MINUTES OF THE meeting
of the
Assembly Committee on Ways and Means
AND THE
Senate Committee on Finance
JOINT Subcommittee on Higher Education/CIP
Seventy-Second Session
April 25, 2003
The Senate Committee on Finance and the Assembly Committee on Ways and Means, Joint Subcommittee on Higher Education/CIP, was called to order at 8:14 a.m., on Friday, April 25, 2003. In Chairman Morse Arberry Jr.’s absence, Chairman William J. Raggio presided in Room 3137 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau (LCB).
Senate COMMITTEE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Barbara Cegavske
Senator Bernice Mathews
Assembly COMMITTEE MEMBERS PRESENT:
Ms. Chris Giunchigliani
Mr. Walter Andonov
Mrs. Dawn Gibbons
Mr. David Goldwater
Mr. Richard Perkins
COMMITTEE MEMBERS ABSENT:
Senator Raymond D. Rawson, Excused
Assemblyman Morse Arberry Jr., Chairman, Excused
GUEST LEGISLATORS PRESENT:
None
STAFF MEMBERS PRESENT:
Gary Ghiggeri, Senate Fiscal Analyst
Mark Stevens, Assembly Fiscal Analyst
Rick Combs, Deputy Fiscal Analyst
Connie Davis, Committee Secretary
Kate Caldwell, Committee Secretary
OTHERS PRESENT:
Refer to Exhibit B.
DEPARTMENT OF ADMINISTRATION (BUDGET PAGE APPENDIX-11)
CIP 03-C07 REMODEL BUILDING 17, PHASE II – STEWART COMPLEX, CARSON CITY
Daniel K. O’Brien, Manager, State Public Works Board, identified himself for the record.
Mr. O’Brien testified that CIP 03-C07 encompassed the completion of remodeling Building 17 at the Stewart Complex. Mr. O’Brien explained that CIP 01-C11, approved during the 71st Legislative Session, funded the partial conversion of Building 17 “from classroom to office spaces” and provided for the upgrade of the mechanical and electrical systems to bring the building up to current standards.
Mr. O’Brien stated that CIP 03-C07 would continue the installation and upgrade of mechanical and electrical systems, complete the tenant improvements on the first floor, and upgrade the entire second floor.
In response to a question from Chairman Raggio concerning insufficient funds for Phase I of the project, Mr. O’Brien explained that funding had been requested for the upgrades to the first floor only.
Mr. O’Brien indicated that after much discussion, confirmation had been received that the Nevada Department of Corrections (NDOC) would occupy the second floor as well as the first floor of Building 17. Currently, the NDOC occupied leased property on Silver Sage Drive, and the intent was to move them from the leased space into Building 17.
Additionally, Mr. O’Brien said that the Peace Officers’ Standards and Training Commission (POST) would be moving into Building 6 when those moving into Building 17 vacated it. POST would utilize about 10,000 square feet of space, and the remaining space would be available for lease through the Division of Buildings and Grounds.
Mr. O’Brien indicated that prison labor had been utilized for Phase I of the project, and prison labor would continue to be utilized for CIP 03-C07. A construction manager would be hired to oversee and coordinate the subcontractors as well as the prison labor.
Mr. O’Brien indicated the project also included parking lot improvements and development of 20 additional parking spaces. Landscaping around the building would include moving the lawn away from the building to prevent water damage from the sprinkler system to the building structure.
In response to a question from Chairman Raggio concerning the $45,000 anticipated for utility and off‑site costs, Mr. O’Brien indicated that a sprinkler system for the entire building would be installed and confirmed that costs included the required fire sprinkler and electric service.
Mr. O’Brien addressed the topic of furnishings, fixtures, and equipment (FF&E) and stated that the furnishings and equipment were for new modular workstations and the common conference areas for both phases of the project.
In response to a request from Chairman Raggio, Mr. O’Brien agreed to provide a list of the furnishings and equipment that would be purchased and detailed information regarding the estimated cost and need for each item.
Chairman Raggio questioned the increased cost of $70 per square foot for Phase II of the project which, he pointed out, was $20 per square foot, more than was anticipated during the 71st Legislative Session.
Mr. O’Brien responded that although he did not have the project manager’s breakdown, the increase could be attributed to inflation.
Gustavo Nunez, Deputy Manager, Professional Services, State Public Works Board, identified himself for the record. Mr. Nunez explained that one of the items inflating the project was FF&E. Phase I of the project, under CIP 01-C11, upgraded the first floor but did not include FF&E while CIP 03-C07 included the FF&E costs of $336,000 for the entire building. Additionally, Mr. Nunez advised that not all of the work could be accomplished through inmate labor.
Chairman Raggio pointed out that the $70 per square foot was for construction costs and reiterated that the cost was higher than had been projected during the 71st Legislative Session. Chairman Raggio asked Mr. Nunez to review the costs and provide the information to staff.
Mr. Nunez agreed to review the information on the increased construction costs.
Senator Mathews addressed using furniture produced through Prison Industries.
Mr. O’Brien indicated that furniture produced by Prison Industries, while competitive with other furniture products on the market, also had to be purchased.
Chairman Raggio asked why the phone system, data equipment, UPS devices and servers currently being used by the Department of Corrections could not be used in Building 17.
Mr. O’Brien responded that the possibility of using the phone system currently being used at the Silver Sage facility was being reviewed.
Chairman Raggio asked whether the $50,000, plus inflation costs for a microwave connection to Department of Information Technology (DoIT), could be eliminated in CIP 03-C07 if the installation of a microwave transport at the Stewart facility, under CIP 03-C13, was approved.
Mr. O’Brien explained that the microwave connection to DoIT was for the entrance to the building and the interior conduits, for which funds existed.
In response to a question from Chairman Raggio concerning whether the $42,000 cost for communications could be eliminated, Mr. O’Brien indicated that if the system from the Silver Sage facility could be moved, the possibility of eliminating the cost for the phone system and the switch existed and was under review.
The Chairman questioned whether there was a need for two separate Heating, Ventilating and Air Conditioning (HVAC) agreements.
Rick Combs, Deputy Fiscal Analyst, Fiscal Analysis Division, LCB, clarified that Phase I of the project included $18,000 for the costs of a Heating, Ventilating and Air Conditioning (HVAC) agreement and Phase II also included a HVAC agreement. Mr. Combs questioned the need for two separate agreements.
Mr. O’Brien advised that the agreement would cover one system and that there was no need to “double dip.” However, Mr. O’Brien agreed to provide verification to staff concerning the agreement.
Chairman Raggio indicated that CIP 03-C50 and C51 would be heard simultaneously and invited representatives from the Treasurer’s Office to the witness table to join Mr. O’Brien and to participate in the discussion.
