Guinn says deal to buy state building might be too late

Wednesday, Feb. 11, 2004 | 8:40 a.m.

CARSON CITY -- A plan that could save the state more than $50 million was offered Tuesday as an alternative to a long-term lease purchase for a new state Department of Conservation and Natural Resources building.

But Gov. Kenny Guinn said the new offering was too late. No money is allocated to pursue the offer to buy the buildings that currently house the agency, he said.

The Conservation and Natural Resources Department currently leases three buildings in Carson City totaling 98,000 square feet. The owner, Dr. Phillip Frost, has offered to sell the buildings and the 6.8 acres to the state for $10 million.

Secretary of State Dean Heller said he had received a letter from Frost's attorney indicating a willingness to sell. He raised the issue at a meeting of the state Board of Examiners, which previously approved the lease-purchase plan.

The state is getting ready to close the deal for construction of a 120,000-square-foot building on state land to cost about $21 million. Under the lease purchase the state would pay $72 million over the next 27 years and end up owning the building. If nothing were done, the department would pay more than $70 million in rent during this period and would still not own the building.

Heller said Frost's offer presented a "real possibility to save money" and that the state should look into it.

Guinn said employees have complained that the roof leaks in the current buildings and major rehabilitation would have to be done.

In addition, state budget director Perry Comeaux said the three buildings would not house all of the agency's staff members who are scattered around Carson City.

"It is not suitable for conservation because of its size," he said. Guinn said the state has been leasing those buildings for 14 years and will end up with nothing. The governor said the certificates of participation for the lease purchase are to be sold soon and that their sale will finance the 120,000-square-foot project.

After the board meeting, Guinn said it was too late to change course.

G. Barton Mowry, attorney for Frost, said a lease-purchase would be a strong possibility. Mowry said the $10 million offer "is significantly less expensive than what the state proposes to pay under the long-term lease-purchase proposal for the 120,000-square-foot, multi-story building on state-owned land."

Mowry said the purchase of the existing building could be made without disrupting the agency.

But Guinn, chairman of the Examiners Board, said any decision would have to wait for the next Legislature, which convenes in February 2005.