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Eckhardt proposes land swap with city for Palm School

Wednesday, July 10, 2019 by Jack Craver

Travis County Judge Sarah Eckhardt is willing to give the city of Austin the historic Palm School building. But she wants a lot in return.

In a July 3 letter addressed to Mayor Steve Adler and City Council, Eckhardt proposed a deal whereby the city would get the Palm School in exchange for two city properties. In addition, Eckhardt proposed that the city allow the county to take over a portion of the Hotel Occupancy Tax that is currently flowing into city coffers.

Mayor Adler and Council leaders have said they want the Palm School, a county office building that was originally an elementary school serving mostly Mexican American children, to be restored and to serve as a public place celebrating Chicano culture. The building is part of an ambitious vision to revitalize the eastern part of downtown, most notably by expanding the convention center and establishing the Waller Creek Chain of Parks.

However, Eckhardt and her colleagues on the county Commissioners Court have said they are not interested in simply handing over the property, which they claim is appraised at roughly $53 million.

The two city-owned properties Eckhardt is eyeing are the former HealthSouth Rehabilitation Center on Red River Street and the Travis County Exposition Center on Decker Lane, in eastern Travis County.

Council envisions the HealthSouth property to be used as subsidized housing targeting those who work in the downtown service economy. While the city purchased the property nearly 50 years ago, it acquired the leasehold interest in the building from HealthSouth as a tenant in 2017. City staffers plan to submit a solicitation inviting parties to submit proposals to develop the property for housing by the end of summer.

Eckhardt suggests the site instead be dedicated to mental health, potentially as a collaboration between the county and nearby health entities Central Health and UT Medical. Representatives from both of those organizations, along with county criminal justice leaders, have similarly asked the city to withdraw its solicitation for the property.

While the city and county share a goal of addressing the mental health and substance abuse disorders that drive homelessness, crime and other societal problems, the county, as the entity that oversees courts and the jail system, is in a “better position to accomplish that shared interest in collaboration with Central Health and UT Medical,” said Eckhardt.

The Expo Center facility is owned and operated by the county, but sits on Walter E. Long Metropolitan Park, which is city-owned property. The county has leased the use of the land through 2033, most notably for the annual Star of Texas Fair & Rodeo.

In November, Council approved a resolution asking city staff to explore ways to redevelop the aging Expo Center, which rodeo officials and a consultant hired by the city have said is badly in need of replacement.

“I believe the city shares the county’s interest in building a community of opportunity in the Eastern Crescent of the city and specifically in the area around Colony Park and Decker Lake,” wrote Eckhardt. “Travis County is fully supportive of the city’s planning efforts for Colony Park. Travis County seeks to amplify the city’s efforts by redeveloping the property at the Travis County Exposition Center as an enhanced sports and entertainment center, employment center, and a point of community identity and pride.”

However, in order to fund the new Expo Center, Eckhardt asked that the county take over the 2 percent Hotel Occupancy Tax that the city currently levies to pay off the debt associated with the last expansion of the convention center in 2002.

That tax is distinct from the 7 percent hotel tax the city levies to fund convention center operations, Visit Austin and other tourism efforts. It is also distinct from the additional 2 percent hotel tax Council is considering to fund another expansion of the convention center. Neither of those require voter approval.

The 2 percent tax Eckhardt is targeting was approved by voters in 1998 to expand the convention center. It is set to expire in 2029, when the debt is scheduled to be fully paid. That tax is authorized under Chapter 334 of state law, which allows cities or counties to levy a “venue tax” on hotel guests to fund any number of public event spaces, such as a sports arena or convention center. However, the tax must be approved by voters and only the city or county can levy it at one time.

If the convention center expansion is approved, city officials have said the city will be able to use funds from the new tax to retire the debt earlier than scheduled, thereby allowing either the city or county to levy a new venue tax.

Council Member Kathie Tovo, who has spearheaded Council’s efforts to acquire the Palm School, said she appreciated Eckhardt’s willingness to discuss a land swap but was hesitant to give up HealthSouth, given the city’s housing plans.

“HealthSouth and the Expo Center are properties that we’ve expressed intentions about,” she said, adding that the county has not come up with any stated plans for Palm School besides selling it.

Tovo said her preference would be “a situation where the county and city partner together around Palm School.” She highlighted the example of the Sobering Center, which is owned by the county but whose operating costs are funded by the city.

Adler said he will consider the proposal, and that his focus is on maximizing the public benefit of the various properties, regardless of which local government entity owns them. He said he would be open to using the HealthSouth site for social services rather than housing if the city can get more housing at another site close by.

In a joint message posted online Tuesday afternoon, Adler and Tovo asked Eckhardt to direct her negotiations to City Manager Spencer Cronk, noting that Council is currently in recess and open meetings laws limit what Council members can privately discuss with one another.

Correction: This article originally stated that the city purchased the HealthSouth property in 2017 and that city staff had already solicited proposals from private entities to lease or purchase the property. In fact, the city already owned the land and only purchased the leasehold interest in 2017. The city has yet to submit a request for proposals.

Photo by Larry D. Moore [CC BY-SA 4.0], via Wikimedia Commons.

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