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Tuesday, December 18, 2018 by Chad Swiatecki

Budget amendment means new $150M Austin Energy HQ at Mueller

Austin Energy will move its offices on Barton Springs Road to a new headquarters at the Mueller development in North Austin, a move that is expected to save the city roughly $1 million per year.

Last week City Council unanimously approved an amendment to Austin Energy’s capital budget that provides $148.7 million for the land purchase and construction of the 3.3-acre parcel that will eventually house all of the city-owned utility’s administrative staff and functions. An existing $1.3 million in AE’s capital budget brings the total price for the project to $150 million.

The budget amendment was approved in the same vote authorizing staff to negotiate a purchase agreement for the property with Catellus Development Corp., the master developer for the Mueller project.

Construction on the 275,000-square-foot building and parking structure will begin next year and is expected to finish in 2021, with about 850 AE employees making the move out of three sets of offices on Barton Springs Road soon after. The consolidation of administrative employees will free the utility from its lease agreements on two of those office spaces, though it will continue to operate some substations and other operational buildings located around the city.

Jennifer Herber, a spokeswoman for Austin Energy, said there is no definite plan for what will happen to the main headquarters building on Barton Springs Road, which is owned by the utility.

Staff estimates have the move saving $30 million over 30 years by moving out of the leased space – a fact that drew praise from Council Member Alison Alter, who said a move to city-owned property creates more financial stability and predictability.

“This third-party finance (public-private partnership) delivery model is allowing us to move from leased space to owned space, which in this case over time will allow us to save the ratepayers money, which is something that we as a city need to be doing more of … so that over time we are taking more financially responsible positions,” she said. “This is going to be something like 35 percent less expensive than our normal procedures and I’m glad we’re moving in that direction. This shift in how we’re doing our procurement and the change in moving from leased to owned space is critical for setting our city up for the best position we can be in 20 to 30 years from now.”

The city began the search for a new home for Austin Energy in 2015 when it entered into a contract with CBRE Inc. – at a maximum cost of $688,000 – to analyze and serve as a broker for possible land and construction deals.

The agreement outline includes language that will guarantee construction workers on the project will be paid at least $15 per hour, with 15 percent of the workers coming from job training programs created to enhance middle-skilled workers in the city.

Those conditions drew praise and comments of support from a group of construction trades leaders ahead of the vote.

Council Member Greg Casar, who has made living-wage issues a policy focus, praised the deal for answering the needs of Austin Energy as well as area workers.

“Delivering a building quickly and at a lower cost that is high quality is a first priority. In addition, bringing in a high-quality building at a lower cost that doesn’t pay anybody that’s building it under $15 an hour provides high-skilled trade jobs, and that is really powerful and important,” he said. “This Council asked the manager back in June how to have a 15 percent requirement for folks that are in training. I’m proud this is the first building that will have that requirement. This creates demand for training. We can provide demand for training that improves quality of life.”

Map courtesy of the city of Austin.

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Key Players & Topics In This Article

Austin City Council: The Austin City Council is the body with legislative purview over the City of Austin. It offers policy direction, while the office of the City Manager implements administrative actions based on those policies. Until 2012, the body contained seven members, including the city's Mayor, all elected at-large. In 2012, City of Austin residents voted to change that system and now 10 members of the Council are elected based on geographic districts. The Mayor continues to be elected at-large.

Austin Energy: As a municipally-owned electric utility, Austin Energy is a rarity in the largely deregulated State of Texas. It's annual budget clocks in at over $1 billion. The utility's annual direct transfer of a Council-determined percentage of its revenues offers the city a notable revenue stream.

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