Boy, the Travis County Commissioners were busy this week selecting a developer for a new courthouse and signing a 99-year ground lease deal worth at least $450 million for two parcels within the Brackenridge tract, prime land between Downtown Austin and the University of Texas. Both transactions have intriguing aspects.
• The Brackenridge 2.6-acre tract — near the new Dell Seton Medical School at UT — is being leased to The 2033 LP, a non-profit established by long-time Austin businessman and real estate guru Sandy Gottesman, according to a story in the Austin American-Statesman.
The county commissioners represent land owner Central Health, a non-profit unique to Austin, which helps provide healthcare to the underserved. It also previously operated the Brackenridge hospital before UT built a new medical school and training hospital nearby in partnership with Seton Family Healthcare.
When the Seton teaching hospital opened, Central Health closed Brackenridge hospital. In the years UT was building the medical school, Central Health launched a search for a master developer to create a mixed-use project that would utilize all the land it owns in the area and replace Brackenridge hospital. After conducting a lengthy competition and selecting four finalists, the process apparently fell apart. It was all very strange.
And now the Statesman quotes Central Health President and CEO Mike Geeslin as saying the “economics weren’t as good as we were hoping.”
That’s interesting. I’ve never seen development economics stronger in any city where I’ve lived and covered real estate — and this particular land is located right in the heart of the city. It should be ground zero for the most stellar of inner city developments.
For reasons unknown, Central Health decided to forgo plans to garner big bucks and foster innovation. Instead, it will lease properties in a piecemeal manner without any clear idea of what’s in the works.
For sure Gottesman is well known and presents a successful track record in real estate, but The 2033 LP is a newly formed entity — besides the legal registration, no additional information is available online.
As a public observer this deal baffles me. It’s sad that Central Health couldn’t find a way to develop its holdings to better benefit all its stakeholders.
How did this organization get so far away from the original intent — which I wrote about at length in the Austin Business Journal which I wrote about at length in the Austin Business Journal — to create a world class development promoting healthy living? A huge opportunity lost.
• In another big deal, Travis County officials announced a new plan and new location for developing a much needed county courthouse at the northwest corner of 17th and Guadalupe streets.
It’s been nearly three years since taxpayers turned down a $287 million bond measure to replace the aging Marion Sweatt Courthouse.
The build-to-suit plan is probably a good way to solve the county’s problem. The developer will acquire the land and develop the property and lease it to the county — at least that’s the strategy at the moment.
What you didn’t see in the other articles about the proposal are the people behind the deal.
The team, according Austin Monitor, includes Hunt Development Group, Chameleon Companies, Hensel-Phelps Construction, Gensler and CGL Companies. It would be interesting to know how these folks came together.
Hunt is based in El Paso, and has a successful track record locally. The company built The Catherine, the hugely successful high-rise apartment complex near Barton Springs Road and South Congress.
Hensel-Phelps is a well known Colorado-based contractor, which built the new Austin Central Library, and Gensler, the design titan, has had its hands on a whole lot of city projects, including ongoing expansion at Austin-Bergstrom International Airport. It’s easy to trace the connections here.
CGL, meanwhile, is a design subsidiary of The Hunt Companies.
So who is Chameleon? According to its website, Chameleon is a “family of venture companies,” headquartered on Ninth Street in Austin. It’s a pretty eclectic enterprise with several development tangents — re-imagining older apartments with a cool vibe, and building smaller office projects as well as self-storage units. Chameleon is also the company behind Swift’s Attic and Wu Chow restaurants.
Stuart Thomajan is the founder and CEO. I’m sad to say that I haven’t met him. He seems like the quintessential kind of Austin real estate entrepreneur. So more power to him and here’s to Travis County solving its courthouse riddle.
Hunt’s team will still have to negotiate a sale with the landowner of the block in order to make this deal work. Records at the Travis Central Appraisal District and Travis County Clerk’s office show that a Dallas entity owns most of the block — Travis Hotel Group LLC.
An executive with Hunt told the Monitor that agreements are in place for Hunt to acquire the parcels from that owner. However, a second landowner in the block, attorney Stephen McNally may not be on board with the deal. He’s owned a 7,000-square-foot office building there since 1986, according to public records.
Without identifying McNally, the Austin Monitor said the county had been unsuccessful in its attempts to reach the second landowner regarding property access. Apparently that’s no problem — assuming Hunt can reach a deal with Travis Hotel Group.
Travis County Judge Sarah Eckhardt, who announced the proposed deal, would not disclose its cost, but said general obligation bonds will not be needed. The county will pay for it within it operating budget.
Finally, this week, I read with interest the financial problems Austin Film Society is facing. At least it seems as if the non-profit is in a delicate position after opening a cinema in north central Austin, which appears to be underperforming.
This is not totally unexpected. Though Austin has a legacy of filmmaking — directors and producers Richard Linklater and Terrence Malick come to mind — culture in general is not going to the movies. Yes, everyone loves watching movies — at home.
Minutes to a recent AFS board of directors’ meeting disclosed the lamentable financial situation, Statesman reporter Bob Sechler writes.
“A number of the film society’s operations — including Austin Studios, the Texas Film Awards and the cinema — were performing below ‘net income budgeted targets’ after a mid-year review, and the organization was at risk of running out of money by the end of its current fiscal year if the situation wasn’t addressed.’
Perhaps all of this would be of no consequence to the public at large, but according to the Statesman, AFS has “received millions of dollars in financial support from Austin taxpayers through the years.”
Moreover, the assertion in the Statesman’s story that the “the FY18 deficit should not be discussed publicly,” is pretty troubling.
Over and again, I’ve been troubled by the lack of transparency across Austin culture. So here we go again. Does that matter trouble you? I encourage your feedback at firstname.lastname@example.org. Thank you.