Massive surf park east of Austin hits legal snags over pool permit

surf park austinAn update from the Austin American-Statesman:

Travis County is on the verge of a court fight with a massive, unopened surf park over a disagreement about whether the park just east of Austin needs a swimming pool permit.

The Commissioners Court last week authorized lawyers to sue the operators of NLand Surf Park, saying the park is being built without conforming to county and state health and safety codes. The suit has not yet been filed.

“Such legal action is essential to protecting Travis County and its citizens,” County Judge Sarah Eckhardt said.

NLand Surf Park, which developers boast will be the first inland surfing facility of its kind in North America, is under construction near Texas 71, east of Austin-Bergstrom International Airport. Contractors are building a lagoon the size of nine football fields that will include artificial waves for 11 surfing areas, according to NLand’s website.

The project is the brainchild of Doug Coors, a member of Colorado’s famous brewing family. Its opening date is unclear.

Attorneys for NLand and Travis County have been negotiating for months over whether the lagoon counts as a public swimming pool and, thus, requires a permit. NLand believes it does not, arguing that the rainwater-fed lagoon is more similar to a lake.

The park’s attorney, Richard Suttle, said the American-Statesman’s call was the first he had heard of Tuesday’s vote and said he was “completely blindsided” that the county would file a lawsuit before the park opened.

“This is a one-of-a-kind in the world (facility), and we are still working the logistics out on water quality,” he said.

State law defines a swimming pool as any “artificial body of water, including a spa, maintained expressly for public recreational purposes.” It requires pools to administer chlorine to keep bacteria from exceeding safe limits and meet other sanitary requirements.

NLand will treat its water with chlorine and has a water quality monitoring system to make sure the water is safe and does not exceed state bacterial standards, Suttle said. But the lagoon is too large to comply with other requirements of a pool, such as refiltering water every six hours, he said.

At least two wakeboardparks exist within Travis County, and neither has a pool permit from the city of Austin, which handles all pool permits in the city and unincorporated areas of the county. Suttle said he tried to raise that point with county officials.

“Their explanation to me was: ‘Just because someone else is speeding down I-35 and we don’t give them a ticket doesn’t mean we shouldn’t give you a ticket,’ ” he said.

Though NLand’s Facebook page continues to insist it will be open in “early summer,” Suttle said the park is months, not weeks, away from opening. A wastewater treatment plant built specifically for the site is set to be online in a few weeks, and that will make it possible to start bringing personnel to the site, he said.

The facility’s website shows job openings for a director of facilities, cafe cook, beer brewer, surf shop clerk, guest ambassador, cashier, bartender and dishwasher, as well as several surf coaches.

Travis County Commissioner Margaret Gómez, whose precinct includes the park site, declined to say what caused the move to legal action now. She called NLand an interesting project.

“They still have a lot of things to complete, but if they get it together and it’s well-run, kids love that stuff,” she said.

Full story>>>

Find out where Austin’s economy is heading

RECA-VerticalAt the Economic Forecast Lunch during the RECA Exchange scheduled for August 9, Real Estate Center of Texas A&M Chief Economist Dr. James Gaines will give share his latest insight and analysis on the local, statewide and national economies and their impact on the commercial real estate industry.

RECA’s half day Exchange brings together hundreds of Austin’s commercial real estate professionals to network and learn about hot topic issues. The event is open to both members and non-members and tickets may be purchased on the RECA website.

Booming Riverside Drive comes up short on retail

mapFrom today’s Austin Business Journal:

The rapidly gentrifying East Riverside Drive corridor presents tenants and homebuyers with a plethora of new housing options but the neighborhood has a significant drawback. There isn’t nearly enough retail to serve the mushrooming population.

Commercial real estate broker Jim Young, principal of Longbow Real Estate Group, has been studying the corridor on behalf of several clients and posted a blog on his website about the retail gap and potential investment opportunities.

Based on data culled from ESRI, a research company that is utilized by the Certified Commercial Investment Members professional organization to which Young belongs, the area shown in the accompanying map currently supports $284 million dollars of retail activity annually. The map shows the area within a five-minute drive of 2015 E. Riverside Drive, a retail strip center where Emo’s music venue is located and near the center of the development activity.

But the capacity of retailers within those parameters is only $191 million annually.

“When there is an unmet need, we call it a retail gap because money is leaking out of the trade area,” Young said. That gap is certain to grow, he added.

Hundreds of luxury apartments have opened in the past two years and single-family home communities also have delivered.

Standard Pacific Homes is underway with an infill community dubbed “Park East,” near East Riverside and Montopolis drives.

Young’s client Presidium Group is developing more than 400 apartments at 1600 Pleasant Valley Road.

