Shumlin balks at questions about $8.6 million ANR expenditure, says the fit-up at National Life was not four times over projections

New Agency of Natural Resources offices at National Life in Montpelier. Photo by Alicia Freese

New Agency of Natural Resources offices at National Life in Montpelier. Photo by Alicia Freese

The Shumlin administration is defending its $8.6 million expenditure to renovate leased office space in the state capital, saying it was the most cost-effective way to relocate roughly 400 Agency of Natural Resource (ANR) employees displaced during Tropical Storm Irene.

The administration also denies having ever given a much more modest cost estimate to the House Institutions and Corrections Committee, which oversees state buildings.

The Associated Press reported that the Department of Building and General Services (BGS) originally gave the committee a “rough” quote of $2 million for the move.

National Life Insurance owns the Montpelier office complex where the state has undertaken the renovations. The space is already home to the Agency of Transportation and the Agency of Commerce & Community Development, whose employees were located at the site prior to Tropical Storm Irene.

Last year, the state leased additional space, and began to reshuffle these workers and renovate all 180,000 square feet of leased space to accommodate the arrival of nearly 400 ANR employees. Those workers had been spread around the state because Irene flooded their work site at the Waterbury state office complex. The transition will be complete in April.

Gov. Peter Shumlin publicly condemned the AP story at an unrelated press conference on Wednesday. Paul Heintz of Seven Days reported that Shumlin broached the topic four times during the conference. “Let me just say every once in awhile there is something that is printed that isn’t true. And that story is not true,” Shumlin told reporters. “We never said that it would cost $2 million.” Secretary of Administration Jeb Spaulding added, “If there had been a cost overrun from $2 million to $8.6 million, people would have a right to be outraged, but that’s not what happened.”

According to administration officials, the “earliest internal rough estimates,” formulated in spring 2012, were between $6 million and $10 million, and costs inched up only slightly from summer to fall.

In July 2012, the administration issued its first formal estimate — $7.5 million — a number it shared with the House Institutions and Corrections Committee. By October, that number was adjusted upwards to $8.6 million — a revision that was again communicated to the committee.

“I don’t think there’s one piece of paper that said it was $2 million,” Spaulding told VTDigger. In reference to Wednesday’s press conference, Spaulding said the adminstration felt the need to combat the misperception that there had been a huge overrun in costs. “Our biggest concern was the way the public would internalize it [the alleged $2 million estimate the administration says was never put forth].”

Rep. Alice Emmons, D-Springfield, who chairs the Institution and Corrections Committee, said BGS first approached her committee last year with a “back of the envelope” request of $2 million to start construction at National Life. The committee gave the go-ahead for BGS to take $1 million from the $15 million in funds set aside for the Waterbury State Office Complex, and it also authorized the department to dip into the total $18 million allocated in the capital bill for the state office complex and a new state hospital in Berlin. The total costs for these project have been pegged at nearly $180 million.

Gov. Peter Shumlin, right, speaks to an Agency of Natural Resources employee last week. Photo by Alicia Freese

Gov. Peter Shumlin, right, speaks to an Agency of Natural Resources employee when he toured the renovated space at National Life in February. Photo by Alicia Freese

Emmons said she knew the estimate was subject to change, but she was not alone in being taken aback by the final figure. “I don’t think anyone anticipated how much movement would have to occur with National Life.”

From the outset, the Institutions and Corrections Committee had envisioned a less cost-intensive transition, Emmons said.

“We were looking at the costs for ANR and thinking they could move into one floor and that would be it, but that’s not how it works in the real world. There were 640 [state] employees there before ANR. You move in almost 400 more ANR employees, and you’ve got to meld that.”

Emmons said that by June, the committee had been informed that renovations would cost about $6 million, and by October, the estimate stood at $8.6 million.

If the first “back of the envelope” estimate sent to the committee had been $8.6 million, Emmons says her committee would have had “more conversations” before making the decision. But, she added, they approved the project for philosophical reasons, which remain relevant despite the higher-than-expected costs.

“I saw it more as an evolving construction project, and it evolved more than anyone anticipated, but you know what, it was the right thing to do because we were looking at efficiency of state government.”

Emmons said her committee made the decision to back the move of ANR employees to National Life in the context of a much larger catastrophe. “Last year we got slammed by Irene. We lost a building that housed over 1,200 people. We lost, within that, a state hospital. We are human. You can only do so much when you’re under crisis.”

Both Emmons and the administration say the state will see long-term benefits from housing several state agencies in a single location. The committee heard testimony, according to Emmons, that “Those three agencies work together on a lot of permitting issues, and what we were hearing was it was making government more efficient and employees more efficient to be housed up there.”

Following reports about consternation among committee members, Spaulding released a fact sheet defending the construction project on behalf of the administration. The report states, “This return on investment will be compounded in the future when employees from ANR, VTrans, and ACCD cooperate and collaborate resulting in the increased productivity that was so evident in the aftermath of Tropical Storm Irene.”

The report also notes the following:

• It would have cost the state $31 million to build new offices rather than renovating and expanding at National Life.

• National Life is picking up $3.5 million of the $8.6 million tab.

