Clock is ticking on 11th, 12th Street renewal projects

Projects continue to move forward along East 11^th and 12^th street corridors, but with a new recognition about the timelines involved for each party on each project.

 

That extra attention to time – on everyone’s part – comes from a new tri-party agreement signed by the City, Urban Renewal Agency and Austin Revitalization Authority (ARA) late last year. Much of the discussion at Monday night’s meeting of the Urban Renewal Board – which reviewed projects on Block 17 and Block 18 – involved the commitment of each party.

 

For instance, to make the 16 market rate work-live lofts on Block 17 work, it will require the successful execution of a number of interlocking transactions. The tri-party agreement commits the city to sell the block to ARA. However, before ARA can pay for the block, it must complete work on five houses on Juniper and Olive streets.

 

The bank wants ARA to complete the deals on those five houses before financing is approved for Block 17. And the purchase price on Block 17 is contingent upon an outside appraiser setting a fair market value for the block in the next 60 days, which could only be determined after the Urban Renewal Board gave its nod to the language of a sales contract this week, which should – if everything goes well – be signed by the end of May.

 

Even while the work is being completed on Block 17, ARA has submitted its Phase I, or preliminary, plans on Block 18. Block 18, in its initial draft, is a four-story commercial building with 9,000 square-feet of ground floor retail. Behind that commercial building there will be 30 units of affordable housing, renting at 40 to 50 percent of median income. At this point, the rent is estimated at $437 for one bedroom and $745 for two bedrooms.

 

Under this new tri-party agreement, everything has a schedule, whether it is a date-specific time or a 30- or 60-day time certain timeline. For instance, the Juniper/Olive houses have certain specifics required in terms of framing and foundations and other parts of construction, all within a 60-day timeframe.

 

Under the negotiations outlined in the tri-party agreement, the houses must be under construction by the end of February and at a satisfactory stage of construction by the end of April. ARA’s plans are to start construction on the first house at the end of February with construction beginning on an additional house every two weeks.

 

“We’re encouraging,” ARA Executive Director Byron Marshall “and our staff to get these people qualified as quickly as possible so we can be moving quicker on getting construction started,” said Paul Hilgers of the Neighborhood Housing and Community Development Department. “We should have substantial movement within 60 days on the first house, so if we start on Feb. 23, then we should see substantial progress by April 23.”

 

The goal is for ARA staff to go to Council on April 3 to request a $360,000 forgivable loan toward the purchase of Block 17. That’s a requirement from the bank to close the deal on financing. Once that’s accomplished, ARA will move forward with the purchase of the land, which has to be done by May 31.

 

As for Block 17, the timing is tight. The project plan is approved on the $3.6 million project. The permits have been pulled and the construction company is in place, Marshall said. All that information has been submitted to the lender in anticipation of the deal.

 

Monday night, the URB walked through the sales contract on Block 17 with attorneys for both the city and the Urban Renewal Agency. This contract – while not approved by the ARA board yet – has been negotiated among attorneys for the city, URA and ARA.

 

No longer are the parties under this agreement straying from the timelines. Under terms that mirror the tri-party agreement, the Block 17 sales contract – which includes the development agreement – requires a specific timeline for completing the project. If ARA fails to meet its timeline for completion – in this case, two years – then Marshall has to give the URB sufficient notice. At that point, URB can agree to grant extensions on the completion of the contract, granting ARA the ability to “cure” any defects.

 

If ARA’s work is not satisfactory, then ARA defaults on the agreement. Under such terms, the city is given the right to purchase the project at 90 percent of its value. This is separate and apart from any financial default that might occur. In the case of a financial default, the bank would reclaim the property and sell it to the highest bidder.

 

The sale of Block 17, for a fair market value, already is on the books with the tri-party agreement. Chair Kevin Cole, however, promised the URB that he would bring the final contract back for the board’s approval, with the actual appraised price. That could be at the February meeting but more likely will be at the March URB meeting.

 

At various points in the discussion last night, Cole would stop and clarify the date of when the “clock started ticking” on various conditions of the contract. There is some flexibility under the contract for ARA. For instance, ARA may decide that the market will only support 8 of the 16 market-rate live-work lofts on Block 17. In that case, the board can approve an indefinite extension of the contract time.