February 2023

New Austin City Council Members Opine on Housing

Leave a Comment / Uncategorized / By Sean Bukowski

At the ULI breakfast last week, three freshman Austin City Councilmembers spoke to the audience in attendance.
Without focusing on specifics, they all seemed to recognize the need to promote housing – specifically affordable housing.
It remains to be seen, of course, whether they will follow through on these promises.

Last fall, I spent a lot of time in this blog talking about the upcoming Austin City Council election. I know that national elections get all the publicity. And they are certainly noteworthy and interesting. But local elections have a huge impact on your daily life. So its extremely important that we all pay attention to the results of elections and how our elected officials are doing.

It was with those thoughts in my head that I attended last week’s Urban Land Institute (“ULI”) breakfast where three freshman city council members were the speakers. I was excited to hear what they were going to say and what they see for the future of Austin. So that’s what we are going to talk about this week.

Three Austin City Council Members Spoke at ULI Breakfast

As I am sure many of you know, ULI hosts monthly breakfasts here in Austin* in which they often have interesting speakers. And this week was no different.

I wrote a lot about the Austin elections in the fall. And one of the areas I focused was on the open city council seats. As I wrote then, those seats were won by:

In District 3, Jose Valasquez won the seat. He is a pro-housing candidate who understands the urgency of the issue. According to his website, he favors a “holistic approach to our housing crisis” that should be built on the “real-life experiences of lifelong and new residents alike.”
In District 5, Ryan Alter won the runoff. He is also a pro-housing candidate who put forth a pretty detailed “Housing Now” program during the election. He has said he wants to get to work immediately solving the issue.
Finally, in District 9, Zo Qadri won the election runoff. Like the other two new councilmembers, Zo appears to also be pro-housing. On his website, he dedicated a section to talking about our outdated land use code and how it needs to be updated to bring it in line with Imagine Austin.

We were lucky enough, therefore, to get all three of these freshman councilmembers to speak at the ULI breakfast last week.

Are the City Council Members as Pro-Housing as Their Campaigns Suggested?

At the breakfast, then, they were each asked a number of questions mostly focused on housing. It is, after all, probably the biggest issue facing our city. While there were not a lot of details in their responses, from a housing and development perspective, I thought it went fairly well.

Having said that, the ABJ described what they said as “development friendly.” I would not go that far. They were mostly pro-housing – with a distinct focus on affordability. Which, from a political and practical perspective, is somewhat understanding. Indeed, instead of being pro-development, it seemed like the councilmembers were challenging developers on affordability.

But all three councilmembers clearly recognized the drastic need for housing in Austin. Again, there were not many specifics, but they all talked about the need to pass housing initiatives. And to do things differently than their predecessors did.

As I wrote above, the councilmembers definitely focused on affordability. Most of the ideas that they discussed were to encourage developers to build more affordable housing. Councilmember Alter specifically mentioned that the current code encourages developers to build large, single family homes. And they need to change that to encourage more dense and affordable housing. Its not totally clear to me how the City Council can encourage developers to build more affordable housing other than through requiring it in exchange for the ability to build to greater heights. But we will see what other ideas they have in store.

The councilmembers did specifically discuss compatibility** – perhaps the single biggest hindrance to density in the city. The councilmembers said that, in other cities, most of the maximum distances for compatibility are 50 feet. As we know, it is much greater here in Austin. They also mentioned perhaps implementing a greater slope of the increase in height as you get farther from the neighborhoods. Those would be, of course, very welcome changes.

Overall, it was not a perfect breakfast. And while they were only talking on stage – and with not much in specifics – it was a start. The councilmembers at least all recognized the need for housing and said they wanted to do something to help the issue. Whether they follow through on that is something we will have to watch in the next few years.

*The breakfast was held in the downtown public library. I know its over five years old, but I’m embarrassed to say it was my first time there. It is very nice. Great job, Austin. Except for the parking. That is a mess getting out.

** Thanks to a particularly brilliant question by an anonymous, fantastic real estate lawyer.

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Lien on Me

Leave a Comment / Property Disputes / By Sean Bukowski

One of the tools a contractor can use in a dispute with a developer is to file a mechanic’s lien against the property in question.
But there are strict rules in Texas a contractor must follow when filing the lien.
If it does not follow those rules, the lien will likely be unenforceable.

One of the things I love about real estate is that we get to see how it can positively transform an area into a great place where people can work, live, and play. Its just so exciting to watch new areas be built up. As a result, we try to work with as many developers as we can. ON a good day, that means helping them get started with purchase agreements and construction contracts and loan docs.

But the flip side of that – developers are constantly working with contractors. And sometimes they have disputes. As a result, we also often work with our developer clients on their litigation disputes with contractors.

