TOPEKA — The administration of Gov. Sam Brownback’s signing of a $20 million lease-purchase deal for construction of a new state power plant in Topeka on Wednesday elicited bipartisan condemnation from lawmakers who contend the maneuver was designed to sidestep legislative oversight and seal the fate of Docking State Office Building.
Members of the House and Senate expressed frustration with the 15-year contract executed Dec. 29 because the total cost was millions of dollars higher than previously disclosed, the first payment due in March wasn’t included in Brownback’s budget submitted this month to the Legislature and the arrangement hadn’t been approved by the state’s joint building committee.
Lawmakers skeptical of the Kansas Department of Administration’s plan to tear down Docking, which houses the Capitol Complex’s existing power plant in the basement, said the financial agreement with Bank of America likely closed the door to reconsideration of full demolition.
Senate President Susan Wagle, R-Wichita, said the contract negotiated by the Kansas Development Finance Authority on behalf of the administration department hadn’t undergone standard review by the Legislature.
“It’s clearly something that wasn’t vetted by the Legislature,” Wagle said.
Sen. Laura Kelly, a Topeka Democrat on the Legislature’s joint building committee, said lawmakers deserved more information about the executive branch’s rush to complete the lease-purchase. She had understood the goal was to take about $17 million from the state general fund to pay for the new power plant and demolition of Docking.
“Then came the avalanche of revenue shortfalls,” she said. “What do we do? Borrow and pay interest to cover the shortfall and forge ahead with a controversial project, hoping no one would notice.”
Brownback and legislators have struggled for the past year to bring revenue into balance with expenditures, and this session they are responsible for resolving an estimated $190 million deficit over the next 18 months.
In October, the administration department said the heating and cooling plant to be located one block north of the Capitol would cost about $12 million. The previous estimate shared with legislators monitoring state building projects was $9 million.
The Department of Administration’s director of facilities blamed Topeka engineering firm Lattimer and Sommers for underestimating the cost. It is unclear what accounted for the most recent growth in the project’s bottom line.
Under the new agreement, Bank of America will finance construction of the power unit at a cost of $16.4 million. Annual payments to Bank of America are pegged at $1.32 million annually through 2031, for a total of $19.92 million.
Department of Administration spokesman John Milburn said the lease process was “conducted with the consultation of the governor’s office and the director of budget,” Shawn Sullivan. This lease debt is to be repaid from rent revenue collected from state buildings in the Capitol complex, Milburn said.
“Additionally,” he said, “utility savings and cost avoidance for Docking operating expenses will help cover the payments.”
Eileen Hawley, spokeswoman for Brownback, said the lease involved “off-budget appropriations” and required payments didn’t need to be reflected in the budget considered by legislators.
Questions have arisen about whether the lease-purchase transaction was legal, said Senate Minority Leader Anthony Hensley, D-Topeka. He has requested the Kansas Legislative Research Department issue an opinion on the matter.
“If, in fact, they were not legally authorized then somebody needs to be held accountable,” Hensley said.
Jim MacMurray, senior vice president at KDFA, said the contract was signed under authority contained in state law and claimed by Sarah Shipman, acting secretary of the Department of Administration. He said it wasn’t unusual for the department to lease buildings, but thought a lease-purchase for construction of a power plant was “probably not the usual route.”
He said a request for proposals for the power plant facility attracted four bidders. The lease option required far less public disclosure than if the state had issued bonds to build the power plant, he said.
Rep. Mark Hutton, a Wichita Republican on the joint building committee, said the Department of Administration had been asked to conduct a feasibility study to determine whether it still made financial sense to proceed as planned or to change course and preserve the power facility and lower floors of Docking. He assumed the agency would return to legislators before signing a contract.
“They circumvented the appropriations process,” Hutton said. “I think it’s atrocious. The Joint Committee on State Building Construction had been tracking that project and working with the Department of Administration on it.”
House Minority Leader Tom Burroughs, D-Kansas City, said the transaction with Bank of America was a fresh example of the Brownback administration’s commitment to government transparency.
“Business as usual. It’s not surprising they’d take that action. We need a more transparent, more forthcoming government,” Burroughs said.
Rep. Annie Kuether, D-Topeka, said officials within the Brownback administration were determined to eliminate from Topeka’s landscape the 12-story building named for former Kansas Gov. Robert Docking.
“They were going to make sure Docking was dead one way or another,” Kuether said.
Demolition and salvage work on Docking was to have started in December, while construction on the power plant was to have begun last May and been completed in March. The state has been transitioning employees from Docking to privately owned space leased in Topeka.