Microsoft leaves; city decides not to pay rent to UA

Last year, the University of Arizona asked the city for $1 million over a four-year period to pay for space remaining vacant until Microsoft Corp.'s planned expansion into the buildings.

Microsoft's telephone support services pulled out of Tucson in February and placed Boston-based Keane Inc. in its Science and Technology Park space. Keane will continue Microsoft's telephone support services.

Representatives from Microsoft said the corporation did not experience the expected increase in telephone-based support and decided it would be better to sublease some of its space to Keane.

Despite Keane's presence, about 240,000 square feet of Microsoft's space remains vacant. Keane has no plans to expand into the unused space.

Instead of compensating the UA for lost rent on the empty space, the all-Democratic council voted to redirect the budgetary allotment into other city programs.

Tucson Councilwoman Shirley Scott said $160,000 went to cover a shortfall in the city's social service spending and $90,000 went to develop the downtown warehouse district.

"The hook for this whole deal was Microsoft. They offered performance standards and job promises, and we are reluctant to say this deal is just transferable," said Councilwoman Janet Marcus.

Bruce Wright, senior officer for economic and community affairs, said that when the university asked for the funds 11/2 years ago, city administrators assumed it was to develop the Science and Technology Park specifically to entice Microsoft.

"I think the city just felt that it was no longer a profitable deal after Microsoft's departure," he said. "Now they want to wait and see how Keane performs before they decide to give us funds."

Since the agreement with the city was verbal and no official documents were signed, the city is not legally obligated to give money to the university, Scott said.

"We have been saying all along we had no contract, so we shouldn't have to honor something we didn't have," she said.

Wright said the move was not unexpected.

"They had been talking about it for a while, but we see this only as a short-term setback for the park."

The councilmembers seem to agree that the door is not closed on the issue, Marcus said.

"We are not saying we aren't willing to entertain other offers in the future," she said. "We just have to have our own plan on how to deal with companies who want to set up in our community."

The university asked for an additional $1 million from the county budget and $2 million from the state budget.

The Pima County Board of Supervisors rescinded its verbal offer of investment, but the state made its first payment of $500,000 in January.

Microsoft representative Jessica Daughetee said the corporation will uphold its original agreement with the UA. She said Microsoft will eventually pay for the unused space.