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Idea of subsidizing parking for City Hall, CSC retail project draws fire

Thursday, May 11, 2000 by

Downtown Commission sees harm to other downtown retailers

Jan Hilton, CSC/City Hall deputy officer for the City of Austin's Redevelopment Services, provided what was to have been a routine update on retail plans for the 2nd Street area last night to the Downtown Commission. She ran into a buzz saw of resistance to the idea of subsidizing parking for retail space in the two buildings to be constructed by Computer Sciences Corp. and the new City Hall.

Hilton said three floors of underground parking are to be built below the new City Hall, with 250 parking spaces per floor. One floor each would be dedicated to CSC, City Hall and retail. She said that Gerald Trimble of San Diego-based Keyser Marston Associates Inc., the city's consultant for the project, has advised that the city must subsidize the cost of parking or the project will not work for a retail developer.

That drew sharp criticism from Downtown Commission Chair Robert Knight, a downtown real estate investor who represents the Urban Land Institute on the commission, and spectator Bruce Willenzik, who owns the Armadillo Christmas Bazaar.

"I think we ought to be looking at the fundamental underlying question: Do we want to force retail into the ground floor of every building with the reality we have to subsidize it with parking or it will not work?" Knight said. "It scares me to death to subsidize business that would compete with struggling businesses downtown," he said. "If the occupancy cost is based on not having to pay for parking then we've subsidized retail at this one location at the expense of the free market."

"Should the city be subsidizing a particular kind of business to accomplish a goal that may not work anyway?" Knight continued. "Or should we look at another kind of use?" He said a subsidy might have the effect of killing the market and still not achieve its goals. With enough critical mass, however, a retail project that can pay market rates will occur on its own, he said.

Commissioner Linda Johnston, an architect who represents Olé México, asked if the city would charge people to leave their vehicles in the retail parking spaces. Hilton said that hasn't been worked out yet. "But if we charge will people come downtown and pay to park?" she said. "They're used to going to suburban retail with all the parking in the world." Johnston said, "I don't see this as all that big a subsidy."

Willenzik lambasted the idea of subsidizing parking for this particular retail project. "This is a travesty," said Willenzik, who earlier had addressed the commissioners concerning the devastating impact construction is having on his and many other downtown businesses. "They say I can't operate in the daytime because I have no parking, but you're putting someone in competition in my neighborhood." The Armadillo Christmas Bazaar is held at the Austin Music Hall, some three blocks from where the CSC, City Hall, and Amli Residential are to construct office and residential projects on six city blocks. Willenzik said, "This will put me out of business. You should make it paid parking for all comers."

Knight noted that the block occupied by the Austin Convention and Visitors Bureau was designed to have ground-level retail but said that has not happened.

Commissioner Chris Riley, an attorney and representative of downtown residents, said it doesn't make sense to require parking for the CSC and City Hall retail, and transit should be stressed instead. But he told Willenzik, "I'm sympathetic to your point and if people want to park they should pay."

Commissioner Bill Keenan, who represents the Downtown Austin Alliance, said, "It's troubling the city would go into negotiations with the assumption that retail will not pay for itself…Developers would not enter this unless there's a huge profit."

"If retail will not work out we need more employment and housing," Knight said. "Let someone build retail and if it doesn't work out, fine. My point is, just for the sake of people walking up and down the street we don't need to subsidize retail."

Hilton said the four prospective retail developers (see separate story below) were interviewed by a team consisting of Joe Canales, chief of staff; Sue Edwards, director of Redevelopment Services; John Stephens, director of Financial Services; Greg Smith of Neighborhood Housing and Community Development; Carol Martindale, purchasing officer for Austin Energy; and consultant Trimble.

Noting the makeup of the interview team, Knight said that Trimble's expertise was more in the financial area than in retail per se. "I don't see anybody on this thing who knows about retail," he said. He recommended to Hilton that after picking the city's developer one of the other applicants ought to be hired as a consultant to help negotiate the contract. "I don't think y'all know the right questions to ask," he said. "These are all good developers but there ought to be somebody on there to ask hard questions."

The commission voted 7-0 to authorize Knight to draft a letter to the mayor and city manager to recommend that a person with retail experience and another person to represent downtown retailers be put on the negotiating team for this retail project. Voting for the project were Commissioners Knight, Riley, Johnston, Keenan, Bill Mullane, Teresa Rabago and Bea Fincher. Commissioner Jean Mather participated in much of the discussion but left before the vote was taken.

