AUSTIN—Tony Villegas grew up in the South First Street area in a bungalow at Gibson Street and Bouldin Avenue where, more than 50 years later, his brother Lawrence still lives.
The Austin American-Statesman reports just down the block, at South First and Gibson, sits El Mercado restaurant, which Tony and his wife at the time, Denise Villegas, founded in 1985. Its colorful outdoor sign bills the restaurant as "the Gateway to South Austin." Though divorced, the two still own the restaurant together, along with family members.
Tony Villegas, 63, recalls when South First Street was mainly a residential corridor, with only a few businesses mixed in.
In those days, downtown was where you went shopping and South Austin was considered rural.
"If you lived south of the river, you were kind of like a hick or country folk," he said.
Through the years, South First has seen several stages of evolution. It has morphed into a predominantly commercial corridor that runs through the Bouldin Creek neighborhood, which stretches from south of Lady Bird Lake to Oltorf Street. Long home to a broad array of neighborhood services such as locksmiths, boot repair and real estate offices, the businesses have expanded to include a quirky mix of boutiques, vintage clothing stores, art galleries, auto repair shops and restaurants.
Now, the area is undergoing its latest—and most intense—surge of new development, one that is transforming South First with new luxury condominiums and mixed-use projects.
The latest wave of development landed South First on Money magazine's list of the coolest neighborhoods in the U.S. last year. But the development boom has added to the area's long-standing traffic issues, raising questions about whether South First is equipped to handle the growth, who will pay for road and traffic improvements, and how the new development will change the neighborhood's character.
With the city's goal of steering dense, vertical, mixed-use development along major city roads, South First to some degree mirrors the changes that have transformed its larger counterparts—South Congress Avenue and South Lamar Boulevard—into higher-trafficked, faster-paced hubs.
"I think people are starting to realize South Congress is done to a certain extent—it's so pricey and high dollar," Tony Villegas said. "South First is the next frontier."
Along South First Street, cranes tower over two sites where local builder PSW Real Estate is building mixed-use projects, with more in the company's planning pipeline. Another landowner, Mario Rubio, plans to replace a small food truck court with a five-story mixed-use project.
And just south of downtown, the street's tallest project yet is coming: a 15-story tower called RiverSouth that is set to rise on land that is currently home to a Hooters restaurant. RiverSouth will have about 330,000 square feet of office space, about 18,000 square feet of retail space and underground parking with 843 parking spaces.
Among those feeling the impact of South First redevelopment are the residents of the Bouldin Creek neighborhood, which lies between South Congress Avenue to the east and South Lamar Boulevard to the west. Most of the Bouldin Creek neighborhood's original growth happened in the 1920s and 1930s, according to the Bouldin Creek Neighborhood Association's website.
At that time, before postwar damming and flood control, land in the area was inexpensive because frequent Colorado River flooding often left residents and businesses cut off from downtown, according to the neighborhood association.
In recent years, many of the original small bungalows have been demolished or relocated to make way for larger homes in Bouldin Creek and mixed-use projects along the South First corridor.
A driving force behind the latest wave of development is PSW, which focuses on redeveloping parcels within urban areas. The firm has two mixed-use projects underway—at 900 South First St. across from the Texas School for the Deaf, and 1600 South First St., the former site of Angel Funeral Home.
PSW has plans for two projects—at 2001 South First, currently home to PSW's Austin headquarters, and another in the 1100 block of South First, where small houses are currently being moved to make way for development
The firm cobbled together the site at 900 South First St. by purchasing six parcels of land owned by the Quadlander family, which had used it as a family homestead of sorts, with several homes built in the 1930s through the 1950s.
Today, the 4.5-acre property is being transformed into a four-story project including 63 condos ranging in price from 500-square-foot units starting at $305,000 to 1,890-square-foot units priced at $1.025 million. The project—being designed around heritage live oaks with a central plaza and three levels of underground parking—will feature retail and commercial services space on the first level.
Behind the condos, PSW is building Bouldin Court, which consists of 23 detached single-family homes and seven townhomes.
At the former Angel Funeral Home site at South First and Monroe streets, PSW is building a four-story building with 59 condos, 23,000 square feet of ground-floor commercial space and a three-story, below-ground parking garage.
"We're really excited about the South First corridor developing in a way that makes Bouldin Creek neighborhood more walkable than it's been, adding amenities, additional restaurants, grocery, retail and office space that allows people to work in the neighborhood," said Ross Wilson, PSW Austin/San Antonio divisional president.
Wilson, who lives with his family in the Bouldin Creek neighborhood, acknowledged the challenges in making South First and its many cracked, narrow and difficult-to-negotiate sidewalks more pedestrian-friendly. PSW's projects are set back from the street with the aim of creating gathering places, he said.
"We want to create a pedestrian hub where you can walk and sit and mingle and not feel like you're on the racetrack," he said.
As far as the housing planned for the area, Austin City Council member Kathie Tovo said she would like to see more diverse offerings.
