Our weekly State Worker column this week updated the sad saga of the Board of Equalization’s Sacramento headquarters, a 24-story money pit that has cost taxpayers more than $60 million in repairs – and there are more to come.
Here’s a quickie Q&A to mop up some BOE background details that the column didn’t cover:
Why did the state purchase the building if it had all these problems from the outset ?
Long-term debt savings. The state had a lease-purchase agreement with CalPERS, which built and owned the tower until 2007, when the government bought it. The purchase saved about $31 million in interest payments.
Why hasn't the state just cut its losses and leveled the building?
There’s $77 million in bond debt remaining on the highrise that won’t be paid off until 2021. The bond terms say the building must be occupied with a rent-paying tenant. So if BOE left, the bond debt would come due.
And where would all those workers go? Moving 2,200-or-so employees from the tower and consolidating them with about 2,000 others now working in BOE satellite offices in the region would require about a million square feet of space, according to a legislative committee analysis. A state real estate market survey concluded there’s no commercial facility that big in the Sacramento area, so something must be built.
Assemblyman Roger Dickinson, D-Sacramento, believes a deal that packages a move to a new facility with the sale of 450 N St. is feasible. Some ideas submitted to the state last year suggested a similar approach, Dickinson says.
(Side note from the analysis: “As a revenue collection agency processing thousands of documents daily, the BOE probably never should have been located in a downtown highrise building,” because moving work between floors isn’t efficient. Citing the the Franchise Tax Board’s complex as an example, the analysis concludes, “Thus relocation of BOE to a low-rise facility makes business sense.”)
And why hasn't someone filed charges against the company, contractors and sub-contractors for faulty just-about-everything in and on the building?
The state’s statute of limitations for defective construction is four years or 10 years, depending on the type of defect. The clock starts when construction is substantially completed. The BOE headquarters’ litigation clock ran out in 2002.