City looks to move away from leased facilities

The city is moving forward on its goal to transition from leased to owned facilities for staff by 2026, according to an update the strategic facilities governance team gave to City Council’s Audit & Finance Committee last Wednesday.

Aiming to develop new and improved facilities for city staff at Rutherford Lane and Johnny Morris Road, Deputy Chief Financial Officer Kim Olivares and her team are proposing a public-private partnership approach similar to the economic development corporation formed in 2020. The public facilities corporation, which would enlist contracted developers to construct, briefly lease and ultimately sell facilities projects back to the city, will seek City Council approval sometime this fall.

Efforts to restructure the city’s real estate assets have been in the works since the city embarked on a Strategic Facilities Plan back in 2012. Since then, shortcomings in the city’s facilities portfolio have remained on Council’s radar, with a 2019 audit finding that a combination of aging buildings, rising rental costs and population growth have led to costly inefficiencies. As of 2021, staff estimate that facilities leases have cost the city an estimated $23 million per year, around twice the projected cost of city-owned facilities.

While there is some pressure to outrun expiring leases in coming years, Olivares says the good news is that the city’s immediate needs, which total around 173 thousand square feet, are within the bounds of existing city-owned assets. Austin Energy’s new headquarters in the Mueller Development and the Permitting and Development Center by ACC Highland will help to bridge the gap, as well as providing a new public-private development model for future facilities projects.

“With the Austin Energy headquarters and the Permitting and Development Center, we were able to achieve that through a private-public partnership, a developer-assisted type of approach,” Olivares said. “That approach allowed us to deliver those projects in less than four years from start to finish, and in a very cost-effective way, relative to other methods.”

Using a similar funding scheme, Olivares’ team is hoping to deliver on a new public safety center on 32 acres of city-owned land at Rutherford Lane. Currently, the city’s police, fire and emergency services departments are scattered about in a number of different facilities, including the rapidly aging police headquarters on East Eighth Street. At the new site, staff hopes to provide a more efficient and centralized home for the coordinating branches, as well as partner with nearby community resources like the neighboring Asian American Resource Center.

Also in the pipeline is a new home for the city’s Resource Recovery department and Fleet Services envisioned at Johnny Morris Road. Staffers hope the new joint service center will relieve overcrowding at the current Harold Court and Hargrave sites, as well as provide additional warehouse space for a number of departmental uses.

Despite the team’s excitement, Council Member Kathie Tovo wondered whether such financing endeavors weren’t already in the purview of the recently formed economic development corporation. While Olivares maintained that facilities needs were outside of the EDC’s wheelhouse, Council Member Natasha Harper-Madison and Committee Chair Alison Alter agreed that the question of redundancy would need to be hashed out before the commission’s approval.

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