CIP 03-C50 CNR LEASE PURCHASE - CARSON CITY
CIP 03-C51 HR LEASE PURCHASE – CARSON CITY
Mr. O’Brien indicated that State Treasurer Brian Krolicki would describe the lease purchase process that was approved in Assembly Bill (A.B.) 567 during the 71st Legislative Session. However, before turning the microphone over to Mr. Krolicki, Mr. O’Brien addressed the funding for what he defined as “the buy down” for the lease purchase of buildings proposed by the Governor to meet the needs of the Department of Conservation and Natural Resources and Department of Human Resources, whose offices were scattered throughout Carson City.
Mr. O’Brien indicated that the first step the Public Works Board had to take in the process was to update the master plan, and he provided the following information:
Mr. O’Brien concluded his presentation and indicated that there was a definite need for state-owned office space in the Carson City area, and the lease purchase process was the “key to meeting those needs.”
In response to a question from Chairman Raggio concerning location, Mr. O’Brien said the two buildings would be built just north of Little Lane on the vacant space next to the Nevada Department of Transportation building. Additionally, Mr. O’Brien said that one of the things considered during the master plan process was to avoid the need to demolish buildings or to impose additional costs as a result of relocating agencies.
In response to a question from Chairman Raggio, Mr. O’Brien confirmed the space was large enough to accommodate two buildings in addition to parking.
Brian Krolicki, State Treasurer, identified himself for the record. Mr. Krolicki addressed the legislation that had been approved through A.B. 567 of the 71st Legislative Session (Exhibit C), which provided the state the authority to purchase property pursuant to a lease purchase or installment purchase agreement. Mr. Krolicki expressed his “pleasure” in watching a process that took many years to develop finally reach a point where decisions were being made.
Mr. Krolicki provided some background information and referenced the Nevada Supreme Court decision State ex. rel. Nevada Building Authority v. Hancock 86 Nev.310 (1970) (Exhibit D) that determined “the state could either buy buildings through its traditional CIP methods,” or rent office space. Mr. Krolicki indicated that it was generally agreed lease purchase was not perceived to be a legal option. With assistance from representatives of the State Public Works Board, State Lands, Buildings and Grounds, and Robin Reedy, Deputy of Debt Management, Mr. Krolicki indicated a test case was developed using the Employers Insurance Company of Nevada Mutual Insurance Company (EICoN) building, and which through “a very complex route” went to the Nevada Supreme Court for a Writ of Mandamus that the lease purchase process would not violate the Hancock Decision and the Constitution of the State of Nevada.
With passage of A.B. 567 of the 71st Legislative Session, Mr. Krolicki said that a tremendous opportunity for statewide lease purchase agreements was envisioned, and over the next 30 years, rent money projected to be paid by the state could be “converted to over a quarter of a billion dollars worth of state‑owned property.”
In response to a question from Chairman Raggio concerning the terminal point at which the state would own the property, Mr. Krolicki explained that through the lease purchase agreement, the property would be amortized. Additionally, Mr. Krolicki discussed utilization of a tool called “Certificates of Participation” (COPS), which would be issued through the Nevada Real Property Corporation, an entity established by the State Treasurer and on which Mr. Krolicki sat as president. Mr. Krolicki explained that the Nevada Real Property Corporation would be used “as a conduit” through which the projects would be funded.
In response to a question from Chairman Raggio, Mr. Krolicki confirmed that the Supreme Court decision recognized that the lease purchase process would not affect the 2 percent constitutional debt limit. Additionally, Mr. Krolicki explained the contracts were written in such a way that there was no liability if non‑appropriation occurred.
Robin Reedy, Deputy of Debt Management, Office of the State Treasurer, identified herself for the record and indicated that the document titled, State of Nevada Lease Purchase of State Buildings, Department of Conservation and Natural Resources – Department of Human Resources (Exhibit E), had been distributed to the Subcommittee. The document, prepared by the Office of the State Treasurer, provided information explaining lease purchase financing, including a flow chart concerning the Certificate of Participation program. In essence, Ms. Reedy explained that the Nevada Real Property Corporation would sell the securities and would hold the contracts with the agencies that were involved.
In response to questions from Chairman Raggio concerning information in the document (Exhibit E), Ms. Reedy confirmed the interest rate would be based on market‑driven long-term, fixed-rate, tax-exempt yields at the time the COPS were issued. Ms. Reedy also confirmed that “lending rates were at their lowest in decades” and the fixed rate would be used in the process.
In response to questions from Chairman Raggio concerning the Nevada Real Property Corporation, Ms. Reedy confirmed that the state would execute the underlying ground lease to the Nevada Real Property Corporation (NRPC) on which the State Treasurer, Director of the Budget Office, and Director of Public Works would serve. The NRPC would then “lease the improved property back on a triple-net basis,” the leaseback to the state. At that point, Ms. Reedy said the property would be treated as though it was owned by the state. Rental payments that would normally be budgeted and sent out as rent would be used to make the payments on the COPS.
In response to additional questions from Chairman Raggio concerning the financing for construction, Ms. Reedy indicated that the funding for construction would be accomplished when the NRPC leased the improved property back to the state. Specifically, Ms. Reedy explained that the NRPC would finance the improvements to the property with the proceeds of long-term, fixed-rate COPS that would be payable from the annual state leaseback payments.
In response to questions from Chairman Raggio concerning the COPS, Mr. Krolicki explained that the COPS were similar to General Obligation Bonds, but were not “a full faith in credit General Obligation debt of the state” and since COPS were not considered a state debt they were unaffected by the 2 percent constitutional debt limit. Additionally, Mr. Krolicki reiterated that there was no liability if non‑appropriation occurred.
In response to additional questions from Chairman Raggio concerning the investors, Mr. Krolicki explained that the tax-exempt COPS would be purchased by anyone who was interested in municipal securities, and reiterated that while the COPS were similar to Nevada General Obligation Bonds, the yield was slightly higher.
In response to questions from Chairman Raggio concerning the rate and time period, Mr. Krolicki indicated that using “a fixed rate” was envisioned over a period of from 20 to 30 years.
Ms. Reedy testified that “at all times the state” would own the underlying real property and would have a leasehold interest in the improved real property. Ownership of the improved property would fully vest in the state upon the full repayment of the COPS issued to finance the improvements, or the expiration of the term of the underlying ground lease, whichever was earlier.
In response to a question from Chairman Raggio concerning the rent payments, Mr. Krolicki confirmed that the agencies occupying the buildings would pay rent, which would be diverted into debt service on the COPS.
In response to questions from Chairman Raggio concerning risk and adequacy of rental payments to service the debt, Mr. Krolicki indicated that a 4 percent inflation for rental space in Carson City had been projected.
Assemblyman David Goldwater commended the lease purchase process as “a very creative means of financing for the state.”
Mr. Krolicki again reiterated earlier testimony concerning the fact that the lease purchase process was not affected by the 2 percent constitutional debt limit because there was no liability if non‑appropriation occurred. Mr. Krolicki explained that the market view would be that it was unlikely the state would walk away from two buildings being constructed on the Capitol Mall while a lease purchase for construction of a building in the middle of downtown Reno might be viewed differently.
