The Langley: Residential High-Rise At 1717 Bissonnet St.

[Subdude]

The developers have spent huge sums of money on the project, which will essentially be stolen though the political process should this go forward.

I'm sorry, but I can't work up a lot of sympathy because the developers have lost money on an investment. None of us are guaranteed returns. Taking risks implies accepting the chance of losing money. The residents of the neighborhood would probably respond that they have spent huge sums of money on their houses, and are glad that those sums will be safeguarded by maintaining the character of the neighborhood.

[TheNiche]

I'm sorry, but I can't work up a lot of sympathy because the developers have lost money on an investment. None of us are guaranteed returns. Taking risks implies accepting the chance of losing money. The residents of the neighborhood would probably respond that they have spent huge sums of money on their houses, and are glad that those sums will be safeguarded by maintaining the character of the neighborhood.

Do not feel sympathy for the developers. They are merely cogs in the capitalist machine that delivers us our wants and needs.

It is our loss.

[lockmat]

I'm sorry, but I can't work up a lot of sympathy because the developers have lost money on an investment. None of us are guaranteed returns. Taking risks implies accepting the chance of losing money. The residents of the neighborhood would probably respond that they have spent huge sums of money on their houses, and are glad that those sums will be safeguarded by maintaining the character of the neighborhood.

But the risk they were taking didn't include the government when they were making their plans, did it? I guess you would just say there are always unforseen risks?

[N Judah]

If stuff like this could replace the system of deed restrictions, I think I personally would not mind at all. however, i want to see what happens in this case before i can say for sure.

[Subdude]

Do not feel sympathy for the developers. They are merely cogs in the capitalist machine that delivers us our wants and needs.

Ummm....OK....I don't know that I had thought of it in quite those terms...

But the risk they were taking didn't include the government when they were making their plans, did it? I guess you would just say there are always unforseen risks?

Risks frequently are unforeseen. That's what makes them risks.

[sidegate]

Rusty Hardin represents Mayor White's daughter in a DUI. Wins case. Hardin is retained by the neighborhood to fight the Ashby highrise. Mayor White acts with extraordinary speed to draft legislation that will stop the highrise.

I'm sure these events are entirely unrelated.

[TheNiche]

Risks frequently are unforeseen. That's what makes them risks.

California makes a good case in point for not pulling this kind of ridiculous crap. Developments there are subject to such a great degree of political risk that if a developer can pull it off, the profits can be exceptionally large. ...but those kinds of profits are only possible because the supply constraints there have caused prices and rents to become exceptionally high.

Developers enjoy a market equilibreum that ensures that risk and reward are kept in line with one another. Consumers get screwed.

Is that what you prefer for Houston?

[crunchtastic]

No, risk is always foreseen. If you don't see risk , you need to re-think your business plan.

It's all about how much you're willing to pony up to mitigate those risks, and as Niche alludes to, whom you've got on your side.

[crunchtastic]

No, risk is always foreseen. If you don't see risk , you need to re-think your business plan.

It's all about how much you're willing to pony up to mitigate those risks, and as Niche alludes to, whom you've got on your side.

Well, maybe except zombies. I don't think you can insure against them. Not with a reputable company, anyway.

[lockmat]

Well, maybe except zombies. I don't think you can insure against them. Not with a reputable company, anyway.

uh, did you reply to yourself on purpose? haha

[nate]

I'm sorry, but I can't work up a lot of sympathy because the developers have lost money on an investment. None of us are guaranteed returns. Taking risks implies accepting the chance of losing money. The residents of the neighborhood would probably respond that they have spent huge sums of money on their houses, and are glad that those sums will be safeguarded by maintaining the character of the neighborhood.

I don't care if the developers loose money on account of a poor product or a market downturn. However, I am deeply troubled when losses are due to governmental fiat. I am also deeply troubled that you cannot see this.

