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Looking for Answers Down Below

Greg Baxter has been in the real estate business since the age of 14, when he started working as a laborer for his father's company, Baxter Construction. The family firm, which was established in 1948, specialized in what's called the "hard-bid business" -- roads, dams, hospitals, schools and other public-works projects.

Baxter left Houston in 1979 to be an investment banker in New York City. In the mid-1980s, he moved to Austin to develop real estate and, for the first time ever, encountered community opposition to his projects.

"Austin's a very neighborhood association-driven city," says Baxter. "I had to do a lot of meeting with people, slide presentations, explaining projects to people, who for one reason or another, were opposed. It's something I had never run into before in Houston, Texas."

Until recently, that is. On December 1, residents from a half-dozen subdivisions in near-north Houston filled the council chamber at City Hall to rail against Baxter's plans to build 288 apartment units and a 63,000-square-foot supermarket between their homes and White Oak Bayou.

Baxter and his partner, Robert Nash, incurred the wrath of the homeowners by asking the city to create a special taxing district to pay for a four-lane public road that would destroy most of a generous helping of publicly owned green space that residents have long claimed as a neighborhood park. The Baxter-Nash project, which the developers call City Park, also alarmed bayou preservationists, who pointed out that just three months before the public hearing, the White Oak flooded badly during Tropical Storm Frances, causing millions of dollars worth of damage to neighborhoods farther north along the bayou.

In the end, however, a majority of City Council concluded that any impact City Park might have on the surrounding neighborhoods was a small price to pay for a new road. By a 7-3 vote (with four councilmembers missing the voting), council created the City Park TIRZ, which for 20 years would collect the increased property taxes generated by the Baxter-Nash development and use it to cover the $3 million cost of extending East T.C. Jester from 11th Street to 18th Street and $2.4 million in additional public improvements. In the estimation of city Planning Director Bob Litke, whose department reviewed the Baxter-Nash proposal and recommended creation of the TIRZ, it was a "win-win situation," at least for the city and the developer.

For the future residents of the City Park Apartments, however, it might not be such a sweet deal.

The Houston Press has learned that state regulators, as well as the federal Environmental Protection Agency, have recommended that before breaking ground on City Park Apartments, Baxter-Nash should conduct more environmental testing of the soil and groundwater at the site which, until the last well was capped in 1985, was a producing oil field known as Eureka Heights. Both the EPA and the Texas Railroad Commission, which regulates the state's oil and gas activity, recommended more testing after reviewing Baxter-Nash's environmental studies and a site assessment done by a previous landowner in 1996.

None of the studies turned up enough hydrocarbons, metals or other contaminants to indicate the land is unsafe for housing. But, in the opinion of the state railroad commission and the EPA, the Baxter-Nash Phase II Environmental Site Assessment in particular is not conclusive enough to rule out the possibility.

In light of the pending lawsuit between Chevron and the residents of Kennedy Heights, a south Houston subdivision, the slightest possibility that the City Park TIRZ site is contaminated should be taken seriously. In 1991, after contractors installing new water lines in Kennedy Heights complained of "a hydrocarbon odor," the city Health Department learned the subdivision had been built atop a former Gulf Oil Co. oil field.

A local civic group hired a consultant who found "extremely high" levels of petroleum-related chemicals in soil samples taken from the Kennedy Heights neighborhood. Claiming a higher-than-average rate of disease and illness resulting from contamination beneath their homes, 3,000 current and former residents of Kennedy Heights sued Chevron, which had merged with Gulf Oil in 1984. Following a mistrial, the parties were ordered into mediation. In November, after 15 months of fruitless negotiation between Chevron and residents --who are represented by John O'Quinn, one of the nation's most successful plaintiffs' lawyers -- a federal judge ordered a new trial, which has yet to be scheduled.

Last week, in a phone conversation with Baxter and his environmental consultants, an official with the regional EPA office in Dallas raised the specter of Kennedy Heights when he asked the developer to conduct more testing at the City Park site. Bob Wilkinson, an EPA investigator, says the soil-sampling method employed by Baxter's consultant, Berg-Oliver Associates, was not rigorous enough.

For example, Wilkinson said, Berg-Oliver took just one groundwater sample from the entire 20-acre site, which aerial photos from the 1950s and 1960s show is pocked with unlined pits and lagoons used to store waste from the oil-field operation.  

"Those old lagoons are a big concern," Wilkinson said. "They would have needed to go down into them for samples and do an extensive analysis of the area, as well as the groundwater. In our opinion, they didn't do that."

