The 7th meeting of the Capital Planning Advisory Board (CPAB) of the 2007 calendar year was held on Monday, October 22, 2007, at 10:00 AM, in the auditorium of the Frankfort State Office Building. Representative Reginald Meeks, Presiding Co-Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Jack Westwood, Co-Chair; Representative Reginald Meeks, Co-Chair; Senator David E. Boswell; Representative Ron Crimm; James Deckard; David Fleenor; Ben Fletcher; Paul Gannoe; John Hicks; William May; Doug Teague; Laurel True; and Garlan Vanhook.
Guests: Jim Abbott, Commissioner, Department for Facilities and Support Services, Finance and Administration Cabinet.
LRC Staff: Pat Ingram, Nancy Osborne, Shawn Bowen, and Debbie Rodgers.
Mr. Hicks' motion to approve the minutes of the October 3, 2007, meeting was seconded by Mr. True and approved by voice vote.
Representative Meeks said the Information Item in members' folders addressed the building in which the meeting was being held, and would be discussed further later in the meeting. He then explained that the Board needed to complete its work on the 2008-2014 Statewide Capital Improvements Plan at today's meeting. Committee Staff Administrator Pat Ingram was asked to review the revisions made to the Policy Recommendations based on discussion at the October 3 CPAB meeting. Ms. Ingram said the cover sheet on Agenda Item V identified the changes that had been made.
Relative to the recommendation concerning state agency maintenance pools, Ms. Ingram said the wording had been changed to reflect the Board's desire for all Investment Income to be pledged to the maintenance pools and for other funds to be appropriated as needed to ensure there is sufficient funding for the pools. Mr. Hicks said the change reflected the Board's intent and asked that the recommendation use the official name of the fund, Capital Construction Investment Income, since there is more than one type of investment income. Representative Meeks said the requested change would be made.
Relative to the recommendation on capital renewal and renovation of state agency facilities, Ms. Ingram said the change was to clarify that both deferred and future capital needs of facilities should be addressed.
As discussed at the October 3 meeting, the next recommendation concerning capital renewal and renovation for postsecondary education facilities called for all future renovation and renewal needs of education and general (E&G) facilities be totally an institutional responsibility and that legislation be enacted requiring that each institution spend each year an amount equal to 2 percent of its E&G facilities replacement value on renewal and renovation projects. Ms. Ingram said this recommendation had been changed significantly based on the October 3 discussion. The revised recommendation was that each postsecondary education institution be required to submit an annual report to the Council on Postsecondary Education (CPE) concerning its capital renewal and renovation needs and its spending in the prior 12 months to address those needs. The revised recommendation also called for CPE to compile and distribute the institutional reports, with its analysis and recommendations, to relevant parties within the executive and legislative branches.
Ms. Ingram said the next policy recommendation concerning assessments of facility condition and maintenance needs also reflected significant changes based on discussion at the last meeting. The initial proposal had recommended that funding be appropriated in the 2008-10 biennial budget for a third-party assessment of all state-owned facilities. The revised recommendation recognized and commended facility assessments completed, underway, or proposed by the Administrative Office of the Courts, postsecondary education, the Finance and Administration Cabinet, and the School Facilities Construction Commission. It also recommended that in-house capabilities be developed to provide for continuing updates of the facilities data to ensure the ongoing availability of current, consistent, and accurate information on project needs and estimated costs.
Ms. Ingram said there were no changes in the next two recommendations. The first recommended funding the Budget Reserve Trust Fund at the 5 percent level specified in statute. The second called for a joint legislative/executive branch study of Kentucky's debt policies and practices.
Regarding the final policy recommendation concerning alternatives to incarceration, Ms. Ingram said there were two changes based on discussion at the last meeting. The organization of the recommendation was changed to state its purpose at the beginning of the recommendation, and it now includes changes to sentencing guidelines among the items recommended for consideration.
There being no further discussion of the policy recommendations, Representative Meeks asked Ms. Ingram to address changes to the project recommendation narrative based on discussion at the last meeting and to report on results of the polling of members regarding their recommendations on state-funded projects.
Regarding changes to the narrative, Ms. Ingram said the section on equipment was now more general in referencing the need for equipment and systems maintenance pools and for funding to allow agencies to establish and adhere to equipment replacement schedules. Recommendations of specific projects were no longer included. She said the section on the long-range plan for housing state agencies in the Frankfort area had been modified to add a section that urges the Department for Facilities and Support Services to also address reducing the amount of leased space in other metropolitan areas including Louisville/Jefferson County and Northern Kentucky. Finally, the section on postsecondary education capital renewal and maintenance was made more general and now simply commends the work done by CPE to assess the current condition and future needs of the postsecondary facilities.