The property owners have invested substantial sums of money in reliance on current law, to the point of purchasing land, improving the sewererage system as required by the city, commissioning architects and applying for building permits. Because their project is politically unpopular, they are having all this effort taken away without compensation. All that money invested...gone. Turned into gallons of red ink. That potential $150 million project, the homes of 240 families...gone. All because some politicians didn't like the project, even though the developers followed the letter of the law as written.

This is all extremely disturbing. As bad as the proposed ordinance is, at least future residential developers will be on notice that their property rights can be confiscated by political fiat. However, Buckhead was blindsided. They had no reason to think that their efforts would be wasted, that their investment would be stolen by the government. All they did was follow the law as written. We should all be extremely worried.

Edited October 29, 2007 by nate

[Subdude]

California makes a good case in point for not pulling this kind of ridiculous crap. Developments there are subject to such a great degree of political risk that if a developer can pull it off, the profits can be exceptionally large. ...but those kinds of profits are only possible because the supply constraints there have caused prices and rents to become exceptionally high.

Developers enjoy a market equilibreum that ensures that risk and reward are kept in line with one another. Consumers get screwed.

Is that what you prefer for Houston?

No, but there's no reason to think that this one example means that things would swing to that extreme in Houston, so I'm not particularly worried about it either. As I said I don't like the way this ordinance was cooked up at the last minute, but one project hitting a political roadblock is hardly the end of the world as we know it. I just don't buy extremist hyperbole that this puts us on the road to some communist hell, with jackbooted thugs marching up the driveway to take our houses.

Look, we don't live in Libertarian fantasy-land, at least most of us. Here on planet Earth, people have different interests, and these interests are typically mediated through political processes, not just business transactions. That's just how it is. You may not like it, but that's what governments do. Political risk is a fact of life, and it's not going away anytime soon.

[jgriff]

No, but there's no reason to think that this one example means that things would swing to that extreme in Houston, so I'm not particularly worried about it either. As I said I don't like the way this ordinance was cooked up at the last minute, but one project hitting a political roadblock is hardly the end of the world as we know it. I just don't buy extremist hyperbole that this puts us on the road to some communist hell, with jackbooted thugs marching up the driveway to take our houses.

Look, we don't live in Libertarian fantasy-land, at least most of us. Here on planet Earth, people have different interests, and these interests are typically mediated through political processes, not just business transactions. That's just how it is. You may not like it, but that's what governments do. Political risk is a fact of life, and it's not going away anytime soon.

If we have to live with political risk why can't these property owners that got this thing blocked live with the risk that someone might build something in their neighborhood someday? I guess now when you buy a piece of land in Houston you get control over all the land around you too. How nice for them. The thing that really stinks about all this is that people all over Houston have lived with unwanted development as the price to pay for the property rights we have and this just shows that rich people don't live under the same laws as the rest of us.

[TheNiche]

No, but there's no reason to think that this one example means that things would swing to that extreme in Houston, so I'm not particularly worried about it either. As I said I don't like the way this ordinance was cooked up at the last minute, but one project hitting a political roadblock is hardly the end of the world as we know it. I just don't buy extremist hyperbole that this puts us on the road to some communist hell, with jackbooted thugs marching up the driveway to take our houses.

Look, we don't live in Libertarian fantasy-land, at least most of us. Here on planet Earth, people have different interests, and these interests are typically mediated through political processes, not just business transactions. That's just how it is. You may not like it, but that's what governments do. Political risk is a fact of life, and it's not going away anytime soon.

I use California as a case in point precisely because it is extreme. You almost can't help but see the cause and effect. A more moderate effect effect may not be so easily identified due to other factors--after all, we live in a multivariate world--so I'm not going to use it as an example (barring funding for an extensive study). But just because this kind of crap isn't as commonplace in Houston (yet) doesn't mean that it won't become more commonplace or that just because it occurs with less frequency than in California that we'll see no effect.

Do bear in mind that about four other projects got snagged by this 11th hour ordinance; it isn't just one proposed project. But even that isn't what will do the most damage. What does damage, as I inferred earlier is that investors' perceptions of Houston's political risk have been elevated. I recall that you've done some energy trading, Subdude. What happens to the commodity price when the risk to new supply goes up for any commodity? Same rules apply.

