GALVESTON — Scott Breimeister was the first to get city council permission to build a mid-rise structure on the seawall under temporary development restrictions adopted in late 2006.
He wrestled with neighbors over the project’s height, scaling back plans in an attempt to compromise. But ultimately, he went to the planning commission with no idea whether his project would be approved.
Under height and density development standards the council adopted last week, the six-story condominium project might have been denied for lack of setbacks, but the Houston-based developer said he still thought the new rules were an improvement over the old ones.
Some agree, but others who’ve invested here in the past say the rules will stifle development and all but guarantee they won’t be breaking ground in Galveston again.
Politics Are Detrimental
“Any guidance that the city can give to a developer that is both fair and enforced in an even-handed way is good,” Breimeister said.
The city’s development rules had never been predictable and any proposal was a gamble, he said.
It took Breimeister 16 months to get his Tuscany Beachfront Condominiums, which will replace the Mayflower Inn at 802 Seawall Blvd., to a point where he was willing to risk a planning commission review. By then, negotiations with neighbors had reduced it from 14 habitable stories to four, with two stories for parking.
“Any time politics come into play, it’s detrimental to development in the long run,” he said. “The more certainty you can give to a developer, the more comfortable developers will be making an investment.”
The new regulations give developers the right to build up to five stories, as long as they meet lot size, setback and floor area ratio requirements. Developers must earn the right to build up to three more stories by providing such things as public open space and affordable housing.
Steve Shultz, an attorney who represents many developers working in Galveston, said he was relieved the city council now had an objective way to judge projects, instead of being swayed by comment at public hearings.
“In the past, it really didn’t matter whether you had a good product proposed,” he said. “It was merely a shouting match at the end of the day. Now we can tell developers what we’re expecting.”
Real Estate Realities
But based on what they have to pay for their land, they might not be able to afford to meet those expectations, said Randall Davis, the well-known Houston developer behind Diamond Beach, an eight-story condominium project at the west end of the seawall.
“The economics are so difficult, because of construction costs, that it will make it difficult to come to Galveston and continue the development process,” he said.
Diamond Beach is being built on an eight-acre site, which made it easier to spread out and defray the land’s $10 million purchase price, Davis said.
But tracts that big are almost impossible to find anymore, and the smaller the property, the higher a developer needs to go to make money on his investment, he said.
Developers who want to build more than eight stories must ask for special permission, a permitting system similar to the interim height rules that caused the development community so much grief.
At least the special permit process leaves open the possibility of high-rises, an improvement over the first drafts of the regulations, which only allowed tall buildings in certain areas, said Greg Harrington, chairman of the Galveston Chamber of Commerce board of directors.
But retaining that element of subjectivity may mean fewer tracts of land are sold each year, Breimeister said.
No developer will pay a premium price for land based on a development plan that might not be granted, he said.
If he were to invest in Galveston again, Breimeister said he would make an offer that was subject to permitting approval and ask for a year feasibility period.
Davis said he wasn’t sure he would even make the effort.
Reasonable Starting Point
And he’s likely not the only one who will stay away, say the regulations’ critics.
“I think it’s going to slow down a lot of potential development,” said Lamson Nguyen, a local developer with the only high density project to be turned down during the period of temporary height restrictions.
“It’s a lot of money and possibility (the council has) shot down… They’ve done a pretty good job of telling people to stay away.”
Those who do keep their focus on the island will probably start thinking of it as a five-story town, because that’s the guaranteed and easiest building height, said Louis Conrad, real estate consultant co-developer of The Tuscany.
There’s nothing wrong with that, as long as the island’s economy can afford the height restrictions, he said.
That’s what remains to be seen, Shultz said. If the regulations are too restrictive, the city will have to go back to the drawing board, he said.
But at least the city now has a reasonable starting point, Breimeister said.
“It’s going to be amended,” he said. “It’s going to evolve just like any set of ordinances and laws do over time. Maybe there’s a better way to do it. But the starting place is a lot better than the free-for-all we used to have.”
