10/13 - Item 40 - Real Estate IFC

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Kathie Tovo
Posts: 128
Joined: Thu Oct 30, 2014 11:18 am

10/13 - Item 40 - Real Estate IFC

Post by Kathie Tovo »

Colleagues,

Included below is a link to a revised draft of Resolution 40, establishing policies for the City’s management of its real estate assets. This draft maintains the significant actions articulated in Draft 1 that posted on 9/23 as well as reflecting many edits that respond to feedback we’ve received from city staff. I believe I’ve addressed most, if not all, of their questions and concerns, but I may have additional edits as they – and my co-sponsors -- review this clarified version.

Resolution: http://assets.austintexas.gov/austincou ... 41426.docx

Redline: http://assets.austintexas.gov/austincou ... 141029.pdf

Generally:

This Resolution aims to set out a consistent, clear process enabling Council to provide input earlier in the decision-making process for potential sales, purchases, redevelopment, and use of City properties. It sets up processes and general policies without being too prescriptive – and maintains the important role that City staff play in using their professional judgement and expertise to advise the Council in its decision-making. This revised process will:

• ensure we’re actively identifying opportunities to achieve important community benefits, such as co-locating childcare facilities and income-restricted housing alongside City facilities in areas of town with higher land values

• encourage collaborations among other public entities, including the Austin Economic Development Corporation

• improve efficiency and save staff time by including Council feedback at the beginning of a process and avoiding delays at the end of the transaction when delays can be more problematic

For your convenience, I am summarizing some of the more significant changes based on staff feedback and additional conversations:

1) Exclusions – We inserted a section at the beginning of the document to make it clear that this resolution will not impair the City’s ability to carry on standard real estate acquisitions related to (a) the development permitting process (e.g., parkland dedication, easements); (b) approved capital improvement plans (e.g., right-of-way acquisition); and (c) utility infrastructure. We also highlighted the original intent that these policies are set on a prospective basis, meaning they won’t impair or impact agreements and leases that have already been executed.

2) Restructured – The resolution was restructured to make it easier to follow. The three major categories are (a) Procedural Policies; (b) Partnerships; and (c) Priorities.

3) Process – The Resolution starts out with the goal of transparency in real estate transactions, recognizing that we’ll need to hear some details in executive session to protect the City’s and others’ interests. It then lays out a process for getting the City Council’s input earlier in the transaction and solicitation process. Generally, the City Manager will bring to the Council real estate opportunities when they arise, excluding offers that the City would not consider (such as offers to purchase strips of parkland) or offers that are not commercially viable.

4)

a. General Policies: the Resolution would embed several general policies, most of which are already general practice. For example, as a general policy, the City favors owning its land in fee simple and using ground leases for development, rather than selling off tracts. Except in limited circumstances where there is a business case, the City should strive to own its facilities rather than lease them. We should avoid long-term vacancies of our properties and consider temporary uses of vacant facilities, when feasible.

b. Leasing: the Resolution directs the City Manager to set up a fair, competitive leasing process when the City is leasing to nonprofit organizations, similar to what we do for our social service contracts.

c. Value: the Resolution includes a requirement that the City obtain updated appraisals for transactions, which is largely consistent with current City process, with a few rare exceptions (e.g., HealthSouth). Based on recommendations from City staff, it clarifies the process for transfers between City departments and assigns a formula for how those transfers should be valued. And, it requests that the City consider conducting its own zoning process for City-owned land before putting it up for market.

5) Partnership – The Resolution establishes a framework for how the City should partner with the Austin Economic Development Corporation and the Austin Housing Finance Corporation to proactively identify opportunities to maximize community benefits, including affordable housing. Based on comments from staff, we clarified that this is a procedural step, leaving room for the City Manager to recommend using alternative methods. Also based on a suggestion from City staff, we expanded the analysis of consideration of potential partnerships to include nonprofit entities that help fulfill community needs. Later in the resolution, we request that the City Manager provide an update on the progress of the collaboration with the AEDC at the December 8 Council meeting.

6) Priorities- -The Resolution sets a target baseline for the use of the City’s land, while allowing the City Manager to recommend divergence. For example, although the target goal embedded in the resolution is 85% income-restricted units for projects with housing, there may be a good case for lowering that threshold if the project can achieve more units under another model. Other Council priorities included are BETTER BUILDER STANDARDS, LIVING WAGES, CHILDCARE FACILITIES, and, after working with staff on alternate language, we were able to include MBE/WBE goals.

7) City Manager Briefing – Based on input from City staff, we removed the requirement that the City Manager would need to provide a briefing to the Council on each real estate solicitation and provided a path that could include a memorandum instead. Council would need to sponsor an IFC to provide input under such a scenario if they desired modifications to a draft RFP/RFQ.

8) Parking Management – Consistent with our prior direction, the resolution requests that the City Manager make recommendations on a centralized parking management strategy in line with our approved transportation plans, financial policies, and climate goals. Language was added to reflect sensitivity to bond requirements.

