A unique public-private partnership between the city, Frost Bank and the Weston Urban development company could result in the first new downtown office skyscraper in a quarter century, more than 300 housing units in the urban core and a multimillion-dollar annual savings to local taxpayers, officials announced Thursday.
Mayor Julián Castro, poised to depart his hometown for a position in President Barack Obama's Cabinet, is capping off his five-year tenure with what would be the most significant project in his so-called “Decade of Downtown.”
“This would be, without a question, a major turning point for downtown San Antonio,” Castro said in an interview. “You can see a very bright future with this investment.
“If anyone still doubts the 'Decade of Downtown' is happening, here you go,” he said. “It is.”
Under the public-private partnership proposal, the city would become the owner of the current Frost Bank tower at 100 W. Houston St. — and its 732-space parking garage — giving the city more than enough room to centralize its 1,100 employees who are currently scattered across several downtown buildings that cost the city some $3.4 million annually in leases.
In exchange, the city would convey five downtown properties to Weston Urban — including Municipal Plaza, which houses City Council chambers. The city would retain the first-floor chambers and its “B-session” meeting room, but the portion of the building along Commerce Street likely would become retail space, said Lori Houston, director of the Center City Development Office.
What's now Municipal Plaza was built in 1922 by Frost Bank and served as its headquarters until 1973, when it opened the Frost tower at 100 W. Houston St. Frost would keep its headquarters there until moving into the proposed 400,000-square-foot “Class-A” office tower that would be constructed at the location of its nearby motor bank. Weston Urban, the development company of Graham Weston, would develop the high-rise.
Frost would be the anchor tenant in the tower and use as much as 250,000 square feet for its corporate headquarters. The remaining space would be available for lease. Castro and others said Thursday that San Antonio needs more high-end office space, which would lead to further economic development in San Antonio.
Weston Urban President Randy Smith said that while there's yet to be a design for the proposed tower, his firm and Frost concur that it will be an “iconic” addition to San Antonio's skyline.
In an interview, Smith noted that Frost's Austin tower has had a significant impact on the capital city's skyline and now appears on Texas drivers licenses.
Houston and Castro both said that the city would only proceed with the partnership if the deal turns out to be cost-neutral or better for the city. Early estimations show that the city would save $3.4 million annually because it would no longer have to lease space downtown and could potentially add revenue by leasing unused space in the Houston Street tower.
In pitching this deal, Frost is making a significant commitment to keeping its corporate headquarters in San Antonio. Phil Green, Frost's chief financial officer, said the proposal runs parallel to key points in SA2020 — Castro's grassroots plan to alter San Antonio in a significant way by the end of the decade — and his concept of the “Decade of Downtown.”
“The mayor's had this vision that he's diligently worked on. Graham Weston has been totally committed to this and poured his capital into it,” Green said in an interview. “I'd say that we're honored to be able to support the process of the visionaries in this city to make San Antonio a better place for its citizens — the people of San Antonio.”
Besides Municipal Plaza, the city would convey to Weston Urban four other downtown properties: a stretch of land along N. Main Avenue between Houston and Travis streets; a parking lot at the southwest corner of Pecan and North Flores; the Metro Health Department's Continental Hotel building at 322 W. Commerce; and the San Fernando Gym at 319 W. Travis.
In all, Weston Urban plans to develop more than 300 residential units in downtown.
Councilman Diego Bernal applauded the proposal and said it creates several exciting prospects for downtown, including the potential of adding more than 700 parking spaces to the city's inventory. Parking is key both for downtown residents and for suburbanites who want to visit the urban core.
The cost of constructing similar structured parking, Bernal said, currently costs between $10 million and $15 million for 500 spaces. So to receive 732 spaces that would be used by city employees during the day and the public on nights and weekends in a deal that would save the city money is a significant win, Bernal said.
“That's like adding another St. Mary's garage to the parking inventory downtown,” he said. “That's huge.”
Houston said the city has accepted the initial unsolicited proposal from Weston Urban and Frost, marking the first time the city has done so since the council approved public-private partnerships in 2012. Now, the bank and the developer have 45 days to submit a detailed proposal that further explains the economics of the deal.
Under the city's “P-3” guidelines, that detailed proposal will be posted for public review and comment for at least 60 days. During that time, the city will “seek to negotiate the terms of a comprehensive agreement based on the detailed proposal.” It will also “simultaneously seek competing proposals,” according to a Thursday letter sent by the city to Frost and Weston Urban.
At the end of the 60-day period, the city has several options. It could decide to not proceed with any proposal, to move forward with the original proposal, to opt for a competing proposal or select multiple proposals.
Whether any competing interests will have time to do the voluminous work that would go into making a competing proposal remains to be seen. And the proximity of the current Frost tower to City Hall — the heart of municipal government — seems to be a key element in the Weston Urban-Frost proposal.
If the city ultimately decides to move forward with the pair, the downtown landscape could move forward relatively quickly. According to a preliminary project schedule, tower design could start by 2015 and construction could begin by mid-2016 with estimated completion and move-in by 2018.
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