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VOL. 37 | NO. 28 | Friday, July 12, 2013

Haslam administration spells out office leasing policy to committee

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NASHVILLE (AP) - The administration of Gov. Bill Haslam has revealed the scope of its outsourcing of state office space.

The Commercial Appeal (http://bit.ly/12JPjQ5) reported Haslam's chief of staff, Mark Cates, acknowledged to the state legislature's Fiscal Review Committee that the administration could have been more transparent in the plan.

"In hindsight, this is a huge deal," Cate said. "It's a big change and we should have treated it more from a communications standpoint like we did on, say, civil service reform. So lesson learned, and we agree we could do a better job of keeping you informed.

"This was uncharted territory. As you're plowing new ground of this magnitude and this level of importance, sometimes it's not easy. Part of this was a continuous learning as we go."

Cates told committee members on Tuesday that the change makes Tennessee "the first state in the country as far as w e can tell that has done integrated, comprehensive outsourcing" of its real estate.

A $38 million contract with Chicago-based real estate firm Jones Lang LaSalle pays management and expense fees as state workers are moved into leased office space. Another contract gives the firm 4 percent commissions on the 10-year rental fees.

Cates defended the plan, saying using commercial office space will save Tennessee taxpayers a net $100 million over the next 10 years with much of the saving toward the end of the time frame.

The administration is counting on the real estate firm to generate savings in office rental rates, security contracts, building operations and other areas through its real estate management experience and negotiations with vendors.

Jones Lang LaSalle recommended the closure of six large state-owned office buildings in Nashville, Chattanooga and Memphis, moving the workers into new state-owned space or leased commercial space.

The two- hour presentation Tuesday was the first comprehensive review lawmakers have received on the change, which represents a major shift in state policy.

After the presentation by Cate, R-Murfreesboro, said the contracts were legal and "above board."