The Year It All Went Wrong
1999: A Killer Year for Austin Music
By Michael Bertin, Fri., Dec. 31, 1999
It's almost dead. Thankfully. And 1999 deserves to die before it kills anything else. Even as these words are being put to page, another vital piece of Austin is in danger of being taken away. Who knows for how long, but even if it's only for a little while, that's still too long. In some perverse way, it's only appropriate that the year is ushered out with the specter of Clifford Antone being ushered off, because he was also 1999's first victim. The annual South by Southwest nuisance (aka the Austin fire marshal) made an early appearance by paying a New Year's visit to the legendary club, then declared them in violation of maximum occupancy. Approximately 30 minutes before 1999 even began, Antone's was forced to clear 200 very unhappy patrons out of the bar and issue refunds on what otherwise should have been one of their most profitable (and merry) nights of the year. For Austin music in general, the next 12 months weren't much better
For proof, look no further than the corner of Guadalupe and Second streets. What's there? Nothing. Well, the Schneider Store is still standing, but not Liberty Lunch. A local musician we all thought would stand forever, Doug Sahm, was also felled -- by a heart attack. The Austin Rehearsal Complex was forced out of its building and out of business. Indie records stores Stashus Mule, Duval Discs, and Rolling Pin Records closed up shop. Major-label releases from Don Walser, the Derailers, and the Damnations went DOA as their label, Sire Records, focused on finalizing its deal with London Records. And the Butthole Surfers suffered the ultimate humiliation of losing their album artwork to Marcy Playground. Even the annual Austin Chronicle Musicians Appreciation Dinner didn't happen this year.
More than anything else, however, 1999 will be remembered as the year Austin's exploding economy leveled the landscape of live music venues. The Electric Lounge is gone. Liberty Lunch is gone. Steamboat is gone. The Bates Motel is gone. Even less vital local venues such as Dessau Music Hall and Austin Blues passed into the past tense, the latter after a mere six months of operation.
Taking inventory of live music venues falling by the wayside has become an annual rite in Austin. Club closings are a constant in the equation. But make no mistake, 1999 was exceptional in this regard, exceptionally brutal, as four of Austin's most frequented venues are no more. Why? Two words: Mon-ey.
Well, duh. That's why any place goes out of business: They aren't making enough of it. Thus it seems patently silly to think that somebody would go out of business while they're making money, but that's almost exactly what happened to these clubs in the course of 1999. The exception is the Electric Lounge, and even they were hobbling along from crisis to crisis just fine until the tax(wo)man stepped in.
In late January, Lounge owners Mike Henry, Jay Hughey, and Mark Shuman announced that if things didn't turn around fairly dramatically and fairly quickly for the club, they might not make it to South by Southwest. The reason? The oversimplified answer is that the state wanted more money from the Lounge than the club could muster, and almost overnight. All establishments in Texas with liquor licenses have to put down a deposit with the state Comptroller's Office as collateral against their alcohol sales taxes. It's the state's way of ensuring it gets its tax money should a place go under. If a bar can't pay its bills and shuts down, the state already has its money in hand. So the state is covered. The club is on its own.
The deposit is roughly equivalent to two- three months of a particular establishment's alcohol sales taxes. So for a neighborhood bar, it would likely be a small sum, maybe $2,000. But for place like, say, Sugar's, where it's not unheard of for the monthly liquor taxes alone to clear $30,000, the state's deposit is a serious chunk of change.
Just after the turn of last year, the Lounge found its deposit with the state being upped from approximately $2,000 to $12,500. The lower figure, according to the state, was based on outdated sales numbers; booze has become significantly more expensive in the past seven years. Mind you, alcohol taxes were not going up, just the Lounge's deposit as per the state. So, with its new and improved tax assessments, the Electric Lounge had itself one more bill it had a problem paying.
"For a couple of months, we were taking every penny we could scrounge and going down to the Comptroller three or four times a week," says Lounge co-owner Mike Henry, who notes that while everybody's deposit went up, the increase coincided, oddly enough, with the election of noted patron of the arts, Carole Keeton Rylander to the job of state comptroller.
The deposit increase wasn't the sole reason for the Lounge's demise. The net result, according to Henry, was more from the cumulative effects.
