Have you ever seen “Lost in America?” It’s a comedy written and directed by Albert Brooks, who also stars in it. Brooks and his wife are yuppies who quit their jobs and sell everything they own. They buy an RV and with a $145,000 nest egg set off to see America. One of their first stops is Las Vegas, where the wife slips off at night and gambles away all their money. Brooks, beside himself, rants about the sanctity of their “nest egg.” His wife is nonplussed and finally tells Brooks to relax while she makes him breakfast. In total frustration Brooks yells, “Don’t touch that food! You might lose it!”
I feel like Albert Brooks. I don’t trust Austin with a dozen eggs, much less with our nest eggs.
Many don’t think like this, but as residents we have public nest eggs. Here are just a few: the 700 acres in Mueller,, which is now being developed; the Green Water Treatment Plant, which is valuable downtown land; the Seaholm Power Plant, which is on Lady Bird Lake; the Holly Electric Plant in East Austin; and even the Austin electric system.
Some nest eggs are heirlooms like your grandmother’s wedding ring, which should be sold only in an emergency. The Seaholm Plant is a beautiful, iconic building that could have been a magnificent public space on Lady Bird Lake. Some nest eggs shouldn’t be monetized.
Austin’s right to tax new buildings and companies moving here is a form of nest egg. It’s similar to an annuity. We have the right to tax, and that revenue is an annuity for our collective retirement.
Is Austin protecting our nest eggs? Austin sold our 700 acres in Mueller for $0 and gave away the tax revenue for years. Austin would have used the most costly contractor to demolish the Holly Plant were it not for great reporting by the Statesman. To develop the Green Plant, the city selected a developer based on a best and highest bid. Several years later it allowed that developer to retrade the deal without rebidding to see if someone would offer more. Austin leased Seaholm to a developer for $1 a year, threw in more than $4 million for renovations, and paid for the streets and environmental cleanup.
For fun, I sent an outline of the Seaholm deal to seven sophisticated investors. Each was incredulous that Austin would sign such a one-sided deal. The best comment was, “Ed, how do I get in on sweetheart deals like that?”
Is Austin protecting our heirlooms? After leasing Seaholm for $1, it gave tax incentives to Athenahealth, which will use the building for their office. There will be virtually no public space — just a lobby. Was it an emergency? Of course not, but Austin still sold our heirloom.
Is Austin protecting our retirement annuity, the taxes we collect? It gave a $54 million tax break to the Domain shopping center. Austin gives tax breaks to National Instruments, Visa, HID Global, Apple, Advisory Board Company, Samsung, Facebook, LegalZoom, Hanger, HelioVolt, Home Depot Technology Center, ATDF, Hewlett-Packard Data Center, and Athenahealth. Austin now proposes to give tax incentives to Dropbox and Websense. Oh yeah, the “Friday Night Lights” TV show got incentives until the series ended in 2011.
Being a liberal, it bothers me when folks say we need business people in politics. That’s code for “cut social programs.” But, being a developer, it bothers me more when Austin enters into one-sided deals and poorly drafted agreements.
Austin needs a formal Business Advisory Committee that would review and critique the terms of joint ventures and tax incentive agreements to make sure the public’s nest eggs are protected. To keep politicians from appointing cronies, select groups should each appoint a member. The groups could include the Austin Neighborhood Council, the Austin Bar Association, the McCombs School of Business at the University of Texas, the Real Estate Council of Austin, and the Austin Bankers Association.
Good managers acknowledge their weaknesses and hire or delegate to fill the hole. The City Council should come up with a way to cover their lack of business transaction expertise. That’s the only way to protect our nest eggs.
Wendler is a real estate developer and longtime Austinite.