Dog's Head: 2,500+ Acre Mixed-Use Development

[We vs us]

Here's a really interesting speculative article from the ABJ about Dog's Head -- a piece of land north of ABIA that's mostly ranchland and/or mining interests, and all of it in the Colorado River flood plain.

This article . . . seems pretty thin on the surface, but also seems to be hinting at something big. Tell me if y'all agree . . . .

https://www.bizjournals.com/austin/news/2021/04/27/development-eyed-in-austins-dogs-head.html

Thousands of acres a short distance from Tesla Inc.’s under-construction gigafactory are being eyed for new development by some of the area's most influential real estate professionals.

The land — tucked between U.S. Highway 183 and State Highway 130 in far East Austin — faces distinct development challenges due to its history as a sand and gravel mining hub. But its proximity to both downtown and Austin-Bergstrom International Airport offers substantial allure. Tesla’s thunderous arrival in the summer of 2020 only added to the intrigue.

Legal entities have been formed in recent months pointing to an overarching plan for the area. And earlier this month, a bill was filed in the Texas Legislature to create a municipal utility district, a crucial first step to boost infrastructure. It could take years to develop this land, which is about 5 miles from the city center, but pieces are now moving to create the foundation for a potentially large-scale project.

If you’re not familiar with the Dog’s Head, you soon will be.

The name refers to roughly 3,000 acres in the city of Austin's extraterritorial jurisdiction where the Colorado River forms the shape of a dog’s head. Parts of the Dog's Head are just a couple of miles from where Tesla Inc. is building its $1.1 billion electric vehicle plant.

Family-owned ranches span about 2,100 acres of the Dog’s Head and exude untapped development potential. A handful of residences are tucked behind overgrown foliage lining dirt roads, and bright orange and pink surveying markers can be spotted in the greenery. Those survey flags are often a sign of development activity.

It’s also hard to miss the various mining operations that leave the area laden with truck activity. The Dog’s Head is still rather quiet, except for the occasional roar from airplanes that fly to and from the nearby airport.

Multiple sources said Austin-based Endeavor Real Estate Group has been eyeing the area for several years now and has tied up thousands of acres in agreements. Endeavor Managing Principal Andy Pastor, who is in charge of Endeavor’s efforts in the Dog’s Head, would not confirm if the firm intends to acquire land in the area. Pastor said Endeavor is helping mining families “figure out what’s next” in the area, which is nearing the end of its useful life for mining purposes.

“This thing is going to be years,” Pastor said. “First the mining has got to stop, and then the reclamation has got to take place.”

He added: “This thing could be interesting in the future, but not in the near future.”

While Endeavor’s plans in the area remain unclear, the creator of big developments such as Southpark Meadows and The Domain — the latter of which is often called Austin's second downtown — certainly has the pedigree to pull off a significant development on the east side. It has essentially cashed out of The Domain, and over the past decade Endeavor has shown a willingness to work on projects that will take years to come to fruition, such as the Austin American-Statesman tract just south of downtown.

Endeavor has also increasingly tackled other alluring markets, such as Nashville and Denver, with big-city proposals.

Land in the Dog’s Head is also the centerpiece of a bill filed April 19 with the Texas House of Representatives that would create a municipal utility district to govern the reclamation of the land and finance utility infrastructure. That would literally lay the groundwork for big-time development. Sources said the bulk of the Dog’s Head does not have access to city utilities and has long relied on well water and septic tanks.

The murmurs of large land agreements and the recent MUD request — not to mention its prime location — has left many to wonder: What could be happening in the Dog’s Head?

What we know

There were no records filed with Travis County by press time that indicated Endeavor owns any land in the area.

But sources said the real estate group has agreements in place with the families that own the majority of the area. According to records filed with Travis Central Appraisal District, Bailey Management Trust owns nearly 1,100 acres and Fitzpatrick Bar X Ranch LP, plus an entity called Fitzpatrick Arline Bolm Etal, has nearly 1,000 acres.

Many landowners across the Dog’s Head did not respond to requests for comment or declined to comment because of non-disclosure agreements. Officials with the area mining operations also did not return requests for comment.

Jamison Stewart of Texas Realty Partners, who still has marketing signs up in the area, confirmed that a 61-acre tract in the area was sold in November, though he declined to identify the buyer.

There are some clear ties to Endeavor, though. An entity called Dog’s Head Ltd. applied for a trademark for the phrase “Dog’s Head” in August 2020, according to the U.S. Patent and Trademark Office. The application lists the same address as Endeavor’s downtown Austin office. The documents state that Dog's Head Ltd. was created for site selection and development services for residential, retail, restaurant, commercial, civic, sports entertainment and mixed-use projects.

Pastor was also familiar with the recent House bill to organize a municipal utility district, saying the legislation is “just part of the process of trying to position it for the future.”

A MUD functions as an independently governed district meant to offer developers avenues to finance infrastructure needs such as water, sewer, drainage and roads, according to the city of Austin. MUDs can issue bonds, which along with property tax revenue and other fees can reimburse costs incurred by the developer. The districts can only be created by the Texas Legislature or the Texas Commission on Environmental Quality.

