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Great Expectations

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Clark used to operate the Waterloo Icehouse and its sister restaurant, The Avenue, near the capitol building in Austin. There weren't a lot of businesses on the north end of Congress back in the late '70s and early '80s, but Clark's places did well, especially when the legislature was in session. But on a December day in 1981, as Clark's restaurants were serving Sunday brunch, jackhammers started puncturing the street and sidewalk outside The Avenue. Glasses rattled on the tables. People got up to leave. The City of Austin was replacing sewer and water lines and sprucing up the sidewalk with new old-style stone pavers. The construction in front of Clark's businesses lasted more than nine months.

Clark sued the city for $125,000 in lost profits. It was an inverse condemnation case, which is a little bit like a condemnation case. Cutting through the legal jargon, condemnation is when the state forces a landowner to sell his property to them for a highway or other necessary public project. Inverse condemnation is when a public entity takes over the use of private property for a period of time but does not actually purchase the land. Some of Clark's customers were Texas Supreme Court justices. One told him he had the case in the bag. And it seemed that the justice was right. A jury awarded Clark $83,660, and an appellate court agreed. But when the city appealed the case to the Supreme Court in 1986, the decision was reversed.

Clark believes the justices changed their tune not because of findings of law but because many amicus, or "friend of the court," briefs were filed by other municipalities closely watching the landmark case. The cities feared that if they were made liable for their impacts on small businesses, it would have a chilling effect on infrastructure improvements everywhere -- and the redevelopment that tends to follow these improvements. The court apparently agreed.

"The inconvenience and damage which a property owner suffers from these temporary obstructions are incident to city life and must be endured," the high court wrote in its opinion. Clark "recoups his damage in the benefit that he shares with the general public in the ultimate improvement which is being made."

But Clark never shared in the benefit with the general public. That same year, he had to close both businesses and retreat to a second Waterloo location. Today, he's out of the restaurant business entirely. He estimates that the entire sequence of events touched off by the construction cost him more than half a million dollars.

"The city fathers, the people who are trying to do all these things, love to lead people to believe it's going to be so great later so you better get in now," says Clark. "No, let me explain to you. It will be good for the people that can afford to come down here later. Be up front and honest. All these people who've been in business all these years down here, they have to go."

Entrepreneurship is like a fight, he says. If you take a shot from one side, you can't stand up to a later blow from the other side. The one-two punch is typically construction followed by redevelopment. "It's simply unworkable for the little guy," he says. "It's really about the little guys."

Redevelopment has been a long time coming to Midtown. The area was one of Houston's first residential neighborhoods. In fact, Howard Smith, who owns the property where Joe's Sandwich Shop now sits, has had that land in his family since the 19th century. His grandfather built a house there in 1893. His father grew up in it. As residential suburbs were pushed farther south and Main Street became a retail corridor, the family tore down the house and built a small shopping center in its place. But by the 1950s, traffic congestion prompted the city to build a system of freeways that surrounded Midtown and pulled cars off Main Street.

Midtown's decline may have begun with the freeways, but it was sealed in the 1970s, when Environmental Protection Agency requirements forced a sewer moratorium on the area. Major developments downtown, at Greenway Plaza and in the Galleria area were overloading the city's main sewer station at Buffalo Bayou, and sewage was escaping into the waters there. In order to keep up with development in these areas, the city had to essentially disallow development in other areas. Property owners in Midtown could continue to use their land as they were already using it, whether as commercial or residential, but there was no sewer capacity available for new land use. Eventually property owners realized that their sewer rights were worth more than the land itself. They sold their rights to developers building on the edges of town, and tore down their now useless buildings in order to save on their property taxes.

In the late '80s, it looked to some real estate speculators like the new skyscrapers being built downtown might just jump over the Pierce Elevated and sprout up in Midtown. Land-banking came to Midtown, but the skyscrapers and the hefty profits didn't. When the real estate market collapsed, the speculators once again lost interest in the area.

A small Vietnamese community had opened shops on blighted Milam because there was a street in Saigon by the same name, and a few businesses, like Joe's, had moved into the north and south ends of the area to take advantage of cheap rents and a few daytime customers venturing from downtown and Montrose. But Midtown was mostly a ghost town, overrun by the homeless. In fact, a 1990 study by the McKinsey Corporation found that there were more than 3,400 undocumented squatters living in the area.

"I had a church in the middle of it," says Stephen Bancroft.

Bancroft had come to Houston to lead the 100-year-old Trinity Episcopal Church at Main and Holman in 1986, as the church teetered on the verge of closing. There was no neighborhood from which to draw congregants, and the commuter membership was growing older. The priest developed a well-known ministry to the homeless, which gave the church an image and attracted new members who wanted to help the downtrodden. But Bancroft knew that sort of ministry wouldn't survive long. People need to see results, he says, or they get burned out. For every few homeless the church helped, there were dozens to replace them.

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