House Minority Leader Craig Fitzhugh is questioning a long-term real estate strategy to would consolidate state properties and sell Davidson County land and buildings in the downtown Capitol hub, including the multi-story Citizens Plaza.
As part of the capital budget for fiscal 2018, the Department of General Services is continuing an effort to improve efficiency and maintenance and cut the amount of office space needed for state government so it can trim state office leases.
In addition to potentially selling downtown Nashville office buildings, it also wants to shift several state operations to 600 acres in Cockrill Bend for a multi-agency law enforcement training center.
“It’s more like shedding the state of some of its assets,” says Fitzhugh, who joined other legislative leaders in a recent meeting with Gov. Bill Haslam for his first briefing on the real estate strategy.
Fitzhugh, an attorney/banker from Ripley considering a gubernatorial run in 2018, is worried the state could be overzealous in its efforts to liquidate. He points out state leaders recently wanted to sell the Cordell Hull Building but instead are transforming it into the new Legislature building and are set to move out of the Legislative Plaza later late this year or in early 2018.
“The point of it is they are moving toward reducing the real estate the state owns, (and it) could be pretty dramatically,” Fitzhugh says.
The state has 97 million square feet in its portfolio, 34 million in general government and the rest in university facilities, according to a strategy report presented recently. About 5.1 million square feet of that space, 15 percent, is leased.
In the Nashville Central Business District, the state owns 10 buildings with 2.6 million square feet and leases 225,000 more in three other buildings. In addition, it owns two buildings and leases four others in Metro Center in north Nashville for a total of 559,000 square feet.
“Eventually we anticipate being able to reduce our space needs in downtown Nashville by some 700,000 square feet, which could potentially allow us to sell a building in Nashville,” says Dave Roberson, spokesman for the Department of General Services, via email.
During discussions about space reductions by various departments to trim leases and consolidate space, Citizens Plaza on Deaderick Street and 4th Avenue North was mentioned as a “possible candidate for sale,” according to Roberson.
For a multi-agency law enforcement training center northwest of the downtown area in Cockrill Bend, the state would move Department of Commerce & Insurance offices from 67 acres in the Hermitage area; Department of Safety facilities from 101 acres at the former Clover Bottom facility and 153 acres at the former Tennessee Preparatory School site and a multi-purpose training facility near Nashville International Airport; the Department of Correction from the Rachel Jackson Building downtown, a Department of Correction training academy on 183 acres in Tullahoma and the Tennessee State Prison on 140 acres.
The proposal points out those properties would be put back on the tax rolls, and as part of the project the state would eliminate millions in real estate costs.
The report projects the state would come out ahead on the multi-agency training facility, because upgrading and maintaining state properties is projected to cost $270 million to $280 million versus the projected cost of $220 million to $230 million for the training center, according to the real estate plan.
Questioning the wisdom of these land moves, Fitzhugh points out the state wouldn’t be able to consider such an expansive move if it had sold the Cockrill Bend property previously. He notes, “When you own something like that down my way, you try to buy what’s next to you. You don’t try to sell it.
“I was also a little concerned because it consolidates so much in downtown Nashville. We’ve already got a traffic problems we’re trying to work through here. It could even exacerbate that. … It just didn’t seem to be a whole lot of transparency to those plans,” he says.
The department presented its capital projects budget three weeks ago to state lawmakers with information on the strategy but didn’t discuss its operating budget until last week with legislative leaders, according to Roberson.
Lt. Gov. Randy McNally, who received a real estate overview as well, says legislators weren’t told about any specific buildings that could be sold.
Office space has been eliminated for some people who work primarily in the field, according to the report. For instance, the Economic and Community Development has consolidated into one floor through more efficient use, legislators say.
“That’s freed up a lot of space, and that is causing the consolidation,” says McNally.
In contrast to Fitzhugh, Senate Republican leaders are downplaying the situation.
But as the process continues, McNally says he expects the Legislature and the State Building Commission “to have a voice,” especially in what buildings and properties are sold.
Says Sen. Bill Ketron, chairman of the Senate Republican Caucus: “This is a long-term vision, and the governor said this is for the long term, long after he’s gone. It’s just to put it on our radar to look at what spaces we’re currently using. I think that’s a prudent business decision.”
Ketron, of Murfreesboro, points out the department also showed lawmakers a plan from 1947 involving the construction of tunnels from the current Tennessee Supreme Court building to the Capitol. A tunnel runs from the Legislative Plaza to the Capitol, and another one is being built from the Cordell Hull Building to the Capitol.
As part of its capital projects plan for fiscal 2018, the state also is planning $15.83 million in interior renovations upgrades and another $1.89 million for alternative workplace solutions. Its facilities management plan shows satisfaction for employees improved from 62 percent in July 2013 to 98 percent in December 2016.
Using a baseline expense of $55 million for operations and energy in fiscal 2013, the department says it has cut costs by $12.9 million over the last three years with a better-trained staff doing more of its own work, reducing utility expenses and doing preventive maintenance and getting better pricing from sub-contractors.
Sam Stockard can be reached at [email protected].