Ms. Reedy testified that the corporation would make every attempt to fill the buildings with tenants whose rent payments would be used to service the debt on the COPS.
Chairman Raggio questioned “up-front” payments totaling $13.7 million for the two projects and why the up-front payment required for the Department of Conservation and Natural Resources was $3.1 million, while the payment for the Department of Human Resources’ building was $10.6 million.
Mr. O’Brien explained that currently the Department of Conservation and Natural Resources occupied leased space and paid a higher cost for the property they leased. The Department of Human Resources was currently occupying state‑owned space scattered throughout Carson City. Mr. O’Brien explained that the Department of Conservation and Natural Resources’ rental payment for their leased space “bought down” their need for additional revenue.
Mr. O’Brien explained that the $13.7 million up-front payment reduced the amount owed on the lease purchase and would be bonded.
In response to questions from Chairman Raggio concerning payback of the $13.7 million up-front money, Mr. O’Brien explained that the $13.7 million was part of the construction cost. Mr. O’Brien expressed his view that the state’s investment in the buildings compared to the ownership in one’s own residence in which the commitment to the residence prevented walking away from it.
Chairman Raggio questioned the occupancy of the state-owned buildings the Department of Human Resources would vacate upon completion of their new building.
Mike Meizel, Chief, Buildings and Grounds Division, testified that the new building would permit many of the Human Resources agencies to be located in one place, and other agencies that were currently renting space would move into the spaces vacated by the Department of Human Resources.
Mr. O’Brien testified that the Department of Human Resources would completely utilize the Kinkead Building and the new building after its construction, and the master plan envisioned another building would be constructed for them at some point in the future.
Chairman Raggio also commended the lease purchase concept but at the same time questioned whether the new concept was cost-efficient, and how much it would cost the state to construct the buildings through the normal CIP process.
Mr. Krolicki indicated that while the most cost-effective approach was through the issuance of General Obligation Bonds, converting monies that were appropriated for rent into hundreds of millions of dollars of taxpayer-owned properties was “probably the most profound legacy” that could be provided to the state.
In response to concerns expressed by Mr. Goldwater in reference to removing private property from the tax rolls, Mr. O’Brien indicated that there was no plan to remove private property in Carson City from the tax rolls. Mr. O’Brien stated that Carson City’s mayor and the chairman of downtown redevelopment were included in the master plan process to keep them apprised of what the state was doing because state leases with the private property owners would be expiring. Mr. O’Brien indicated that the state wanted to ensure that Carson City representatives understood that, as part of that expiration process, private property owners had enough time to look for other tenants. Additionally, Mr. O’Brien indicated that Carson City representatives voiced their support of the lease purchase concept and the master plan and appeared to be excited about the synergy expected to occur in the downtown area by the construction of the two buildings.
Mr. Krolicki clarified that the monies for the lease purchase process, with the exception of the $13.7 million down payment, would be accomplished without using the bond interest redemption fund revenues associated with traditional debt issuance and relieved some of the pressure on the ad valorem rates the state levied to fund the General Obligation debt.
Mr. O’Brien corrected an earlier statement he made indicating that the Kinkead Building would be solely occupied by Department of Human Resources’ agencies, and indicated that other state agencies would be occupying the Kinkead Building as well.
Mr. Goldwater questioned whether the property held by the Nevada Real Property Corporation under the lease purchase process would be covered by sovereign immunity.
In addition to Mr. Goldwater’s question, Chairman Raggio asked Mr. Krolicki to explain the necessity for establishment of a nonprofit corporation.
Mr. Krolicki explained that the Nevada Real Property Corporation was established as the structure through which to generate the securities or Certificates of Participation to finance the improvements to the property.
Additionally, Ms. Reedy explained that the Nevada Real Property Corporation provided the ability to lease the improved property back on a triple-net basis, the leaseback to the state.
Mr. Goldwater questioned whether the Attorney General or outside counsel had been consulted concerning the question of sovereign immunity, or any other legal aspects of owning a building under the lease purchase process.
Robert Bryant, Senior Deputy Attorney General, Public Works Board, identified himself for the record. Mr Bryant advised that under lease purchase, sovereign immunity would continue to be applicable under the provisions of Nevada Revised Statutes (NRS) 353.630. Mr. Bryant advised that as provided by statute, property under the lease purchase process was considered to be state land subject to the limitations and offenses under NRS Chapter 41.
Although Mr. Bryant indicated he was reasonably certain the nonprofit corporation was covered by the same immunity enjoyed by the state, Chairman Raggio requested he research the immunity question and provide the information to staff. Mr. Bryant agreed.
Mr. R. Michael Turnipseed, P.E., Director, State Department of Conservation and Natural Resources, identified himself for the record. Mr. Turnipseed testified that within the Department of Conservation and Natural Resources there were eight divisions presently at nine different addresses and looking for an additional 3,400 square feet of space at a tenth address. Mr. Turnipseed pointed out that the Department of Wildlife, located at two separate addresses in Reno, would remain in Reno. Mr. Turnipseed indicted that nine different addresses required nine different T-1 lines, data lines for fast computer access, nine different phone systems, nine different servers, as well as the fact that the offices were scattered throughout Carson City.
In response to a question from Chairman Raggio, Mr. Turnipseed indicated the new building would accommodate all agencies of the Department of Conservation and Natural Resources with the exception of the Division of Wildlife and Division of Forestry. Mr. Turnipseed said that the Division of Forestry was planning to move out of the Armory and would relocate to a building adjacent to the newly constructed National Guard Building because of their emergency response and radio systems.
In response to questions from Chairman Raggio concerning how the 4 percent inflation cost was determined, Cindy Edwards, Property Manager, Buildings and Grounds Division, identified herself for the record. Ms. Edwards explained that the 4 percent inflation cost was reached after rent rates for the last four years were averaged.
Michael J. Willden, Director, Department of Human Resources, identified himself for the record. Mr. Willden testified that the Department of Human Resources’ eight divisions were also located throughout Carson City. While the plan for the new building would bring most of the Human Resources agencies together, the Welfare Division, totaling about 43,000 square feet, and the Division of Health Care Financing and Policy would not move to the new building. As previously indicated, Mr. Willden indicated that the Department of Human Resources would almost need a second building, or another 70,000 square feet, to put all the divisions together.
In response to questions from Chairman Raggio regarding efficiency, Mr. Willden confirmed that efficiency would be achieved by having most of the agencies together and eliminating the need for separate T-1 lines, phone systems, servers, and conference rooms.
