The Teacher Retirement System of Texas has disclosed partial costs of its office lease in an upscale high-rise under construction in downtown Austin, seven months after the American-Statesman first asked for financial details about it and the state agency sought to keep it secret.

The starting base lease rate disclosed by the retirement system — which has an investment relationship with one of the developers of the 36-story Indeed Tower going up on West Sixth Street — equates to about $326,000 per month initially.

That rate is below the current average for top-end office space downtown, according to local real estate experts. However, it’s well above the amounts paid for most state office leases in Austin.

In addition, the retirement system is still declining to disclose its total cost of the lease — a figure that would include a significant amount attributable to the building’s operating expenses. In commercial real estate, a total lease rate typically is made up of a base rate and a rate apportioned on a pro rata basis for operating expenses, such as property taxes and maintenance of shared amenities.

The annual base rates for the retirement system’s roughly 10-year lease of about 100,000 square feet in the building will begin at $38.50 per square foot, or about $326,200 a month, and then increase periodically to top out at $45.25 per square foot, or about $383,392 a month, in the final year. The base rates alone add up to about $3.9 million annually to start and rise to $4.6 million in the final year.

Advocates for government transparency have said the lease’s total cost should be disclosed, because such a detail about a state agency’s operations — how much it pays in office rent — is information that taxpayers have a right to know. TRS manages retirement benefits for about 1.6 million current and former Texas teachers and school employees.

"I would hope that they come to realize this is public information," said Kelley Shannon, executive director of the nonprofit Freedom of Information Foundation of Texas.

The disclosure of the retirement system’s base rates for the building — named Indeed Tower after the internet job-search company that will occupy its top 10 floors — came in the wake of a new request submitted by the Statesman on Jan. 2 under the Texas Public Information Act for financial details of the lease.

The newspaper made an initial formal request for the information in June, but TRS and the building’s developers sought and received an opinion from the office of Texas Attorney General Ken Paxton allowing them to keep it secret.

However, a new state law took effect Jan. 1 that significantly raised the hurdle for public entities trying to conceal such spending information.

The retirement system subsequently released its base lease rates on Jan. 17, saying in a written statement that it is "committed to transparency" and that it only declined to disclose the information initially because it had been considering renting more office space downtown and didn’t want to tip off other building owners to how much it might be willing to pay.

It said that issue no longer is a concern, because it announced in December that it is instead opting to study the prospect of building its own office complex outside of the city’s center, rather than looking to rent more space.

Still, TRS spokesman Rob Maxwell said the agency is seeking a new ruling from Paxton’s office as to whether it is required to release additional financial details of the Indeed Tower lease beyond the base rates. The move is designed "to protect any information which may be confidential by law and to provide an opportunity for third parties to make arguments in support of withholding information based on statutory exceptions," Maxwell said in a written statement.

Joe Larsen, a Houston attorney and a Freedom of Information Foundation board member, called the notion laughable that the agency is both "committed to transparency" and is still declining to disclose the full cost of the lease.

"That’s obviously doublespeak," Larsen said. "That can’t be taken seriously."

He said the retirement system could be attempting to test the limits of the new law that took effect Jan. 1. Larsen said he expects other public entities around the state to try as well.

The new law — Senate Bill 943, spearheaded by state Sen. Kirk Watson, D-Austin — aims to nullify portions of two 2015 Texas Supreme Court decisions that allowed government officials to conceal from the public certain information about their spending of taxpayer money on outside contractors and quasi-governmental entities.

Local commercial leasing experts, meanwhile, said it is common knowledge how much various buildings in Austin charge for office rent, even as TRS continues to withhold from the public the total that it will pay at Indeed Tower.

Jeff Graves, director of research for real estate services firm Cushman & Wakefield Austin, said the base rate currently being quoted for Indeed Tower is $48 per square foot, while the average base rate for Class A, or top-end, office space in the central business district is $40.34 per square foot — meaning the retirement system’s starting base rate of $38.50 is a good price.

The initial operating lease rate for Indeed Tower is being marketed at $19 per square foot, Graves said, which combined with the base rate would put the retirement system’s total lease rate in the building at $57.50 to start.

"They seem to have negotiated a fair market deal that looks even better given the acceleration of rents in downtown," said Mike Kennedy, president of commercial real estate advisory firm MK Interests.

The rate does, however, remain well above the amounts paid for most state office leases in the Austin metro area. The Texas Facilities Commission — which oversees procurement of office space for most state agencies, but not for the Teacher Retirement System and a handful of others — pays an average total lease rate of $24.44 for an estimated 2.1 million square feet in Austin. Most of that office space is outside downtown, however, and not all of it is Class A space, according to the facilities commission.

In September, Maxwell, the TRS spokesman, defended the retirement system’s choice of Indeed Tower, saying its efforts "to recruit and retain top investment talent in a dynamic, professional workplace" are helped by having upscale office space in the city’s downtown financial district.

The retirement system’s staff "conducted a thorough review of existing space options for its investment personnel and considered all alternatives," Maxwell said in a written statement. "It was decided it was in the best long-term fiduciary interest of the system and its members to lease space at Indeed Tower."

Trammell Crow Co., which is jointly developing Indeed Tower with Iowa-based investment firm Principal Real Estate Investors, declined to comment on the building’s lease rates or on its lease agreement with the Teacher Retirement System.

TRS has an investment relationship with Principal Real Estate Investors and has committed an estimated $1.4 billion over the past decade to investment funds managed by the firm, according to retirement system records reviewed by the Statesman.

The state agency — which oversees a total retirement portfolio topping $160 billion — declined to comment on whether the relationship with Principal Real Estate Investors helped it secure its lease rates in Indeed Tower.

TRS Executive Director Brian Guthrie attributed the rate to the agency’s decision to commit to the project early. The lease for the retirement system’s Indeed Tower office space was finalized last February after negotiations began in 2018, although the building won’t be finished until next year.

"Today, 18 months later, those lease rates are well below current rents for comparable space in Austin’s tight rental market," Guthrie said in a written statement.

TRS letter, rental rate chart by Barry Harrell on Scribd

Brian Guthrie statement by Barry Harrell on Scribd