House Bill 4650, sponsored by District 51 Rep. Eddie Rodriguez, would create a MUD called the East Central Travis County Conservation and Reclamation District No. 1. According to documents, it would comprise roughly 2,100 acres owned by the Bailey and Fitzpatrick families.

Richard Suttle, a prominent land use attorney with Armbrust & Brown PLLC, is representing the landowners in the request to create the district. He said it “could be a first step in trying to rehabilitate land that’s so close to downtown.”

Suttle declined to comment further on the plans for the area and the players involved. Suttle has served as a land use attorney for Endeavor in the past and was recently involved in the Tesla gigafactory project, according to past Austin Business Journal reporting. He also represents the Robinson family, who own a huge ranch on the north side and sold the land to Apple Inc. for its new campus.

The MUD would ultimately need to be approved by Austin City Council.

The district outlined in HB 4650 would be governed by a five-person board of directors serving staggered four-year terms. The largest landowners within the district would control much of the process of creating an interim board. Another election would be required before imposing any ad valorem taxes or issuing bonds payable from such taxes.

Rodriguez, who sponsored the bill on behalf of area landowners, said there’s a good chance the MUD could pass this session. He said he sponsored the bill because it would be a piece to envisioning the future of far East Austin. As of April 26, the bill was in still in committee.

“A lot of the city is growing in that direction,” Rodriguez said of the Dog’s Head. “This is a good start to getting it — when it’s no longer a mining facility — ready to be used in a way that’s more conducive to a growing city where people are moving to ... and East Austin not being the dumping grounds, or in this case, the mining grounds in east Travis County.”

Andy Linseisen, assistant director of the city’s Development Services Department, said no plans had been filed with the city for massive development in the Dog’s Head by press time.

What it’s going to take to develop the Dog’s Head

Eyeing opportunities in the Dog’s Head on a map is one thing, but actually developing a project in the area — much of it located in flood plains, without city utilities — is another prospect altogether.

While some parts of the Dog’s Head are connected to city utilities, other sections are miles away from water and wastewater lines. Connecting them to a development could require costly easements with neighbors, said Bailey Harrington, a civil engineer at WGI who is not involved with development plans in the area.

Because the Dog’s Head is located in Austin’s extraterritorial jurisdiction, or ETJ, the city of Austin has little motivation to extend new utilities to the area, Harrington said.

Meanwhile, development plans in the area will likely have to contend with floodplain regulations — which could restrict certain types of construction. Plus, there are additional restrictions on residential development because the southern portion of the Dog’s Head lays within an airport overlay.

“Every time I’ve looked at sites in the area for developers, the discussion kind of stops when we talk about how far water and wastewater lines are,” Harrington said. “You’re talking probably five years just to deal with the floodplain stuff by itself.”

Harrington estimated it could ultimately cost “in the billions” to create a substantial development across 2,000 acres in the Dog’s Head. But it isn’t an impossible project for a highly motivated developer.

“It’s going to take somebody with enough land and enough vision and enough capital to actually build this infrastructure,” Harrington said. “It’s a big investment.”

There are also the mining operations to consider, plus the various manmade ponds that were previously mining sites. Reclamation of the Dog’s Head has been pegged as a process that could take around a decade to complete. While that may be true, Tesla also had to reclaim land from previous mining operations before constructing its massive facility. Groundwork began in the summer of 2020, and CEO Elon Musk has said the factory will be operational this year.

The swift Tesla factory construction stands as a stark reminder of how development timelines can be accelerated, given the requisite willpower. The Tesla site had previously been imagined as a massive mixed-use development called Austin Green, with an estimated timeline of up to three decades to fully build out.

Troy Martin of NAI Partners represents several landowners with roughly 25 acres just outside the Dog’s Head, near U.S. 183. He said the development challenges aren’t impossible obstacles.

“The Dog’s Head is filled with untapped potential,” Martin said in a statement. “The zoning regulations and noise from ABIA planes would preclude most residential development but the appropriate kinds of office and industrial would work well. … Resolving the floodplain issue would require substantial amounts of engineers, lawyers, time, and money.”

Once those hurdles are cleared, developers would still have to consider the needs of the city of Austin, which could ultimately annex the MUD. District 2 Councilwoman Vanessa Fuentes wants to ensure robust community benefits are part of any future development of the Dog’s Head. She cited grocery stores, pharmacies and hospitals as key needs for that part of Austin.

“It’s my hope that the city always considers using the annexation process to ensure that marginalized communities have the tools to increase their quality of life,” Fuentes said.

Fuentes added that she was excited about the future of the Dog’s Head, noting that “you need economic activity to draw in the infrastructure” necessary to meet the basic needs of the community.

“For me, it’s an exciting opportunity because it gives us a chance to get in early on the process,” she said. “It’s going to be challenging, but I’m not one that backs away from a challenge.”

Fuentes cited Tesla’s gigafactory project as an example of an inclusive development process that others would do well to follow.

“We’re no longer a small city. We’re the 11th-largest city in the country,” she said. “We have to understand, ‘What does that mean for the future of Austin?’”