Butler family, said that when the project moved forward in 2014, it did so with neighborhood support.

However, this rezoning does face opposition. Kristine Garaña, with the Swede Hill Neighborhood Association, said the group’s support at the time was “tentative” and though residents are now willing to work with the developers toward a fix, she believed that city staff initiating the rezoning “set a bias.” Rusthoven explained that staff had taken that step so the Butler family would not have to pay additional fees for a mistake by the city.

Commissioner Trinity White said that she felt the decision about whether the zoning should happen was “irrelevant” to the question at hand, given that a public conversation would happen during the public process that accompanied the actual rezoning decision. She pointed out that more people would receive notice that the conversation would be taking place, and it would necessarily involve a greater number of stakeholders as a result.

As for the possibility of bias, Commissioner Fayez Kazi assured those present that the commission had heard those concerns and would keep them in mind as the case moved through the process and returned to commissioners later for a recommendation.

Commissioner Tom Nuckols agreed.

“If there is an indication that the developer has not tried to work through things with the neighborhood, that will definitely influence my view,” said Nuckols.