Three more cases in which the candidate’s legal work pitted him against environmental regulations

Investigative Report by Ken Martin
Part 5 in a series

Austin mayoral candidate Stephen Ira “Steve” Adler has handled hundreds of lawsuits, he says, and he doesn’t want to be judged by the handful in which he represented developers who, through his legal assistance and occasional legislative maneuvering by others, were able to avoid complying with the City of Austin’s current environmental regulations.

“My concern is that others in the city want to get me defined by three cases out of hundreds of cases and there’s a narrative they’re trying to create on the street and it’s not fair and it’s not true,” Adler said in a May 15 interview. (For the record, there are four such cases.)

“I’m talking to as many people in the environmental community as I can,” he said. “I’m asking people to judge me on matters over time and not … walk away thinking I was challenging SOS Ordinance.”

That’s one way of putting it. Another would be that he and other attorneys he worked with helped property owners avoid complying with the Save Our Springs Ordinance, or other environmental protection ordinances that preceded it, by asserting a right to develop under older, less restrictive ordinances.

Whether an attorney running for office should be judged by the clients he represented is a question for voters to decide.

But an attorney’s clients definitely played a decisive role in a past city council election.

Opponent’s clients helped Slusher get elected

In 1996, Daryl Slusher, then a political columnist and reporter for The Austin Chronicle, ran for City Council Place 1. Five others also were running for that seat. Slusher got 42.67 percent of the votes in the general election of May 4.

Attorney Jeff Hart placed second, getting 27.41 percent, to put him in a runoff. Slusher won the June 1 runoff, beating Hart by 1,194 votes to net 51.32 percent.

Slusher—who had come within a hair of beating incumbent Mayor Bruce Todd in 1994—waged his runoff campaign against Hart, a millionaire attorney, in part based on the fact that Hart was representing a rendering plant in Bastrop County owned by Griffin Industries Inc., which had been the subject of numerous air-quality complaints.

As I reported in the May 29, 1996, In Fact newsletter, the Sierra Club was active in the Slusher-Hart runoff and issued a press release noting that at the request of the Texas Natural Resources Conservation Commission (predecessor to the Texas Commission on Environmental Quality) the rendering plant had been sued by the Texas attorney general for 32 separate violations of the state pollution law.

Hart argued the pending lawsuit should have no bearing on who’s best qualified to serve on the City Council. Slusher retorted, “I think it’s significant that I have spent much of my adult life to protect the environment of Austin, and (Hart) represents a corporate polluter.” Hart warned that printing his client was a polluter was libelous as the lawsuit had not yet been tried.

The Sierra Club nevertheless noted that Austin had been creeping toward exceeding the maximum limits for ground-level ozone and Austin could be forced into non-compliance with the Clean Air Act—so who sits on the council mattered.

“Are they going to be fighting our air pollution laws, or helping to enforce the laws to keep our air clean, and protect the people who breathe our air,” stated the Sierra Club’s Scott Royder.

Flash forward to the current mayoral election.

Although Adler’s legal work dealt not with air quality but with gaining rights for property owners to construct more impervious cover over the aquifer, the themes that hurt Hart’s candidacy could play out in the forthcoming mayoral campaign should Adler’s opponents choose to attack him on environmental grounds.

Adler’s representation of a Lowe’s Home Center that was built in Sunset Valley was reported in Part 4 of this series.

Who else has Adler represented in lawsuits seeking to develop projects in environmentally sensitive areas?

Harper Park Two
5816 Harper Park Drive

At dispute in this case was a portion of land on U.S. Highway 290 West (aka State Highway 71), located east of what is now Freescale Semiconductor Inc.’s Oak Hill manufacturing facility, and south of St. Andrew’s Episcopal School. (The tract fronts Highway 290 and is situated between Oakclaire Drive and Oak Boulevard.)

The case involved grandfathering rights bestowed by House Bill 1704 and incorporated into Local Government Code Chapter 245. The statute is intended to give certainty to developers and freeze the regulations that are applied to a project at the time of the initial application.

Section 245.002 states, “Each regulatory agency shall consider the approval, disapproval, or conditional approval of an application for a permit solely on the basis of any orders, regulations, ordinances, rules, expiration dates, or other properly adopted requirements in effect at the time.”

