Austin Energy, the city’s electric utility, will take over a 3.3-acre tract in the Mueller Development with a new $150 million, 275,000-square-foot headquarters following Austin City Council’s Dec. 13 approval.
The project, which officials expect to break ground in 2019, represents an efficiency effort by the city to move government employees from leased space to purchased office buildings. Upon completion, 850 Austin Energy employees will exit their offices at 721 and 811 Barton Springs Rd and 5202 E. Ben White Boulevard into the new headquarters.
Austin will save an estimated $30 million over 30 years on leasing costs because of the project, said Andrew Moore, project manager with the city’s financial services department.
Catellus Development Corp., the developer responsible for the Mueller development, sold the land to the city, and will build the project. Moore said this project, located at 4815 ½ Mueller Blvd., differs from usual city operations. He said the city does not typically build administrative buildings, choosing rather to purchase or lease existing structures and retrofit them to the city’s needs. Moore said that typical city process would have likely cost $50-$60 million more.
Moore said although the $150 million price tag seems high, the Catellus deal was “on the low end” among the nine proposals they received.
“This is a market-driven process and a test of the market,” Moore said. “Office space is extremely expensive right now, unfortunately.”
Rates will go up slightly in order to finance the project, but not as much as the increases that would have come as a result of staying locked into the lease, Moore said. He said Austin Energy will have to take out bonds to cover the cost of the new facility, but those costs would not come online until 2021. Moore estimated an average increase of 5 cents per month.
A new Austin Energy headquarters has been in the works for years. In 2014, the city had a plan to develop a new headquarters in Southeast Austin for $67 million, however, Moore said the price tag, at the time, appeared high and the city ditched the deal.
Prior to their approval, City Council members Thursday praised the project for its multi-layered benefit to the city. Coupled with the $30 million in savings, the city will require construction workers to receive a minimum wage of $15 per hour, on-site safety training, and at least 15 percent of the workers to have completed or actively enrolled into apprenticeship programs.
“[This project] deals with facility needs, is fiscally responsible and addresses inequality in our community all at once,” said District 4 Council Member Greg Casar, who also called the project a “great success.”
Moore said the project would also include an adjacent 6-story parking garage, with the top two floors designed in a way that makes them easy to convert to office space should the headquarters need to expand in the future.