The City of San Antonio has published for public review a comprehensive downtown development proposal by Weston Urban and Frost Bank that would transform several square blocks of western downtown north of Main Plaza into a vibrant new urban zone over the next six years.
The proposal is breathtaking in scope and complexity. It creates a new concentration of municipal employees, all within one block of Main Plaza and City Hall. It adds the first new office tower to San Antonio’s skyline in 25 years. It furthers the City’s downtown redevelopment goals by adding hundreds of new downtown residences, jobs, retail activity and pedestrian street activity. Several historic buildings will be given new life. A new, 1.15-acre private park will be developed on a now-vacant square block for the enjoyment of area workers, residents and visitors.
A 71-page document detailing the proposal was made available on the City’s website around 8 p.m. Monday, and will remain there for public comment for the next 60 days. Competing development bids also will be accepted over the next 60 days. Given that competing developers could put forward their own comprehensive proposals, key financial data – including key appraisal figures and development and revenue estimates – are blacked out in the released document, making it impossible to gauge the financial scope of the deal at this juncture.
The document does state that 300 new housing units will represent a $93 million investment and support 670 jobs with wages and benefits exceeding $35 million.
City officials received the proposal on Aug. 8 and have been evaluating it for the last 10 days. City officials previously said they will work to approve the deal if they are assured it will be “revenue neutral” for the City and is not surpassed by a competing proposal.
The proposal was first made in an unsolicited letter sent to the Center City Development Office by Weston Urban and Frost Bank in late June under to so-called P3 Program, which stands for Public-Private Partnerships. P3 was passed by City Council in 2012 after a new state law went into effect in 2011 designed to spur urban core redevelopment via public-private partnerships.
Weston Urban was founded in 2012 by Rackspace Co-Founder, Chairman and CEO Graham Weston and former Rackspace Vice President of Real Estate and now Weston Urban CEO Randy Smith with the aim of accelerating downtown redevelopment and improving San Antonio’s national profile as a destination city for young professionals and their families.
Under the broad outlines of the Weston Urban-Frost Bank proposal, a three-way swap of properties would occur among the parties. The City would acquire the existing, 22-story Frost Bank Tower and 732-unit parking garage, allowing it to consolidate more than, 1,100 employees now working at five different leased sites at an annual cost of $3.4 million in rents. The City would pay for the Frost Bank properties by conveying five other properties to Weston Urban for redevelopment.
Weston Urban, in turn, would develop the first new downtown office tower in 25 years, consisting of 400,000 square feet of office space. No height for the tower is provided in the document, but the nearby Weston Centre averages 14,000 sq. ft. per floor, which would put the new tower at 25 stories. Renderings provided in the document show a blue rectangular volume situated on the city skyline from various vantage points.
Frost’s new corporate headquarters would occupy 250,000 sq. ft, and the remaining 150,000 sq. ft. would be offered by Weston Urban at market rate. The tower would be built on the present site of the Frost Bank Motor Bank and adjacent parking lot on the square block bounded by Houston, North Flores, Travis, and Camaron Streets.
“Weston Urban and Frost intend to design the New Tower in a manner that will symbolize Frost’s long-standing heritage in San Antonio as well as San Antonio’s rising economic prominence,” the document states. “The New Tower will also deliver modern Class A office space downtown, which is essential to recruiting additional corporate employers to the City’s urban core.”
Frost Bank was founded in San Antonio by T.C. Frost in 1868, and currently has 1,150 employees based downtown, some of whom work in the historic Rand Building on East Houston Street, which Weston Urban acquired from Frost last year and will take complete control of for renovations in 2015.
Frost is the largest Texas-based bank operating exclusively within the state and has $26.5 billion in assets. It has 4,000 employees statewide and occupies modern office towers in Austin and Houston and will move into a new office tower now under construction in Dallas.
The new Weston Urban tower will assure that Frost remains downtown. With the planned H-E-B corporate campus expansion south of Cesar Chavez Boulevard, two of San Antonio’s iconic business names and major employers have made long-term commitments to remain downtown.
Both the City and Frost Bank will convey properties to Weston Urban. Frost would convey its drive-in bank and parking lot and the undeveloped green space just north of its current tower. That green space would become a new Weston Urban-owned and maintained private park, “an outdoor gathering space” with public access except during private events.
The city would convey the Municipal Plaza Building on Main Plaza to Weston Urban, but continue to occupy ground floor City Council chambers and the rooms used for B Session meetings. An underground tunnel connects the current Frost Bank tower to the Municipal Plaza Building, which would serve as a convenient walkway for employees moving between City facilities.
Weston Urban would acquire the Municipal Plaza Building; the historic Continental Hotel on West Commerce Street and its rear parking lot, which now houses Metro Health; the property located along the east side of Main Street between Houston and Travis Streets; the parking lot located along Pecan Street, at the southwest corner of its intersection with Flores Street; and the former San Fernando Gym at 319 W. Travis Street.
Presumably, the three-way property swap and the rents it would save over a stipulated period would add up to a revenue-neutral transaction for the City, although the Weston Urban-Frost Bank document does not explicitly guarantee that in its summary of the proposed deal. With pending appraisals of some of the properties and blacked out financial data, it’s impossible to make an independent assessment at this time.
The various parties will agree to leasebacks, according to the proposal, during the period of time after a Comprehensive Development Agreement is signed and the new Frost Bank Tower is completed and it vacates its current tower. Weston Urban’s Smith previously said that ground could be broken on the new tower by early 2016 and construction completed by August 2018, 48 months from the time the City received the detailed proposal.
Redevelopment of the city properties by Weston Urban could occur by the end of 2020.
The 71-page document also makes clear that Weston Urban’s downtown development ambitions extend beyond the current proposal as it strives to create a downtown live-work environment more conducive to the recruitment and retention of Millennial generation young professionals. The document cites the redevelopment of the Rand Building’s seventh floor, which now houses Geekdom, Graham Weston’s nationally-recognized tech incubator and co-working space, as an example of the kind of urban development Weston Urban hopes to see proliferate throughout the downtown.
The document also contains extensive biographical material on the Weston Urban team, the Frost Bank leadership, and its lists Alamo Architects and Pape-Dawson Engineers as the firms working closely with Weston Urban on this and other downtown projects. Weston Urban states its intention to solicit proposals for the new tower design from a select number of outside architecture firms, but has not started that process while the proposal is still under City consideration.