[0:00] Construction order. Today, August 31st. Welcome, committee members. Thanks for taking your time

[0:07] out. This shouldn't be a long meeting, hopefully. I did want to mention that we don't have on

[0:15] the agenda is just maybe recapping Kyle towards the end before we adjourn just the days and

[0:22] weeks and what we got coming up just in case. I think that sounds good. So I guess at this

[0:32] point we'll go ahead and who is presenting? Is it Paul with the Department of Administration?

[0:38] Yes, I'm here to present two leases. Okay. Maybe what we do is we'll start with one

[0:45] and then we'll take some questions and then jump to the next one. Which one do you want to

[0:51] start with when you got there. I had first up the Department of Labor's

[0:55] Lonexa office. Okay that sounds great. All right thanks for your time this

[1:01] afternoon. I'm the lease administrator for the Department of

[1:04] Administration Office of Facilities and Property Management. My presentation is

[1:09] the proposed lease for the Kansas Department of Labor office in Lonexa,

[1:14] Kansas. They have been at their previous location since 2013. In June of

[1:19] By 2026, Labor and the Department of Administration released an RFP to search for suitable space

[1:25] to relocate their operations.

[1:27] Their current facility has ongoing issues with the roof, which has impeded their ability

[1:32] to conduct hearings in the office.

[1:34] The following terms were negotiated from a response to the RFP.

[1:39] The new lease will be for 10,647 square feet of office space, with a starting

[1:45] rate of $24.20 for a term of 15 years. The lease includes a five-year renewal option which is at

[1:53] the discretion of the agency. In addition to alleviating ongoing issues with building maintenance,

[1:59] the new building will be located on the ground floor which will make it easier for

[2:03] workers' compensation claimants coming to the office for hearings. The additional office

[2:08] space will allow labor to increase their presence in the Kansas City area and better serve the

[2:13] public. An energy audit will be completed by the lessor after one year of occupancy has been

[2:18] established. The Department of Administration is supportive of this lease. I'm available to

[2:23] answer your questions as is a representative from the Kansas Department of Labor.

[2:29] Okay. Well, thank you for that, Paul. Committee, I might just start with one and then if others

[2:36] have some questions we can jump in. And so, Paul, can you explain that the lease includes

[2:43] a five-year renewal option. So it's set up for 15 but doesn't go, doesn't go five years and then

[2:51] or above the 15. No, the renewal option is addition to the 15, the initial 15. Okay. If at the end

[2:59] of that, they like the space, they can renew it for another five years at the previously negotiated

[3:04] rate. Okay, I just wanted to be clear on that. That's what I thought but thank you for making

[3:11] Can that clear? Committee members, anybody got a question?

[3:15] I do, Mr. Chairman.

[3:17] Yes. Go ahead, Senator.

[3:19] Thank you. So two questions for you. One, how many responses did we receive to the RFP, first of all?

[3:27] There were two responses to this RFP.

[3:29] Only two. And was it just in a specific geographic area? Is that why it was limited in response or?

[3:38] We posted it for Lenexa, Kansas, and those were just the only two we received.

[3:44] Okay. And during that 15-year term, there's no increase in the rate of the lease?

[3:52] There is an increase of 2% per year in the 15 years of the lease.

[4:08] Thank you for answering those questions for me.

[4:11] Of course.

[4:14] Any other members?

[4:16] I've got a question.

[4:22] So I guess following up on the second question, Senator Owens shared.

[4:28] So 2% per year increase, is that what you said?

[4:34] Yes, that's correct.

[4:35] So what does that amount to at the end of the 15 years?

[4:38] How much more of an increase?

[4:40] I mean, 2% doesn't sound like much, but over 15 years, just I

[4:51] was looking at the final

[4:53] numbers, the current increase.

[5:01] So we're from 1.6 to 4.4 in the 15 years.

[5:06] What is the increase then amount to?

[5:09] Are you talking about above that?

[5:12] Yes.

[5:13] I'm pulling up the exact number now.

[5:17] It

[5:42] will end up at $31.90 at the end of the 15th year.

[5:50] All right.

[5:52] The only other question I've had is, can you touch on the current lease, 18, and then 36 when it comes to the FTEs?

[6:01] How many are in play right now then?

[6:04] Is that still at 18?

[6:06] Yes, it's still at 18.

[6:08] But in talking to labor, they have several employees that live in the Kansas City area

[6:14] that would be moving to this office once the larger space opens, and they'd like the

[6:19] ability to grow.

[6:21] So that would be the final capacity for this new office.

[6:26] Okay.

[6:27] Appreciate that.

[6:28] Any other questions, committee?

[6:30] Yeah.

[6:31] If we're looking at consolidating other offices in there, are the contracts in place to allow them out of their leases in the other places?

