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?

Julio Laguarta stood in a busy hallway in the City Hall Annex, looking tense and uneasy. It was early October, but for the squat, burr-headed homebuilder, it was getting uncomfortably late in the game.

For almost two years, Laguarta had been quietly making deals to buy up an 80-block area in the Fourth Ward just west of downtown. By late last summer, he had negotiated earnest money contracts on roughly half the territory, some 1,100,000 square feet of the hardest-looking urban real estate in Houston.

In September, City Council had approved a plan by Houston Renaissance -- a private, nonprofit corporation Laguarta formed in 1994 -- to develop and sell home sites in the area, which happens to encompass land that was first settled by freed slaves. Since 1986, that land has been known as the Freedmen's Town Historic District, and though it's been reduced over the years to a neglected wasteland inhabited by less than 800 people, most of them very poor, it remains sacred ground to many black Houstonians.

Given Houston Renaissance's own history, it really shouldn't surprise anyone that the group has yet to acknowledge that significance. As a result, everything about the men behind Renaissance -- who they are, what they want to do, and how -- haunts their plan to make over one of the most coveted pieces of land in the city and alienates them from the very community they vow to save.

The idea of a private-sector organization rebuilding the urban core was first broached by Laguarta, who was a member of the Houston Planning Commission until it was recently revealed that he actually lived in Bellaire. Also involved in fashioning the initial concept was Billy Burge, a confidant of Mayor Bob Lanier and a suburban developer with a River Oaks address, who, at the time, was the chairman of Metro. In late 1994, Burge pitched Houston Renaissance to Lanier, who was currying favor with U.S. Secretary of Housing Henry Cisneros in anticipation of launching a series of inner-city revitalization projects.

The mayor liked what he heard, and the new organization attracted a wealthy, pedigreed board of directors who, like Laguarta, have business relationships with the local building and banking communities that are at least as solid as their political connections. No less than five of Renaissance's board members are in the real estate business, either as brokers, developers or builders. Two of Houston's most prominent construction companies -- the W.S. Bellows Corporation and P.G. Bell Company -- are represented on the board. The group's secretary and treasurer, Pat Kiley, is executive director of the city's largest association of contractors.

In November 1994, Laguarta announced that Renaissance's first project would be to rebuild an area bounded by Dallas, West Gray, Taft and Heiner streets. Shortly after that, the mayor's Neighborhoods to Standard program finally made it to the Fourth Ward; a whopping $9 million in street, curb and gutter and sewer reconstruction projects are now under way in the area, which hasn't seen any such improvements in at least two decades.

So last October, Julio Laguarta walked into Council chambers confident he would leave with a $3.4 million grant that Houston Renaissance would use to close on the land. But before that could happen, he received a crisp reminder that the Fourth Ward was unlike any real estate venture he or his colleagues had ever pursued.

As luck would have it, the Houston Renaissance grant appeared on Council's agenda a few weeks after the city had given Randall Davis, another politically wired private developer, a generous subsidy for his renovation of the Rice Hotel. That deal, a key project in Lanier's inner-city strategy, was criticized by three African-American councilmembers, Michael Yarbrough, Jew Don Boney and Judson Robinson III. They complained that Davis, who is white, had been given preferential treatment and a handout to build downtown housing for other well-off whites. (It didn't help that Davis gave Council no assurances that he would adhere to the city's minority hiring guidelines.)

Laguarta had to anticipate that his Fourth Ward project, which will include homes priced as high as $150,000, would rile the usual suspects on Council for several reasons -- not the least of which was that the Houston Renaissance plan has a lot more in common with Randall Davis and the Rice Hotel than it does with those who either live in Freedmen's Town or feel an obligation to preserve its African-American history.

Perhaps much more significant, however, is that Renaissance hopes eventually to cram at least 2,000 new homes into the area. That would essentially wipe out any vestige of the past, not to mention displace poor black and Hispanic residents for whom inexpensive housing options are limited. Moreover, the $3.4 million grant would put Houston Renaissance firmly in control of an area that is eligible to receive millions of dollars in various federal housing subsidies.