On July 30, 1985, the predecessor-in-title to Harper Park Two filed with the City of Austin an application for a preliminary plan for a subdivision of 98 acres to be known as Harper Park, according to the history cited in Harper Park Two LP, Appellant, v. City of Austin et al (No. 03-10-00506-CV), the Third Court of Appeals decision filed August 18, 2011. The decision invoked the vested-rights protection of Local Government Code Chapter 245 with respect to the “project.”

Because the property was in Austin’s extraterritorial jurisdiction (ETJ), it was subject to the City’s limited authority to regulate platting and subdivision of land by a pair of City ordinances governing subdivisions in the Barton Creek Watershed. The Barton Creek Watershed ordinances could impose limits on density for two categories of development:

• single and two-family residential housing units, and
• “commercial” development, which included “all development other than one or two-family residential housing structures.”

The preliminary plan application proposed a mixed-use development of Condo, Office, and Commercial, with 13 lots, roads, and other infrastructure. Each of the lots were labeled with a use that included Retail, Multi-family, Athletic Club, and Office. One of the lots, about six acres, was labeled for Office use in the preliminary plan. This is the lot that triggered contention later. The labels were not mandatory and not binding at the time, the appeals court decision states.

The City of Austin approved the preliminary plan in November 1985 and, later the same year, annexed the subdivision and gained zoning authority over it. Due to bankruptcy of the original owner the zoning was not approved until 1992, when the property was owned by a bank, per Zoning Ordinance 920123-E.

In the mid-1990s, then-owner of the Harper Park subdivision submitted a revised preliminary plan in which the six-acre lot labeled “office” was unchanged. By that time, Chapter 245 had taken effect and the owner requested determination from the City of Austin as to whether the project would retain vested-rights protections that would allow it to develop under the preliminary plan of 1985. The city issued a determination the property would remain protected.

Section One of Harper Park Two comprised 74 of the original 98 acres and was ultimately developed to construct St. Andrews Episcopal School. That project fronts Southwest Parkway and has no access to Highway 290.

On May 3, 2007, Gail Whitfield formed HP Two-GP LLC and the next day formed Harper Park Two LP, according to files maintained by the Texas Secretary of State.

On June 18, 2007, Harper Park Two LP purchased the remaining four lots totaling 24.0637 acres of the subdivision, from Benash LC, according to the General Warranty Deed recorded June 20, 2007.

In 2007 Harper Park Two applied for a final plat for the six-acre lot, called Harper Park Section Two, and a vested-rights determination that the final plat would be subject to the land-use regulations in effect in 1985. The city rejected the application, asserting that “office” precluded retail uses. The application was revised to call for “Commercial-Office” (an informal term not addressed in city regulations) and the city ultimately approved a final plat in December 2007.

In October 2009 Harper Park Two submitted a site-plan application to build a hotel on the six-acre tract and sought approval under the regulations in effect in 1985. The city asserted that a hotel was a different “project” from the one initiated in 1985 and only an office could be developed on Section Two under the 1985 regulations. To construct a hotel would require compliance with the city’s current land-use regulations (including the SOS Ordinance).

Contending that current impervious cover limits would preclude any commercial development, Harper Park Two sued the City of Austin and its director of Planning and Development Review, Greg Guernsey.

Following a bench trial the district court rendered judgment that the plaintiff’s proposed hotel constituted a change in the project under Chapter 245 and was not entitled to commercial development pursuant to 1985 regulations. “[t]he project on July 30, 1985, was an office,” and [a] hotel is not the same project as an office,” the ruling stated.

Harper Park Two appealed and was represented by Mary A. Keeney of Graves Dougherty Hearon & Moody, Terrence L. “Terry” Irion of the Law Office of Terrence L. Irion, and Adler.

The Third Court of Appeals found that “the relevant ‘project’ under Chapter 245 is the Harper Park subdivision as a whole—as reflected in the 1985 preliminary plan application—not the six-acre lot viewed in isolation.”

The appeals court agreed that the “project” identified in the 1985 preliminary plan application was a “commercial” development, as defined under the then-applicable Barton Creek Watershed Ordinance and was not limited to an office building or any other specific type of “commercial” development.

“We would further observe that the City’s approach strikes at the heart of a statute that, as previously noted, is intended to combat regulatory uncertainty.”

The decision, issued August 18, 2011, states, “We reverse the district court’s judgment and render judgment declaring that Harper Park Two is entitled to develop Section Two as a hotel, office, or any other commercial use consistent with the rules, regulations, ordinances, and requirements in effect on July 30, 1985….”

