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Issues raised about costs of moving state agencies to WV Capitol grounds

By PHIL KABLER

Charleston Gazette-Mail

CHARLESTON, W.Va. — Commerce Secretary Woody Thrasher told legislators Tuesday that, if he had a choice, he would not have moved department agencies into Capitol complex Building 3, which reopened this summer after undergoing a $34 million renovation.

Woody Thrasher
W.Va. Commerce Secretary

“It’s a judgment call whether we should have moved to that building,” Thrasher told members of the Joint Committee on Government and Finance. “Given the financial times, I would not have done it.”

Committee members Tuesday raised issues about the costs of moving the offices for the state Development Office, Tourism, Workforce West Virginia, and the divisions of Labor and Personnel into the eight-story building, commonly called the DMV building.

That includes an overall increase in rent paid by those agencies totaling more than $1 million a year, as well as the purchase of more than $4 million of cubicles and office furniture from Capitol Business Interiors.

In order to help pay off the bonds sold to finance the renovation, the state Real Estate Division is charging $19 a square foot to lease space in Building 3 — which is $5 to $8 more per square foot than the agencies had been paying.

“The rate increase has hurt us,” Thrasher said. “It gives us less money to deal with the issues we have.”

A day earlier, Thrasher told legislators the Development Office needs $35 million a year for site preparation and other incentives in order to compete with other states in business recruitment.

Jon Amores, executive director of the Real Estate Division, said Tuesday the division is required to charge market rates for office space it leases to state agencies, and Building 3 is considered Class A property, which can run up to the low $20s per square foot in downtown Charleston.

As for the cost of the office furnishings, Amores said that with modular furniture, it is frequently more expensive to take apart old units, move them to the new location and reassemble them.

“Once you break them down, the cost and expense of moving them and reinstalling them costs as much as a new cubicle,” he said.

Thrasher noted that furnishings left in the agencies’ previous offices in Capitol complex buildings 4 and 6 can be used by whatever tenants move there in the future. Amores said the old office space will need to be renovated by the General Services Division before new agencies will be lined up to move in.

Also during legislative interim meetings Tuesday:

n A proposal to fully exempt military pensions from state income taxes would cost the state about $3.1 million a year in lost tax revenue, and would provide about 3,800 retirees — mainly former officers and 20-plus year career military veterans — with an average tax savings of $800 a year.

That’s according to Deputy Revenue Secretary Mark Muchow, who briefed a legislative interim committee on the tax exemption proposal.

Muchow said West Virginia is home to about 130,000 veterans, but only about 10,000 receive military pensions. Under state law, the first $22,000 of military pensions is currently exempt from income taxes, so the majority of military retirees would not benefit from a full exemption, he said.

A full exemption might attract a few military retirees to move to West Virginia, Muchow said, but said a greater attraction for retirees likely would be the state’s low property taxes, which he said are significantly lower than all surrounding states.

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