Given the stakes, Yarbrough, a young second-termer from Pleasantville, didn't hesitate a moment before exercising his right to be a contrarian. He immediately "tagged" consideration of the grant, delaying a vote on the award for one week.

Outside Council chambers, Laguarta commiserated with Jim Tipps, assistant director of the city's Department of Housing and Community Development, over the thankless lot of the urban pioneer. They were standing near a wall, at the end of a short, narrow corridor. At the other end of the hallway were Jew Don Boney; Richard Johnson, chief aide to Yarbrough; and the Reverend D.Z. Coffield, a member of the Fourth Ward Ministers Alliance, which represents the interests of the area's 16 houses of worship. Their conversation was held in hushed tones, but was furiously animated. They were soon joined by Tipps's boss, Margie Bingham, who, as the city's housing director, is responsible for recommending which organizations receive federal economic development funds.

Laguarta checked the gleam on his shoes; Tipps, a mournful-looking man relatively new to the city bureaucracy, put his hands in his pockets and looked around. They were only a few feet away from Boney and the others, but they might as well have been separated by the polar ice cap.

"I don't get it," Laguarta said at one point. "I really don't."

It's probably more troublesome than sad that Julio Laguarta professed to be so clueless, for the simple reason that no one involved in Houston Renaissance could be that ignorant of the political realities of urban redevelopment.

There is, however, more than a little self-righteousness, even arrogance, behind the group's approach to rebuilding the Fourth Ward. And if things go as planned, Renaissance hopes to turn the project into a model for rebuilding other distressed inner-city neighborhoods -- a goal that conjures the unpleasant prospect of a bunch of suburban developers tearing into the city's distinctive urban enclaves. Moreover, Renaissance de- scribes itself as a private, nonprofit corporation, a designation that demands some charitable or civic mission. But it's difficult to see what exactly the organization intends to give -- particularly since it is asking the city of Houston to pay for it.

The plan Council approved last fall was to be funded by a $7.4 million Economic Development Initiative grant from the U.S. Department of Housing and Urban Development, which would come with another $7.4 million of federal housing loans guaranteed by the city.

According to Houston housing officials, HUD was awash in EDI applications from other cities, which caused an indefinite delay in the funds' arrival. With a number of Renaissance's real estate contracts about to expire, Lanier ordered up $3.4 million in seed money for the group, culled from two separate city housing funds. Despite Yarbrough's tag, Council approved Lanier's request in October so the group could begin assembling land.

Federal regulations stipulate that the money be used in blighted neighborhoods to create large-scale "homeownership zones" for families with a broad range of incomes. Increasing the number of jobs and small-business opportunities is encouraged, and significant contributions are expected from banks, foundations and community-based groups. The feds call it "New Urbanism," and it's worked in places like Boston, Pittsburgh and Richmond, Virginia.

In theory, the program seems almost utopian: the government bringing together the well-off and the poor to live, work and raise their families in harmony. The reality, however, is that prospects for the Fourth Ward seem far less reassuring. For one thing, the private-public partnership between Houston Renaissance, the city and the community is tenuous, at best. While it is still hoped that construction of more than 100 new homes will be under way by year's end, distrust among the partners has tied up contract negotiations on the $3.4 million grant, stalling the evolution of the redevelopment plan.

At the heart of the dispute is, of course, what Houston Renaissance wants to do to the Fourth Ward and how it plans to do it. According to its EDI proposal, the group hopes to "augment" the federal grants and loans with another $85 million, about half of which, Renaissance projects, will come from revenues generated by the sale of land to private builders. Additional public money, in the form of tax credits, mortgage assistance and, perhaps, community development block grants will ultimately be available as well. Renaissance has also begun soliciting contributions from foundations and is negotiating a $7.2 million line of credit with a consortium of banks.

