August 2023

Exciting Development for Pseudo-Soviet Relic

Leave a Comment / Real Estate Development / By Sean Bukowski

The University of Texas and MD Anderson announced a partnership to build two new hospital buildings in Austin.
The two new buildings will be a cancer center and a specialty hospital.
It will bring a number of new jobs and is scheduled to be finished at the end of this decade.

That’s an interesting title. What is Bukowski writing about this week? The Soviet Union? Maybe the KLM line? No. Sadly I am not writing about the Miracle on Ice or anything like that. But I am writing about a very exciting development announced last week in Austin.

The University of Texas announced that it is going to expand its hospital. And this is great news for our city. It will bring a lot of new jobs plus enhanced health care to Central Texas. Not to mention additional research facilities and prestige to the University. So lets talk about it.

MD Anderson and the University of Texas Team Up on Hospital Expansion

I moved from Dallas to Austin in late 2010. It was a great move – I love it here and still get to go up to Dallas every month. There were, however, a number of surprises when I moved here. And one of those was certainly the Frank Irwin Center. While it was pretty nice inside – from the outside it looked like a relic of 70s Soviet architecture. No windows? Anywhere? Not a beautiful building by any stretch.

So the Moody Center was certainly a welcome addition when it was completed last year. And now comes news that the eyesore known as the Frank Irwin Center is to be torn down and replaced with a new hospital. That should be a win for Austin.

The University of Texas and MD Anderson announced a new $2.5 billion partnership last week. The two parties are jointly going to develop a new hospital and research center on the Frank Irwin site. According to the parties, they will build two new towers to start. One will be a UT/MD Anderson cancer center. The other will be a UT specialty hospital.

These new buildings will greatly expand treatment options for patients. The long-term goal is that Central Texans will not have to travel to Houston for specialized cancer treatment. We will be able to get that high quality care right here in Austin. And, of course, the expansion will provide a lot of research opportunities.

When completed, it is projected that the hospital will bring 4,000-5,000 jobs to Austin. And it will bring increased visibility and prestige to the University of Texas and Dell Medical Center. Which is only beneficial for the whole State.

The new hospital is expected to be completed in 2029 or 2030.

How Will the New Hospital Affect the Area?

I need to write an entire follow up on the I-35 renovations that are being floated around by TxDot. I need to dig into those and figure out exactly what the proposals are. But TxDot is planning to add at least two HOV lanes in each direction. For that, I assume it will have to condemn land on both sides of the freeway. And the Frank Irwin Center is built pretty close to I-35. So its not clear to me how all of that is going to work. As the proposals become more distinctive, we will write more about what is planned.

Otherwise, two more hospital buildings on the Irwin site should only improve that area. There will be a need for more hospital support. And that could help create new, exciting mixed use development.

So for now, this seems like a great win for Austin.

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Fun with Homeowners’ Associations

Leave a Comment / Property Disputes / By Sean Bukowski

Homeowners Associations are governed by strict by-laws that they must follow when making decisions.
If the association does not follow its guidelines, it can lead to a dispute between the homeowner and the association.
When this happens, its important for a homeowner to know what the by-laws require when filing a lawsuit.

Where I live, we don’t have a homeowners’ association. I generally think that’s good for me overall. But I think that view is probably biased because of what I do for a living. It seems like whenever I run into an HOA its because we are representing a homeowner against some egregious action the HOA has taken.

But HOAs aren’t all bad. Associations can offer a sense of community, shared amenities, and efficient maintenance services. However, the intricate web of rules, fees, and maintenance responsibilities can sometimes lead to disputes. And that’s when things can get ugly. And the homeowner needs to know how to protect his or her property. So that’s what I wrote about this week.

Understanding Common Dispute Areas

Homeowners and their associations often find themselves entangled in disputes revolving around three main areas: rules, fees, and maintenance.

