The Great Land Grab

A nonprofit "charity" is pursuing millions in taxpayers' money to redevelop the Fourth Ward. The question for Houston Renaissance is, charity for whom?

Board member Gilbert Herrera, an investment banker, says Renaissance has identified 100 or so elderly persons living in the neighborhood as a "priority population." The plan is to temporarily relocate them during the redevelopment, then bring them back as the work is completed. Beyond that, however, Herrera says Houston Renaissance is under no further obligation to house the Fourth Ward's residents, or by extension, poor working families that live in cheap, substandard dwellings across the city.

"We'd like to find a way to house that elderly population, either by rehabbing the house or finding a way to convert rent to mortgage payments," Herrera says. "But if it's a group environment where four or five people live there together because it's a cheap place to live, we don't have a duty in my view to homestead [them]. They fall victim to the same economic situation that you and I fall victim to, and that is we'd all like a place where we can pay $150 or $200 a month. But the fact is, no one guarantees us that."

That's irrefutable logic in the private sector, but not what you'd expect to hear from a sincere philanthropic effort -- particularly one supported by the taxpayers.

Stephen Fox, an architectural historian at Rice University who has studied the Fourth Ward, says Houston Renaissance appears intent on exercising what he calls the "total destruction option" -- an approach associated with "a strictly market operation" rather than a nonprofit.

"They want to act like private developers when, in fact, aside from their personal attitudes and orientation about this, they are statutorily a public body because they are a nonprofit," Fox says. "To me, it's fundamentally based on what one's values are. Obviously, if those values are 'how can we make money from a given situation?' then Houston Renaissance makes perfect sense. Of course, if you have other values that say that community stability is a good thing, that historic preservation is a good thing, that conservation of distinctive, long-standing subcultures is a good thing, then their argument doesn't amount to much.

"It's an old, tired, extremely poor neighborhood, and it's not likely, without the leverage of some outside agency, to change. But I find it appalling that so much of this important historic community will be destroyed by people to whom that doesn't matter at all -- and that the city, which should be there, in my opinion, to defend the integrity of this community, is making it possible."

Whether or not Houston Renaissance is a charitable organization is a matter of interpretation. The IRS didn't think so when Laguarta filed an application for tax exemption in February 1995, three months after he announced Renaissance's intent to rebuild the Fourth Ward.

At the time, the group's mission mirrored that of Citizens for a Better Houston, a volunteer organization that came together four years ago to fight the proposed zoning ordinance. Among the group's most active members were its leader, Laguarta; co-founder Billy Burge; Pat Kiley, executive director of the local chapter of the Association of General Contractors; architect Frank Kelly; and Republican consultant Denis Calabrese.

Citizens for a Better Houston launched an aggressive advertising campaign that touted deed restrictions as a better way to protect the city's neighborhoods, and the ordinance was defeated in November 1993. After the election, the organization decided to continue its efforts.

Renaissance board member Holcombe Crosswell, who recently replaced Burge as Metro chairman, sat on Houston Renaissance's first executive committee. Crosswell, the grandson of legendary Houston mayor Oscar Holcombe, recalls the genesis of the new group's formation as "wanting to do something instead of being against something."

"At that time, we didn't know quite which way to go," Crosswell recalls. "As I recall, we floundered around for a year before we got into the idea of inner-city redevelopment."

Indeed, the group's early mission was so vague that, at first, it couldn't qualify as a nonprofit under Section 501(c)(3) of the Internal Revenue Code. As described in its application, Renaissance proposed to act on a number of ideas, including "a comprehensive city plan" and "long-term strategies and programs" for rebuilding the inner city.

But the IRS envisioned no public benefit resulting from the group's stated intentions and, in a reply to Laguarta, noted that Renaissance "lacks charitable purposes and a targeted charitable class." The feds suggested it might more accurately be called a "civic league."

A month later, Laguarta packed off some additional information to the IRS, outlining Renaissance's goal of "transforming blighted, unproductive tracts of land in inner-city neighborhoods into low to moderate income housing developments ...." At that point, Renaissance was hunkered down at the drawing board, devising a plan for the Fourth Ward. But for the IRS, Laguarta sketched out a scenario that suggested the organization was working closely with the Lanier administration on broader possibilities.

Laguarta told the agency that Renaissance and mayoral advisor Michael Stevens had "identified and utilized municipal programs available to aid housing development" in the Fourth Ward. Laguarta added that he was also having discussions with the board of the Midtown Redevelopment Authority, a special taxing district, "to identify potential development sites."

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