UT’s land deal quietly unites a fractured acreage
As McRaven sought site in Houston, parcel was found almost by chance
The plot of old oil land in southwest Houston where the University of Texas is planting its flag began to take shape 15 years ago.
The more than 300 acres were nearly home to several projects, including a master-planned community, hotels, shops and office space. It wasn’t until last summer that another op- tion for the land emerged.
The big land sale to UT, which sparked excitement and concern in Houston, happened almost by chance — and nearly didn’t happen at all. An architect and a real estate developer spent a decade and a half buying dozens of little connecting parcels, creating one of the largest undeveloped swaths in Houston. Last year, they were set to sell some of the desirable land to commercial developers when leaders of the state’s largest university system made an offer.
“I would have put the odds as very low that this transaction would have happened,” said John Kirksey, founder and owner of the Houston-based Kirksey Architecture and a UT alumnus who owned much of the land. “It just seemed like such a big undertaking and a long shot. It’s amazing that something so fractured, that the pieces could all come back together again and then for that unified whole to be put in the hands of an institution like the University of Texas. I think it’s wonderful that it was able to happen.”
The deal came together quietly last summer before UT Chancellor William McRaven announced in November that he wanted to expand UT’s footprint in Houston by building something “bold” and “innovative.” His vague announcement caught many by surprise, and the proj- ect continues to be a tough sell to some. A group of state lawmakers last week blasted McRaven for not telling them of his plans before pulling the trigger on the land deal that will cost more than $200 million. Opponents already fear UT will steal top faculty and siphon research funding as the University of Houston strives to become a top-tier university. UH boosters have called the land purchase an “invasion.”
“I would strongly have recommended that y’all send the balloon up before you did it,” state Sen. Paul Bettencourt, a Houston Re-
publican, told McRaven at a Senate higher education committee hearing Tuesday in Austin. “No one even saw the balloon on the horizon, so obviously somebody was doing a pretty good job of not talking about that issue.”
Sen. Kel Seliger, an Amarillo Republican and chairman of the committee, said the move showed a “total lack of transparency.”
The silence was necessary, those involved in the deal have said. McRaven told the committee that he should have come to them first — admitting it was a mistake he made because he was new to the job — but he argued prices would have skyrocketed on the land if the public knew UT was looking to buy it.
In an interview, Kirksey said he had contracts in the works to sell the land to two other buyers and was still working to buy smaller parcels to complete the 300-acre swath.
“As I told him, if word was on the street, then it would kill us,” Kirksey said. “Our ability to buy all of these out tracts would probably evaporate.”
UT has acquired 252 acres at a price of about $ 187 million so f ar and plans to make adjacent purchases into next year. The price tag for the full swath is $215 million. UT, meanwhile, has formed a task force of prominent Houstonians to decide what to do with the land. McRaven has said he wants it to be an “intellectual hub” with opportunities for collaboration with other Texas universities.
UT wants to “create a new model for public higher education” in Houston, said Paul Hobby, co-chair of the task force. But as UT faces pushback from lawmakers and University of Houston leaders, much is at stake, the former chairman of the Greater Houston Partnership said.
“Pettiness could defeat the grand vision,” Hobby said. “If this is a problem for Houston, there are a lot of other cities that would love this problem — where university systems are fighting to bring new intel- lectual capacity. It’s a good problem to have.”
Just the place to expand
Joel Scott, a principal in TerraMark Ventures, a Houston-based real estate development firm, began buying parcels in the old Pierce Junction oil field in southwest Houston around 2001. Kirksey, his longtime friend and investor, joined him in 2002. Because it was an old oil field, the land was fractured and took years to piece back together.”
They sold some of the land to developers of apartments in the area. They had plans to develop a mixed-use urban community in the area as far back as 2004, when Scott told the Chronicle that they were attracted to the area because of its proximity to the Texas Medical Center and Reliant Center.
The two worked with city officials to get infrastructure in place as well, and formed a municipal management district.
But 12 years later, much of the land is still vacant. When Les Allison, a UT alumnus and Houston developer, ran into Kirksey last summer and asked about the project, he was shocked to hear that Kirksey and Scott had pulled together hundreds of acres.
