downtown Austin's real estate and neighborhood blog
Waller Creek Tunnel project inches forward. According to the ABJ, “Austin City Council approved an agreement with Austin-based H.R. Gray to provide engineering services for the Waller Creek Tunnel project. The contract amount is up to $300,000. H.R. Gray will conduct an engineering review of the Waller Creek Tunnel project’s design and construction plans.”
Baby steps.
This month the public can preview at the Downtown Austin Public Library a model of the future tunnel. While progress is slower than we would like to see, this has been a good month for Waller Creek. Below are some other highlites.
US Army corp of engineers report
This is a strong indicator that the engineering efforts are moving forward.
http://downtownaustin.files.wordpress.com/2009/01/waller-creek-army-corps.pdf
Waller Creek district TIF is now line item on property tax statements
The city and county approved TIF financing is now a line item on the property tax bill for properties within the Waller Creek District. This indicates that the County is prepared to fund its portion of the redevelopment. No additional taxes are levied, rather a % of property taxes collected from Waller Creek district properties go towards repaying the bonds financing the construction of the tunnel.
Dale Glover will replace Tracy Atkins on the Waller Creek Citizens Advisory Committee
Dale is a vocal and outspoken advocate of Downtown Austin and Waller Creek redevelopment. His appointment is for the DAA’s chair on the committee. This is in addition to his involvement with Downtown Austin Neighborhood Association, Downtown Austin Alliance, and the Austin Parks Foundation.
Also, over the holidays, I shared a thought about how the loss of the Marriott and AMOA should reflect positively on 21c’s decision to move forward. The addition of 21c museum/hotel/residences along Waller Creek would be excellent for our values. Hopefully, they will begin to see the light!
Downtown Austin’s Villas on Town Lake condos home owners’ association (HOA) will agree to sell the entire property – comprised of 57 individually owned condos – to The Sutton Company, who beat out a handful of bidders. More than one source close to the deal has rumored the amount of the offers [plural] were in the ballpark of $50,000,000.
This is exceptionally interesting because we normally expect to see development activity on surface parking lots, or on an assemblage of adjacent parcels. The Villas is a fully occupied condominium! This means there are multiple owners, strong personalities, and diverse motivations. Corralling everyone into agreement is a herculean task.
What’s so special about the Villas?
Situated along Waller Creek, the Villas on Town Lake condominium is one of downtown Austin’s older mid-rise residential buildings. Villas is a modest, courtyard-style, community, built long before the Rainey Street neighborhood became a “district.”
Most importantly, Villas On Town Lake is coveted for its location.
The site is one of downtown Austin’s most desirable. With only city-owned park land between it and Lady Bird Lake, if Villas were to be razed and rebuilt as a tower, it would deliver views of the lake and hill country, with adjacent access to Waller Creek, Lady Bird Lake, and the hike & bike trail. The site is not encumbered by Capitol View Corridors and has CBD zoning.
Villas vitals:
How does this happen?
Property rights in Texas are such that a condominium association can dissolve itself. When this happens ownership reverts to a single parcel with tenancy in common, and proceeds from a hypothetical sale are distributed based on percentage of ownership. The HOA can sign deeds of units that have not volunteered to sell.
(I welcome comments from real estate attorneys who can shed light on the mechanics of this.)
Years ago the Villas HOA had the foresight to realize the market would eventually grow to a point where the modest condo community was no longer the best use of the land. In 2006, the Villas HOA revised their bylaws to allow 80 percent of the Villas ownership could vote to dissolve the entire HOA. This change paved the way for a deep pocketed buyer to buy the whole shebang with only 80% of the owners needing to agree.
In September of last year, the Villas HOA issued a Request for Proposals from development groups. Groups like World Class Capital are rumored to have been among the bidders. The winning bidder, The Sutton Company, is one of Austin’s most prolific developers, responsible for several downtown Austin condo projects, including: Plaza Lofts, Avenue Lofts, Brazos Lofts, and the 5 Fifty Five. They also assembled the land for the Millennium Rainey, and are developing the land adjacent to the Villas as Waller Park Place.
Is it a good deal?
Yes, it is, for both buyer and seller.
