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Ott pulls Austin Energy building plan from City Council agenda

Thursday, June 26, 2014 by Michael Kanin

Austin City Manager Marc Ott plans to remove a controversial item from today’s agenda that would authorize the design of a new Austin Energy headquarters. Speaking from the dais at Council’s regular Tuesday work session, Ott noted the need for more information.


“Certainly I recognize that Council has a lot of questions and I understand that Austin Energy wants and requires some additional time to work on this project. I’m requiring that they take additional time to work on this project,” Ott said.


According to initial reports, a new Austin Energy headquarters building could cost as much as $67 million. Council was set Thursday to approve up to $9 million for design of the project.


The price has produced no small amount of balking on the part of Council members. At a June 10 work session, members Bill Spelman, Kathie Tovo and Mike Martinez all chimed in with concerns. These ranged from questions from Tovo over whether Council members had ever actually approved construction of the facility; concerns from Spelman that staff weren’t putting their best foot forward in terms of describing the need; and suggestions from Martinez that approval of a master plan that contained construction of the new facility.


“We approve facility master plans quite frequently in different departments and apparently we did 30 months ago at Austin Energy,” Martinez said at the time. “To me that doesn’t create an assumption that we’re going to build whatever that facilities master plan says.” (See Austin Monitor, June 11)


Questions lingered on as developer Howard Yancy of Zydeco Development –the group behind Met Center – fired off a scathing email to Council members over the proposed deal. In it, Yancy suggests that “a building we constructed for the Department of Veteran Affairs in Met Center two years ago” was far below the costs of the proposed Austin Energy headquarters.


NOTE: After this story was posted, the Austin Monitor learned that Yancy is suing AE.


In his email, Yancy notes that the Met Center Veteran Affairs building is 150,000 square feet, meets LEED silver standards, contained a host of other internal and external construction amenities, but cost only $180 to $185 per square foot.


Though Yancy allows for additional costs that the utility might face in constructing its new headquarters on what he calls “very difficult” soils, Yancy also fires off a deeply skeptical conclusion. “A very specialized Federal Government building, probably THE most specialized building in Austin, cost $185 per square foot all in (his Veteran Affairs building), which is not too far off the per square foot cost of the new Federal courthouse, compared to an AE estimate of approximately $367 a square foot,” Yancy writes. “And estimated architectural, engineering and other fees of $9,000,000 ($50 per square foot) compared to $3.33 per square foot for a highly specialized Federal Government Building?”


Yancy continues to suggest a price – as well as his interest in staying far away from the project. “I or any other developer could deliver the project AE is seeking for no more than $225 per square foot, guaranteed, particularly if a flatter site is available (and many, many such sites are available within 1 mile of the proposed AE site, and I or any other developer would take the land AE owns in trade as part of such transaction for its fair market value – it is actually much better as a multifamily site due to the severe topography restrictions associated with the site),” he writes.


Council members postponed action on the building at their last official Council meeting in favor of more data about the need for construction. They did not receive what they were looking for by the end of Monday’s full-Council Austin Energy subcommittee meeting.


Though Council members pressed for more answers, they ran out of time (See Austin Monitor, June 24). As Council members picked up the discussion at Tuesday’s work session, Ott delivered his remarks.


Spelman sketched the outlines of how long might be too long in terms of a delay in a go-ahead for the building. Austin Energy officials have argued that construction will avoid substantial leasing costs. They confirmed that, so long as Council took action before the end of 2014, their timeline would be in tact.

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