Slow Turning

It has been a year of little change since Houston Renaissance gave up control of the Fourth Ward redevelopment

In retrospect, the Fourth Ward project probably should have been shelved at that point, pending another stab at federal funding. Instead, then-mayor Bob Lanier, through his $1-a-year housing adviser, Michael Stevens, urged Renaissance to seek bank financing for the project. In the meantime, Stevens, who was president of HHFC at the time, started lending Renaissance large chunks of HHFC's cash to fund additional land purchases and to cover the nonprofit's operating costs.

By the end of 1997 Renaissance owned more than 1.1 million square feet in the Fourth Ward, purchased at roughly $5 a foot. And after nearly two years of distrust and animosity, Renaissance and a group of Fourth Ward ministers managed to put aside their differences to complete the long-awaited master plan for the project.

It was all downhill from there. In January 1998 Renaissance lost its political cover when Lee Brown replaced Lanier as mayor. Not long after, Renaissance abandoned its attempt to get bank financing, meaning the nonprofit's bills became the permanent responsibility of HHFC.

The Fourth Ward project is lagging, but nearby Perry Homes is selling homes that haven't been built yet.
Houston Press
The Fourth Ward project is lagging, but nearby Perry Homes is selling homes that haven't been built yet.

In September 1998, while Renaissance continued to rack up enormous administrative costs while doing little to advance the master plan, Brown ordered an audit of the organization's $3.4 million grant. A month later the state attorney general's office announced that, in response to a complaint, it was initiating an investigation into alleged deceptive trade practices, as well as possible violations of the state nonprofit corporations act by Houston Renaissance.

Both the city's audit and the state's investigation were likely inspired by Renaissance's cavalier spending habits, which were not merely excessive but were geared toward lining the pockets of board members.

In November 1998 the mayor's office published the findings of its audit. Brown's chief administrative officer, Al Haines, who authored the report, acknowledged that Renaissance's effort was "rife" with problems, including the weak organizational skills of former executive director Bob Boyd, whose $240,000-a-year salary was "perceived as excessive."

Still, Haines was intent on being optimistic. His report reiterated Brown's support of the project and placed much faith in new executive director John Walsh's "detailed plan" to move the project forward.

As it turned out, that faith was misplaced. In February 1999, after less than six months on the job, Walsh quit, having accomplished nothing except spending another $600,000 of HHFC's money. A month later Renaissance's board of directors agreed to dissolve and turn the project over to HHFC.

Since taking over the project, HHFC has been continually dogged by Renaissance's missteps. One of its first actions was to commit another $2.7 million toward "project development." More than $500,000 of that has already been spent paying off contractors, including a total of $50,000 to former executive directors Walsh and Boyd. HHFC also found itself stuck with a $160,000 bill from Mayor, Day, Caldwell & Keeton, which is representing Renaissance in the A.G.'s investigation.

Not surprisingly, Renaissance's huge debts are now making it difficult for HHFC to carry out the affordable-housing component of the Fourth Ward project. Those debts also put HHFC at the mercy of private developers, who must be persuaded to take a chance on the Fourth Ward if HHFC is to recoup its investment in Houston Renaissance, which is now about $8 million and counting.

With the booming real estate market and the desirability of land so close to downtown and Midtown, one might expect buyers to be clamoring for a piece of the action. But efforts to promote market-rate housing have not inspired a stampede.

The agency has sold just two lots, netting about $160,000, to the developers of a Best Western planned for the 900 block of West Dallas. The only other serious offers have come from apartment developers Camden Property Trust and loft developer Randall Davis, who wants to renovate an existing building into a retail center. Those deals would be worth about $2.5 million to HHFC.

Smith acknowledges that getting the right mix of affordable and market-rate housing in the Fourth Ward is tricky, but he's not too worried about the slow pace of market-rate sales yet.

"We realize that may take some time. Our key thing is doing everything we can to get the affordable housing started. The market, we think, will take care of itself."

Smith believes the affordable housing will take care of itself as well -- once the church-based groups are able to start signing up buyers. When that will be is anyone's guess. First the city has to finish preparing the land for construction, including deciding on the location of utility hookups.

Such delays are almost inevitable in the wake of Houston Renaissance.

"We're just trying to do the best we can with the cards we were dealt," Smith says.

E-mail Brian Wallstin at brian.wallstin@houstonpress.com.

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