Walmart Supercenter At 111 Yale St.

[TheNiche]

Good for you for not supporting 380s in general. Wal-Mart has as much to do with this as does Murphy's Deli, whether Murphy's Deli is a tenant or not. Water, sewer, and storm sewer connections are obviously required; traffic control measures of this extent may or may not be. As a statement of fact, your comments are either ill informed or coercive; I have not decided which.

[Leonard]

The traffic control measures in the 380 are all required in the Traffic Impact Analysis that Ainbinder had prepared as required by the City. This is a fact.

Murphy's Deli is not required to open in the Ainbinder 380 for reimbursement - the Walmart is. That's why Walmart is relevant to the 380 and Murphy's Deli has nothing to do with it. This is a fact.

"As a statement of fact, your comments are either ill informed or coercive; I have not decided which." You don't know what a "fact" is, a "fact" either is or isn't, it's not something that you decide.

[RedScare]

TheNiche, I don't support ANY 380's. I don't know if RUDH does or not.

How could Walmart not "need" the infrastructure in the 380? They are required to connect to water, sewer and storm sewer. They are required to put in traffic control measures (turn lanes and traffic signals).

My comments are neither ill informed nor coercive.

You linked to the exhibit showing all of the improvements provided by the 380. It far exceeds water, sewer and storm water connections. It calls for replacing the sewer and storm water pipe over the length of that section of Yale. It also calls for replacing the entire roadbed, something that Ainbinder or Walmart would not normally be required to do. To make connections, they would normally simply cut the asphalt, make the connections, and repave the cut. The 380 replaces the entire street and adds expanded sidewalks.

Given that you found the link and probably read what you found, the evidence suggests your arguments to be coercive, rather than ill-informed...unless you actually believe retailers are required to replace streets when they build.

[samagon]

s3mh - you are exactly right. 380's were not set up to be loans TO the City, they're supposed to be loans or grants FROM the City.

Both the Ainbinder and Kroger 380's are set up as loans to the City for work that should be paid for by the developer.

whoa wait, since when is a 380 ONLY for the use of a loan?

http://www.statutes.legis.state.tx.us/Docs/LG/htm/LG.380.htm

Sec. 380.001. ECONOMIC DEVELOPMENT PROGRAMS. (a) The governing body of a municipality may establish and provide for the administration of one or more programs, including programs for making loans and grants of public money and providing personnel and services of the municipality, to promote state or local economic development and to stimulate business and commercial activity in the municipality.

The word is INCLUDING, it doesn't say LIMITED TO. Please correct me if I'm wrong, and don't be shy about including references!

[Leonard]

Redscare, the current storm water system isn't big enough to handle the runoff from Walmart and keep the parking lot from flooding, that's why they are replacing it - to provide bigger pipes. There is nothing in the 380 Exhibit C list I linked to about replacing Yale, only providing a left turn lane.

The requirement is to return the street to the condition before the cuts were made. Patching is not allowed unless the street is on the 5 year plan.

Samagon, hopefully RUDH will win it's lawsuit against this 380. I stand by my statement, if it was originally intended for private enterprise to provide loans to the City at uncapped interest to fund improvement the developers would have been required to do, they would have listed it.

[samagon]

Samagon, hopefully RUDH will win it's lawsuit against this 380. I stand by my statement, if it was originally intended for private enterprise to provide loans to the City at uncapped interest to fund improvement the developers would have been required to do, they would have listed it.

You're certainly entitled to your opinion, the way it reads the intended purpose is to do exactly as it says:

...to stimulate business and commercial activity in the municipality.

So, I'm going to go with what the law states vs. your interpretation of it. If you can provide some data to show me that your thoughts are more than just your opinion, I'll be more inclined to not disagree with your statement.

Basically, if you can show some legal precedence that backs up your understanding of the law, that's really what I'm hoping you can provide.

Otherwise, the court hearing this case will be making the legal precedence. I just hope that if the city wins RUDH can afford to pay, rather than it falling to my tax dollars paying for their failed boondoggle.

[RedScare]

Redscare, the current storm water system isn't big enough to handle the runoff from Walmart and keep the parking lot from flooding, that's why they are replacing it - to provide bigger pipes. There is nothing in the 380 Exhibit C list I linked to about replacing Yale, only providing a left turn lane.

The requirement is to return the street to the condition before the cuts were made. Patching is not allowed unless the street is on the 5 year plan.

Samagon, hopefully RUDH will win it's lawsuit against this 380. I stand by my statement, if it was originally intended for private enterprise to provide loans to the City at uncapped interest to fund improvement the developers would have been required to do, they would have listed it.

Now you are simply making things up. Are you an alter ego of s3mh? Contractors patch roads all over the city. And a 6 foot cut in the street does not necessitate a total rebuild of a quarter mile stretch of road. Are you that ignorant, or do you just hope that we are?

