REPORT OF THE

JOINT LEGISLATIVE AUDIT AND REVIEW COMMISSION ON

CONSOLIDATION OF OFFICE SPACE IN NORTHERN VIRGINIA

TO

THE GOVERNOR

AND

THE GENERAL ASSEMBLY OF VIRGINIA

SENATE DOCUMENT NO. 15

COMMONWEALTH OF VIRGINIARICHMOND

1983

MEMBERS OF THEJOINT LEGISLATIVE AUDIT AND REVIEW.COMMISSION

ChairmanSenator Hunter B. Andrews

Vice ChairmanDelegate L. Cleaves Manning

Delegate Richard M. BagleyDelegate Robert B. Ball, St.Senator Herbert H. BatemanSenator iohn C. Buchanan

Delegate Vincent F. Callahan, it.Delegate Theodore V. Morrison, it.

Delegate Lacey E. PutneyDelegate Ford C. Quillen

Senator Edward E. WilleyMt. Charles K. Trible, Auditor of Public Accounts

DirectorRay D. Pethtel

JLARC STAFF FOR THIS REPORT

Mark D. Willis, Project DirectorSuzette P. Denslow

Sarah J. Larson

Susan L. Urofsky, Division Chid

PREFACE

Senate Joint Resolution 29, passed during the 1982 Session ofthe General Assembly, directed the Joint Legislative Audit and ReviewCommission to study the feasibility, desirability, and cost effec­tiveness of consolidating State agency offices throughout Virginia.This report is the second regional study conducted by JLARC.

In the Northern Virginia area, an alternative for consoli­dation which could generate significant cost savings is not presentlyavailable. However, many agencies could benefit from locating to­gether. Consolidation could create a more visible State presence inthe area with the potential for improved services to the publ ic andmore efficient use of space. Furthermore, co-location of offices couldcorrect deficiencies in current space.

Although cost effective alternatives are not currently avail­able, several actions could be taken to improve agency offices or makebetter use of space in the Northern Virginia area. The Department ofGeneral Services should assist agencies to correct problems in currentspace and achieve economies by locating offices together whereverpossible. In addition, institutions of higher education in NorthernVirginia should take steps to obtain more economical and efficientinstructional space. Finally, given the benefits that could occur as aresult of consolidation, the State should remain alert for cost­effective opportunities, such as vacated public buildings.

On behalf of the Commission staff, I wish to acknowledge thecooperation and assistance of the agencies involved.

Ray D. Pethte1Di rector

January 5, 1983

ICONSOLIDATION

OF OFFICE SPACEIN NORTHERN

VIRGINIA

January 5, 1983

throughout Virginia, This review IS thesecond regional study conducted by jLARC

In the Northern Virginia area manyoffices could benefit from' consolidation, Tobe a practical alternative to current arwnge'nlcnts, however, consolidation must be costeffective, The jLARC analysis showed thatin light of current economic conditions, anoption with significant cost savings is notpresently available, Given the potential bene'fits of consolidation, however, the Staleshould remain ,tlert for cost effective oppor'tunities.

Feasibility and Desirability of Conso­lidation (pp. 9-31)

In the Northern Virginia area, whichincludes the cities of Alexandria, Fairfax,and Falls Church, and Fairfax and Arlingtoncounties, it is feasible and desirable to conso,Iidate 26 out of 55 agency offices, Theseagencies do not have unique program'rclatedneeds which would preclude relocation,although commonly mentioned preferencesfor location include on,site parking, location

Although most State agencies areheadquartered in Richmond, additionaladministrative and service offices can befound in over 1,200 locations across theCommonwealth, In many localities, seventlagencies maintain separate facilities withinclose proximity to each otheL State agenciesown or lease a total of more than 68million square feet of space, The Common,wealth spends over $24 million annually on1,500 leases, and owns 8,300 buildingsvalued at $2] billion,

Senate joint Resolution 29, passed duringthe 1982 session of the General Assembly,directs jLARC to study the feasibtlity, desira,bility, and cost effectiveness of consolidatingState ,Igency office space in various locations

"

Joint LegislativeAudit and Review

Commission

on nl;.lSS transportation lines, quick access tointerstate highways, and proximity to otherState and local agencies, Generally, officeshave similar physical plant needs, but someagencies need special facilities such as labo,ratorics and secure space.

Most of these requirements could be metin ,I well'planncd and appropriately designedconsolidated site, For many agencies, ilwould be particularly desirable to relocate inorder to be more accessible and vLsible tothe public and clients, or to improve thephysical condition of their present quarters,

Although 26 offices could be relocated, asingle site could not meet the needs of allthese agencies, Nine offices need to belocated within the specific geographic areasthat they serve for easy access by clients ornearness to other agencies; these officesshould only be considered for consolidationat sites in their current geographic ,Ireas,One office needs a site with easy pedestrianaccess that is ncar a bus or subwaYi and one

L

office should be considered for relocationanI y in anew1y constructed building. All ofthe 16 remaining offices could be accommo­dated 111 any well-planned site, althoughthere are special considerations regarding thespace leased by two off-campus highereducation programs.

