Bryan Building example of lease-purchase

Tuesday, July 5, 2005 | 9:45 a.m.

CARSON CITY -- Agencies have started moving into a new state office building, a building the state is leasing to own.

Dedication of the Bryan Building, south of the Capitol, will be July 14. It will house most divisions of the state Department of Conservation and Natural Resources.

The department has been renting private office space in Carson City, but now the rent money will go towards the lease-purchase agreement in which the state will end up owning the 120,000-square-foot building in 27 years.

The building is named after the former governor and U.S. senator, Richard H. Bryan.Typically the state pays cash or uses money from a bond issue to finance building construction.

Deputy State Treasurer Robin Reedy said Friday the building will cost $44 million when construction and interest is added in during the 27 years.

Investors purchased certificates of participation in amounts of $5,000, with that money being used to fund the construction.

The building, authorized by the 2003 Legislature, is constructed on state land.

A lease-purchase contract does not count against the state's debt limit of 2 percent of assessed valuation. Gov. Kenny Guinn pushed for this plan because in 2003 the state was short of cash and most of the construction money and bonding capacity is allocated to the universities, community colleges and prisons.

He suggested this year that the state enter another lease-purchase agreement for a new building for the state Human Resources Division. But the Legislature rejected that idea.

While many suggest this is a new way of financing for the state, there were actually two buildings constructed in the late 1950s and early 1960 under this financing scheme.

Dick Ham, former director of the state Department of Employment Security, said the office in Las Vegas on Sixth Street was a lease purchase financing arrangement. Ham, who later became chief of staff for Gov. Grant Sawyer, used the lease purchase option in constructing the Carson City headquarters in the early 1960s and it is still in use.

The Conservation Department has offices at seven locations in Carson City and renting these from private companies.

The state spends an estimated $15 million a year on renting private office space in Las Vegas, Reno, Carson City and some rural counties.

In the event the state gave up its lease and moved out, Reedy said the investors would be free to find other tenants.

Agencies will be moving in during the next two weeks. Other tenants will be the Public Employees Benefits Program, the Financial Institutions Division and the Manufactured Housing Division.