Squeezed UT looks east to Motorola land

School is in talks to acquire partially vacant site for expansion

By Kirk Ladendorf and Sharon Jayson
AMERICAN-STATESMAN STAFF
Wednesday, March 5, 2003

Motorola Inc. is negotiating with the University of Texas at Austin about selling or giving roughly half of its East Austin manufacturing campus to the giant school, which is hungry for space.

Motorola has been making chips at the site, on Ed Bluestein Boulevard, for 29 years. But two of the three plants and much of the office space on the 255-acre site are empty because the company has cut its Austin work force and moved some employees to other Austin facilities.

Top university officials confirmed that the school has been in talks for several months about acquiring the Motorola property, which it might use to house academic departments and research laboratories.

Motorola would keep its remaining chip factory.

"We're waiting to hear from them," said Juan Sanchez, UT vice president for research, who has been involved in the negotiations. "We'd like to see whether they indeed would like to dispose of the property or what their plans are."

UT has been working for several years to find answers to a space crunch that gets worse as enrollment grows. The downtown campus is landlocked. The university has considered expanding the J.J. Pickle Research Campus in North Austin, but the Motorola site is closer to the main campus. It includes offices that could be converted to classroom space as well as advanced laboratory space, a cafeteria and parking garages.

Sanchez said the Motorola site would "solve our space problems for a very long time."

UT officials are calculating whether they could absorb the additional operating costs. Acquiring the facilities is less of a problem.

"They would give it or sell it to us at fair market value," said Kevin Hegarty, UT's chief financial officer. "It's a gift versus buy, and they're looking at the tax consequences."

The Motorola facilities are at 3501 Ed Bluestein Blvd. (U.S. 183) in East Austin, about 5 miles east of UT's main campus.

Motorola has been trying to keep its talks with the university quiet, asking UT officials to sign a nondisclosure agreement. But word about the negotiations has leaked out.

A Motorola spokesman declined to comment directly on the talks with UT but said the company is studying what to do with its vacant facilities.

"It's pretty common knowledge that the Ed Bluestein site is not fully occupied," said spokesman Jeff Hahn. "Our facilities and real estate department is studying how the site might best be used going forward."

Hahn said Motorola is talking with more than one potential buyer.

"Any talk about one party and not another is speculation and very much premature," he said.

Officials from the Greater Austin Chamber of Commerce last year began encouraging the university to take a look at the Motorola campus. UT officials have toured part of the site and are trying to determine whether the university can afford the costs involved, said Pat Clubb, a UT vice president who oversees campus facilities.

"This is the beginning stage of just trying to get a feel for what the space looks like and what it would cost to run it," she said.

Operating costs are a major issue because the university, like other state agencies, must cut its budget by 12.5 percent over the next two years. Higher education budgets are expecting even greater reductions.

"Given the size of the facility, operating costs would not be insignificant," Hegarty said. "When we talk about retrofit costs, that's a sizable financial commitment, and right now it's very difficult to envision how to possibly manage that." More than 5,000 people worked at the site in the late 1990s before Motorola began cutting jobs in Austin, closing facilities and consolidating operations at its Oak Hill and Parmer Lane campuses.

About 2,000 people still work on the Ed Bluestein campus, which includes Motorola's most advanced chip factory and related research facilities. The company would retain that facility. A separate manufacturing building used for packaging and testing finished chips is scheduled to close by the end of this year.

Motorola's chip factories could be converted for technical laboratory space. Chip factories come with sophisticated air filtration systems and other equipment needed for laborato- ries.

One of the vacant factories may be suitable for an expanded research center for the International Sematech chip research consortium. Austin lawyer Pike Powers and UT and state government officials are working on a proposal to bolster Sematech's research efforts in Austin and to tie the consortium more closely to UT.

The idea is to give UT and Sematech researchers a joint lab in Austin that is similar to the setup of the Albany Nanotech laboratories in New York, where Sematech is establishing a branch research operation.

Powers has said he doesn't want his work on behalf of Sematech to interfere with UT's ability to acquire the Motorola site, should negotiations work out.

Although Motorola has had chemical spills from its factories at the Bluestein site, Hahn said the company's past work to clean up the spills makes any environmental remediation work unnecessary.

kladendorf@statesman.com; 445-3622; sjayson@statesman.com; 445-3620