Council pushes vote on HealthSouth redevelopment to January

City Council again delayed confirming a contract with Aspen Heights Partners to redevelop the HealthSouth tract in northeast downtown.

Instead, Council members opted to further consider how the redevelopment could include more affordable housing and community benefits. Council first postponed the vote a week ago.

“We’re not going to have an opportunity like we have here anytime soon,” Council Member Pio Rentera said at Thursday’s meeting. “I want to make sure that we do this the right way.”

The lack of affordable housing downtown and around the city has increased Council’s desire to include as many affordable units in the project as possible. Because the site is owned by the city, Council has much more control over the level of affordability. A state prohibition on inclusionary zoning makes requiring affordable housing tricky in private development.

“This tract,” Council Member Kathie Tovo said, “is a catalytic project for affordable housing in the downtown area. I believe that we can and should use this public asset to achieve even more affordable units at this site.”

A 2018 Council resolution made affordable housing on the site a top priority. Council members believe they can leverage more affordable housing in part because at the last meeting, Council waived developer fees for the reconstruction of Red River Street.

In addition to more affordable housing, some Council members floated the inclusion of a live music venue, on-site child care, space for the Downtown Community Court and other community benefits.

Though the city will settle such details further along in the redevelopment process, Council members wanted to ensure that they – and the community – have enough time to consider all possibilities for the site before picking a developer for the project.

Prompted by questions from Tovo about affordable housing and potential community benefits, Council members indicated at Tuesday’s work session they would postpone the vote. However, on Thursday, Council Member Natasha Harper-Madison objected, arguing that Council members and the community would have ample time to leverage more community benefits and affordable housing as the city and developers negotiate. 

“I still don’t think us moving forward today would circumvent anybody’s opportunity to participate in the process,” Harper-Madison said.

Other Council members, in addition to wanting more time to consider the proposal, also noted that, because they had previously indicated their intent to postpone the vote, it would be unfair to the public to do otherwise. Harper-Madison concurred and removed her objection, but assured the community that they would still be able to engage during the later phases of negotiation.

City staffers recommended the Aspen Heights proposal over three other submissions. The proposal includes a 36-story tower with 365 apartments and 160 condos and a 15-story office tower. It also includes more affordable housing than the other proposals. Twenty-five percent of the rental units would be affordable, priced for those making 50 percent and 60 percent of the area median income. In addition, some of the condo units would be affordable to those making 80 percent AMI.

Aspen Heights Partners, which most recently completed the Independent, Austin’s tallest tower, assembled an all-local design team for the HealthSouth project, including STG Design, Studio Balcones and Civilitude.

The site, at 1215 Red River and 606 E. 12th St., sits in the city’s Innovation District, and its prominent location next to Waterloo Park, the upcoming Brackenridge Hospital Redevelopment and a future Project Connect Gold Line transit corridor raises the stakes for redevelopment.

Council will decide on Jan. 27 whether to direct city staffers to carry out an exclusive negotiation agreement with Aspen Heights. If approved, the exclusive negotiation agreement will likely take six months to complete, at which point staffers will negotiate a master development agreement, which could take up to two years. Council must then ratify the master development agreement before construction can begin.

Rendering of proposed project by Aspen Heights Partners courtesy of the city of Austin. 

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