UT System May Construct $100 Million Austin Office

UT Board of Regents Chairman Gene Powell asks the Board to support Chancellor Dr. Franciso Cigarroa at their Austin meeting on May 12, 2011.
UT Board of Regents Chairman Gene Powell asks the Board to support Chancellor Dr. Franciso Cigarroa at their Austin meeting on May 12, 2011.

The University of Texas System Board of Regents will meet in Tyler this week and consider, among many things, whether to approve the construction of a system office building in downtown Austin that is projected to cost $102,417,000.

The UT System's downtown Austin offices are currently spread across five aging buildings — the oldest has been around for more than 130 years — with mounting maintenance costs. Officials determined that a change was in order. They decided that the best option would be to construct a 16-story building comprising 258,500 square feet of office space and garage capacity for more than 650 vehicles in a spot — close to the state Capitol and the University of Texas at Austin — where two of their current buildings sit.

Pending approval by the board, the new facility is expected to house more than 700 workers, including system employees and those of retail and commercial tenants.

In an interview Monday, Scott Kelley, the system's executive vice chancellor for business affairs, seemed sensitive to the way this news might be perceived by some who have been given the impression that money is hard to come by in higher education, and particularly in Austin, where voters just approved a tax hike to support a new medical school at UT-Austin.

Kelley noted that the system has committed millions to the medical school over the coming years and that the need for the new office is actually a product of belt-tightening. "We're doing this actually to save money," he said. "It is part of the fact that we are tight."

Compared with the cost of maintaining and inhabiting its current  facilities, and factoring in revenue derived from leasing some of their current space, he said the construction of a single building is projected to save the system around $60 million or more over the next three decades. The plans and projections prepared by the system's real estate staff were reviewed by J.P. Morgan, who Kelley said felt they were actually conservative in their estimates.

"We would be fiscally irresponsible, candidly, to not move forward," he said.

The proposal, as prepared for the regents' consideration, calls for applying those savings to student success initiatives, though precisely what those initiatives will be has yet to be determined.

While the new facility is expected to be nicer than the system's current homes and to incorporate the latest technology, Kelley promised, "We're not going to be opulent."

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