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Capital Metro hears proposals to redevelop Plaza Saltillo area

Wednesday, April 16, 2014 by Elizabeth Pagano

It’s a familiar headline at this point, but more change is coming to East Austin.


After years of planning and discussion, Capital Metropolitan Transportation Authority is on the verge of selecting a development plan for the Plaza Saltillo area. Currently, the land is mostly vacant, but that’s set to change as soon as the transportation authority selects one of the four development plans they heard at a Tuesday work session.


The Capital Metro board of directors heard from the four finalists for the project. The board will hear public comment on the projects at its April 25 meeting, and could make a decision on which is the winning proposal as soon as May 19.


The four finalists that presented Tuesday were Argyle Residential/ Cypress Real Estate Advisors, Endeavor Real Estate Group, Riverside Resources and Saltillo Collaborative.


The Endeavor Real Estate Group was the first to present to the board. Like every other group, they emphasized their ties to Austin. Jason Thumlert told the board that they had developed seven other mixed-use projects in Austin, including The Domain.


Among the amenities that their plan offered was a 60,000 square foot grocery store, which is slated for the parcel closest to I-35, 1.7 acres of public parkland, and 1.8 acres of “elevated private open space” that could be used by residences. The group is planning to offer 25 percent of their units as affordable, with half of those units for residents aged 55 or older. Unlike some of the other projects, their proposal would not require a variance.


Jeremy Smitheal of Riverside Resources told the board that they had been based in Austin for 24 years, and developed a range of projects during that tenure. The Riverside proposal would include an office building on the parcel closest to the highway. The plan also calls for a stand-alone 160-unit affordable housing project, which would be spearheaded and managed by DMA Companies.


DMA Senior Vice President and General Counsel Janine Sisak explained the project would seek 4 percent federal tax credits and, most likely, city bond money, to finance the affordable housing project.


The Saltillo Collaborative would take the same tack for its affordable housing component, and they have partnered with both Foundation Communities and the Guadalupe Neighborhood Development Corporation in order to do that. Their plan proposes 170 affordable housing units, which would be offered at 30 to 60 percent of the Median Family Income for 99 years.


Perry Lorenz said that the project would require a variance as it is currently proposed in order to build a 120-foot hotel on the tract closest to the highway.


“It’s come up a couple of times – that it’s a strength not to ask for a variance. I understand that. In this town, we all understand that variances aren’t certain things,” said Lorenz. “We are going to ask for a variance… We need to do that to create some value. We cannot have non-profitables, non-profits, and a building that is housing this kind of deep affordability without getting value somewhere. This idea is fully vetted with the neighborhood, with the neighborhood planning team. They understand it and they support us… I don’t think it’s a negative. I don’t take it for granted, but I’ve done this before and I have a good feeling we can get the variances required.”


Lorenz said that they had not only spoken with the neighborhood, but won the majority of support for their project at a meeting of the East Cesar Chavez Neighborhood Association. Lorenz told the board that their project would also offer all construction workers a living wage, which had won the support of the Workers Defense Project, and was in “serious, exclusive discussions” with South by Southwest about relocating their headquarters into their office project.


The final presentation of the afternoon was from Argyle Residential/ Cypress Real Estate Advisors, who is currently developing one of the lots just north of the project – the Corazon Apartments on East Fifth Street.


Argyle Residential Managing Director John Burnham said that they felt it would be a mistake to house all of the affordable housing in one building, and to rely on the “lottery” of state and local funding. Instead, explained Burnham, they would be financing the affordable housing component with “their own financial wherewithal of private capital,” which would make them less susceptible to potential threats to the project’s viability.


“If you segregate, if you do a separate building that is affordable, it won’t be fully taxed. We are going to be fully taxed across the entire parcel,” said Burnham. “We take an economic hit for that, but we think it’s in the greater good to ultimately pay full taxes and have a build out where we anticipate $5 million taxes a year will be paid.”


The Argyle plan would offer 15 percent of their residential units as affordable, priced at 50 percent Median Family Income, and 15 percent of their commercial space as affordable. Additionally, 50 percent of the retail space on the site would be reserved for small, local businesses. The project would also require a variance, in order to build a 14-floor mixed office/ retail/ residential building closest to I-35.


In October 2013, Capital Metro released a Request for Proposal for redevelopment of more than 10 acres in close-in East Austin. The land that is slated for redevelopment surrounds the Red Line track – stretching from the I-35 frontage road to Plaza Saltillo (Navasota Street) between East Fourth and East Fifth streets. The land is currently zone Transit Oriented Development Mixed Use.


The area served as Austin’s train depot for 100 years, up until the 1980s. Capital Metro subsequently purchased the land in 1995. In 1997, the City of Austin built Plaza Saltillo, which will remain intact regardless of what plan is selected.


The city adopted the Plaza Saltillo Transit-Oriented Development Station Area Plan in 2008. In 2011, Cap Metro received a federal grant to realign the rail to the southern edge of the property, from its middle. Money generated from the redevelopment of the plaza will go into Capital Metro’s general operating fund.

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