In response to questions from Chairman Raggio concerning the projected time frame on construction, Mr. O’Brien advised that the deadline for submission to the request for qualification process was March 12, 2003. A team that reviewed the statements of qualifications provided what was defined as a short list of three firms. A Request for Proposal (RFP) would be sent to the three firms around the first week in May and final selection would be made at the end of May, or first week in June. Mr. O’Brien indicated he was hopeful that the proposals could be presented to the Subcommittee before the session ended, however, admitted it was unlikely. Mr. O’Brien indicated that the contractor approval and start date would be August 2003. He said the process was on a “fast track” and that the lease purchase process utilized a “design-build” process that incorporated the skills of the architect and contractor as a team. Mr. O’Brien advised that staggering the construction of both buildings produced a synergy effect as the contractor began work on the next foundation at the next site as soon as he finished work on the first foundation. Mr. O’Brien expected there would be some cost savings from which the state would benefit.
In response to questions from Chairman Raggio concerning the furnishings, fixtures and equipment (FF&E) requests, Mr. O’Brien assured the members of the Committee that the project included the FF&E.
Mr. O’Brien thanked all the individuals who participated in the process for their cooperation and indicated there was a significant team effort between the Department of Conservation and Natural Resources, the Department of Human Resources, the Department of Administration, the Treasurer’s Office, the Public Works Board, and the consultants.
CIP 03-M01 REPAIR EXTERIOR TILES – SAWYER OFFICE BUILDING, LAS VEGAS
Mr. O’Brien testified that during the past year exterior ceramic tiles had been breaking loose and falling from the Grant Sawyer Building in Las Vegas. The Division of Buildings and Grounds had been monitoring the tile situation and after bringing it to the attention of the State Public Works Board, it was determined that a forensic study was needed. Mr. O’Brien advised that the preliminary study was concluded and a copy of the final study would be distributed in May 2003. The study thus far revealed some concerns regarding the installation of the tile. While the tile installation had nothing to do with the state, Mr. O’Brien expressed concern in reference to the issues surrounding the loose tiles.
Mr. O’Brien indicated that the funding recommended in CIP 03-M01 would be used for hiring experts that might be needed for litigation support and for mitigation of any moisture intrusion into the building. Mr. O’Brien explained that if a section of the tiles fell off, the building would have to be sealed to prevent moisture from seeping into the building.
In response to questions from Chairman Raggio concerning whether mold was a problem, Mr. O’Brien indicated that the concern was preventing moisture intrusion into the building that could create mold. However, Mr. O’Brien reiterated that the funds would be used to support litigation. Mr. O’Brien advised that the contractors, the subcontractors, and the architect were notified that the forensic study had taken place, and they would be provided a copy of the study. Mr. O’Brien indicated the loose exterior tiles on the Grant Sawyer Building were the responsibility of the contractor.
In response to questions from Chairman Raggio, Mr. O’Brien advised the members of the Subcommittee that the building was built in 1990-1991.
In response to questions from Chairman Raggio concerning the $708,000 approved during the 71st Legislative Session, Mr. O’Brien recalled that the funding authorized for CIP 01-M4 was for the remediation of the mechanical system to eliminate odors that were going into the building as well as some concrete work. Mr. O’Brien indicated there was some funding remaining from the $708,000.
Chairman Raggio indicated there was some concern with respect to the use of bonding money for litigation.
Mr. O’Brien agreed that using funding to bring in experts was also a real concern for the State Public Works Board and indicated that perhaps contingency funds could be accessed.
Chairman Raggio questioned the need for litigation funding given that the Board had access to the services of the Attorney General’s Office.
Mr. O’Brien explained that the funding wasn’t necessarily for the litigation but for the experts that provided the support.
In response to additional questions from Chairman Raggio concerning funding the repair of the tiles, Mr. O’Brien indicated there were concerns that the actual repair of the tiles could be in the millions of dollars. Mr. O’Brien advised that the SPWB was not proposing to repair the tiles because until the forensic study was completed, the extent of the repairs was uncertain. Mr. O’Brien reiterated that the forensic study results would be received in May, and it was possible that the information could be submitted to the Subcommittee prior to the end of the legislative session.
Mr. O’Brien advised the Subcommittee that the general contractor, which was a joint venture by Kitchell Construction Inc. of Arizona and Precision Construction, had notified the SPWB that they wanted to participate in the study. Mr. O’Brien further advised that there was insurance for latent defects, and it was anticipated that everyone involved would step forward.
Sue Dunt, Risk Manager, Risk Management Division, identified herself for the record and pointed out that the loose ceramic tiles also presented a life-safety issue. Ms. Dunt explained that the ceramic tiles measured 12 inches by 12 inches, and the fact that the tiles occasionally and spontaneously became loose posed a safety risk for people entering the building. From a risk management standpoint, Ms. Dunt advised that it was important to have some source of funding available to perform the periodic surveillance that was required.
Chairman Raggio agreed with Ms. Dunt’s assessment but reminded her that the SPWB was not proposing to repair the tiles.
Ms. Dunt advised the members of the Subcommittee that barriers were being constructed and netting was being placed around certain areas of the Grant Sawyer Building to prevent tiles from falling. Ms. Dunt indicated that if the problem accelerated it would be important to have identified a source of funding so that preventative measures to protect the employees and the public entering the building could be addressed.
Expanding on Ms. Dunt’s comments, Mr. O’Brien indicated that netting was being installed on the spandrel beams in front of the building, and tunnel barricades were being constructed at the entrances so that people could safely enter and depart the building.
In response to questions from Chairman Raggio concerning the number of tiles that had fallen, Mr. O’Brien advised that while he did not have a count, at least six or eight tiles had fallen. Mr. O’Brien expressed some concern in reference to panels on the west side of the building that were just beginning to become loose.
CIP 03-M02 REPAIR EXTERIOR SIDEWALKS – GRANT SAWYER BUILDING, LAS VEGAS
Mr. O’Brien testified that some displacement of the sidewalks in front of the Grant Sawyer Building in Las Vegas had occurred as a result of shifting in certain areas.
Chairman Raggio questioned the adequacy of the $35,600 appropriation by the 2001 Legislature for replacement of 200 feet of sidewalk in front of the Sawyer Building.
Mr. O’Brien advised that approval of CIP 03-M02 would provide for sidewalk repair work in addition to the $35,600 appropriated by the 2001 Legislature.
In response to questions from Chairman Raggio concerning the project management and inspection fees, Mr. O’Brien advised that the $27,119 for project management and inspection fees was “definitely incorrect” and that a new amount would be provided.
CIP 03-M03 UPGRADE ELECTRICAL POWER DISTRIBUTION SYSTEM – STEWART FACILITY, CARSON CITY
Mr. O’Brien testified that approval of CIP 03-M03 would be the third phase in a continuation of CIP 91-21 and CIP 95-M38 to replace the overhead electrical power distribution system with underground service at the Stewart facility in Carson City.
In response to a question from Chairman Raggio, Mr. O’Brien testified that CIP 03-M03 completed the renovation of the electrical power distribution system at the Stewart facility.
