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The Making of Downtown North · 09.28.07

Written by Richard Whittaker for The Austin Chronicle

It's been derided as a shopper's Disneyland and pre-emptively dismissed by many Central Austinites as a strange, upmarket interloper, more suited for the tonier districts of Dallas or Houston. But if the developers and the city planners manage to deliver what they say they have in mind, the still-sprouting Domain shopping and residential complex on what is now the near north side will start to look a lot more like Austin. And – what may strike greater fear in the hearts of the Faithfully Weird – Austin may begin to look a lot more like the Domain.

At the moment, the development itself doesn't look like much, at least on the long approach. Driving in from Braker Lane, visitors progress along the uninvitingly named Domain Drive, where the only visible green is the cloth barrier that hides the demolition work. Beyond that is what looks like an industrial wasteland, accompanied in the distance by the gentle sound of backhoes and wrecking balls. A dusty expanse of concrete pad and gravel is interrupted by a forest of electrical pylons and mounds of rubble.

Then, suddenly, there's a brand-new Macy's. Park, and walk around it, and there's what appears to be a recently refurbished, meandering European town street – three- and four-story buildings with apartments above street-front stores, broken up by small plazas and shaded by well-established trees. Except – most small European streets don't have a Neiman Marcus. Nor a Tiffany's. Nor a Louis Vuitton. But then, neither do most Austin streets.

Welcome to the Domain, where it's not like most of Austin. Yet.

What's in a Name?

When it comes to urban development, it's hard to hear the word "domain" without sticking "eminent" in front of it. But for all its recent negative associations of diminishing private-property rights, the place name for this project actually dates back to the heady days of the dot-com boom – and shortly thereafter, which tells the whole tale. In 1999, the newly formed Endeavor Real Estate Group, in partnership with private equity investors the Blackstone Group and JER Partners, acquired the 304-acre former IBM campus on North MoPac. With its shift away from manufacturing to support at the site, the computer behemoth needed less of a construction footprint for its 6,200 employees. At that point, according to Endeavor principal Kirk Rudy, "the plan was to demolish the buildings and put up offices for the dot-com industry. Literally, within a matter of months, that strategy was proven to be a failure. Then we thought, 'We've got a significant power and fiber infrastructure, so let's build a 2-million-square-foot telecom hotel.' And then the telecom market collapsed. So we were really scrambling to get some value from the land."

So while the planning ground shifted, the cyberspace name persisted – for a "domain" that turned back to its future as a commercial and residential fiefdom. A 55-acre slice of the site, adjoining MoPac, was basically free of tenants and ripe for quick redevelopment. Realizing that its high tech plans were dead, Endeavor took the project in a completely new direction: a mixed-usage or "new urbanist" community, combining retail and residential in a neatly defined neighborhood. One problem: The old partners weren't interested in this new kind of development. So Endeavor refinanced with RREEF Alternative Investments and started looking for partners. They settled on Illinois-based Simon Property Group Inc., experts in mall development who already ran several sites around Austin including the Arboretum and Highland Mall.

But this project would be as different from those malls as it was from Endeavor's original plan. It would be what urban planners, and increasingly the city of Austin's neighborhood gurus, call "vertical mixed use": stores below, residences above. More importantly, the shopping demographic would be far removed from the traditional low-key Austin approach. The developers would court A-list commercial tenants like Barneys New York Co-op and Sur la Table and thereby create a "regional shopping destination" – a commercial venture that in recent decades had been confined by definition to the suburbs, not the new urban core.

The immediate appeal for the city to rezone this light industrial property to attract a bunch of tony stores, in turn dragging in the big-city swells and high-end shoppers, was simple: sales tax. According to Fred Evins, redevelopment project manager for the city's Economic Growth and Redevelopment Services Office, "We'd seen more retail sales go to Round Rock and San Marcos and surrounding areas. The city's share of sales-tax dollars in the region was shrinking, and it was hoped this would turn that tide by providing a unique destination."

It wasn't just about getting out-of-town shoppers spending their tax dollars within city limits; it was also about keeping the city's own affluent shoppers here. "One of the things I always appreciated about Austin was the laid-back, comfortable approach," said Evins, "But there's more than one facet to Austin, and there are more black-tie events, more fashion, and more money coming in with the tech companies. This is meeting the market demand. It may not be the traditional Austin, but it's appealing to a market sector."

