Call to Order and Roll Call
The first meeting of the Budget Review Subcommittee on General Government, Finance, and Public Protection of the Interim Joint Committee on Appropriations and Revenue was held on Monday, August 1, 2016, at 10:00 AM, in Room 129 of the Capitol Annex. Representative Rita Smart, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Danny Carroll, Co-Chair; Representative Rita Smart, Co-Chair; Senators Joe Bowen, Stan Humphries, and Dennis Parrett; Representatives Adam Koenig, Brad Montell, Steve Riggs, Tom Riner, and Brent Yonts.
Guests: Representative Derrick Graham; Mark Bunning, Deputy Secretary, Finance and Administration Cabinet; Andy Casebier, Director, Division of Engineering and Contract Administration, Finance and Administration Cabinet; Chris Moore, Executive Director, Kentucky Communications Network Authority; Brenda Brown, Assistant Architect, Kentucky Communications Network Authority; and, Doug Hendrix, General Counsel, Kentucky Communications Network Authority.
LRC Staff: Joe Lancaster, Katherine Halloran, Raymont Griffith, Stephanie Rich, and Spring Emerson.
Finance and Administration Cabinet
Deputy Secretary Bunning and Director Casebier provided an overview of the New State Office Building/Capital Plaza Tower project as well as an update on the Lexington Convention Center Expansion.
In response to a question from Senator Bowen, Mr. Bunning said the owner of the New State Office Building is CRM Development Company, Inc. The state has entered into a 35-year lease, and at the end of the lease period, ownership reverts to the state.
In response to a question from Senator Parrett, Mr. Casebier said utility cost estimates are based on the costs of the subpar HVAC systems in the old buildings versus the more efficient new systems, and those estimates will be adjusted with time and actual usage.
In response to questions from Representative Yonts, Mr. Bunning said energy savings will be realized in the New State Office Building, as compared to the Capital Plaza Tower (CPT). Mr. Casebier said the developer is to pay for any maintenance or repairs while the building is under lease.
In response to a question from Senator Carroll, Mr. Casebier said the new building will require the purchase of new furniture due to size constraints. The old furniture will be reused elsewhere or sold for salvage. The finance charge for the five-year purchase of furniture is less than one percent.
In response to questions from Senator Bowen, Mr. Bunning said the cost of utilities is not included in the lease amount, but any maintenance or repairs are included. Mr. Casebier said the state will be responsible for the cost of utilities, janitorial services, moving walls or doors, adding data lines, etc.
In response to a question from Representative Montell, Mr. Casebier said the Request for Proposal (RFP) included lengthy maintenance requirements in order to keep the building in good shape for a long period of time.
In response to questions from Representative Riggs, Mr. Casebier said the food service would be a new venture for the Department for the Blind, which will not be a full-service cafeteria, but a popular style of service including soups, salads, and sandwiches. The building will also include a snack and sundries shop. The building is a joint venture between CRM Development Company, Inc. and DW Wilburn, Inc. A traffic study was done by the Department of Transportation, assuring that the size of the building would not cause any significant increase in traffic flow at the intersection of Sower Boulevard.
In response to a question from Representative Yonts, Mr. Casebier said the Department of Corrections did not build the new furniture.
In response to a question from Senator Carroll, Mr. Casebier said the lease payment is a fixed rate for 35 years, but the built-in maintenance fund may require an adjustment near the end of the lease. Mr. Bunning said the lease amount is $4,522,000 annually.
In response to questions from Chair Smart, Mr. Casebier said even though the workspaces will be slightly smaller, employees will have adequate space at 237 square feet per person. New tenants like their new environs. Mr. Bunning said the Energy and Environment Cabinet occupies floors one through three, the Cabinet for Education and Workforce Development occupies half of the fourth floor, and the Department for Education will occupy the other half of the fourth floor as well as the fifth floor. There would be some cubicle sharing in the Education Cabinet, due to telecommuting efforts. The parking lot accommodates local planning and zoning requirements and includes parking for visitors and handicap-accessible spots. There will be a separate lot for the fleet vehicles used by the Energy and Environment Cabinet.
In response to a question from Representative Yonts, Mr. Bunning said options are being explored for the CPT if it does not sell.
In response to a question from Senator Carroll, Mr. Bunning said that, since the RFP for the CPT is active, he could not disclose any information regarding the cost of renovations at this time.
In response to a question from Chair Smart, Mr. Bunning said the Lexington-Fayette Urban County Government is putting cash into the expansion of the Convention Center, and Lexington Center Corporation will be issuing bonds.
In response to a question from Representative Yonts, Mr. Bunning said the expansion of the Lexington Convention Center would not affect Rupp Arena. Rupp Arena is owned by Lexington Center Corporation.
In response to questions from Chair Smart, Mr. Bunning said each building would be evaluated for maintenance needs.
In response to a question from Representative Yonts, Mr. Bunning said the cost for the food space in the New State Office Building would be paid for by the building tenants, which is also true for the cafeterias in the Transportation Cabinet and the Cabinet for Health and Family Services buildings. Representative Yonts expressed his concern that the cafeteria in the Capitol Annex building is in dire need of updates and improvements.
Kentucky Communications Network Authority
Director Moore provided an update on the status of the KentuckyWired Initiative.
In response to a question from Chair Smart, Mr. Moore said the 10-month delay is due to pole attachment agreements with AT&T and Windstream.
In response to a question from Senator Parrett, Mr. Moore said public right-of-ways are used as much as possible in order to avoid the cost of obtaining easements.
In response to a question from Representative Riner, Mr. Moore said the Kentucky Communications Network Authority (KCNA) cooperate with the public safety community, including the Department for Homeland Security, which would mitigate the effects of a possible Electronic Magnetic Pulse (EMP) attack.
In response to a question from Representative Yonts, Mr. Moore said the KentuckyWired initiative is not using eminent domain to obtain rights.
In response to a question from Chair Smart, Mr. Moore said the various grants available are for Community Planning, Community Access Centers, and eCommerce Training.
In response to a question from Representative Montell, Mr. Moore said KentuckyWired is a wholesale provider, not an internet service provider.
In response to questions from Senator Carroll, Mr. Moore said there is no duplication of services and the e-rate federal subsidy is unaffected, as KentuckyWired does not provide services for K-12 education. The KentuckyWired initiative is a Public-Private Partnership (P3).
In response to a question from Representative Yonts, Mr.
Moore said there would be a presence in all 120 counties in Kentucky.
In response to a question from Senator Bowen, Mr. Moore said it is a self-sustaining venture, governed by the P3 agreement over a 30-year period.
There being no further business before the subcommittee, the meeting was adjourned at 11:46 AM.