It has taken the Texas Facilities Commission two years to regroup for a gubernatorial line-item veto that left in shambles its plans for housing San Antonio state employees based in the G.J. Sutton Complex at 321 Center Street. The site, originally a foundry for casting metal, was purchased by the state and converted to office use in 1975.
When Governor Gregg Abbott vetoed a Legislature-approved $132 million redevelopment fund for the century old Sutton Building, San Antonio politicos and Eastside boosters were disheartened. Engineers had already declared the buildings unsafe, and state officials scheduled a series of moves between 2012 – 2014 to relocate staff away from the 6-acre campus.
There is no official project underway, but the TFC floated a Request for Information on April 6 that solicits interested developers to volunteer their ideas on how best to structure a public-private partnership (P3) project.
“Hopefully, this is an indication that we’re moving past zero,” said Jackie Gorman, chief executive officer at San Antonio for Growth on the Eastside (SAGE). “This is an opportunity for developers to give input on how the deal might be structured.”
As head of a non-profit agency advocating for economic development in the city’s historically underdeveloped east side, Gorman knows there is interest. Real estate developers often inquire with her office on the status of the Sutton complex and whether there is a chance some portion of it could be sold.
Gorman said some developers have even shown her renderings of concept developments. The state, however, has shown no interest in selling. Located on the east end of downtown, the Sutton is conveniently placed for the personnel of various state agencies that commute from across Bexar County.
The state once had a centralized operation with this building, and despite the diaspora, TFC appears determined to get it back. The question has been how to proceed, but when one door closed another opened.
At the same time the Legislature approved the ill-fated funding bill, it also passed the Texas Public and Private Facilities in Infrastructure Act. As a result, a new department of the TFC was created: The Center for Alternative Finance and Procurement, charged with helping public entities in launching public-private partnerships in Texas. But the agency has been experiencing a learning curve.
“I think it’s a pretty new tool for them and I don’t know that they’ve successfully completed a project yet,” Gorman said.
In the RFI, the Facilities Commission lays out several conditions and assumptions about what is needed and what may be possible in regards to the Sutton complex. In a nutshell, there is a baseline on the square footage of new office space the state requires, and an assumption that plenty of land will remain for a developer to pursue some kind of mixed-use commercial project.
The Sutton complex’s historic buildings, which date back to 1911 – 1912, only occupy a fraction of the site, Gorman said. To what degree a developer may maximize density will depend on their concept configuration and the demands of the market.
“But there is a lot of parking land,” Gorman said. “There are acres of parking.”
The Facilities Commission has already designated the following must-haves:
- A new building with 260,000 square feet of office space.
- Parking for 840 vehicles.
The state estimates the cost for the building and parking from $100-$120 million. In return, the Facilities Commission suggests it could provide the chosen developer $3.5 million annual rent for 30 years on performance-based terms.
Other assumptions in the RFI include giving the developer 33-year rights to incrementally develop the site’s remaining property. However, the Facilities Commission expects a share of revenue from commercial development through an annual revenue stream or a one-time, up-front sum.
The specific type of development is still open to negotiation, but per the Facilities Commission, “Residential/Mixed use was used for the State’s analysis and is the current assumption of highest and best use.”
Fortunately, the Sutton is directly in the path of progress. More than a decade of city government focus on urban infill development has finally paid off, and high-density residential projects are in progress on the adjacent blocks east and west of the complex.
Given the fact that the state wants its employees in a new office building, and there are conditions in the RFI and in the city of San Antonio that protect the Sutton from demolition, there is an unwritten assumption that any development concept will have to include the cost of restoration and produce designs for some type of adaptive reuse. Responses to the RFI must be in by April 24.
Gorman said she could not venture an educated guess as to how motivated the Facilities Commission is to proceed quickly on the release of the Request for Proposals and a project contract.
“I have a sense of urgency, because this is my community. I look at it every day. I’m not sure what their sense of urgency is.”