State lawmakers have rejected the Arkansas Building Division's request for $20 million in spending authority in each of next two fiscal years for a proposed new building to house the state Insurance, Bank and Securities departments near the state Capitol in Little Rock.
The proposed building would be located at 1610-1616 W. Third St., where building space is now leased to the Arkansas Assessment Coordination Department, Dayspring Health Council and Girls & Boys Club of Central Arkansas. The plan would be to demolish the existing structures for a new building, state officials said.
This week, the Legislative Council and Joint Budget Committee approved a motion by Sen. Bart Hester, R-Cave Springs, not to include the building division's request for $20 million a year in spending authority in both fiscal 2018 and fiscal 2019 in appropriation measures that will be considered by the Legislature in the regular session, starting Jan. 9, and the fiscal session in 2018, respectively. Gov. Asa Hutchinson, a Republican, recommended granting the spending authority. Fiscal 2018 starts next July 1.
"At this point, they are going to have to fight to get it back in" the appropriation for the building division in fiscal 2018, during next year's regular session, Hester said after a meeting of the Legislative Council and Joint Budget Committee.
Building Division Director Anne Laidlaw told lawmakers on Wednesday that the new building was initially estimated to cost about $20 million, but division officials don't have an estimate from a design professional yet.
"We have not begun design of that building specifically. We are in the design professional selection process. The interviews will be held next week, so within another 30 days we should have a contract. The design professional will then begin the design and we will get an estimate of the construction of that building. We will design to meet our budget," she said.
"At this point, we don't know that we can afford to build a parking deck," Laidlaw said, adding that the designers will determine how best to provide parking for the property.
In response to a question from Hester, Laidlaw said she believes that state government can build and maintain buildings cheaper than the private sector, and state officials have proved that in the past.
Hester said, "I think this may be the only part of government that I ever heard that can do it better than the private sector."
Laidlaw said the building division has emphasized energy-efficiency programs in its portfolio of buildings to reduce utility expenses by almost 40 percent.
Hester replied, "You can do all those things when your cost of funds are zero, just on the burden of the taxpayer."
Sen. Keith Ingram, D-West Memphis, asked Laidlaw about the motivation behind the proposed building.
Laidlaw said the Insurance Department leases three buildings for its divisions.
The proposed building is aimed at placing departments with common needs and purposes together to reduce their square footage and their lease payments, Laidlaw said.
Earlier this year, Insurance Department Director Alan Kerr promoted the project to state officials and state lawmakers. Kerr is a former Republican state representative from Little Rock.
On Wednesday, a Joint Budget Committee co-chairman, Rep. Lane Jean, R-Magnolia, asked how much the departments pay for their leases.
"I want to see what they are paying in rent now and the cost of the building and then to do some figuring out if this is really a good deal. I don't have all the information yet," he said in an interview.
Laidlaw said Thursday that the Insurance Department pays about $1.1 million a year to lease 65,915 square feet from the Arkansas Teacher Retirement System; the Bank Department pays $310,356 a year to Responsive Education Solutions of Dallas to lease 16,650 square feet; and the Securities Department pays $231,895.23 a year to lease 13,468 square feet from J. Chandler & Co. Inc.
She said the leases total about $1.64 million a year for 96,033 square feet.
Hester said in an interview that he opposes the proposed building project.
He said he would prefer these departments lease from the private sector rather than have the state finance a new building for them. He said he couldn't justify spending $20 million of insurance premium taxes to construct a new building for these three departments to his constituents in Cave Springs when his constituents are financially struggling.
In fiscal 2016, the state transferred $2.5 million in insurance premium taxes for the proposed building project, said state Department of Finance and Administration spokesman Jake Bleed. The state purchased property for the proposed building for $1.2 million, according to state records.
Metro on 10/28/2016