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City may begin evaluating creative spaces bond sites in June

Monday, April 13, 2020 by Chad Swiatecki

The city expects to use real estate and economic development professionals from the Texas Facilities Commission to broker the acquisition of what may be multiple properties for local artists and musicians to use.

An April 3 memo spells out the steps that will be taken to purchase creative spaces using $12 million in bond funding voters approved in 2018. Up first will be negotiations between the Economic Development Department and the facilities commission on contracts for a public-private partnership adviser and a real estate broker, separate roles that will work to identify sites and negotiate deal terms.

Sites will be evaluated and selected largely using the criteria established by a joint working group created by the arts and music commissions. That group spent most of 2019 gathering community feedback on how to best address the need to preserve and create spaces for artists and musicians in the face of rising land prices throughout the city.

The working group made equity the top priority for using the bond money, with service to underserved and underrepresented groups among the requirements for applicants looking to be acquired and contracted by the city.

The criteria, which were approved separately by the arts and music commissions in January, state a preference for small, flexible rehearsal spaces, venues and studios, with preference given to properties located in East and South Austin, downtown and north of the University of Texas campus.

Once the agreement is approved with the Texas Facilities Commission or a similar vendor, the real estate broker will issue a solicitation for properties while the Purchasing Department will issue a request for information from potential facilities operators for the sites the city eventually purchases.

The memo explains that this parallel process is necessary because the city will almost certainly need to be the sole owner of any properties using the bond money. Any property deals not involving direct city ownership would likely face possible legal hurdles with the state, as would any that had an economic development component other than providing space for creative use.

There is no timeline spelled out for the property acquisition, with the interlocal agreement to hire the real estate broker and public-private partnerships adviser expected to be approved by City Council by the end of June.

The process spelled out in the memo appears to finally set a preference for using the bond money to acquire and support existing venues and arts spaces that are facing rising rents, property taxes and redevelopment pressures, thanks to the city’s hot real estate market.

As scenarios for the bond money were discussed beginning in late 2017, some consideration was given to using the bond funding to create a new multi-use arts facility, a concept that appeared to have some support from Mayor Steve Adler. The decision to lower the creative space bond request to $12 million from the $40 million-plus recommended by community groups made it far less likely that the money could be used to fund new construction.

Still undetermined is whether either a land bank or economic development corporation – two public-private tools that have long been discussed as possible solutions for the city’s creative space crunch – will come into play as part of the property acquisition process. Members of Council and arts proponents in the community have supported those mechanisms because of the possibility of “recycling” the bond money through purchase and leaseback agreements with existing arts groups, with rental revenue capped to preserve affordability and used to fund future purchases.

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