Off-CampusProgram Considerations (pp. 31-35)

Higher education institutions spend aconsiderable amount of money for theirfacilities in Northern Virginia. Two off-cam­pus programs-UVA continuing educationand VP1&SU graduate studies-spend almosta half million dollars annually for COmmer­cial office space, a large portion of which isused for elassrooms. The space leased is notonly expensive, it is the most inefficientlyused space among the agencies reviewed inNorthern Virginia, due in part to the natureof the programs. More cost effective meth­ods of providing space for these programsshould be sought, ineluding sharing facilitieswith George Mason University and North­ern Virginia Community College and explor­ing the usc of local secondary schools.

Consolidation Alternatives (pp. 35-46)The 26 agencies currently spend $1.2

million annually for their office space.These costs arc expected to increase an aver­age of 5.3 percent per year for the next 20years, and total costs could reach $3.2million by the year 2000.

Three options for establishing a consoli­dated office building were examined as partof this review, (1) leasing space for theagencies, (2) constructing a new building,and (3) purchasing and renovating an exist­ing building.

Numerous office developments in North­ern Virginia could accommodate State agen­cies in a leasing arrangemen t. To be costeffective compared to current facilities, theState would have to lease space within afairly narrow range-between $10.00 and$13.50 per square foot, depending on theagencies included and configuration of space.Some savings could be achieved by usingmore efficient office designs and by sharingcon1n1on facilities. However l because n1Qvingand refurnishing expenses would have to beincluded, significant savings would occur

II.

anI y if space could be leased well belowthat range.

Several alternatives for construction of aconsolidated office building were examinedwith different combinations of agencies andspace configurations. For some alternatives,construction appeared to be marginally costeffective. The most cost effective alternative,with UV A and VPI&SU programs included,produced savings of $2.8 million over 20years. However l savings would not Occuruntil the year 1999.

Purchasing an existing building IS asomewhat limited option. Because themarket for building sales is constan tl ychanging, the availability and cost of build­ings cannot be predicted in advance. Howev­er, renovating facilities built for purposesother than office space, such as schoolbuildings, could be explored.

Conclusionand Recommendations (pp. 47-48)

At this time, consolidation of Stateoffices in the Northern Virginia area docsnot appear to be cost effective. However,general consolidation could create a morevisible State presence in the area with thepotelltial for improved services and moreefficient usc of space. In some cases, co-loca­tion of offices (when current leases termi­nate) could also correct office space deficien­cies. Services to the public could beenhanced by improving the visibility, acces­sibility, and condition of current offices.The degree of cost savings would depend onthe site, the agencies included, and thespace design. Savings for the alternativesexamined by /LARC arc apt to be marginal,at best, in light of current economic condi­tions. Given the potential benefits of consoli­dation, however, the State should remainalert for cost effective opportunities.

Recommendation (1). The Departmentof General Services should be alert to oppor­tunities for cost effective consolidatioll andco-location of offices in Northern Virginia.The Secretary of Administration and Financeshould charge the department with responsi­bility for more carefully monitoring the realestate market in Northern Virginia to iden­tify sites with significant potential for long-­term cost savings through lease or purchase.When buildings of appropriate size and price

become available, DGS should initiatedetailed site analyses and take appropriatesteps to promote consolidation of offices asidentified in this report.

Recommendation (2). To overcomeproblems with the visibility, accessibility,and condition of existing facilities, DGSshould monitor the termination of leases andassess opportunities to correct the deficien­cies which exist. When current leasesexpire, the department should assist theagencies in improving existing space Of l tothe extent possible, correcting problems andachieving economics by locating officestogether. Economics could be 'lchievedthrough more efficient office layout and bysharing common facilities and equipment.

Recommendation (3). Regardless of anyaction taken to consolidate offices, UVA andVPI&SU (with the assistance of the StateCouncil of Higher Education) should explore

the opportunities available in the NorthernVirginia area to obtain less expensiveinstructional space for their off-campusprograms. Several alternatives could beexamined, including (1) sharing facilitieswith George Mason University and North­ern Virginia Community College, (2) usingthe facilities of loc.ll public schools to agreater extent, and (3) exploring the poten­tial for acquiring a vacated school building.

Supplementary to its study of off-campusprograms, SCHEV should examine the uscand cost of leased facilities for administrativeand instmctional purposes. Aud, under itsstatutory duties for ensuring economical andcoordinated continuing education programs(Section 23-9.10 of the Code of Virginia ),SCHEY should also consider the develop­ment of policies 'lnd stand'lrds regardingspace USC 1 acquisition l and leasing for off-­C~lnlpllS programs.

B. Andrews

~(~:~~~';L~.~c~hleaves~anningRay D.

III.

TABLE OF CONTENTS

I. INTRODUCTIONStudy Approach . .Background . . . .

II. FEASIBILITY AND DESIRABILITYOF CONSOLIDATING STATE OFFICESIN THE NORTHERN VIRGINIA AREAIdentification of Offices for ReviewAnalysis of State Office Relocation .

III. EXAMINATION OF OPTIONSFOR A CONSOLIDATED OFFICE BUILDINGAssessment of Cost Savings. . . . . . . . . . . . . .Location and Other Special Considerations . . . . .Options for Consolidating State Offices in Northern VirginiaConclusions and Recommendations

IV. APPENDIXES .Appendix A: Senate Joint Resolution 29 .Appendix B: Technical Appendix Summary .Appendix C: Agency Responses . . . . . . .

