Austin City Council Selects Aspen Heights Partners to Redevelop the Former HealthSouth Property in the City’s Innovation District

The Austin City Council approved Aspen Heights Partners’ proposal to redevelop the city-owned HealthSouth tract, a key step forward for a project that will bring 232 units of affordable housing and various other community benefits to Downtown Austin. The Austin-based developer, which will partner with Capital A Housing and The NHP Foundation on the development, has been selected to build the multi-tower, mixed-income complex after a master development agreement was approved in a Council meeting on Thursday, September 29.

Aspen Heights Partners, which has been working with Austin city officials and community stakeholders on plans for the redevelopment since 2020, enlisted Capital A Housing and The NHP Foundation for the project.

The mixed-use residential development will take up almost the entire block bounded by 12th Street, Red River, 13th Street, and Sabine Street, including all of the old HealthSouth hospital site. It will have two towers built atop a six-story podium with a 30,000-square-foot public plaza with green space, water features, an 18,000-square-foot local restaurant food-hall/business-incubator, and views of the Capitol, Waterloo Greenway, and downtown. There will also be an on-site music venue with below-market rate rents.

The residential towers will total 921 units, of which more than 25% will be affordable housing for low-income Austin families. The project also hosts an on-site childcare center provided at affordable tuition. The 232 affordable units will comprise approximately 18 of the south tower’s 27 floors, and will be developed, owned, and operated by NHP and Capital A.

The search for a developer began in November 2019, when the Council issued a Request for Proposal. In April 2020, Aspen’s proposal scored the highest among three other proposals. Bringing on Capital A Housing and the NHP Foundation to the project, and with plans for economic opportunity, sustainability, and affordable housing, the City Council approved negotiations to move forward.

While the City Council approved negotiations to proceed, they asked city staff to return when the final agreement is finished for final approval of the 99-year lease and development agreement. However, staffers expect to execute the development agreement by Spring 2023 so as not to postpone the project’s proposed delivery in Summer 2027.