[6:46] I didn't speak with Labor about the contracting employees from other areas or moving employees from other areas to the selects office as to what their plans are for that space.

[7:00] We do have Dawn from the Department of Labor on if she has to answer that question.

[7:06] And then the other one, you had mentioned at the end of year 15, the lease was how much per foot, I believe you said?

[7:16] $31.90.

[7:17] $31.90, and how much is it today if we get into it?

[7:21] The starting rate is $24.20.

[7:25] $4.30.

[7:28] Okay. So the 2% per year for 15 years is that a – I'm looking at the raw numbers. Is that a linear equation or is it a 2% gain on, the 2% gain, you know, stair step done up?

[7:45] It's the stair step. It's a 2% each year. So the next year would be –

[7:56] All

[8:02] right. Thank you.

[8:04] Paul, the Senator Owens, just one more time.

[8:08] So was there any consideration given – I mean, looking at spending $4.4 million over 15 years,

[8:15] was there any consideration given to looking at real estate that's for sale in the area?

[8:21] There was not any large consideration for real estate for sale.

[8:27] The RFP does ask that the lessors give us an option to purchase the property at the end of the lease, but it's not something that has been looked at very closely at this point.

[8:46] So what is your standard operating procedures when it comes to looking at property versus leasing?

[8:52] I mean, when you put on an RFP for a lease, I mean, the Department of Administration's

[8:59] mind is made up that we're only going to lease at that point, or do we even take into consideration

[9:05] available purchase options?

[9:07] The RFP we release, the default is for leases and not for purchasing.

[9:17] Okay.

[9:18] Is there any particular reason for that?

[9:22] I think that's just the overall – because agencies need overall a larger amount of money

[9:32] up front in order to facilitate any purchase that – unless it's already been planned

[9:38] ahead of time and presented to this body and others, it's generally not something

[9:45] that's considered just because of it would need to be pre-planned in a greater extent

[9:50] compared to the RFPs for these office leases?

[9:57] That makes sense at least.

[9:59] I could say that that at least makes sense, right, because a monthly payment is easier

[10:03] to budget for on a lease, but that doesn't make it the best value for the taxpayer

[10:06] at the end of a 15-year cycle.

[10:09] And that might be a conversation for another day, but I at least understand the logic

[10:14] of why you're approaching it that way as needed. Thank you, Mr. Chairman.

[10:19] Thank you for that question. I think as well, my thought is if they have an opportunity to buy

[10:27] it at the end, so obviously you've done that before on other properties, is any of that

[10:35] lease amount ever go towards that like or is it just all all lease for the

[10:42] generally this is all lease unless there was part of the negotiation was all

[10:49] ready to plan to purchase at the end okay I do know this one does have a price

[10:55] point if there was a desire to purchase but it's in the lease it's close

[11:03] to it's over five million dollars it looks like from the terms.

[11:18] Okay committee any other

[11:19] questions or thoughts before we move on? On the comment on the five million is that

[11:25] to purchase after the lease or is that an outright buy or what's that number coming from?

[11:32] It came from a number provided by the owner of the building.

[11:39] And that is to buy it out or what?

[11:44] To purchase.

[11:45] That would be to purchase the property from the landlord at the end of the lease.

[11:53] At the end of the lease, okay.

[11:55] Okay.

[11:58] So I was just looking at the numbers.

[11:59] You're looking at, on average, just under 300,000 a year to lease a thing.

[12:04] And over a 15-year period.

[12:07] I mean, you've hit that number you just said.

[12:11] Right. Okay,

[12:18] no one else have any questions. We'll go ahead and move to the next one.

[12:25] Okay, my second presentation is for the proposed lease for the Kansas State Board of Integents

[12:32] Defense Services Office in Garden City, Kansas. They have been at their previous location

[12:37] since 2013. In January of 2026, SBIDs and the Department of Administration

[12:43] released an RFP to search for suitable space to relocate their operations.

[12:48] Their current facility is in need of significant upkeep and has been dealing

[12:52] with some mold issues. The only response to the received to the RFP was

[12:57] thought to be too expensive so the agency began looking for vacant space

[13:01] independently. The following terms were negotiated from a landlord that was

[13:05] contacted about vacant space. The new lease will be for 3,718 square feet of office space

[13:12] with a starting rate of $14.50 per square foot for a term of 10 years. The lease includes

[13:19] a five-year renewal option which is at the discretion of the agency. The new office

[13:23] will be a more efficient layout for staff and the public as well as eliminating the

[13:27] ongoing concerns with the current office. The additional space will also allow the

[13:31] agency to expand their presence in the community.

[13:35] An energy audit will be completed by the lessor after one year of occupancy has been established.

[13:41] The Department of Administration is supportive of this lease.

[13:44] I'm available to answer your questions as is a representative from the State Board

[13:49] of Endogenous Defense Services.