This is no small matter. According to Wilkinson of the EPA, much of the property managed by the federal government under the Comprehensive Environmental Response, Compensation and Liability Act, otherwise known as the Superfund program, was land once used for oil and gas exploration. In cases that merit a Superfund designation, the level of contamination is, almost without fail, so extensive that cleanup and redevelopment of the land is out of the question.

Even a so-called "brownfield," an abandoned or idle industrial facility where contamination is suspected,would require a thorough investigation of the soil and groundwater, which may then require a time-consuming remediation. Real estate investors, as well as the banks that finance the projects, are understandably wary of developing brownfields.

Perhaps the city should be, too, says City Councilman Orlando Sanchez.
"I'm not a lawyer," says Sanchez, who supported the City Park TIRZ, "but it seems to me that, from a liability standpoint, you potentially have another Kennedy Heights situation."

Like the rest of his colleagues on City Council, Sanchez was unaware of the environmental status of Baxter-Nash's land when he voted to create the City Park TIRZ. That's because Baxter-Nash submitted misleading information to city planners when the developers approached them about extending East T.C. Jester.

Last June, Baxter-Nash produced a 40-page marketing study on the City Park development. The document's main conclusion was that the apartment complex would be 97-percent occupied within nine months of completion. As for the environmental condition of the land, the marketing study, which was the only information considered by Councilmembers before they approved the City Park TIRZ,stated that all hazardous waste had been cleaned up and that a state regulatory agency had given Baxter-Nash the go-ahead for residential development.

"It is our understanding that the site has been remediated and that a 'closure letter' would be forthcoming from the Texas Railroad Commission," read the study, which was prepared by the Houston marketing consultants Revac, Inc.

That was news to the Texas Railroad Commission. John Tintera, assistant director of the commission's site-remediation program, said the information Baxter provided the city is flat-out wrong. "There may or may not be a cleanup [in the future]," Tintera says. "But clearly he should not be expecting any sort of correspondence from us."

One might think city officials would be alarmed to find out that Baxter-Nash misrepresented the environmental status of the City Park site. While no one is prepared to say the land is contaminated, the basic question remains: Should the city agree to finance the road for Baxter-Nash before having conclusive evidence that the City Park site is safe for development?

Why not, says planning department spokesperson Becky Nevers. Even if Baxter-Nash had gone so far as to submit detailed environmental information along with the marketing study, the city wouldn't even have bothered to look at it.

"We knew there were environmental studies done, obviously," Nevers said. "They mentioned them in the marketing study. But those types of studies are not required to be part of the developer's submission. We'd only become involved if they wanted to use money from the TIRZ for the cleanup."

That's unfortunate, because the City of Houston is apparently the only governmental body with enough leverage --the power to rescind the City Park TIRZ -- to compel Baxter and Nash to conduct further environmental tests on their land. Oddly enough, while both the EPA and the Texas Railroad Commission are concerned with potential hazards, neither agency has any enforcement powers over the City Park site.

The railroad commission's jurisdiction extends to oil-field operators only. And the federal waste-management law contains an "oil exemption" that restricts the EPA's authority over oil and gas sites to contaminants unrelated to the actual drilling and extraction processes. According to Bob Wilkinson, the EPA has the authority to investigate the City Park site, but no money to do it.

"Our enforcement budget was significantly curtailed by the last Congress," he said.

Wilkinson says Baxter-Nash has acknowledged the EPA's concerns, but so far the developers have not agreed to do more testing. In an interview at his attorney's office, Baxter was adamant that no further investigation of the site is needed. He insists the Berg-Oliver reports, when considered alongside the studies conducted in 1996, prove there is no environmental contamination of the City Park site.  

"We have done over and beyond the necessary testing to determine if there is a problem," Baxter said. "This is a clean site."

That state and federal environmental experts aren't convinced doesn't carry much weight with Baxter's partner, Bob Nash. At least not enough to threaten his real estate project, which, once the road is built, the apartments are rented and the supermarket is open, will be worth an estimated $32 million.

"I have a well-known, well-regarded environmental company that poked 47 holes in the ground out there," said Nash, who was exaggerating; Berg-Oliver Associates poked 14 holes, or borings. "They didn't find anything because there is nothing there.

"The bottom line is, at the end of the day, these regulators will have you chasing down the street. At some point you have to make a business decision about how much money you want to spend on this stuff. Do I want to spend the extra fifteen- or twenty-thousand dollars digging up the ground if it's probably going to be under a parking lot?"