Mr. O’Brien indicated that updated line item costs would be provided to staff in view of the fact that the Americans with Disabilities Act (ADA) plan check was not required for the project.
CIP 03-M04 SEISMIC STRENGTHENING OF THE CAPITOL ANNEX, CARSON CITY
Mr. O’Brien testified that seismic strengthening of the Capitol Annex Building was overlooked when the project cost estimate for CIP 01-C10 was presented to the 2001 Legislature. Mr. O’Brien explained that approval of CIP 03-M04 would provide the funding for the renovation of the Capitol Annex and at the same time address life‑safety issues with seismic strengthening of the masonry building.
In response to questions from Chairman Raggio concerning CIP 01-C10, Mr. O’Brien explained that CIP 01-C10 was for the Capitol, Capitol Annex, and Blasdel Building renovations approved by the 2001 Legislature. Additionally, Mr. O’Brien indicated that the project needed to be completed prior to the beginning of construction for CIP 01-C10.
In response to requests for information from Chairman Raggio concerning the inflation factor, Mr. O’Brien agreed to look into eliminating the built-in inflation factor and providing staff with a construction cost estimate that included a breakdown of construction costs.
CIP 03-M21 HVAC SYSTEM UPGRADES – CAPITOL BUILDING AND ANNEX, CARSON CITY
Mr. O’Brien testified that approval of CIP 03-M21 would replace the two existing chillers for the Capitol Building and the Capitol Annex Building. He explained that the air-cooled chiller that served the Capitol Annex Building was approximately 20 years old and had reached the end of its life expectancy, although Division of Buildings and Grounds’ staff, who maintained the building, hoped it would last the summer. Mr. O’Brien stated that replacement of the equipment would provide energy efficiency by consolidating the cooling requirements for both buildings.
Chairman Raggio questioned whether there were insufficient funds in CIP 01‑C10, approved in 2001, to complete the HVAC modifications for the Capitol and the Capitol Annex.
Mr. O’Brien explained that the HVAC equipment was not part of the CIP 01‑C10 request.
In response to questions from Chairman Raggio concerning the funding, Mr. O’Brien advised that he was unable to determine until the successful bidder was selected whether funding would remain. However, Mr. O’Brien indicated that it was unusual to revert funding from the replacement of mechanical equipment projects.
Chairman Raggio asked the SPWB representatives to work with staff and, as previously requested for CIP 03-M04, asked for an updated project cost estimate for CIP 03-M21 in order to determine the total cost to complete both projects.
Mr. O’Brien agreed.
CIP 03-M22 HVAC SYSTEM UPGRADES – STATE PRINTING FACILITY, CARSON CITY
Mr. O’Brien testified that approval of CIP 03-M22 would provide for the renovation and replacement of the existing HVAC equipment for the State Printing facility. Mr. O’Brien stated that the equipment was approximately 35 years old and had reached the end of its life expectancy. While the boiler and cooling tower had been replaced through funding provided in CIP 01-M7, Mr. O’Brien said the HVAC system would have to be replaced if the building was going to be used for the next 20 years.
In response to questions from Chairman Raggio concerning the funding provided in CIP 01-M7, Mr. O’Brien indicated that the system renovations included the replacement of the cooling tower, pumps, and boiler. Mr. O’Brien indicated he was unaware of any funding remaining in CIP 01-M7.
Although aware of the problems the State Printing Division was having with its revenue stream, Chairman Raggio questioned whether a repayment plan should be a condition for approval of the project since the Division was self‑funded.
Mr. O’Brien said that it was his understanding there would be no repayment plan because of the problems the State Printing Division was experiencing with its budget. Since the building was a state-owned facility, Mr. O’Brien indicated that whether or not State Printing used it, the building would continue to be utilized by the state and would continue to need heating and air conditioning service.
CIP 03-M23 LIBRARY/ARCHIVES STUCCO REPAIRS, CARSON CITY
Mr. O’Brien testified that approval of CIP 03-M23 would provide for the repair and sealing of cracks in the exterior stucco finish of the State Library and Archives building built in 1990-91.
Chairman Raggio questioned whether the cracks in the stucco were related to settling.
Mr. O’Brien’s response was that the cracks in the exterior finish were a result of the “old type stucco system” typical to buildings of the 1990s rather than the synthetic finish used on new buildings.
In response to questions from Chairman Raggio concerning whether the finish would appear to be patched, Mr. O’Brien explained that an elastomeric coating over the entire surface would prevent the stucco from appearing patched.
Chairman Raggio indicated he had been made aware of a problem with the roof leaking on occasion and loose gravel migrating from the roof down the roof drains.
Mr. O’Brien confirmed that a roofing problem existed, however, the roof was under warranty, and the roofing contractor was taking care of the problems. Mr. O’Brien pointed out that the project cost estimate for CIP 03-M23 included a reference to roof repair and a notation to refer to the Statewide Roofing Program project.
In response to questions from Chairman Raggio concerning the roof problem, Mr. O’Brien explained the problem had occurred where the two roofs, the flat roof and the folder plane were joined. Mr. O’Brien reiterated that the contractor was taking care of the problem through the warranty.
In response to additional questions from Chairman Raggio concerning the availability of funding should the problem not be resolved, Mr. O’Brien indicated funding had not been budgeted for the project. However, he said that if problems developed and based on need, the work would be accomplished through the Statewide Roofing Program project. Mr. O’Brien mentioned, however, that currently there were more projects than the funds requested in the Statewide Roofing Program could support.
CIP 03-M41 PARKING LOT EXPANSION – ATTORNEY GENERAL’S OFFICE, CARSON CITY
Mr. O’Brien testified that approval of CIP 03-M41 would provide the necessary funding for the demolition of the firehouse behind the old Carson City courthouse and space for additional parking for the Office of the Attorney General.
In response to questions from Chairman Raggio concerning asbestos removal prior to the demolition of the firehouse, Mr. O’Brien indicated it was his understanding the asbestos issue had been resolved.
Mr. O’Brien advised the members of the Subcommittee that the firehouse, which was no longer a useful building, was “a maintenance nightmare” for the Division of Buildings and Grounds who, among other things, routinely had to repair or replace broken windows. With the renovation of the Ormsby County Courthouse building for the Office of the Attorney General, Mr. O’Brien said the need existed for additional parking.
Chairman Raggio expressed concerns in reference to funding the project with $350,000 in bonding money and questioned how many cars the lot would accommodate, and why the project was priority number 41 on a list of 72.
In response, Mr. O’Brien indicated that the building was an eyesore, a maintenance problem, and that a real need for additional parking existed. Mr. O’Brien indicated the parking lot would accommodate 16 to 20 cars.
Chairman Raggio commented on the cost-effectiveness of using bonding money to demolish a building and suggested deferring the project. Based on the fact that the Legislature was faced with using bonds to fund maintenance projects, the Chairman suggested that the SPWB review all the projects that were to be funded with bonding funds and determine whether there were any that could be deferred.