If the rumored $50,000,000 is close to the purchase price, then the average price per foot of “saleable” space is $759/ft!! Based on the average unit size, were someone to try and accumulate control of 46 units – the number I estimate required to gain 80% control of the Villas – would take approximately 14 years to do based on historic sales velocity.
Accelerating 14 years of effort requires offering a premium to market right now; however, the winning bidder also owns the adjacent property and can reasonably expect to recoup that premium.
Per the MLS, 63 units have sold at the Villas since the summer of 1997. In 1997, market price for a typical condo at Villas on Town Lake was ~$100 per foot. Now, imagine for a minute that you’re an owner at Villas back in 1997 and a someone approached you saying, “I will pay you double the market rate, $200 per foot!” Most reasonable people would agree to less than double the market rate from an unsolicited offer. If anyone wants to pay me twice market value for my place… I’m ready to talk!
The most recent sales record we have for a one bedroom at Villas was from March 2015, when a 675 sf condo sold for $279,000. So, if the rumored amount of the winning bid – $50,000,000 – is close to accurate and proceeds are distributed by square foot, then that same built-in-1982 Villas one-bedroom may be closing for $512,325. That’s a windfall.
Kudos to the Villas for getting it.
~ Jude
Nice story in The Statesman about the vibrant community that continues to grow downtown – not just in terms of nightlife, but also new economy jobs and associated residents: Austin’s Tech Scene Heats Up Downtown.
It’s worth pointing out however that all this has not “just happened” by itself.
It has been 15+ years in the making with great purpose by the likes of the Downtown Austin Alliance (DAA), the Downtown Austin Neighborhood Association (DANA), Mayors Kirk Watson, Will Wynn, Lee Leffingwell and their City Councils, the Downtown Austin Plan, and many more driving forces.
Except for weekday lunchtime and weekend nights on East 6th, it was a veritable ghost town when my team first opened an expanded Wild About Music down here in 1995, then started living here in 1999.
There’s still a ton of work to be done around issues of homelessness and vagrancy (two different matters), affordability (having only $50/ft rents and million dollar condos is not sustainable), traffic (a car-free zone?), and that IH-35 east-west barrier.
Dave Sullivan, longtime Austin civic leader during this big growth period, also just told me: “When I joined the City Planning Commission in 1994, software development was a prohibited use Downtown. I remember voting to change that in the late 90s. Seems incredible.”
Incredible indeed, Dave.
And a worthy update: After this story published I received a note from a longtime steward of Downtown Austin’s evolution, Michael Knox, of the City’s Economic Development Department. He filled in another 10 years of preparation that went into the creation of today’s Downtown before my timeline even picks up. Mike says:
“I started working on downtown in 1988, when it was part of AustinPlan’s Sector 1. Of course AustinPlan, the comprehensive plan update to replace Austin Tomorrow, was never adopted.
“In 1989 we (Jose Martinez and I) started working with the Downtown Commission, actively promoting a thing called R/UDAT. The 1990 R/UDAT application we co-wrote was accepted, and in 1991 we got the R/UDAT team visit and report, followed in 1992 by “A Call to Action: R/UDAT Implementation” that, in 1993 gave birth to the Downtown Austin Alliance and the Austin Downton PID. These efforts involved hundreds of dedicated Austinites.
“Downtown initiatives were kicked up a notch in 1997 when Kirk Watson became Mayor, and Assistant City Manager Jim Smith (now Aviation Director) and I put together Kirk’s first six downtown initiatives, including the Waller Creek tunnel, Downtown Design Guidelines and the Poleyard and AMLI developments.”
So there you go…another of Downtown Austin’s many unsung heroes. We thank you, Michael Knox.
~Fred
For the past couple of years the east side of Rainey Street’s [already limited] sidewalks were barricaded for the construction of the Millennium Rainey apartments.
Today, those barricades came down! Woo hoo!!! The Millennium Rainey adds 326 downtown apartments to the rental inventory.
Some of you will remember that The Sutton Company assembled several Rainey Street parcels back in 2012 and planned this three story tower. Then, they sold the assemblage to Dinerstein and the intertubes pitched a fit about Lustre Pearl moving.
Now, Lustre Pearl is back, Millennium Rainey is completed, Sutton is focused on Waller Park Place, and the Rainey neighborhood has better sidewalks.
-Jude
