ARIZONA STATE SENATE
Phoenix, Arizona
governmental mall office
buildings
Increases from two to three the number of buildings for which the Director of the Department of Administration (DOA), subject to the approval of the Joint Committee on Capital Review (JCCR), may enter into lease-purchase agreements.
According
to DOA, state-owned space on the Capitol Mall is currently 99.93 percent
occupied, virtually prohibiting further expansion on the mall in state-owned
buildings. Additionally, if current
growth trends continue, DOA estimates that an additional 950,000 square feet of
office space will be needed within the next decade. Because of the lack of existing state- owned space, any expansion
would have to be accommodated through private sector leases. The state
presently spends $10.5 million per year for leased space; this is expected to
grow by $1 million annually under current projections.
In
2000, S.B. 1063 granted authority to DOA to enter into lease-to-own agreements
for two buildings (Department of Environmental Quality and Department of
Administration)
The
proposed 170,000 square foot facility will consolidate seven operations of the
Department of Health Services (DHS).
The proposal will encompass the relocation of approximately 150,038
usable square feet of DHS lease space and operations located in DOA lease
purchase buildings.
Similar
to the development of the first two buildings, DOA will issue a request for
proposal to the development community for the planning, design, construction,
operation and maintenance of the building.
Proposers will present their respective plan with an accompanying lease
cost for the term of the lease. DHS
will make annual lease payments for the term of the lease to the
developer/manager. At the conclusion of
the lease term, the state will own the building.
While
prospective lease payments should be covered by the redirection of existing
lease payments, the fiscal impact of this legislation is unknown.
1. Increases from two to three the number of buildings for which the Director of the Department of Administration may enter into lease-purchase agreements.
2. Requires JCCR to review the lease-purchase agreement before the transaction takes effect.
3. Specifies authorized conditions of the lease agreement.
4. Exempts the buildings from property taxation during construction and while occupied by the state for governmental activity.
5. Provides for a general effective date.
Prepared by Senate Staff
January 25, 2001