Page· I· I

... 3

· 9.9.13

.25

.25

.29

.35

.47

.49

.50· 51.52

I. INTRODUCTION

Although most State agencies are headquartered in Richmond,more than 80 percent of the State's offices are actually located out­side the capital. Agencies administer their programs and provideservices to the public out of over 1,200 facilities located across theCommonwealth. In many localities, several agencies maintain separateoffices within close proximity to each other.

State agencies currently own or lease over 68 million squarefeet of space. The 8,300 State-owned buildings are valued at $2.7billion, and over $24 million is spent annually on 1,500 leases. In asystem of this scale, more effective and efficient means of providingspace for agencies could result in significant cost savings and im­proved services to the public.

Senate Joint Resolution 29, passed during the 1982 session ofthe General Assembly, directs JLARC to study the feasibility, desira­bility, and cost effectiveness of consolidating State agency officespace in various locations throughout Virginia. In addition to costsavings, the resolution cites other potential advantages for consoli­dation, including enhanced visibility and accessibility for agencies,shared facilities and equipment, and increased coordination amongagenci es.

STUDY APPROACH

Over half of all State agencies and two-thirds of Stateemployees are situated in the eight metropolitan areas of Virginia(Table 1). This review of office space in Northern Virginia is thesecond JLARC study whi ch wi 11 assess the potentia 1 for conso 1i dat i ngoffice space in a region of the Commonwealth; the Roanoke area was thefirst region studied.

Study Objectives

The objectives of each regional study are:

.to determine whether it is feasible and desirable for indivi­dual agencies to relocate their offices from existing sites;

• to examine whether it is feasible and desirable for allagencies or selected groups of agencies to consolidate theiroffices in a centralized location;

------------- Table 1 -------------

STATE FACILITIES AND EMPLOYMENT

AreaNumber of State 1Agency Locations

Number ofState Employees

Metropo 1i tan Areas 2:

Richmond SMSA 231 28,104Norfolk-Virginia Beach-

Portsmouth SMSA 112 6,839Northern Virginia SMSA 86 5,656Roanoke SMSA 58 2,026Newport News-Hampton SMSA 58 4,869Lynchburg SMSA 44 3,720Bristol SMSA 31 1,029Petersburg-Colonial Heights-

Hopewell SMSA 29 3,692649 55,935

Rural Areas:

SouthwestNorthwestSouthsideCentra1Northern Neck and Eastern Shore

Totals

155114132107

52560

1,209

11,0206,6904,677

11,000668

34,055

89,990

2

lIncludes only locations which are on the State Controlled AdministrativeTelephone System (SCATS). Does not include specialized facilities.

2Standard Metropolitan Statistical Areas (SMSA).

Source: Department of Telecommunications, Department of Personnel andTraining Report PSP-207 .

• to determine if it is more cost effective in the short andlong term to consolidate offices than to maintain the presentindividual arrangements; and

• to examine the cost effectiveness of different methods forestablishing a consolidated office building including con­struction, leasing, and purchase and renovation.

Each study presents severa 1 options for consoli dat i ng Stateoffi ce space based on assessment of current space confi gurat ions andeconomic conditions. Any action to consolidate offices, however, willhave to be preceded by additional architectural, engineering, and

financial studies to specify particular site details, such as exactagency space requirements, office layout, and cost estimates.

Methodology

Office space in the Northern Virginia area was systematicallyassessed. An inventory was deve loped of all agency 1ocat ions. Staffat each location were contacted by telephone to determine the nature oftheir operations and any special factors regarding their facility orsite. Based on the pre1imi nary survey, some agenci es were eli mi natedfrom further consideration because of unique factors precludingconsolidation.

The remaining agencies appeared to have potential for reloca­tion in a consolidated office building. JLARC staff visited each ofthose agencies and collected detailed information on the use of theoffice, expenditures, and locational needs. The data were computerizedand a detailed analysis was conducted to determine the feasibility anddesirability of relocating various agencies using different consolida­tion scenarios. The costs of a consolidated building were estimatedusi ng accepted constructi on and 1eas i ng cost gui del i nes, and thesecosts were compared to current expenditures and projected for 20 years.

A technical appendix, which explains in greater detail themethodology and research techniques used in this study, is availableupon request.

Report Organization

The remainder of this chapter will present background infor­mation on State property management and office space in NorthernVirginia. Chapter II looks at the feasibility and desirability ofrelocating and consolidating Northern Virginia offices. Chapter IIIdetails existing costs for the agencies and presents an analysis of theestimated costs for various consolidation alternatives.

BACKGROUND

State agencies operate field facilities such as offices,maintenance garages, halfway houses, and hospitals in order to performa wide range of administrative and specialized functions. The reviewsconducted under SJR 29 are focused on offi ce space. Regardl ess oftheir programs and activities, agencies use office space to supportadministrative functions and to provide places where the pUblic andclients can come for information and services and where field employeescan carry out their administrative responsibilities. Typically, officespace inc 1udes reception areas, offi ces for staff, conference rooms,and special ized work areas.

