City staff expressed hope on Wednesday that recent movements in capital markets could ignite stalled redevelopment initiatives on various city properties. At a briefing held for the City Council’s Audit and Finance Committee, Financial Services Department representatives pointed to a recent interest rate cut by the Federal Reserve System as a potential catalyst for progress on projects like the St. John and HealthSouth sites, both of which have faced years of delays.
Christine Maguire, manager of the Redevelopment Division, highlighted that both projects had received necessary entitlements and were steps away from implementation, but market uncertainties, high vacancy rates in the multifamily sector, and elevated borrowing costs have hindered their advancement.
The St. John site, previously home to a Home Depot and Chrysler dealership near I-35, was fully rezoned in 2022, with demolition of structures completed last year. A development agreement has been established with partners Greystar and the Housing Authority of the City of Austin, with plans for a mixed-income housing development, increased park space, and new retail opportunities.
Maguire indicated that the cooling multifamily rental market has complicated financing efforts, forecasting that the City Council could receive an updated plan for the St. John project within the next 12 to 18 months.
Similarly, redevelopment on the city-owned HealthSouth property downtown is also halted. Deputy Chief Financial Officer Kim Olivares stated the need for more favorable financial conditions before a new solicitation can be released for that project. Additionally, Olivares mentioned that the HealthSouth initiative might encompass adjacent properties, including the Austin Resources Center for the Homeless and the current Austin Police Department headquarters, as part of a more extensive downtown land strategy.
As various redevelopment efforts are organized on differing timelines, Olivares confirmed that a new team member has been added to lead a comprehensive evaluation of the city’s real estate portfolio. This analysis aims to identify opportunities for shared public facilities, revenue-generating assets, and lands that could support new developments in changing land-use areas.
Despite the aforementioned delays, the city continues to advance well-established projects, such as the Colony Park site in East Austin. After years of planning with local stakeholders, the 208-acre site is reinforced by a $304 million capital stack, featuring federal grants, a tax increment reinvestment zone, and city investment. Currently, a Central Health wellness center is under construction at this site, and preliminary subdivision planning along with infrastructure coordination has begun to accommodate future housing and civic uses.
Another significant endeavor gaining traction is the redevelopment of the former Tokyo Electron site on Grove Boulevard, now termed Grove Riverside. This 125-acre area includes city-owned land as well as property held by the Austin Housing Finance Corporation, with existing buildings intended for municipal office use.
Strategically positioned adjacent to a future light rail stop part of the Project Connect system, Grove Riverside will commence community discussions this fall, with a phased developer solicitation process expected to unfold by late 2026. Following the presentation to City Council, members requested access to maps outlining the city’s holdings. Maguire emphasized that a more in-depth analysis will be needed to gauge the development potential beyond mere parcel locations.
Maguire also shared insights gained from previous projects like Mueller and Seaholm, which are nearing completion and continue to inform upcoming initiatives. Emphasis was placed on long-term ground leases, public-private infrastructure financing, and commitments to providing affordable housing and small business spaces. The current market conditions, which include rising multifamily vacancy rates, necessitate more adaptability in structuring development agreements and determining optimal timing for project launches.
A forthcoming report outlining portfolio findings and redevelopment priorities is anticipated to be presented to the Council in the next year, with ongoing updates expected as the analysis progresses.
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