The Iowa Finance Authority confirmed Tuesday it will lease a new building in Des Moines, despite concerns raised about the cost of the deal negotiated by the agency’s former director.
The agency’s board reaffirmed an earlier decision to move from a state-owned building at 2015 Grand Ave. to leased space at 1963 Bell Ave. after a third-party review showed the move would save the state money over 10 years.
However, the 36-page review by Public Financial Management shows the leased option would be a comparable cost to renovating the Grand Avenue space in 15 years and would cost $3 million to $4 million more in 20 years.
“The board now feels comfortable that we have all of the facts related to the cost comparisons,” Iowa Finance Authority Board Chairman Jeff Heil said in a prepared statement Tuesday. “We can now move forward with the current lease with Hubbell knowing that the due diligence has been completed, provided to the board and is an appropriate use of funds.”
David Jamison, who was fired March 24 based on allegations of sexual harassment, had pushed for the Finance Authority to relocate.
The board initially approved the Bell Avenue lease with Hubbell Realty Co. on Feb. 7, but then requested a third-party review of the costs associated with the move, according to the news release.
Carolann Jensen, who was named interim director after Jamison’s ouster, asked Hubbell this spring how much it would cost for the agency to get out of the lease. A letter Dan Cornelison, Hubbell senior vice president, wrote to Jensen April 18 says a buyout would cost $5.75 million.
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“We consider the lease duly executed, having gone through all appropriate approval processes by the state of Iowa, as well as being fully negotiated by legal counsel for both tenant and landlord,” Cornelison wrote in the letter obtained by The Gazette through an open records request.
Public Financial Management found the 10-year costs of leasing the Bell Avenue site are $8.3 million, compared to $10.7 million for renovating the Grand Avenue office or $11.2 million for renovating the Grand Avenue space with an addition. The 15-year costs for all three options are between $12 million and $12.6 million, PFM reported.
In 20 years, the leased site will have cost $17.3 million, compared to $13.5 million for the renovated Grand Avenue space and $14 million for the larger renovated space, the report shows.
However, the cost of remaining in the Grand Avenue building did not account for the additional $5.75 million to terminate the Bell Avenue lease, Finance Authority spokeswoman Ashley Jared said.
The agency plans to move by the end of the year.
The Finance Authority is facing several investigations over the sexual harassment claims and allegations of misspending. The agency oversees programs in affordable housing, water quality and for beginning farmers.
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