For Endeavor and Simon, the obvious downside was the upfront cost. This wasn't going to be a bolt-together strip mall, nor even a high-end strip mall but an "integrated retail environment" meant to attract demanding tenants with a world-class reputation. Increased residential density means more people, which means more parking, but the initial point of the project had been to get better use from IBM's massive areas of old surface parking. The new direction meant costly structured parking. The city was also looking for improved public amenities, like wide, pedestrian-friendly sidewalks, public art, and trees. To facilitate these goals and to help underwrite them, Endeavor and the city struck a deal: $25 million (notably, in 2003 dollars), paid out over 20 years to the developers, and based on sales- and property-tax receipts.

The incentive cash was in part intended to allow the developers to spend extra money on finishings to attract high-end retailers like Neiman Marcus. However, it was also an incentive package to get small local businesses and affordable housing into the development. "Simon told me that, if they'd approached this, they'd only have worked with national retailers," said Evins. But with a million dollars in promised incentives, seven local businesses either opened or moved on-site. (That still accounts for only around 10% of the stores currently planning to open along the Domain's main shopping street.)

According to Amy March, co-owner of teahouse the Steeping Room, not only would her firm probably never have moved to the Domain without those incentives, but it might never have opened at all. March had helped set up Central Market's specialty tea program at the north store and had been looking to open a gourmet tearoom that would also serve food. She and her business partner, Emily Morrison, had been looking in South and Central Austin for a site for their new business. But finding somewhere affordable where they could serve the menu they wanted to the clientele they needed seemed impossible. "All these places were interested in us," said March, "but we were an upstart start-up, and they'd whittle us down into a space that wouldn't give us any business." In December 2005, they saw the plans for the Domain and found the developers were already negotiating with a national tea chain. The incentive package helped get them through the door instead. It still wasn't going to be cheap, but as March noted, "Real estate is expensive everywhere. For a more established business, they might have said, 'that's expensive.' But for us, as the first teahouse in Austin, we needed somewhere that was going to get big attention and support us."

Even though the number of local vendors is relatively small, they have always felt well-served by the Domain, said Craig Staley, owner of fellow tenant Bettysport. "We add something different to what the chains bring," Staley said. "They make it like every other shopping center, and we're making it unique." With the first branch of their women's sportswear store already open Downtown just off Lamar, he and co-owner Stephanie Terrell were looking to expand, and like the city planners, they had their eyes on out-of-town customers. "We were looking to Georgetown and Round Rock," said Staley, "population centers that, with Austin's growth, are now so far from Downtown. For the people out there, getting into Downtown is such a headache, with the travel and the parking. So for us, this was just about gaining access to a segment of the population that we weren't touching." They were keen to avoid getting stuck in a low-density strip mall, so the Domain's combination of mixed-usage and high-end retail neighbors with national profiles was part of the appeal. "We're a destination shop," said Staley, "so for us to be in the middle of that, it puts us in with our direct market – females 35 to 55, with the means and the time to be going to yoga, gyms, and Pilates."

Of course there are also the nationally recognized names. Among the first tenants Simon attracted was McCormick & Schmick's, and the seafood restaurant held a grand opening of its second Austin site in August. If the Domain seemed like a change from the chain's normal locations, near to office and after-work dining, it was. "I've been doing this for 36 years, and when we go into a new community, our preference is always to move into downtown," said Doug Schmick, CEO and co-founder of the chain. Yet with the planned mix of office and residential, the Domain felt like a downtown. "What we've found over the last five or six years is that there are a lot of quasi-lifestyle centers that start to create a sense of community and destination within the suburban environment," said Schmick.

Which is exactly what the city would like to hear.

If You Build It, They Will Stay

Big as it is, the Domain is only a small portion of a much bigger plan being formulated by the city of Austin. Technically, it's called the North Burnet/Gateway area. But there's a simpler name for it: Downtown North.

"A second downtown was inevitable," says Council Member Brewster McCracken. "It's just that if you didn't plan for it, it would be like Las Colinas or the three satellite downtowns in Houston, where it's an office park next to a regional power center next to several gated apartment complexes – and they're a failure. So, if this is going to happen anyway, let's get ahead of the curve and plan it so it functions like a true urban core."

