Rackspace Backs Out of ACC Deal

Remember to lock down a lease

Rackspace Backs Out of ACC Deal

Austin Community College is learning the hard way to check the paperwork. Cloud computing company Rackspace had plans to move its Austin offices into the ACC Highland campus. Construction and renovation had already begun. Recently, however, Apollo Global Management, the private equity firm that bought Rackspace last year, realized that no lease agreement had been signed, and has since walked away from the project, leaving ACC in the lurch. The Rackspace deal was supposed to be the next stage in a process that initiated when ACC began acquiring the Highland property in 2010. Classes began in the failing mall in 2014, before ACC took over the entire site in 2015. Highland Mall proved a lot more property than the college needed, however, so the aim became to set up business incubators and secure a major tenant, one that could potentially provide workplace training and opportunities for students. Enter (and exit) Rackspace – though the company may now be less likely to serve as a destination for ACC graduates. This week, it announced it was laying off 6% of its U.S. workforce, including employees in Austin and San Antonio.

Update: A spokesperson for ACC sent the following statement from ACC Executive Vice President of Finance and Administration Neil Vickers:

ACC worked in good faith to finalize details of a public-private partnership with Rackspace Hosting. In summer, ACC held several public hearings on the proposed lease agreement and the ACC Board of Trustees approved and submitted a contract to Rackspace. Ownership at Rackspace changed shortly thereafter and progress stalled. ACC issued a deadline in late fall notifying Rackspace that the college would lift the contract to move forward in pursuit of other partnership opportunities in the best interest of ACC stakeholders. The college is now finalizing the construction timeline. Renovations remain scheduled to begin this year.

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