Bill aims to change Madison-centric state leases

State paying higher lease rates than necessary

MADISON, Wis. – In real estate the mantra is, “location, location, location.”

Photo by UWEX.edu

Photo by UWEX.edu

MADISON-MINDED: A bill working its way through the Legislature would require the DOA to look beyond Madison and Dane County when selecting leased property for state agencies.

So it goes for the state’s agency leasing program.

But when it comes to the Department of Administration, the government’s leasing agent, location is most often Madison, Madison, Madison.

A bill authored by state Rep. Joe Sanfelippo, R-West Allis, and Sen. David Craig, R-Town of Vernon, aims to change that singular point of view.

The measure would require the DOA to identify the “most appropriate and cost efficient locations to place an agency when securing or renewing a lease.”

Leasing agents would have to consider situating a state agency where it provides the most services, and identify multiple locations – at least two of which are outside Dane County.

“When considering leases to house state agency headquarters, the Department of Administration (DOA) currently restricts eligible property locations to a limited geographical area,” Sanfelippo wrote in a legislative memo. “This practice has created an artificial market for commercial real estate which is inflating the cost of lease rates and resulting in taxpayers paying unnecessarily high prices.”

DOA’s general policy, Sanfelippo said, is that the state agencies have to be located in Dane County, and primarily in the county seat and state capital, Madison.

“You see these buildings all right there around the Capitol, for the most part,” the lawmaker said in an interview Tuesday with Wisconsin Watchdog. “These landlords know (about the DOA policy) and they screw us 10 times from Sunday when it comes to these leases.”

The lawmakers say they’ve received “mixed signals” from DOA officials regarding state statutes on government leasing. Sanfelippo said the agents couldn’t provide anything specific and ultimately said that the Dane County-centric leasing philosophy is “unwritten policy.”

DOA spokesman Steve Michels said the agency is happy to look at any proposal that might save money and improve its services.

“We are aligned in our shared goal to deliver value to the taxpayers through a more efficient government,” he said.

RELATED: Bill would provide more oversight on costly state leases

The argument has long been that Madison is the seat of state government. The infrastructure is there and that’s where state government operations should remain. There is no bigger advocate of that position than the city of Madison, a ready benefactor of state centralization.

Keeping state agencies together in the same city or geographical area makes it much easier for departments to interact with the executive and the Legislature, proponents say.

Sanfelippo says those arguments no longer apply, particularly in the Digital Age.

“The vast majority of employees that work in these agencies do not interact on a daily basis with the Legislature, and most of the secretaries don’t. That pretty much goes out the window,” the legislator said. “In 1848, when we became a state, maybe that made sense back then, with communications and transportation primitive at the time. In 2017, you don’t have to be in one place. It doesn’t make sense anymore.”

It’s also not fair to citizens who live hours away from Madison, the bill’s authors assert. Some government services arguably are much better suited for other locations around the state.

The Department of Natural Resources’ forestry division is a case in point.

Gov. Scott Walker’s budget proposal calls for moving the division north. The 2017-19 budget plan requires the headquarters to relocate by early 2018 to an existing DNR building north of state Highway 29.

State Sen. Tom Tiffany told Wisconsin Public Radio last month that the move would do wonders for forestry division recruitment.

“They like to hunt. They like to fish. They like to be in rural Wisconsin, small town Wisconsin,” the Hazelhurst Republican said. “It was limiting the pool of people that would apply for some of those jobs. I think it’s really good to move the division headquarters to northern Wisconsin, and hopefully that will be accomplished here.”

The state lease location bill also would require the Department of Children and Families to develop a plan to move its headquarters to Milwaukee County. DCF would have to complete the plan in time for it to be included in the agency’s 2019-21 biennial budget request, according to the legislative memo.

DCF’s lease is up in the next couple of years, and the agency is planning a move, Sanfelippo said. Why not consider moving the agency to Milwaukee, where more than half of its customers live and where rents are often substantially cheaper, the lawmaker said.

Photo by Wisconsin Legislature

Photo by Wisconsin Legislature

CHANGE OF ATTITUDE: State Rep. Joe Sanfelippo, R-West Allis, said the state needs to think more like a business in negotiating leases for agency operations.

“Look at the private sector. When a business is looking at a headquarters, they look at, No. 1, what’s most economical and, No. 2, where their market is,” Sanfelippo said. “You want to locate close to your market.”

Walker vetoed a similar measure in the last budget, but Sanfelippo said he believes that was merely a matter of timing. Walker was busy on the presidential campaign trail at the time.

“I needed to do a better job of communicating with the Governor and his staff,” Sanfelippo said.

Michels said talking about agency office space in a “vacuum” doesn’t always account for the “diverse program needs of each agency and its stakeholders.”

“The spatial and geographic needs of the legislative service agencies, for example, are very different from the DNR forestry division,” the DOA spokesman said.

Leasing reform legislation seems en vogue right now.

Last week, State Rep. Rob Hutton, R-Brookfield, and Sen. Chris Kapenga, R-Delafield, introduced a bill to require DOA to conduct a cost-benefit analysis before signing a lease for government buildings.

And the bill would require the secretary of the Department of Administration to sign the contract. All leases totaling more than $500,000 must be submitted for a 14-day “passive review” by the Legislature’s Joint Committee on Finance.

As Wisconsin Watchdog first reported in December 2015, an extended lease on the state Department of Corrections headquarters at 3099 East Washington Ave. will cost taxpayers more than $51 million over a decade, between fiscal 2012 and fiscal 2021, according to a copy of the lease.

That’s more than three times the $14.38 million assessed value (2015) of the 14-acre property.

DOA has been working through its Madison Master plan, described by the Wisconsin State Journal as “a once-in-a-generation reshuffling of state offices involving thousands of workers. The plan is designed to trim the number of state building leases and, ultimately, save taxpayers money.

But it remains Madison-centric.

Sanfelippo said it’s time to change the attitude of the bureaucratic fiefdom. He knows that won’t be easy.

“These are their little kingdoms. They don’t like anybody telling them what to do,” the lawmaker said.

M.D. Kittle is bureau chief for Wisconsin Watchdog and First Amendment reporter for Watchdog.org. Contact him at mkittle@watchdog.org. Cross-posted from Wisconsin Watchdog.

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