The North Burnet/Gateway area is the end result of a 10-year series of studies and consultation exercises by the city. Currently, it only exists as a draft master plan, but its scope – and its potential impact on North Austin – could be enormous. An unevenly shaped zone, it covers 2,300 acres between MoPac, Metric, and Research (plus a bulge west of MoPac, including the Gateway shopping center). That's roughly equal to Downtown plus the UT campus. It's what is now officially known as a transit-oriented development – in the new-urban newspeak, a "TOD." The idea is that people will be able to take either highways or mass transit, such as Capital Metro's new Capital MetroRail, to the area. Once there, the integrated nature of the larger neighborhood, with its mixed-usage, pedestrian-friendly design, and broad selection of entertainment and employment opportunities, will mean they'll be able to walk, cycle, or (still at least in theory) use public transport to get where they want to be.

The city is not going to be doing the developing itself: Nor is it likely to create another subsidy sweetener like the one accorded the Domain. There has been a sharp and continuing public outcry against these particular incentives (see "Giving Incentives a Bad Name," p.30), and city officials themselves now argue that the Domain deal was a product of a particular economic time and place. In a Finance Commission's Audit Committee meeting on Aug. 28, the council made it clear that such economic incentive packages will probably remain restricted to industrial and not retail developers. Instead, said Molly Scarbrough, senior planner with the urban design division of the Neighborhood Planning and Zoning Department, "We'd change the zoning and design standards in the area to encourage the kind of developments we're looking for. But in our plan, we think that by doing these changes, the area could accommodate up to 40,000 new units: 80,000 people. That's probably aggressive, but the city's regulations would allow for that level of development."

There are, of course, technical issues, and by formulating a master plan now, rather than responding to developments piecemeal as they go in, the city hopes to avoid simple but damaging problems like mismatched-water-pipe bores or moving electric cables from out of the way of one development and straight into another. But that will take policy changes. "Our infrastructure policy is traditionally big on rewarding ex urbis [i.e., suburban] developers," said McCracken, "so that's an example where our infrastructure policy is 180 degrees from our land-use policies. People who develop density will have to be rewarded equally to subdivision builders."

I, II ... Many Domains

So how do a bunch of swanky stores and condos fit into this grand urban vision? Technically, what is open now is not "the Domain," but "Domain I," the first stage of a much larger plan. The site breaks down into four sections. After selling the campus to Endeavor, IBM leased back five buildings, totaling a million square feet of real estate. Simon has already opened Domain I, and now both Simon and Endeavor are working on their own separate second-stage developments (both called, confusingly, "Domain II").

The plans are elaborate and large-scale. Domain I is a compact and self-contained development; attempting to fill the remaining acreage with something the same but almost five times the size was a nonstarter. "If you overlay the boundaries of the Domain over Downtown, it would stretch from Town Lake to north of the Capitol and four blocks either side of Congress," said Rudy. "It has the potential to become something significant."

The current plan is not to extend Domain I but to turn it into the shopping district for a new, larger community. There will be more vertical mixed use, with residential over retail, but there will also be separate apartment buildings, as well as offices and hotels. On Endeavor's 170-acre second stage, there's already a commitment to a 10-acre park with a small lake at its heart. A mile-and-a-half jogging track will roam through the area, and there's even a proposal for a 7,000-seat outdoor amphitheatre. In total, Endeavor is looking at 6,000 new residents and 17,500 employees on-site. "The first area was exclusive, and this will be much more diverse," said Rudy. "Our tagline is, 'Austin Continued.'"

Transferring over to mixed- and vertical-mixed-usage would allow space for this big population, but then there's the ever-persistent question of where they all will park their inevitable (two?) cars. A large part of why the IBM campus looked so sparsely populated and underutilized were the large tracts of open-air parking. "Our consultants found that you could take the existing parking lots, put in some structured parking garages, and start infilling that surface," said Scarbrough. "Then you could keep some existing retail and then infill with residential over time." For Endeavor, structured parking wasn't simply helpful, but essential in order to cram everything in. "If we were to replicate this in the suburbs with surface parking lots," said Rudy, "it would require 700 acres, not 170."