Once the land is purchased, all but a few of Freedmen's Town's old trademark bungalows and shotgun shacks will be demolished. Those worth rehabilitating will be moved to a new "historic district," which will be reduced from 40 blocks to a quaint seven-block theme park. A trolley car route will connect the special district to the rest of the neighborhood, which will be built out to a tightly packed scheme of townhomes, row-house-style structures and commercial space. As many as 25 retail or single-family residences, or a combination of the two, will be constructed on each block, more than double the current density.

The result will render the Fourth Ward unrecognizable from its current state. Although severely depressed, the ward retains a sleepy, small-town feel that is a reasonable approximation of how the neigh- borhood was 100 years ago -- notwithstanding the downtown spires that now hover over its shoulder.

At $5 to $7 a square foot, this is some of the most valuable raw land in the inner city, and developers have long envisioned its potential. A recent study commissioned by Houston Housing Finance Corporation -- the quasi-public city agency headed by Michael Stevens, Lanier's unpaid urban revitalization advisor -- estimates that the Fourth Ward can accommodate as many as 4,000 new housing units over the next ten years.

Houston Renaissance is prepared to develop 2,000 of them in a mix of lofts, condominiums and houses priced from about $75,000 to $150,000. Its plan suggests some apartment units will be built on the east side of the project in the vicinity of I-45. The group also hopes to raise $2 million to acquire land for five parks.

Renaissance is required by law to use the $3.4 million grant from the city for 350 "affordable" single-family homes reserved for households earning 50 to 80 percent of the area median income, which is about $46,000 for a family of four. Prices for those homes will be capped at around $90,000. That's not at all attainable for the people who live in the Fourth Ward now, but it's not supposed to be.

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."

Like the Fourth Ward, the Midtown district between the Pierce Elevated and U.S. Highway 59 is one of several key, interlocking components in Lanier's urban renewal strategy. The potential for Midtown, which borders the Fourth Ward to the northwest, has been greatly enhanced by property tax breaks that could total as much as $350 million over the next 30 years. Those subsidies were assembled by the Council-appointed board of the Midtown Redevelopment Authority, which is chaired by another close Lanier associate, Doug Williams.

Williams is on the city payroll at $112,000 a year, plus a generous benefits package. As the mayor's special assistant for inner city revitalization, he was hired to advance a series of urban redevelopment projects that include Midtown and the Fourth Ward.

Satisfied by Houston Renaissance's promise to build low-income housing, the IRS finally granted the organization its nonprofit tax exemption in November 1995, by which time the group's board had begun to flex and contract in significant ways. Burge, who was listed as a board member in Renaissance's early promotional literature, stepped back at the request of Lanier, who didn't like the idea of one of his closest friends on the receiving end of public money. He now has an "informal role" as an advisor, according to other board members.

The group also brought three African-Americans onto its board: insurance agent Bill Calhoun, a Republican who is vice chairman of the board of Unity Bank, the only black-owned bank in the state; attorney Jim Lemond, a former lobbyist for the law firm of Akin, Gump, Strauss, Hauer & Feld; and Third Ward developer Gerald Womack, who was active in Sheila Jackson Lee's 1994 congressional campaign and is now working on the City Council campaign of the Reverend James Dixon.

Two other original board members became paid consultants to the organization: Consultant Denis Calabrese stepped down to handle public relations and fundraising, while Barry Snowden, a member of Renaissance's first executive committee, became its legal counsel.

But the most prominent -- and troubling -- transformation was in Laguarta's role. In a brief document drawn up in 1995 and entitled simply "4th Ward Building Plan," Laguarta -- Houston Renaissance's founder and, at the time, president of its board of directors -- proposed that he and the group form a "joint venture" in which he would become the "operating partner."

In late 1995, Laguarta took over the day-to-day strategy of securing the Fourth Ward land in exchange for a $6,000-a-month fee, plus $3,000 for administrative expenses. He stands to make hundreds of thousands of dollars more in real estate commissions when his Fourth Ward contracts come to fruition.