And I'm all about optimization. Nobody is saying that the world is or should be devoid of political risk. There is a spectrum of political risk; it isn't just 'on' or 'off', '1' or '0'.

[TheNiche]

If we have to live with political risk why can't these property owners that got this thing blocked live with the risk that someone might build something in their neighborhood someday? I guess now when you buy a piece of land in Houston you get control over all the land around you too. How nice for them. The thing that really stinks about all this is that people all over Houston have lived with unwanted development as the price to pay for the property rights we have and this just shows that rich people don't live under the same laws as the rest of us.

It is an aristocracy. And it is not an aristocracy based on money; the aggregate monies of those that would live in the tower would've justified that the greater pooling of resources would've prevailed. It is an aristocracy based upon political connections, favors, backroom deals. It is an 'Aristocracy of Pull'.

[sidegate]

Do bear in mind that about four other projects got snagged by this 11th hour ordinance; it isn't just one proposed project.

Do we know which four other projects? The City was staying tight-lipped on which ones were affected, as I recall from the report.

[lockmat]

Do we know which four other projects? The City was staying tight-lipped on which ones were affected, as I recall from the report.

Did the law already get passed? And I thought by discussions on here that 1717 still had a fighting chance even if it got passed? I guess I missed it.

[jgriff]

It is an aristocracy. And it is not an aristocracy based on money; the aggregate monies of those that would live in the tower would've justified that the greater pooling of resources would've prevailed. It is an aristocracy based upon political connections, favors, backroom deals. It is an 'Aristocracy of Pull'.

I agree it has more to do with connections than money, but money usually gets you those connections. The future inhabitants of this tower would have been wealthy also but right now it's just a couple of developers against a rich well connected neighborhood. Aristocracy is a very good description of what is happening here.

[bkjones98]

how can the enacting of this ordinance affect the 1717 developers' plans in any way?

is it not ex post facto where the 1717 project is concerned?

nate that's how I interpret what you said, but would like some clarification from the crack HAIF legal staff (no, not the HAIF staff on crack).

As I understand it, the rule against ex post facto laws refers only to the constitutionality of criminal laws. Here, we are probably dealing with either a "taking" or breach of contract.

[Saddleman]

If I were the developer, and this ordiance kill my tower plans. I'd then build a paper mill or something else stinky out of spite.

[bpe3]

The developers need to take the gloves off and come out swinging. Maybe it's time for a tortious interference lawsuit against every single contributor to the opposition's war chest.

I'm not a lawyer, but I stayed a Holiday Inn Express last night.

[Subdude]

I use California as a case in point precisely because it is extreme. You almost can't help but see the cause and effect. A more moderate effect effect may not be so easily identified due to other factors--after all, we live in a multivariate world--so I'm not going to use it as an example (barring funding for an extensive study). But just because this kind of crap isn't as commonplace in Houston (yet) doesn't mean that it won't become more commonplace or that just because it occurs with less frequency than in California that we'll see no effect.

Do bear in mind that about four other projects got snagged by this 11th hour ordinance; it isn't just one proposed project. But even that isn't what will do the most damage. What does damage, as I inferred earlier is that investors' perceptions of Houston's political risk have been elevated. I recall that you've done some energy trading, Subdude. What happens to the commodity price when the risk to new supply goes up for any commodity? Same rules apply.

True enough to a point, but it is a flawed analogy. I don't like the way this law was passed, but my point is that, unlike energy markets, real estate development is subject to a great deal of political risk from various stakeholders. In most communities this is managed by zoning, but in Houston it comes about through public pressure on politicians. Zoning I suppose at least adds some transparency to the process. Yes, if things got to an extreme this would lead to higher prices, but again I still believe Houston will be seen as an attractive development market. Bear in mind that high and low real estate prices are the result of many factors of which political logjams are just one. Low real estate prices are great, but they are not all that is important. People may be willing to settle for an overall higher level of prices in exchange for neighborhood stability, good infrastructure, etc. I'm sure real estate is dirt cheap in Bangladesh, but it doesn't make it a desireable place to live.