As for the storm water comment, where is your proof? The city now requires 18 inch culverts in the ditch in front of my house, even though the ditch never floods. New standards are different from "cannot handle".

[s3mh]

whoa wait, since when is a 380 ONLY for the use of a loan?

http://www.statutes..../htm/LG.380.htm

The word is INCLUDING, it doesn't say LIMITED TO. Please correct me if I'm wrong, and don't be shy about including references!

The City of Houston ordinance creating the City's 380 program is limited to loans and grants. Although, the Walmart 380 is effectively a grant because it allows the developer to recover its cost from taxes. But to the extent the improvements are not required, then it is basically a financing agreement with the developer providing financing to the City.

[Leonard]

Redscare, I repeat: replacing Yale is not in the 380 Exhibit C on the City's website.

Samagon, "to stimulate business and commercial activity in the municipality". Ainbinder said the project would go forward without the 380. Therefore, the 380 does not stimulate anything. I'm hoping that RUDH sets some legal precedence.

[s3mh]

Good for you for not supporting 380s in general. Wal-Mart has as much to do with this as does Murphy's Deli, whether Murphy's Deli is a tenant or not. Water, sewer, and storm sewer connections are obviously required; traffic control measures of this extent may or may not be. As a statement of fact, your comments are either ill informed or coercive; I have not decided which.

Walmart bought the land. They are not leasing from the developer. The trafic control measures are required mitigations. No traffic engineer in the world could jack up the numbers enough to make a Walmart anchored development work without any left turn lane access from the main traffic artery.

[samagon]

The City of Houston ordinance creating the City's 380 program is limited to loans and grants. Although, the Walmart 380 is effectively a grant because it allows the developer to recover its cost from taxes. But to the extent the improvements are not required, then it is basically a financing agreement with the developer providing financing to the City.

I don't disagree with what you're saying, but as this is the first I have heard that Houston has a ordinance that states what you're saying, I'd love to see it myself

the code is big, please reference so we're working off the same data:

http://library.munic...?clientId=10123

If the city is acting against it's own ordinances, I'd be happy to donate to the cause.

Edited March 29, 2012 by samagon

[s3mh]

I don't disagree with what you're saying, but as this is the first I have heard that Houston has a ordinance that states what you're saying, I'd love to see it myself

the code is big, please reference so we're working off the same data:

http://library.munic...?clientId=10123

If the city is acting against it's own ordinances, I'd be happy to donate to the cause.

It is ordinance no. 99-674. It is referenced in the Walmart 380. I do not think it got put into the code of ordinances. It is just like the zillions of ordinances that are passed everyday to approve expenditures etc. I saw it online once, but cannot remember where. Maybe someone else has a link.

[samagon]

It is ordinance no. 99-674. It is referenced in the Walmart 380. I do not think it got put into the code of ordinances. It is just like the zillions of ordinances that are passed everyday to approve expenditures etc. I saw it online once, but cannot remember where. Maybe someone else has a link.

thank you for trying at least. I did see that 99-674 was the ordinance, but can't find it online.

I'm not sure if this was posted previously, but I found the lawsuit itself...

http://dig.abclocal....H380Lawsuit.pdf

it is interesting to note that in the lawsuit there is mention that the current 380 agreement was amended because RUDH mentioned that the city wrote a 'blank check' which no matter how I try to understand it, it always sounds like RUDH was accusing the city of giving the developer money, as in a loan (and a loan with no cap), not the other way around.

no matter, the crux of my understanding of the 'spirit of the law' is to promote development by whatever means the city has available. I'm expecting we'll find out that this is how the city intended to execute the law, not limit itself to only a specific handful of tools to execute a 380 agreement.

I was hoping though that you could shed some light otherwise, and really until we can read the ordinance for itself, we can't do much other than make conjecture on what we expect the ordinance allows, or doesn't.

Edited March 29, 2012 by samagon

[Leonard]

The "blank check" statement is because the 380 intially allowed a single City staffer increase the amount of the 380 w/o it going back to Council. I don't remember which staff member. The Parker Administration amended the 380 to cap the 380 at $6.05M (interest is outside the cap, however) because of protests from RUDH and others.

SilverJK, great input to the debate, however, it was s3mh who brought up the 99-674 Ordinance, although I have read it.

[SilverJK]

Well, i figured since others were making up "facts" i might as well too.

[Leonard]

The Houston Press links to Ordinance 99-674 in this article:

http://blogs.houstonpress.com/hairballs/2010/10/heights_walmart_ainbinder_380.php

Follow the Houston 380 Ordinance link.

SilverJK, yes, it's me Leonard making this post.

s3mh - I like my bridge icon. Speaking of bridges...

[TheNiche]

Ainbinder said the project would go forward without the 380. Therefore, the 380 does not stimulate anything.

