FISCAL NOTE

Date Requested: February 11, 2016
Time Requested: 03:14 PM
Agency: Administration
CBD Number: Version: Bill Number: Resolution Number:
2528 Introduced HB4510
CBD Subject: Finance and Administration


FUND(S):



Sources of Revenue:

General Fund,Special Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The Department of Administration cannot estimate with any precision the effect on costs or revenues to the agency. Currently, the Real Estate Division conducts a number of steps in purchasing real estate such as environmental site assessments, appraisal, title searches and negotiation of the purchase agreement, all of which occur before the property inspection. Where applicable, the a building inspection is done by a local architectural/engineering firm, and a report is generated. Very few purchases are done with the intent to be reused, as the majority of the purchases result in the demolition of the existing building, so the required structural engineering report would not be utilized. Neither Real Estate nor General Services have a structural engineer on staff, and would need to contract for those services required to complete the report required by the legislation. It's not clear that the cost benefit analysis required by the legislation will produce any savings to the state, or will result in a net savings with the cost of the structural engineering services.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


    Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.
    Because the Department of Administration does not have a structural engineer on staff, the required services to produce the report will need to be contracted for. A typical hourly rate for a structural engineer is $125-150/hour, and a facility engineer's hourly rate is $75-100/hour. For an average size building, likely 20-40 hours of structural engineer services, and approximately 40-60 hours of services by a facility engineer to produce the report, excluding any cost benefit analysis. A structural engineering report for an average building would cost $8500 to 11,500. To have the cost benefit analysis included in the report would likely cost an additional $3,500 to 6,000. The age of the building and the size will affect these costs.
    To hire a structural engineer as an employee of the agency, the annual salary would likely be in the range of $65,000 to $120,000 plus benefits.
    There are a at least two pending lease/purchases that will be completed in the next fiscal year, and each one will require the structural engineering report and cost benefit analysis. Of course, the Real Estate Division does receive due diligence reports before any purchase of real estate is conducted, however, those reports are typically not done by a structural engineer.
    



Memorandum


    The Real Estate Division does conduct due diligence in the acquisition of property, but it is not conducted by a structural engineer, and a structural engineering report is not produced. The Department of Administration is unable to estimate with any precision the costs or savings that would be derived from the implementation of the legislation.



    Person submitting Fiscal Note: Jennelle H. Jones
    Email Address: jennelle.h.jones@wv.gov