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Photo by STG Design, via city of Austin

Council likely to vote on negotiation only for Aspen Heights deal

Wednesday, September 28, 2022 by Jo Clifton

At Tuesday’s work session, City Council members praised a proposed final agreement with Aspen Heights Partners for a large development at 1215 Red River St. and 606 East 12th St., formerly known as HealthSouth. They were particularly appreciative of the fact that the development will include 921 new apartments as well as other amenities, such as a child care center and a live music venue. But Council Member Kathie Tovo proposed only approving negotiations with the developer, requiring staff to return to Council for the final OK on executing the 99-year lease and development agreement.

Nearly a year and a half ago, Council directed staff to negotiate the agreement with Aspen Heights Partners for terms governing the development, construction and lease of the mixed-use residential development and associated infrastructure on the city-owned properties. Aspen Heights is offering a one-time payment of $12.2 million to the city and $8.8 million to the NHP Foundation to develop affordable units. The city will share in any profit, with conditions to be determined within the development agreement, according to the term sheet presented Tuesday.

Susana Carbajal, deputy director of the Economic Development Department, explained that there would be two mixed-use 37-story towers on the site. The south tower will include a total of 348 apartments, including 232 units renting at or below 50 and 60 percent of the median family income. That tower will include a child care space for 75 children, including a $3.7 million allowance for tenant improvements. There will be a public mural on the exterior wall of the building. Builders are to strive for Green Building 4 or LEED Gold standards.

The north tower will include 573 market-rate apartments and a music venue with a 10-year term and a 10-year renewal, with rent capped at 60 percent of market. Carbajal said developers and their partners would make a good-faith effort to serve historically disenfranchised operators. The tower will include commercial and retail space as well as a local food incubator.

Mayor Steve Adler and Council Member Pio Renteria acknowledged Council Member Natasha Harper-Madison for her work keeping the project alive when it looked like it might be scrapped.

Harper-Madison expressed her appreciation of staff for their hard work bringing the project to fruition. “I’m deeply appreciative of all my colleagues for sticking it out” and seeing the project through to this point, she said. “When we first started talking about this project publicly back in January, I asked staff to try to add several items to their negotiations” with the developer. “I’m more than pleased to see all of those requests have been incorporated into this best and final offer.” She cited creative ways to allow for more on-site affordable housing, which “everybody wants.”

Harper-Madison said local musicians are happy with the prospect of a new performance venue. And the city and the developer will be creating 232 units for households making less than 60 percent of the MFI. She reminded her colleagues that the site where the new towers will be built was once homes that were torn down “for the sake of so-called slum clearance. We created a crater in that part of downtown.” Now with the new teaching hospital nearby, this development will provide “so many transformative benefits.” She asked her colleagues not to hold up the project for too long.

Carbajal explained that the site is going to be designed to improve connectivity in the area, with a $6.6 million minimum investment in designing a streetscape along Red River, and the city will participate financially in creating a new 13th Street. Carbajal also explained that developers have planned 30,000 square feet of open space with an aquatic amenity. The development will include two parking garages with public parking available, according to the term sheet.

The developer will comply with city standards, including tenant protections, but does not offer any office space for the city or ownership opportunities. Commercial tenants will not be subject to the city’s living wage requirements, Carbajal said. The city has promised to initiate zoning for the tracts and support rezoning for an adjacent private parcel.

Staffers anticipate executing the development agreement by spring 2023, including briefings to the downtown and design commissions. There will be a “community engagement plan developed for all phases of redevelopment.”

In response to a question from Tovo, Carbajal said, “We recommended negotiation and execution in order to deliver these community benefits and the housing to the community as soon as possible – so by summer of 2027 as the developer proposed. However, if it’s the Council’s will to only negotiate and be able to come back to Council with a draft before execution, that’s not a problem. It could delay the project a little bit but it’s not a problem.” Tovo is leaving office in January and a new Council member will be voting on the final agreement next year.

If all goes well, the south tower will be built first or at the same time as the north tower with a delivery date of summer 2027. Aspen Heights’ design team includes local firms STG Design, Studio Balcones, and the architecture and engineering firm Civilitude.

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