The Teacher Retirement System of Texas has signed a lease for a new building for its investment staff, but local officials say the retirement system is paying too much.
The investment staff is in the process of moving from its downtown Austin digs into a slick new 36-story building called the Indeed Tower.
TRS will pay more than $326,000 per month for three floors, according to the terms of its lease, after paying nothing for the first four months, a rental rate schedule obtained by the website for local news television station KXAN shows. This new 100,000 square foot office space will house the investment team’s 180 members, who manage the system’s $160 billion.
According to TRS, the price of the new space is worth it: It will help the retirement system attract and retain talent.
“Appropriate workspace remains an important factor for the investment management division to continue to recruit and retain top investment talent in a dynamic, professional workplace,” said Brian Guthrie, executive director of TRS, in a statement sent via email.
Guthrie said in the January statement that the agency as a whole is looking to move to more appropriate long-term space, as the team has outgrown its 1000 Red River Street office. The investment team was already moved out of that office and into 816 Congress Avenue, which, according to Guthrie, has also become too small for the team.
“The goal is to develop a plan to relocate to a new HQ campus outside of Austin’s central business district,” according to Rob Maxwell, TRS of Texas investments communications spokesperson.Guthrie said that TRS was able to negotiate rates early in the construction process of Indeed Tower, which means that the rental rates will be comparable to those of its current office space, December 2019 TRS meeting minutes show.
But state officials aren’t convinced. Tweeted the state’s lieutenant governor, Dan Patrick, on January 29, “Retired teachers are right to be upset with this outrageous rent and I stand with them.”
[II Deep Dive: Texas Teachers Increases Exposure to Private Markets]
State legislators have gotten involved, requesting hearings on the matter.
“TRS is in breach of its constitutional requirement to manage assets held in the trust by any principles of common sense,” according to a January 29 letter from Texas State Representative Drew Springer to Rep. Jim Murphy, Chairman of the House pensions, investments, and financial services committee, and Rep. Giovanni Capriglione, chairman of the House Appropriations Committee, which oversees the state’s budget and spending.
Springer’s letter sought oversight hearings on the lease. And he got them: An agenda for the state Senate Finance Committee shows that it plans to take up the matter on February 25 and will “specifically review the facility space costs of the Investment Management Division.”