Travis County to acquire 15-story, $62 million building

Travis County commissioners learned on Tuesday that their offer to purchase a new downtown building was accepted, paving the way to eventually house a reconfigured commissioners court. The court had made an offer on the 15-story, 315,000 square-foot building last week, and it was accepted on Friday. The building, which is located at 700 Lavaca Street, is the former Chase Bank Building.

 

The purchase also includes a half-block parking garage, capable of holding 675 cars, attached to the office tower by an underground tunnel. The final negotiated price was $61,250,000 plus closing costs and fees.

 

The court hired Broaddus and Associates to study a reconfigured downtown presence over the last year as it grapples with chronic space shortages that are projected to get even worse. Staff told commissioners that the county already has a 30 percent deficiency in space for the downtown Central Business District, and that is expected to balloon to 50 percent in the next five years in the face of population growth. Travis County’s population was 761,000 in 1998 and is expected to be at 1,178,000 by 2015. County Auditor Susan Spataro said a vast amount of what the county does is dictated by the state, so cutting services in the face of a space crunch wasn’t really an option.

 

The new building is 30 years old, and within the last year the owner has put $1.5 million into improvements to HVAC, mechanical systems, and other building maintenance. The spacious first floor has ample room to relocate the commissioners courtroom and house more citizens and staff in the audience of the court. Other advantages, staff said, are the security card access system and the six elevators.

 

700 Lavaca Street has an 82 Energy Star rating, compared to the national average of 50. Roger A. El Khoury, director of Facilities Management, called it a “good building” with a service life of another 50 years, with improvements needed every 25 years.

 

Another advantage to the property is its location, a mere two blocks from the Heman Marian Sweatt Travis County Courthouse. It is also 65 percent filled by lease-paying tenants, who will be able to pay for the maintenance and upkeep of the building as the county transitions into its new seat.

 

Pct. 2 Commissioner Sarah Eckhardt released a statement summarizing her excitement about the property. “By purchasing 700 Lavaca now and at this price,” she wrote, “the County takes advantage of a great location, a great price, and low interest rates, helps stimulate the economy and treads lightest on current and future taxpayers.” 

 

Eckhardt also said that by buying a building rather than constructing a new one, the county could conservatively expect to save $24.9 million. Pct. 3 Commissioner Karen Huber pointed out that the building costs about $97-100 per square foot, whereas a new one would run $175-200 plus land-acquisition costs for the county to build its own structure. Eckhardt added that even finding a suitable parcel would be difficult.

 

The county hired UGL Equis to represent them in the transaction. Rodney Rhoades, executive manager of Planning and Budget, said it was during Broaddus’ Phase I analysis that the county found this “excellent piece of property” that “immediately opens space” for general government and for courts going forward.

 

Spataro spoke about the timing of the purchase, saying it couldn’t be much better. The general fund unreserved balance increased by 14.08 percent between 2008 and 2009, and undesignated funds have also increased. Considering the economic downturn, she said, Travis County is “one of the few governments in the country today” that could make such a claim.

 

Given the health of the county’s financial situation, Spataro said, issuing debt “made sense in this case.” Spataro said the county would likely seek a $63-65 million bond and would spread the cost out over 20 years so that the newcomers the county is expanding for will be paying for the facilities benefiting them. Spataro estimated the yearly debt service to run between $4 and $4.5 million, which would amount to an average increase in yearly property taxes of $4.90 a year per home. Spataro said, “This is the least expensive and more efficient way for us to meet the requirements of county government.”

 

The county began a 90-day due diligence period last Friday, and Spataro told In Fact Daily that the bond funding wouldn’t be available until April, when the county issues all of its bonds at once in order to save money.  Commissioners unanimously voted for a subcommittee composed of Huber and Judge Sam Biscoe to carry forward with staff until closing on the sale. “I’m excited; I think this is a tremendous opportunity,” Huber told In Fact Daily.