When UT-Austin benefactor George Washington Brackenridge donated 500 acres to the University of Texas in 1917, his plan was to make the tract a site for a new main campus. The idea never materialized, however, and because of its distance from the (onetime) 40 Acres, the UT System Board of Regents found the Brackenridge Tract's educational purposes few.
Meanwhile, like the city around it, its potential as a revenue source grew – and grew. And now the tune has changed. Regents and members of the Brackenridge Task Force speak no longer of "educational purposes" for the tract, instead of using the land to further the university's "mission." And that mission is becoming more capital-intensive by the year.
The direct cost of higher education has soared in recent years, thanks to rising utility and construction costs, layers of deferred maintenance, and the need to pay nationally competitive salaries. Yet state appropriations for UT grew by only 1.8% last year, lagging behind even the rate of inflation. "The university is starved for funding," said Kevin Hegarty, UT's vice president and chief financial officer. "We have to look at our assets and ask: Are they being put to the best uses?"
Pressure from above doesn't make matters easier, Hegarty added. In 2003, a rider in a state appropriations bill attempted to force UT and A&M to liquidate or redevelop their land holdings, he said. The rider never made it into the final bill, but the UT System got the hint – and shortly thereafter, administrators started pursuing ways to better utilize the land.
Hegarty, who served on the task force, said it's nearly impossible to fathom the kind of revenue the Brackenridge Tract could potentially generate, if developed. Situated on a picturesque stretch of land along Lake Austin Boulevard, the property would be a hot commodity in Austin's feverish real estate market. Half of the original 500-acre tract's remaining 345 acres is used for university purposes: a biological field lab and housing for graduate and married students. The other half is home to the Lions Municipal Golf Course, known as "Muny," along with a few retail establishments, the Oyster's Landing docks, some upscale apartments, and the Lower Colorado River Authority's offices.
Since the Brackenridge Development Agreement, which paved the way for development in 1989, the university has made almost a million dollars a year from commercial leases alone. But that's a fraction of what could be made if the whole tract is redeveloped. Almost a third of the lease revenue comes from 14 acres of development on what's called the Deep Eddy Tract and 2 acres leased to Safeway Inc. Most of those leases were signed in the late Eighties or early Nineties, so the tenants locked in bargain prices.
The city of Austin, which set a 32-year lease on Muny in 1987, got the sweetest deal: an annual rent of $345,000 for 141 acres, or $2,500 per acre. By contrast, Heidi's German Bakery (on the Deep Eddy Tract) pays about $28,000 for less than a sixth of an acre (about $180,000 per acre). The city has historically been low-rent: The original lease on the entire golf course, set in 1927, was $60 a year ($690 in inflation-adjusted dollars). And the city even failed to pay that for five decades, according to a 1972 report by regents then-Chairman Frank Erwin. The modest development on the Safeway and Deep Eddy tracts annually brings in $19,500 per acre. If the Muny tract were generating at least that much revenue, it would bring in $2.7 million a year. It isn't exactly an apples-to-apples comparison, according to a written statement from the UT System Real Estate Office. "There are a large number of variables that are considered in setting rental uses permitted by the lease, number of acres, responsibility for maintenance, etc." But still, the financial spread from city to small businesses is undeniably substantial.
The lease on Muny, however, doesn't expire until 2019, so if the regents want earlier redevelopment, their best bet would be to develop the Brackenridge Apartments, available for nonuniversity use in 2009 under the development agreement, and the Colorado Apartments, which became available in 1999. In its report to the board in October, the task force recommended the regents redevelop the apartments, reiterating that they don't represent the "highest and best use of the land" – a real estate term meaning, essentially, the most financial bang for the buck.
The hundreds of graduate and married students who live in the apartments beg to differ. At a November public hearing, students turned out to protest the task force's recommendation. Many pointed to the incalculable value of the apartments as a UT recruiting tool. Two students testified they had been considering going to Berkeley, but the lack of decent married-student housing was a deal-breaker.
Hegarty responded that redeveloping the site is simply the price of change: "Everyone wants things to change but not with respect to them." He added that the money generated from the land could pay for stipends and offset tuition raises. "Affordable housing for students doesn't have to be in the form of brick and mortar," Hegarty said. The students argue that stipends are a poor substitute for their current homes, which are safe, quiet, and provide a community that can't be had anywhere else.
The Brackenridge Field Lab – arguably the use on the tract that most directly conforms to Brackenridge's original intent – may not be safe from development, either. While the task force wasn't clear in saying the lab should go, the members weren't exactly convinced it should stay. The leadership of the lab and the School of Biology insists the lab remain. Moving it, they say, would destroy more than four decades of research. However, the task force's outside consultant, Peter Raven, said that with improvements, the lab could be reduced to 60 acres without compromising research.
It's too early to speculate what kind of development will take place on the tract, said Hegarty, adding that the specter of high-density development is being used as a scare tactic by those who oppose the project. "No one on the task force saw big-box development. If the university wanted to be irresponsible, it could do anything it wants. It could build a nuclear reactor there, but it's not going to."
Any development plans would still have to get the nod from the city. "There is a clear incentive to build more densely on this land," said Sheridan Titman of the McCombs School of Business, "but it is unlikely that they will get approval to do so."*
The next step is for the regents to select a master planner, sometime early next year. The board will discuss the report and the public response at its December meeting.
Oops! *The following correction ran in the December 14, 2007 issue: Last week in the article "UT's Brackenridge Tract," we reported, in error, that the master-planned multiuse development known as the Domain was developed on a tract owned by the UT System. Although UT does own nearby land (the Pickle Campus and smaller tracts), no UT land underlies the Domain, which was developed on land formerly owned by IBM. Also, the land was originally granted to UT in 1910, not (as we reported) in 1917.
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