Central Health envisions a high-density, mixed-use development for its now-empty University Medical Center Brackenridge campus in downtown Austin. For some, this brings to mind luxury apartments, expensive restaurants and high-end boutiques — prompting calls from some community advocates for a project that includes affordable housing and amenities open to everyone.
While there’s an obvious need for Central Health to make money from leasing out the property in order to carry out health care initiatives for under- and uninsured residents, officials with Travis County’s hospital district say they are also committed to meeting those community goals.
“It’s a balancing act for sure,” said Christie Garbe, Central Health vice president and chief strategy officer. “We see this as a beautiful opportunity to build a healthy, new neighborhood in Austin, Texas, where everyone feels welcome and comfortable.”
The 14.3-acre site at 15th and Red River streets is awaiting its next chapter now that the old hospital has been replaced by Dell Seton Medical Center at the University of Texas, which opened in May.
Four developers are in the running to build something new on the site, and this month Central Health issued a detailed list of features that should be included in their proposals. Among other things, it tells developers to include some kind of affordable housing component – and to pay it more than lip service.
Developers are asked to define the number of units and bedrooms that would be affordable, the timing of when the units would be available and the proposed income thresholds for residents to qualify for them.
Central Health, which has held almost three dozen public workshops in the past few years and put out four surveys on the site’s future, has heard a consistent refrain from community members: Whatever gets built should include affordable amenities that can be reached by the larger community.
“Making sure that the space is utilized by all of Austin, making it accessible and that it doesn’t become just a nice place for people who live in the immediate area is what I would like to see,” Marva Overton, executive director of the Alliance for African American Health in Central Texas, said at a June 6 workshop.
Profit vs. public good
Real estate experts have predicted that the six-block property’s redevelopment could constitute one of the largest mixed-use projects to come to downtown Austin and one that could be highly lucrative for Central Health, which would collect lease payments from the master developer. The project will be completed in phases over the next 15 years or more, officials say.
Central Health is depending on that lease revenue to offset the loss of rent from Seton Healthcare Family, which used to operate the Brackenridge hospital on a long-term lease for about $34 million a year.
After receiving detailed proposals Aug. 25 from the four developers vying for the project, Central Health will pick one. Each developer has been asked to plan for the possibility of the City Council creating a new Capitol view corridor that might limit the height of construction on part of the site to provide a protected sightline of the statehouse.
In some ways the district is at the whim of a competitive real estate market downtown, but Garbe said Central Health is committed to exploring ways to make the site’s housing and amenities accessible for people of all incomes. The master plan and request for proposals explicitly mention inclusion of an affordable housing element and a transportation hub, Garbe noted.
“There’s going to continue to be a tension because that does have an economic impact on the project and the income that would come to us … but that’s where we believe partnerships can come into play and creative solutions,” Garbe said. By way of example, she said, Central Health or its developer could establish partnerships with companies that would provide employer-assisted housing to their workers.
‘Who’s writing the check?’
The Brackenridge project will come in the wake of two other transformative developments downtown: the revamping of the former Seaholm Power Plant and former Thomas C. Green Water Treatment Plant.
Those projects reinvigorated downtown’s southwestern edge, bringing hundreds of new apartments and condominiums, along with new offices and shopping, dining and entertainment options.
The redevelopment of thosecity-owned sites also brought calls for affordable housing.
With the redevelopment of the Green Water Treatment Plant, housing advocates wanted to see more affordable units than the developer said was financially feasible. Eventually, developer Trammell Crow agreed to provide 10 percent of its units under market rate to people who earn less than 80 percent of Austin’s median family income.
In the case of The Independent, a condo high-rise under construction in the redeveloping Seaholm District, developers chose to contribute more than $2 million to the city’s Affordable Housing Trust Fund.
“There was a community expectation that these big projects needed to do something toward affordable housing,” said co-developer Perry Lorenz, noting it helped the company win the contract for the site.
Affordable housing also was an issue in negotiations over the development of Plaza Saltillo, an 11-acre former rail yard in East Austin owned by Capital Metro. Under the zoning approved by the City Council in March, Endeavor Real Estate Group will build 800 apartments, including 141 with below-market rents reserved for people making 50 percent or less of median family income in Austin.
Under that plan, Endeavor, Capital Metro and the city will each kick in $540,000 for a fund to subsidize affordable housing (Endeavor would contribute an additional $600,000 if it chooses to build a taller office building).
And that’s typically the issue with including affordable housing: As Lorenz puts it, “Who’s writing the check?”
“If affordable housing is built, it will be because either someone is forgoing profits or someone is writing a check,” said Lorenz, whose projects include Spring and other high-rise, luxury condo developments. “It won’t be market driven.”
The affordability equation
Walter Moreau, executive director of Foundation Communities, a nonprofit affordable housing developer, said he wished his answer were different, but from a practical standpoint, creating all affordable housing on the Brackenridge site “may be really hard to accomplish.”
“It’s really almost impossible to build affordable housing above five stories because once you get above five stories, construction costs double, and there’s just not enough capital in the affordable housing world to pay for that extra cost,” Moreau said.
A building with a portion of affordable housing might be doable, but it’d more likely be accomplished with moderately affordable housing, not deeply affordable — and in a mid-rise building, not a high-rise, Moreau said. Other affordable housing projects, such as Foundation Communities’ Capitol Studios, were possible because they remained under five stories, he added.
The Brackenridge site could also include other amenities that speak to overall affordability, such as hosting public events at little or no cost or providing free access to Waller Creek.
“It’s quite possible that not everyone can afford to live there, but they certainly should feel as though they have the ability to visit and enjoy the amenities,” said Dewitt Peart, president and CEO of the Downtown Austin Alliance. “And I think that has to be part of the affordability equation, too.”
Garbe agreed that there are other opportunities to make the site welcoming for everyone, even beyond the brick-and-mortar. For example, she said, Central Health plans to include a public market on the site that would give new entrepreneurs a chance to start out and sell goods at modest prices.
“It’s not necessarily a trade-off,” Garbe said. “It’s a pathway to opportunity that just has to be designed into the DNA of the property.”