Endeavor Real Estate, by the narrowest of margins, won permission from the Capital Metro board in 2014 to build a mixture of housing, retail and a park on 10 acres in East Austin owned by the transit agency.
But more than 14 months later, Capital Metro and the Domain developer have yet to complete negotiations on a master development agreement for the long-planned project on the former rail yard just east of Interstate 35. Capital Metro had spent almost $190,000 through June on outside legal help in hammering out the still incomplete agreement.
And the required relocation of a MetroRail track running through the center of the seven-block parcel, which agency officials had said would happen by the end of 2014, hasn’t begun.
That preliminary step, at least, appears on the brink of occurring. The Capital Metro board on Monday will consider a $6.4 million deal with Jay-Reese Contractors to move the track to the strip’s south side, near East Fourth Street, and add a second track alongside it for about 2,000 feet. But even that movement forward — delayed by two previous bid attempts that first yielded no takers, and then only one bidder — could be hamstrung by lack of funding.
Capital Metro landed a $4.3 million federal grant several years ago for the track relocation, and that money should be enough to do that part of the project, Capital Metro’s president and chief executive officer, Linda Watson, said this week.
But she said the agency will have to “scrub its budget” to find the other $2.1 million to install the second track and the automatic switching equipment where the dual tracks would merge at either end. Those options were added after the project was first conceived.
“Those options will only be done contingent on funding availability,” Watson said. “Right now we haven’t identified that money.”
Although the agency’s 1 percent sales tax for the past five years has been bringing in much more cash than predicted, Watson said Capital Metro has plans for all of that money. Some of the cash is going toward replacing old buses and adding more train safety technology to the agency’s rail line, while the rest needs to remain in reserve to meet legislative and board requirements.
Capital Metro, in an effort to run its MetroRail trains every 15 minutes during rush hour rather than the current 35 minutes, is adding siding tracks in several locations and has ordered four additional train cars. Agency officials said that the proposed siding track at the Saltillo tract, while useful to operations, isn’t critical to achieving the shorter train intervals.
The track project, if the board approves the contract Monday, would begin soon and take about four months, agency officials said. It appears that environmental cleanup of what was long considered a “brownfield” site won’t hold up construction.
“We have determined that contamination is minimal” on the site, Watson said.
As for the lingering talks on the Endeavor deal, Watson said a complicated agreement such as this one, particularly given that it also involves city government, reasonably should take awhile. Watson said she wouldn’t speculate about when the talks would produce a final draft for the board’s approval.
“Yes, it feels like it’s taking a long time,” Watson said. “But we knew it would be lengthy. … If you look at other, similar projects where there’s a public-private partnership, such as Mueller, Green Water Plant, Seaholm, we’re right on track.”
The city required more than two years to finalize a development agreement for the Seaholm Power Plant site, said Melissa Alvarado, a spokeswoman with the city’s Economic Development Department, and almost four years to agree on details of the Green plant site makeover.
Watson, citing legal concerns, declined to offer any details about the pending deal, including which elements might be taking the most time to work out between the agency and the company. Endeavor officials referred all questions about the agreement, which reportedly would be a long-term lease of the land rather than an outright purchase, to Capital Metro.
The transit agency has refused to provide any financial details until the deal is finalized.
Endeavor, according to the minimal details provided publicly during the spring 2014 procurement battle with three other finalists, said it would build about 800 apartments on the site, with 25 percent of them defined as “affordable.” Endeavor’s pitch also included a 60,000-square-foot grocery store, 50,000 square feet of retail and a 1.7-acre park that would be dedicated to the city.
City Council Member Sabino “Pio” Renteria, whose District 3 includes the Saltillo tract, has been involved for years in discussions about what to do with the site. He and other neighborhood activists lobbied Capital Metro for well over a decade to develop the site in a way least likely to disrupt the area.
Renteria said it was his understanding that the deal has been held up, at least in part, by the need for the city to “vacate” ownership of short pieces of side streets such as Brushy, Medina and San Marcos that intrude into the site. Beyond that, Renteria said, Endeavor would now like permission to build a structure as high as 120 feet near I-35, an entitlement that losing bidder Saltillo Collaborative had said it wanted for a hotel. He also said that Endeavor, which at one time wanted to build the development in phases, now wants to do all of it in one phase.
The Austin law firm of DuBois, Bryant & Campbell has aided Capital Metro with the extended contract negotiations. From July 1, 2014, through June, the firm’s billings totaled $187,827, the agency said. Billing figures for July and August weren’t available.
Why it matters
Capital Metro has been spending more than $15,600 a month on lawyers to help with negotiations with Endeavor on developing the Saltillo tract. Beyond that, the agency won’t begin receiving revenue from a long-term lease of the 10-acre site until the pact is final. The agency has given no hint of the magnitude of that money or how it might spend the proceeds.
Ben Wear has covered Austin-area transportation since 2003. In 2007, his reporting disproved claims that a new commuter rail line would meet its $90 million budget and 2008 startup date. In 2009, he revealed Capital Metro had dangerously low financial reserves and a $50 million-plus debt to the city of Austin.