Nearby, the biggest game changer in recent history will occur when Oracle Corp. builds its 560,000-square-foot campus on the south shore of Lady Bird Lake just west of Pleasant Valley Drive. Some 1,000 employees are expected to be based there, and Oracle purchased an adjacent apartment building with the expectation of providing workforce housing.

Though an HEB Plus Grocery Co. store serves the area, the rest of the retail offerings tend toward fast food restaurants and smaller service providers. The need for more retail development is larger than expected, Young said.

“I’m really surprised by this gap, but East Riverside has changed so dramatically in the last five years both in population and resident income,” he said. “Clearly there’s a new income demographic for the area and it makes sense in hindsight that the retail gap is so large. Someone much smarter than me once said, ‘Retail follows rooftops.'”

Young said he hopes shedding light on the scarcity of retail in an area, which previously was a bulwark of student housing and lower-income households, will lead to more stores and restaurants.

“My hope is that retail and mixed-use developers with creative vision will look deeper at East Riverside Drive as an area to bring some major projects to Austin,” Young said. More information>>>

Massive tract east of Austin on market for $250M

sandowFrom today’s Austin Business Journal:

Alcoa Inc. has put its Texas land holdings on the market for $250 million, which include a vast array of water rights that could be the biggest known deal of its kind ever struck in the Lone Star State.

The property — known as Sandow Lakes Ranch — being sold by the New York-based metals manufacturer totals nearly 33,800 acres. The land spans three counties and sits about 45 miles east of downtown Austin.

“This is the largest water deal of its kind,” said Bernard Uechtritz, who is the Dallas broker behind the sale of the famed $725 million Waggoner Ranch .”It has an incredible amount of holding capacity and that holding capacity could be increased.”

Uechtritz is marketing Sandow Lakes Ranch, which stretches 30 miles long across three Texas counties, on behalf of the seller, Alcoa, through his newly formed company, Dallas-based International Icon Properties.

The ranch includes 14 lakes covering 1,960 surface acres, totaling 48,379 acre-feet of water. Each year, the ranch is permitted 44,000 acre feet of water through the Simsboro Aquifer with an additional 14,000 acre-feet available for permitting.

An additional 18,000 acre-feet of surface water from the Little River run through the property. By selling the ranch, Alcoa would transfer 100 percent of its water rights.

Uechtritz said the company has won a number of environmental awards for its operations and the water — which is continuously checked — could be bottled for consumption today.

As part of the deal, Alcoa would like to leaseback portions of the ranch, which includes two power plants operated by lignite with rail service. The metals manufacturer has been working at the property since the 1950s, at a time when Alcoa was mining coal on the land.

Along with water rights, the acquisition of Sandow Lakes Ranch includes:

  • 6,000-acre industrial complex, which includes roads, railhead, intermodal facility, warehousing, distribution and manufacturing;
  • 5,564 acres with 100 percent oil and gas minerals, along with 22,489 acres with 60 percent oil and gas minerals;
  • An estimated 200 million ton of lignite coal
  • A plethora of fish and wildlife that could be used for conservation;
  • Last year, the ranch produced 16,000 bales of hay, a figure that could triple under the right owner, Uechtritz said.

This is the first time Alcoa has taken the property to market since acquiring it about 100 years ago. Much like Waggoner Ranch, Uechtritz said he plans to market it worldwide through September. Uechtritz expects to select a buyer by the end of the year.

“We’ve got a lot of interest in the property,” he said. “There is so many end users for it — whether it’s bottling or municipalities or conservation — it’s a multi-faceted property from industrial to commercial to agricultural.”

One of the interested buyers could be Central Texas Regional Water Supply Corp. It has proposed a billion-dollar-plus pipeline, which, if built, would deliver water to San Antonio. The proposed 142-mile pipeline would likely cross the southern end of Sandow Lakes Ranch.

“We have the chance to put this in the right hands,” Uechtritz said. “This is an oasis outside of Austin that can really serve the community.”

Full story>>>

Huge airport mixed-use development slated for approval

From today’s Austin Business Journal:

Velocity Crossing, a 390-acre mixed-use development near the airport with almost 2 million square feet of office space and hundreds of apartments planned, is expected to receive a zoning change Thursday from Austin City Council that would clear the way for work to begin.

The land is owned by local investors including Karl Koebel and Doug Launius. Austin Business Journal broke the news about the development in a March 2015 cover story about the booming Southeast Austin submarket.