CIP 03-M42 HEATING SYSTEM UPGRADES – STEWART BUILDINGS 12 &13, CARSON CITY
Mr. O’Brien testified that approval of CIP 03-M42 would provide funding to replace the existing heating system in Buildings 12 and 13 at the Stewart facility in Carson City. Mr. O’Brien provided a brief history of CIP 01-M3, which he indicated was the original project to replace the heating system upgrades. Mr. O’Brien explained that it was discovered once into the design process the needs for both buildings could not be met with the available funding. Mr. O’Brien advised the members of the Subcommittee that CIP 03‑M42 replaced CIP 01-M3, and with the engineering already accomplished, there was a clear indication of the work involved to replace the existing heating systems.
In response to questions from Chairman Raggio concerning the $40,000 listed in the Project Cost Estimate for Architecture and Engineering (A&E) services, Mr. O’Brien explained that the $40,000 was mainly targeted for construction supervision.
CIP 03-M50 HEATING SYSTEM UPGRADES – STEWART BUILDINGS 6 & 107, CARSON CITY
CIP 03-M51 TEMPERATURE CONTROL SYSTEM UPGRADES – STEWART BUILDINGS 6 &107, CARSON CITY
Mr. O’Brien indicated the SPWB believed CIP 03-M50 and CIP 03-M51 could be combined.
In response to a question from Chairman Raggio concerning whether CIP 03‑M42 could be included with CIP 03-M50 and CI 03‑M51, Mr. O’Brien said that if the projects were at the same facility and the work was similar, the projects could be combined. At the Chairman’s request, Mr. O’Brien agreed to look into combining CIP 03-M42 with CIP 03-M50 and CIP 03-M51.
CIP 03-PO1 KINKEAD BUILDING STRUCTURAL EVALUATION, CARSON CITY
Mr. O’Brien advised the members of the Subcommittee that the 80,000 square‑foot Kinkead Building, of which 65,000 square feet was occupied, had floors that had sagged since it was built in the late 1970s. The sagging was attributed to the post tensioning of the concrete slab and to design and construction problems. Mr. O’Brien indicated the sloping floors had been a continuous source of complaints, medical claims, and questions concerning the building’s structural integrity. The request before the Subcommittee would provide funding to conduct a structural evaluation of the building.
Chairman Raggio questioned the need to spend $65,000 in General Obligation Bond funding that would not solve the problem.
Mr. O’Brien responded that the “structural evaluation would include a verification of the building’s ability” to withstand an earthquake and a determination concerning whether the sloping floors could be corrected.
Mike Meizel, Chief, Buildings and Grounds Division, informed the Subcommittee that the floors in the Kinkead Building appeared to be continuing to move. Steel posts were added in the 1980s as “compression members to stop the sagging.” Mr. Meizel said that recently a piece of concrete had come loose and was held by the tiles in the ceiling, which presented safety issues. Mr. Meizel indicated that while it was his belief the floors could not be leveled, the administration had an obligation to monitor the building to ensure the safety of the employees.
CIP 03-P02 CAMPOS BUILDING FACILITY USE STUDY, LAS VEGAS
Mr. O’Brien testified that approval of CIP 03-P02 would provide General Obligation Bond funding to conduct a facility use study for the Campos Building and Annex. Mr. O’Brien advised the Subcommittee that the Campos facility was located on 1.50 acres in Las Vegas with parking for less than 100 vehicles. The site had two buildings, one of which had 24,000 square feet and the 8,000 square foot Annex. Both buildings were currently occupied by the Division of Parole and Probation and managed by the Buildings and Grounds Division.
It was Mr. O’Brien’s opinion that the facility, which was constructed in 1954, was in poor condition and a Facilities Condition Analysis survey, recently conducted by the State Public Works Board, determined that the costs to make the necessary repairs would equal approximately 60 percent of the estimated costs to construct a replacement facility.
In response to a question from Chairman Raggio concerning the necessity of a study to tell the Board what it already knew, Mr. O’Brien advised that the request was to conduct a needs study for the Division of Parole and Probation to determine their future space needs.
In response to a question from Chairman Raggio concerning whether the SPWB could conduct the study in‑house, Mr. O’Brien indicated that it was the SPWB’s normal procedure to hire architects to spend time with an agency to determine their needs.
Chairman Raggio announced that staff had provided the Subcommittee a breakdown of the statewide projects and a list of the six major statewide projects since 1991. The Chairman requested that staff provide an overview to the Subcommittee.
Rick Combs, Deputy Fiscal Analyst, Fiscal Analysis Division, LCB, testified that the information provided to the Subcommittee was for the statewide projects that had been recommended for the biennium as well as those from 1991 to the present, which included Roofs, Americans with Disabilities Act (ADA), Sprinklers, Paving, Asbestos, and Underground Storage Tanks. Mr. Combs reported that $44,551,825 had been approved for statewide projects from 1991 to the present and $11,195,456 had been requested for the current biennium for a total of $55,747,281.
In response to questions from Chairman Raggio concerning whether funding remained from either the 1999 or 2001 statewide projects, Mr. O’Brien indicated that the 2001 program had not been very productive and while the SPWB was moving forward, many of the projects were not yet completed. Mr. O’Brien indicated that Mr. Nunez would address the funding remaining in the 1999 program.
Chairman Raggio questioned why the Legislature should approve funding that would not be used until after the end of the 2005 Legislative Session.
In response, Mr. O’Brien addressed the need for the roofs and also indicated that the SPWB had begun to monitor the statewide programs and, in particular, the Statewide ADA Program and the Roofing Program. Mr. O’Brien indicated that Gustavo Nunez, Deputy Manager, Professional Services, SPWB, would provide oversight and work with the project coordinators to ensure that the projects were completed.
Chairman Raggio indicated that the repair or replacement of roofs should be accomplished in a timely manner. The Chairman expressed his reluctance to use bonding money, which was costly, and questioned the need to authorize funding for statewide projects such as sprinklers, ADA, and roofing, if those projects were not even going to be worked on during the current biennium. The Chairman indicated that some kind of perspective was required on the statewide projects before the Legislature would authorize the $3 million requested for the roofing project.
CIP 03-S01 STATEWIDE ROOFING PROGRAM
Mr. Nunez advised the members of the Subcommittee that the roofing needs from a number of state agencies had been inspected by the SPWB Statewide Roofing Coordinator who had concurred that the roofs needed to be replaced.
Chairman Raggio questioned the roofing projects that were targeted for the current biennium since there were roofing projects that had been funded by the 2001 Legislature that had not yet been started.
Mr. Nunez advised that many of the 2001 roofing projects were underway, and explained that some delays had been experienced in bidding projects because many of the roofing contractors who normally worked for the Board had not bothered to become pre-qualified. However, in the last 60 days, Mr. Nunez said four or five contractors had pre-qualified, which provided the Board a good pool of roofing contractors.
