Alamo Drafthouse owners bought an old school and promised affordable housing. Years later, there is none.

For a moment, the possibilities for a former school building in one of Austin’s most coveted neighborhoods seemed endless.

A contemporary arts center with space for restaurants. What about a community theater? The 4-acre spot in Hyde Park, several groups suggested, could be used to build homes public school teachers could afford.

Even in 2017, the Austin Independent School District knew it couldn’t pass on an offer to help house teachers in a city where homes regularly sold for more than $400,000. (Five years later, they sell for much more.) After receiving nearly a dozen bids to buy the old Baker School in Hyde Park, AISD sold the property to the owners of the Alamo Drafthouse, who said they would restore the old building and build a block of affordable homes.

But years after the sale, there is no affordable housing on the Baker School plot – and no plans to build any. So, how did AISD sell a piece of public land on a promise that never materialized? One way to explain it involves the city of Austin, a movie theater company hamstrung by the pandemic and a school district left rethinking how it should manage valuable property.

A second life for an old school

The Baker School lived several lives by the time it got new owners.

Built in 1911, the three-story building was once an elementary school, a middle school and then a high school. AISD began using it as administrative offices in the 1990s. The building’s heyday is memorialized onscreen; the facade has been cast as a fictional school in both “Friday Night Lights” and the remake of “Walker, Texas Ranger.”

But if there was ever a question as to whether the Baker School would open its doors to students again, AISD answered it in 2016. As the district faced a narrowing budget, it considered how it might leverage one of its biggest assets: real estate. (The district is one of Austin’s largest landowners, with more than 2,000 acres to its name.)

Public school districts are allowed to sell properties they deem “surplus” – buildings and tracts of land that can no longer be used for educational purposes. So, the district put together a list of properties it planned to get rid of, including the former Baker School.

Would-be buyers and renters readied their pitches. But there was a catch: AISD asked that any development offer some benefit to the public school system, either by providing educational opportunities for kids, affordable housing for teachers or a significant source of revenue for the district.

“This is not some type of business venture,” Paul Cruz, then-superintendent of AISD, said at a school board meeting in March 2016. “This is really about different opportunities to support our kids and families throughout our communities.”

He cautioned that if the district didn’t receive any compelling offers, it was not obligated to do something with the properties.

“If we like what we see in one, some, all or none – we either take action or we don’t,” he said.

The district liked what it saw, at least in the case of the old Baker School. Eight entities bid for it, including the city of Austin and several real estate developers. They offered anywhere from $1 to $15 million and a number of visions: a community arts center, dozens of income-restricted homes, office space.

The founders of the Alamo Drafthouse were among the bidders. Tim and Karrie League agreed to pay $10.6 million for the school and proposed converting the building into the movie theater company’s new headquarters. The couple also planned to build up to 70 homes on the property, some of which would be set aside for public school teachers.

At a meeting in late 2017, school board members voted to sell the Baker School to the Leagues.

“We didn’t expect to get it,” Karrie League told KUT last month. Two entities offered several million dollars more, one with plans to build affordable housing.

Others were also surprised – and upset. David Kahn, owner of ColinaWest Real Estate, sued AISD over the pending sale, alleging that by going with a “significantly lower bid” the district did not follow proper vetting processes; Kahn had bid $12 million. Eventually, he decided it wasn’t worth pursuing.

KUT asked AISD, five years later, to explain why it chose Alamo’s bid. A district spokesperson said since staff who evaluated the bids were no longer employed by the district she could not provide an answer.

KUT contacted one of these former staff members by email. Nicole Conley Johnson, AISD’s former chief financial officer, said she remembers only that staff thought the owners of the Alamo would be “more responsive to community concerns.”

League said she believes AISD chose their offer because they agreed to maintain the historic school. But according to the original bids, at least one other entity agreed to keep the building.

When KUT reached out to members who were on the school board at the time of the sale, several responded but only one was willing to talk.

“I can’t explain how that happened,” former Board Member Ted Gordon told KUT.

Wax figures and floodwaters

Alamo Drafthouse’s new headquarters in the former Baker School serves as part office, part storage space. While architecture firms, software companies and nonprofits work out of converted offices on the top floors, the basement’s inhabitants are decidedly less industrious: One former classroom stores at least a dozen Amish wax figures, mostly men in overalls seated at wooden desks as if awaiting an instructor.

“My husband is an impulsive collector. He acquired a wax museum from Pennsylvania,” League said. “He just liked it and he bought it with no thought as to what he was going to do with it. So, (the wax figures) just sort of hang around and creep people out.”

Down the hall from the classroom of wax figures is the cafetorium (cafeteria and auditorium) where instead of hungry kids, vintage movie posters fill the space. On the menu this day were vintage kung fu films; a framed poster for Bruce Lee’s 1974 movie “Super Dragon” had been propped against the wall along with a dozen others.

