Details emerge as Capital Metro board approves Plaza Saltillo deal

After an almost two-year negotiation and a last-minute increase in what workers will be paid, the Capital Metro board on Monday approved an agreement to develop the 10-acre Plaza Saltillo site in East Austin.

Under the 99-year rental agreement, Endeavor Real Estate and Columbus Realty will pay $1.6 million in the first year to Capital Metro, which owns the tract. The annual payment will increase 3 percent in each of the first five years, board member and Austin City Council Member Ann Kitchen said, then each year after that by a percentage based on increasing residential and retail rents at the site.

Further details on that formula were not available Monday because Capital Metro declined to release the contract. The agency said the contract would not be made public until it is signed by the Federal Transit Administration at some unspecified date. An Endeavor official said, however, that the contract caps the total amount of increased rent payments to $200 million cumulatively over the life of the contract.

Board members did not receive a copy of the contract until Friday, Kitchen said, and then only after her fellow board member and City Council colleague Delia Garza asked to see it. Garza also asked to see the developers’ financial projections — “Otherwise, how do I know that $1.6 million is a good deal?” she asked — but did not receive them.

Garza nonetheless joined the 7-0 vote to approve the contract. Board Chairman Wade Cooper recused himself because a law partner had been contacted for possible work by one of the private parties involved in the development.

As part of the deal, construction workers on the project just east of Interstate 35 at East Fourth Street will be paid the city’s living wage of at least $13.03 per hour, higher than the $11.39 hourly wage planned as recently as last week. In addition, Capital Metro will retain veto power over the selection of a work site monitor meant to ensure that worker protection rules are followed, and the transit agency will have the right to talk with the monitor outside the presence of developer representatives.

The Workers Defense Project had pushed for such protections, as well as universal workers’ compensation coverage at the site. Texas law does not require workers’ compensation coverage, officials said.

Jason Thumlert, a principal with Endeavor, said after the meeting that workers in certain trades at the site would be covered by workers’ compensation insurance. Others’ injuries would fall under general liability and occupational accident policies, he said.

Thumlert said the project is in detailed design now and that construction, depending on city approvals, could begin as early as the first quarter of 2017 and take as little as 30 months.

The mixed-use project will be built on an old railroad yard between Interstate 35 and Onion Street, sandwiched between East Fourth and East Fifth streets. MetroRail runs along the south edge of the site, and the Plaza Saltillo station lies just beyond its east end. Capital Metro and neighborhood officials have wrangled over what to do about the mostly vacant property for two decades.

The project, first awarded to Endeavor and Columbus Realty in June 2014, will include at least 800 apartments, with at least 15 percent designated as “affordable”; 110,000 square feet of ground-floor retail; 120,000 square feet of office space; and underground parking. At least 2.25 acres will be “public and private open space,” Capital Metro said in a news release.

The affordable apartments, including some reserved for seniors, would be rented only to individuals or families whose income is 50 percent or less of the federally calculated median income.

Endeavor and Columbus, in their 2014 proposal, had said the project would include a 60,000-square-foot grocery. Thumlert said that, as designed, the project includes “a space large enough to house a grocery store. To date, no one has committed” to lease that space.

Capital Metro officials had said in 2014 that the 10 acres were worth about $40 a square foot, or $17.4 million. Last year the Travis Central Appraisal District valued the land at an adjacent property, at 500 San Marcos St., at about $60 a square foot.

The late hike in the minimum wage for the project and other changes did not fully satisfy Bo Delp, the Better Building Program director for the Workers Defense Project. He said that the site monitor, who would be hired and paid by the developers in consultation with Capital Metro, would not be fully independent.

“They’re going to have a fight on their hands, guaranteed” from workers and neighborhood groups, Delp said, as the company seeks zoning variances (and perhaps fee waivers) from the city of Austin to build an office building as high as 120 feet on the project’s west end near Interstate 35.

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