Considering the risk to, as the EPA puts it, "human health and the environment," $20,000 might seem like a bargain if it determines, once and for all, how safe the soil and groundwater are at the City Park site. But either Baxter and Nash are extremely frugal or they fear additional testing might force them to make a difficult "business decision" --carry out a costly clean-up effort or kill the project.

Indeed, to what degree such dismal prospects are influencing Baxter-Nash's forthrightness on the environmental issue is a legitimate question. Until he was contacted by the Press, Greg Baxter apparently had no intention of correcting his initial misrepresentation, made in the June 1998 marketing study submitted to city planners, that the site was clean and cleared for development.

Baxter's office referred the matter to his attorney, Neil Rackleff, who laid the blame on the consultant who prepared the study, Revac Inc.

"According to Greg, Revac just made a mistake in what they concluded here," Rackleff explained. "My understanding is that there were two oil wells out there that were capped approximately 30 years ago, and in doing the Phase I and Phase II testing, they had determined there were no problems in developing the property and that everything was clean."

That statement is as misleading as the marketing study. Baxter may believe that his land is safe for development, but the state agency charged with regulating the environmental safety of oil-field operations has yet to determine if the City Park site is suitable for housing.

John Tintera, of the railroad commission's site-remediation program, says Baxter-Nash's environmental consultant, Chris Thayer, a project manager for Berg-Oliver Associates, asked the agency in April 1998 for a "closure letter" verifying that the site meets state environmental standards. Tintera says he evaluated the developers' Phase I and II studies, as well as an assessment done by the previous landowner in 1996, and told Thayer and Baxter that "a more comprehensive assessment" was needed before he would consider clearing the land for housing.

"We haven't had a response since that conversation." Tintera said.
Baxter is under no obligation to cooperate with regulators; he can simply ignore their requests, which is exactly what Baxter did when the railroad commission asked him to conduct more testing at the City Park site. Moreover, the Texas Railroad Commission has no authority to compel real estate developers to follow the same environmental rules as the actual operators of oil and gas sites.

Still, those are the rules that offer the best protection against environmental hazards, says John Tintera. Has Baxter-Nash met them? No one knows.

"We would need a risk assessment to [determine] that," Tintera said, "and the data that's been supplied to us are insufficient to compile a report."

As for why the city was assured the site was clean, Rackleff says Baxter simply missed Revac's mistaken interpretation of the environmental soundness of the land in the final marketing study. Last week, Rackleff produced a "correction" from Revac dated January 13. That only muddied the waters more.

"We consulted with Mr. Chris Thayer of Berg-Oliver Associates on January 12th regarding a Limited Phase II environmental assessment ... prepared in April 1998," wrote David Pallante, a Revac analyst. "Mr. Thayer indicated the site is environmentally clean and no further action needs to be taken."

It doesn't take a close reading to notice that, contrary to Rackleff's assertion that Revac had made a mistake, Pallante clearly does not admit making an error in the June 1998 study. The "correction" is nothing more than a carefully worded update received, verbatim, from Chris Thayer the previous day. Moreover, in the interests of complete accuracy, the correction probably should note that state and federal regulators disagree with Thayer's conclusions.  

If Baxter purposely misled the city -- a possibility Revac's "correction" did little to eliminate --no one in the planning department, at least, seems awfully concerned. When told that Baxter had admitted giving the city inaccurate information, department spokesperson Becky Nevers referred back to the state tax-increment financing act.

"First, we'd have to know about [an environmental problem]," Nevers said, "and we're not required under state law."

Under the circumstances, it would be hard not to conclude that the legal particulars are beside the point. Jim Blackburn, a local environmental attorney, said it would be a "reasonable request" for city officials to ask Baxter for copies of his environmental studies. After all, even rumors that a piece of land is contaminated can significantly affect its value.

"I would have thought that the city would have been more curious as to what the developers' Phase I and Phase II studies showed, particularly if you've got a marketing study that basically identifies a problem, then just says it's been taken care of," says Blackburn, who opposed the City Park TIRZ on the belief that development alongside that stretch of the bayou is "suicidal."

"If those facts are incorrect, it would make a difference in the marketing study. And you're creating a tax-increment district based on the marketing study? I think it'd be prudent to have that information."

