Teachers Retirement System Of Texas Audit Sought After Rent Flap

AUSTIN, TX — A state senator on Thursday has called for an audit into real estate investments and partnerships involving the Teacher Retirement System of Texas after revelations its officials had signed off on renting space at an office skyscraper at a minimum monthly rate of $326,000.

With a completion date of March 2021, the 36-story office tower at 200 West 6th St. is pricey even by the standards of downtown Austin that has seen soaring rent costs amid brisk municipal growth. Teacher Retirement System of Texas officials had cited space constraints at its current 816 Congress Ave. location, as KXAN reported. Backlash partially fueled by media scrutiny from the Austin American-Statesman and others over the lavish rent space prompted officials to reverse course and look into expanding its existing space instead.

But the repercussions of having even considered signing a lease have seemingly just begun given a request for an audit by State Sen. John Whitmire (D-Houston), the longest-serving current member of the Texas State Senate who has represented District 14 since 1983.

Patch reached out to Whitmire's office on Thursday, receiving the following prepared statement from the state senator dubbed the "Dean of the Senate" given his longevity:

"In an abundance of caution, I have asked the Attorney General to determine the legality of any real estate investments made by TRS. Regardless of the opinion issued, if the direct or indirect ownership of real estate is a wise and prudent investment option, the statute and Texas Constitution should be amended to ensure that no one is hiding behind a limited partnership or other financial arrangement in order to invest pension funds in real estate."

Whitmire cited the sacrosanct nature of safeguarding teachers' pensions as the main driver of his request: "The investment and management of a $150 billion pension fund benefiting our retired teachers is one of our most serious fiduciary responsibilities," he said. "We owe it to our dedicated active and retired teachers to ensure the investments of their hard-earned pension funds are sound and transparent."

Whitmire's office also provided Patch with copies of the audit request made to the State Auditor's Office along with the formal request for an opinion from the Office of the Attorney General. In the latter, Whitmire asks the attorney general a pair of questions:

• "Are any investments in or ownership of real estate either directly or indirectly by the Teacher Retirement System of Texas a violation of the Texas Constitution or Texas Government Code?"
• "If the investments are in violation of the Texas Constitution and/or state statute, what is the remedy?"

According to the Teacher Retirement System of Texas website, the pension fund has grown from 38,000 members at its inception in 1937 to 1.6 million public education employees and retirees today. Since its founding, according to the website, the fund has grown to $154 billion.

"Despite our growth, we remain focused and committed to delivering benefits efficiently while prudently managing the assets held in trust for the people we serve," pension fund Executive Director Brian Guthrie wrote in a welcome letter on the website. "Our system is strong today and I am committed to making sure it remains so."

Being built by developers Trammel Crow, the Indeed Tower began construction in October 2017, with an expected completion date of March 2021, according to information found on its website. According to a project description, the 683,000-square-foot, Class AA tower will feature retail space on the ground floor, a circa-1914 post office reformatted as a 25,000-square-foot retail/restaurant space and a 20,000-square-foot urban green space section.

"At 36 stories tall, the office building will stand as the tallest and largest office tower in downtown Austin and offer tenants an unparalleled experience through its extensive office amenities, including a fitness center, dedicated conference center and outdoor terraces," developers wrote on the company website. "Indeed Tower's floor plates, at an average size of 33,000 square feet, will be among the largest in the market, making the project attractive to the growing tech tenant population while maintaining flexibility to appeal to more traditional office users."