The development will be off State Highway 71 east of Austin-Bergstrom International Airport and have up to 410,000 square feet of retail and restaurant space, 1.5 million square feet of industrial space, 893 apartment units, a 10-screen movie theater, 1,200 hotel rooms and 26 acres of open space, the Austin American-Statesman reports. Construction is expected to wrap up in 2025 but no estimate was given for when it might begin.City Council gave preliminary approval to the zoning change in March.

Southeast Austin has seen increasing development activity lately as investors and homebuyers flock to the open spaces and lower prices outside the urban core and the relatively built-out North Austin submarket. Projects in the area include Brookfield Residential’s Addison and Easton Park master-planned communities plus the forthcoming Pilot Knob.

“It’s really all about transportation access,” Koebel told ABJ last year. “You can get to a job downtown in 15 minutes.”

Additional information>>>

Developer vows to move forward on Pflugerville mega-project; lawsuit pending

Renderings of Pflugerville Crossing

From the Austin Business Journal:

Scott Mann, the Houston developer behind the proposed $800 million Pflugerville Crossing LP mixed-use project north of Austin, said he has no idea why Pflugerville has backed out on an incentive agreement that was inked in January 2015.

“I don’t really know why (they) would terminate you with no discussion,” Mann said. “It bears investigating.”

The 119-acre project has two main elements: Sunshine Village Town Center and SunTech Office Park, which was previously profiled by ABJ.

Terri Toledo, a spokeswoman for the city of Pflugerville, said there’s nothing mysterious about the March 22 decision by City Council to void the agreement.

“The agreement was ended because the terms of the agreement weren’t met,” Toledo said. “The developer didn’t secure purchase of the land. The city didn’t receive completed development plans. It wasn’t progressing and letters were sent notifying Scott of the status of the project and the cancellation.”

Despite the cancellation of the deal, Mann said he is prepared to go forward.

“I feel (we’ve) done everything in good faith,” Mann said. “(The city) wanted to see this land developed a certain way and we did just that. We were ready to submit for permits.”

“The circumstances in those cases are on record. It was common knowledge,” Mann said.

Toledo said she could “confirm that the city was aware [of his criminal record].”

An attorney for landowner Kenneth Bohls Cousins Trust would not comment.

Major investment

Mann said his company, 88 North LLC, has invested as much as $1 million in planning and engineering fees. Mann, who is also a principal of Star Stream Capital, forged the agreement with the city, which included up to $303 million in property and sales tax rebates over 30 years, in exchange for creating the development and investing about $85 million in infrastructure.

Though he faults the city for unjustly yanking the project from his company, Mann directed his legal team to file suit earlier this month against the owner of the property. His company had not finalized the purchase from the Kenneth Bohls Cousins Trust.

In a complaint filed March 3 in Travis County District Court, Mann’s attorneys — Gray Reed & McGraw PC — allege that Phyllis Pastre as the trustee for the trust and another company, Green Island Investments LLC of Hackensack, New Jersey, committed fraud, negligent misrepresentation, tortious interference, conspiracy and other charges. 88 North LLC is seeking exemplary and punitive damages.

J. Scott Jackson of Fishman/Jackson, the defendants’ attorney, said “the trust will answer the lawsuit in due course and expects that the lawsuit will be resolved in its favor quickly.”

Here’s what Mann’s attorney claims is the essence of the complaint: 88 North LLC hired Sikich LLP, a professional service firm, to identify potential investors and during that process introduced the development company to Green Island Investments. Proprietary information was supplied to the potential investor with an understanding of confidentiality, the lawsuit states.

“It now appears Green Island is trying to cut plaintiff out of the deal and execute its own deal with the trust and the city,” the lawsuit states.

It goes on to say that 88 North LLC submitted a sales contract and a $100,000 escrow payment to the trust before learning that the trust and Green Island “entered their own deal cutting out the plaintiff.”

Criminal past

During an interview Monday, Mann confirmed that he spent time in prison in the early 2000s in connection with a savings and loan fraud case that dates back to 1996 when he was an executive with Jefferson Savings and Loan Association in McAllen, Texas.

Mann said that the 1996 criminal case was intertwined with the federal government’s takeover and management of the savings and loan crisis in the late 1980s and early 1990s and that many of the charges eventually were dropped.

He spent more than three years in prison. Court records show he was ordered to pay $460,000 in restitution to the Internal Revenue Service and $11,587,000 in restitution to other parties.

Mann said a settlement was reached with the IRS in 2001, but the other restitution is still pending in the courts — almost 20 years later.

“The restitution settlement is awaiting court approval,” Mann said. “Contractual and other obligations prevent me from providing the information you have requested.” Additional information>>>

Four Seasons Austin hotel pricey part of blockbuster Blackstone deal

four-seasons-hotels-and-resFrom today’s Austin Business Journal:

The transaction involves Beijing-based Anbang Insurance Group purchasing the luxury hotel portfolio of Blackstone LP (NYSE: BX). The total amount is estimated $6.5 billion, according to published reports.