Mr. Nunez pointed out that the project cost for the Statewide Roofing Program totaled $3,515,670, which included $2,700,000 million for construction, $187,979 for architectural and engineering design and supervision, and $130,000 for the maintenance agreement, as well as other small, miscellaneous fees. Mr. Nunez advised that it was the Board’s intent to complete the Statewide Roofing Project for the next biennium as well as the projects that remained for 2001.
Chairman Raggio requested that the Board’s Statewide Roofing Coordinator review the previously authorized projects as well as the proposed projects and develop a list of projects that needed to be done in the next biennium.
Mr. O’Brien agreed that the SPWB could provide the Subcommittee’s staff with a list of roofing projects and a description of the work in priority order.
CIP 03-S02 STATEWIDE ADA PROGRAM
Chairman Raggio noted that the total project cost for the Statewide ADA Program was $1,118,644 and requested information on the number of projects still outstanding.
Mr. Nunez advised the Chairman that ADA projects at the campuses of the Southern Nevada Adult Mental Health Services and Child and Family Services would complete all the 2001 ADA projects.
Additionally, Mr. Nunez indicated that approval of the Statewide ADA Program CIP 03-S02 would complete all the ADA projects at the mental health campuses both in northern and southern Nevada and specifically mentioned the northern Nevada campuses for the Northern Nevada Adult Mental Health Services, the Desert Regional Center, and the Sierra Regional Center. Mr. Nunez noted that the amount needed to complete the ADA projects for the entire program was $583,500 of the overall budget.
Additionally, Mr. Nunez advised that the budget included $25,000 to take care of the requirements under S.B. 324, which were revisions to NRS 338.180 and NRS 448.408, which dealt with signage. Mr. Nunez indicated that $25,000 would provide enough funding to buy the signage, and the Statewide Coordinator would determine where and how those signs would be installed. Maintenance facility employees in those buildings would install the required signage.
Chairman Raggio requested that the SPWB provide staff with “a detailed report regarding the buildings that had been retrofitted for ADA compliance, as well as a description of the projects that remained outstanding and needed to be completed.”
Mr. Nunez agreed.
The Chairman called a recess at 9:37 a.m. and reconvened the meeting at 9:43 a.m.
CIP 03-S03 STATEWIDE FIRE & LIFE SAFETY PROGRAM
Chairman Raggio questioned the significant increase in requested funding for the Statewide Fire & Life Safety Program.
Mr. O’Brien responded that the majority of the projects were a result of the Board’s Facilities Condition Analysis report.
Chairman Raggio expressed his reluctance to spend costly General Obligation Bond funding for statewide projects.
Mr. O’Brien referred to the construction cost breakdown and the need for statewide emergency egress lighting in Phase I that totaled $524,787 and statewide emergency exit signs that totaled $38,563.
Chairman Raggio pointed out that the total project cost totaled $3,520,787.
Mr. O’Brien acknowledged the total project cost, however, indicated that the Department of Corrections required $750,000 to address the fire and life safety issues for all their facilities, which was a large part of the total cost.
In response to questions from Chairman Raggio concerning the difference between code requirements and the State Fire Marshal’s requirements, Mr. O’Brien explained that there had been concern regarding the Fire Marshal’s directive that all state buildings be provided with sprinkler systems. After reviewing Nevada Revised Statutes and meetings with the State Fire Marshal, it was determined that the requirement to provide sprinkler systems was only applicable to a building that was being modified. As a result, Mr. O’Brien explained the scope was changed to include sprinkler systems only for those buildings that were being remodeled.
Chairman Raggio questioned what appeared to be a change in the focus of the statewide program from installation of sprinklers to the installation of detection equipment.
Mr. O’Brien indicated that the Board would provide staff a detailed breakdown of each statewide project and the code requirements. While an “actual code violation” would necessarily need to be corrected, Mr. O’Brien provided an example of a situation wherein the State Fire Marshal indicated a sprinkler system was necessary for the long-standing Lost City Museum. However, because of the artifacts in the facility, the Museum representatives were unwilling to have a sprinkler system in the building, and it was proposed to install the detection equipment only. Mr. O’Brien reiterated that the Board would review each of the statewide projects and provide an analysis as to whether the installation of the equipment was a result of actual life-safety code violations or being proactive.
Chairman Raggio noted that each of the line items indicated that the recommendation was for Phase I and questioned the number of phases that would be required.
Mr. O’Brien was unable to respond to the question and indicated that Mr. Nunez had the information, however, he indicated that, as an example, more than one phase would be required for the Department of Corrections because of the enormity of the project.
Chairman Raggio requested that the Board work with staff on the cost breakdown to see if some of the requests could be “pared back” to assist in reducing costs in the overall budget process.
Mr. O’Brien agreed.
CIP 03-S04 STATEWIDE ADVANCE PLANNING PROGRAM
Mr. Nunez provided an overview of the Statewide Advance Planning Program and advised the Subcommittee that $150,000 was requested to formulate the advance planning for the 2005 Capital Improvement Program. Mr. Nunez explained that the same amount was provided for the 2001 Capital Improvement Program.
Mr. Nunez addressed the $80,000 request for the Capitol Complex master plan, Phase II, and he informed the Subcommittee that Phase I, which included a needs assessment, parking and traffic study, and land use identification had been completed. The current request would continue the process with respect to the land use plan as well as development of standards that would provide a guide concerning development of the entire master plan and would tie design, landscaping and building style together.
In response to questions from Chairman Raggio concerning the architect with whom the Board contracted to update the Capitol Complex in Phase I, Mr. Nunez responded that Ganther Melby in Reno was the architect. Mr. Nunez indicated the necessity of having to go through the selection process for Phase II and, while Ganther Melby would not necessarily be selected again, it was Mr. Nunez’ opinion that they had an advantage over anyone else.
Chairman Raggio questioned the necessity of a master plan for the Stewart complex at the current time.
In response, Mr. Nunez advised that the need existed to develop a master plan to determine the state’s long-range program for the Stewart facility, how it was to be developed, which state offices should be placed at the facility, and how the different buildings would be utilized. Additionally, Mr. Nunez indicated the Stewart facility had land that could be developed for future state expansion.
Chairman Raggio questioned the Board’s inclusion of $33,750 for project management and inspection fees noting that in the past, the Legislature had not funded project management and inspection fees for the project to plan the next CIP program.
Mr. O’Brien explained that while there were no inspection fees included, the $33,750 listed under Professional Services would address costs associated with contract administration, staff time, and coordination of the project.
Chairman Raggio requested that the SPWB provide staff a breakdown on the project management and inspection fees, and Mr. O’Brien agreed.