On February 29, 2012, the City of Austin petitioned the Supreme Court of Texas in City of Austin et al v. Harper Park Two L.P. for review of the judgment rendered by the Third Court of Appeals, claiming, “The decision mistakenly assumes that all commercial projects are alike for purposes of establishing vested rights under Chapter 245, regardless of differences in scale, intensity, or use.”

The City of Austin’s position was supported by the Texas Municipal League, which filed a letter of Amicus Curiae on behalf of its 1,100 plus member cities, stating, “[T]he purpose of Chapter 245 would be defeated by allowing a landowner to file a ‘placeholder’ subdivision plat for a project and later assert vested rights, no matter how unrelated the use.”

The petition was denied March 9, 2012; the Supreme Court did not take up the case, so the appeals court judgment stood—much to the dismay of Austin environmentalists.

The Appeals Court decision is relatively recent and it has been cited in few subsequent cases. But the “full impact is not in the public record, but how government and developers arrange their business in light of this decision,” says Bill Bunch, director of the SOS Alliance,

Greg Guernsey, director of the city’s Planning and Development Review Department agrees with Bunch. He said Harper Park Two decision has changed how the city handles applications for which grandfathering rights are claimed.

“If we have a case similar to Harper which started in the county, where we don’t have land-use controls, a subdivision in Austin’s ETJ, we would treat it similar to Harper with respect to granting it vesting or grandfathering … where we might not have done it before,” Guernsey said.

“Given a similar set of facts I would treat it more liberally than looking at drilling down to a specific use on a specific property,” Guernsey said.

Will Schnier, chief executive officer of Big Red Dog Engineering and a board member of the Real Estate Council of Austin, wrote about the Harper Park Two case in an undated article on the firm’s website and concluded, “While each case is unique and must stand on its own merits and facts, Harper Park Two will no doubt have lasting effects on future Chapter 245 claims for projects in the City of Austin.”

Bunch said that the Harper Park Two case further erodes essential growth management powers—not just for Austin but for all cities and counties across Texas.

Adler disagrees. In responding to Bunch’s assertion, he said, “I don’t think so because I construe that opinion apparently much more narrowly than Bill Bunch is describing. And I would argue for its narrow application if I was mayor.”

Does the Harper Park Two decision affect how other jurisdictions would handle claims for development with vested rights?

Guernsey said, “I would assume so, statewide, not just Austin, because it’s a ruling I’m sure other cities would have taken into consideration. I’m not an attorney, but attorneys representing the property owners would probably say the same thing.”

One World Theatre
7701 Bee Caves Road

One World Theatre sits on an 8.328-acre hillside tract west of Loop 360. The popular live music venue was built in 1999 when owned by Barton Creek Art Center Ltd.

On November 29, 2007, the theatre was sold to BCAC Acquisition LLC, according to deed records. BCAC is owned by Hartt Stearns and Edna Stearns, according to corporate records maintained by the Texas Secretary of State.

One World itself was started in 1993 as a 501(c)(3) nonprofit by Hartt Stearns and his future wife, Nada, according to the theatre’s website.

A site plan application for the Barton Creek Arts Center was approved by the City of Austin February 2, 1999, authorizing three buildings. A 2003 site development permit designated the three buildings as Phase I, and designated a proposed kitchen and amphitheater as Phases II and III, respectively, the petition states. Development of all three phases would cover some 2.426 acres with impervious cover, or 29 percent of gross site area in compliance with the Barton Creek Watershed Ordinance—and not the Save Our Springs Ordinance.

Phase II construction of the kitchen project was halted by the City of Austin’s stop-work order issued April 23, 2012, based on a claim that the site plan had “expired.” BCAC did not agree but nevertheless applied for a new site development permit for the previously approved phased development, and asked the city to recognize development was entitled to proceed under the Barton Creek Watershed Ordinance.

The city refused consideration of the new application under that ordinance and indicated it was not entitled to Chapter 245 protection. As a result, the lawsuit filed September 28, 2012, sought a declaratory judgment that development on the site was subject only to rules in effect in July 1983, the date the first permit application initiating the project was filed, according to the petition in BCAC Acquisition LLC v. City of Austin (Cause No. D-1-GN-12-003061).

“You won’t find more environmental or pro-green folks,” Hartt Stearns said of the owners, in an Austin American-Statesman story October 1, 2012. “We built a theatre 13 years ago made of 85 percent recycled Styrofoam. But if we have to go under the SOS Ordinance, we have to shut down the organization.”