3

As the size of government has grown and the number of fieldoffices has increased, governments have frequently reviewed the feasi­bility of consolidating office space in order to reduce expenditures.Several states contacted by JLARC have established consolidated officebuildings outside of their capital cities for this purpose. Althoughrecent studies in Virginia have addressed the issue of office consoli­dation, each agency is currently responsible for locating and acquir­ing its own field offices, and there have been few attempts by agenciesto share space. Nevertheless, because of the large number of Stateoffices located in the region, consolidation could be considered inNorthern Virginia.

Consolidation in Other States

Of eleven states contacted by JLARC, all but two have estab­lished consolidated office buildings outside their capital cities tohouse the field offices of various agencies (Table 2). Florida hasestablished a policy that planning for a consolidated office buildingmust begin when the total amount of leased space in an area exceeds50,000 square feet. Several states indicated that shared space andreconfigured office designs (e.g., from private offices to modularfurniture) can reduce agency space needs by 15 to 20 percent.

-------------Table 2 -------------

CONSOLIDATED OFFICE BUILDINGS IN OTHER STATES

State

Number ofEmployees

(1980)

Number ofConsolidat'ldBuildings

Size of Buildings(Sq. Ft.)

14,000 - 198,00053,000 - 223,000

100,000100,000

66,000 - 187,00030,000 - 50,00050,000 - 450,000

200,000 - 2,000,000

o5

12o1 (2 planned)1 (14 planned)

10778

61,13881,29281,75483,30086,60387,350

104,664123,816125,630215,217

South CarolinaLouisianaMarylandGeorgiaNorth CarolinaNew JerseyFloridaIllinoisMichiganNew York

1Located outside of capital city. May include local and federaloffices in addition to state offices.

Source: JLARC Survey of State Property Managers in Eleven States.

4

In almost all cases, consolidated office buildings have beenconstructed by the state rather than a lease or a purchase/renovationarrangement. However, the availabil ity of funding may have been amajor facto~ in these construction decisions. All of the states con­tacted had financed their construction by issuing bonds when interestrates were low. There has been no new construction in the last fewyears due, in part, to the high cost of financing.

Consolidation of agency office space is also more likely tooccur where there is centralized responsibility and authority forproperty management. With centralization, there is typically strongerplanning for office space needs and greater control over agency loca­tion and leasing arrangements.

Studies of Office Space in Virginia

Since 1973, the General Assembly has requested three studiesof office space. A 1973 report by the Department of State Planning andCommunity Affairs and the Division of Engineering and Buildings inven­toried State office space in 187 localities. A 1975 report by the sameagencies found a lack of central control of State office space. Bothreports found a need to improve information about facil ities acquiredby State agencies. They recommended that consolidation of offices takeplace in certain localities and that State agencies be provided addi­tional real estate management services. Both reports emphasized theneed to improve the roles of the Division of Engineering and Buildings(now in the Department of General Services) and the Division of Budget(now the Department of Planning and BUdget) in bringing about a moreeffective system of office space control.

A report to the 1979 General Assembly by the Virginia Advi­sory Legislative Counci 1 found no central oversight of agency leasingand no coordination among agencies to consolidate facilities. Thestudy committee recommended a broader role for the general services andbudget agencies in reviewing leases, stronger legislative oversight oflease expenditures, and study by the Department of General Services ofthe economic benefits of consolidating office locations.

The first study of office space by JLARC showed that it wasfeasible, desirable, and cost effective to consolidate up to 20 officesin the Roanoke area. Several alternatives for establishing a consoli­dated offi ce bui 1di ng were found to be cost effective compared toexisting arrangements for office space. Savings of up to $7.3 millionover 20 years were projected.

Locating and Acquiring Office Space

Because agencies are not requi red to coordi nate thei r expan­sion or relocation plans with other agencies they usually make suchdeci s ions independent ly. Agenci es have developed thei r own II rul es of

5

6

thumb" for locating and deciding whether to lease, purchase, or con­struct offices. Typically, the criteria considered include cost,availability of parking, convenience to the public and employees,access to mass transportation, and access for the handicapped. Thesecriteria are informal and may change to meet the circumstances of eachoffi ceo

Generally, office managers in the field offices determinethei r space needs, locate sui tab 1e space, and negotiate 1eases, ifnecessary. Proposals are submitted to central office administrativestaff, who coordinate the approval process through the Department ofGeneral Services.

The Department of General Services has established space usestandards with which agencies must comply when acquiring facilities.The standards specify the maximum amount of space that may be allottedfor a gi ven use. For staff work areas, the standards range from 64 to256 square feet per employee, depending on employee rank in the agencyand the configuration of space (such as private offices or open areas).The Department of General Servi ces also revi ews proposed real estateacquisitions and maintains records on State-owned and leased property.

As the following examples show, some consolidation of officeshas occurred on a limited and informal basis:

The Lgnchburg office of the Department ofstate Police moved into a basement office in abuilding constructed for the Division of MotorVehicles. Officials of the two agencies workedtogether during the design of the building toaccommodate the needs of the State Police. TheState Police pays a monthly rent to DMV.

* * *In June 1982, the Department of Rehabilitative

Services' area office in Roanoke moved into thesame building that houses the department's regionaloffice. They now share copiers, conference facili­ties, and telephones. Staff of the offices indi­cate that there are substantial cost savings.

* * *The Department of Transportation Safety has

closed or is in the process of closing its tenfield offices. Field personnel will be providedoffice space in Division of Motor Vehicles facil­ities. The department estimates that this willsave $10,000 annually in rent.