Laguarta could probably use the money. In fact, his job with Houston Renaissance has been one of his more lucrative undertakings of late. Last July, the homebuilder filed for Chapter 11 bankruptcy protection, listing assets of $1.7 million against liabilities of more than $3 million, including about $30,000 owed to the IRS.

The bankruptcy petition shows that in the last three years Laguarta's annual income -- he owns National Homes Corporation and Laguarta & Company and is involved in a number of real estate partnerships -- has declined to about $40,000. Board president Frank Kelly explains that paying Laguarta was "essential" to Renaissance's ability to carry out its Fourth Ward plan.

"Julio brings to the table both the expertise in real estate development and the knowledge of the city and area," Kelly says. "We needed him to work full time on this thing, and the clear agreement was that he couldn't do that and be a member of the board. So he left the board, and we hired him."

It's probably best that the Lanier administration recently ordered Laguarta to step down from the Planning Commission after it was revealed that he had been violating the commission's by-laws by living in Bellaire. Elected officials and appointees are prohibited from benefiting from city-backed programs, and Renaissance has asked to be reimbursed by the city for more than $300,000 in administrative expenses, including more than $270,000 paid to the three former board members. Had he remained a planning commissioner, Laguarta's fee arrangement may have constituted a conflict of interest under city law.

As it is, Houston Renaissance has enough to worry about from an image standpoint. Even its board members, none of whom have done an iota of business in the Fourth Ward, acknowledge that the involvement of this particular mix of people could lead to some unflattering conclusions.

"Everybody assumes someone's got land or is going to get a contract," says Crosswell. "That's everybody's natural inclination.

"I have zero interests. I don't sell insurance, I don't own land anywhere near the vicinity and I'm not an engineer. There is absolutely zero for me to get out of this, and I don't believe anyone on the board has any financial interest anywhere near the place."

The Renaissance board members are simply "civic minded," Crosswell concludes. "That's the difference. We got a lot of other things we could be doing."

Property tax records support Crosswell's claim, repeated by other board members, that none of them have direct ownership interests in the Fourth Ward. That said, the civic minds alluded to by Holcombe Crosswell are apparently only willing to open so far.

Renaissance is indeed planning 350 houses priced within reach of buyers determined by HUD to be "moderate income" wage earners. That's nice, but it's hardly charity: Taxpayers, not Houston Renaissance, will foot the bill. The city's $3.4 million grant will be used to "buy down" the cost of the land for the 350 low-cost units, savings that will be passed onto homebuyers.

But if Renaissance gets its way, a portion of the grant will be held back and used to buy land for market-rate housing that will generate significant revenues for the nonprofit. Board members maintain that Renaissance will eventually meet its affordable housing obligations, though it's easy to get the sense they'd prefer they didn't have to.

"Our quid pro quo with the city is to ensure that there is a true, mixed-income, diverse community," says board member Gilbert Herrera, who has a significant stake in Renaissance's success, having personally guaranteed a $250,000 bank loan for the project. "The only way the city can ensure that certain units are set aside as affordable is to participate in a meaningful way."

Herrera acknowledges that Houston Renaissance, as a nonprofit, has thus far been able to overcome the kind of obstacles that have thwarted previous efforts to redevelop the Fourth Ward.

"First, it allows us to take advantage of these public-private partnerships with the city," he says. "And two, it removes the very issue that got American General in trouble, which is a bunch of white, for-profit developers coming in and trying to dictate to a black community what they're going to do."

Herrera was referring to Founders Park, a Fourth Ward redevelopment project proposed in the late eighties by American General and the Cullen Center, the corporate legacies of two local civic deities, Gus Wortham and Hugh Roy Cullen, respectively. Founders Park was to be financed in part by property tax subsidies, but the plan dissolved after the administration of then-mayor Kathy Whitmire failed to lend its support.