"As the years went by and the financial noose grew tighter and tighter, the slightest mistake became like a kick in the head," he laments. "I can't tell you how many times we begged the creditors for one more day, or how many times we came to work to find the power off, collected every dollar we could, and dashed off to pay the bill so that we could have a show that night. As time went on, we were slowly losing the battle."
So the comptroller's kick wasn't lethal by itself per se -- it just knocked the already-battered head off the body. Sometime in the early morning hours of Monday, April 12, Henry pulled the plug on the glowing red "Electric" sign over the stage. How sad was it? So sad that at the let's-drink-the-bar-dry farewell shindig the previous night, people were doing shots of Midori. Okay, that's a different kind of sad, but no less painful. And even before Austin music lovers had a chance to recover from the post-Lounge hangover, there was another wake well into the works.
During the fall of 1998, Mayor Kirk Watson unveiled a plan to bring software developer Computer Sciences Corp. (CSC) and its 1,500 employees to the downtown area as part of his Smart Growth initiative to foster a "Digital Downtown District." In the deal, CSC would pony up $11.9 million to the city for three new office buildings on three adjacent blocks of city-owned land, property for which the corporation would get a 99- to 139-year lease. One small problem: One of those city blocks was home to the venerable and beloved Liberty Lunch. Welcome to Austin: The Software Code Writing Capital of the World.
The deal, which Watson called the logic behind "so obvious it hurts," meant the end of Liberty Lunch as Austin knew it for over 20 years. The building would be razed to make way for CSC. Painful as it was, it actually wasn't too much of a shocker, at least not to the club's owners.
"I have always told people that I was literally amazed that Liberty Lunch was there as long as it was," says Lunch co-proprietor Mark Pratz. "There were innumerable times that we were done for, just flat-out city-says-"Y'all are gone. Six months' -- done. This time, there was just enough economic justification to make it happen. [Mayor Watson] was doing what he thought he needed to do. I can't say I agree with him, but I can't bear him any ill will."
CSC's property taxes alone for that location will total over $700,000, several orders of financial magnitude larger than the comparative Lunch money from the city's previous tenant. There will also be retail space on the ground floors of each building, from which the city will collect more tax revenue. Moreover, the deal preempted CSC from building in the environmentally sensitive Barton Creek watershed.
On July 31, then, after over 20 years of playing host to a who's who of rock, pop, Wilco, reggae, world beat, punk, post-punk, hardcore -- oh hell, you name it -- and 24 hours' worth of "G-l-o-r-i-a," Liberty Lunch was served for the last time at Second and Guadalupe. Now, the lot's empty. Soon, there will be an office building there, and if you didn't know there was ever a place called Liberty Lunch sitting on the site, you know now.
As cognizant as Pratz was of the fact that council after council wanting to use the land in a more lucrative fashion meant he was always one vote away from being kicked off the property, that didn't make dealing with the loss any easier. In fact, Pratz isn't dealing with it, period.
"I just won't go by there," he avers. "And if I ever go by that part of town of again, it will be a long, long time from now. I can't do it. I can't drive by there. It was home to me for too long, and I really don't want to see it looking like that. And when they put up a bunch of six-story office buildings and apartments, it's just going to look like everywhere else. So I don't see any reason to go look at it then either."
Then there are the curious cases of the Bates Motel and Steamboat. Both were on Sixth Street, both were doing fine, and then both found themselves getting pushed out of their respective buildings. At least it wasn't being done by the city.
According to Steamboat's Danny Crooks, a group of investors, one of whom owns San Antonio nightclub the Aquarium, approached his landlord, Saxon Fox, and told her they'd spend up to $400,000 refurbishing her building and pay her two and a half times the $900-a-week rent Crooks was currently paying if they would, as Crooks put it, "kick me out." Guess what happened? Better still, there's an insidious twist to the story.
"The main guy that bought the place, I guess he's like a 24-year-old kid," says Crooks. "His dad bought it for him. Anyway, I threw him out [of Steamboat] about a year and a half ago, and he told me that he was going to buy the place and kick me out. I guess he was true to his word."
