AUSTIN (KXAN) — Austin City Council voted unanimously on Wednesday to give city staff the green light to negotiate an agreement with Aspen Heights Partners to redevelop tracts of city-owned land northeast of downtown, with the goal of building mixed-use properties with a focus on affordable housing.

A map of the city-owned tracts of land in northeast downtown Austin being discussed for re-development. Image from a City of Austin memo.

This is part of a discussion the city has been involved in for five years about how to use the city-owned parcels at the site of the former HealthSouth rehabilitation facility and its parking garage at 1215 Red River and 606 East 12th.

At Wednesday’s virtual meeting of the Austin City Council, council members added on two amendments (plus amendments to some amendments), then authorized the negotiation of this Exclusive Negotiation Agreement (ENA). The ENA sets rules and timelines for the negotiation process between the city and Aspen Heights. If all goes as planned, the two will then negotiate a Master Development Agreement detailing the length of lease and cost, which the public will then get to comment on, and the council will ultimately vote on.

HealthSouth building (KXAN)

After the council took its vote on this item Wednesday, Austin’s Economic Development Department Director Veronica Briseño acknowledged her team is aware that housing is the council’s top focus with this redevelopment, but the council also wants to see opportunities for child care and live music at that location.

The wording that council ultimately approved for this item stated “the central use of this tract is to be housing, specifically affordable housing.”

The council also asked city staff to negotiate with Aspen Heights to see if the Downtown Community Court can be incorporated into future redevelopment there.

This property falls in Austin City Council District 1, which is led by Natasha Harper-Madison (who was elected Wednesday by her colleagues as Mayor Pro Tem of the council for the next year).

A rendering from Aspen Heights Partners of the potential redevelopment of city-owned tracts of land at the former HealthSouth location. Photo from a City of Austin memo.

In December 2016, the council authorized the acquisition of the HealthSouth tract. In March 2017, the council asked the city manager to look at options for repurposing those parcels of land. In October 2018, the council asked the city manager to solicit plans to redevelop that land. From November 2019 through April 2020, the city accepted applications for this process. Of the four developers that applied, the city’s evaluation indicated Aspen Heights Partners made the best offer.

City staff recommended that the developer would partner with the city to create an “innovative, catalyst mixed-use project” at that location. Staff also noted Aspen Heights Partners is based in Austin and has experience in a variety of housing types including multifamily apartments, condominiums and student housing.

Council members talked extensively about this item, spurring calls from city staff for the council to clarify their priorities for the redevelopment and whether the council’s intent was to lease or sell the properties. Council members quickly clarified their intent is to lease the properties for redevelopment.

“At the end of the day, it’s a public tract, and we want to be able to do on this tract what we’re always asking private developers to do more of,” Council Member Kathie Tovo noted. “More housing, more amenities for our families, that are appealing to diverse households.”

“The lens that I want to be looking at this is through my lens of responsibility to the city to obtain as much affordable housing as we can,” Council Member Ann Kitchen noted.

Austin Mayor Steve Adler noted that while it is a priority for him to get “as much housing as we can get as deep as we can get it” on this property, he also wants to see it be used to support Austin’s live music community.

Adler expressed concern that some of the music venues in the Red River Street area between 9th and 11th Streets may face difficulty remaining in those locations as more tall buildings come into the area.

“So if we want to make sure there is music generally in this location, this may be our last and best chance to be able to preserve that,” Adler said.