As bad as the proposed ordinance is, at least future residential developers will be on notice that their property rights can be confiscated by political fiat.

I suppose it depends on how you define "property rights." They're not inviolate under law, are they? If you think property ownership gives you some "right" to always do as you wish, you are probably in for disappointment.

[marmer]

I spent a lot of time in the neighborhood this weekend. If the building could just miraculously appear overnight, it might not be too bad although Bissonnet is pretty crowded. But a year's worth or more of construction traffic, cranes, dump trucks and 18-wheelers would be sheer hell in the area and on all the surrounding streets.

[TheNiche]

True enough to a point, but it is a flawed analogy. I don't like the way this law was passed, but my point is that, unlike energy markets, real estate development is subject to a great deal of political risk from various stakeholders.

So...you're saying that stakeholders such as politicians in Russia, Iran, Iraq, Venezuala, the U.S., etc. either have no power over oil markets or have not been impactful to any perceived political risks impacting the supply of oil? Is that what I'm hearing? Because to me, it still seems like my analogy holds pretty firm.

When stakeholders with any degree of power start acting unpredictably, the risk profile goes up, and so do prices. The only difference is the time horizon. What takes a couple hours on the NYMEX may take a couple years on MLS.

In most communities this is managed by zoning, but in Houston it comes about through public pressure on politicians. Zoning I suppose at least adds some transparency to the process. Yes, if things got to an extreme this would lead to higher prices, but again I still believe Houston will be seen as an attractive development market. Bear in mind that high and low real estate prices are the result of many factors of which political logjams are just one. Low real estate prices are great, but they are not all that is important. People may be willing to settle for an overall higher level of prices in exchange for neighborhood stability, good infrastructure, etc.

So what you're saying here is that zoning is a better solution than regulation by whim because it is more transparent (i.e. less risky) and can accomplish all the same things largely perceived--rightly or wrongly--as positives (i.e. neighborhood stability, good infrastructure, etc.). I'd agree with you. I'd rather have zoning than willy-nilly potshots taken at random by the local aristocracy. Governor Aggie and I are on opposing sides of the zoning issue, for instance, but we're both pissed off about this because it goes way way too far--we both want what we view as optimal policy, but we don't want this. For the life of me, I can't figure out why you'd defend it.

I'm sure real estate is dirt cheap in Bangladesh, but it doesn't make it a desireable place to live.

Houston isn't Bangladesh. If ever there was a need for an example of a weak analogy, you've just provided it.

I suppose it depends on how you define "property rights." They're not inviolate under law, are they? If you think property ownership gives you some "right" to always do as you wish, you are probably in for disappointment.

I do not assume that what is law is just or should be echoed in my own personal set of ethics or policy stances. You are correct--I am constantly disappointed. I'd rather be forever disappointed than a willful accomplice to theft.

[talltexan83]

In lieu of greater restrictions, the 1717 Bissonnet issue represents market forces acting as we would expect. In this case, the neighborhood residents appear to have greater pull with the city government than the developers. In my experience in Houston, this successful anti-development campaign (so far.......I would say the Southampton residents are winning) is a welcome change from the norm. There are already countless examples in our city of developers building without respect to their surroundings.

Regardless of the outcome, the push back from these wealthy residents will result in a deterrent for the better. Our inner city is already in a construction boom, but most of the projects lack an urban continuity. With the recent announcement of expanded light rail construction, and this ordinance from city call, I look forward to development with a more long-term focus.

Edited October 29, 2007 by talltexan83

[jgriff]

I look forward to development with a more long-term focus.

It's just too bad that this long-term focus involves rich people keeping "undesirables" from moving into their neighborhood by using the government for their own benefit over that of others. If they want control over the property around them they should buy it like everyone else has to do. When I was a kid my parents bought empty lots on both sides of our house to keep the neigborhood undeveloped. That's they way to handle something like this. I'm sure if a good enough offer was made these developers would sell the land and move to another site. Apparently it's not important enough for the neighborhood to put up their own money, instead they trample on the rights of the rest of us.

