Here’s an intriguing development opportunity to ponder.
The University of Texas real estate division is seeking proposals for two small, but well-positioned, properties it owns on Lake Austin Boulevard — just east of Lions Municipal Golf Course, which UT also owns.
The public course, which dates back to the 1920s and is deeply embedded within Austin’s civil rights history, faces its own reckoning day next year when a longstanding lease with the city expires with no plans for renewal. But more on that later.
The parcels involved in the current UT RFPs are modest compared with MUNY, which is part of the university system’s 350-acre Brackenridge Tract. That property includes aging student housing on the banks of the Colorado River along Lake Austin Boulevard. Still, these smaller real estate opportunities — both offered as ground leases — may presage dramatic transformation in that area.
First up, the “Safeway Tract.” UT’s ground lease with the California grocery chain —operating as Randalls in Texas — expires May 30, 2019 “at which time all buildings/improvements become property of the University,” the RRP states.
The 31,000-square-foot store, built in 1977 and renovated in 2010, sits on about 2.6 acres. Records at the Travis Central Appraisal District show that the building, which will revert to UT next year, is valued at $1,053,995. The land is worth nearly $5.4 million.
Across the street and a short distance east is the second property referred to as the “Deep Eddy Tract.” Currently a 7-Eleven convenience store operates on the site in a 3,000-square-foot building that sits on about a half acre.
That ground lease also expires May 30 “at which time all buildings/improvements are to be removed by the Lessee unless notified by the University to leave in place. The current Lessee shall also remove underground storage tanks and take any remedial measures to deliver the site to the University unencumbered by pollution from Lessee’s use,” the RFP states.
The store is valued at about $230,000, according to TCAD, while the land is valued at about $1.25 million.
Proposals are due Sept. 25, and could include lease offers for the existing structures or complete ground-up redevelopment. Investors and/or developers may bid on one property and not the other.
Amy Wanamaker, director of real estate for UT Austin, and Kirk Tames, executive director of real estate for the UT System, will sort it all out.
“The University seeks to establish a contract or contracts … with a qualified and experienced developer/operator to lease and redevelop the Property for its highest and best use, or use the Property with existing improvements for commercial use,” the RFP states.
Within that context, UT hopes to “identify possible uses for the Property that serve the needs and requirements of the University, including income, long term success of the development, and appeal of the development to the University and surrounding community.”
Since the two properties are not contiguous, UT officials have already contemplated that some investors/developers may be interested in one but not both.
The deal might be even more compelling if the adjacent retail center, where Maudie’s Cafe and Goodwill are among the tenants, was a part of equation. It’s not.
That property is owned by TASC Properties LP, an entity formed by Tracy Ann Smith Connally of Houston. Connally was previously married Texas Gov. John Connally’s son, John Connally III.
As an individual, and later as the managing member of TASC Properties, Tracy Smith Connally has owned the 12,190 square foot retail center since at least 1994 when the couple divorced.
Just for fun, I searched Zonability.com, a subscription real estate database and analysis website, to see what might be do-able on all three parcels, based on existing land entitlements.
The Randalls’ site could support more than double the existing square footage — up to 72,000 square feet, probably on a maximum of two or three stories, according to Zonability. Zoned as Limited Office, the site could probably support medical office or creative offices. Retail might not be a possibility should the site be completely redeveloped.
With respect to the Deep Eddy Tract, it could potentially support two or three stories for a total of 11,604 square feet. Land entitlements there would allow another convenience store, gas station, cafe or offices, according to Zonability.
To reiterate, the adjacent retail center owned by TASC Properties is not part of the UT deal, but Zonability sheds light on significant “untapped potential” at that location. A four-story property with up to 53,250 square feet could possibly be redeveloped at 701 Newman Drive.
No telling yet how much interest this RFP is drawing, especially with so many developers extremely busy in Austin’s red hot real estate market. Depending on the quality of bids, UT may or may not act upon them.
But back to Lions Municipal Golf Course. UT’s board of regents unanimously voted in 2011 to allow the lease with the city to expire in 2019. The regents said they had a fiduciary duty to seek the best deal for the property and the lease with the city — for around $415,000 a year — falls far short.
That decision has been lamented by many folks for the past seven years and probably contributed to MUNY being added to the National Register of Historic Places in 2016. Though the course, which was built in 1924, has hosted some of the game’s biggest names — including Ben Hogan, Byron Nelson and local legend Ben Crenshaw — the matter of paramount concern for many is its role in the civil right’s movement. It was the first municipal golf course in the South to be desegregated in 1950.
To address the controversy during the Legislative session in 2017, a measure was introduced that would transfer ownership of the property from the UT System to the Texas Parks and Wildlife Department, which in turn would extend the lease with the city of Austin.
That idea never generated enough support, and now it appears than only an 11th hour effort during the 2019 Legislative session could preserve the property as a golf course.
The clamor is starting. The Architects Newspaper, a New York-based publication, sounded the alarm in a story posted Aug. 10.
Entitled “Civil rights landmark in Austin is threatened by development,” the article chronicles the experience of 9-year-old African-American caddy Alvin Propps, who was arrested for playing golf at the course in 1950 when segregation was the standard.
At the time the Austin mayor’s office decided to drop the charges against Propps, and the city followed through with a desegregation policy that has remained an important part of the city’s history.
The article decries the possibility that one of the birthplaces of the civil right’s movement “could be handed over to developers.”
For more questions regarding UT’s RFPs, contact Amy Wanamaker, email@example.com.