Review of leases requested after report of unused building
BISMARCK, N.D. (AP) — A North Dakota state lawmaker said Friday that a news report about expensive but unused office space underscores the need for a review of all state leases to protect taxpayers.
The Associated Press reported Thursday that taxpayers are on the hook for nearly $3 million in rent over the next two years for unused office space in Bismarck for a state agency that intends to allow most of its more than 400 employees to work from home indefinitely.
“This is a classic example of the inefficiency and wastefulness of government,” said Republican Rep. Rick Becker, a Bismarck plastic surgeon, commercial real estate developer and former gubernatorial candidate.
“Can you imagine a business doing that? But no business would do that, of course,” he said.
The North Dakota Information Technology Department’s 85,000-square-foot leased space in a newly remodeled, privately owned office building in north Bismarck is unoccupied, except for about a dozen employees, the agency told the AP. It is the largest and most expensive leased office space in the state, officials said.
Though the lease was signed before the conavirus pandemic, the agency’s head had already begun moving toward having employees work remotely — and has said he intends to continue with that even after it subsides.
Becker previously sponsored a resolution that called for “studying the amount, type, cost, and occupancy of property leased by the state or any state agency” since 2018.
The resolution approved by the Legislature came after GOP Gov. Doug Burgum promoted working from home as a way to cut costs. Burgum spokesman Mike Nowatzki said it also has been pushed to “promote workplace flexibility as a recruiting tool.”
The study is one of 72 that are optional for review by the Legislature, and if chosen could inspire legislation for the 2023 session. The Legislative Management committee, a 17-member panel of lawmakers that supervises business between sessions, will meet Wednesday to select the topics.
Lawmakers this year approved a $275 million two-year budget for the Information Technology Department, and increased its workforce from 402 people to 479. Included in the budget is funding for the agency’s digs, at about $2.9 million over the next two years.
Shawn Riley, who heads the Information Technology Department, told the AP on Friday that the agency did its “due diligence” in trying get out of the lease, since almost all of its employees are now working from home.
Riley said the agency inquired about having lawmakers cut funding for the lease but were told by the state attorney general’s office it would likely lead to a lawsuit.
“I would say we were adamant about our situation,” he said. “We were advised there would be a legal battle.”
Liz Brocker, spokeswoman for the attorney general’s office, emphasized on Thursday and Friday her agency would not comment on legal strategy with a state agency. GOP Attorney General Wayne Stenehjem did not respond to repeated phone messages.
Documents obtained by the AP show that the state pays more than $10 million in rent for agencies at about 170 locations statewide, at an average rate of $13.33 a square foot.
North Dakota Capitol Facilities Manager John Boyle has said each state lease has an “appropriation clause” that allows the state to get out of it if the Legislature doesn’t provide funding.
The IT agency’s lease, obtained by the AP, contains that clause, saying the state “has no obligation under this lease for the initial or succeeding terms if the North Dakota Legislature fails to appropriate” funds.
The state has been sued before for breaking a lease after the Legislature failed to appropriate enough money in the late 1980s for rent on a building in Fargo for the state Department of Human Services. The North Dakota Supreme Court in 1991 sided with the state in that case.