A core part of this plan is dependent on something Austinites do not do very much but at least measurably more than most other urban Texans – they walk. Domain I was always intended to be foot-friendly and walkably sized. Domain II will require even more design to support those purposes, including retention and replanting of mature trees to provide cover and shade. For the area plan to work will take some major re-engineering. "We're looking at a redesign of Burnet to make it a little more pedestrian-friendly," said Scarbrough, "because it's got pretty fast-moving traffic that could be quite scary if you were a pedestrian or on a bike."

According to Evins, this transfer to foot may take some effort and a culture shift. "Texans, for the last generation or two, haven't been big on walking." However, lessons are being learned from other projects around town. "2nd Street is a prime example of how we've taken an 80-foot right-of-way and reapportioned it. We've taken away from the car and given it to the pedestrians, without restricting vehicular access," he added.

A Sense of Place

For McCracken, the fact that Austin is already very pedestrian-friendly makes the proposed plan more likely to work here than most other cities and a lot more "Austin" than the early and voluble detractors consider Domain I. Few southern or Texas cities have large, walkable areas like the Drag, South Congress, or Town Lake, or so many of them. "I was driving around with my family in Corpus Christi this weekend," McCracken said, "and I realized the enormous progress we have made and the futility of trying to do in Corpus what we've done here. There's no way."

So a pivotal part of the plan is that the entire development remains integrated rather than isolated bubbles that become virtually gated communities. "We talk with Simon often," said Rudy, "and we agree that when someone comes to the Domain, they feel like it's 'the Domain.' Not Simon's Domain, not Endeavor's Domain; so it will all be connected." The city and the developers are hoping for a cascade effect: If Domain I succeeds, that will help make Domain II successful. If the Domain works out, it will attract the other developers the North Burnet/Gateway area needs.

But being a test bed for a much bigger development has its risks. If the hope is that Domain I will trigger further construction, then Domain I is also dependent on that new growth for long-term success, especially if, as this first stage is situated, it's currently an oasis of consumerism in the middle of an industrial wasteland. Doug Schmick in fact describes that uniqueness as part of the early appeal. "In my business, we've always felt that coming in a little earlier has its advantages, and we have long-term faith in the viability of the project. To be one of the first ones in, some people may perceive you as taking a risk, but you're establishing a sense of place, and you become known and deeply entrenched in the overall development."

For Schmick, using regional destinations like Domain I is a way to kick-start a sense of community in an ailing city center or a new urbanist setting. "One of the issues of living in suburbia was that there wasn't any heartbeat or central core, and these kind of developments are an attempt to bring that into play. I think from a city-planning point of view it's pretty unique, and it began in Reston, Virginia, about 20 years ago."

However, Reston could also serve as a warning for the city and the developers. The unincorporated municipality was a model for new urbanism, and between 1970 and 2000 its population exploded from 5,700 to 57,000. But residents of surrounding, more suburban communities like Hunter Mill are now opposing what they see as high-density urban sprawl from their mixed-use neighbor. Many Fairfax County residents complain about Reston's skyline, now dominated by tall office towers. While the majority of buildings proposed at the Domain would be between four and eight stories, Endeavor has already closed a deal with Novare Group Holdings LLC (the firm behind 360 Towers in the "old" Downtown) to do a 28-story tower containing 145 hotel rooms and 360 condos on Domain II.

It's also worth keeping in mind that this is the third proposal for the land since the developers took over from IBM, only eight years ago. There is no definitive ground plan for the whole Domain; the city has not yet adopted the area master plan – and another economic downturn could again throw everything into disarray.

October will be a big month for both the Domain and the North Burnet/Gateway area. Endeavor breaks ground on the first significant new component of Domain II, a 137,000-square-foot office building. They'll also start the design process for a number of four- to eight-story residential blocks, totaling around 240 rental units averaging 900 square feet. On Oct. 18, the Neighborhood Planning and Zoning Department will present its master plan for the area to the City Council. But the full Domain project, and the greater area plan, will depend on that idealized walkability and whether even Austinites can be consistently separated from their cars. The Steeping Room's Amy March was optimistic, having already seen foot traffic in front of her tearoom. "A lot of people say, 'Oh, it's an outside mall in Texas; no one will come,' but they came. Yeah, we were lucky with the weather this summer, but it's Texas: You get used to the heat."

