After purchasing the Frost Bank tower for $52 million in 2016, the City of San Antonio on Thursday committed $59.5 million to renovate its staff’s new home, bringing the total project cost to an estimated $127 million.
Other expenses, including those associated with electrical upgrades, fiber optics, and other IT needs, make up the $15.5 million balance of the total project cost, said Mike Frisbie, director of the City’s Transportation and Capital Improvements department.
Councilman Clayton Perry (D10) cast the lone vote against the contract.
The “old” tower, which the City purchased from Frost Bank, will accommodate about 1,400 staffers from 24 departments. City employees will begin a phased-in move in 2020 and should all be relocated by spring 2021, according to City estimates.
Now scattered across San Antonio’s urban core, City staff will consolidate into the 22-story tower originally built in 1975 as Frost’s headquarters. The bank’s new digs across Houston Street, a 23-story glass tower, are slated for completion next summer. Once Frost employees move out of the old building and into all but the ground and top eight floors of the first new office high-rise in San Antonio in more than 25 years, the City will begin renovations.
Officials had anticipated the deal would save about $1.2 million over 30 years because the City would no longer have to lease other buildings and would generate revenue from leasing some office space in the old tower and parking garages. But the recent uptick in local development, Frisbie said, has led to double-digit inflation over the last few years.
“We did not anticipate that in 2014” when staff was calculating the price of the project, he said.
As a result, staff now estimates the City will break even on the project and move. A new building would have cost the City about $220 million.
Perry said the project should have been part of the 2017 bond process so as to let voters decide.
Assistant City Manager Lori Houston, who was director of the Center City Development and Operations Department at the time the agreement was reached, said the unsolicited proposal from Weston Urban in 2014 came with a deadline.
As part of the public-private partnership with the City and Frost Bank, Weston Urban, which was co-founded by Graham Weston and is building the new Frost Tower with Dallas-based partner KDC, will construct at least 265 housing units on properties it acquired from the City.
By approximately 2023, Weston Urban will construct 65 housing units in the Municipal Plaza building above City Council chambers and offices at 114 W. Commerce St., according to Weston Urban President and CEO Randy Smith. Plans for the vacant San Fernando Gym at 319 W. Travis St. (also known as 300 North Santa Rosa) and a parking lot at 403 N. Flores St. are still being developed.
It’s too early to tell if those housing units will be for rent or sale, Smith said, because “we can’t anticipate what the market will be like then.”
However, “any housing that we do will have appropriate mixed use” such as office or retail, he said.
On Thursday, Council also approved the Mayor’s Housing Police Task Force’s policy framework aimed at addressing affordable housing issues in San Antonio, but the 2015 agreement with Weston Urban does not include requirements for affordable housing.
“I think we’ve always been interested in [affordable housing],” Smith said, “but there’s a million and one definitions of what affordable means.
“The concept for me has always been embodied by diversity of housing stock,” such as affordable, workforce, and market rate options, he said. “We know to be vibrant, [downtown] has to offer a diversity of pricing points across a diversity of products. I can’t imagine that across all of the acreage that we’ve been able to piece together that our holdings don’t represent a microcosm of all that.”
The new Frost tower is located on the banks of the $175 million San Pedro Creek Improvements Project, and the building’s base will have an entrance to the linear park.