Let's say that you were a sport fisherman and you went catfish noodling in a pond nearby. You wish that it were stocked with bass and that the rutted road would be filled in, but it isn't. You still go noodling. A local municipality considers stocking it with bass and installing some aerators to improve the ecosystem, but some joyless numbskull argues that since sport fishermen already enjoy the use of the pond, it isn't beneficial to make it any more enjoyable. (The numbskull would prefer that the money be used to lure a "chef-driven restaurant", whatever the hell that is.) You'd be pissed, right, because that's just stupid. Your behavior may not change, but you and people like you would still enjoy the improvements...even if none of you could afford to finance them on your own.

If the 380 doesn't stimulate anything, then why would the developer bother with it? Clearly there is a public benefit, just not enough for the developer to agree to pay for such things as scraping and re-painting the Heights and Yale bridges, or to remove an old railroad bridge over White Oak Bayou, or to re-grade and re-seed the bayout itself without sharing the cost by some public mechanism. (All of these things are part of the 380 Agreement.)

[Leonard]

The developer bothers with it because it gets the City to reimburse them for all of the items in the 380, the vast majority of which they are required to do. Plus interest.

So they do the work on the bayou, they get paid back plus an uncapped amount of interest at an uncapped rate. They're making money on it.

[Leonard]

It's easy to see in the Kroger one. Kroger is making a $40K "donation" to Olivewood. For this faux-lanthropy, Kroger gets paid back the $40K plus 5.17% interest. That's a pretty good rate.

Same deal with the stuff Ainbinder is doing, except we don't know the interest rate.

[samagon]

The Houston Press links to Ordinance 99-674 in this article:

http://blogs.houston...nbinder_380.php

Follow the Houston 380 Ordinance link.

SilverJK, yes, it's me Leonard making this post.

s3mh - I like my bridge icon. Speaking of bridges...

Thanks for linking it, dug in and found the direct link:

http://media.houstonpress.com/5545889.0.pdf

note that it says that they accept gifts (4th whereas) as well as offer loans and grants.....

then under section 1-ii it states again, to accept contributions, gifts or other resources persuant to section 380.001 of the local government code...

I hope that the only leg wasn't that this is not a loan....

[Leonard]

It's called an Infrastructure and Financing Agreement, so maybe it is a loan. But it's definitely not a loan TO Ainbinder. If it is a loan, it's a loan FROM Ainbinder TO the City. To pay for stuff Ainbinder should be paying for.

[TheNiche]

The developer bothers with it because it gets the City to reimburse them for all of the items in the 380, the vast majority of which they are required to do. Plus interest.

So they do the work on the bayou, they get paid back plus an uncapped amount of interest at an uncapped rate. They're making money on it.

I would contend based on Exhibit C of the executed 380 Agreement that they would not be required to perform the vast majority of the scheduled items if the 380 had not been executed. Earlier language within the agreement requires Ainbinder to conform to local codes and ordinances and authorizes Ainbinder to bill the City for compliance with respect to the infrastructre that is being built for the City, but that's a perfectly reasonable default condition. I can see how it seems confusing, however.

I would also contend that to the extent that Ainbinder finances the improvements with debt, Ainbinder only gets reimbursed for the cost of the debt. In that situation, Ainbinder does not make any money, however Ainbinder is being indemnified by the City so as that it is Ainbinder's responsibility to properly construct the improvements and to properly deal with its contractors and subcontractors. Construction is a risky enterprise, so Ainbinder's commitment is valuable. If Ainbinder finances the construction with its own money, it is only entitled to the prime rate plus one percent, which at this moment equates to 4.25%. But that means that they've tied up their money indefinitely for a rate of return that is a fraction of the IRR that is being sought from the development itself. Ainbinder is not a subsidiary of Bank of America, after all, they're a small business. They'd CERTAINLY rather have the money in their pocket than have it be tied up in the City's infrastructure. The opportunity cost is too high, meaning that Ainbinder ends up leaving money on the table.

Again...I don't pretend to believe that the City structured the deal optimally and I am against it, but your criticisms are unfounded.

Edited March 29, 2012 by TheNiche

[Leonard]

TheNiche - you're wrong about the infrastructure not being required. They have to connect to water, sanitary sewer and storm sewer systems. Surely you concede that these items in the 380 are required (Walmart needs water for it's low flow urinals and somewhere to flush them to). They have to provide traffic controls - it's in the Traffic Impact Analysis they had to commission. For example, the $200K traffic signal at Yale and Koheler is REQUIRED for the development - the developer should pay for this.

The idiotic language in the 380 saying they have to conform to codes and ordinances means nothing - of course they have to conform to codes and ordinances - whether or not there is a 380.

If COH does not pay the entire amount on the 15th month anniversary of the grand opening of the Walmart, the interest rate is 10%.

