Feb. 20-21 TRS Board Meeting Highlights
Investment Staff Likely to Stay Put for Now
TRS Retreats on Office Space Lease
TRS board members unanimously voted (webcast) to backtrack on the system’s once-firm, but highly controversial commitment to lease, for 10 years, three floors of
Instead, the system plans to keep, for now, the investment staff where they are currently housed (since 2009) in another building in downtown Austin — at 816 Congress Avenue.
A publicly revealed portion of the Indeed Tower lease agreement requires TRS to make monthly “base rent” payments of $326,200.88, with periodic increases after that to a high of $383,391.94 for the final 12 months of the 10-year lease.
Sublease
For all this to happen, the system will have to find a tenant or tenants to sublease the 100,000 square feet the TRS had committed to when it signed the Indeed Tower lease in 2019, at what system officials said was below-market, preconstruction rates for the building, which is expected to be completed next year.
This shouldn’t be too much of a problem, knowledgeable developers contend, due to the immense hunger for Class A office space in downtown Austin.
At the same time, the TRS is entering into negotiations to extend, by at least seven years, its lease for the current 816 Congress Avenue office space for the investment staff. The current lease ends in March 2021.
Staff said the reason that the system initially wanted to move its investment staff from its current location at 816 Congress Avenue to the Indeed Tower was because at the time the Indeed Tower lease was signed, there was no more room to expand at the Congress Avenue location to adequately house the system’s growing investment staff.
The Situation Has Changed
But, the situation has changed since then. Due to other tenants moving out of the Congress Avenue building, the system has identified additional space that could be utilized for the investment staff, the board was told.
With everything considered — subleasing the Indeed Tower space and keeping the investment staff at 816 Congress Avenue for an additional seven years — the TRS could realize a projected net savings of $9.1 million, increasing to a projected net savings of $10.6 million if the Congress Avenue building lease is increased to 10 years, according to background info presented to the board.
The total rent for the entire, expanded Congress Avenue space would be $296,000 monthly compared to more than $326,000 at the Indeed Tower.
More than 3,500 Comments
System officials reported being aware of more than 3,500 (presumably negative) comments from active and retired TRS members and the public — on various Facebook pages and in comments to the media, to the retired teachers’ association and to the TRS itself — about the Indeed Tower lease, when news of the leasing costs was publicly revealed in January, and a dozen legislators also sent letters of concern to the system about the lease.
“Shameful”
As one TRS retiree put it: “It is shameful that our money is spent for the luxury of those who are entrusted with our future while retired teachers must go without what they deserve. Needless to say, we are all furious. Do something about it.”
- Note: At press time (Feb. 25), the Senate Finance Committee was holding a hearing on a charge by Lt. Gov. Dan Patrick to examine the TRS’ long-term facility plans and to specifically review the facility space costs of the system’s investment management division.
A House committee will also examine TRS’ long-term space planning at a March 9 hearing.
The Old Austin Airport
Meanwhile, still tentative plans are taking shape to sell the current TRS main headquarters, consisting of two very large buildings that take up an entire block fairly close to the Capitol.
The TRS anticipates building a new headquarters “campus” at a more convenient location (for employees and visitors), somewhere in Austin.
One top site reportedly being considered is on land just north of downtown at the old Austin Mueller airport — which has been transformed into a large multi-use development.
The TRS is also considering establishing regional offices in various parts of the state.
The board is expected to be briefed on the space planning progress at its next meeting on April 16-17.