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Seaholm redevelopment plan wins final approval

Friday, June 8, 2012 by Elizabeth Pagano

After years of negotiations, members of the Austin City Council gave the green light on Thursday to redevelop the majestic old Seaholm Power Plant into office space with a small amount of space devoted to retail and public use.


The power plant site, on the north shore of Lady Bird Lake, will also be home to 294 newly constructed apartment units and a Trader Joe’s grocery store.


In its action on Thursday, Council approved changes to the original 2008 agreement to allow developers to lease the bulk of the decommissioned plant as offices instead of as retail and public space as once envisioned.


“There was a period in there where nobody thought we’d ever build anything again,” Seaholm Power LLC Managing Partner John Rosato told In Fact Daily. “But two years ago we started really going back out on the market and really trying to bring people back in…. What we noticed was the brokers’ community kept bringing us high-tech firms, essentially.”


Rosato said after receiving a letter of intent, he felt it was necessary to amend the master development agreement (MDA) with the city to accommodate a prospective commercial tenant.


“Without amending the MDA, we would have had to tell a 100,000 square foot tenant, ‘sorry’,” Rosato said. He declined to name the potential business that would move in.


Council approved amendments offered by Council Member Laura Morrison that carved out some space in the main building for the public, ensuring that there will be at least three public spaces: 1,000 square feet for a coffee or juice bar with views into the main hall; 5,000 square feet for a restaurant and a 1,000 square feet for public art.


“It’s a matter of making sure that under the contemplated lease, there would still be some public access, even though there is going to be office use,” said Morrison. “It seems like a good balance, and a good pragmatic way to allow you to move forward with something specific now.”


Another amendment from Morrison was also approved, limiting the length of time the space can be leased to a total term of 20 years, and stipulating that 24 months prior to the end of each lease a “mutually acceptable independent research publication or independent study,” should determine whether retail use is viable. If it is, the owner must lease the ground level for retail uses.


Rosato also agreed to a last-minute request by Council Member Kathie Tovo to extend  affordable housing for the 294 apartments that will be located elsewhere on the property. Originally, the agreement was to provide affordable housing for 25 years on 5 percent of the units. Rosato agreed to extend that to 40 years.


“It sounds like an interesting idea. If that is the last question that we have today, I would be happy to do that,” Rosato said.


The Council approval and the limited public and retail space requirement in the final agreement did not satisfy everyone. Ken Atles, founder of the Friends of Seaholm, told Council that throughout the public input process no one clamored to turn the old power plant into an office building.


“Council has had a weak vision for this building, weak guidance and weak policy. I really think that if you allow this kind of fig leaf, this particular agreement, and if you allow this to become an office, it’s gone,” said Atles. “You will be remembered as the Council that lost Seaholm.”


For his part, Rosato said he also was disappointed other tenants didn’t materialize. “Nothing we do now will compromise or preclude future civic or retail use,” he said. “There is no doubt that many of us are disappointed that the perfect use, my favorite one was the Children’s Museum, has not materialized. But we should not reject the good hoping and waiting for the perfect.”


All told, the city is expected to invest about $31 million at the site to pay for an underground parking garage, new streets and infrastructure improvements. The developers will pay the city just $1 a year to lease the property, but they are expected to invest at least four times that amount in the project.


“I’ve seen numbers reported of $130 million or $140 million. I think that’s a reasonable number, but we really don’t confirm or talk about that,” Rosato said. “It’s a major undertaking.”


Rosato said construction will start this summer, with the Trader Joe’s and the former power plant ready for occupancy in January 2014. The apartments are expected to open six to eight months later.


Developers are still hammering out the details, but Council Member Mike Martinez hopes the development will set a bar in terms of paying construction workers a living wage as well.


“Hopefully we will achieve the first joint-venture project where $12 (an) hour is the minimum wage,” said Martinez, though he explained that they were still working out the details. “I think it’s going to be an extremely significant, historic step.”

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