Brief ⁽¹⁾

The bill would enact a new statute that would place with the Secretary of Administration the exclusive responsibility for negotiating leases for state office space in nonstate buildings. The Secretary also would be responsible for planning and coordinating such leases. Heads of all state agencies would be required to provide information to and cooperate with the Secretary in implementing the new law. The Secretary would be authorized to delegate lease negotiation authority to any state agency.

After June 30, 2000, existing state leases for nonstate space can be renewed or extended only with approval of the Secretary. The bill would specifically state that it does not require renegotiation of any leases in effect on July 1, 2000; however, agencies could request that the Secretary renegotiate existing leases.

The bill also would require that all leases of nonstate space of more than 10,000 net assignable square feet or for a term of longer than 24 months would have to be presented by the Secretary to the Joint Committee on State Building Construction before the Secretary could approve those leases.

The bill would authorize the Secretary to fix, charge, and collect a lease negotiation service fee to recover costs incurred by the Department in implementing the new law. Receipts from any such fees, which would be paid in annual installments over the term of the lease involved, would be credited to the State Buildings Operating Fund.

Background

The bill would implement a recommendation made in a March, 2000 Legislative Post Audit report, Assessing the Benefits of Leasing Versus Owning Office Space for State Employees (00PA04).

At the Senate Federal and State Affairs Committee hearing on the bill, the Post Auditor and the Acting Director of the Division of Facilities Management of the Department of Administration presented testimony in support of the bill. No opponents presented testimony at that hearing.

The Senate Committee amended the bill to reduce the length of leases that would have to be presented to the Joint Building Committee from 60 to 24 months, to authorize the collection of a service fee in connection with leases, and to clarify that the bill would not require renegotiation of existing leases.

The Division of the Budget's fiscal note on the bill states that some savings could be realized from centralized leasing: (1) because centralized negotiation may lead to more shared space and (2) because the cost per square foot might be less expensive as a result of volume discounts and negotiations by skilled, centralized staff. According to the fiscal note, the Division of Facilities Management indicates the bill would impact its operations because policies and procedures must be analyzed, developed, and recommended to the Secretary of Administration and additional data must be developed, maintained, and refined so that meaningful advice and analysis can be presented to state agencies.

The fiscal note states that the Division of Facilities Management anticipates that new responsibilities associated with the bill would require the addition of two Management Systems Analyst I positions, at a cost of $71,925, and one Office Assistant IV at a cost of $22,875. Other operating costs in support of those positions would cost an estimated $16,277, for total expenditures of $111,077 during FY 2001. The Division is currently authorized to charge fees to recover costs related to leasing activities, so these expenditures could be financed from fees or the State General Fund. This bill is not part of the Governor's budget recommendations.

Finally, the fiscal note includes the observation that some staff currently dedicated to lease negotiations in other state agencies would be relieved of those responsibilities, freeing up their time to perform other tasks. However, no estimate of potential savings was included in the fiscal note.

The fiscal note, which was prepared on the introduced version of the bill, did not address the Senate Committee's amendment that would authorize collection of service fees associated with negotiation of leases of nonstate facilities.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html