The Austin Chronicle

http://www.austinchronicle.com/gyrobase/Issue/story?oid=543306

Giving incentives a bad name By Richard Whittaker

Currently the most controversial aspect of the plans for the Domain is not the wholesale redesigning of a large section of North Austin but the original subsidy deal that the City Council and the developers struck to pay for it. In 2003, the council entered into an economic incentive agreement with then-developers Endeavor, under Chap­ter 380 of the Texas Local Government Code. The agreement means that, based on property- and sales-tax receipts from Domain I tenants, the developers would receive subsidy payments for initiating the project. The incentives were capped at $25 million at 2003 values: Inflation index-linking means this could lead to an eventual payout, over the agreement's 20-year term, of $37 million.

However, opponents of the deal, now organized as Stop Domain Subsidies, argue that the real cost to city coffers could be as high as $65 million. The group contends that, due to a court case brought by SDS founder Brian Rodgers in 2003 and a subsequent renegotiation, the city is neither ethically nor legally bound to fulfill the agreement, and they've been pressuring the council to terminate it. According to SDS consultant (and former county commissioner candidate) Jeff Heckler, the group's campaign has been met with broad support for its opposition to what it describes as a subsidy for high-end retailers. "We seem to have tapped into some anxiety within the small-business community," said Heckler. "It was there before, and we're not responsible for it."

Thus far, SDS has concentrated on getting local business people to sign a petition asking the council to terminate the deal. At press time 371 firms have signed on, and the group has also received support from the local AFL-CIO. Heckler said that the group is not opposed to the Domain development or to 380 deals in general, just to this particular agreement. The city has five other 380 agreements in place, but the difference between those and the Domain deal is that they are what are called firm-based incentives, undertaken with a single employer. The Domain deal is the only project-based incentive agreement, where the developer and not the employer is the recipient and the only one with a retail component. Not only is SDS trying to end the current deal, but it is advocating a charter amendment to prevent such a deal being repeated in the future. They are currently refining the language for an amendment that would severely restrict the city's ability to use tax money to create incentive packages that would give any retail development an unfair commercial advantage over smaller retailers. "We hope the city will fix this with an ordinance, but we're not slowing down waiting for them," Heckler said.

SDS plans to get the amendment onto the ballot for the uniform election on May 10 next year, by collecting 18,000 petition signatures (5% of registered voters). Heckler believes that the support from the business community will quickly translate into those signatures. "This may be the easiest petition drive we've ever run," he said. "Our small-business partners are eager to help us, and we've had no local resistance at all."

While the Greater Austin Chamber of Com­merce took no position on the original agreement, it has since worked with the city to develop a formal policy on redevelopment incentive packages. Senior Vice President for Economic Development Dave Porter says the chamber has always supported firm-based incentives. However, he did strike a note of warning about ending the current agreement prematurely. "If the efforts lead to the city reneging on the agreement," he said, "this could send a message to corporations around the country that Austin can't be trusted."

The Austin Chronicle September 27, 2007 Density, Diversity, and Especially Design The Domain as TOD By Richard Whittaker

Call it a "mixed-usage environment," an "activity center," or "new urbanism." Bandy about planning lingo like "polycentrism" – under whatever name, the Domain could become what the city and Capital Metro call a "transit-oriented development," or TOD.

To refresh those whose eyes glaze at planning acronyms: In May 2005, the City Council adopted the TOD ordinance, in order to take advantage of the development possibilities created by the new Capital Metro MetroRail commuter line between Austin and Leander. Major stops along its length would become mixed-use centers; the public transport between them would make them easy to get to, and the combination of retail, residential, and employment would make them appealing places to stay. Rather than segregating houses into suburbia and jobs into the city center, they would be mixed together in these self-contained but connected communities.

The city already has six defined TODs, all north of Town Lake and all connected by planned high-speed transit systems. Oak Hill, the seventh and the first south of the river, was added to the list in March 2006, but its boundaries have yet to be defined. Of TODs currently in progress, the majority – the Convention Center, Plaza Saltillo, MLK, and Northwest Park & Ride – will be connected by commuter rail; the North I-35 Park & Ride will contain the north end of the rapid bus starter line; and the two routes will converge at the proposed transit center at Lamar and Justin Lane. If the North Burnet/Gateway area master plan is adopted, it could become the eighth TOD.