State Facilities in the Northern Virginia Area

The Northern Virginia area has one of the highest concentra­tions of State facilities outside of Richmond. Twenty-eight agenciesoperate out of 102 different locations in the area, which includesFairfax and Arlington counties and the cities of Fairfax, Falls Churchand Alexandria. State agencies spend $3.6 million annually on leasesand own facilities valued at $125 million.

The agencies in the Northern Virginia area carry out a widerange of activities, from providing institutional services for thementally ill to enforcement of laws and regulations, as well asadministrative functions. In addition to office space, facilitiesinclude maintenance garages, storage areas and retail stores (Table 3).

Office space represents about ten percent of State-owned andleased space in the Northern Virginia area. Twenty-two agenciesoperate out of 55 1ocat ions cl ass i fi ed as offi ce space. Of these, 47are 1eased, three are owned by the agenci es, and fi ve are in spacereceived free of charge from other agencies.

------------- Tabl e 3 -------------

TYPES OF SPACE IN THE NORTHERN VIRGINIA AREA

Total Square Feet

General office spaceMaintenance/storage facilitiesInstitutionsRetail storesOther

Owned

17,4431,320

2,817,0513,375

45,518

2,884,707

Leased

321,479116,579

48,187109,172

3,273

598,690

Source: Fixed Asset Information System (FAIS) and JLARC review of DEBrecords. An additional 2,218 square feet of general officespace is provided free of charge.

7

8

II. FEASIBILITY AND DESIRABILITY OF CONSOLIDATINGSTATE OFFICES IN THE NORTHERN VIRGINIA AREA

To assess the possibilities for consolidation in the NorthernVirginia area, JLARC first identified the State offices which couldpotentially be relocated to a consolidated facility. Then, each officewas examined to determine the feasibility and desirability of a movefrom its present location.

For the purposes of this analysis, "feasible" was determinedto mean that there were no location or physical plant constraints whichwould preclude the move, that employee needs could be reasonably accom­modated, and that suitable sites for relocation existed. "Desirable"meant that the accessibility, visibility, and condition of the presentoffice locations could be improved, and that a consolidated facilitywould be more cost effective than the individual agency sites.

Many offices in the Northern Virginia area could be relocatedinto one or more consolidated facilities. Most of the administrativeoffices have no location or facility needs which would preclude movingfrom their present sites. For the most part offices which serveclients or the public need to be located in certain geographic areasand should be considered for consolidation options only in those areas.

IDENTIFICATION OF OFFICES FOR REVIEW

Offices with potential for consolidation were identified froma comprehens i ve inventory of allState facil iti es in the NorthernVirginia area. Eliminated from the analysis were specialized facil­ities such as institutions, Division of Motor Vehicles branches, andAlcoholic Beverage Control stores that leased or built to meet uniqueneeds of agencies.

Office Space in the Northern Virginia Area

About forty percent of the State offices in Northern Virginiaare administrative agencies and do not provide direct services to thepUblic (Table 4-A). These offices are typically in commercial officebu i 1dings or in free- stand i ng structures des i gned and bu i 1t spec if­ically for the agencies. Some agencies have special facilities withintheir offices such as libraries, classrooms, laboratories, and computerrooms.

9

------------ Table 4-A ------------

FUNCTIONS OF AGENCIES IN LEASED, OWNED, AND FREE OFFICE SPACE

Number of Number of Number ofFunction Agencies Offi ces Employees

Administrative 18 20 488Services to Public 5 16 208Local Health 1 13 630Other 4 6 131

Total 55 1,457

------------ Table 4-8 -----------­COSTS FOR LEASED OFFICES

(FY 1982)

Total Number Total Average Costof Square Facility Per Square

Type of Off; ce Feet Expenditures Foot Range

Administrative 55,293 $ 582,136 $10.53 $6.65 - $12.50Services to Public 45,440 467,276 10.28 $6.89 - $12.09Local Health 155,808 492,530 3.16 $0.28 - $10.73Other 64,938 670,417 10.32 $4.04 - $11.20

Total 321,479 $2,212,359 $ 6.88 $0.28 - $12.50

Source: JLARC Facility Analysis and the Fixed Asset Information System(FAIS)

The following examples illustrate the range of State officesin the Northern Vi rgi ni a area:

The state Fire Marshal's office is located inan older high-rise apartment building in Alexan­dria. The office COvers 965 square feet and con­sists of a reception area, storage room, conferenceroom, and three staff offices.

* * *

10

The Department of Social Services regionaloffice is located in a medium size office buildingin Falls Church. The agency leases 13,500 squarefeet of space over three floors at an annual costof $151,875. Although the office building isrelatively new, staff indicated that there wereproblems with maintenance and cleanliness of thefacility.

Expenditures for facil ities in leased space totaled $2.2million in FY 1982 including rent, utilities, janitorial services,rna i ntenance expenses, and other costs dependi ng on prov is ions of thelease (Table 4-B). Lease expenditures range from $.28 per square footpaid by a health department office in Fairfax County to $12.50 persquare foot paid for the Regional Office of the Department for theVisually Handicapped in Arlington. MUltiyear leases often includeesca1ator cl auses under whi ch renta 1 cos ts increase annua lly. Thethree State-owned offices in Northern Virginia are valued at $910,000with annual operating expenses estimated at $53,000. Annual operatingexpenses include utilities, janitorial services, routine maintenance,and security services but do not include capital costs.

