News: CJ Exclusives

NCGA Panel Taking Another Look at State Asset Sales

Program Evaluation Division initially identifies 17 government properties with no value to the state

A General Assembly subcommittee is looking at state property with an eye toward selling land and buildings the state owns but doesn’t need, and seeing if it might save rent by moving from leased spaces to unused or underused state property.

The subcommittee, a branch of the General Assembly’s Program Evaluation Oversight Committee, already has begun looking at 49 state-owned properties, 17 of which have been found to be of no value to the state.

“This is going to take a little time,” said Sen. Rick Gunn, R-Alamance, who will chair the new subcommittee. “I don’t mind the time aspect as long as we’re moving this thing forward.”

Sens. Ben Clark, D-Hoke, and Shirley Randleman, R-Wilkes, will join Gunn on the committee, along with Reps. Becky Carney, D-Mecklenburg, Ted Davis, R-New Hanover, and Rena Turner, R-Iredell.

The Program Evaluation Division recommended that the state sell 17 of the 49 properties; 12 of the 17 are within a few blocks of the Legislative Building in downtown Raleigh. Other properties are in Rose Hill, Wilmington, Statesville, Greensboro, and Garner.

It would take about $18 million to bring the properties up to usable condition, according to the division’s report.

The division estimates that the state could garner one-time revenue of $14.3 million by disposing of the properties. In addition, local governments would collect an estimated $138,236 in annual tax proceeds once the properties are sold.

Among findings in the report to the Program Evaluation Division are:

• Along with the one-time money generated, disposing of unneeded real property and optimizing use of state-owned property is expected to save state taxpayers $2.6 million going forward.

• North Carolina lacks a systematic process to identify surplus real property.

• The Department of Administration does not control and manage the state’s portfolio of real property effectively.

• Discrepancies in the property database and insufficient access controls jeopardize the completeness, accuracy, and security of the state’s inventory of real property.

The report estimated that all of the property the state owns statewide could be valued at more than $27.5 billion.

Many of the items contained in the report were readily identifiable pieces of property in the downtown Raleigh area.

“We are confident this is a portion of the iceberg, we just don’t know how big that iceberg is,” said Sean Hamel, senior program evaluator with the Program Evaluation Division.

The report notes that a “regular systematic review of state property could yield additional opportunities to dispose of or consolidate assets to reduce cost.”

Several of the houses identified near the downtown legislative complex are historic properties and would require renovations before they could be sold or repurposed. But most aren’t.

Much of the subcommittee’s work on state property has yet to occur. Gunn said he expects his subcommittee to really get geared up after the General Assembly adjourns its regular 2015 session. Adjournment could be weeks away.

The report also recommends that the General Assembly direct the Department of Administration, which oversees the Office of State Property, to allocate underused state-owned space to meet needs of expiring leases. It also suggests that state agencies look for current property that is not being used or is underused before seeking or renewing leases.

This isn’t the first time lawmakers have attempted to identify and sell off unused state property. The General Assembly had such an effort as recently as 2003. After some initial fanfare, it didn’t gain a lot of traction.

“There were probably four different studies of different magnitudes” of potential asset sales, Gunn said, adding that he is determined not to let the current effort go to waste.

Barry Smith (@Barry_Smith) is an associate editor at Carolina Journal.