Edited October 29, 2007 by jgriff

[suzerain]

So what I would imagine would happen now is:

1) City passes the ordinance

2) Developer(s) file for a temporary injunction prohibiting the enforcement of the ordinance as enacted; and

3) Concurrently, they will file a Declaratory Judgment Action seeking to declare the the ordinance is void because the City Council does not have the power to institute zoning.

Then the city of Houston and various developers will pay a lot of money to attorneys to duke this out. What a shame. I love how the ordinance claims:

That there exists a public emergency requiring that this Ordinance be passed finally on the date of its introduction as requested in writing by the Mayor;

therefore, this Ordinance shall be passed finally on such date and shall take effect immediately upon its passage and approval by the Mayor.

So for this ordinance to apply to the proposed building would require:

(1)Would increase the residential density within the proposed

development by 100 percent or more;

(2) Comprise 100 or more dwelling units; and

(3) Is proposed to take any vehicular access from an abutting twolane

street with two-way traffic;

for which development no structural permit has been issued.

So basically, if there are 67 existing units, they could build a 133 unit building without falling under this statute. That would be about 1/3 fewer units than the developers are currently proposing. The funny part is, the developers could double the commercial and office components in the proposal, thereby causing greater traffic than the residences alone and there would still be nothing the neighborhood (except for passing another ordinance) could do about it. Additionally, the developers could make the building even taller with they fewer units and the neighborhood could not do anything.

I do not know a whole about land use ordinances in Houston, but I would argue this would be a violation of the equal protection clause. Although the standard of review in commerce cases is only rational basis, there is seems to be no rational basis to have the law only apply to residential properties and not others. I would imagine the traffic impact of a Wal-mart would be way greater than the high rise, as would a 23 story office building. There seems to be no rational basis for this only to apply only to a residential building. Given the time span given in writing this statute, you know the city has no basis for believing there is something unique about residential buildings that

(1) Increasing traffic congestion, hazardous traffic conditions, travel time and

vehicle conflicts on City streets;

(2) Increasing vehicle/pedestrian conflicts resulting in injury or death to

pedestrians; and

(3) Impeding the ability of police, fire, ambulance and disaster response

services to respond effectively to emergency or disaster situations;

The city charter states:

Section 13, Referendum on Zoning.

The City of Houston shall have the power to adopt a zoning ordinance only by: (a) allowing a six month waiting period after publication of any proposed ordinance for public hearings and debate and ( holding a binding referendum at a regularly scheduled election. Any existing zoning ordinance is hereby repealed. (Added by amendment January 15, 1994)

So how can they go ahead and have this hearing so quick and adopt the ordinance. I am assuming all of this is based upon their police powers relating to the public streets. We all know that is a load of garbage, but it is hard to fight the government when they give any reason to courts, the courts will usually listen.

Edited October 30, 2007 by suzerain

[musicman]

13 news just had a story regarding this. the mayor said "this developer isn't as cooperative as other developers." should be interesting.

[CDeb]

the mayor said "this developer isn't as cooperative as other developers."

You mean they aren't willing to roll over throw away a half million bucks?

Whoda' thunk that, Bill?

[RedScare]

13 news just had a story regarding this. the mayor said "this developer isn't as cooperative as other developers." should be interesting.

Gee, I wonder why. Wouldn't have anything to do with an ex post facto kick in the jewels, would it, Mayor?

I am one of Mayor White's biggest supporters, and as I have stated before, I have no dog in this hunt, but this kind of below the belt legislation infuriates me. You just don't go changing the rules in midstream. It is cheap, sleazy and unethical.

I hope the developers do exactly what suzerain suggests, coming in with larger, more expensive 133 units, and adds more retail to the project. A Houston Apartment Association spokesman said on the news that the ordinance is aimed squarely at residential, even though residential has a low impact on traffic. Commercial and retail has the biggest impact, yet it is not addressed by the ordinance.