The props and posters distract, at first, from the building’s interior. The Leagues spent more than $4 million renovating, including rehabbing the original wood floors and student lockers. Despite it being a private building, its restoration has been touted as one of the ways in which the property benefits the public; it also includes office space for a nonprofit that teaches students guitar and serves as a polling station (which also happened under AISD’s ownership).

League said she and her husband had every intention of building affordable housing on the Baker School lot. But in 2018, the city of Austin approached them with what she called a surprise: We need to buy an acre of your land as part of a plan to mitigate flooding, it said.

That acre, which had been the school football field, was where the Leagues planned to put the agreed-upon housing.

“It was very puzzling to us that AISD and the city of Austin are so disconnected that they wouldn’t have just sliced (off the land) at the time (of the sale),” she said. A spokesperson for AISD said the district was not aware the city wanted the land while the district still owned it.

What’s also puzzling is that when the city bid to buy the Baker School it did not mention flooding. The city said it had envisioned building dozens of permanent affordable homes on the land; three years later, it said it needed the land to be used as a detention pond instead. Austin’s housing department, which wrote the bid, would not agree to an interview. Mike Kelly, assistant director of Austin’s Watershed Protection Department, chalked it up to a lack of communication among departments.

“(The flooding issue) was probably not known by the Austin Independent School District, nor was it known by Austin housing,” he said.

When asked if the city could build housing on top of the detention pond, Kelly said it wouldn’t be a good idea. One reason, he said, is that when the land floods, as it is designed to do, people living above it could find themselves stranded on a veritable island. Rather than fight the city, League said, they agreed to sell.

“We did not enjoy the prospect of an eminent domain battle,” she said. “We thought about it for a little bit but then we were already leaning toward, ‘Yeah, let’s not fight this’ when Covid hit and then it was, ‘Absolutely, here you go.’”

City Council members approved the 1-acre purchase for nearly $3.8 million on March 12, 2020 – a day before public health officials confirmed the first case of the virus in Austin. League said she was grateful when the check was finally cut.

“I remember being very relieved and thankful to know we’d be getting that check from the city, because of the theaters closing down,” she said in an email.

At the time of the sale, there was no legal document requiring the owners of the Alamo Drafthouse to build housing. But if in some universe far, far away, housing does get built, the owners would be legally obligated to make some of it affordable to teachers. As part of the sale, AISD drew up a legal document that said if any housing was built, 25 percent had to be income-restricted.

Even if they still had the land, League said she’s not sure any housing would have been built; the realities of the pandemic have made it financially impossible.

“We had to close all of our theaters for two years. We had to lay everybody off. We had to declare bankruptcy,” she said. “All sorts of not-fun stuff.”

Last year, the company sold most of its assets as part of a bankruptcy filing. Once that process was through, the company announced it would open several new theaters, including in New York, Missouri and Washington, D.C.

“We’re still scraping to rebuild the basic business that would have provided the seed money for the affordable housing,” League said. “We would have built it, eventually.”

If you build it

Of the properties AISD sold in 2017, two went to a private developer. Habitat for Humanity, which has partnered with the developer, is building 30 homes on these properties in Northeast Austin; the homes will sell for about half of what they typically go for in the city, and people working for AISD will get first dibs.

A week after Habitat opened a site for potential applicants earlier this month, more than 1,000 people have expressed their interest; that’s about 33 families per home.

If you build it, they will come.

“That’s huge,” Jeremy Striffler, AISD’s director of real estate, said. It’s also indicative of an affordability crisis that is pushing not only students but school staff out of Austin. “Staff are taking jobs with other districts because they can more easily afford to live in those areas.”

League told KUT she is surprised this wasn’t AISD’s approach back in 2017.

“It didn’t make sense for them to sell it. They shouldn’t have,” she said. “But as a beneficiary of their mistakes, I’m not going to complain too much.”

Others have complaints. In 2020, Austin’s Planning Commission considered whether to grant historic zoning to the property, which would offer the Leagues a property tax break. One commissioner, Awais Azhar, spoke before the vote.

“This was public land that was purchased from our school district. At the time of purchase a pledge was made to build housing and affordable housing that is now being completely negated,” Azhar, who works for a nonprofit that advocates for affordable housing, said. “We have had wool drawn over our eyes, and it seems like this is a break of the Austin community’s trust.”

Richard Weiss, the architect whose firm worked on the restoration of the building, responded.

“They’re in the business of showing movies,” said Weiss, who represented the Leagues at the meeting. “Tim and Karrie are not in the business of building affordable housing.”

He’s right.

This story was produced as part of the Austin Monitor’s reporting partnership with KUT.

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Posted In: Austin, District 9