Arts group blasts memo blocking city from purchasing historic church space

The nonprofit Austin Creative Alliance has pushed back against a memo from city staff that appears to have derailed an effort by City Council members to preserve a pair of East Austin properties that serve as the group’s headquarters and cultural space.

For more than a year, ACA leaders had discussed with city staff and a handful of Council members the potential purchase of the properties at 81 and 87 San Marcos Street – the historically designated former First Church of the Nazarene – with money from the Historic Preservation Fund designated for purchasing and preserving historic properties with revenue from the Hotel Occupancy Tax.

At issue is a June 6 memo from Kim Olivares, deputy chief financial officer, which lists four reasons the city is unable to purchase the properties that are currently listed for sale at $2.2 million by Hightower Abate Properties Inc., owned by former progressive Texas Agriculture Commissioner Jim Hightower. Among those reasons: There is no general obligation bond funding available for the purchase; there is no hotel tax money identified as eligible for the acquisition and management of the site; potential tenant relocation, property tax and utility expenses could violate the state law covering hotel taxes; and potential city administrative uses for the property would not satisfy hotel tax guidelines that prioritize efforts to support tourism.

Last week, Sean Bukowski, an ACA board member and local real estate attorney, sent a response to five Council members who’d been involved in the purchase discussions, arguing Olivares and other city staff have incorrectly evaluated the potential to acquire and preserve the properties for the potential benefit of dozens of local arts groups. The Council members who were sent the response materials are Jose Velásquez, whose district includes the properties in question, along with Vanessa Fuentes, Chito Vela, Zo Qadri and Ryan Alter.

“The memo upon which this decision was based contains fundamental errors. It takes pains to cite the unavailable options for the City’s acquisition, yet fails to address the specific financially and legally valid path to preserving this essential community asset. Please also note that contrary to the memo, two historic buildings are at risk,” Bukowski wrote concerning the 0.29 acres that include 5,700 square feet of office and arts space.

Responding to the claim of no bond funding being available for the acquisition, Bukowski notes there is no municipal debt needed since a 2018 Council resolution set aside hotel tax revenue for historic preservation, with at least $11 million in funding available as of early this year.

On the second point of a lack of hotel tax funding being identified for the purchase, Bukowski notes the property has received federal and state historic designations and is in an area near the Austin Convention Center eligible to attract visitors interested in culture and historic architecture.

In an email responding to the Austin Monitor’s inquiry about the memo, a spokesperson from Velásquez’s staff wrote, “Based on recommendations from City staff, there is no plan to bring an item forward for the purchase of this property.”

Bukowski said he and other ACA leaders have grown frustrated with the city’s unwillingness to use available funding to preserve a culturally relevant space – at a time when the asking price has declined from when it was first put on the market nearly two years ago.

“The money is sitting there in the preservation fund. They’ve only done one acquisition like this since the preservation fund was set up, and the money will be replenished from the Hotel Occupancy Tax within a year. Honestly, I don’t get it. It seems like a no-brainer to me,” Bukowski told the Monitor. “We’re at a danger spot right now, as Austin becomes more expensive, of losing all those spaces and losing artists. Any time you can preserve some space that is used not only by artists, but also by a nonprofit that helps support artists, I think it’s something that’s very worthwhile for the city.”

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Posted In: Austin, District 3