Fatal Illness Claims Renaissance
Houston Renaissance Inc., the nonprofit organization formed by a group of real estate professionals to rehabilitate Fourth Ward, died last week at the age of four.
The official cause of death has not been released. However, Renaissance, which doubled as a jobs program for certain Houston law firms and real estate consultants, had been ill since late last year, when it collapsed during a scuffle with the city of Houston on the steps of an elite downtown establishment called The Public Trough.
Since then, Renaissance, burdened with taxpayer-funded debt and haunted by failure, had been shuffling sadly around town, clutching a plastic bag that contained its sole possession: the title to one million square feet of Fourth Ward land, associates say.
The passing of Renaissance could have a significant impact on the future of the organization's offspring, the ambitious Fourth Ward project. The nonprofit planned to rebuild the entire area -- roughly 80 acres that includes the Freedmen's Town Historic District -- into a mixed-income neighborhood of single-family homes and commercial development. However, Renaissance, which promoted itself as an elite group of Samaritans with a superior knowledge of real estate development, had yet to develop a single homesite before death came calling, despite nearly $10 million in public subsidies.
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Some supporters of Renaissance are reported to be in denial over the passing. But the namesake of the nonprofit would live on as a mere shell of its former self, to retain ownership of its land holdings. (See "Public and Private Doug.")
Those familiar with the deceased say the nonprofit struggled throughout its short, unhappy life with numerous personality disorders. Most chronic was a stubborn form of narcissism that, coupled with an appalling lack of discipline, not to mention shame, probably contributed to its downward spiral.
"We all know someone," said one baseball fan, "who is born on third base, yet who truly believes he hit a triple."
Indeed, Renaissance owed its existence to the not-so-secret patronage of former mayor Bob Lanier. Legend has it that Lanier impregnated an impoverished real estate developer named Julio Laguarta with the idea in 1994, during a late-morning tryst at City Hall. Two years later, Lanier gave the developer a $3.4 million grant and three merchant ships built by a "public-private partnership" comprised of 12,750 engineering consultants hired by the city's public works department and the United States Navy.
In October 1996, with the power vested in it by the Texas Nonprofit Corporation Act, Houston Renaissance set sail for Fourth Ward. Upon landing on the shores of the wretchedly poor neighborhood, Laguarta is said to have exclaimed, "It's good to be the king."
But public money and the power of conquest provoked a change in Houston Renaissance, friends say. The nonprofit forgot its humble roots as a ward of the state and began treating its business partner, a large consortium of local taxpayers, with a thinly veiled contempt. Renaissance exhibited bizarre behavior, such as doling out contracts without soliciting bids, barring the public from its monthly board meetings and even refusing to open its financial books for inspection.
"That's just crazier than a mudbug on moonshine," said a local character, "especially when it's the taxpayers' money at stake."
Some observers say the nonprofit may have contracted its fatal affliction while hanging out with Laguarta at The Public Trough. His own homebuilding business eventually failed, forcing Laguarta into bankruptcy. He quietly resigned as Houston Renaissance's executive director but surprised many by turning up on Renaissance's payroll as a real estate broker. Other board members of the self-styled "charity" became paid consultants, too. Still others brought their friends around to The Public Trough.
Those close to Renaissance say the debauchery continued until July 1998, when the nonprofit woke up in a gutter, broke and humiliated, buried in urine-soaked, taxpayer-funded professional service contracts. A combination board meeting and intervention was scheduled for August 4, 1998, when directors learned that Renaissance's books were kept with a crayon and a Big Chief tablet. The organization owed at least $6 million to one public agency and was dangerously close to defaulting on the $3.4 million grant from another, the City of Houston. Its one significant achievement, a $200,000 master development plan, was buried on a shelf, impossible to implement.
Several strategies for saving the master plan were proposed. Then-executive director Robert Boyd reported receiving inquiries from builders interested in buying Renaissance's land. All of them promised to meet the city's requirement that 255 of the new homes be made available to less affluent buyers.
"Most of these builders indicated they could move quickly and close by the end of the month," Boyd said. "In fact we could sell 90 percent of our land in the next 60 days."
That option appealed to some board members, who saw it as a way to curtail Renaissance's self-destructive behavior and, perhaps, get the organization the help it so desperately needed.
"Renaissance could be off fishing someplace right now, enjoying assorted canapes and a variety of imported white wines," said one board member. "It was time to let someone else gentrify -- I mean, revitalize -- Fourth Ward."
A majority of board members disagreed, though. They argued that Renaissance just needed to be cleaned up and slapped around a little. They did have a tumor removed from the nonprofit's neck by firing executive director Boyd, which relieved the pressure caused by his $250,000 annual salary.
Unfortunately, the infected area threatened to spread to the courtroom, and Boyd secured a $10,000-a-month severance package dressed up as a consulting gig. The board hired a new executive director, John Walsh, a Renaissance board member and former president of Exxon's defunct real estate arm, Friendswood Development Company. Perhaps because he happened to be unemployed at the time, Walsh accepted a mere $100,000-a-year salary.
Walsh brought a unique genius to Renaissance's Fourth Ward project, in particular an ability to give the illusion of leadership. Renaissance, Walsh said just before resigning from the nonprofit's board to become executive director, needed to "transition from an organizational phase to a development phase."
"We need to establish transitional operational operations capacities and functions key to development," he announced at the August 4 board meeting. "In other words, do what we started out to do...."
Not surprising, perhaps, Walsh failed to stop the bleeding. Renaissance was admitted to the clinic at the Houston Housing Finance Corporation, which continued to administer public money to the nonprofit's gaping wounds. It was a futile effort.
"Strangest case I've ever seen," said one member of Renaissance's medical team. "No sooner did we complete the procedure, and the money would be gone. We think it may have been some form of parasite that managed to glom on to the critical management and administration function of the brain."
Finally, Dick Rogers, chief of the Houston Housing Finance Corporation, disconnected Renaissance from the public teat. As expected, the nonprofit's board of directors stopped functioning shortly thereafter. As the end drew nearer, Renaissance's directors, lawyers and advisors, as well as public officials such as Mayor Lee P. Brown, began the emotional process of getting the nonprofit's affairs in order. They quietly relieved John Walsh of his duties as executive director, although it was agreed that he will continue to be paid as a consultant to the new Fourth Ward development effort. Rogers and Brown appointed Doug O. Williams as "point man" for the new project, which is expected to be pared down significantly from its original scale.
Williams's first order of business is to finalize the sale of 150 parcels of Renaissance's land to the city's Housing Authority. The sale of land to private homebuilders is not expected to begin before mid year.
Houston Renaissance is survived by the usual suspects, headed by Julio Laguarta, who has been retained as a consultant on the project; more than $6 million in unpaid loans to the Houston Housing Finance Corporation; a $3.4-million obligation to build affordable housing in the Fourth Ward and, as of October 1998, an investigation by the Texas Attorney General's office into possible violations of the state nonprofit corporations act.
Private services are planned. In lieu of flowers, mourners are encouraged to send money.
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