Besieged by the Bay

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Eventually, someone with plenty of cash and a grand vision was bound to notice the large and comparatively cheap stretches of waterfront in San Leon and Bacliff. ZZ Top bassist Dusty Hill built his dream palace several years ago on the peninsula's north shore. Local businessman Chuck Jardina purchased prime real estate, constructed expensive houses on it and resold to wealthy buyers at a nice profit. New three-story beach-style vacation homes sprouted next to the older dwellings, creating an odd aesthetic mix similar to the blocks of West University Place where huge Tudor mansions tower above the surviving ranch-style teardowns.

Sales to the well-heeled are about the only ones taking place in the area. Wary of the threat of hurricanes, banks are reluctant to make loans for construction along the shoreline, meaning that buyers generally have to finance the sales themselves. Maintenance of the bulkheads and other protective measures are extremely pricey, as is insurance, if you can get it. About the only people who can afford to buy and build anymore have big-balance bank accounts.

The model for what might eventually happen can be found a short distance to the north along the Clear Creek Channel to the bay. In the early 1980s, Kemah looked a lot like San Leon and Bacliff still do. But the funky atmosphere has given way to a more moneyed air. What was once called "Saigon Harbor" because of the plethora of Vietnamese fishing boats docked there is now an exclusive marina crowded with pleasure craft. The modest houses that lined the bayfront have mostly been replaced by fancy homes with private piers and yacht slips. And after the Landry's chain recently purchased the four waterfront restaurants it didn't already own, Landry's chairman Tilman Fertitta announced plans to transform the strip with retail shops and possibly a boardwalk and a Planet Hollywood or Hard Rock Cafe.

With Kemah locked up, it's to be expected that the search for prime waterfront lots for development has turned south -- toward San Leon and Bacliff. The rumor is spreading around town that Fertitta has purchased the prime lot occupied until recently by Bacliff By The Sea, a restaurant that burned several months ago. Fertitta says he hasn't.

Regardless, those who are buying on the water are paying top dollar for the land. Priced beyond the ability of most people to pay, the poor man's Riviera may soon go the way of other waterfront zones along the bay, or any other exclusive community. Middle-class inhabitants such as Rick Handley may last awhile, scrimping to pay escalating taxes and other expenses, but their clocks are ticking.

"Eventually," Handley laments, "it'll be like West University."

Sandy Peck bought a pair of San Leon waterfront lots on Avenue A 1/2 in 1989. A teacher in the Clear Lake schools, Peck had always desired a home on the bay and picked San Leon for one reason. "It was cheaper," she explains. She lived in a tiny rental house across the street with her daughter while working several jobs to save enough for two adjacent lots, which she bought in 1994. To keep costs down, Peck built her own house on the property with help from her friends.

Peck hoped to leave the place to her daughter, who recently graduated from college and now lives in Houston. But the meteoric rise in property values -- the assessment on her land tripled this year, from $25,710 to $79,530 -- will make that difficult, if not impossible. "Down the road here, it's gonna have to be sold," says Peck. "I can't stay."

Ironically, the Galveston CAD is using Peck as an example of how property values have increased in the area. For her second two lots, according to CAD records, she paid $44,000, or $7.85 per square foot. Averaging that and other sales in the area, says the CAD's director of appraisal operations, Jerry Daum, the current value of waterfront property stands at about $6.50 a square foot.

One little problem, says Peck: The CAD figure is wrong. "That isn't what I paid," she says, placing the price at closer to $36,000, not including closing costs and other expenses picked up by the previous owner. But even using her figure, Peck still paid $6.42 per square foot for her land -- close to what the CAD says it's worth.

Other sales in the area would appear to push the number downward. A large waterfront tract recently purchased by local businessman and developer Chuck Jardina, for example, sold for close to $2 per square foot. But Jerry Daum notes that a chunk of land as big as Jardina's generally sells for less per square foot than smaller lots. Besides, for every sale below $6.50, there's another one higher; $6.50 is the average, Daum says.

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Bob Burtman