A victory for Texas teachers and taxpayers could be in jeopardy due to the economic effects of the Chinese coronavirus.
Established in 1937, the Texas Retirement System provides retirement and related benefits for more than 1.6 million Texas teachers, college professors, and other educational employees. It is supported by the State of Texas and manages a $150 billion trust fund established to finance member benefits. TRS is the largest public retirement system in Texas and is the sixth-largest public pension fund in the U.S.
Earlier this year, it was revealed that TRS had signed a 10-year lease, beginning in June of next year, for three floors of office space at the Indeed Tower, a highly sought-after location for companies seeking extravagant downtown accommodations in close proximity to the city’s bar district.
What’s more? The cost of the space was a staggering $326,000 a month.
Once their lavish lease was revealed, criticism poured in from teachers and taxpayers at large, railing against the move at a time when the solvency of TRS retirement payouts is a perennial problem during state legislative sessions.
Public pressure from citizens and lawmakers forced TRS to reverse its decision in February, and trustees voted to remain at their current location and sublease the space at Indeed Tower instead.
But the economic downturn resulting from government-ordered shutdowns in response to the Chinese coronavirus could make that task difficult, especially with the commercial real estate all but frozen as businesses put expansion plans on hold to fight for survival.
At a recent meeting of the board of trustees, Eric Lang—a senior managing director for TRS—expressed concern about whether or not a tenant for a sublease could be found.
“My confidence, as well as the real estate team’s confidence, in subleasing the space has decreased some since we last talked in February,” he said.
He added that the board may need to “re-evaluate” their decision.
Tim Lee, the executive director of TRS, agreed, saying he thought it would be “very tricky for TRS to find a tenant.”
The biggest benefit TRS has at the moment is time. With the lease not scheduled to begin until June 2021, it remains to be seen whether or not the group will be able to find a tenant to take its place in the palatial tower.