State offices in the Northern Virginia (Figure 1) area tendto be located near major highways such as the Beltway (Interstates 95and 495) and Interstate 395, which goes into Washington D.C. However,offices are dispersed throughout the area from Alexandria in the eastto Herndon over 18 mi 1es to the west. I n many cases, program- re 1atedneeds have required agencies to locate in particular areas such as nearclient groups or near other government offices. In many instances,however, agencies have located at a particular site because of avail­ability, cost, or convenience to employees and visitors.

Selection of Offices for Review.

Not all of the 55 locations classified as office space wereincluded in the consolidation analysis. Twenty-seven have specialneeds or constraints which preclude relocation:

• Free Space - Five offices receive their office space free ofcharge in another government-owned facility.

• Owned Fac i 1ity - The three State-owned offi ces were omi ttedbecause, in addition to office space, these facilities havespace that is dedicated to special functions, such as aretail store; helicopter landing pad; and maintenance work­shop. The cost of replacing these other facilities makesthem impractical for consideration.

• Joint Operations - Fourteen offices are jointly funded by theState and local government. Typically, these offices arelocated in facilities owned by the locality, and lease expen­ditures are considerably less than they would be for com­mercial office space.

• Unique Physical Plant Needs - The State Medical Examiner hasa morgue located at a hospital.

• Other - Four other offi ces were not cons i dered in the con­solidation analysis:

] ]

Figure 1

LOCATION OF STATE OFFICESIN THE NORTHERN VIRGINIA AREA

//

..*

•

. City ofl'_4~Alexandria

;-.7'---~'~ :;""',.+<'+

~~Q~,\\'\::

'. Washington, D.C.

•

FairfaxCounty

City of• Fairfax"-~=

•'0

Key:• leased Offices* Owned Offices• Free Offices

Scale,I inch = 4.2 miles

Source, JlARe Representation

12

- one office was completely federally funded and wasrequired to meet federal space standards

- one office was scheduled to close by the end of 1982

- two leased offices will be moving to a State-ownedfacility that is under construction.

The remaining 28 offices were considered for potential con­solidation. Table 5 provides summary information on all State officesin the Northern Virginia area. The offices excluded from this revieware set apart.

ANALYSIS OF STATE OFFICE RELOCATION

Over half of the 28 offices could be relocated from theirpresent facilities without significant problems. For the most part,location and physical plant needs could be accommodated in a consoli­dated location. It would be desirable for several agencies to movefrom their current facilities because of poor accessibility, visi­bility, and quality of the offices.

Although it is feasible and desirable to relocate most of theoffices, some should be relocated within limited geographic areas. Onthe basis of program-related needs, two groupings of agencies weredeveloped: (1) agencies with no location requirements and (2) agencieswhich need to be located in certain geographic areas because they serveclients in those areas.

Feasibility of Relocating Offices

To the extent possible, relocation should take into accountthe location, physical plant, and program requirements of each agency.

Location Preferences. Generally, agency preferences werefound to include free, near-by parking, accessibility to major trans­portation routes, and proximity to client groups or other agencies(Figure 2).

Accessibil ity for the convenience of employees and othersvisiting the office was frequently mentioned. Fifteen of the agenciesi ndi cated that they needed to be on a metro trans i t 1i ne and elevenwanted quick access to major highways. For example:

The director of the regional office of theDepartment for the Visually Handicapped indicatedthat his office must be located near a metro line.Some of his staff are visually handicapped and must

13

Table 5

STATE OFFICES IN NORTHERN VIRGINIA

Agency

OFFICES INCLUDEDIN CONSOLIDATION ANALYSISAgriculture &. Consumer ServicesAir Pollution ControlCommerceCorrections, AlexandriaCorrections, Arlin,l;lOnCorrections, FairfaxCorrections· Regional OfficeGeneral ServicesHealth, Regional OfficeHousing, Fire MarshalInduslrial CommissionLabor &. IndustryRehab. Services, AlexandriaRehab. Services: Falls ChurchRehab, Services, Falls ChurchRehab, Services Falls ChurchRehab. Services, Ml. VernonRehab. Services, Ml. VernonReh-ab. Services, Regional OfficeSocial ::crviccsTaxationUniv. of Virginia. Cont. EducationVirginia Employment CommissionVisually HandicappedVPI&SU Graduate Studies ProgramVPI&SU Urban StudiesWar Veterans ClaimsWater COntrol Board

OFFICES EXCLUDEDFROM CONSOLIDATION ANALYSISAlcoholic Bevera,l;e ControlComm. on the Status of WomenHighwavs & Transport;llion

Fairfax ReSidencyConservation & Eeon. Devdopment ForestvHealt h, AlexandriaHealth, AlexandriaHealth, Arlin,l;tonHealth: ArlingtonHealth, ArlingtonHealth, ArlingtonHealth· FairfaxHealth: FairfaxHealth FairfaxHealth, FairfaxHealt h, FairfaxHealth, FairfaxHealt h· FairfaxHealth· Med. ExaminerRehab. Services: Disability DeterminationRehab. Services, Fairfax HospitalRehab. Services, No, Va. Mental Health Inst.State Police (Area 9)State Police (BCI)State Police (7 HQ)Va. Employment Comm., Employment ServiceVa. Emplovment Comm.: Work IncentiveVPI&.SU Research Division