Rules: Every community association operates under a set of governing documents, including bylaws, covenants, conditions, and restrictions (CC&Rs), which outline the rules homeowners must abide by. Disagreements may arise when homeowners perceive these rules as restrictive or unreasonable, leading to conflicts over issues like property alterations, noise levels, or pet ownership. Or when the HOAs just flat out don’t follow those rules – which happens more than you’d think.
Fees: Associations levy fees to cover maintenance, repairs, landscaping, and amenities. Here, disagreements can arise when associations misallocate or misuse those fees. And as a result, if the homeowner refuses to pay, this can escalate the situation.
Maintenance: Maintaining shared amenities and common areas is a significant responsibility of community associations. Disputes can arise if the HOA is not meeting its maintenance obligations, resulting in conflicts over property values, aesthetics, and quality of life.
Abuse of Power: Ultimately, associations are governed by a board made up of people. And then that board hires a management company – run by other people. And sometimes those people are fallible. They can fail to follow the rules or abuse their power. If that happens, homeowners can understandably get angry.

What to do if You are Fighting with Your HOA

Again, I admit I may be jaded because I am a real estate lawyer. But we see a lot of homeowner/HOA disputes. So what should you do when you have a dispute with your HOA?

Open Communication: Both homeowners and associations should maintain open lines of communication to address concerns promptly. Associations should have regular meetings to discuss issues and keep homeowners informed about decisions that affect them.
Mediation and Arbitration: Before rushing into litigation, consider alternative dispute resolution methods like mediation and arbitration. These processes can help parties reach a compromise without the time and expense associated with a lawsuit. Texas law encourages mediation for community association disputes before pursuing legal action and the community by-laws may require it.
Know the Governing Documents: Homeowners should familiarize themselves with the community’s governing documents to understand their rights and responsibilities. Associations must ensure these documents are clear, well-drafted, and regularly updated to avoid ambiguity and potential conflicts.
Engage Legal Counsel: When disputes escalate, seeking legal counsel is essential. Attorneys experienced in Texas property law and community associations can provide tailored advice and representation. Legal professionals can help interpret governing documents, assess the strength of a case, and guide negotiations.

What to do When Suit is Only Option

If all else fails, however, the homeowner may want to file a lawsuit against the HOA. If this is where you are at, its very important to make sure you have read the association by-laws. They will dictate what steps you need to follow. And often they will require mediation or arbitration as an alternative way to resolve the dispute. But, as with any dispute resolution, you should not go into this alone. Hiring a competent lawyer to help you navigate the process and present your grievance is essential.

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Welcome to the New Sixth Street

Leave a Comment / Real Estate Development, Social Issues of Central Texas / By Sean Bukowski

Stream Realty Partners has bought up about 40 properties on historic Sixth Street.
It recently received approval from the Austin City Council to begin its revitalization of the area.
This will include a new hotel, a residential tower, while hopefully keeping the character of the area with live music venues.

If you are like me, you’ve probably heard a lot of rumors about the revitalization of Sixth Street. But haven’t really seen anything going on. And every time I asked someone what they have heard, nobody seemed to really have the answers. Except for the folks at Stream, I reckon.

Sixth Street is iconic in Austin. Its one of, if not the, most famous areas of the city. But COVID was rough on it. And it definitely could use a makeover.

Well I had heard the rumors that a makeover was coming. But hadn’t seen the progress yet. That all changed two weeks ago when there was a big step forward taken. And now the work may begin.

Makeover Coming to Sixth Street

For the past four or five years, Stream Realty Partners has been buying properties on Sixth Street. They have apparently amassed approximately 40 properties in the area. After spending about three years accumulating these properties, Stream announced its plans in the Spring of 2022. At that time, it said that it planned to revitalize a large area of what we all affectionately call “Dirty Sixth.” This revitalization was to include offices, hotels, restaurants, and entertainment.

Since that time, I have not heard much more on the project. For anyone involved in development in Austin, of course, this is not that surprising. Getting plans through the City Council can be … time intensive.

I have heard a lot of concern, however. That area of Sixth Street has a lot of good memories for a lot of people. It’s a classic area. It does need help and revitalization. But we also don’t want to lose the fun and character. And more importantly – the music venues where local musicians can play.

City Council Approves Measures

On July 20, however, there was news. The City Council finally approved Stream’s plans to update Sixth Street. To make the makeover financially viable, Stream asked for increased height restrictions from the current 45 feet. As a result, between Sabine and Neches, the City Council approved new construction up to 140 feet.

Stream announced a few definitive plans for this strip of Dirty Sixth. It plans to build a 150 room hotel that will be approximately six floors high. It also plans to build a 122 foot high residential tower. Stream does plan to keep some music venues in the area and expand the width of the sidewalks to 25 feet.

