CSC-U-L8R

When asked last week about his greatest accomplishments as city manager, outgoing CM Jesus Garza first listed the city's 1995 lease agreement with Seton Healthcare Network to operate Brackenridge Hospital -- which has now hit a major snag. Another achievement was the city's 1999 deal with Computer Sciences Corporation to develop the city's prime waterfront property in the Warehouse District. But on Jan. 10, the city announced its proposal to pay $4 million to CSC and take back Block 21, the northernmost corner of the CSC Triangle, between Guadalupe and Lavaca and Second and Third streets.

It could be worse, but the city wants to "buy back" something it already owns. With the economy sagging, the California-based tech company decided it didn't need three office buildings in downtown Austin -- especially since it won't even occupy fully the two it has already built. Fewer than 1,000 CSC employees will move into offices in the two buildings next week, said company spokesperson Howard Falkenberg, with final capacity approaching 2,000 in the event of expansion.

Under its agreement with the city, CSC has until 2015 to actually build on Block 21, and at least another year to start paying on the 99-year lease. But when word got out that the company was considering its options -- including finding another developer -- City Hall started to negotiate. The city had set aside $2.7 million in incentives and improvements for CSC on that block; on the city's books, we're only spending $1.3 million, which will come from unanticipated revenue from bond sales.

"But it's our land!" you scream. Well, tough. As Council Member Will Wynn puts it, "Despite what I've been hearing around town, CSC is not in default of its obligations under the agreement. They've done exactly what they told us they would -- including finishing their two buildings, even though they don't plan to occupy them, unlike Intel. We're taking advantage of their downturn, and they want to be compensated, which is fair."

CSC isn't issuing any public comments about the proposal at this time, says Falkenberg. Given the example of Intel, that's understandable. It's not clear how seriously CSC shopped its Block 21 property rights to other developers or for what price, but it seems likely they could have gotten more than $4 million. CSC would have lost some of its incentives had it dealt off Block 21, but the 1999 agreement didn't preclude such dealmaking.

In any case, it's agreed that the city made the first move. "There have always been some people, including council members, who've wanted to get that block back," Falkenberg said. "And in the ongoing discussions that have been part of the City/CSC partnership since 1999, there are always issues they were addressing." The city's press statement, which also mentions the wishes of council members, says the current proposal is the fruit of "months of negotiations."

The City Council is expected to sign off on this plan at today's (Thursday) meeting, which leaves the city once again with an empty chunk of the Warehouse District. Wasn't it the city's inability -- or failure -- to come up with valuable uses for the site that made the CSC deal so worthwhile? That's what then-Mayor Kirk Watson said, but he's gone now. Meanwhile, Wynn has already floated the suggestion that Block 21 become home to Austin's much-needed new central library, as was proposed by Garza at least twice in the years before the CSC deal. Others, including Council Member Beverly Griffith, have speculated that the city could use the land to enlarge its new, petite, 115,000-square foot City Hall (under construction on the block due south), or build an annex to it across Second Street. While Austin is likely too far along with Antoine Predock's City Hall plans to start over, taking a CSC building off Block 21 changes many of the ground rules -- for example, the goals for street-level retail -- under which this whole quarter was being designed and built.

Then again, the city could spend the next 28 years sitting on Block 21, which it first acquired in 1974, and then cut a deal overnight to "transform" it -- as it did with CSC. But this probably isn't likely, given the city's rapid growth. "I deserve some criticism for opening my mouth and suggesting a specific use," says Wynn, who before joining the council was president of the Downtown Austin Alliance and a strong backer of the CSC deal. "But I trust that we'll quickly pursue the analysis of how best to use this asset. It needs to be a compatible use for City Hall. My instinct is that you couldn't get a more compatible use than a central library, but there are other possibilities as well."

It's at least a little surprising that CSC, which was willing to look 20 years down the road into Austin's future when it entered into the 1999 master agreement, has now changed plans completely in response to a downturn that, though pronounced, is part of an ordinary business cycle. So much for the hopes of a CSC-anchored "Digital Downtown." Like the Intel building, Block 21 shows how city government, which measures time in decades, can get whiplashed in partnerships with tech companies, where time is measured in nanoseconds.

That's probably not what Jesus Garza had in mind when he memorialized the CSC deal. But the city may be able to pull something useful (more useful to the public than another CSC building) out of the hopper. "I'm a little surprised that we have this chance, which is why I believe we need to act on it now," Wynn said. "It's an opportunity we shouldn't pass up."