I hope this helps summarize the work we’ve been doing, and I look forward to our conversation on Thursday. Should there be significant revisions between now and then, we will do our best to get them distributed as quick as possible.

Best,
Kathie

Council Member Kathie Tovo
Austin City Council, District 9
Council District 9
Kathie Tovo
Posts: 128
Joined: Thu Oct 30, 2014 11:18 am

Re: 10/13 - Item 40 - Real Estate IFC

Post by Kathie Tovo »

Dear Colleagues,

We just had a really productive meeting with City staff to sort through some remaining issues with regard to the real estate resolution. In the interest of the best use of everyone's time, I will be postponing this item until next meeting to afford an opportunity to continue working with staff on additional revisions and to provide everyone with more time to review them.

My sincere thanks to all of the City staff who have participated in this process and to my co-sponsors. I'm excited to see this revised process move forward.

Best,
Kathie
Council District 9
Bobby Levinski
Posts: 5
Joined: Wed Oct 12, 2022 4:19 pm

Re: 10/13 - Item 40 - Real Estate IFC

Post by Bobby Levinski »

Council Members,

On behalf of Council Member Tovo, I am posting this revised version of the IFC related to the City’s real estate portfolio (Item 41 this week). These revisions were made based upon continued conversations with City staff, as well as conversations with her cosponsors.

Revised Version (clean): http://assets.austintexas.gov/austincou ... 120030.pdf

Comparison with prior draft: http://assets.austintexas.gov/austincou ... 120049.pdf

Additionally, we were forwarded questions made through the Q&A process from Council Member Pool’s office. As the lead sponsor of the IFC, we have prepared the following responses to Council Member Pool’s questions.

1. Does this council direction inhibit staff’s ability to exercise their expert judgement in the Council/Manager form of government?

D9 Response: No; under State law, the City Council is the body responsible for approving the acquisition and disposition of the City’s real estate. The resolution sets out a process for gathering Council input, earlier in the process of real estate-related transactions, and maintains opportunities for the City Manager and City Staff to offer and act according to their expertise throughout the process. The intent of this resolution is to set out a process, without being too prescriptive.

2. If the affordable housing percentage requirement is set at 85%, what is the likelihood that the City will attract multiple, competitive responses to a solicitation on a City-owned property? Are there peer cities in Texas with similar requirements for publicly owned property?

D9 Response: The referenced affordable housing “target goal” is not a requirement; rather, it is intended to serve as a baseline goal. This target goal is based upon established City policy for the use of its own land for affordable housing, if developing under the AHFC, which was explained to the City Council during the deliberations of the HealthSouth project. The resolution delineates a process for the City Manager to recommend alternative proposals that might generate a significant amount of housing that could not otherwise be generated under a typical City project.

3. This direction calls for multiple council check-ins on real estate acquisitions; considering that agendas for council meetings and executive sessions may take several weeks to schedule, what influence will these requirements have on our ability to acquire land in a competitive market?

D9 Response: The resolution does not call for multiple check-ins. Rather, it seeks the City Council feedback at the beginning of a proposed solicitation or a proposed real estate transaction (i.e, authorization to negotiate) and then delineates a transparent and public process for the approval at the end (i.e., authorization to execute). These are the same two steps involved in any transaction, and the resolution provides a better framework for making these steps meaningful. The goal is to gather Council input earlier in the process to avoid unnecessary delays at the end of the transaction, when delays caused by Council concerns could become more costly and problematic in a proposed transaction.

4. Are there drawbacks to a rezoning of public property before a solicitation has been completed? If so, what are they?

D9 Response: Rezoning a property prior to marketing it removes the guesswork involved and avoids complications that might result from tying a proposed rezoning change to a contract, which is unconstitutional under State law. While appraisals can take into account estimations made by City staff on what the City Council might approve on a particular piece of property, such estimations might not be reflective of the full development potential of a site. The appraisal (or lack thereof) of the HealthSouth is a good example of an appraisal that did not capture the true value of a property and thus did not provide the City Council a great assessment of what should be the proposed market value.

5. The Aviation Department does not appear to be exempted from these requirements. How is Aviation affected by these changes, and are the regulations by the FAA a factor in implementing these requirements?

D9 Response: The resolution carves out an exemption for Airport-related functions, outside of leasing to vendors and developing airport land for commercial uses. This resolution would not preempt federal law or any other laws.

6. In staff’s best judgement, does the Austin Economic Development Corporation have the capacity and the budget to take on the requirements listed in the IFC?

D9 Response: As opportunities arise, the capacity of the AEDC to handle individual transactions will be part of the conversation. There is nothing in this resolution that requires the use of AEDC for any particular transaction, nor do the requirements of this resolution apply to the AEDC, except in the case where AEDC might be assisting with City-owned land.

Please note that these responses are intended to explain the intent of the resolution from the perspective of CM Tovo, and they are not intended to provide legal advice or substitute any advice that the City Legal Department might provide.

Many thanks,

Bobby Levinski
Office of Council Member Kathie Tovo
Austin City Council, District 9
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