In the Council discussion of the Kroger 380, CM Clutterbuck said COH can borrow money with tax exempt bonds at 2.55%, or taxable bonds at 4.06%. Both of these are lower than 4.25%.

Ainbinder most likely thinks this is a good deal or they wouldn't have made it. If they CERTAINLY would rather have the money than have it tied up in infrastructure, then CERTAINLY they wouldn't have made this deal.

[RedScare]

TheNiche - you're wrong about the infrastructure not being required. They have to connect to water, sanitary sewer and storm sewer systems.

I'm confused by this. Would you explain what YOU believe connecting to water, sanitary sewer, and storm sewer entails? Would you be so kind as to give YOUR estimate of what this would normally cost? Would you give YOUR estimate of what demo and reconstruction it would entail?

The reason I ask is that MY experience with this things involves at best a few thousand or ten thousand dollars. Water lines are generally not under the street, and invloves cutting into the existing line and adding a meter. Not expensive. Sanitary sewer lines are also often not under the street, though occasionally they are. Connection involves cutting into the pipe to add the connection. Sometimes, it involves cutting out a section to add a section with a wye built in. More expensive than water connections, but not prohibitive. Storm water connection depend on how much drainage is needed. It is the most expensive, but again, not more than a few tens of thousands of dollars.

The 380's most expensive provision involves purchasing land and building an extension of a street. This is definitely not required in order to build the Walmart. The city wants it, and asked Ainbinder to build it. But, I'd like to know what YOU think is required and what it cost.

[TheNiche]

I'd like to know what YOU think is required and what it cost.

Me too. Please itemize and cite the relevant ordinances.

[Leonard]

You are absolutely right - the costs listed in the 380 are probably much too high - and 20% soft costs and 20% contingency on top of that is way out of line.

All of the water, sewer and storm sewer connections are listed as belonging to a street - possibly because they run under the street. For example, half of Bonner (one lane) was torn up for the sanitary sewer connection - it's listed under the Bonner Street section. Just to make the sanitary sewer connections the 380 Exhibit C lists these costs as over $70K (not including any road work). I guess you could have saved the City tens of thousands of dollars on just this work alone.

But you can read the 380 yourself and see what they say it all costs.

The Koehler extension is listed in the Traffic Impact Analysis: "As part of the proposed retail development additional roadway improvements are planned as a deliberate effort to enhance mobility, provide access and reduce the impact of this development on traffic." It's required, like the traffic lights and the turn lanes.

The 380 itself calls the Improvements (the Exhibit C list) "necessary to serve the Project".

[TheNiche]

Why do you think that the soft costs and contingency are way out of line? What is reasonable in your view? Why is your view more valid than those that authored the agreement?

Also, I would advise you to go back and read the 380 agreement, as well. You should see what it says and what the costs are. You should itemize the infrastructure that is required of all new development and cite the ordinance that requires it. I'm asking this of you because it was obvious at first that you were criticizing the 380 Agreement without having read it. Now, you read it, and have moved onto citing code without having read that.

The TIA sounds like it took into account certain assumptions as defined in the scope of services. I'd imagine that the strip center across the way required an appraisal assuming the presence of Wal-Mart, the anchor store, in order for the developer to obtain construction financing. It doesn't mean that a Wal-Mart is mandated by law or even by the loan docs. By the way, can I get a link to the TIA?

As for the 380 stating what is "necessary", RedScare is a lawyer. Perhaps he would be so kind as to provide us with the legal definition of the term when it is not propped up by even the slightest mandate or consequence.

Edited March 30, 2012 by TheNiche

[Leonard]

I think 5% contingency would be more in line, and not on top of soft costs. The Kroger 380 has 10% contingency, not on top of soft costs. Although the Kroger 380 includes contingency on the $40K "donation", which makes no sense.

I've read the Ainbinder 380 many times, starting when it first came out. Yes, I have gone back to refer to it.

I'll try to find a link to the Ainbinder TIA.

[RedScare]

I think 5% contingency would be more in line, and not on top of soft costs. The Kroger 380 has 10% contingency, not on top of soft costs. Although the Kroger 380 includes contingency on the $40K "donation", which makes no sense.

I've read the Ainbinder 380 many times, starting when it first came out. Yes, I have gone back to refer to it.

I'll try to find a link to the Ainbinder TIA.

If you had read the fine print at the bottom of Exhibit 'C', you would have seen that these are estimates. It is entirely possible that these numbers come in much lower, given current conditions in the construction industry. It is also possible that this 5% contingency may in fact occur. Reading what is actually stated, as opposed to imagining the worst case, helps.

[Leonard]

Of course it's an estimate. Contingency can ONLY be on an estimate. Actual amounts are never spent on "contingency", they are spent on actual stuff.

You're the one that originally said these amounts are too high. I was agreeing with you.