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.
Weston Urban proposed the idea to Council and then-Mayor Julián Castro in June 2014; it was approved one year later.
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.
Once again, thank you Mr. Perry for standing alone. In 2016, right after purchase by City, City employees were told they would be moving into the Frost bldg in 2018. This of course will not happen, and nobody really believed it would, because it is likened to all rash decisions the City makes before doing their homework.
It was physically apparent at time of purchase to the lay eye (and is today, maybe worse) that the condition of the building, would need mega rehabilitation. But of course this was not completely vetted by the City engineer or he just went along with higher power demands to do what he is told. And as all other outrageous purchases made by the City, the tax payer bears the burden of their lack of proper action. Why do city contractors do business with the city? Because it is so lucrative! Contractors with the City bid low to get the contract, but at the same time their bid is twice what they would charge a private citizen. Another question, why do we need so many City engineers, when all design and construction is outsourced? So much fluff within city employee ranks.
Respectfully, JMF, I would take a different viewpoint. I work for a General Contractor that pursued the Frost Tower renovations, but was not successful. We spend a lot of money pursuing these type of projects, so we study them carefully before to ensure they are financially viable. This public private partnership for COSA with Weston-KDC is a taxpayer home run. You must look at the entire transaction to see the benefit.
I agree that it is obvious the Old Frost tower was going to require significant renovation. However, I can assure you that the numbers in the article for a new City occupied building of the same size are approximately $50 million low in today’s market. What this means is that the Old Frost tower transaction stands on its own financially and the other parts of the deal are benefitting the City in addition. Turning the Old Municipal Building into residential units is benefitting the taxpayers over and above the Frost transaction.
In my experience in dealing with the City over this City Manager’s tenure has been that she and her staff are fiscally conservative and progressive in making financial decisions. This was a huge win for the taxpayers.
I’m sure you do a great job vying for city contracts and just like real estate professionals, they do the same, but dont get the job. My point was not to degrade you, it is more to the point of tax payer dollar expenditures and that the city has to pay more for your work than if you were doing the same job for a private citizen. More importantly, the city has a municipal plaza full of licensed engineer employees that meet and track the design and construction of OUTSOURCED contractors. Why is it necessary then, to have all these city engineers and continue to outsource? So much fluff in city engineering deptartment employees. AND before you are even considered, the acquisition prices paid by city for major purchases like libraries, parks, and buildings are not conservatively negotiated, even with expensive appraisals made. The chosen real estate professionals involved in the purchases just smile all the way to the bank because they are chosen and have not had to do extra work for a public contract vs. a private contract. It appears Frost was not properly vetted prior to purchase to get an accurate cost to rehab it, and whatever the cost, should have been built into the 2017 bond like Perry said. This acquisition was really about political trade offs and incentives. It was brewed very secretly and executed secretly. All public acquisitions should be open and transparent prior to purchase. Not saying growth will be bad but dont think city should be part of the real estate ownership group. Cities should only own parks, libraries, and government run facilities. City owned Frost bldg should not be for the use of private business once they are in, and parking should house only government employees with free parking. Take away the approx $45 per month per employee stipend for parking and put those dollars back to offset the cost of this enormous project.