Allison, who serves on the UT Chancellor’s Circle Executive Committee, knew McRaven had a lot of interest in Houston. Allison said he, the chancellor and others in Houston were in “very loose conversations” last year about being on the lookout for land here. McRaven wrote a blog post about a luncheon Allison hosted in Houston, noting that he was interested in “planting a larger UT flag in Houston.”
Kirksey’s land — close to the medical center, with a rail stop — could be just the place for UT to expand, Allison thought. McRaven agreed.
“With its proximity to the Texas Medical Center and downtown Houston, we believed it was the perfect location to begin to chart a vision for the future, in the same way that the TMC was created over time, to provide extraordinary opportunities for new and unprecedented collaborations, initiatives and innovation,” McRaven said in a statement this week.
But when Allison went back to Kirksey later last summer, he learned Kirksey was close to closing two contracts to sell some of the land to a hotel developer and an office building developer. Allison told Kirksey he had a big potential buyer, but was short on details — he didn’t say UT was interested.
“He said how hard will it be to get you to sit still on those contracts,” Kirksey said. “That was a difficult decision to make, because the proverbial bird in hand.”
But Kirksey held off, a decision that he said he felt much more comfortable with once it became clear who was looking to buy the property.
McRaven toured the land in August, meeting with Kirksey for the first time. In the fall, UT Regent Jeffrey Hildebrand, the founder, chairman, and chief executive officer of Houston’s Hilcorp Energy Company, asked his friend Walt Mischer, Jr., a partner a Houston-based Mischer Investments, L.P., to take a look at the land, too.
Within weeks a deal was struck. The UT Board of Regents approved the land acquisition in November, days before McRaven announced the university’s plans to buy the land.
‘Great, magnificent city’
Tension began to build between McRaven, state lawmakers and University of Houston leaders almost immediately after the chancellor announced last fall UT would buy the land. The tension was on full display during the Senate higher education committee hearing last week when McRaven, sitting next to UH Chancellor Renu Khator before the panel, de- fended his plans against a volley of concerns raised by the senators. Seliger questioned whether UT was losing sight of its core mission of education. Sen. Kirk Watson, an Austin Democrat, wondered if UT’s money might be better spent on its flagship campus in Austin.
“This is what I would hope you would expect a great university to do, which is to take bold initiatives and do things that are innovative,” McRaven responded. “Sometimes you have to invest in that, even when things are tight.”
Houston, he said, is the right place to expand.
“My responsibility as the chancellor of the University of Texas is to the state of Texas, first and foremost,” he said. “When we look at the state of Texas, not taking an opportunity to look at Houston — that great, magnificent city that has such great sectors in medical and business and energy and transportation — I think that would be egregious.”
McRaven convened the local task force to draft a plan of specifics for how to use the land. The chancellor has insisted that he has no secret ideas for how the land should be used and wants his panel to tell him how it could best serve the city and the state.
The 18-member panel includes representatives from Texas Southern University and Rice University. UT offered UH a spot on the task force, but UH officials declined in a January 28 email obtained by the Chronicle.
McRaven has stepped aside and is letting the group do the planning, said Carin Barth, the other co-chair of the task force. The group is looking globally for ideas, said Barth, president and co-founder of LB Capital and former Texas Tech regent. She said the land should be used for collaboration, as McRaven has stressed. And Barth said members of the group have made it clear they do not want to duplicate any effective education or research programs in Houston or across the state.
The group has approached the planning by looking at what would benefit Houston and the state rather than any one university, she said.
“I don’t see someone putting the TSU hat on. I don’t see someone putting the Rice hat on. I see people bringing what they’ve learned from being engaged in the city of Houston,” Barth said. “I got involved because I saw it as a way to elevate the intellectual capacity of the city, the state and beyond... I feel like the University of Texas coming to the city in a different capacity — it obviously wants to elevate everybody’s game.”
Kirksey, who said he is a big supporter of UH, also said he is confident the city will be better off with UT owning his land. Whatever UT puts together, he said, will be far better than what was on the table for the old oil land before last summer.
“What we probably would have developed out there is another pound of something Houston has 5,000 pounds of already — residential, commercial,” Kirksey said. “If you put all that land into the hands of an institution like the University of Texas, which has the money and can take the long-term view … it has the potential to be something far, far greater for the city of Houston.”