Senate Bill 679 and House Bill 1200 have been introduced as a vehicle to spark capital-intensive projects by Intel and its like and are direct outgrowths of an idled Intel project on 532 acres at Alliance. With or without legislative relief, the industrial project may never come to fruition. Some $70 million of concrete and rebar infrastructure would have to be ripped out for Intel to proceed since the state-of-the-art beginning is now long obsolete, John Kelly, Intel's government affairs manager for Arizona and Texas, tells GlobeSt.com.
The Alliance project had looked like a go for quite awhile after the 1996 purchase. Then, construction trailers disappeared. In January 2000, Intel had finally announced it was mothballing the project. "There's been tremendous growth in the services sector but not the manufacturing sector," emphasizes Kelly.
Perhaps it's just a twist of fate that another Intel project, this one in the state capital, will see work grind to a near halt at the Fifth and San Antonio work site just as state legislators gather for a March 6 hearing on Ft. Worth Rep. Kim Brimer's HB 1200. The Austin project will continue for about two months, then slow once the concrete skeleton's up. Intel wants to watch the local and state economy for awhile, says Jeanne Forbis, Intel's Austin spokeswoman. She says a decision will be made by year's end about proceeding on the 10-story, 400,000-sf first phase office project. The project had broken ground in September 2000 and had carried a fall delivery until recent weeks. "We are looking at all kinds of options," she says.
Austin remains a strategic location for Intel, emphasize Kelly and Forbis. "We are absolutely not laying off anyone," she tells GlobeSt.com. Intel's projected 30% employee growth of its 500-member Austin workforce has been slashed to 15%, she confirms, but there are across-the-board corporate cuts being made to advance the 2001 goals on the domestic and foreign fronts.
Intel currently leases two office locations in Austin. More space could be leased if necessary while corporate heads weigh the office project's fate, Forbis explains. Intel also has pulled the plug, at least temporarily, on office projects in Chandler, AZ, Fulsom, CA and Portland, OR. Five manufacturing facilities from the ground up or expansion projects remain a go in Arizona, New Mexico, Massachusetts, Oregon and Colorado, but that's definitely not the case for the Texas market.
Kelly says Intel has been meeting regularly with Brimer about the legislation to cap assessed valuation by school districts. It's the numbers that determine a project's viability and Texas has fallen behind even California, says Kelly. A billion-dollar investment in California would cost $1.5 million annually in school taxes and $17 million in Texas. In Arizona, it would be $7 million per year, which is probably why an Albuquerque-area project will see completion this year.
Fortunately for the Austin CBD, Intel's pullback isn't affecting other downtown office projects as yet. Vignette and Cousins Stone Austin Development Office say it's still a go for them. Vignette is awaiting a final cost analysis, a spokesman tells GlobeSt.com. But, the plans remain unchanged, he says, for two to three, 25- to 30-story office buildings, retail and a parking garage along Chavez Street.
Cousins Stone's project holds the most promise for becoming reality. The office is planning a 500,000-sf to 530,000-sf spec building at 401 Congress Ave. Tim Hendricks, senior vice president, tells GlobeSt.com he's optimistic come mid- to late March that his team will have met the minimum self-imposed 90,000 sf of leased space that's required to push the project ahead. "We're still moving forward, but we're cautious as everyone should be," he says. Hendricks is in the midst of talks with several existing downtown tenants for space in the class-A undertaking.
He too is watching the market far closer than he ever has. "We're still very optimistic about the Austin economy. And we're optimistic that the national economy will make a strong comeback," assesses Hendricks.
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