Each TOD, inevitably, has separate demands, different problems, and a different mix between the core components. "No TOD has everything," said Lucy Galbraith, TOD manager for Capital Metro. "Some will primarily be employment centers, some retail or residential. Nobody ever gets everything in there – except maybe Downtown Manhattan."

So what do they have in common? "It's the three D's: density, diversity, design," explained Galbraith. Density isn't about buildings per acre but bodies. It means enough people to make the area feel like a community. There's a psychological factor, that a busy street is a comfortable street. "If you're the only person walking, it can be a little lonely," Galbraith said. "If there's 50 people walking, you feel fine." Similarly, diversity is supposed to reflect not just the usage but the culture of a TOD. "It's incomes, housing types, ethnicity, everything you can find," she added, "because the full range creates the kind of all-day use that makes it a healthy, lively place."

But the third and most critical component is design. Transit plans depend on road design, and a transit plan that hopes to balance public, private, and pedestrian traffic needs to get it right early on, because fixing a road is a lot harder than building it in the first place. According to Galbraith, for a really successful TOD, that means putting people-on-foot first. "There's many technical details, but basically you think about how you make life easy for the pedestrians, and then you fit in everything else."

The Austin Chronicle September 27, 2007 Getting From Here to There By Richard Whittaker

At the moment, what is meant to become one of Austin's most pedestrian-friendly areas is virtually unreachable on foot. Transportwise, the Domain is a pair of conjoined twins, each with separate needs. Domain I, the retail area, is meant to be a regional destination, a shopping environment meant to drag in tax dollars from much of Central Texas. Domain II will be a heavily residential, mixed-use environment, planned to prioritize public transport, biking, and foot traffic. Domain I needs a lot of traditional road access for incoming customers; Domain II is about getting residents out of their cars.

Part of the initial appeal of the Domain for developer Endeavor was its easy road access. Not only is it right next to MoPac, with 13 points of road ingress along its entire border, but it benefits from the east-west road system that northern Travis and southern Williamson counties have and most of Austin lacks. It's also a short drive from the new $2.3 billion toll-road system. "If you look at these roads – 183-A, SH-45, SH-130, and the North MoPac toll-road – it sort of forms a goalpost," said Endeavor's Kirk Rudy, "and at the base is the Domain."

When Domain II really kicks in, Capital Metro expects its role will increase dramatically. Currently, two bus routes – the No. 3 Burnet/Manchaca, and the No. 174 Burnet Limited Service from Downtown – go past the Domain but not onto it. That could change with three big markers. First, when people start moving into Domain II; second, with the opening of routes on Cap Metro's planned high-speed MetroRapid "road train" high tech buses; and third, when a proposed nearby station on the MetroRail commuter line opens. Although Cap Metro is hoping to open the station in the Kramer Lane area, the exact location has yet to be confirmed, said Capital Metro spokesman Adam Shaivitz. As soon as the layouts for both Domain II and the rail are confirmed, Cap Metro will start to plan to meet future needs. "Our planners are keeping a close eye on that," said Shaivitz, "and will be making route changes as and when."

One concept being considered is a circulator shuttle-bus service that will pick up train passengers and distribute them through the area. It will mean less of an overall dependence on the ubiquitous Cap Metro big bus, but it's not exactly virgin territory for the city's public-transport system. "Our range is a little longer than people perceive, because not everyone sees our express buses or our smaller special-transit service shuttles," said Lucy Galbraith, TOD manager for Cap Metro.

This doesn't mean, by a long shot, no cars in the Domain. Having a drivable street network could take some pressure off major roads. The hope is that people will take short hops on the local streets, freeing highways up for long-distance trips. "That's what they're good at," said Galbraith. But there's also a hope the development will reduce the number of road journeys, as some people walk to work. That means fewer cars on the road and less need for car parks taking up development space. "Think of Downtown," said Galbraith. "It has 90,000 employees, and if 10 percent of them took transit or biked or walked, that saves building a 9,000-space parking garage. We don't need to get 51 percent of people to do this – 5 percent to 10 percent makes a significant difference."