Attorneys Steve Adler and Terry Irion represented BCAC in the lawsuit.

“For the record, I did not seek and I was not paid a legal fee for representing One World (Theatre), an arts nonprofit that, when I was approached, was facing the prospect of having its theatre closed by the city.”

The petition states that when the preliminary plan for the project was filed the property was in the extraterritorial jurisdiction (ETJ) of the City of Austin and subject only to the Barton Creek Watershed Ordinance, and thus entitled to 35 percent gross site area imperious cover. The property was annexed for limited purposes May 5, 1984, and zoned for office use, a commercial use consistent with the initial project, the petition states.

As in the Harper Park Two case, the lawsuit notes that the Barton Creek Watershed Ordinance did not distinguish between office uses and other commercial uses.

The lawsuit claimed the development was entitled to Chapter 245 protection or, in the alternative, plaintiff was entitled to take advantage of Plat Notes 6 and 7 in the final plat of the property, which would be more favorable than the SOS Ordinance, and would entitle the project to 35 percent impervious cover.

Attorneys Adler and Irion, on behalf of BCAC, filed a motion for summary judgment December 11, 2012, based on the same alleged facts contained in the original petition, and with numerous supporting exhibits. Among the legal precedents cited in the motion was the Third Court of Appeals decision in Harper Park Two LP, Appellant, v. City of Austin et al (No. 03-10-00506-CV), the case that Adler and Irion previously helped to win. But both Adler and Greg Guernsey, director of Planning and Development Review, stated that the deciding issues in these two cases were different.

The motion for summary judgment states, “The City has approved site plans and plat notes for the Project and has allowed the continued use of the One World Theatre complex for 14 years in a manner that is consistent with the Barton Creek Watershed Ordinance and that would be in violation of the SOS Ordinance. The One World Theatre complex has never been intended to comply with the SOS Ordinance by either the Plaintiff or the City. The only construction that has occurred on the property since the 1983 Preliminary Plan has been the One World Theatre complex and Phases II and III are continuations of that use.”

The City of Austin filed an amended answer to the lawsuit December 21, 2012, denying the material allegations. The answer pleaded the defense of governmental and sovereign immunity and stated that plaintiff BCAC had waived its right to complete construction under the Barton Creek Watershed Ordinance and waived its right to assert entitlement under the plat note.

Once again the litigation was playing out under the watchful eye of the Texas Legislature that would convene in January 2013.

State Representative Paul Workman (R-Austin) filed three bills that targeted the Project Duration Ordinance, according to a Westlake Picayune article April 4, 2013. The City’s Project Duration Ordinance was further undermined by a December 10, 2012, opinion issued by Texas Attorney General Greg Abbott.

Adler, however, says, in an e-mail reply to a request for comment about the One World lawsuit, “…any legislative activity targeting the city’s Project Duration Ordinance, albeit occurring at about the same time, was not relevant to the One World Theatre matter because the contested legal issues in One World Theatre did not turn on the project duration issue. That the AG had issued an opinion that stated the city’s ordinance was void because it conflicted with state law does not demonstrate otherwise.

Adler further notes that the Attorney General’s opinion, which happened to be issued during this litigation, was requested by State Representative René Oliveira, chair of the Committee on Land and Resource Management, in a letter of June 22, 2012—months before the BCAC lawsuit was filed.

“It is also unfair and inaccurate to suggest that the project duration issue, the city’s related ordinance (later repealed), the AG opinion on the matter, and pending legislative action were relevant to anything I was working on with the One World Theatre matter. The Legislature was not threatening a bill that addressed the legal issues on which One World Theatre relied.”

Nevertheless, with the legal ground for regulating land development rapidly receding beneath the city’s feet, a Mediated Settlement Agreement (for which a public information request has been pending since June 2, 2014) was approved March 28, 2013, through passage of Ordinance No. 20130328-018. The vote was 6-0 with Council Member Kathie Tovo casting the lone nay.

“As I looked at the terms of the (settlement) agreement and looked at what would be required under (the SOS Ordinance), I just could not get comfortable with the extent to which this would be in variance,” Tovo said, according to an April 4, 2013, Westlake Picayune article.