[13:52] Okay, thank you for that.

[13:54] Committee, any questions?

[13:57] Yeah, I have one, Mr. Chairman.

[14:00] Paul, as I'm looking over this, this looks like it's an all bills paid lease.

[14:04] Is that correct?

[14:07] Yes, that's correct, except for janitorial in the space.

[14:12] Janitorial, but electricity and all that's all covered.

[14:15] And is there a built-in increase into this lease as well?

[14:21] Yes, there is. It is.

[14:52] Did you give the amount or were you waiting on us because I didn't hear a response?

[14:56] No, I was trying to look it up on the...

[15:00] I know you were looking at your computer screen. I couldn't tell if you were looking for me to say something.

[16:02] So this one increases. By year 10, it's going to be $18.92 per square foot.

[16:12] Okay. So is that right at the 2% a year or you're not able to find that number for me?

[16:29] That is at 3% a year.

[16:31] if we're sending air. Okay. Still not bad.

[16:36] Okay, that answers my question. Thanks, Mr. Chairman.

[16:40] Thank you for that. Committee, any other questions?

[16:52] Okay. Well, with that then, I think we'll

[17:01] make, we'll have a motion at this point if somebody wants to bring a motion on

[17:07] Kyle should, I guess we should probably deal with these separately. So we can start with

[17:11] the first one. Let's get a motion on it and does anybody got a motion on the first one

[17:22] which would be LaNexa?

[17:32] And did we, Bob did we, I'm sorry Bob I'm looking at Bob's name.

[17:36] Kyle did we get an answer on whether or not it's just a recommendation or is this approval?

[17:43] This doesn't go past us, does it, on this particular?

[17:50] The Department of Administration and or advisors may have some input on that.

[17:58] Traditionally, this has been done as an advise, and there's not – there doesn't have to be a vote.

[18:04] They voted on it before, but I'm told it's not necessary, so I guess however you want to move forward.

[18:11] Oh, so we're just hearing it, making comments, and just making, what, a recommendation then?

[18:18] Yes.

[18:19] I mean, if there were serious concerns, we would certainly address that before moving forward.

[18:25] If I might chime in, sir, this is Jill Walters in the Revisions of the Statutes Office.

[18:32] Paul is correct.

[18:34] The statute 7537, I think it's 65B only requires advising and consulting, but past precedent

[18:44] committees have done motions to approve before.

[18:48] So it's certainly up to you as chairman and the committee if they want to have a formal

[18:53] motion to approve.

[18:54] But this is considered that you have been advised and consulted.

[19:01] Okay.

[19:02] I appreciate that update.

[19:03] So, I wasn't here in any motion of any sort.

[19:08] Leo, do you have a preference?

[19:10] Well, I've traditionally this committee has not approved or it has recommended or not recommended.

[19:18] So, I think that's where we need to be standing on this one.

[19:22] Because I think for an actual approval, I'd have to go through a probes or whatever appropriations on the Senate side to.

[19:32] You're actually right, Leo. Yeah, he's correct, Senator.

[19:37] Okay. Thank you, John. I appreciate that.

[19:40] So, we'll just go ahead and get a motion then on the first one and for a recommendation and go from there. So, if someone wants to make that or

[19:57] not.

[19:59] It's correct.

[20:00] Could I ask Paul one more question?

[20:04] Yes, go ahead, Stephen.

[20:05] So my only concern with this is the sheer amount of dollars that we're spending.

[20:14] So we had two responses to the RFP and we chose to go with one of those responses.

[20:21] Whereas in the Garden City lease, we had zero responses to the RFP.

[20:26] and so we went out and we sought after opportunities.

[20:30] My question that I suppose I have with the LNXL lease is if our default

[20:35] is to accept whatever comes in, are we one? Go ahead Paul.

[20:43] A slight correction for the Garden City lease. There was one response but

[20:48] in talking with the agency and we decided it was too high

[20:52] for that market and that's why we sought out space on our own. And for this

[20:57] Lenex lease, both of the initial responses were fairly high and we began

[21:03] negotiating them down and at that point we were even were consulting about

[21:08] finding other locations but the one of the responses was willing to go down

[21:14] enough that we were comfortable with that location over both the other RFP

[21:19] response and the initial responses we had found searching on our own.

[21:24] Okay, that makes me feel quite a bit better about the situation. Obviously I don't know

[21:28] lease rates in Lenexa, Kansas, right? I suspect that the rates in Newton, Kansas are more like

[21:35] that of Garden City, Kansas. So knowing that you guys have negotiated it down, that you

[21:40] looked at other options, stuff like that, then I would go ahead and make the recommendation,

[21:44] Mr. Chairman that or make the I don't know what do you want a motion that we recommended favorably

[21:50] or just what wording would you like there Mr. Chairman. Well I think that's kind of what we've

[21:58] done in the past making a motion to recommend as we've gone over this as presented. Then I would

[22:05] make that recommendation and motion. Okay I got a second and are we doing it on the first one

[22:13] or both? Either one. I'm comfortable with both of them at this point having that knowledge.