Most of you probably know, when there is a dispute between a developer and a contractor, a mechanic’s lien can provide contractors and suppliers with a valuable tool to protect their interests in unpaid bills for services rendered or materials supplied. But in Texas, there are very specific requirements for contractors to file and enforce a mechanic’s lien, and understanding these requirements is critical to ensure that the lien is valid and enforceable. So what are those requirements? That’s what we talk about this week.

What are the Requirements for a Contractor Filing a Mechanic’s Lien

A mechanic’s lien, also known as a construction lien or materialman’s lien, is a legal claim against a property that secures payment for labor and materials used in construction. To file a mechanic’s lien in Texas, contractors must comply with several specific statutory requirements. The Texas Property Code sets out these requirements in detail. In summary, to be eligible to file a mechanic’s lien in Texas, a contractor must be a party to the contract and must have provided labor or materials for the improvement of the property.

First and foremost, contractors must provide notice of their intent to file a lien. This notice must be provided in writing, and it must be sent to the property owner, the general contractor, and any other party with an interest in the property. The notice must be sent via certified mail, return receipt requested, or via registered mail. The notice must contain specific information, including the amount owed, the property address, and a description of the services provided or materials supplied.

The notice must be sent within strict time limits. In Texas, a contractor must send the notice at least 15 days before filing the lien. This notice is critical, as failure to provide the required notice can result in the invalidation of the lien.

Once the notice is sent, the contractor can file the lien. The lien must be filed in the county where the property is located, and it must also be filed within strict time limits – four months from the last date they provided labor or materials. If the contractor is contracted with the original owner of the property, the lien must be filed within the 15th day of the fourth month after the completion of the contract.

The lien must contain specific information, including the name and address of the contractor, the property owner, and the general contractor. It must also include a description of the work performed or materials supplied, the amount owed, and the dates the work was performed. The lien must also contain a legal description of the property.

After the lien is filed, the contractor must serve a copy of the lien on the property owner and any other party with an interest in the property. The lien must be served via certified mail, return receipt requested, or by personal delivery. The contractor must file proof of service with the county clerk’s office.

Once the Lien is Filed, How does the Contractor Enforce It?

Once the lien is filed and served, the contractor must enforce the lien by filing a lawsuit. The lawsuit must be filed within strict time limits. In Texas, a contractor has 2 years from the date the lien is filed to file a lawsuit to enforce the lien. Failure to file a lawsuit within this time frame will result in the invalidation of the lien.

In addition to the statutory requirements, there are other considerations that contractors should keep in mind when filing and enforcing a mechanic’s lien. For example, it is important to ensure that the lien is filed against the correct property. The lien must be filed against the specific property that was improved or supplied with materials. Filing a lien against the wrong property can also result in the invalidation of the lien.

It is also important to ensure that the lien is properly served on all interested parties. Failure to serve the lien properly can result in the invalidation of the lien.

Finally, it is important to work with an experienced attorney when filing and enforcing a mechanic’s lien. An attorney can help ensure that all requirements are met, and can help to navigate the legal process of enforcing the lien.

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Airport Expansion Plans Hit Some Turbulence

Leave a Comment / Social Issues of Central Texas / By Sean Bukowski

Austin’s population is growing fast. As a result, the City is looking to expand the airport to meet some of that growth.
To do that, it is seeking to use eminent domain to close the South Terminal and build a new, bigger terminal.
Last week, the eminent domain panel awarded the property owner a fair market value 45 times what Austin was originally offering for the property.

Austin is growing fast. That’s not a big secret. Its one of the biggest stories in the country the last few years. I mean – I even do a podcast about it. Really – you should listen. Its pretty good.

One of the inevitable results of this growth is that our infrastructure has to grow with it. Specifically, our airport currently has 34 gates in the main terminal. And that is just not really sufficient for a metro area with about 2.3 million people. Thankfully, the City of Austin recognizes this and has some plans to expand the airport.

I wrote previously, though, that those plans had hit a bit of a snag. Well in the last couple of weeks, there has been a major development in the airport expansion plans. So that’s what we are going to talk about this week.

Issues Facing the City in Expanding the Austin Airport

As a loyal reader of this blog, you probably remember the issues surrounding the airport expansion, but I’ll briefly recap them for our new readers.

The Austin City Council understands the need to expand our airport to meet the growing demand of our city. As a result, they have enacted the 2040 Master Plan. According to the plan, they expect to have 31 million passengers annually through ABIA by 2040. To meet this demand, Austin plans to expand to 64 gates by that time – almost doubling the current ABIA capacity.

In addition to the gate expansion, they also plan to make major renovations to the current main terminal. This will include upgrading the terminal and making it more accessible for the increase in passengers.

Finally, they also plan to add ten new gates to a new midfield concourse – with it ultimately growing to 32 total gates. And that’s where the problems started.