Another factor in the death of Founders Park was Allen Parkway Village, which lies just north of the Fourth Ward. In opposing the redevelopment, low-income housing advocates rallied around the near-empty housing project to highlight the failure of the proposal to address the needs of poor residents.

"If you reflect back on it," says Frank Kelly, Renaissance board president and an architect who worked on Founders Park, "these were two corporations that had all the bucks necessary to make the thing happen without anybody else doing anything. But in the end, they just concluded that, with the political atmosphere and the lack of support from the city, it just didn't make sense and they quietly let it drop.

"We don't have that sort of corporation. The city's health is pretty doggone important, and I think this is a classic case of folks who care trying to figure out how to make something happen."

What Houston Renaissance came up with was to fashion itself into something called a "community-based development organization," a HUD designation that qualifies the nonprofit group for certain federal subsidies. By definition, a CBDO, as they are known, assumes a grassroots approach to economic development. For-profit corporations, as well as nonprofits, can qualify, as long as 51 percent of their boards of directors are either "low- and moderate-income residents of its geographic area of operation" or active in serving the area, either as, say, the owner of a business or pastor of a church.

Last August, as Renaissance was preparing its EDI grant proposal, Laguarta wrote Jim Tipps, the city's deputy director of housing, asking for "expeditious approval" of the group's CBDO status. Laguarta opined that Renaissance qualified because a "preponderance" of the board were "owners or senior officers" of area establishments that served the community. In case the city didn't agree, Laguarta indicated he was prepared to let HUD make the determination.

However, Laguarta wrote in closing, "We trust the enclosed materials are sufficient for your department to qualify [Houston Renaissance] as a CBDO without doing so." Apparently, Laguarta failed to immediately convince city housing officials. It wasn't until two months later -- during which time Houston Renaissance went ahead and described itself as a CBDO in its grant proposal to the city -- that housing director Margie Bingham notified Laguarta that HUD had agreed to the designation.

Houston Renaissance probably could have skipped the CBDO gyrations if it had simply put a few Fourth Ward residents or ministers on its board of directors. The most obvious choice would have been Gladys House, director of the Freedmen's Town Association, one of the city's oldest community development groups.

A longtime Fourth Ward activist, House is probably the most strident defender of the neighborhood's black heritage, and she was instrumental in getting Freedmen's Town listed on the National Register of Historic Places. Not surprisingly, she was left almost apoplectic when Laguarta announced Houston Renaissance's plan in November 1994, and she has remained pretty much of the same mind since then.

After so many years of neglect, House wondered, why is the Fourth Ward suddenly so popular with private developers? And why is the city so anxious to accommodate this particular group, especially when House has been trying for years to launch a few modest community development projects of her own?

"I've been here for 16 years, trying to do good," says House, who last summer was responsible for the first new home built in Freedmen's Town in 50 years. "But there's been all of these complaints that Gladys House hasn't done anything. Well, the city never would give us the money that they're throwing at Houston Renaissance."

Nonetheless, everyone involved knew better than to ignore Gladys House, who has filed several complaints with HUD alleging bias in the city's awarding of federal housing funds. City housing officials organized meetings with the Freedmen's Town Association and Houston Renaissance, with the hope that the two groups could collaborate.

No one was surprised, however, when, in late summer 1995, Laguarta and House ended their brief affiliation, as philosophically opposed as the day they met. House now accuses Laguarta of stealing her ideas for redeveloping the Fourth Ward, though the homebuilder says House really didn't have much to offer.

"It became clear to us," says Laguarta, "that there was no compatibility on the basis of her skills and resources. Whether it was management style, experience, whatever, there just weren't the ingredients for a successful relationship."

House submitted her own EDI proposal last summer, a development of traditional single-family houses she envisioned would complement historic homes she hoped to rehabilitate. In December, three months after the city approved Renaissance's plan, she filed another complaint with HUD, alleging racial bias that "assured delivery of money to big developers rather than grass-roots, community-based and minority-run Freedmen's Town Association."

