Contrary to popular belief that the firm wasn't asking for much more than fee waivers, Vignette Corp. may ask the city to pay up to $25 million of what it will cost the company to move downtown.
"It's called dishonesty by omission," says local activist and businessman Mark Tschurr of the nitty-gritty details being negotiated between the city and the software superstar. Vignette's advocates, meanwhile, defend the financial figures being kicked around in the discussion process, although they say nothing specific has emerged from the talks.
One source familiar with the negotiations said the $25 million figure was reached by taking a third of the estimated $75 million difference between what it would cost Vignette to build in the suburbs and what it would cost to build downtown, where parking is at a premium. According to the company's cost comparisons, a project of similar scope and size in Round Rock would cost the company $150 per square foot; in far suburban Austin, $175 per foot; but in downtown, a whopping $240 per square foot.
Vignette says it's willing to spend an extra $50 million for the opportunity to relocate downtown, but it wants the city to pick up the remainder of the $75 million cost difference by means of reimbursements, waivers, and other methods. As one idea stands now, any financial help the city would agree to give Vignette would come from the actual revenue generated from the project, and not out of the city budget.
Additionally, Vignette would expect to be reimbursed for its promised $5 to $7 million toward financing the cleanup and landscaping of Waller Creek. The reimbursement request caught many people off-guard, as Vignette officials have never mentioned that their much-ballyhooed "investment" in Waller Creek was actually a loan. "They're willing to spring for the up-front investment, but they do expect to be reimbursed over time," says Brigid Shea, a former Save Our Springs Alliance leader who is now a consultant on the Vignette project.
The creek runs alongside the three parcels of undeveloped land on Cesar Chavez, just south of the Austin Convention Center, where Vignette wants to build its new headquarters. The company, which is quickly outgrowing its existing space in five office buildings in Southwest Austin, has a contract option to purchase the downtown land. They secured rezoning approval last week from the Planning Commission. The City Council will consider the item Nov. 30.
In the meantime, the Vignette proposal is garnering cheers from downtown boosters who believe the company and its young workforce can breathe new life into the otherwise lifeless southeastern end of downtown. And environmentalists have championed the proposal because Vignette's decision to move downtown endorses a common goal to direct new construction away from the aquifer. In contrast, Motorola and Computer Sciences Corp. have both used the aquifer as a bargaining chip in their negotiations with the city before agreeing to build their new facilities within the Desired Development Zones.
Tschurr, who is chairman of the SOS board, says that while his group endorses Vignette's move downtown, he personally takes issue with what the company is asking in return. "I think this deal is being greenwashed to the extent that nobody is saying anything about the subsidies," Tschurr says. "This is a $5 billion company," he says of the publicly traded firm. "They should never, never be subsidized."
Vignette, as a locally based company, has a lot of community support behind its move downtown, but Tschurr's irritation over the city's willingness to give huge incentive packages to major employers might serve as a good excuse to rethink the objectives of the two-year-old Smart Growth program. Where, for example, should the city draw the line on providing large subsidies to multibillion-dollar corporations?
These sort of questions were last raised in May, when the council approved $15.1 million in incentives to seal a downtown deal with Intel Corp. The world's largest chipmaker is building a two-building, two-garage office complex at Fifth and San Antonio, not far from another big project currently being built with Smart Growth incentives, CSC. Other companies, such as Dell and Tivoli Systems, an IBM subsidiary, have also reaped Smart Growth benefits by choosing to build their new facilities within the city's desired zones.
Shea acknowledges the public's wariness of tax-funded incentive packages. "These are questions that need to be addressed," she says. "There needs to be a large open forum to decide not only where we're going to direct growth, but how do we achieve that."