With regard to the recommendation of individual projects, Ms. Ingram said the last three pages of the agenda item listed specific project recommendations to be inserted into the narrative in the categories of maintenance and renovation, information technology, and new construction. She said each list was a compilation of projects selected in that category by the Board members. Inclusion on the list was dependent on at least four members having selected the project. The projects were listed alphabetically, such that the order was not an indication of the number of members that listed a particular project.
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Representative Crimm made a motion to approve the Board's 2008-2014 Statewide Capital Improvements Plan including the policy and project recommendations as presented and to authorize the Co-Chairs to work with staff to resolve any questions that might arise in finalizing the plan for publication. The motion was seconded by Senator Westwood and approved by unanimous roll call vote.
Representative Meeks thanked the members for their dedication and commitment to the capital planning process and staff for their hard work on the plan. He also expressed appreciation for the good working relationships with the various agencies of state government, particularly the Council on Postsecondary Education and the Commonwealth Office of Technology - both of whom provided special reports to the Board. Representative Meeks noted that the buildings, technology, and equipment addressed by the Board in the plan are the tools that are used to deliver services to the people of the Commonwealth. As in the past, both the policy and project recommendations address the high priorities that the Board places on maintenance and on being good stewards of these assets and the state's resources.
Representative Meeks then invited comments from members. Representative Crimm said the Co-Chairs had done a great job and expressed his appreciation for their efforts. Mr. Hicks said he wanted to commend the staff, noting that the planning process involved every state agency and institution, complex computer software, and the compilation of a very large amount of data.
Moving to the next agenda item, Representative Meeks said a rededication and ribbon cutting ceremony for the newly renovated Frankfort State Office Building was held on Wednesday, October 17, 2007. He noted that renovation of the building was a major step in implementing the long-range plan for housing state agencies in Frankfort. Representative Meeks then asked Jim Abbott, Commissioner of the Department for Facilities and Support Services (DFSS), to discuss the renovation and to address how completion of the project would impact further implementation of the long-range plan.
After welcoming the Board to the building, Commissioner Abbott explained that the facility was originally constructed in two segments and had never served well as a single unit. The "front" portion facing the Commonwealth Credit Union was built in 1938, and the newer part on the Holmes Street side was built in 1964. He said the renovation included updates to address mechanical, technology, and ADA issues. It also replaced conventional office furnishings with a modular system that increased the density of the building occupancy.
Commissioner Abbott commended the work of Paul Gannoe, Director of the Division of Engineering and Contract Administration, and Joe Myer and Butch Hatcher, architects in the Division, for their work on the renovation project.
Mr. Abbott said the project cost was able to be reduced by approximately $4.1 million from the original estimate while the overall scope of the project was enhanced. He particularly referenced increased aesthetics for the parking lot relative to curbing and additional lighting. Additionally, a former scrap yard site adjacent to the building was donated to the state. It was capped to address environmental concerns and to provide additional parking for the increased number of building occupants. There are plans to modify another nearby state-owned building to provide for warehouse and other operational support for the Personnel Cabinet and the Department of Revenue, which are housed in the State Office Building. The upper two floors would be removed leaving a 1.5 story building, and a new front would be created facing the State Office Building. The building formerly housed the state's Surplus Property Division, which has relocated to another site.
Commissioner Abbott explained that after the statute was enacted calling for the development of a long-range plan for housing state agencies in Frankfort and a reduction in the amount of leased space, studies were undertaken to examine addressing the balance between state-owned and leased space as well as to examine functional obsolescence issues in existing state buildings. He said the first significant step was to construct the new Transportation Cabinet Office Building (TCOB). When Transportation Cabinet employees were relocated to that facility in 2004, it was possible to proceed with asbestos abatement and renovation of the State Office Building. The Department of Revenue and the Personnel Cabinet are now relocating from leased space to the newly renovated State Office Building. Commissioner Abbott said this would result in payments previously made to the lessor by the agency now being made to DFSS.
Commissioner Abbott went on to explain that the Capital Plaza Tower was to be entirely vacated and renovated as the next step in the long-range plan. However, the intent now is to consider remodeling that building by vacating only two or three floors at a time. This process was previously used in renovating the Capitol Annex. It is comparable to the approach that a private owner would use and will cause less disruption in the income received by DFSS from building tenants.