The complaint probably killed any chance that House might have of ever contributing to the Renaissance project, either as a subcontractor or by helping find potential buyers for the group. But in the opinion of Rice University's Stephen Fox, Houston Renaissance, by dismissing House's input, set a dangerous precedent for other neighborhoods the organization may have designs on in the future.

Fox says the revitalization of another inner-city community, the West End, is an example of how the Fourth Ward could be rebuilt. The neighborhood, north of Washington in the Shepherd-Durham area, is made up largely of Hispanic renters, most of them poor. In the past few years, a number of more affluent residents have moved in and rehabilitated old homes or built new ones without disrupting the lives around them. But generally, says Fox, community historic preservation is ignored in Houston.

"We tend to see it in extreme situations, which is either preserving it as a kind of perverse museum of racism and poverty or annihilating it and replacing it with something that is totally unconnected in any respect to what was there before."

Because of its past, fashioning the Fourth Ward's future is a sensitive endeavor that has already wrought considerable conflict. But there is little disagreement that something needs to be done.

A decade ago, the National Historic Register recognized Freedmen's Town as "one of the oldest and most important black communities in Houston," providing the "economic, spiritual and cultural focus" for the city's African-Americans.

Passing through the area today, it's difficult to make that connection. Streets are narrow and rutted and in some cases dead-end at litter-strewn lots or abandoned commercial property. Many of the old shotgun shacks are on the verge of collapse or have already fallen to the ground. And the extreme poverty that burdens Fourth Ward residents has prohibited even the spark of private redevelopment activity that you can now find in other depressed neighborhoods.

The average yearly income in the Fourth Ward is less than $10,000. Rents average about $200. Though Renaissance will be publicly subsidized, the nonprofit's success depends on its ability to operate like a private, for-profit developer. So far, that approach has found few real barriers; Renaissance has been able to do what developers do: assemble land, though the organization has no money to actually buy it.

But that's where life as Renaissance knows it ceases to exist. Before it can begin developing its first 680 home sites, the group has to reach an agreement with the city on the use of the $3.4 million grant. According to sources familiar with the negotiations, that has been anything but an easy process, with current talks essentially a struggle for control of the project.

"A lot of people who've been with the city for a long time and have watched this Fourth Ward thing want to see it done right," says one source. "I don't think they're concerned much with who's going to do it, but there's a real sensitivity to low-income people and minorities.

"I think what you've got now is the city in the middle, saying this is what we do and this is why we're here. They can't just write a contract and give it to Houston Renaissance."

Among the points of contention: How Renaissance wants to spend the grant, and what happens if it defaults and fails to generate 350 affordable homes. Correspondence between the group and the city's Legal Department indicate that Renaissance is seeking to delay development of some of the affordable housing units in order to proceed with the purchase of land on which market-rate housing will be built.

That strategy would generate revenue that the nonprofit could use to build out the Fourth Ward according to its master plan, which projects as many as 2,000 homes. It might also provide the capital needed to rebuild other neighborhoods, though Renaissance will not be obligated to develop low-cost housing in those places.

But in a December 18 letter to Renaissance attorney Barry Snowden, assistant city attorney Jean White pointed out that such an arrangement for the Fourth Ward does not meet federal regulations, since the affordable housing units are restricted to low-income persons for only five years. Therefore, White wrote, "there is a real likelihood that the agreement will terminate prior to actual completion of 350 homes and the sales thereof to 350 qualified homebuyers."

Snowden, whose expertise as a real estate attorney has been largely for the benefit of private developers of master-planned communities, disagrees with that interpretation.

"If you look at the regulations, you can see that HUD doesn't look at housing development as a bigger scheme," Snowden says. "It's a government program to the builder, rather than a government program to developer, then to builder. The regs are intended to include both, but they haven't been applied that way."

City attorneys and housing officials refused to comment on the contract negotiations, other than to say they are "ongoing." But how Houston Renaissance agrees to spend the grant is of no small concern, given that the group is also looking to secure some generous terms should it default and fail to build the requisite number of affordable homes.

