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YELLOW SHEET Office of the State Auditor of Missouri |
December 5, 2000
Report No. 2000-122
Management of leased space was
effective and with some enhancements could be more effective.�
This report addresses the State
Auditor�s Office assessment of whether Division of Facility Management (DFM)
officials have provided effective oversight over the leasing of office space
for state agencies and whether agency officials have been encouraged to support
the economic development of inner cities through the leasing of office
space.�
Leasing personnel have
successfully used the formal bid, informal bid, or negotiated methods in
determining agency lease rates. Our review disclosed that there are some
opportunities to improve operations. Currently, leasing personnel are not
required to perform market analyses to determine fair market rental rates, nor
are they required to document results when negotiating lease renewals or new
leases.� The lack of market analyses of
lease areas under consideration and lack of documented negotiation results
raised questions as to whether leasing officials could be assured the lowest
possible lease rates were achieved.��
Community-based actions challenging
leasing decisions have led to delays and changes in leasing decisions.� Audit
resultsshowed examples where community activists
resisted agency placements in the community or agency relocations to another
community. In one example, leasing officials attempted to consolidate several
agencies at one location, but, community activists succeeded in
preventing one agency from relocating out of the community into the new
consolidated space in a different community.�
As a result, two locations are necessary and the state will incur an
additional $268,835 in leasing costs over the next 5 years.�
DFM leasing fficials have allowed agency officials to fund unique requirements and major renovations to agency leased space through lease payments rather than from agency funds.� As a result, lease costs, renovation costs, and the potential for shortfalls in lease funding have increased.� For example, one lease will cost the state an estimated additional $406,000 over the next 10 years because leasing officials allowed unique requirements and major renovations to be paid by the lease.� DFM leasing officials now believe unique requirements and major renovations should have been paid out of agency operating funds and are taking action to stop this practice.�
The state does not have a policy, and leasing officials do not have any guidance addressing locating leased state offices in the inner city as a means of supporting the economic development of those cities.� Our review of rationale used by most agency officials for locating leased space in the St. Louis and Kansas City metropolitan areas showed the reasons for locating office space outside these cities were justified. �Some agency officials did not have compelling reasons for placing offices outside the city.� By locating state agencies in the inner cities, inner cities stand to gain the benefits associated with having additional workers in the city and enhanced employment opportunities that state agencies afford.
