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Fairmont developer ditches plan to buy historic downtown spot

Financier withdraws proposal for Palm School property amid city and county negotiations

Two-story light brown stucco building with portico and palm tree in front
The Palm School
By Larry D. Moore, licensed under Creative Commons

Austin’s Fairmont Hotel opened just over a year ago, but its (literal) connection to the Austin Convention Center and proximity to the historic Palm School—all located in a southeast downtown area that has seen intensive recent development—means that it is almost necessarily involved as current plans for those spaces move forward.

Fairmont Austin developer and financier Douglas Manchester appears to have jumped the gun on that front, though, entering the fray earlier in the week with an announcement that he planned to issue a letter of intent to purchase land around the Palm School for potential commercial development, according to a Monday Community Impact story. The property in question is located next to the Fairmont and does not include Palm Park, which is owned by the city.

A day later, Manchester sent Travis County commissioners a letter reading that he will not, in fact, be making an offer to buy the land, which, along with the Palm School building, is owned by the county. His intent, he wrote, was to work with commissioners to “offer a meaningful solution to ensure the Palm School’s long-term viability, while simultaneously helping taxpayers realize the maximum financial benefit from the site’s surrounding land.”

Possible Palm School plans

Opened in 1892, the Palm School served a primarily Latino elementary-aged students for 84 years prior to its closure in 1976. County health services have occupied the building for the past several years but plan to move its offices there by late 2021.

Recent momentum to rebuild and expand the Austin Convention Center, which is across the street from both the hotel and the former school, focused public attention on the Palm School property. Austin City Council members have asked the county to consider selling the property to the city, not selling it all, or donating it as a public park. The Palm School building is a designated city of Austin historic landmark.

For its part, the county wants to get the most benefit out of its valuable real estate, which was recently appraised at $53 million, while making sure its cultural and physical history is maintained. The Commissioners Court last month approved restrictive covenants that would help protect and preserve the property’s legacy and public use. They require that the building be preserved in perpetuity be designated a state historic landmark. A buyer would need to restore the school within three years of purchase, and no new construction could occur until restoration is completed. In addition, 80% of the space on the property that can be occupied must be dedicated to cultural heritage or community use, and the main area must be open and available to the public.

An area on the southern part of the property that includes the probable footprint of the original school is marked for preservation, and a strip of land that connects the building to the Waller Creek trail would also be preserved. The remaining 40 percent of the property—presumably included in the land Manchester announced his non-intent to purchase—could be developed for other purposes.

City-county land swap proposed

In addition to approving restrictive covenants, the county has proposed a land swap with the city, Community Impact reported Monday. In a July 4 letter to the Austin City Council and manager, County Judge Sarah Eckhardt that the county swap ownership of Palm School for that of the former HealthSouth physical rehabilitation facility on Red River Street just south of University Medical Center Brackenridge; the Travis County Exposition Center; and a portion of unclaimed local hotel occupancy tax that is already available to the county.