The Department of Arkansas Heritage's plan to build a new headquarters has encountered some opposition, but officials say the proposal is still on track.
Department officials said Friday that they expect a draft of the architectural plan to be completed by the end of the month, and they've begun asbestos abatement at the property on North Street in Little Rock where the headquarters will be located. The department is hoping the finished headquarters will let it consolidate most of its operations in one space.
But, at least one legislator said he isn't convinced that the project is economically sound or follows the appropriate rules. And the Arkansas Appraiser Licensing and Certification Board will decide this week whether a complaint alleging that the appraisal was improperly increased by about $1 million merits a formal hearing.
Martha Miller took the reins of the Department of Arkansas Heritage in January 2013. She said the discussion about building a new headquarters started when she was a deputy director at the agency.
The department currently rents three floors in the Tower Building at Fourth and Center streets in Little Rock. The Arkansas Arts Council, the Arkansas Department of Historic Preservation, the Arkansas Natural Heritage Commission and the Department of Arkansas Heritage director's office will move from the Tower Building to the new headquarters after it's finished, sometime about March 2016.
"It's been apparent to all of us that we have a space problem in a lot of different ways," Miller said. "We probably started the conversation about two years ago about how we could resolve our issue with lack of sufficient space."
Miller said the agency took a lot of steps to address the problem before concluding that it needed to build a headquarters. Department officials digitized paper records to save storage space, they shifted people and offices around -- sending some employees to work out of the collections storage facility on LaHarpe Boulevard -- and they met with the management at the Tower Building to ask about renting more space.
"We already were at a point where we were spending a generous amount of money on rent, and the additional cost to rent more space in this facility gave me a little heartburn and a little pause," Miller said.
The agency spent almost $440,000 this year on about 28,000 square feet of space in the Tower Building, and the lease has a built-in 2 percent annual increase on the rent. Miller said the cost of renting space increases when you consider arranging for parking for employees, as well as traveling back and forth to the storage facility and to laboratory space for some of the programs.
Plans call for the new building to have between 30,000 and 34,000 square feet. It will cost between $6 million and $7 million. Because the construction is being funded through a bond issue, interest on the amount will eventually raise the cost to about $8.6 million, according to department figures.
The headquarters will be adjacent to the department's collections facility on LaHarpe Boulevard where the agency stores collections -- including documents, artifacts and other sensitive materials -- for its four museums and equipment for its three departments.
Late last year, the department made a deal to purchase the adjacent North Street property from the Hoffman Family Trust for $2.5 million.
The building plan calls for renovation of about 14,000 square feet of an existing industrial building, which provides a strong concrete structure for some of the heavier storage or laboratory materials. The rest of the square footage will be new construction. The plan will also keep intact a small 50-year-old building where the Mitchell Law Firm is currently located.
The original plan would have increased the space to 50,000 square feet. Department officials said that plan included accommodating another agency and looking at possible future uses, but department officials decided instead to design the building smaller with adaptable spaces that it could grow into.
The department also revised a preliminary estimate of operating expenses for the new building, increasing the annual amount to about $105,000 for the first five years, $127,500 at six years and $150,000 at 16 years.
A preliminary report had estimated the cost at $83,000 a year with no increases over the 20-year period, which opponents had criticized when reviewing the plan.
Not all sold
At least one legislator said he doesn't entirely believe the rosy picture the agency is painting about its plans.
"I'm not opposed to the project, if it can pass two or three tests," said Rep. Kim Hammer, R-Benton. "If it can be proven that it's an economically sound move for the state, I'm OK."
Hammer said he also wanted assurance that the funding source to build the headquarters is appropriate and that it's more cost-effective to build new than to continue renting at the Tower Building.
"When the Department of Heritage budget comes up for discussion during the session, it is going to be looked upon very heavily to answer whether they have lead us down a path that will expose us to liability," he said referring to the legislative session that starts next month.
Hammer filed a complaint in June against the appraisers who valued the headquarters property in 2013. The complaint questions the validity of a $1 million difference between a February appraisal and a September appraisal.
A panel of the Appraiser Licensing and Certification Board on Thursday criticized the appraisal reports that were written by appraisers Stephen Cosby, Eric Edmondson and appraiser trainee Blake Casey of CBRE Inc. The board said the work involved in arriving at a highest and best-use appraisal was not demonstrated and that the group should not have let a trainee take the lead on such a complicated appraisal.
Edmondson and Cosby are facing another investigation after an appraisers board member filed a complaint about an appraisal the two performed with another trainee, Josiah Smelser. The three valued a piece of farmland in McCrory at $1.25 million. The complaint alleges that they did not consider soil quality, irrigation or farm leases in reaching that dollar figure.
The appraisers had not filed responses with the board as of Thursday when a Freedom of Information Act request for previous complaints was answered.
Board staff members said Thursday that a formal hearing to consider the complaint would likely be scheduled for some time in the spring.
Hammer said that depending on how that investigation is decided, he will be ready to move forward with any appropriate actions or complaints in other avenues if needed.
"Whatever the board decides, they don't have the ability to change the appraisal," he said. "So does the attorney general have the ability to go back to the appraiser to seek damages because they exposed the state to a $1 million liability? I'm researching options at this point."
A letter from Arkansas Building Authority Director Anne Laidlaw to Gov. Mike Beebe, obtained through a Freedom of Information Act request, endorses the property purchase. Laidlaw wrote that the appraisal change was made because the property was originally classified as "depressed industrial area," and the second appraisal changed the classification to "commercial purposes."
Laidlaw also noted that the owners originally had asked for $3.5 million, and Miller offered $1.5 million. The two negotiated a final price of $2.5 million.
Heritage Department officials said they have heard at least some of the concerns, including criticism of a plan to use conservation funds to pay for debt service on the building's construction bonds.
Voters approved a one-eighth percent sales tax in 1996, with the proceeds earmarked for several agencies, including the Department of Heritage.
Hammer and other legislators have raised concerns about whether the law allows the sales tax to be used for new construction. Hammer asked for an attorney general's opinion, which was inconclusive. An attorney in the office said a court would likely look askance at expenditures for other purposes, but the amendment creating the tax did not specifically require the proceeds to pay exclusively for "natural heritage."
Miller said the department has been using a small portion of the tax proceeds to pay some of its rent at the Tower Building. Because of the concerns that have been raised, the agency has revised its funding plan and will no longer use those tax proceeds to pay for the construction bond, she said.
"This building is going to make life a lot more efficient for us and save money in other ways, as well," Miller said. "We heard that complaint and that is not part of our plan anymore. One of the reasons we are so comfortable with this building and this cost is that Anne Laidlaw with all of her expertise is confident that the numbers work for us, including future operation expenses."
Metro on 12/14/2014