In her letter to Snowden, White took issue with Renaissance's insistence that it not be required to repay the grant if low-income housing requirements are not met. She reminded Snowden that HUD would demand that the city repay the $3.4 million subsidy if the project produces anything less than 350 affordable homes for the Fourth Ward.

Even if some city officials are wary of Houston Renaissance's ultimate intentions, Michael Stevens isn't. Since he was tapped by Lanier in early 1995 to be the mayor's "special assistant for housing and inner-city revitalization," Stevens's responsibility has been to screen each urban redevelopment project brought before the administration.

Some credit him for the resolution of the Allen Parkway saga, which ended after 15 years last spring when HUD finally approved the project's demolition. Others believe Stevens possesses a power that borders on sinister: When the city's housing authority recently missed the deadline for an application to build 400 units of subsidized apartments in the Fourth Ward, Stevens was blamed in some circles for orchestrating the snafu.

Though improbable, it's not such a stretch. Stevens's bottom line is, well, the bottom line, and Houston Renaissance board members say the city capped affordable housing in the Fourth Ward at 350 because that's all the market could handle. Yet even Stevens, an apartment developer with millions in real estate holdings, professes to understand the political implications of what Renaissance is trying to accomplish.

"They have no alternative but to provide those 350 affordable houses," says Stevens. "That contract is a legal obligation for them to deliver something, and if the contract is breached, those board members have a liability. This is a well-aware group of people who, I think, would fairly cringe at the prospect of being in noncompliance."

Stevens has already demonstrated that he can step in and close a deal, if that's what Lanier decides is necessary. His behind-the-scenes involvement in the Rice Hotel negotiations turned the tide and delivered the coveted project for the Lanier administration. It's probably only a matter of time before the mayor grows impatient with the pace of the Renaissance project and asks Stevens to settle the issue.

To do that, however, Stevens will have to somehow appease Jew Don Boney, or risk what could become a public confrontation. The freshman representative from District D, which includes portions of the Fourth Ward and Freedmen's Town, has kept tabs on the Renaissance project on behalf of the Fourth Ward Ministers Alliance.

Boney and the dozen or so ministers who make up the alliance have been attempting to secure a guarantee that they will have some influence on the redevelopment. Initially, the group asked Renaissance to enter into a joint venture and "share ... as full and equal partners" in the Fourth Ward project. That suggestion was quickly rejected by Renaissance, whose board members say the ministers still haven't identified what they might contribute.

At Boney's urging, however, city officials put in its EDI application last fall that Renaissance would work specifically with members of the ministers' alliance, as well as other community groups such as the Freedmen's Town Association. But when the city tried to include the same requirement in its contract with Renaissance, the nonprofit balked. Instead, Renaissance says it will put forth its "best efforts" to include "qualified community development corporations ... with the ability" to build or sell the low-income units.

Renaissance board president Frank Kelly says negotiations with the Fourth Ward's community groups, including the ministers, are not dead by any stretch. But the discussions are "sort of comatose right now, just hanging in the air with a zillion other things," he adds.

Stevens, however, says the nonprofit is concerned that any "partners" taken on by Renaissance will damage the delicate "economics" of the project. "They will have the opportunity to participate, even in the construction, as long it doesn't end up costing the buyer any more money," says Stevens. "That's the test, because the person who ends up paying for inefficiencies in the system is the homebuyer."

Boney says he understands that argument and even agrees with it. Still, his primary concern is the community's "indigenous people," the current Fourth Ward residents, who, like previous generations, have been so marginalized that the common perception is that they cannot save themselves.

The councilman seems intent on disproving that image.
"I don't see any way around it," Boney says. "Everyone who has tried to ignore the political realities and go into the Fourth Ward, take it over and change it has failed. So it seems to me fruitless to even try it that way because it's not going to happen.

"I think it would be just smart business sense to realize that. Otherwise, it's just going to be a fight.

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