by Jan Buchholz – Senior Staff Writer, Austin Business Journal
The intersection of 12th and Chicon Streets was infamous some seven years ago for being the center of Austin’s illicit drug market. The drug trading spun off other criminal activity — prostitution, burglary and assault. The neighborhood’s decline was heartbreaking to many who remember the area as the nexus for Austin’s African-American community.
During the past few years civic activists, Austin Police Department and various nonprofits have stepped in to reclaim the East Austin neighborhood. The rapid gentrification of the east side and the associated private investment of millions of real estate dollars nearby has translated into major improvements in an area just five minutes from the Texas Capitol.
Now a major mixed-use, mixed-income project with residential condos and storefronts is headed toward completion at that notorious crossroads. The Chicon, a development partnership of the Chestnut Neighborhood Revitalization Corp. and Pegasus Planning and Development, will deliver in the next few months.
Straddling both sides of the road at 1212 Chicon and 1301 Chicon, the $12 million project includes 43 residential for-sale units and eight commercial for-sale units.
Sean Garretson, president of Pegasus, also serves as the volunteer president for the Chestnut Neighborhood Revitalization Corp., a nonprofit entity created in 2000. It was set up to address the need for affordable housing in an area covering about a dozen blocks, roughly bounded by East 12th Street on the south and Martin Luther King Jr. Boulevard on the north, from Chicon Street east to the railroad tracks.
Garretson began the process for developing a project in the area about four years ago after purchasing a vacant lot from a minority owner at 14th and Chicon Streets. In time he cobbled together a few more properties and presented his idea for a mixed-use, mixed-income project to the Austin Housing Finance Corp., which is governed by the Austin City Council.
About $1 million from the affordable bond measure that was approved by voters in 2013 was earmarked for The Chicon, Garretson said.
“We used that to secure the land and do the design and due diligence,” he said.
Other financing was assembled from Frost Bank and the Texas State Affordable Housing Corp.
Although the process may sound streamlined and simple, it wasn’t.
There were title issues. A woman who owned a sliver of land among the assembled lots had died without heirs. Obtaining the land was time-consuming and fraught with delays.
Then Austin Energy said it would require the partnership to lower utility lines for a cost of $2 million — far more than the pro forma could bear. That crucial matter was revised to a more acceptable amount of improvements — about $125,000.
Originally the project was slated to be apartments. But the neighbors and the housing board preferred a homeownership model, ensuring occupants had a vested interest in the long-term viability of the area.
Garretson secured the services of Hatch + Ulland Owen Architects to design the project. That firm has a long history in the affordable housing sector. Big Red Dog, another Austin heavyweight, handled the engineering. Bartlett-Cocke, a versatile general contractor with a growing Austin presence, is the builder.
Roland Galang, principal with Skout Real Estate, to sell the retail space — about 6,600 square feet in eight spaces with some additional commercial that could be added later. So far, four spaces have been sold to Greater Good Coffee (576 square feet); Paws on Chicon (642 square feet); Structure Texas (592 square feet); and Salon Chicon (629 square feet).
Galang said he’s had no difficulty finding interested parties. The challenge is finding just the right mix for the project and the neighborhood as a whole.
“We’ve actually said no to some parties like a jazz club that we thought would be too noisy and out-of-state investors, who don’t know the neighborhood,” Galang said.
The Chestnut Neighborhood Revitalization Board makes the final decision about the retail buyers. That group is eagerly looking for just the right restaurant operator for a 1,400-square-foot space on the corner of 13th and Chicon.
“This area has been absent a good restaurant for a long time,” Garretson said.
Galang is confident they’ll find the right eatery.
He’s leveraging his knowledge and synergies across East Austin. Currently Skout is repping the Next Door Creative Offices at 1224 E. 12th St.; a creative office and retail project next door to Hillside Farmacy at 1211 E. 11th St.; and a similarly formatted mixed-use project at 1701 Martin Luther King Boulevard. That submarket savvy is what sold Garretson on Skout.
“I’m really impressed with how they handle marketing events,” Garretson said.