Randall Stockton, manager of Sixth Street punk haven the Bates Motel, found himself in the similar situation of simply being outspent for his space. Stockton, who had inherited his lease from the previous tenant before taking over management, experienced the most considerate ejection of all the club owners. His lease ended, and his landlord signed a lease with another renter who was willing to pay more money. Even with the least insidious eviction, however, there was still a bit of a weaselly element to it.
"The deal was made before I got a chance to make a counter offer," claims Stockton. "At one point, I started thinking, "Well gosh, it's about five months before the lease is up. Why don't I approach the landlord and tell him that I'd like to take up the lease and start it as my own business?' And he was like, "Ah, well -- ' And he put me off and put me off and put me off. He eventually said, "Okay, I made the deal a long time ago.' ''
The best Stockton can figure, the deal with the new tenant was signed several months (if not up to a year) before his lease was up, precluding him from even a chance of maintaining the Bates at that location. Stockton had been paying about $1,800 a month in rent, and while his landlord didn't reveal what the owners of the Blind Pig -- the establishment now occupying the Bates' old space -- would be paying, he did term it "a substantial increase." Perhaps most bizarre among closing stories is not that of any of local club, but rather the tale behind shutting down the now-defunct Austin Rehearsal Complex. Home to many of Austin's most famous musicians -- the Double Troubles and Joe Elys of the city -- the ARC's demise is truly an exercise in the absurd; as a result of winning, yes winning, a lawsuit against its landlord, the ARC found itself out of business.
"We won the lawsuit and we were rewarded a judgment," explains former ARC owner Wayne Nagle. "Now, we had to get our judgment to pay off our attorneys. And in order for our landlord to pay us that judgment, he had to sell the building, which we were in."
In 1993, the ARC was bought for $300,000 by a gentleman from Ohio named Joe Shell, whom Nagle describes as "a carpetbagger to the max."
"He had never lived in Austin," continues Nagle, "and he bought the building with one thing in mind: to kick out all of the musicians and sell it at a profit."
There was a slight hitch with that plan, though. As part of its lease with the building's previous owner -- under which Nagle was still operating when Shell bought the place -- the ARC had the right of first refusal to rent or buy some of the building's other spaces should the spaces, occupied by other tenants, become available. When some of those spaces did become available, Nagle and co-owner Don Harvey were ready to expand into them. Shell refused to let them. So in 1995, Nagle took him to court and won. Shell appealed and lost. The entire process took about four years.
When Shell unloaded the building to pay the settlement, it went for $800,000 to the Stan Bederman Co., the same company that owns the BookPeople property. One of the conditions of the sale, however, was for the ARC to move out. Bederman bought Nagle and Harvey out of the remaining six years on their ARC lease for what Nagle describes as "what we would have gotten out of the place in six years with no money left over."
It was essentially a break-even proposition that saved Nagle and Harvey six years' worth of work, but everybody seems to have lost on the deal. Nagle laments the fact that it ended the way it did.
"Had it been over a year earlier, I think we could have bought the building," he asserts, which was our plan -- to buy the building with the money that we were awarded. Unfortunately, in the last year of the appeal, someone offered him double the money that we thought it was worth or that the bank would loan us. So we didn't get to buy it."
Not surprisingly, the root cause of all of the closings was economic in some form, with rent or property value being a common factor. The ARC got caught up in court for one year too many and found the price of its building had doubled. Steamboat and the Bates got squeezed out by people willing to pay significantly more per month for their respective spaces. In the case of Liberty Lunch, the city determined that its property was too valuable to allow a music venue to continue operating there on the cheap. And the Electric Lounge just got to the point where it couldn't pay all of its escalating bills, not the really important one anyway.
"From the time we started this business until the time that we closed it, our rent, which was fair based on market value, more than tripled," Henry notes. "Our profits, needless to say, did not. You do the math." Here's some math: From1990 to 1999, Austin's population rose from 465,622 to 613,833 people -- almost a one-third increase -- while the greater metropolitan area (which encompasses Travis, Williamson, Hays, Bastrop, and Caldwell counties) jumped from 846,227 to over 1.1 million people. That means that for the back half of the decade, the city grew at a fairly astounding rate of over 3.5% annually. The impact of all that growth is so distinct and manifest that only a dead person could fail to notice it.
