Industrial lofts win first victory at Council

Upending traditional NIMBY roles, a proposed loft project in South Austin pitted heavy industries against a residential project, and presented an interesting conundrum for City Council members.

In the end, Council voted to approve the zoning change on first reading on a 4-2 vote, with Council Members Kathie Tovo and Laura Morrison in opposition and Mayor Lee Leffingwell absent.

Developer GFD Holdings hopes to build a project, called St. Elmo Market and Lofts, on about 9.5 acres at Industrial Boulevard and South Congress. The proposed project consists of a 43,000 square foot shopping center, 400 apartments, a boutique hotel and a music venue — possibly a relocated Saxon Pub — on the land. In order to complete the project, the developer was asking for a change from industrial to mixed-use zoning.

Staff did not support the zoning change, because it would put residential units right next to heavy industrial uses. Additionally, the rezoning is not supported by the neighborhood plan, which calls for preservation of the industrial district.

Saying that it was a case that “may well dictate the future of this area” and determine whether it would remain industrial, Morrison spoke passionately about maintaining the character of that area.

“We have an increasing income equity gap in this city, and if we drive workforce-level jobs and trade jobs out of this city, it’s going to become worse and worse,” Morrison said. “We are going to solve the problems of the haves and have-nots by just not having any have-nots. That’s not any way to solve the problem of an income equity gap.”

Council Member Mike Martinez was a bit more pragmatic. He said he was willing to vote in favor of the zoning on first reading, but from a policy perspective, thought there were “conversations to be had” about community benefits and affordable housing. A representative from the neighborhood planning contact team said the group would support the project on the condition that developers built “market-rate housing only” rather than affordable housing.

GFD’s Brandon Bolin explained his idea for the project and stressed the preservation of the 1945-era warehouse that is currently on the site.

“My vision for this is to turn it into a food hall, similar to what you would see in Europe,” said Bolin. “The Mercado San Miguel is a perfect example, or even locally here in the U.S., the Chelsea Market in New York or Faneuil Hall in Boston or Oxbow in Napa.”

Though the neighborhood planning contact team supported the zoning change, other nearby residents and workers didn’t want the area to be activated and worried about the potential impact of a residential project on what they described as a thriving industrial area.

Robert Palmerton, who owns businesses and land in the St. Elmo industrial area, was one of the people who spoke against the rezoning.

“This area does not need to be fixed. This area is a healthy industrial neighborhood that offers hundreds and hundreds of highly skilled and well-paying jobs,” said Palmerton. “Four to five years from now, when there is a new City Council in place and a new mayor, people will forget who came first … This is where we start getting pushed out.”

The Planning and Development Review Department’s Jerry Rusthoven explained the reasoning behind staff’s opinion.

“This development is located pretty much in the center of the St. Elmo industrial district,” said Rusthoven. “Staff believes it is a basic tenet of city planning that industrial uses and residential uses are not compatible. We feel it is inappropriate to put a large-scale residential project in the center of an existing industrial district, which has been there for quite some time.”

“If this were anywhere else, staff probably wouldn’t be opposing it,” said Rusthoven.

Attorney Jeff Howard of McLean Howard disagreed with the idea that the lot was “in the middle” of an industrial area and preferred to identify it by its proximity to South Congress Avenue, which he noted was just 350 feet away from the project.

“It’s in need of transformation,” said Howard. “It is not our vision right now … This project will activate Congress Avenue.”

Council will debate whether the area is in need of transformation at its next meeting.