The value attributed to Four Seasons Austin is an estimated allocation within the16-property portfolio, which includes the famed Hotel Del Coronado in San Diego and several other Four Season operated hotels around the U.S. The deal is under contract.

Here’s the chronology of events: Strategic Hotels & Resorts purchased the Four Seasons from Lodging Capital Partners and partner Prudential Real Estate Investors in the spring of 2015 for just under $200 million. Then the property quietly changed hands around Christmas when Blackstone purchased Strategic Hotels & Resorts (NYSE: BEE). About 10 days ago, Blackstone unveiled its deal with Anbang.

If Real Capital Analytics data is correct, the Four Seasons Austin will trade at more than $1.2 million per hotel room.

The Four Seasons, which includes 291 rooms and 2.3 acres of land, is located at 98 San Jacinto Blvd. and sits on 2.3 acres of land on the north shore of Lady Bird Lake.  Additional information>>>

Austin school district to seek bids on 10 properties worth $95 million

aisdFrom today’s Austin American-Statesman:

The Austin school district will seek bids for 10 of its properties, including its 128,000-square-foot headquarters on West Sixth Street, the former Millett Opera House currently leased by the Austin Club, and the Baker Center administration building in Hyde Park.

The district could sell, lease, swap or repurpose the properties to generate one-time revenue or create other long-term plans for their use. They have a total value of more than $95 million.

The most valuable of the offerings is the Carruth Administration Center, which sits on 2.75 acres at 1111 W. Sixth Street. Originally designed to be a mixed-use project with office, residential and retail components, the headquarters is valued at $33.6 million, according to district estimates.

The district bought the property more than 25 years ago and has looked into selling it at least once, but it never got an offer that was attractive enough to district leaders.

“I can certainly see this as an opportune time; the market would respond very favorably,” said Charles Heimsath, president of Capitol Market Research, an Austin real estate consulting firm, pointing to the major redevelopment taking place at the former Seaholm power plant and the former Green Water Treatment Plant nearby.

Regarding the Austin Club, which is a half-block off of Congress Avenue, Heimsath also said “there’s a wide range of possibilities for a property like that.”

District records show the Austin Club, which has had a lease with the district since 1979, paid the district about $48,000 in rent in 2014. The district has valued the property at an estimated $6.3 million.

The list of properties the district is offering includes the former Allan Elementary, and the school board is also considering options for other plots of land, ranging from an acre in East Austin to 32 acres in Northeast Austin, as well as its Central Warehouse and Service Center. The properties are labeled as being noninstructional, but some trustees pointed out that early education is being taught at Allan, albeit through partnerships with local nonprofits and not by the district. More than 12 acres of green space the district owns in Travis Country in Southwest Austin has been used as an outdoor environmental sciences classroom by the Green Tech Academy at Small Middle School.

The Austin school board will vote Monday night on whether to issue requests for proposals that allow developers and other entities to pitch ideas for using the lands and facilities. District leaders are considering a three- to four-month time frame to gather proposals, but the process could take longer.

“We’re hopeful that we can get some really thoughtful proposals back,” said Nicole Conley, the district’s chief financial officer. “There’s a lot of interest now in sort of partnering in the market.”

Community members and some city and district leaders have discussed ideas such as creating affordable housing for teachers and other civil servants on surplus property, doing leasebacks or swapping properties.

“These are not done deals,” Trustee Ann Teich said. “We’re exploring opportunities with this land, and it would be a better use of our time and our energy to do this rather than to just leave these properties unexamined.”

The Austin school district previously sought bids in 2011 for its West Sixth Street headquarters and the Baker Center in Hyde Park to ease a budget crunch, but it ultimately wasn’t satisfied with the offers. This time, trustees say looking at the district’s real estate resources is a necessary step for long-range planning.

As was the case in 2011, the district has retained Austin commercial real estate firm Southwest Strategies Group in seeking proposals for the properties.   

Previous board discussions on properties have dealt with how to more wisely use district assets, including leasing buildings for market value. The district last month hired consultant Brailsford and Dunlavey to look at facilities and planning in a broader way, as trustees tackle prolonged issues of underenrolled schools in some areas, overcrowded schools in others, and aging facilities. District leaders expect a master plan for all the facilities by May 2017, and they will consider any proposals made for the 10 facilities within that plan.

