City taps Rally Austin for funds to buy historic cultural spaces

The city plans to give Rally Austin control over an estimated $11 million designated to purchase historic properties that could enhance tourism and cultural uses.
Thursday’s City Council meeting saw passage on consent of a resolution that directs staff to work with the economic development group and other relevant entities to develop a plan for using money allocated for the Historic Preservation Acquisition Fund, which has gone mostly unused since it was created in 2018.

That plan would work in conjunction with the Equity-Based Preservation Plan, which is slated for adoption later this year.

Use of the preservation dollars sparked a small controversy earlier this year when staff blocked an attempt to use the money to help the Austin Creative Alliance in purchasing the historic East Austin site it rents for its headquarters, which offers space to eight working artists in addition to meeting the group’s administrative needs.

Thursday’s passage doesn’t immediately solve ACA’s potential loss of its HQ due to rising property taxes and rent, but CEO John Riedie said he is encouraged by the resolution.

“It’s great news to see these resources starting to move into the marketplace. Certainly hope that the city can set up a process quickly so that we don’t lose any historic properties in the meantime,” he said. “We’re moving ahead with all of our options, looking to purchase directly, while still hoping that maybe the city will partner with us. The clock is ticking, though.”

Rally Austin representatives had no comment on the resolution, which will add money and a new group of uses to its existing focus on creative spaces and affordable housing. In addition to a trio of high-profile deals it has completed since last summer, the group will also play a large role in overseeing the redevelopment of two historic blocks of East 11th Street just east of Interstate 35.

Local preservationists have supported the move to use the acquisition funds, which are funded by Hotel Occupancy Tax revenue and grow at between $2 million and $3 million per year.

Lindsey Derrington, executive director of Preservation Austin, said she hopes the forthcoming plan will prioritize saving sites in East Austin that have been under-invested in and are at risk of disappearing as the city grows.

“We really want the city to look at this through an equity lens and to look at parts of Austin that have lacked investment historically, namely East Austin landmarks that represent Black and Mexican American heritage, and other kinds of histories,” she said. “A process is really important because this amount of money seems like a lot, but when you look at buying buildings in Austin in 2024, it might not go that far.”

Derrington also noted the city and Rally Austin could work together to secure historic preservation tax credits from the state that could help cultural groups improve historic buildings with a savings of up to 25 percent. Those tax credits can often be sold ahead of time to an outside entity at a discount to provide upfront funding for improvement efforts. In addition to the equitable preservation plan, Derrington said recent city surveys of cultural and historic spaces throughout East Austin and other parts of the city will offer plenty of options for acquisitions using the Historic Preservation Acquisition Fund.

“There’s a lot of different layers that the city and city staff will need to take a lot of time figuring out, how those pieces fit together. It’s not just the city buying buildings. It’s the city buying buildings with the right use potential, or buying buildings that already have these cultural uses, but where the tenant or the property owner is really struggling to keep up with their property taxes or their rising rent because of property taxes.”

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