Years after purchase, city-owned 1.7-acre downtown Austin site inches toward redevelopment

The 87,744-square-foot campus formerly occupied by HealthSouth has remained vacant for several years. (Courtesy Google Maps)
The 87,744-square-foot campus formerly occupied by HealthSouth has remained vacant for several years. (Courtesy Google Maps)

The 87,744-square-foot campus formerly occupied by HealthSouth has remained vacant for several years. (Courtesy Google Maps)

Since the city of Austin bought the former HealthSouth site at 1215 Red River St. in 2016, the property, combined with an adjacent city-owned parking garage, has been seen as a rare opportunity for the city to place a strategic and highly impactful development in northeast downtown.

After years of delays, analysis and debates among city leaders, the 1.7-acre downtown site could have an approved proposal and developer by the end of the year, according to city documents. Although no details have been released, the city has ranked the four proposals it received since opening the application process in November 2019.

In a Nov. 3 memo to City Council, the city’s chief economy recovery officer, Veronica Briseño, said her department would recommend a proposal and seek council’s approval to enter negotiations at the Dec. 3 City Council meeting. The city is seeking a development that provides multiple-bedroom, mixed-income housing for families making at or below 60% of the area's median family income, which is $58,550 per year for a family of four, aligns with city values and maximizes the value of the property for the community.

The proposals come from a mix of familiar names tied to major Austin developments. The proposal from Austin-based Aspen Heights Partners, responsible for downtown’s Independent skyscraper, received the highest score from the city’s purchasing office. The second-highest scored proposal came from a partnership between Vancouver-based developer Intracorp and the Austin-based DMA Companies. Intracorp was responsible for the 44 East condo project in the Rainey Street District, while DMA Companies has developed local mixed-income projects around the Mueller Development and Goodnight Ranch.

The third-place proposal came from another partnership, between global design and architecture firm Gensler and local nonprofit 2033 Higher Education Development Foundation. Gensler is responsible for some mega-projects in Austin and around the globe, such as 6th x Guad, Third + Shoal, the Austin FC stadium and the downtown SXSW Headquarters building. The 2033 Higher Education Development Foundation was created locally to help the University of Texas Austin. The architecture firm and the nonprofit are already partnering on the redevelopment of a site down the street from HealthSouth—the 14.3-acre property at 1313 Red River St. formerly occupied by the University Medical Center Brackenridge.

In last place is a proposal from Pennrose LLC and its El Paso-based minority owner, Hunt Companies. Pennrose has no Texas projects, but Hunt subsidiary Hunt Development Group is responsible for The Catherine, a luxury high-rise apartment building at 214 Barton Springs Road.

Austin Mayor Steve Adler has tied his hopes for the 1215 Red River St. property to the city’s burgeoning Innovation District—the northeast quadrant of Downtown Austin that city and local state leaders want to become a multidisciplinary hub that attracts business, creative and medical-focused tenants of global-scale prestige.

Last year, as tensions around the city’s homelessness crisis grew and before the city opened up the application process for development proposals, there was a push from some on City Council to turn the vacant 1215 Red River St. property into homeless shelter space—something the city desperately needs. The proposal gained no traction but was brought up again earlier this year by Council Member Kathie Tovo, who said the city should look into using the site as an emergency homeless shelter while the city awaited redevelopment proposals. City staff deemed the proposal not feasible, as it would cost millions and take months to convert the existing building into a habitable space.
By Christopher Neely
Christopher Neely is Community Impact's Austin City Hall reporter. A New Jersey native, Christopher moved to Austin in 2016 following years of community reporting along the Jersey Shore. His bylines have appeared in the Los Angeles Times, Baltimore Sun, USA Today and several other local outlets along the east coast.


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