CIP 03-S05 STATEWIDE PAVING PROGRAM
Mr. Nunez advised the members of the Subcommittee that the project cost estimate for the Statewide Paving Program reflected a total of $5,480,790 in projects that needed to be completed.
Chairman Raggio noted the list of paving requirements for various state agencies as listed in the Capital Improvement Program and questioned if each of the projects was essential.
Mr. Nunez indicated the projects were all essential.
Mr. O’Brien commended the SPWB’s Coordinator and Project Manager that had been assigned to the Statewide Paving Program and under whose direction the projects were being completed.
Chairman Raggio questioned whether the $2 million listed under the Total Project Cost would be sufficient to complete the eight projects listed under the program.
Mr. O’Brien explained that the eight projects listed were a description of the entire project breakdown, and while $5,480,790 was needed for projects, only $1,427,402 was requested.
Mr. Nunez clarified that the $5,480,790 encompassed the total project budget.
In response to questions from the Chairman concerning which projects were targeted for completion, Mr. Nunez advised that the paving projects would be completed on an “as needed basis,” and the eight projects listed under the description were in priority order.
Chairman Raggio asked for information concerning how many of the eight projects would be covered by the $1,427,402.
Mr. Nunez advised that a list of the projects that could be completed with the requested funding would be provided to staff during the first part of the following week, or during the week of April 28, 2003.
Mr. O’Brien added that the SPWB staff had provided a list of the total projects in order that the Legislative members were aware of what the needs were.
CIP 03-S06 STATEWIDE ASBESTOS, LEAD, MOLD, INDOOR AIR QUALITY
Mr. Nunez advised the members of the Subcommittee that the Statewide Asbestos, Lead, Mold, Indoor Air Quality Project funded indoor air quality problems, including asbestos and lead paint abatement, required for regulatory compliance for all CIP remodels, renovations, and demolition projects.
Chairman Raggio questioned how much of the problem could be addressed by the requested funding.
Mr. Nunez explained that the recommended funding of $764,085 would be used in the abatement of asbestos and lead paint in certain Nevada Division of Wildlife residential housing units. Additionally, the funding would be used to respond to miscellaneous asbestos, lead paint, and indoor air quality concerns, and to investigate and survey for the presence of mold, and perform mold remediation in buildings in which state employees were housed.
In response to questions from Chairman Raggio concerning which mold remediation projects would be addressed, Mr. Nunez advised that complaints about indoor air quality issues were investigated and acted upon as received. Mr. Nunez further advised that indoor air quality problems were being addressed at a monetary rate of about $20,000 per month.
In response to a request from Chairman Raggio for comments concerning funding transferred from Risk Management, Susan Dunt, Risk Manager, advised that funding had been transferred out of the Risk Management Fund to the Statewide Program to provide funding to immediately address the increase in requests for investigation of mold problems. Ms. Dunt indicated that Risk Management wanted to provide a mechanism to fund the investigations since there were increasingly more complaints as awareness grew. Ms. Dunt advised the members of the Subcommittee that mold problems were being discovered that were the result of deferred maintenance issues, such as leaking roofs that had not been repaired in a timely manner.
Chairman Raggio indicated that he believed it was important for the SPWB and the Buildings and Grounds Division to establish a high priority list to quickly address areas of deferred maintenance. Chairman Raggio reiterated once again that funding projects that would not be started until 2007 or 2005 was not in the best interests of the state.
Ms. Dunt agreed and discussed the difficult situation in which Risk Management was placed if a large mold investigation, on their part, resulted in a discovery that they did not have the money to address.
In reference to asbestos abatement, Senator Cegavske discussed contradictory information she had received concerning whether it was appropriate to seal an asbestos problem or more hazardous to disturb the material during the abatement process. Senator Cegavske questioned which method the state preferred.
Mr. Nunez discussed the options of encapsulation or abatement and indicated that the state preferred the abatement method and explained that encapsulation required maintenance. Mr. Nunez indicated that precautions were taken during the abatement process, and testing was accomplished after completion and before any occupancy was permitted.
Senator Cegavske also questioned whether the Statewide Program addressed indoor air quality issues in leased buildings.
Mr. Nunez advised that complaints concerning indoor air quality were addressed and investigated as received for both state‑owned and leased buildings.
Senator Cegavske questioned whether the landlord paid for the investigation and remediation of the problems in leased buildings.
Ms. Dunt responded that Risk Management and the SPWB worked together to identify the health issues involved with leased buildings because there were times when the landlords were not responsive to state concerns. Ms. Dunt indicated that many times a health-related issue with a building had to be demonstrated to landlords before they were willing to correct the problem. Additionally, Ms. Dunt indicated that without state oversight, a landlord’s remediation methods sometimes created a greater problem. Ms. Dunt indicated that problems were identified by the State Public Works Board and turned over to the landlord to develop a remediation plan, which was then overseen by the Risk Management Division to ensure the problems were correctly addressed.
Senator Cegavske recommended that language be included in state lease agreements that the costs associated with the remediation of asbestos, lead, mold, and indoor air quality would be borne by the landlord rather than the state.
The Chairman agreed and suggested that the SPWB representatives work with the Attorney General’s Office concerning inclusion of the language in leases as recommended by Senator Cegavske.
Insofar as the mold issue, Mr. O’Brien indicated that the SPWB had learned to respond as quickly as possible in order to protect employees.
Additionally, Mr. O’Brien advised the members of the Subcommittee that the need for asbestos abatement was being reduced because the problem was being addressed as buildings that contained asbestos were being remodeled.
CIP 03-S07 STATEWIDE UNDERGROUND STORAGE TANK REMOVAL
Mr. Nunez testified that the Statewide Underground Storage Tank Removal project included removal or closure of existing underground storage tanks (USTs) and replacement of those tanks.
In response to questions from Chairman Raggio concerning the location of the underground storage tanks, Mr. Nunez indicated that one of the tanks slated for replacement was located at the Ely State Prison and others were located at various locations at the Stewart facility.
In response to questions from Chairman Raggio concerning the number of tanks scheduled for removal, Mr. Nunez indicated that he did not have information concerning the size or the number of tanks but would provide the information.
In response to questions from Chairman Raggio concerning funding the remediation costs from the Petroleum Fund, Mr. Nunez advised that “currently the State Petroleum Fund would only reimburse costs from underground storage tank remediation projects if the underground storage tank met all regulatory requirements of the United States Environmental Protection Agency December 1998 Regulations.” Mr. Nunez indicated that the projects listed for Ely State Prison and the Stewart facility did not meet all of the regulatory requirements.
Mr. O’Brien noted that project costs for furnishings and equipment included in the Statewide Underground Storage Tank Removal Project should not have been included, and the project cost estimate would be adjusted.
Chairman Raggio adjourned the hearing at 10:06 a.m.
RESPECTFULLY SUBMITTED:
Connie Davis
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:
Assemblyman Morse Arberry Jr., Chairman
DATE: