The waste of space
Perdue's team struggles to fix the final frontier
The six floors and nearly 100,000 square feet of the state-owned Clark Harrison building sit serenely on Ponce de Leon Avenue in Decatur.
Its tall, symmetrical windows reflect city life as it goes by on the street, and an orange traffic cone stands sentry in the leaf-strewn lobby. The air conditioning buzzes in the summer. The heat whirs in the winter.
And it's empty. In fact, since a division of the Department of Human Resources moved out about three years ago, the $11 million building has been completely vacant.
That's strange, considering the state has more than 1,100 leases with private landlords that cost taxpayers about $144 million annually, a figure that includes maintenance and janitorial services. All told, the state owns nearly 4.2 million square feet of office space, but only 83 percent of it is occupied, when the industry average is in the low 90s.
"It's a little unusual to have space available that's already being paid for and then be generating external leases," says Gov. Sonny Perdue's chief operating officer, Jim Lientz, who heads up the space management team that's trying to solve the problem. "But I've got to tell you that it's perfectly rational on the part of all these agencies that have [moved out], because the space here has not been properly maintained. It's not just one or two years. It's multiple years of lack of attention."
The Clark Harrison is just the most dramatic example of a nasty budgetary conundrum that has likely cost the state millions of dollars during the last decade or so. Georgia has been wasting taxpayer money by putting its state agencies into leases when it has office space available. The problem, as Lientz says, is that much of that office space isn't habitable and the state lacks the money to renovate it.
Here's how the problem started: An agency housed in an office building owned by the state has to pay rent. That money goes to the Georgia Building Authority so it can pay to run the buildings.
Each year, according to former GBA facilities administrator Jerry Gabbert, who left the state two weeks ago after a reshuffling at the Building Authority, the authority asks for enough rent money — about $14 per square foot — to not only operate the buildings but allow them to set aside some money to renovate and rehabilitate them.
But every year, the Office of Planning and Budget and the Legislature come back with a much lower rent figure — currently $9.80 per square foot for all the buildings on Capitol Hill, when the going rate for commercial property in the area is somewhere between $16-$20.
And this happens over and over again, because the Building Authority's requests for increased rents in the state budget compete against requests for classrooms and jail cells, not to mention the pet projects of legislators.
"All those guys and ladies over there in the Legislature are going, 'Now. Do I give Ms. Essie the park back in Hahira, Georgia ... or do I tell everybody that their taxes are going up because we need $2 million to renovate this state office building?'" Gabbert says.
Classrooms always win, and the outcome for the GBA becomes obvious. Buildings fall into disrepair. They aren't upgraded. And when they deteriorate, there's no money to fix them up.
So what's a state agency to do? Move, of course. And when they move, the agencies usually move to rented space. So taxpayers get a double whammy. Not only do they have to pay for a security guard and maintenance for the 60 percent of the Trinity-Washington building on Capitol Hill that isn't even being used, as just one example, they also have to pay for new, rented office space.
"My position is we either need these buildings or we don't," Lientz says. "I would argue that we ought to either utilize this building appropriately or we ought to do something else with it. We ought to tear it down or sell it to somebody, whatever the options might be, but the highest and best use of this building is to fix it up where it's a comfortable place for people to work and fill it up — in that order."
Covered under the $144 million in private rents the state pays is the state Board of Education and the Board of Regents, which inflate the total rent allocation, but it does not include the labor department, prisons or diversion centers, says Elliott Penso, who handles outside leases for the Department of Administrative Services. The average price per square foot is $13.20.
To save the state some money immediately, Penso says the governor's office sent out letters to 800 private landlords, who own space occupied by the state, and asked them to reduce rents or suspend increases during the current budget crunch. Penso says 50 percent of the landlords responded, which could potentially save the state up to $900,000.
Tim Connell, who is Lientz's executive assistant, says the eventual goal is to be able to charge flexible rates for state buildings that reflect the relative amenities of each structure. How much that rent will be, however, is still unknown.
"What we do know is that it's going to be appropriate for them to charge more than $9 a foot," Lientz jokes. "What we do know is that it's probably going to be less than they could obtain in a newer building somewhere. That's just truth. Forget the fact that the taxpayers already own this building and they've paid for it, and they're entitled to have some people in it."
Ultimately, the goal is to remove the Georgia Building Authority from the budget process completely so that it would be a self-sustaining agency.
"It's always tough to get a building renovation competing in an environment in which you need to pay school teachers and you need to build prison bed space and all the other very legitimate demands that are frankly probably higher priority in meeting the needs of the citizens," Connell says.
So far, Lientz and his team haven't come up with a total amount that renovations could save the state. And it will mean spending money initially to generate savings. How much those renovations will cost is still an unknown.