$180 million project envisioned for Hill's Cafe site in South Austin

Dean Goodnight recalls working as a busboy at Hill's Cafe on South Congress Avenue when he was five years old.

That was 55 years ago.

Now, even though the family recently sold the 15-acre property at 4700 South Congress Ave. and a mixed-use development is planned for the site, Goodnight's ties to the property will remain.

His family has kept a financial stake in the land and the planned project, Goodnight said. He said the family intends to be involved as the site transforms with a project that proposes more than 600 apartments, along with retail and office space, a hotel — and potentially a new life for Hill's Cafe that could include a restaurant and live music venue like before.

Goodnight and the new owners/developers say they want to incorporate a revived iteration of Hill's Cafe to carry it into future generations. The restaurant and music venue, a landmark on South Congress for more than 70 years, has been closed since 2018. A previous mixed-use development planned for the site several years back never materialize.

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"We're still very bullish on South Austin, and as such that's why we're looking to stay involved with this project on South Congress and did not just cash out," Goodnight told the American-Statesman.

Mac Pike, chairman of the Austin-based Sutton Co., said his firm bought the 13.8-acre Hill's Cafe site in July, along with a hotel on the property, the Classic Inn, which sits on about one acre.

The planned development is being called the Hill's Cafe project for now. Pike said the two phases that are planned could amount to a $180 million project.

"We're hopeful that we can revive Hill's Cafe in some form or fashion, (although) we don't know what that's going to look like. Right now that's our goal," Pike told the Statesman.

Development in phases

Pike said the new Hill's Cafe development team plans to start construction on the first phase of the proposed project, which would consist of 400 apartments, by the middle of 2022.  He said the apartments will be on the project's west side, which backs up to tributary of Williamson Creek. 

The first units could open about 18 months after construction starts.

In the project's first phase, Pike said Sutton Co. is partnering with Dallas-based KOA Partners and New York City-based Atalaya Capital, which  Pike said is a capital partner in the general partnership. The developers have obtained a $13.7 million loan from Madison Realty Capital to purchase the site and start initial pre-development work, Pike said. The architect on the Hill's Cafe project is IBI Group.

The current management team will continue to operate the Classic Inn, although eventually both the hotel and Hill's Cafe will be demolished to make way for the new project, Pike said.

Pike said the site already has the necessary zoning, but both phases will need site development permits and other approvals from the city — a process that he said is in the works.

The zoning allows for up to 60 feet of multifamily and mixed-use development, Pike said. 

Pike said the first phase of apartments will have two buildings, stepping in height from three to five stories and wrapping around a parking garage, on about eight acres.

The development would have a second phase with 250 smaller "micro-unit" apartments; a building with 100,000 square feet of office space; a hotel with about 180 guest rooms; retail space; and ideally, a reincarnated Hill's Cafe and music venue.

The development is the latest planned for the emerging St. Elmo area of South Congress, south of Ben White Boulevard.

Austin-based real estate expert Charles Heimsath calls the area "certainly one of the emerging 'hot' submarkets," and it is seeing a surge of new projects, both proposed and under construction. Those include condos and apartments, restaurants, breweries,  music venues and other development.

"The St. Elmo area is absolutely booming," Pike said.

Tim Harrington, a senior vice president with Commercial Industrial Properties who represented the Sutton Co. in the purchase of the Hill's Cafe site, said he has known both the buyer and sellers for years, and has hopes for a project that would "keep some of the Austin feel," along the lines of the apartment development surrounding the legendary Broken Spoke music venue.

"We need to keep our music, our musicians, in town," Harrington said. "A great music venue here (at the Hill's Cafe site) would be fantastic."

Hill's Cafe's history

Dean Goodnight said Hill's Cafe opened in 1947, and the adjoining motel even earlier, in 1941. In those days, South Congress was known as the Austin-San Antonio highway, Goodnight said, before Interstate 35 was built.

Goodnight said his great uncle, Merle Goodnight, bought some of the initial acreage for where Hill's Cafe eventually would be located in the 1930s, after he wearied of his service station at Congress and Riverside flooding and moved it farther south on Congress.

"That's how he landed where we are now," Dean Goodnight said.

The hotel on the property was originally called the Goodnight Court, and later the Goodnight Motel and eventually the Classic Inn. The motel hasn't been owned by the Goodnight family since 1965, Dean Goodnight said.

The cafe shared a common wall with the lobby of the motel, which it still does to this day.

The cafe opened in 1947 as a small diner under the original operator, Sam Hill (hence the Hill's Cafe name). Dean Goodnight said his great uncle and Sam Hill were partners from 1947 to 1957.

When Hill decided to get out of the restaurant business, Dean Goodnight said his father, Charlie Goodnight, bought the restaurant and the business. Dean Goodnight said his father continued to expand the cafe over the years,  growing it into one of the largest independently owned and operated restaurants in the Austin area in the 1960s and 1970s.

In the mid- to late-1980s, the restaurant would hit difficult times as food tastes changed and  "big steaks" fell out of favor, Dean Goodnight said. The cafe got a second life around 2000, when Austin radio personality Bob Cole and his partners stepped in, and with that came outside dining and a music venue, Dean Goodnight said.

Now, Goodnight says he is hopeful the planned development could bring a new life to Hill's Cafe.

"I think it would be a plus to what is ultimately developed around it," he said, adding that the Goodnight family "is not going anywhere. We will continue to be involved in the project as it goes forward."