Function

ServiceAdministrativeAdministrativeServiceServiceServiceAdministrativeLaboratoryAdministrativeAdministrativeAdministrativeAdministrativeServiceServiceServiceServiceServiceServiceAdministrat iveAdministrativeAdministrativeEducation&>rvieeAdministrativeEducationEducationServiceAdministrative

AdministrativeAdministrative

AdministrativeAdministrativeHealthHealthHealthHealthHealthHealthHealthHealthHealthHealthHealthHealthHealthMorgueAdministrativeServiceServiceAdministrativeAdministrativeAdministrativeServiceServiceResearch

Number atSquare Fl.

8711,297

7702,7002,5835,6875,6878,5502,400

9651,9802,0002,ISO3,7242,3133,3041,0592,2202,024

13,5003,371

10,00015,0002,103

33,3166,812

7004,860

1"4"T346

10,020126

4,528350

18,31024,22011,9601,100

10,29312,0388,8156,6736,160,;'2156,724

16,70024,6002,1009,831

360432

2,6001,9052,895

9':;03,129~199,194

TotalFacility

Expenditures{Fy 1982)

$ 8,55214,4667,320

31,79717,78444,20863,90076,63028,8006,4208,855

17,00024,00034,69722,5S230,76912,62726,83321,012

ISI,87532,567

112,000176,25026,292

373,1397,':;,098

,':;,76038,925

$1.490,128

$ (a)

o(a)

o6,':;,22090,3693,8401,489

14,77511,95877,13142,040,;8,52037,80072,1569,6007,632

16,750125,346

oo

20,80018,558

{a)

o31,44716800

$ 722,231

Number ofEmployees

385

14173517341743

169

IIII20

835

6751293524,;625

24,33

26I

432

329638

2(,153422732356178734

70234

5526249I6

924

14

{a) Owned office. CostS not comparahle to leased facilities.

Source.. lLARC Facility Analysis and Fixed Asset Information System.

Figure 2

LOCATION PREFERENCES AND PHYSICAL PLANT REQUIREMENTSOF NORTHERN VIRGINIA OFFICES

LOCATION PREFERENCESPHYSICAL PLANTREQUIREMENTS

Agency

• • • • •

• •

• •

:e

I

•••

•

.'.1.• •

•

•.'• • • •• • •

·.. '

•

••

• •

•

••

••••••

• •••'.

•

••••

••

• ••• ••••

• • •

•

•

• •

Rehab. Services, Falls Church

Industrial Commission

Rehab. Services, Mt. Vernon

Housing, Fire Marsha!

Rehab. Services, Mt. Vernon

Rehab. Services, Falls Church

Corrections, Regional Office

Rehab. Services, Regional Office

Corrections, Arlington

Rehab. Services, Falls Church

Health, Regional Office

Labor & Industry

CommerceAir Pollution ControlAgriculture & Consumer Services

Taxation

Corrections, Alexandria

Kenab. ~ervices, Alexandria

Corrections, Fairfax

Socia! Services

Genera! Services

• • • •• • •• •

•• ••

•

• •• ••• •

•••

• •• ••VPI&SU, Urban StudiesWar Veterans ClaimsWater Control Board

VPI&SU, Graduate Studies

Univ. of Virginia, Conti Education

Visually HandicappedVa. employment lommission

Source, JLARe Facility Analysis

IS

rely on the subway and bus to reach the office.Some visually handicapped clients also use themetro system to reach the office.

* * *The State Fire Marshal's office in Alexandria

is a short drive to Interstate 395. The profes­sional staff travel extensively throughout theNorthern Virginia area and indicate that theyprefer to have quick access to the interstatehighways.

Two agenci es, the Department of Correct ions and the Depart­ment of Rehabilitative Services, have established nine offices through­out Northern Vi rgi ni a to serve the popul at ion in specifi c geographi careas. Staff in those offices indicated that their programs wouldsuffer if they were relocated to a site that was not convenient toclients. For example:

The Department of Rehabilitative Servicesoffice in Mount Vernon was located to providecounseling, service coordination, and placementservices to clients in the Springfield area andalong the Route 1 corridor. The facility alsohouses the department's evaluation center whichprovides testing services to potential clients.The office is centrally located to most of itseligible population.

Several offices are located in close proximity to other Stateoffices and local government and community facilities. Staff in theseoffices indicated that their effectiveness would suffer if they wererelocated to a site that was not convenient to these offices.

The Department of Corrections Probation andParole offices in Arlington and Alexandria arelocated next to the courthouse, and the Fairfaxoffice is within easy driving distance of thecounty courthouse. Agency staff frequently visitthese other agencies as part of their jobs.

* * *

16

The Department of Rehabilitative ServicesEvaluation Centers in Falls Church and Mount Vernonare located with the DRS field offices in bothfacilities. The evaluation centers receive many oftheir referrals from the field office counselors.

Although agencies have expressed preferences for particulartypes of locations, 17 of the 28 offices have no overwhelming program­related needs which would preclude moving to a consolidated site. The

location preferences of the remalnlng nine agencies, particularly theneed to be near client populations, were taken into account in identi­fying offices for potential consolidation at particular locations.

