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Developer Proposes Building Two Towers, Including Affordable Housing, At Former HealthSouth Site

An artist's rendering of the proposed towers in downtown Austin.
Aspen Heights
Aspen Heights
The proposal includes a rooftop cafe and public viewing area.

A developer has proposed building a 36-story residential building and a 15-story office building on city-owned land downtown. The proposal includes income-restricted apartments, a rooftop café and music space.

The City of Austin has owned the land at 12th and Red River streets since the 1970s. It has leased the property to various health care entities, the most recent being HealthSouth, which ran a rehabilitation facility.

In 2016, HealthSouth closed the center, and the city took it up on its offer to sell back the remainder of its lease. Two years later, the Austin City Council passed a resolution asking staff to find a way to get affordable housing built on the site.

Council Members will consider whether to begin initial negotiations with developer Aspen Heights over this proposal at the end of January.

Aspen Heights
The developer has proposed building a 36-story residential tower with more than 500 units.

Here's what it's offering to build:

A residential tower with 348 apartments and 160 condos

  • more than a fourth of the homes would be restricted to people making less than the median family income
  • rental units would be available to people making 50% to 60% of the median family income; for a family of four, that’s less than $58,550 a year
  • ownership units would be available for people making 80% of the median family income; for a family of four, that’s $78,100 a year

An office building with more than 25,000 square feet of retail space

A 22,000-square-foot elevated plaza that connects the two towers.

Council will vote Thursday on whether to begin initial negotiations with the developer. If approved, these first negotiations could take up to six months. After that, it could take another two years to come up with a Master Development Agreement, which is needed before construction can begin.

Council Member Kathie Tovo said last week she thought the public needed more time to consider the proposal.

“I am concerned about the timeline,” she said at a City Council work session, adding that she wanted to see more housing and less office space. Tovo has also asked the council to consider requiring the developer to provide on-site childcare and whether the site could be home to a new downtown community court. “It is important to me that we have as robust a public conversation about this really significant public project as possible.”

But Council Member Natasha Harper-Madison, whose council district includes the property, said she did not want to delay the development much longer.

“I really like how much we have in the way of affordability here,” she said. “I don’t know what else would be proposed that would make these numbers work out.”

In a 2018 report, researchers at the Austin chapter of the Urban Land Institute decided that of five city-owned properties, the site offered the best chance to make a dent in the city’s affordable housing needs.

“The Health South site provides a rare opportunity to provide affordable housing within the Central Business District, an area of high opportunity,” ULI authors wrote. “Along with downtown job opportunities, the site is near Dell Medical School and the teaching hospital, the future redeveloped Brackenridge site, and the future Waller Creek parks and developments.”

This story has been updated to reflect the fact that Austin City Council Members postponed a vote on entering into initial negotiations with Aspen Heights to January.

Got a tip? Email Audrey McGlinchy at Follow her on Twitter @AKMcGlinchy.

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Audrey McGlinchy is KUT's housing reporter. She focuses on affordable housing solutions, renters’ rights and the battles over zoning. Got a tip? Email her at Follow her on Twitter @AKMcGlinchy.
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