Keep government employees downtown

The Texas Facilities Commission is proposing a massive office complex somewhere along Texas 130 east of town.  It envisions a model "company town" that would direct growth to the city's preferred growth corridor.   The massive complex would have room for 9,000 employees -- thousands of whom would be relocated from downtown Austin.   

This would be disastrous for downtown Austin.

As the Commission correctly notes, the area surrounding the Capitol is cluttered with low-rise state office buildings and parking garages; as an urban environment, it's a wasteland.  The plan also would put valuable downtown Austin properties on the tax rolls for the city, county and school district.

But emptying thousands of employees out of downtown Austin is no solution.  A vibrant downtown needs lots of people.  Quality buildings matter, of course, but they are useless if they are empty.   And while easing congestion is laudable, turning a large chunk of downtown into a ghost town is too steep a price to pay.   Indeed, some congestion is healthy; roads are lightly traveled when no one wants to go where they lead.

The Commission has a legitimate interest in reducing the rent it pays for downtown office space.  Putting valuable state property back on the tax rolls would be great for the city, county and schools.  Anyone who cares about the urban environment would like to see us redevelop the clunky office buildings and street-killing garages surrounding the Capitol.  But Austin simply does not have enough demand for downtown office space to replace thousands of government employees.

Here's a better solution:  The state should consolidate its employees and agencies downtown and sell off its parking garages and low-rise office buildings to developers.  The developers would redevelop the existing structures and lease office space back to the government at cheap rates.  Redevelopment actually would be feasible with a huge, guaranteed base of tenants.

Everyone would benefit:

1.  The state government would reap the profits from selling under-productive properties, would get cheap office space with room to expand, and would be relieved of the expense and hassle of managing state-owned properties.  The government would also enjoy the synergies of having its employees concentrated in a small area.

2.  The city, county and schools would see valuable properties added to the tax rolls.

3.  Downtown Austin would benefit from the influx of thousands of new employees and from the inevitable growth in state government.  And this plan would revitalize an ugly, sterile quarter of downtown which, incidentally, functions as a barrier between pedestrian-friendly UT and pedestrian-friendly Congress Avenue.

The only advantage I see to a complex on SH 130 is that it would spark growth in the preferred growth corridor.  Decimating a large chunk of downtown is not worth it. 

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Comments

[Paul Young]

But...but...but...East Austin is disadvantaged/low income/needs growth/etc!

Agree that the swath of State buildings around the Cap is a ghost town. I'd personally love to see those remade into some kind of mixed use with retail on the bottom, offices in the middle and possibly condos on top. Think of the Cap/UT tower views!

I question your plan though, especially this part: "The developers would redevelop the existing structures and lease office space back to the government at cheap rates."

How do you figure? Let me get this straight, the gov't buildings that aren't subject to tax rates and don't currently have to pay rent, sell of their buildings to developers who now have to pay taxes on them (high because of the great location) and they're supposed to turn around and re-lease the space to the gov't cheaply? As a developer, where do I sign up! Seriously, either you mandate the cheap rents as part of the transfer, meaning you don't get anyone to agree b/c rent control is bad for business, or you allow market rents which will raise the cost of our already bloated gov't. Not that building a sprawling new complex East of the city would be cheaper...

Other issues: Gov't buildings have requirements for codes these days to make them more protected, etc in the wake of terrorism - so that will add cost to any redevelopment. Also are these new developers supposed to knock down these state buildings for rework, or add on to them somehow? If they're building new then we have a shortage of space for gov't workers while that is going on.

Another problem: "...the inevitable growth in state government..." I am assuming that you are a liberal because a libertarian or true conservative (e.g. not Bush) would never make that statement. I choose not to see gov't growth as inevitable, and to the extent that it is these days is indicative of a failure on the part of the people to reign it in. Or success on the part of the entrenched parties in creating an ever growing, all consuming tax monster.

Here's an alternative plan: let's set a stretch goal to cut spending in Texas by 30%. Yes, that means eliminating headcount and services, and reigning in other services. Without all the headcount, the Gov't won't need the office space, and can stay where they are. Then they can sell off or lease some of these valuable buildings and parking garages at a profit and put that money back into general revenue.

[Tim]

I think it's probably a good idea in the long term, but it's going to be a delicate balance. If we look at the longterm outlook for Austin, everything within the new loop is going to be "city". These little pockets they're developing now like Braker, Mueller, etc. These are just preludes to what's eventually going to happen. I think the question is when will downtown Austin stretch from the current downtown all the way out to the fringes like SH130.

I think we have to wait on this until downtown is so built up that we're seeing overflow into the major arterials. Once we start seeing developers deciding that it's worth the pain to deal with the neighborhoods associations to build high-rises (without lake views) on South Lamar, we'll know that the value of downtown real estate is enough to sustain that sort of blow.

[M1EK]

Tim, I don't see that kind of future in the cards - I see growth slowing down drastically as the economy settles in, and the long-term future for us is pretty bleak (as a country, not necessarily as a region), thanks to the decisions we've made mostly over the last 8 years with regards to energy. (Fuel prices are low, temporarily, thanks to what's practically a depression in waiting - they will not stay there long).

We would have had to have spent a lot of money a lot differently the last decade or two to have any hope of being able to afford a lot of quality growth down the road.

Even with smarter decisions having been made, downtown stretching out to SH130 seems impossible (for any reasonable definition of downtown) - that would require several times Manhattan here even if we're calling downtown just midrises.

[mktiv]

Better than selling off downtown land, the state should enter into long (99 year) leases and still control the property but reap the rewards of leasing. There is precedence for this- Central Market, the Heart Hospital and the triangle are all sitting on land owned by the state but leased to developers in long-term deals.

[AC]

Paul, the idea is to demolish low-density buildings or parking garages, replace them with denser uses, and then charge market rates to the private tenants. If the government insists on cheap, long-term leases, it will get less from a sale. If it wants market price for the property, it will have to give up cheap long-term leases (although developers sometimes subsidize large anchor tenants.) Or the deal could be structured as a long-term lease, as mktiv suggests; I don't think the precise structure matters that much.

It's a safe bet that state government will continue to grow. That's not an ideological prediction; it's just the way things are. (Maybe I'll post one of those vanity polls someday asking my readers to guess whether I'm liberal, conservative, libertarian or "other.")

I agree Tim that someday downtown might be able to weather such a blow. That day is many, many decades off, though, particularly if the state-owned property is put back into the development pool.

[Tim]

Yeah, I realized after I posted that my view of near future was more in the 20-30 year range whereas I think everyone else was thinking 5.

[Mike M]

As an immediate option - sell one of the buildings to the federales so they can avoid building that disaster of a new courthouse on the old Intel site.

[DSK]

I wonder if there's any compilation out there about what other states have done things like this? The main one I can think of firsthand is New York (west of downtown Albany, near the SUNY campus and Crossgates). It's difficult to say what the larger effects were in that case, because the area is such a disaster anyway. Also, NY didn't vacate downtown Albany completely, they also have the weird modernist Empire State Plaza there.

But IMHO, it's pretty much safe to say that Austin does *not* want its state offices to end up on the Albany pattern.