Four entities vying for contract to develop retail in CSC, City Hall project

Staff may recommend increasing City Hall to 115,000 square feet

The City of Austin solicited interest from retail developers with a letter signed by City Manager Jesus Garza and Mayor Kirk Watson on March 22. Hilton said four potential retail developers for the 76,480 square feet of retail subleased from Computer Sciences Corp. (CSC) by the city have been interviewed by a team of city staff and a consultant.

City staff is also considering asking the City Council to increase the size of City Hall from 100,000 square feet to 115,000 square feet, Jan Hilton, CSC/City Hall deputy officer for Redevelopment Services told the Downtown Commission last night. The expansion would consist of 10,000 square feet of retail and 5,000 square feet to accommodate either a larger City Council (if voters should approve single-member districts) or growth needs. The additional 10,000 square feet of retail on the 2nd Street frontage of City Hall would fill the gap that otherwise would exist between the retail space in the two CSC office buildings, and would bring the total retail space to about 86,480 square feet.

Hilton said discussions so far have indicated that the phased nature of this retail development as the new buildings are completed may be beneficial. "There will not be 76,000 square feet on Day 1," she said.

Additional information from the applicants has been requested by mid-May, and as early as June 8 the City Council may be asked to authorize negotiations with the recommended developer, Hilton said. Key traits sought in a developer are financial strength and urban retail experience, preferably downtown. The four developers being considered are:

• Amli-Bonner Carrington of Austin. Amli Residential already plans to construct residential buildings with ground-floor retail on Blocks 20 and 22, immediately north across 2nd Street from the CSC office buildings on Blocks 2 and 4. Hilton tells In Fact Daily that an estimated 70,000 to 80,000 square feet of retail will go into those two buildings.

• Henry S. Miller Interests & Urban Partners Joint Venture. Both are based in Dallas, where they are developing West Village, consisting of commercial, residential and retail.

• Trammell Crow Co. of Austin.

• UC Urban of Dallas, where it is developing Mockingbird Station, consisting of residential, retail and offices near a Dallas Area Rapid Transit station.

Once the council authorizes negotiations, it will take an estimated 90 days to close the contract, Hilton said, based on discussions with the developers. One thing to be discussed in these negotiations is what type of retail that would be recruited, she said, although it is envisioned the CSC and City Hall retail space will have no anchor tenants.

The city was formerly in discussions with Federal Realty Investment Trust about the possibility of incorporating the city's retail plans into a larger vision for a retail corridor along 2nd Street. (See In Fact Daily Jan. 19, 2000.) Federal Realty is currently doing the Houston Street Project in San Antonio, involving some 10 properties totaling 355,000 square feet. Hilton says because of the San Antonio project and other work in California, Federal is stretched too thin to work on the Austin project.

Rail Austin…The Greater Austin Chamber of Commerce will hold a news conference at 11:30 a.m. Friday, May 12, to brief the community on the chamber's light-rail study and decision-making process. Chamber President and CEO Mark Hazelwood will outline chamber efforts to reach a reasoned decision as to whether to support the light rail initiative. Consultants and members of the chamber's task force will be on hand. The event will be held in the 8th Floor conference room at 111 Congress Ave. For more info, call Sarelee Tiede at 322-5649 or e-mail stiede@austinchamber.org… Take the tour…The Heritage Society of Austin has already sold a record number of tickets to the Friday preview party for its annual tour of historic homes. Julie Morgan, executive director of the society, said the group has already sold 425 tickets to the special event at the Stephen F. Austin Hotel. The society has sold another 500 tickets to Saturday's historic homes tour. Based on that figure, Morgan said she expecting about 2,000 people to tour downtown historic buildings. For more information, call the Heritage Society at 474-5198… No competition…With disclaimers as to any plans to form a new organization, neighborhood leaders Jim Walker, Sabrina Burmeister and Cathy Echols have organized a Neighbor to Neighbor Workshop for Saturday, May 20, from 9 a.m. to 2 p.m. at Martin Middle School, 1601 Haskell. The workshop is being billed as Brainstorming Solutions for a New Austin. Early birds can enjoy coffee from Cafe Mundi starting at 8:30 a.m. and examine the tables of literature. An introduction to the workshop method goes from 9 to 9:30 a.m., followed by small groups brainstorming solutions until 12:15 p.m. A buffet lunch will be hosted by Hoover's till 1:15 p.m., followed by a summary and plans for the next step. To reserve a complimentary meal, call Walker at 499-0526, extension 4, or e-mail jwalk@greenbuilder.com.

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