Now might be a really good time to have 10 acres of land sitting literally in the shadow of downtown skyscrapers.
And it would be even better if this undeveloped dirt was surrounded by what Forbes magazine dubbed the seventh “hippest” neighborhood in the United States (although one has to wonder if financial periodicals are the proper arbiters of coolness).
Capital Metro happens to own such a prize, a former city rail yard just east of Interstate 35 between East Fourth and East Fifth streets called the Plaza Saltillo tract. Mind you, a railroad runs through it, and at least some chemicals run through the soil beneath it, the legacy of the parcel’s industrial past. Both situations will have to be addressed before condos, offices and restaurants sprout from the ground.
But the location, and the timing, are excellent for Capital Metro to make a killing on the land, which it acquired in 1986 from Southern Pacific as part of the purchase of a 162-mile line from Llano to Giddings. Most of the $9.3 million purchase price came from a federal grant. Capital Metro contractors run freight trains and the MetroRail commuter service on the line.
Now this parcel, surrounded by burgeoning condo developments and a variety of new restaurants and bars, alone might be worth $40 a square foot, Capital Metro officials say, or about $17.5 million for 10 acres.
Not that Capital Metro will necessarily sell it outright. In a “request for proposals” the agency released last week through its development consultant, Capital Metro said the deal could take the form of a ground lease similar to what the state of Texas did in the 1990s with the Central Market tract on North Lamar Boulevard. In such cases, the government continues to own the land — exempting it from property taxes — while the developer or tenants own the actual buildings that rise from it and pay taxes on those.
“We don’t want to dictate to potential proposers what we’d like to see,” Capital Metro president and chief executive officer Linda Watson told me last week. “It depends on what is most competitive. And it’s not just about the money. There are a lot of other goals with the project.”
All of this has been a long time coming.
Capital Metro has toyed with various development proposals since the late 1990s, developing a master plan and even issuing requests for proposals previously. And the agency, after nearby residents raised fears of high-rise buildings on the land and no provisions for low-income housing, engaged the surrounding East Cesar Chavez neighborhood in a development planning process that lasted as least seven years. Most of this was ultimately shelved.
But Lori Cervenak-Renteria, who lives a few blocks away from the tract, and other activists are still around and watching, and hoping to have some input on what comes out of the development pipeline. That may be difficult.
Capital Metro has hired Cushman & Wakefield and Oxford Commercial to solicit and analyze the proposals at a cost of more than $400,000. Given confidentiality constraints of the procurement process, it’s not clear just how much access the public will have to the proposals until much later in the vetting process.
Developers have until Nov. 19 to come forward, according to the proposal documents, and Watson said she hopes that the Capital Metro board will be in a position to pick the successful bidder by May.
Sometime later in the year, using a $4.6 million federal grant, Watson said she hopes Capital Metro will be moving the track running through the center of the land to the south edge, near East Fourth. That would make it more feasible for developers by providing a larger, uninterrupted space for construction. That track runs between the Plaza Saltillo and downtown MetroRail stations.
And the developer and Capital Metro might have to do some sort of environmental cleanup. Soil analyses done by Capital Metro, according to a June 5 letter to the agency from the Texas Commission on Environmental Quality, showed “chemicals of concern.”
All of which puts off construction of the development until at least 2015.
Just in time for the next recession?
CORRECTION: This story previously said that Oxford Commercial was involved with the Central Market deal. It was not.