Likewise, anybody who has gone into business recently in Austin has likely witnessed one of the by-products of that growth -- the one that helped push the live music venues out of their buildings: skyrocketing property values. The numbers may be slightly out of date, but no less indicative of the trend. From 1994 to 1996, the valuation of nonresidential property increased sharply: retail space from $16 to $47 per square foot, office space from $38 to $82 psf, and industrial prices from $29 to $137 psf. Just in case you've haven't caught on yet, Austin is hardly a cheap place in which to live or do business anymore.
And it's not just that rents are up. The average commuting time has increased from under 10 minutes a decade ago to nearly 20 minutes today. In 1996, Austin was classified as a near non-attainment city for ozone air quality, meaning the city wasn't in any danger of becoming Los Angeles. In 1997, the EPA changed the standards for air quality measurement and decided it would reclassify cities based on that new standard in 2000. Even after the change, Austin still violated the EPA standards for ground-level ozone in 1997. It doesn't take numbers for longtime residents to know that the changes are as palpable as they are pronounced.
"Our quality of life is way down," Nagle notes. "We have more air pollution, more traffic. I don't know why we want more people to come here."
The answer to that rhetorical non-question depends on who "we" are. "We" the natives might not want more people flocking to the region, but "we" the high-tech industry might. Austin reported a minuscule unemployment rate of 2.3% for the first half of 1999. From 1988 to 1998, an astonishing 246,200 new jobs were created here, placing Austin behind only Las Vegas in job growth percentage for the Nineties. Of course land in Vegas is going for a song, but don't worry, it's a dry heat.
Moreover, Austin, like Branson, Missouri, is "The Live Music Capitol of the World." Even if we don't want more people moving here, they want to move here and enjoy the quality of life. They want to swim in Barton Springs Pool, on the days when high fecal coliform bacteria counts haven't shut it down. They want to jog on the hike-and-bike trail, except on ozone action days when the air is unfit for human consumption. They want to go see live music at Liberty Lun -- Whoops.
"Here's the part of Smart Growth that's not so smart," asserts Henry. "The mayor wants to do all of this stuff to Austin, specifically downtown, to make it more attractive to live in, but in doing that, he's destroying the character and charm of the city that made all of those people want to move here in the first place. Sure you can make a bigger, more efficient, newer downtown. And it can be just like Dallas. You wanna live in Dallas? I don't." Okay, let's calm down. Sure, Dallas doesn't have a Liberty Lunch, and neither does Austin right now, but there's slight a difference: Austin will have a Liberty Lunch again. The city even thought enough to ensure the club a second incarnation by providing owner J-Net Ward a $600,000 low-interest loan to help cover the club's start-up costs. The new and improved Liberty Lunch will open in the location adjacent to Stubb's, and it will be just that -- a new location and an improved building -- with some of the feeling and flair pilfered from the old place and installed in the new.
Just like the old, the new Lunch will have some kind of skylighting. One side of the building will have garage doors that roll up to give it that open-air ambiance. There will be a mural. There will also be more bathrooms and an upstairs giving more people better sightlines.
Elsewhere, Danny Crooks may be out of a building right now, but he just had a benefactor help cover a $70,000 debt with an old partner and is actively looking for a new home for the 'boat. The Bates' Stockton has already begun booking shows at Trophy's, and is also hunting for a new home for his next club. And while the Lounge appears to be gone for good, the Red Eyed Fly has opened and seems to be scratching the same musical niche with some success.
Moreover, there are other non-club scenes burgeoning in pockets around town. Sixteen Deluxe opened their Bubble Studios, thus creating a haven for Trance Syndicate refugees in the aftermath of the local indie label's closing shop at the end of 1998. -- And They Will Know Us by the Trail of Dead, Lil' Cap'n Travis, SXIP, Kathy Zeigler, and even semi-famous people like the Breeders have all dropped in to record at the Bubble. Record store Thirty Three Degrees has packed its store by trading in things that fly beneath most clubs' radar screens.
"We did Dub Narcotic over here," says co-owner Dan Plunkett. "And at the time I'm thinking, "Wow, why didn't the Electric Lounge pick this up?' We had over 200 kids in here."
