Statesman seeks court order for TRS to comply with open-records ruling

The Teacher Retirement System of Texas has continued to conceal portions of its $487,000-a-month office lease in the Indeed Tower high-rise under construction in downtown Austin, a year after the American-Statesman first asked for the unredacted document and despite a recent opinion from Texas Attorney General Ken Paxton’s office that it must comply.

On Wednesday, the Statesman sought a court order compelling the taxpayer-funded state agency to abide by the attorney general’s ruling and release what advocates for open government contend is basic public information.

"One of the fundamental tenets of good government is that the people must be able to see how their money is spent,” Statesman Executive Editor John Bridges said. “Too often in Texas, lawmakers and courts have found ways to weaken our Public Information Act and put the interests of businesses over those of the people. The TRS lease is one of those cases."

Bridges noted that the newspaper has been successful over the past three years in pursuing open-records cases against the city of Austin, the University of Texas and the Texas Department of Family and Protective Services, “and we look forward to prevailing in this one."

"We all should demand good-faith compliance from our public institutions when it comes to open-records laws,“ he said. ”If these agencies truly acted in the people's interests, we would not be forced to go to court to get access to the public's records.“

Officials with the Teacher Retirement System, which oversees benefits for about 1.6 million Texas teachers and school employees, provided virtually no financial information about the Indeed Tower lease when they announced it in May 2019. They subsequently said they received a competitive lease rate from its developer — a Trammell Crow-affiliated company called TC Austin Block 71 LLC — because they committed early to be a tenant in the building, but they wouldn’t disclose the terms.

Since then, the Statesman’s reporting has revealed that the retirement system has a significant ownership position in the 36-story high-rise going up on West Sixth Street, through a $230 million investment in a partnership that financed TC Austin Block 71 and has a stake in it.

In addition, the Statesman pushed the state agency to divulge the base lease rates it has agreed to pay — which it did in January, seven months after the newspaper first asked for complete financial information. More recently, the agency also confirmed the additional rate it will pay initially for its portion of the building’s estimated operating expenses.

Combined, those two rates add up to $57.50 per square foot to start, equating to about $487,000 a month for the retirement system’s roughly 100,000 square feet — or $5.8 million annually, a sum that will climb over the 10-year duration of the lease.

The price is well above the amounts paid by most state agencies to rent space in Austin, although local real estate experts have said it’s below average for top-tier offices downtown.

Despite disclosing those figures, the retirement system still has declined to provide the Statesman with an unredacted copy of the lease, even though Paxton’s office said April 22 that it must do so because the document isn’t exempt from disclosure under the state’s Public Information Act.

It’s unclear what information is in the redacted portions of the lease supplied to the Statesman. All but a couple of paragraphs of six full pages under the heading “Base Rent and Operating Expenses” are blank, in addition to a number of other redactions.

Retirement system officials wouldn’t comment on the issue Wednesday or on the Statesman’s legal action.

About two weeks ago, the agency said it can’t release the document in its entirety despite Paxton’s action because “a third party” — TC Austin Block 71 — has filed a lawsuit against Paxton seeking to overturn his decision and keep the redactions secret.

“Even though TRS did not object to withholding any part of the lease (in the latest legal wrangling over it), the third party did object and subsequently filed a cause of action in this matter,” retirement system spokesman Rob Maxwell said. “Those portions of the lease that are not part of the court case, we have provided to you.”

But Joe Larsen, a Houston lawyer and a Freedom of Information Foundation of Texas board member, said at the time that the retirement system had no legal basis to continue concealing the lease, because Paxton’s office said that it couldn’t and because the state agency didn’t file a lawsuit of its own to contest the decision within a 30-day window that it had to do so.

On Wednesday, the Statesman intervened in TC Austin Block 71’s lawsuit, opposing the effort by the Indeed Tower developer to overturn Paxton’s decision and seeking a court order forcing the retirement system to immediately provide the newspaper with an unredacted copy of the lease in accordance with the attorney general’s decision.

The retirement system “has a ministerial duty to ‘comply with the decision of the attorney general’ by producing the lease to the Statesman,” the newspaper says in its legal filing.

An attorney for TC Austin Block 71 didn’t immediately respond to a request for comment Wednesday.

The retirement system originally intended to move one of its divisions into Indeed Tower, which is named after the internet job-search company that will occupy its top 10 floors when the building is finished in 2021.

After the state agency disclosed its base lease rates this year, however, some retired teachers and state lawmakers balked at the price tag and questioned why it needs high-end offices in Austin’s most expensive commercial district. Retirement system officials subsequently backed off those plans in February and instead are trying to sublease the space.