Sixth Street Makeover is Welcomed

We all love Sixth Street. Or at least did love it at one point. But I don’t think there’s any real doubt it needs some updating. COVID was not friendly to the area. Many of the venues shut down at least temporarily and appear to continue to struggle. And crime in the area has increased.

So Stream coming in and making some improvements and refreshing the area could be terrific not only for the new parts of town but also for the parts of Sixth Street it does not revitalize.

Having said that, I have written in this blog and talked on my podcast about how Austin is losing its artist performance spaces. I don’t know the Stream folks but its not hard to imagine that with the new construction will come higher rental rates. And I worry that those will drive out some of the traditional music venues. Or make it more difficult for new ones to open up. And that’s not good for anyone in Austin. I hope, therefore, that Stream can figure out a balance between its needed revitalization while keeping – and expanding – performance venues for artists.

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Tenant Screening Regulated by Federal Law?

Leave a Comment / Landlord / Tenant Dispute / By Sean Bukowski

A new lawsuit out of Massachusetts had a ruling last week that eventually could affect Texas landlords.
The court ruled that a tenant screening company that provided a single credit score number was subject to the Fair Housing Act.
As a result, a lawsuit against the screening company and landlord is allowed to move forward.

There was a pretty interesting lawsuit out of Massachusetts last week that caught my eye. You may be thinking – “What in the world does Massachusetts have to do with Texas or Michigan?” Well for one, Vineyard Vines makes some great clothing that looks good no matter what state (physical or mental) you are in. And for two, the decision from this lawsuit could affect multifamily tenants throughout the country.

Obviously because it is from a Massachusetts federal district court, it does not directly impact Texas landlords. But the issue could be a common one that influences courts or plaintiffs here. As a result, I think it’s a topic worth discussing. So lets do that.

Massachusetts Court Rules on Tenant Screening Algorithm

So the basics of the case are this – a Boston area property management company was using an outside company SafeRent Solutions LLC to conduct tenant screening. And then using that information to determine whether to rent an apartment to potential tenants.

SafeRent used an automated algorithm in its screening to determine if a tenant was qualified for the apartment community. This provided a SafeRent Score that was based on several factors, including credit history, bankruptcy records, past due accounts, payment performance, and eviction history. But allegedly it had no separate human input. It was simply a computer algorithm.

Nonetheless, both the landlord and SafeRent were sued as part of a class action lawsuit. In that lawsuit, the Plaintiff alleged that SafeRent’s algorithm is calculated in large part on factors that produce disproportionally lower SafeRent Scores for Black and Hispanic applicants. And the factors it considers do not necessarily show higher risk tenants. As a result, it violated the Fair Housing Act.

In response, SafeRent argued that an algorithmic screening program is not subject to FHA standards. It argued that it is simply an algorithm it provides to landlords to make their decision. SafeRent does not make tenant decisions itself.

Thus far, SafeRent’s arguments have not been persuasive to the Massachusetts court. The Court said that there was enough evidence in the Plaintiff’s petition to show that SafeRent provided a unifying score based solely on its algorithm that the landlord could not change. And SafeRent knew that the landlord solely relied on that score to make the rental decision.* As a result, SafeRent is subject to the FHA and the plaintiff’s lawsuit, therefore, is allowed to continue.

What Does this Ruling Mean for Texas Landlords

So what does this all mean? Should Texas landlords care? Well yes. And no. And it means a lot. Or maybe nothing. Does that clear it up?

First, this ruling is from a Massachusetts federal district court. Massachusetts courts have no precedential value on Texas courts. As a result, technically this decision does not mean anything for Texas landlords.

But its not unusual for courts to look to other districts for guidance and reasoning. If a similar case came up in Texas, therefore, a court could possibly look to this Massachusetts decision. It is, thus, potentially influential in a Texas court.

And, of course, the defendant can appeal the decision. And if that happens, then the Circuit Court and potentially the Supreme Court could give a ruling on the issue. The Circuit Court decision would not be direct precedent, but it would be even more influential than the District Court decision. And, of course, a Supreme Court ruling would be the law of the land.

The most likely reason that Texas landlords should take note, however, is this decision is very likely to give incentive to other plaintiffs around the country. And perhaps right here in Texas. And that could mean Texas landlords are sued for violations of the Fair Housing Act for engaging with some tenant screeners. At the least, its something that landlords should be aware of.

*This was a motion for summary judgment.

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