Blackburn says the previous property owner's consultant, Harding Lawson Associates, wouldn't have bothered with a Phase II study of the site in 1996 if there wasn't already enough information to suspect a problem. "The fact that aerial photos show storage pits going back to the '50s, that's the end of Phase I right there," Blackburn says. "In a Phase II, you take soil and water samples to try to determine what you're dealing with."

Harding Lawson Associates began a Phase II study after discovering three 55-gallon drums of an unidentified anticorrosive, one of which was leaking, and an open pit filled with six inches of water that gave off a "strong odor of hydrocarbons," a potentially harmful byproduct of petroleum operations. The firm's final Phase II assessment, dated October 6, 1996, reported levels of hydrocarbons in the area of a former tank battery on the eastern side of the site, near the intersection of Bevis and West 16th, that exceeded limits set by the state. The study also turned up high concentrations of lead and chromium in and around several large storage pits in the center of the property.

While Harding Lawson did not recommend that the site be remediated, the firm's study urged additional testing, particularly around the tank battery near Bevis and West 16th. Harding Lawson also concluded that "the site will require independent review by the Texas Railroad Commission."

Baxter had already begun a Phase II environmental study when he bought the 20-acre tract of land from its longtime owners, the Lackner family, in September 1997 for $2.8 million, or roughly $3 a square foot. Baxter carried out the study in four stages between August 1997 and March 1998, while simultaneously working all bureaucratic and political angles to secure an extension of East T.C. Jester through his property.

In November 1997, Baxter and Nash pitched in $1,000 each to the campaign of District A City Council candidate Bruce Tatro, whose future constituency would include residents of the surrounding subdivisions. By March 1998, less than two months after Tatro took office, Baxter was working on the nuts and bolts of his proposed project with city planners.

Baxter's final Phase II site assessment, which concluded there was "little likelihood of contamination," was sent to the Texas Railroad Commission in April 1998. A month later, the commission rejected Baxter's request for a "closure letter" and recommended that the developer's environmental consultant perform additional tests, including a risk assessment.

Baxter has yet to conduct the additional testing.
Now, a month after City Council approved the City Park TIRZ, clearing the way for the construction of East T.C Jester, the EPA is challenging the conclusions of Baxter's environmental studies.

According to EPA investigator Wilkinson, Baxter's consultant took composite soil samples rather than using the so-called "discreet" protocol, which federal regulators prefer. The difference is that discreet sampling allows a separate analysis of each layer of a 12-to-16-foot plug of soil. By taking composite samples, Wilkinson says, Berg-Oliver ends up mixing all the soil together, diluting the amount of metals such as lead and chromium that may be in the soil. Composite sampling also tends to "stir up the soil, driving off all the volatiles," such as benzene, Wilkinson says. "You want to disturb these samples as little as possible so you know where in the soil the contamination actually is."  

The EPA has urged Baxter to do a more thorough evaluation of groundwater at the site. Again, despite the presence of numerous pits and lagoons scattered throughout the property, Berg-Oliver only took one groundwater sample. Wilkerson says Baxter should do more testing closer to White Oak Bayou.

Finally, there is a question of whether Baxter tested the same tank battery area that Harding Lawson identified in 1996 as having leaked excessive levels of hydrocarbons. In the second stage of Baxter's Phase II testing, Berg-Oliver set out to "affirm or refute" those readings. Baxter's consultants reported that they made ten borings in the same area as Harding Lawson's tests but found only a trace of hydrocarbons in the soil.

Baxter says Berg-Oliver's tests indicate Harding Lawson may have identified residue from an isolated dumping incident unrelated to the oil-field activity. "The speculation is someone changed their oil there," he says.

But, according to Baxter's final Phase II report, Berg-Oliver concentrated its testing at a tank battery near Bevis and 17th streets, one block north of the site at which Harding Lawson discovered elevated levels of hydrocarbons. If true --and both reports clearly state the location from which the soil samples were taken --Baxter's follow-up testing certainly wouldn't affirm Harding Lawson's findings; the two consultants didn't look in the same place.

Chris Thayer, the Berg-Oliver project manager at the City Park site, says he verified his sampling locations with Harding Lawson. Thayer says he "suspects" that Harding Lawson's engineers made a "typographical" error in their study. Perhaps that's true; Harding Lawson refused to discuss its Phase II assessment of the City Park site. But it doesn't explain why Berg-Oliver took just three soil samples --and no groundwater samples --from two large storage pits in the center of the property, which happens to be where Baxter plans to construct the City Park Apartments. Indeed, the other soil samples were taken from land north of 17th Street, where Albertson's plans to build a 63,000-square-foot flagship store.

