Council OKs staff to negotiate over HealthSouth contract

Last week, City Council directed city staff to move forward with negotiations with Aspen Heights Partners, the NHP Foundation and Capital A Housing on redeveloping the HealthSouth site at 12th Street and Red River. But it wasn’t a simple vote: Council Member Kathie Tovo and Mayor Steve Adler added some amendments to the staff plan, although it’s not clear whether those amendments will make much difference in the final outcome.

Staff will be returning for final authorization on the project next spring, when the city will have a new mayor and at least three new Council members, if not more. (Mayor Steve Adler and Council members Kathie Tovo, Ann Kitchen and Pio Renteria are stepping down, while Council members Paige Ellis and Natasha Harper-Madison are running for reelection.)

The final motion directed Austin City Manager Spencer Cronk to return to Council with a report on negotiations on a monthly basis.

The final vote was 9-1-1, with Council Member Mackenzie Kelly opposed and Council Member Vanessa Fuentes absent. Kelly told the Austin Monitor she was concerned about possible changes to the project as a result of an amendment from Tovo. Tovo added several amendments related to increased funding for affordable child care and making sure developers pay taxes on the for-profit part of the project.

But Kelly was concerned about Tovo’s addition to Adler’s amendment encouraging staff to add permanent supportive housing – long-term assistance for people experiencing homelessness – to the mix of affordable housing and market-rate housing.

Kelly texted the following statement to the Monitor: “I believe people experiencing homelessness should have access to wraparound services and facilities that support their individual needs. I also believe struggling families should have access to all the available units at Aspen Heights. Putting the two together could be a recipe for disaster and I could not support the item after the amendment was added without fully vetting” the implications.

Aside from that disagreement, there were some harsh words from Renteria, who expressed concern that Tovo’s amendments would amount to a “poison pill” for the project. Tovo assured him that was not the case, saying she wants affordable housing as much as anyone.

But the argument over details did not diminish the considerable praise for the project. Adler said, “The HealthSouth development is another tool we are using to increase our affordable housing supply. Through this project we had over 200 more affordable housing units downtown – doubling the number that currently exist. We need more, but this is an important step.”

According to the term sheet, the project will have a total of 921 rental units, including 689 market-rate units and 232 affordable units. Of those, 117 units will be rented to people earning 50 percent of the median family income and 115 units will be rented to families earning 60 percent of the MFI.

The project will consist of two towers that will include a live music venue as well as an art venue and commercial space, and there will be a public plaza and two parking garages. Aspen Heights Partners has promised to recruit local commercial tenants for the retail space.

Aspen Heights has been working with city officials and community stakeholders on plans for the redevelopment of the site since 2020, enlisting Capital A and the NHP Foundation for the project.

Greg Henry, CEO of Aspen Heights, released a statement saying, “We look forward to working closely with city officials and coordinating with our development partners to make this project a reality and to help make Austin a more vibrant and inclusive place to live.”

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Posted In: Development, District 1