[22:20] Yeah, I mean, I think so. So we'll include both of them in that.

[22:25] I'll second that. Okay, you'll second that.

[22:29] Perfect. Any other discussion on that?

[22:33] And with that then we will move that to accept that all in favor.

[22:50] All right, well, then that motion for both pass as recommendation as presented today.

[22:59] Great.

[23:00] So I guess on our agenda then the last thing would be just maybe an update on some of the

[23:09] Kyle, if you can do that for us.

[23:13] Yeah, sure.

[23:14] So, for the five-year capital plan hearings, we have three days for that.

[23:22] They will be the 14th, the 21st and 22nd of September.

[23:27] And on the 16th of September, we are going to be touring the schools for the deaf

[23:33] and schools for the blind, as well as KU Medical Center in Kansas City.

[23:40] September as well.

[23:42] Correct, sir.

[23:43] Okay. And do we have time?

[23:47] Sorry.

[23:48] Just, I just, once again, go over those dates, 14, 21st and 22nd, did you say?

[23:56] Yes, sir.

[23:57] Okay. Thank you.

[24:02] Yeah, I had 15th on my schedule as well, so nothing on the 15th of September just to confirm.

[24:08] So originally we were planning to do the two highway patrol discussion days on the 14th and 15th. Those two days got pulled out to a separate committee.

[24:18] So the 14th got repurposed and the 23rd cut off.

[24:24] So what are we doing on the 14th again?

[24:26] The first day of five year capital plan hearings.

[24:30] Or everything or.

[24:32] for the SBC related agencies, I can see if I can pull up the rough agenda real quick.

[24:55] So on, that's the wrong five.

[24:58] The 14th is looking like the KDADS-related agencies in state hospitals primarily.

[25:14] Then on the 21st, it's going to be primarily K-Board-related stuff and some of the public safety agencies.

[25:24] And then the 22nd is the other schools and the ag related agencies for the most part.

[25:41] Okay, committee any questions regarding that.

[25:45] And the other questions, one of the things we've been kicking around for some, some years and and I'm going to be pushing.

[25:56] in the next session if I'm there is the construction in Hutchinson of the renovation or construction

[26:07] of a new prison.

[26:08] I'm wondering if any of these dates we're going to be discussing prisons.

[26:18] I would probably have to get back with you on that one.

[26:21] All right.

[26:22] All right.

[26:23] All right.

[26:24] Kaylaka is presenting on the 14th on the tentative agenda.

[26:30] Who is on the 14th?

[26:32] Department of Corrections, which covers the prisons.

[26:38] Okay.

[26:38] You'll see.

[26:40] But that's just kind of a brief update on the five-year plan.

[26:46] Correct.

[26:47] Yep.

[26:48] And do we have a starting time, have we come to that yet?

[26:55] So on the 14th and 22nd, it looks like we start tentatively on the 8th, 9th, 30th, and

[27:04] then on the 21st at 10th, 30th.

[27:12] And then the 16th, we will meet up there,

[27:18] everybody's responsible to get there.

[27:21] And what time will we be meeting up there, just so members know?

[27:27] I had tentatively planned to start the first tour at 10 o'clock, but I was going to try

[27:33] and see if that was going to work for people before setting that in stone.

[27:39] You said on the 16th?

[27:41] Correct.

[27:42] And that is, we're touring what?

[27:45] Schools for the deaf and blind in KU Medical Center.

[27:49] Okay.

[27:49] Okay, so what are we looking to accomplish out of these tours?

[27:54] Is there specific building issues we're going after?

[27:58] Is there expansion going on? What's going on there?

[28:01] The schools for the deaf and the blind have had a number of renovation and raising related projects recently.

[28:11] And KU Medical Center has a number of buildings under renovation as well as the cancer center under construction.

[28:18] Okay.

[28:25] And it was, I'm just going to throw it out just so everybody knows, but on the

[28:31] 14th, and I think I let Kyle know too, but Senator Fag and I are doing a energy presentation

[28:38] in Kansas City with just a big energy panel that pulls an LA legal firm, so we'll be

[28:45] tied up there all day on the 14th.

[28:52] Okay, maybe any other questions or input and

[29:00] sound like it. Okay. Well, I appreciate everybody's time today and thank you, Kyle for that update and we look forward to getting the details on those meetings.

[29:11] And with that, I believe we're adjourned.

[29:14] All right. Thank you, sir. Thanks guys. Thanks Kyle for putting it together.

[29:20] Thank you all.

[29:21] Thank you.

[29:22] Have a good one.

Joint Committee on State Building Construction

Transcript