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August 2006-December 2006
Buckhead Investment Partners Inc. acquired Maryland Manor in late August 2006 with the intention of redeveloping the site. Prior to that time, during our due diligence period, and as any prudent developer would do, we applied for a water and sewer capacity reservation from the City based on a conservative estimate of the actual capacity required (the idea being that more capacity is reserved than may ultimately be needed). We were issued initial capacity reservation letters in June 2006 that were superseded by revised letters in December 2006. Both of these capacity reservations required us to construct an approximately $500K sanitary sewer to serve the site regardless of what we might choose to build on it because the existing sanitary sewer was determined to be “inadequate.” Subsequent to acquiring the property, besides continuing to operate the existing apartments (which is a principal part of our business), we continued to evaluate various concepts and financial models for the new development, ranging from townhouses to high-rise residential.
2007 to Date
In early 2007, we decided to move forward with the design of the new sewer since we knew we’d have to build it sooner or later and since we had a number of on-site sewer leaks that were causing problems that needed to be addressed. Our sewer design approval and permitting followed a publicly prescribed process. Anyone could have learned about the project by a quick trip to the City plan room or by making a simple inquiry with the Public Works Department (sewer construction is not something that one ordinarily makes the subject of a press release). By written notice dated April 2, 2007, our contractor advised all residents living along Dunlavy (the route of the new sewer) that the sewer work would begin on April 9. There were several large pieces of construction equipment, including a backhoe and steamroller, traffic control signs, stacked materials and other highly visible evidence of construction present on the street from April 9 through mid-June 2007 when the project was completed. Finally, after incurring the full construction cost of the City-required sewer, on June 4 we also paid to the City of Houston water and sewer impact fees required by the capacity reservation letters equal to just over $216,000.
On March 20, 2007, we were contacted by both our lender and property manager and told that Evalyn Krudy, Executive Director of the Southampton Civic Club urgently needed to get in touch with the Maryland Manor owner. We called her on March 21. She explained she was aware that the property had changed ownership, reported that surveyors had been seen by neighbors in the area and wanted to know what our plans were for the site. We told her we were “evaluating all available redevelopment options” and operating the apartments in the meantime. We also told her that we were preparing to do some sewer work and she requested that we keep her informed about what we eventually decided to build on the site. Evalyn later erroneously combined two separate remarks into one statement when she reported to the Southampton Civic Club that we were “looking at options due to a collapsed sewer line that was causing foundation problems with one of the existing structures on the site” when in reality we said that we were 1) looking at all available redevelopment options and 2) we were getting ready to start some sewer work because the existing line was inadequate and we were experiencing structural problems due to on-site sewer leaks also.
In the same report to the Civic Club referenced above, Evalyn Krudy also stated, “[in March 2007] the developers’ representative informed Council Member Anne Clutterbuck that a townhouse development was planned” and that, “Morgan and Kirton did not disclose their true intentions until late August of this year, when they approached Council Member Clutterbuck, who immediately notified the neighborhoods of the imminent threat of a high-rise.” Both of these statements are entirely false. Furthermore, Council Member Clutterbuck released a false statement to the press on October 5, 2007 that was reported in the Examiner October 10 as follows:
“In a statement released Friday, Councilwoman Anne Clutterbuck said she first became aware a high-rise had been proposed at the Maryland Manor site August 21, 2007 following a phone call from Andy Icken of the Public Works Department. ‘I immediately called the directors of our local civic clubs and we began efforts to stop the project in any way we could,’ her statement read” (emphasis added).
In truth, as the sewer project was wrapping up in early June, we decided to move forward with the primarily residential mixed-use concept, having ruled out the lower-density options and concluded that it best satisfied the highest and best use of the site. As you are likely aware, inner-loop land values have risen precipitously during the past five years, and our basis in the property clearly did not support the lower-density options, such as 3-story townhouses. Understanding the special location and the unparalleled 360° views offered, we also concluded that the site deserved a project like the one we’ve proposed, which is based on our extensive studies of others like it in cities such as Vancouver, Atlanta, San Francisco and Dallas. Between early June and late July, our design team completed construction documents for the foundation of the building. Also in July, we recorded our plat for an unrestricted reserve (basically a subdivision that will accommodate any number of uses), which had received preliminary approval from the City in early 2007 following a public process. On July 30, 2007, we submitted our foundation permit application to the City, which included plans based on the exact uses contained in our traffic study. On this same date, we hand-delivered letters to the offices of Mayor White, CM Anne Clutterbuck and CM Peter Brown advising them of the permit application submission, describing the project in detail and requesting meetings with each of them at the soonest available date to discuss the project and potential opposition to it by certain of their constituents. The Mayor requested that we meet with Deputy Director of Public Works Andy Icken, and City Planning Director Marlene Gafrick, which we did on August 21. We next met separately with CMs Clutterbuck and Brown on August 30. Finally, on September 7, we met with the presidents and executive directors of the Southampton Civic Club, Boulevard Oaks Civic Association and Southampton East Civic Association (the multi-family-restricted lots directly behind our site and east of Ashby). The Poe School rally then ensued on September 20.
As you can now better understand, for whatever reason, there are substantial inaccuracies in various personalities’ public statements regarding our project. For example, no representative of Buckhead Partners Investment Inc. has ever informed Anne Clutterbuck “that a townhouse development was planned” for the site, as misstated by Evalyn Krudy to the SCC. We disclosed our plans to the Mayor first and then to Council Members Clutterbuck and Brown in writing on July 30, not in “late August” when we supposedly “approached Council Member Clutterbuck” as also erroneously reported by Evalyn Krudy to SCC. No townhouse development was ever planned, and we never communicated with Anne Clutterbuck about ANY plans for the site until we hand-delivered our letter to her on July 30, 2007. That is when she first found out about the project – not on August 21 as her statement otherwise purports. In short, she knew about the project 21 days before she notified the civic clubs.
Before the 2006-2007 school year concluded, we completed a traffic impact analysis (TIA) for our site. This study neither then nor now is required by any regulatory body. We wanted to confirm for ourselves that high-rise residential has minimal impact on the neighboring streets. In fact, the study confirms that belief. The completed TIA was submitted to the City for their review and approved in September 2007--only to have the approval withdrawn in October.
In October 2007, Mayor White developed an emergency ordinance specifically targeting our project but with far-reaching and long term detrimental impact to the future development of the City of Houston. In early November and at the urging of area developers, we agreed with the City to cease action to further our permit applications for 90 days if the City would in turn hear from all stakeholders affected by the proposed ordinance so that a more reasonable and less project-specific ordinance might be developed.
Since October 2007 and during the time that we voluntarily agreed to have our permit application placed on hold, Buckhead Investment Partners Inc. has met with representatives of the civic associations, various elected and appointed city officials, and developers to discuss our project. We remain committed to building our planned project on the unrestricted property that we own.