Trustee Amber Elenz said she is excited to see what ideas come forward and considers the requests for proposals a necessary step before the district can consider going back to voters with a bond request to address its needs. However, she cautioned that the district might need to place appropriate restrictions or expectations on any real estate deal.

“We’re approaching this as an opportunity to see what greater yields we may have in the use of these different properties,” Trustee Yasmin Wagner said. “It’s an exploration exercise at this point, not an austerity measure.”


 

Stantec buys Bury in blockbuster Austin deal

Miller BuryFrom today’s Austin Business Journal:

Bury, the civil engineering stalwart based in Austin, will be acquired by global giant Stantec for an undisclosed price. The Bury brand, so prominent in Austin, will cease to exist within a short time.

The transaction is expected to close in March and Bury employees were notified of the purchase Wednesday afternoon. Management and operations at Bury’s six offices will continue as normal and the leadership team will not change — though founder Paul Bury, who also serves as CEO and president, will exit the company soon. No precise date has been determined for his departure.

“Obviously, it’s a little bittersweet,” said Bury, who started the company in 1984. “It’s a great time for the company to transition to the next level.”

Stantec (NYSE: STN, Toronto Stock Exchange: STN), a multifaceted design firm headquartered in Edmonton, Canada, has more than 15,000 employees in 250 offices. With the acquisition, it will assume a major presence in Texas, along with some additional traction in Florida and Arizona.

Bury’s 325 employees — in Austin, San Antonio, Houston, Dallas, Phoenix and Orlando, Florida — will operate under the Stantec name very soon. Bury is the fifth-largest engineering company in Austin with 2015 billings of $20.86 million, according to Austin Business Journal’s latest list of the largest engineering firms. Stantec ranked No. 9 on the ABJ’s architecture firms list with $4.89 million in design revenue in 2014.

A quick transition

The change of signage and business operations will be a major logistical undertaking, but Bury said he wants to see it happen quickly — for the benefit of everyone involved. He believes Stantec’s acquisition will open up many new opportunities for Bury employees and provide clients with a stronger reach of services.

Stantec Executive Vice President Eric Nielsen, who is based in Irvine, California, led the acquisition effort from that end. He has high praise for the Bury brand, which has handled many premiere real estate developments and design assignments during its 30-year history. Additional information>>>

Austin architects deemed among best in the U.S.

AIA

From today’s Austin Business Journal:

Being inducted into the College of Fellows at the American Institute of Architects is a lofty goal for any design professional — and it’s a rare one.

Austin is particularly well represented in the 2016 class, which was just announced.

Ten architects from Texas will be inducted along with 139 others from around the world. Half of the Texas fraternity are from Austin — an extraordinary representation, and perhaps a nod to the looming significance of the University of Texas School of Architecture.

Three of the five Austin designees studied at UT.

They all will be formally initiated at the AIA national convention in May in Philadelphia.

Here they are:

• James Brady, Page. Brady has deployed his expertise in the educational facility sector through a variety of positions from architectural design practice to executive leadership for the Texas Association of School Boards and America’s Schoolhouse Council. Currently, he’s an associate principal for Page in the Academic PK-14 division. Brady studied architecture at Oklahoma State University.

• Lawrence Connolly, Connolly Architects & Consultants. Connolly founded his company in 1979, less than four years after graduating from the University of Texas School of Architecture. Though he’s handled a wide array of projects, Connolly has earned kudos for the design of animal shelters and special habitats. He’s presented workshops for a variety of organizations that support the welfare of animals. Connolly also has served as a contributing editor to “Texas Architect” magazine.

• Ernesto Cragnolino, Alterstudio Architecture. After studying at the University of Texas School of Architecture, Cragnolino joined Alterstudio in 2003 and became a partner in 2005. The multi-faceted company had earned kudos over the years for everything from contemporary residential design to smaller commercial projects. Alterstudio homes often land on the AIA Home Tour. Cragnolino amplifies his design practice with teaching design and construction at UT.

Phillip Reed, Cotera+Reed Architects. As a principal with Cotera+Reed, Reed is responsible for the day-to-day management of the firm. He participated in the design process in creating Austin’s city hall and has a deep interest in sustainable, affordable projects. Reed also studied at the University of Texas School of Architecture.

• Al York, McKinney York Architects. A partner in another prominent local design firm, York’s background is decidedly unconventional. He first studied design at Auburn University and eventually landed at Cornell University. He later added the vast, rugged landscape of West Texas as a backdrop for his career as a professor at Texas Tech University in Lubbock. He moved to Austin with his wife, an historic preservation expert, in 1995. McKinneyYork has a diverse practice. In a previous ABJ profile, York told the ABJ that he specializes in design and tech matters at the firm and also takes the lead on financial management. Additional information>>>