Historically, that's the way things happen in Austin. For every closing, something new pops up. It's been that way for years. Raul's, the Cannibal Club, Club Foot, the Armadillo (whose death was presided over by then-Austin mayor Carole Keeton Rylander) are all gone, but the music still plays.
"This isn't anything new," notes Emo's proprietor Eric Hartman, now an elder statesman among local club owners. "You look back, there was Henry's Bar way back about six years ago. He had been there forever, and then his landlord wants to double his rent and it puts him out of business. It's nothing new. It just seems like a lot of that has happened this year."
So everything is going to be just fine. It was just a bad year, a statistical aberration. Happily ever after. Blah, blah, blah. The end. Well, not so fast. Steamboat might not make it back after all. Crooks has already seen two potential locations fall through, the buildings formerly known as the Spot and the Lakehills Theatre. Why?
"Too damn expensive," he says.
According to Crooks, he has a third deal in the hopper, but if that one falters, he admits there are no other options on the table. Even if a location pans out, the longtime club owner still has far more pressing concerns than resurrecting Steamboat. Crooks already suffers from hepatitis C and was recently diagnosed with environmentally induced asthma, which pretty much precludes him from hanging out in smoke-filled rooms. He is quite seriously getting nearer death's door, and the very thing he loves to do -- supporting live rock & roll, which involves being in smoke-filled bars nightly -- is reaching out to help ring the doorbell. Liberty Lunch is goingto have to overcome a variety of obstacles of its own to live a second life. First, rent. The new location won't actually have a rent payment, because Pratz and some of the Stubb's investors are buying the land and the building that will sit on it. Pratz guesstimates that when the new property payment is figured into the equation, it will mean about a tenfold increase in their general expenses. That's right, the old expenses times 10. The Lunch will have to cover that somewhere -- ticket prices, alcohol, etc. Pratz even hints at doing some preferred seating at certain shows, giving people with more dollars the chance to have reserved seats and other amenities like waitress service, all at a premium price.
The second factor is parking. The old location was fortunate enough to be surrounded by city lots that were mostly empty at night. No such luck over on Red River, where parking is already at critical mass. The situation will only get worse, because the whole Waller Creek corridor is slated to become a San Antonio-esque "creekwalk" with construction of the $25 million Waller Creek Tunnel and flood control project. Austin voters, or rather the very few that actually bothered to cast their ballots, approved money for the development in May 1998.
The project will transform the entire Waller Creek Corridor: The Convention Center is expanding up one end, and more bars and restaurants are going in on the other. Two clubs, an Irish pub taking over across from the Red Eyed Fly and another in the space currently occupied by Hurt's Hunting Ground, are slated to open in early 2000. And somewhere along the corridor are hopes for another hotel. The Ready Ice building, located immediately north of the new Lunch site, currently looks like the prime candidate.
This brings us back to the development of the entire downtown area, which, oddly enough, was the reason Liberty Lunch was dislocated in the first place. Is the city setting incompatible goals? Are getting people to work and live downtown, the essence of the whole Smart Growth initiative, and trying to sustain Austin's Live Music Capital reputation mutually exclusive? People living where there's nightly, loud, live music has already proved a bad combination in River City. Crooks remembers very well the impact of the former on the latter in his old neighborhood.
"Sixth Street has been dying since ESSCA [the East Sixth Street Community Association]," he opines. "Since they started that about five or six years ago, businesses started getting slower, things just started getting strange. And now, everybody down there is more into being shot bars and drinking destinations instead of entertainment destinations. It has turned into a kiddie drinking zone."
When ESSCA, an organization consisting of downtown residents, put pressure on the police to enforce Austin's noise ordinances, it resulted in multiple fines and even more ill will between residents and club owners. Now back up to the possibility of a hotel being built directly across the street from the new Liberty Lunch. Think about that: a hotel full of people sitting right over Stubb's -- right over Liberty Lunch. Even a mere handful of occupants wanting to bed down early could be pretty problematic. At least if they call the cops, and the cops can yell out their back window at Pratz to turn it down.
"Just people living downtown is going to make it very different," says Pratz. "It's hard to tell who those people are going to be, and what they are going to mean to the economy and the nightlife down there. You can bet it's not going to be college kids. I get a gentrification kind of feel about it."