Thayer says he focused his testing on "areas of potential impact," which he defined as those places where Harding Lawson found contamination.

"When we investigate a site, we do it without regard to its future use," Thayer says. "And on this site, most of the potential problems are on the Albertson's site."

But what if Harding Lawson didn't make an error in its Phase II report, and Berg-Oliver took samples from the wrong tank battery site? Wouldn't it be wise, as the EPA suggested last week, to conduct more testing just to be sure something wasn't missed?

"I've sent a copy of our reports to the EPA," Thayer said. "But the EPA has no jurisdiction over this site."

That remains to be seen, says Wilkinson. The agency has "extensive legal jurisdiction" under a federal law that regulates hazardous waste facilities, Wilkinson says. But, because of the "oil-field exemption," the feds would have to have evidence of contamination caused by materials other than those used in the actual process of drilling for, and extracting, oil.

That, of course, will require more testing by the developers, something no one seems able or willing to get Baxter-Nash to perform.

"The data speaks for itself," Wilkinson says.

While just another example of the persistence and power of Houston's real estate developers, the City Park project also reflects the myopic vision of city officials, whose willingness to help finance private development is so automatic as to be almost reckless.

Indeed, signs of Mayor Lee Brown's "neighborhood-oriented" governing style were nowhere to be found at the December 1 public hearing on the City Park TIRZ. Brown, who has promised to implement a program to ensure greater involvement of residents in the redevelopment of their communities, betrayed that promise by abruptly cutting speakers off when their time at the podium expired. The mayor didn't bother to question either the developer or the residents and passed most of the meeting hunched over the speaker's list with a pen in his hand. Most Councilmembers --led by Bruce Tatro, a staunch supporter of the City Park TIRZ --posed questions that subtly challenged the most critical residents to prove they weren't namby-pamby environmentalists or antidevelopment heretics.

Meanwhile, opponents of City Park were appalled that the city, which administers the federal flood insurance program for Harris County, would encourage development in a portion of the 100-year flood plain surrounded by residential neighborhoods.

"This is totally irresponsible," said Shady Acres resident Dixie Gay Friend. "City Council should be taking steps to help with the flooding problem, not making it worse."

Whether or not the White Oak can handle the storm-water runoff from another 20 acres of concrete along its banks seemed like a reasonable concern, especially since roughly 80 acres immediately south of the City Park site belongs to the Harris County Flood Control District which, as its name suggests, owns land for just one reason. Moreover, the Federal Emergency Management Agency recently determined that Baxter's land, as well as several adjoining neighborhoods in a large watershed to the east, are now within the 100-year flood plain.  

Many opponents of the project complained that traffic in the area didn't justify early construction of the East T.C. Jester extension. Janet Rodgers, whose family lives at the present terminus of the road, in a house overlooking a rich expanse of open space that will be destroyed, confronted city officials with their own traffic analysis, which shows the extension won't be needed until well into the next decade.

"To help a development that we in the community do not want, the city is proposing to build a road we do not need," Rodgers said.

None of the residents' complaints seemed to resonate with Brown and City Council, who were clearly more interested in hearing the reasons to approve the City Park project. Indeed, planning director Bob Litke admitted that Baxter planned to develop the site, with or without the TIRZ. But, Litke said, if the city agreed to finance construction of the T.C. Jester extension, Baxter-Nash could attract commercial developers to the site. Without the road, Litke warned, Baxter would likely end up building almost twice as many apartment units.

"The area, as we see it, cannot develop for commercial activity ... unless the road is put in place," Litke told Council. "It's my judgment that if we don't create T.C. Jester at this time, this particular proposal is not likely to occur, and having commercial development mixed with residential development is a good use of land."

But is it a good use of this land?
Maybe. Then again, maybe not.
Last week, Councilmembers were just learning that Baxter-Nash had misled them about the environmental status of the land. Indeed, most weren't even aware that, until about 15 years ago, the site was a producing oil field. Some had been in office long enough to remember that, even before the Kennedy Heights lawsuit, former Mayor Bob Lanier delayed at least one city-sponsored housing project when environmental concerns arose.

Lanier was just being prudent, of course. The feds had promised $500,000 in housing money for the development, as long as the city took responsibility for making sure the site was clean and safe for future homeowners.

So far, no one in the current administration seems remotely interested in extending the same courtesy.


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