When the South terminal was first built, Austin and Lonestar Airport Holdings agreed to a forty-year lease for Lonestar to operate the South Terminal. Austin wants out of the lease so that it can expand the airport. But, of course, Lonestar does not want to let Austin out of the lease without getting paid what it is owed. As a result, the City decided to use its power of eminent to acquire the South Terminal, which was privately run. And that’s where our story picks up.

Award for Lonestar Much Greater than What City Offered

When using its power of eminent domain, the usual process is the condemning authority (in this case, the City of Austin) will make an offer for the property. And if the property owner does not agree, fight the condemning authority on what the market value of the property is. The first step is usually a hearing before the panel.

In this case, Austin offered Lonestar $1.95 million for the property. Lonestar objected to this. As a result, they went to a hearing before a panel last week. After hearing from both sides, the panel ruled that the City of Austin would have to pay $90 million to Lonestar for the property. That is 45 times what Austin originally offered.

The case is not done yet. It is still tied up in litigation with the City allegedly moving forward on its airport renovation plans. But obviously this large decision by the eminent domain panel puts a wrench into that system. Renovations to the airport have suddenly become a lot more expensive than Austin probably assumed they were going to be.

So what does that mean going forward? Can we still expect to have a significantly bigger airport in the next few years? I guess we just need to wait and see when the plans are ready to take off again.

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Time to Dig Deep

Leave a Comment / Social Issues of Central Texas / By Sean Bukowski

Another winter storm hit Texas and showed us how vulnerable our overhead power lines are to severe weather.
Burying electrical lines is expensive, but the benefits it provides may outweigh the extra cost.
Developers, therefore, should bury electrical lines in new developments.

For the third year in a row, we unfortunately have had a major winter storm here in Texas that has caused havoc to our power systems. I am writing this on Friday morning and there are still many of my fellow Austonians who are without power. Unlike past years, this time the power outages appear to mostly be caused by the severe ice storm damaging trees which fell into power lines.

The immediate reaction to that, of course, is to wonder why our power lines are not buried. It’s a concept that has been around in some form since Thomas Edison’s days. Yet I look outside my window and all I see are overhead power lines. So should we bury our power lines? Is it even possible? What about new developments? I am not an expert in this and not a civil engineer. But that’s never stopped me from opining before. So let’s do it.

The Benefits and Challenges of Undergrounding

As I wrote above, burying electricity lines, or undergrounding, has been around a long time. Obviously the technique has changed through time, but the concept remains the same.

The benefits of undergrounding are pretty clear.

Aesthetics – It is generally seen as an improvement over overhead power lines that clutter sight lines.
Durability – By placing the lines underground, they are far less susceptible to storm and weather outages – as we well know in Texas.

Given these great benefits, why aren’t all power lines buried? The cost, of course.

The cost of burying electricity lines is significantly higher than installing above-ground systems. The cost of burying a single mile of line can be up to ten times the cost of installing an above-ground line. That’s because undergrounding requires excavation, trenching, building the concrete to hold the wires, and installing the cable. It can also be more time consuming. So a result, the cost is likely significantly higher than overhead lines.

Undergrounding can also be a difficult and time-consuming task. The excavation process involves digging a trench, which is a difficult and slow process, especially in populated areas. The process must also be carried out with caution, as there may be existing underground utilities such as gas, water and sewage lines that must be avoided. The installation of cables also requires a significant amount of time and effort. The cable must be installed in a way that ensures its protection and prevents any damage that may occur during the excavation process.

And then once you have the cables buried, maintenance becomes an issue. Its obviously much easier to identify and repair an overhead power line than one that is under the ground.

New Developments Should Bury the Cable

Despite these difficulties and expenses, it is much easier to bury electrical lines when it is planned from the beginning. As a result, new Austin developments likely should bury their electricity lines. As I wrote above, they are much more reliable in uncertain weather. And now, for the third winter in a row, we have had a significant storm. Storms and nasty weather seem to be coming at a faster pace. Having those power lines buried is a significant benefit to new developments.

In addition, burying electricity lines can also have a positive impact on property values. Above-ground electrical power distribution lines can be unsightly, and they can detract from the beauty of a development. Burying the lines underground eliminates this problem. Aesthetic appeal is important, especially in new developments, as it can help to attract buyers and increase property values.

Finally, burying electricity lines can also improve power reliability. Above-ground lines are vulnerable to damage from natural disasters, theft, and other causes, which can result in power outages. Buried lines are less vulnerable to these problems, and they can provide a more reliable source of power. This is important, especially in new developments, as it can help to attract buyers and increase property values.

We obviously have a lot of overhead lines here in Texas. It would be extremely expensive to change those to underground lines. As we move forward, therefore, those will cause us to be vulnerable to extreme weather. But we are also seeing a tremendous amount of new development. And as those developments continue, it only makes sense to dig deep and bury those lines.

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