"The people who can afford to live down there are going to be people who already have their money -- a 30s demographic, and even people in their 40s," echoes Stockton. "And it's been my experience that the people who go to see live music are not your wealthier people. They're not going to see bands, they're going to clubs to be seen -- if they go out at all."
Increasing rents. Increasing population density. We have already seen the havoc the former is capable of wreaking; the latter's impact is yet to be determined. And yeah, clubs have always closed and new ones have always opened, but in the past, Austin was a much cheaper and smaller place to live in and do business. That's just not the case anymore, so there's less of a guarantee that the future will bear any resemblance to the past.
"There are still clubs, and I imagine more will open," explains Henry, "but here's the thing: In the days of Raul's, and the Cave Club, and Club Foot, Austin was affordable. It was a musician's town. I think today, the city stands with one foot in the grave -- the grave of not being a musician's town anymore. Lots of clubs, musicians, and artists of all types have been pretty effectively evicted from downtown, because it's just too expensive to be there anymore."
That's another point worth making: Today it's the clubs, tomorrow it could very well be the musicians. Nagle notes that many of the professional musicians who used to frequent the ARC have already fled to the hinterlands of Buda and Kyle, where rents are cheaper.
"Twenty years ago at, say, the Continental Club, a regular payday for a band was about $250-$300," he says. "Now, 20 years later, it's almost the same thing. I book Jon Dee Graham there on Wednesday nights and he makes $300. But now, instead of musicians paying $100 to $200 to live, their rent is $1,000."
Close. Average rent for a 1,023 square foot, two-bedroom, two-bath apartment is $808. Yet the average per capita income in Austin is a paltry $20,079, something most musicians would be lucky to get at their day jobs. If you're splitting the cost of that average apartment with your average roommate who's making that average income, almost 25% of what you make pre-tax is going to rent. Wanna buy? According to Texas A&M Real Estate Center statistics, the average price for an existing home in Austin in 1998 was $158,500. Not exactly cheap. This year, that same home jumped to $164,800.
"I'm worried about the musicians more than I am about whether or not I can open a stinkin' little club," remarks Stockton. Clubs come and go and councils do, too. Some leave significant marks on the community, which this Watson-led council certainly will. Many of the things the council is trying to do will hopefully have positive impacts -- if not today or tomorrow, then somewhere down the road. Austin is growing at a fantastic rate, and is experiencing some of the spillover costs of growth it wasn't prepared to handle -- increased traffic, pollution, and cost of living.
Some of those costs became too high for the city to continue to afford many of the unique things that have made Austin Austin. But if more people live nearer where they work, traffic decreases. If traffic decreases, air quality improves. And that's pretty damn important. CSC might be dislocating Liberty Lunch, but it is only that -- a dislocation -- and one that kept a major development out of the watershed.
Yeah, the new Lunch might take some getting used to. It might even be worse, but it will be there, as will the memories of the old place. As important as it is for Austin to have a CSC or an AMD or a Dell, some locals think it's more important to have an Antone's or a Liberty Lunch or an Armadillo, places they can go and be entertained and feel better about life, if only for a while. As important as it is to create jobs, very few of them ever meet that description.
The question is: Can Austin have both? The answer is yet to be determined. But after 1999, Austin has fewer legendary or semi-legendary venues, and it should be painfully clear that maybe next time, even an Antone's might not survive another publicity stunt-cum-tax raid by Carole Keeton Rylander (strange, there's that name again).
"I think people have the wrong idea about clubs," laments Henry. "They think club owners are making money hand over fist, and it's simply not true. The margin for error has gotten so slim, as has the profit margin most of the time, that I believe it's getting to the point where starting and running a live music venue without some sort of financial safety net is close to impossible.
"Straight up, I pray that new clubs will open, and that the kinds of musicians and bands that I have grown to love so dearly will continue to live and work here. I believe it will happen. That's why I'm still here. But I believe it will happen in spite of the city government, instead of in concert with them. I just think it comes down to the fact that the city government is determined to create a new city. I'm just not sure that city is Austin."
Amen. And Happy New Year. If you're a musician or a patron thereof in the Live Music Capital of the World, it couldn't be any tougher than 1999. 