• “This is not luxurious space … The average space per employee is decreasing by over 50 square feet.” Spaulding explains that the state had to make renovations on all seven floors, including the basement, in order to squeeze in the additional employees.

Alicia Freese

Comments

  1. Ann Meade :

    I don’t understand why we continue to pay rent at National Life year after year? How much money has been paid in rent over the years?

  2. Roy Moss :

    The “cost overrun” is one major concern. Another concern is whether or not the space redesign allows state employees to perform their jobs efficiently. Certain jobs like engineering have very specific requirments (paper size which would require a certain amount of desk space, space for reference materials, etc.) Did the state take these issues into account? Did the state bring those who are actually performing the work at National Life into the planning process so that they had a very clear picture of the needs of the state employees? I’m not talking about luxury, I’m talking about things that are necessary for efficient work flow. I dont know the answer to these quetions so I’m hoping that someone can enlighten me.

  3. Kathy Nelson :

    Considering ANR’s total lack of consideration for Vermont’s natural resources, like unspoiled ridgelines, and Deb Markowitz’s gross incompetence in just about everything, I believe it would be in the best interest of Vermonters to cut the ANR staff by 50 percent. The areas then not used by ANR at National Life could be rented out to help pay for the bloated costs of this unnecessary luxury office space. In fact, if we dumped about 50 percent of the useless staff at the Dept. of Public Service (a true misnomer) then we might be able to stuff some of the ANR staff in there. Markowitz doesn’t really need an office anyway, just a cell phone and a parking space at the WalMart.

  4. david Black :

    “Where there is smoke, there is fire”. It seems like Gov. Shumlin has been doing a lot of balking lately.

  5. Cynthia Browning :

    If the Administration knew “in the spring” that the NL renovations would cost $6 m or more, why didn’t they tell the Insitutions Committees then? My recollection is that around March 21, 2012 BGS asked for funding for the NL renovations, and told House Institutions and Corrections that the project cost might be about $2 million. [Neither Governor Shumlin nor Secretary Spaulding were in the room.]I don’t think that they knew it would be over $6 million until they got info from NL later. If they had, I think that they would have asked for more dedicated funding.

    What happened with this project had extenuating circumstances that Rep. Emmons accurately explains above. However, in my opinion it is part of a pattern in which an Administration tends to lowball the estimate of a project’s costs, whether intentionally or not, and that makes it easier to get Legislative approval. Then later, surprize, it costs a lot more, but it is too late to back out.

    I would like to work with BGS to get us better cost estimates up front so that the Committees can make better decisions in allocating resources to projects serving Vermonters.

    Rep. Cynthia Browning, Arlington

  6. sandra bettis :

    and, on top of all these issues, aot had just purchased new furniture which was then sent to surplus. what a colossal waste of money. and we are cutting programs for the poor to pay for it.

  7. sandra bettis :

    another issue is – why weren’t these (and other) employees returned to the waterbury offices as the gov said he would do over a yr ago? what happened to that idea? are those buildings just going to sit there empty while we are paying exorbitant rents elsewhere? about 10 yrs ago, the state’s policy was to get away from rented space – what happened to that idea???

  8. The National Life building renovation cost fiasco is just another example of Gov. Shumlin’s : READY, FIRE, AIM management style.

    We now know the governor takes exception to $2 million estimate, saying it was higher. On the other hand, folks in the legislature say they are taken aback by the cost of the project. There is definitely plenty of confusion on what the costs were expected to be.

    This confusion seems to exist with what the Administration led the legislature to believe FEMA would pay for the Waterbury rebuild. Then we have the confusion over the $500 million in first year health care savings that the governor promised, the confusion over the safety concern issue with VY, the revenue to be generated from a tax on the break-open tickets and the list goes on.

    With this disturbing trend of confusion, one might say that the governor is a good talker but a poor communicator. This is not good.

    The people of Vermont and more importantly the press are starting to tire of the governor’s failure to do his homework before he speaks or acts. Today’s Rutland Herald presents an editorial entitled: “Declaring Independence”, which takes up the Legislature’s dealings with the governor on tax recommendations. The editorial really takes the governor to the woodshed citing:

    …..ill – conceived ideas emanating from the executive branch

    ….. Democrats stand up to the governor when he veers into swampy ground

    ……Shumlin had not done sufficient spade work

    As a kid, if I brought a report card like that, there would have been plenty of excitement and it wouldn’t have been good.

    Bottom line, Vermonter’s cannot afford a: READY, FIRE, AIM governor and the legislature, press and people are beginning to speak up about their concerns.

    • Doug Spaulding :

      Well certainly not loud enough for me to hear them and not loud enough for anybody I know to hear them either. This state is rife with democrats who crawl out of the woodwork once every 2 years to pull the lever for their favorite candidates and then slither right back in. Rest assured they will crawl out again in 2014 and the “READY, FIRE, AIM governor and the legislature” will claim their usual victories while the republican minority is left to lick its wounds. Nothing is going to change and those who can’t see that are indeed operating with blind faith.

  9. Chris Palermo :

    I am curious to know, beyond the upfront cost of the National Life renovation, what the expense is for the yearly lease and how long a term the state is committed for. That would be the dollar for dollar comparison needed in this conversation to evaluate putting money into an asset that you own vs. rent.

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