New Towns… rotting central cities, recently or imminently dismantled federal programs, and the national new town movement itself over the next few decades. The larger subject is not whether to have new towns, but where to put them, how to finance them and who is going to plan, own, build, sell and live and work in them. HUD has extended loan guarantees to 13 planned new towns already and more than 70 more applications are filed. In Texas, Flower Mound new town already exists incipiently as a village of 2,000 people 20 miles northwest of Dallas. A 20-year development, it has been granted $18 million in HUD loan guarantees. The Woodlands, a projected new town 28 miles north of Houston, has the maximum federal loan guarantee of $50 million and is expected to be a $3 billion development. Texas Eastern’s entirely privately owned “Houston Center” is described as a “city within a city” for living and working. Loan guarantees are now being considered by HUD for a planned new town for Tyler. The San Antonio Ranch new-town proposal filed with HUD in November, 1970, envisioned a community vocational training institute to train the underskilled; “selected basic industry”; open job opportunities and “programs which fill social needs”; and residences for an eventual population of 88,000, including “a substantial amount of low-cost housing . close to employment sources,” with about 20 percent of the dwellings in the $12,500 to $17,500 range and sites for mobile homes and modular factory-produced units. A year later, the Hayden Head group of investors and promoters said, in their draft environmental statement, that they were planning a 2,000-acre greenway system containing recreational facilities, including two golf courses, three lakes, swimming pools, tennis courts, game fields, a hike and bike trail and possibly horse trails. They intended “a suitable number” of public housing units for low-income and moderate-income people, how many to depend “upon the market that emerges” for them, which in turn, they said, “will depend on the employment and income as it develops in the community.” A dope sheet put out at this time said the new town would entail “more than a billion dollars in development financing in a 30-year period.” On Feb. 28, 1972, George Romney, then the secretary of Housing and Urban Development, announced in Washington an $18,000,000 “federal pledge to guarantee development” of the new town northwest of San Antonio. The month before a federal bureaucrat had recommended that “when the press release is prepared on this project that it specifically discuss the precautions that are being taken and the conditions that are being placed on the developer to protect the environment.” Romney’s release said the new town “will serve as a model to the Southwest on how best to preserve what is best in the environment” and that “a series of planned steps will be taken” to protect the Edwards underground aquifer, “this precious resource,” from pollution. Steps being considered were sewage and storm water treatment and the preservation of parks and open spaces to deter erosion. Construction over the aquifer could not proceed until anti-pollution steps were taken, Romney said. A second focus in Romney’s release was the new town’s “special emphasis on needs of the Spanish-speaking community,” with 25 percent of the 28,000 housing units to be for families with annual incomes of $7,500 or less. If HUD was hoping the San Antonians opposed to the new town would not sue, the answer was not long coming. The same day HUD made the qualified $18 million commitment, the lawsuit was filed. Environmentalists, local water protection agencies and Bexar County itself joined forces against the development on the aquifer’s recharge zone. ILLUSTRATIVE of the suspicion with which some of the local people view the Ranch Town promoters is urbanologist Catherine Powell’s view of what might happen. She says she was told by an executive for Ray Ellison Industries, which builds much of the moderate-income housing in San Antonio, that developers are not alarmed about competition from the ranch town because they don’t think it will be built. “They are just going to skim the cream off the top,” she quotes the executive as saying. Nobody makes a lot of money on houses the profit is in the land, she says. Given the federal guarantees on $30 million worth of cheap credit, she suspects, the developers will borrow it, and having that money, they will then sell the new town and make a whole lot on the land. “I think what they’re after,” she says, “is an option on the development of the whole northern part of the county with very little investment.” “Keep in mind,” local architect Cy Wagner says, “these guys never built a damn thing. They’re not developers.” As he sees it, the investors buy about 8,000 acres in an obscure part of the county, “16 miles from the center of the city as the expressway flies,” for $500 or $600 an acre. If they get it approved for the new town, “the . wholesale price of the land would escalate to a minimum of $1,500 an acre. Then it would escalate up to $2,000 to $2,500. At the minimum they stand to make $9 million, just getting the new town approved. Nobody has been able to shake me loose from that one fundamental fact.” In a letter to HUD early in March, 1970, Bob Honts, principal spokesman for the investors, said that the ranch, worth $4.5 million as agricultural land, would increase in value to between $6.2 million and $7.9 million “just on the basis of the large, planned . . . ranch unit.” During several interviews with the Observer Honts readily agrees that the backers of the ranch new town “can depend on major land appreciation.” Since the ranch was bought two years ago it has “probably doubled” in value from “natural appreciation,” he says. “You can count on a tremendous escalator in such a project, 55 to 60 percent. When they put the University [of Texas at San Antonio] out there you can really count on some appreciation.” He also said that on the whole project the “discounted annual return . . . based on dollar net in equity” would be 14 to 20 percent a year. But he said that the time-frame for the ranch new-town plan is 30 years, and it is bound around with many HUD requirements. “You cannot sell out without specific Secretarial approval by HUD,” he said, referring to a thick indenture and trust agreement between the developers and the federal agency. The Observer examined three related agreements provided by James Williams, the ranch new town’s lawyer, with Honts’ approval. Under these draft contracts, which are still subject to modification, the Honts group and the United States are in business together, with the First National Bank in Dallas acting as trustee. The United States guarantees $18 million in new town debentures, subject to terms and conditions and secured by the 87-page “indenture of mortgage and deed of trust” between the investors and the bank. The investors get and spend the U.S.-guaranteed loans only on building the new town in accordance with their agreements with HUD, including the development plan. In the event of an extended default by the developer, the U.S. can “assume control of [the] developer” until the default is cured. In short, it appears that the private investors agree to carry out the purposes of the new communitites law of 1970, as administered by HUD, in exchange for the profits made possible by their use of the country’s credit. The investors also agree that they will not dissolve their business entities or sell out their interests in the new town without advance written permission of the Secretary of HUD. The principals agree, too, not to have any interest in developments three air miles outward from the boundaries of the new town. They retire their guaranteed debt through payments to the trustee bank which the bank can invest only in specified non-speculative ways. In one of the draft agreements, the investors certify there is no pending or threatened proceeding that questions any action to be taken pursuant to the June 29, 19 73 3
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