In response to a question from Senator Boswell, Commissioner Abbott said the time line for the Capital Plaza Tower renovation has not yet been set since there are serious questions about what to do relative to the entire complex including the tower. For example, he noted that the parking structures are in poor repair, and there are questions about whether to repair, replace, or eliminate the pavers that go across the entire complex. According to Commissioner Abbott, there is a need to determine whether it is in the best long-term interest of the state to remodel the complex, to change and improve it, or to do something entirely different. Over the next several months, the state's consultants for the project will develop a plan to be discussed with community leaders, tenants of the complex, and others.
Representative Meeks asked about savings that will result from agencies relocating from leased space to the newly renovated State Office Building. Commissioner Abbott said he will be better able to answer that question next year. He said there will be efficiencies in utility and maintenance costs because of a new central utility plant that serves three structures (the TCOB, the State Office Building, and the State Office Building Annex). Additionally, a project impacting the staffing needs of one of the agencies will sunset in the next few years, which will allow other employees to relocate to the building from leased space. Finally, some more space will be made available for employee occupancy when the former Surplus Properties Building is renovated to provide space for storage as previously described.
Responding to a question from Mr. Teague, Commissioner Abbott said the 11-floor building is now about 50 percent occupied. The sixth floor is being occupied this week.
Representative Crimm asked about DFSS's responsibility for buildings across the state and, specifically, the Lieutenant Governor's Mansion in Frankfort. Commissioner Abbott explained that DFSS is the landlord and facility manager for the major state office buildings in Frankfort. DFSS is also the construction procurement officer for the majority of state construction projects excluding those of the Administrative Office of the Courts and the five universities who have opted to perform their own capital construction. He said the Lieutenant Governor's Mansion is administered by the Historic Properties Branch of DFSS. Similar to the state-owned Berry Hill Mansion, it is rented out for functions such as weddings and receptions.
Senator Westwood congratulated DFSS for completing the State Office Building renovation for less than the planned budget. He asked how that was accomplished and how the savings will be used. Commissioner Abbott explained that the initial cost estimate for the project was reduced by $4.1 million. Because of a good bid climate and value engineering (analysis to identify lower-cost product and service designs), DFSS was able to include additional enhancements that were not initially a part of the project authorization, such as the parking lot and work on the former Surplus Properties Building.
Commissioner Abbott was asked to discuss the leased space being vacated by agencies that are relocating to the State Office Building. He said some of the space is at the Fair Oaks complex. There is interest in relocating to that space employees of the Environmental and Public Protection Cabinet (EPPC) currently housed in leased space at the Ash Complex, which is immediately across Wilkinson Boulevard from the Fair Oaks Complex. The Ash Complex is in a basin that is prone to flooding, and the space is old and overcrowded. However, EPPC does not have adequate funding for the increased cost of the proposed new space or for the costs associated with moving to that space. Such funding would need to be sought in the upcoming budget process. Commissioner Abbott said the other space being vacated is located at Perimeter Park. Consolidating and relocating the Department of Corrections to the Perimeter Park space is being discussed. This action would address the needs of the agency as well as address the need to have occupants in the building, which is owned by the Kentucky Retirement Systems. Funding for this purpose will also have to be sought in the 2008-10 budget.
Mr. True asked for a report on the Human Resources building. Commissioner Abbott said mechanical issues in the building were addressed through an Energy Savings Performance Contract. Other changes that were primarily cosmetic in nature (e.g., floor coverings, painting, reconfiguration of some space to improve agency efficiency) have also been completed by taking the building off line in segments. No further renovations of the building should be needed for another 15 years. Commissioner Abbott noted that the Jones Building near the Human Resources Building has also been renovated after being off line for several years. Workstations from the State Office Building have been "recycled" for use in that building, which is scheduled to be occupied by the Commonwealth Office of Technology in early 2008.
Representative Meeks thanked Commissioner Abbott for his presentation. He then noted that the Board does not meet during the General Assembly Session, but during that time staff will provide updates on the Board's recommendations and other issues relating to capital planning.
Mr. True asked that a future CPAB meeting address the Kentucky River dams and related water supply issues.
There being no further business to come before the Board, the meeting was adjourned at 11:05 AM. Following the meeting, members were provided an opportunity to tour the newly renovated State Office Building.