City Offers $10 Million to County for Palm School

Eight months and an election later, the city has finally responded to Travis County's offer to sell the historic Palm School property at I-35 and Cesar Chavez, with a $10 million counterproposal.

In a letter to County Judge Sarah Eckhardt on Friday, Feb. 21, City Manager Spencer Cronk writes "The Palm School property represents an inspirational and essential piece of our shared community, and the public’s desire to find a future use of the property that both maintains public ownership and preserves its historic significance and cultural values has been made clear." The property, most recently used as offices by the county's Health and Human Services department, served as the primary school for Austin's Mexican American community nearby from 1892 to 1976.

Since its days as a school, the Palm School property has been nearly swallowed up by Austin's Downtown renaissance, and now sits in the midst of the Austin Convention Center, Waller Creek/Waterloo Greenway, and Rainey Street. That's made Latino leaders ever more keen to ensure the school is preserved and used to tell the story of Mexican American life in pre-gentrification Central and East Austin. The county officially agrees with this vision and placed restrictive covenants onto its own property, Eckhardt says, to guarantee Palm School's restoration and public use in perpetuity.

Even with those covenants, though, the county says its own appraisals indicate the Palm School property's market value is around five times what Cronk has offered ($53 million was the figure quoted with Eckhardt's initial offer in July). "But, it's a long-awaited response from the city, so that is some progress," Eckhardt told the Chronicle, reserving further comment until she can discuss the city's offer with the full Commissioners Court; Palm School will be on the court's March 3 agenda.

A $10 million offer is, however, a lot more than the zero dollars the city had intended to pay for Palm School, before Eckhardt raised the stakes in July with her offer of a land swap, exchanging Palm for a slew of city-controlled assets: the land underneath the Travis County Exposition Center, the former HealthSouth rehab hospital property on Red River, and 2 cents of Hotel Occupancy Tax capacity. The county subsequently, at the ballot box last November, secured voter approval to collect that HOT for renovations to the Expo Center, but the city has yet to relinquish it, and Eckhardt says the county may close down the Expo Center entirely if this impasse isn't resolved. Cronk's letter makes no mention of the Expo Center or of HealthSouth, which the city aims to use as a housing site.

At the same November 2019 election, the city fended off a citizen ballot initiative that would have hampered its own Convention Center expansion plans and redirected HOT collections to other purposes. That left intact the current allocation of 15% of the city's HOT revenue to historic preservation, which Cronk in his letter identifies as the source of the funds to acquire Palm School; he references "several potential funding sources" for its restoration and ongoing maintenance and operations.

This is a developing story; check for updates online and in next week's print edition.