Naked City

CSC Closure

Coming soon: New office towers from Computer Sciences Corporation.
Coming soon: New office towers from Computer Sciences Corporation. (Photo By John Anderson)

The symptoms have been noticeable since October: the beloved Liberty Lunch razed and traffic detouring confusedly around the torn-up stretch of Second Street. But very soon, possibly even today, Feb. 10, will come the official confirmation that the city has indeed contracted Computer Sciences Corporation. It's been nearly a year since the City Council gave its blessing to the information technology giant's proposed office complex on three blocks of city-owned property, but CSC and the city manager had yet to sign a formal agreement even as the city's bulldozers were clearing the way.

The agreement in question, a complicated partnership between the city and CSC which will raise not only three office buildings but a new City Hall, public plaza, and 80,000 square feet of retail space, is a legal behemoth full of details infinitely more complex than anyone imagined they would be, according to Nathan Schneider, the city official coordinating the development. While some downtown watchers have been kicking and screaming for CSC's intentions to be nailed down on paper, Schneider insists that the company had reached the point of no return long before the Lunch was toppled. "As far as we were concerned, there was never any issue" of a contract being signed, he says.

So what does it say, you ask? The details are mostly familiar to anyone who followed along as Mayor Kirk Watson assembled this downtown redevelopment kit. CSC will lease the three blocks for 99 years, and in return, the city will improve those blocks with new water and sewer lines, sidewalks, and other landscaping, and also foot the bill for underground parking, a tunnel connecting the three blocks, and a new chilling plant with enough capacity to cool both CSC and the surrounding buildings.

The city predicts total costs for those improvements -- which officials stress are largely public and revenue-generating investments -- at just over $18 million, though as with any construction project, those figures are a bit open-ended. The city will also finance the construction of retail space on the ground floor of the CSC towers ($6.8 million) and lease the space back from the company at a cost of $2.3 million, for a total public investment of around $27 million.

CSC is obligated to pay rent and begin construction on the first block (west of the current Municipal Annex) immediately, but the company doesn't have to build on the second block (east of the Annex) for another four years. And construction on the third block (directly across Second) doesn't have to begin for 15 years. If for some reason CSC chose to flip a portion of its lease to another developer, or if the company leased a portion of its office space to another business, the city would have the right to match that offer with a counter-proposal.

Schneider and the legal team representing the city say, however, that CSC shows every sign of building out all three blocks quickly. Although the company laid off 100 employees at its Northwest Austin office last year, trimming its roster to 1,200, CSC spokesperson Howard Falkenberg says the company intends to hire 2,300 new employees in the next few years and will require all three downtown structures to house them.

All in all, says Thompson & Knight attorney Geoffrey Osborn, who's been representing the city, Austin brought home a fair deal. The city negotiated in a way that "made sure there weren't giveaways here," according to Osborn. "My own view of how the city conducted itself is, it did press for, and got, the kind of safeguards a private landowner would ask for."

To date, no one outside of CSC claims to know exactly what the office towers will look like. Schneider says they've been described as "quietly elegant" structures of limestone and glass which will not raise anything like the furor provoked by the proposed Gotham condominium building across the lake. But he adds that CSC has been squeamish about releasing its designs for fear of distracting from the negotiations over the financial nuts and bolts of the deal. Falkenberg says that if the deal is closed within the next few days and construction begins, CSC could hold a public celebration and show its renderings before the end of the month.

But at least one downtown contingent, the developers promoting a retail renaissance along Second Street, are confident that CSC's building design will be compatible with their dreams for a main-street marketplace. Stuart Shaw, president of Bonner Carrington Development, which is angling to buy the leasing rights to the space around the base of CSC's two waterfront buildings, says retail space wasn't foremost on the minds of CSC officials during the negotiations; but, with a little poking and prodding from the downtown community, they have assented to, if not exactly embraced, local small-scale retail. "[CSC is] saying, 'We don't want to pay for it, but we like it,'" says Shaw.

CSC's original agreement with the City Council mandates retail on the ground floor of the first two buildings, but not the third. Whether CSC will agree to ground-floor retail in their third structure is still unknown. "The hammering out of these [retail] agreements has probably been the most complex issue that lawyers on both sides have ever confronted," Falkenberg says.

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KEYWORDS FOR THIS STORY

Computer Sciences Corporation, Nathan Schneider, Kirk Watson, Howard Falkenberg, Thompson & Knight, Geoffrey Osborn, Stuart Shaw, Bonner Carrington Development

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