Friday, June 17, 2016

Property wanted by insurance commissioner for new building targeted for purchase

Posted By on Fri, Jun 17, 2016 at 9:51 AM

click to enlarge RECOMMENDED FOR PURCHASES: Office buildings on West Third would be razed for new quarters for Insurance Commissioner Allen Kerr.
  • RECOMMENDED FOR PURCHASES: Office buildings on West Third would be razed for new quarters for Insurance Commissioner Allen Kerr.
An item on the Legislative Council agenda this morning asks for the Council's approval of the state's purchase of buildings at 1610-14 West Third St. for $1.2 million.

The request comes from the Building Services division of the Department of Finance and Administration. That letter mentions that the state intends to redevelop the property, which currently has three tenants, for state offices and to "implement a framework and streetscape plan to create a continuity between the property and the Capitol complex." The letter indicates the improvements would be completed by the fiscal year beginning July 1, 2018.

Nowhere does the letter mention what this is REALLY about. What it is really about is Insurance Commissioner Allen Kerr's desire for deluxe offices commensurate with the vanity license plate on his Lexus. We've written before about this plan. He's a couple of blocks up third from the Capitol, but he has grand plans for a royally outfitted new headquarters. He came up with the scheme, which DFA Director Larry Walther, his good friend, has endorsed, to consolidate several state agencies in a building to be constructed after existing structures are torn down.

Earlier, Gov. Asa Hutchinson had indicated some reluctance to moving ahead with the plan. It's expensive. New construction is particularly expensive. Kerr has said rent savings justify the move, but as yet no hard data has been demonstrated on that. Kerr failed in an effort to jam the project through the recent special legislative session. Then, the proposal also included a vacant service station on Third for total property purchases of $2.8 million. Kerr's total project estimate was around $20 million, though a budget plan drawn up by a contractor put the total near $40 million. That included $5 million worth of furniture, fixtures, equipment and artwork ($250,000).

I've asked the governor's office if he's fine with the plan now. Things are tight elsewhere. No pay raises for state employees. Rising tuition for college students. Diverting general revenue to highways. Talk of more tax cuts for rich people. And we can afford an Insurance Palace?

The Insurance Department spokesman, Ryan James, declines to answer questions, refers me to the Department of Finance and Administration. No return call as yet from the governor's office.

UPDATE: The Legislative Council positively "reviewed" — or approved — the purchase on a voice vote.

UPDATE II: Jake Bleed, spokesman for DF &A, says the agency indeed is moving forward with purchase of the property with an eye toward demolition and construction of a new building for multiple agencies. He said DFA hasn't yet determined which agencies will be involved. (Put your money on Insurance, for one. Banking and Securities also were part of Kerr's original master plan.)

He said the governor, who'd previously expressed some reservations, had been kept in the loop and it was fair to assume he was comfortable with proceeding toward a new building. The current tenants have leases that run through June 30, 2017, so no work can begin before that time. He said what engineers and others determine might be necessary will have a lot to say about the size, scope and cost of the new building. I'm hoping for some tentative estimates.

There are, however, no new numbers of what the new building might cost or an analysis of how it would save money over existing rent outlays.

Bleed also said a $295,000 offer for the service station property was rejected by the owner, Providence Properties. The idea for that parcel in Kerr's scheme was to convert the station into a Capitol vistor center, restored to its original appearance as an Esso station.

UPDATE III: Response from the governor's office through J.R. Davis:

The purchase of the property is justified. That does not mean that any particular building is justified. There are no further specific building plans at this time. It continues to be reviewed by Building Authority.

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