City staff recommended approval of the agreement, according to the Picayune article: “The site has been, from an environmental standpoint and an environmental code compliance standpoint, in disrepair and noncompliance for years,” City Environmental Officer Chuck Lesniak told Council members. “This agreement will get them to, at least from an environmental functionality standpoint, significantly improve the situation out there.”

The ordinance waived and modified the site development regulations, legitimized the structures and improvements on the site, and allowed construction of the remaining phases, all in exchange for greater water quality controls and less impervious cover that earlier regulations for which vested rights were asserted. (For details see: Mediated Settlement Agreement Cause No. D-1-GN-12-003061.)

South MoPac at William Cannon
Dunaway and Garza v. City of Austin

Eli Garza owned 34.6 acres of land at this major South Austin intersection, part of the Garza Ranch his parents purchased in 1928.

In 1991, this tract was platted for 10 lots of commercial development. The plat notes allowed Garza 70 percent impervious cover on his remaining lots in exchange for deeding to the City of Austin two lots totaling about 3.5 acres, which the city would use to extend the Williamson Creek Greenbelt.

Garza conveyed those lots to the City of Austin in a Special Warranty Deed recorded October 8, 1991.

In July 1996 Garza sold one of the remaining lots to Circle K Corporation. The City of Austin refused to approve Circle K’s site plan, which called for 70 percent impervious cover. The city wanted development limited to 18 percent. Circle K appealed. In February 1997 the Planning Commission granted the appeal and the right to 70 percent impervious cover.

In July 1997 Gordon Dunaway of Provident Realty Advisors Inc. contracted to buy 5.4827 acres of the Garza Ranch Subdivision for commercial development, subject to approval of a consolidated site plan from the City of Austin.

The city denied approval, maintaining the site plan must comply with an Interim Non-Degradation Ordinance. This notwithstanding the fact that the recorded plan for the Garza Ranch Subdivision allowed greater impervious cover under the plat notes, which reflected the deal made when the subdivision was platted.

Later in 1997 Dunaway and Garza sued the City of Austin (Gordon Dunaway & Eli J. Garza v. City of Austin, Cause No. 97-12434) and the litigation lasted for years.

A key factor in the city’s defense was the argument made in testimony of James Patrick Murphy Jr., the city’s environmental officer. Murphy’s deposition stated the plat granted by the Planning Commission, which allowed the Garza Ranch Subdivision to be developed under the Comprehensive Watershed Ordinance, was in error “because it violates and contradicts City of Austin watershed protection ordinances.”

The case was tried December 19, 2002, before Judge Pete Lowery of the 261st Judicial District. Lowery issued judgment on February 3, 2003, in favor of plaintiffs Garza and Provident Realty Advisors Inc.

Steve Adler was not involved in the lower court lawsuit, in which the plaintiffs were represented by attorneys Terry Irion and Glenn K. Weichert.

Adler came into the case when the City of Austin filed an appeal. (See City of Austin, Appellant, v. Eli J. Garza and Provident Realty Advisors Inc., Appellees, Cause No. 03-03-00307-CV.)

On December 18, 2003. the Third Court of Appeals issued a decision in favor of Garza and Provident Realty Advisors to bar the city from requiring the developer to comply with restricted impervious cover requirements and to allow development to proceed in accordance with the approved subdivision plat.

In other words, the developer was entitled to 70 percent impervious cover—not 18 percent as the city contended—which was the quid pro quo for the city accepting the land to extend the greenbelt. In this case the city was in essence forced to keep its part of the bargain it had struck with the landowner.

Property rights or environmental baggage?

The Austin Bulldog’s two lengthy reports of Adler’s involvement in lawsuits that pitted the rights of landowners against the rights of the City of Austin to regulate land development for environmental protection are now concluded. How these matters will be judged will be for voters to decide.

Next up: Steve Adler as land developer

Links:

Harper Park Two Corporate Records (11 pages)

Timeline for Environmental Litigation Involving Attorney Steve Adler

Previous Bulldog coverage:

Steve Adler’s Baggage: Environmental Lawsuits: Mayoral candidate a lawyer whose work puts him at odds with environmental organizations, May 21, 2014

Steve Adler Launches Mayoral Campaign: Big crowd turns out on a hot day to hear what the little known candidate would do, May 5, 2014

What’s Steve Adler Done for Austin? This mayoral candidate has given significant time, energy, and money to numerous important causes, May 1, 2014

Steve Adler Wants to Be Mayor: He views the 10-1 system as a gift and an opportunity to restart, revitalize city government, April 23, 2014