AUSTIN, Texas — The Austin Housing and Planning Committee is trying to get back on track with redeveloping the HealthSouth projects, two months after City of Austin leaders decided to scrap its deal with the developers.
The old rehabilitation center, which is off Twelfth and Red River streets in Downtown Austin, was set to be transformed into two mixed-use towers for apartments, child care and affordable housing.
In an effort to keep the project in line to meet the needs of the community and what can actually be accomplished, recommendations and a presentation were laid out.
“When I got into office, you know, HealthSouth had unfortunately become kind of a mess. And we’ve seen other things become messes, and I don’t think that’s something we want to do with this. We want to be careful and do this right," said Councilmember Zo Qadri (District 9), who has been vocal about getting the project off of the ground.
Mandy DeMayo, deputy director of the City's housing department, said during the next council meeting on Sept. 14, an item will be placed on the agenda to authorize the demolition of the building by January 2024.
The ideal scenario is for the City to retain ownership of the property; redevelop the area as a mixed-use, mixed-income project; provide affordable housing scenarios on site and within Palm District Plan; and explore the Austin Housing Finance Corporation, as well as the Austin Economic Development Corporation, as potential negotiators of the site.
Wednesday's meeting provided broad insight into how to fulfill those needs efficiently.
DeMayo added that community engagement was also part of the process. A survey and a roundtable were conducted throughout August to see what residents wanted to come out of the project and what they though would best serve the area long-term.
"We remain committed to HealthSouth and understand that is is really a prime opportunity within Downtown Austin for the creation of truly affordable housing," DeMayo said.
Darren Smith, who is the managing principal with the consulting firm of Economic and Planning Systems, detailed how the market conditions have changed and development costs have gone up faster than values since 2019. He also added how the demand for affordable housing has increased.
"There's a great demand for affordable housing throughout the city and certainly downtown, as we've heard from the community outreach. And the HealthSouth site provides a unique opportunity to address that issue," Smith said.
City officials pointed to projects being delayed or abandoned, saying they hope that won't be the case for HealthSouth.
DeMayo mentioned there are three scenarios that can play out. First would be a request for qualification (RFQ) by early 2024. The second would be to take a pause and wait out market conditions on a local, national and hyperlocal level. The final option would be to phase out the project in a way where it can align with the market conditions.
Councilmembers are set to meet on Sept. 14 to have a full discussion and vote on the authorization to demolish the structure.
Boomtown is KVUE's series covering the explosive growth in Central Texas. For more Boomtown stories, head to KVUE.com/Boomtown.