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Travis County shops for tools to blunt courthouse bonds

Wednesday, June 24, 2015 by Caleb Pritchard

Travis County will host a forum for developers to explore options for a second, privately built tower on the block that would also be home to the proposed $292 million Civil & Family Courts Complex.

The Commissioners Court voted on Tuesday to schedule the forum to span July 8 and 9 with an optional third day on July 10. The forum will allow the county to open a preliminary dialogue with real estate developers to hash out ideas on a plan to dull the edge of the Civil & Family Courts Complex’s projected cost.

Voters will decide in November on the bond package that would pay to build the 14-story facility at the corner of W. Fourth and Lavaca streets in downtown Austin. The Austin Bar Association, which has endorsed the bond, says owners of $350,000 homes could expect an increase of $42 per year on their tax bill if it’s passed.

There is almost universal consensus that the county needs to replace the current home of its civil law functions. The Heman Marion Sweatt Courthouse originally opened for business in 1931, when the county’s population was almost one-fifteenth its current number.

Ironically, the population growth that supporters say makes the new courthouse a necessity is also driving the engine that could help derail the November vote. Affordability proved to be a major issue in the 2014 Austin City Council elections, and throughout the process to prepare the Civil & Family Courts Complex bond proposal, members of the Commissioners Court have expressed a wariness to tempt voters’ expressed antipathy toward higher property taxes.

It is that wariness that is the overt impetus behind the notion to bring in private developers to build the second tower on the proposed block. “We plan to build the CFCC in the most cost-effective manner,” County Judge Sarah Eckhardt said. “The least expensive option is to build the CFCC and simultaneously develop a revenue-generating office tower on the south side of the site.”

County Strategic Planning Manager Belinda Powell told the Austin Monitor that the goal is to sell lease the air rights on the southern half of the block to a developer who would then build the second tower and lease it to private tenants. She explained, “They would own the building, and that’s why they would have to pay property taxes — because they own the improvement,” but not the land, Powell explained.

Powell also said that eventually the county would gradually replace the private tenants in the tower, but not for another two or three decades, after the 20-year bonds for the CFCC could be paid off.

The plan doesn’t stop there, though. The county is also exploring the possibility of using tax-increment financing from the second tower to fund improvements to the surrounding streetscapes as well as Republic Square Park directly across from the property on W. Fourth Street.

Powell also mentioned that the TIF money could be used to help the State of Texas in its planned redevelopment of its adjacent Hobby Building on Guadalupe Street. the county has reached out to the State of Texas to inquire about including the any increase in value from planned redevelopment to the adjacent Hobby Building on Guadalupe Street to the reinvestment zone. However, she explained, that project has no definitive start date and plans are proceeded independently of county intentions in the area.

In all, using a private developer to build the second tower is one of several proposals commissioners are exploring in order to blunt the cost of the proposed courthouse. The others include evening and weekend parking revenue from the two buildings’ parking garages and the sale of several other county-owned downtown properties.

Powell is expected to return to the court next week to give a preliminary briefing on the value of each of the proposals to offset the bond. The specific developers’ proposals that the county will start fishing for at the July forum are not expected to come back until December, after voters will have decided the courthouse bond’s fate.

Image courtesy of Travis County.

This story has been corrected

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