In the proposed deal, the city would finance the nonprofit Austin Revitalization Authority's plan to buy land for a 57,000-sf office building and lease space in the building for the Neighborhood Housing and Community Development department at a cost of $8 million for 10 years.
The ARA is working to redevelop parts of 11th and 12th streets in East Austin and the office building is seen as a crucial element to that effort. The authority is working with Austin-based Riata Development to build a mixed-use project in the area.
It was the cost that raised red flags up and down the city council dais at Thursday's meeting. Councilman Will Wynn, a real estate developer, sharply questioned the deal's economics as did colleague Daryl Slusher. Wynn pointed out office space could be had at much cheaper rates.
Mayor Gus Garcia, an accountant, agreed the deal might be a bit too high, but that the revitalization idea behind the project was worthwhile. He called the city's participation an investment.
Paul Hilgers, director of the housing agency, told council that his agency needs the 22,000 sf it would get in the new building because it is now cramped on 13,500 sf at One Texas Center. The move would also provide classrooms and meeting space plus make the agency more accessible to its East Austin clients. The council sent the deal back to city staff to renegotiate the lease.
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