Executive Summary

Issue Area 1: The State Building Commission Should Either be Limited in Its Function or Terminated, but Selected Legislative Oversight is Needed for Public Property Transactions.

The findings of this report show that state property transactions and management decisions are often carried out by staff without Commission input, review or approval. In some cases, the Commission approved transactions after the fact. Commission minutes and interviews with members reveal member complaints of not being informed early enough in some transactions, or decisions being made on SBC's behalf without its knowledge. The Commission is charged with operating and maintaining state property; yet rental rates, leases, and prioritizing capitol improvement needs are not brought before the Commission. The Commission also has the function of issuing revenue bonds when needed. Currently, there are two bond issues outstanding totaling over $191 million.

This report concludes that the state does not need a Commission that reviews decisions that have already been made. However, the Legislative Auditor finds that there is a need for overseeing property transactions, given the large monetary consequences. The current oversight structure of the SBC is impaired and exhibits a high risk of costly and improper transactions occurring. Therefore, the Legislative Auditor recommends that the Legislature consider providing direct oversight over property sales and purchases, and lease-purchases of certain monetary value. Also, since there are outstanding bonds issued by the Commission, it is recommended that the Commission either be terminated after the bonds mature, or the Commission's function be restricted solely to bonding, while property transactions and management be conducted by the staff of the Department of Administration.

Issue Area 2: Management Decisions Are Arbitrary and Inconsistent.

Rent varies within the same building for no apparent reason, causing an inequitable distribution of funds between state agencies that are paying different amounts for similar office space. In one building, tenants are being over-billed by a small amount, and in another building the staff does not know if there are vacancies or if tenants are being over-billed by a total of $47,250 annually. In another building vacant space has been unoccupied for a few years. In two lease-purchase buildings the monthly rent paid by tenants is less than the monthly lease-purchase amount owed. The amount of rent that pays for utilities varies from 1% to 47%. Rent has not been increased as stipulated in the leases. This type of management has resulted in expenses for some buildings exceeding the revenue collected. Collecting an inadequate amount of rent in the current time period allows building improvements to be put off into the future. This will result in improvement costs accumulating over time to the extent that future Legislatures may find it difficult to make funds available to make necessary building improvements. An example of this is the Motor Vehicles building on the Capitol Complex which needs about $23 million in improvements. The conditions in this building have been described as "deplorable."