"Recent multifamily developments or redevelopments in the central city have consisted primarily of expensive one-bedroom and efficiency apartments or condominiums," said Tovo, whose district includes the Bouldin Creek area. "As tracts along South First redevelop as larger, mixed-use developments, I hope the residential units will be designed with multiple bedrooms and the other amenities that will attract families with children, and that a significant percentage will be income-restricted. The challenges in the years ahead will be finding the points of leverage to ensure these outcomes."
Tovo also said infrastructure improvements should be a priority.
But Jeff Jack, a longtime neighborhood activist and former member of the city's Planning Commission, questions who is going to pay for them.
Over time, Jack said, the cost of road, sidewalk, bike lane and other improvements has shifted from private developers "who financially benefit the most from our growth" to taxpayers, further pushing up property taxes. Developers' costs are now limited to their 'pro rata' share, he said, "which is far less than the total cost for such improvements. Those costs, and those from other commercial projects that developers should be paying, can now be offloaded to the $720 million transportation bond package voters approved in 2017."
Change isn't happening everywhere on South First. Some businesses—auto body shops, warehouses and workshops—are still holding their ground amid the new projects, and some property owners like Kim Stearns are in no rush to redevelop.
For more than a decade, her family has leased their property at 1311 South First to a mix of food trailers, including Torchy's Tacos. The land has been in Stearns' family since the 1960s, when her parents operated their business Longhorn Disposable Service and later leased it to various businesses, including car repair and paint shops.
The idea for food trailers came about when Torchy's approached the family about using the site in 2006, Stearns said. Its business long since transformed into a brick-and-mortar chain, Torchy's closed its operation there last year, but Stearns and her family plan to keep the food trailer park
"We're trying to hang onto it for a while," she said. "I just hate to let it go to be a high-rise style thing. This is kind of old Austin, and we would really like to keep it that way."
Tony and Denise Villegas said it's only a matter of time until an offer comes in for El Mercado that they can't refuse. They said rising property taxes, along with rents and labor costs, are making it harder and harder for mom-and-pop businesses, theirs included, to hang on.
"If things keep going the way they're going, I can see myself having to get out in three or four years," Tony Villegas said.
Tony Villegas said El Mercado's property tax bill has jumped to $79,000 currently from $37,000 a year in 2014, for a restaurant that takes in about $1 million a year in revenue. (His father purchased two of the parcels for El Mercado's site in 1970 for $7,000.)
"My first love is family, and my second is working," Tony Villegas said. "I love this business, but at some point, I have to look at it and go, 'Do I lose my tail?' It's hard to make a living selling enough enchiladas for $10.99 and tacos for $3 and a bowl of soup or $6.50. Our margins are getting less and less and less."
Denise Villegas said a prominent commercial real estate broker told her Austin property is in such demand that "he doesn't even put a price
"People are throwing money at people for their property," Denise Villegas said. "Someone's going to offer us a lot of money, and we'll say, 'We're out.' That's the sad part of gentrification."
As older properties get redeveloped, more of South First Street's traditional neighborhood services likely will relocate in the years to come, Tovo said.
"But right now the corridor retains an eclectic mix of independent businesses, new and old," Tovo said. "And I hope those businesses will survive and thrive, because having neighborhood-level retail close to concentrations of residents cuts down on driving and is key to our goal of creating 'complete communities.'"
Cory Walton is a longtime Bouldin Creek neighborhood resident and immediate past president of the Bouldin Creek Neighborhood Association.
Walton said for the most part, the city-approved neighborhood plan to guide growth in the area "has helped us work with developers and the city" to keep redevelopment compatible with the neighborhood, and he expects that to remain the case. Walton said he was speaking only for himself, and not on behalf of the neighborhood association.
"Most Bouldinites acknowledge and anticipate continued infill and redevelopment on commercial corridors like South First Street, and on adjacent residential streets as well," Walton said. "If city planners uphold the progressive planning they've already done with residents, Bouldin can coexist with redevelopment going
Walton provided a list of numerous projects where the neighborhood's collaborative efforts yielded community benefits, including PSW's projects at 900 and 1600 South First.
At 1600 South First, for instance, the negotiated solution resulted in "several important improvements to the project," Walton said. They included an on-site employee parking requirement; a traffic light at Monroe and South First "so residents can continue to get in and out of their own neighborhood" and five affordable housing units the city did not require, for a 12.4 percent overall increase in residential density.
Even with the collaboration, the neighborhood plan and active residents "can't completely mitigate the negative impacts of Austin's rapid growth and redevelopment," Walton said.
"Traffic on South First Street during morning and afternoon rush hours is horrendous, and it will only get worse, as the city has no comprehensive traffic plan," Walton said.
Still, some residents, like Tony Villegas, say they are not opposed to the way the South First area is changing and realize it's just part of living in Austin. Villegas said Austin as a whole "is overwhelmed with the growth," and city leaders are "doing the best they can" to navigate it.
"That's just progress," Villegas said. "I understand that."