Physical Plant Requirements. Most offi ces have receptionareas, staff offices, conference rooms, and storage areas. Some agen­cies need special facilities such as laboratories, testing rooms, andclassroom facilities (Figure 2). For example:

The Department of General Services' NorthernRegional Laboratory provides forensic services tolaw enforcement agencies. The office has severallaboratory stations, a special room for ballisticstests, and special controls for heating and venti­lation. Access to the office Imlst be strictlycontrolled because evidence is stored there. Aground floor location is desirable because bulkyitems are often delivered to the facility.

* * *The Department of Rehabilitative Services has

evaluation centers in Falls Church and in MountVernon. Each has a large room in which clients aretested on various skills such as visual acuity andmanual dexterity. One center also has a classroom.

* * *The University of Virginia Continuing Educa­

tion Division and the Northern Virginia GraduateSchool Branch of Virginia Tech are located in amodern office building in Fairfax County. Eachoff-campus program has a number of classrooms andboth share a library and bookstore. VPI also hasan engineering lab and a computer room.

Several agencies indicated that their offices needed to beaccessible to handicapped individuals. For some agencies, it is afederal requirement. Although Section 2.1-519 of the Code of Virginiarequires State-owned buildings to be accessible to the public, there isno general requirement for leased facilities. Seven of the 28 officesvisited by JLARC were not accessible to the handicapped.

Some agencies need special layouts of facilities to accom­modate large numbers of visitors or to control access to certain partsof their offices. In at least one case -- the Department of SocialServices a special layout is required by federal regulations.Examples of special layout requirements include:

Theby theServices

Department of Social Services is requiredfederal Department of Health and Humanto arrange its Support Enforcement offices

17

for direct access by the public and to meet certainsecurity needs.

* * *The Department of Taxation regional office has

computer terminals which allow access to taxpayerrecords. Access to the room which houses theterminals must be strictly controlled.

* * *

18

The Virginia Employment Commission officelocated in Fairfax County has several hundredvisitors each day. The office requires a largereception area and a layout to separate individualsbeing served by the agency's different programs.

For the most part the special physical plant requirements ofagencies do not preclude relocation and could be accommodated in aconsolidated building. In fact some needs, such as special facilitiesand handicapped access, could be more economically provided in a con­solidated site because agencies with similar requirements could sharefacilities.

Other Factors. The relocation analysis considered additionalfactors that could affect the feasibility of relocating State offices.For example, some offices have long-term leases which expire as late as1989 (Table 6). The cost of early cancellation of these leases issignificant and could reduce the potential cost effectiveness of aconsolidated building.

Table 6

LEASE EXPIRATION OATES

Year of Number of Total Square Annual CostsExpiration Leases Feet (FY 1982)

1983 13 31,709 $294,4361984 5 15,595 159,0421985 6 30,639 331,0531986 2 43,316 485,1391989 1 15,000 176,250

Source: Fixed Asset I nformat ion System.

Program and Employee Impacts. Any proposal to relocateoffices from existing locations should address the concerns of em­ployees and the potential effects on program del ivery. Most agencystaff i ndi cated that they coul d be moved if a new 1ocat i on was still

central to their region and in an uncongested area near Interstate 95,1-395, or 1-495 in Fairfax County. Several indicated that locations inAlexandria and Arlington are too congested and do not permit quickaccess for employees and visitors.

Staff in offices which provide di~ect services to the publicand clients indicated that a move could hurt their programs if the new1ocat i on was not close to thei r present offi ce. These offi ces wereestablished to serve the clients in a particular geographic area.

Another consideration in locating offices together is compat­ibility of functions. Some offices have a large number of visitorswhich would make a consolidated site congested.

Several hundred people come daily to theVirginia Employment Commission facility in FairfaxCounty to obtain job-seeking assistance and coun­seling, to be tested, and to file unemploymentinsurance claims.

Many of these concerns are legitimate but can be addressedthrough the proper location, planning, and design of the consolidatedsite. Easy access for visitors and employees could be arranged bylocating near major highways and on metro transit lines. Potentialincompatibil ity of functions could be accommodated in the design andlayout of a building.

Because the potential benefits of a consolidated site to thepublic and the State can be considerable, every effort should be madeto ass i st emp 1oyees in accept i ng and adj ust i ng to the changes as so­ciated with a sound consolidation option. They should be made aware ofthe potential benefits. For example, employees' access to State ser­vices such as a credit union, messenger delivery, and training may beenhanced. It would be easier for the State to locate such services ina consolidated facility than to serve disparate locations. Moreover,interagency coordination and sharing of space and equipment would befacilitated, and many agencies could have access to facilities andequipment superior to that now available.

Desirability of Relocating Offices

For some agenciesrelocation could improve thecondition of their offices.cost savings can be achieved.

consolidation would be desirable in thatvisibility, accessibility, or the physicalIt is also desirable to consolidate if

Current Visibility, Accessibility, and Physical Conditions.State offices in Northern Virginia are not very visible. They arepresently dispersed around the metropolitan area and are not oftenlocated in easily identified buildings. Twenty-three of the 28 officeshave no sign on the outside of their buildings which would indicatethat a State office was located there.

19

Even though most present offi ces are access i b1e, some haveproblems which could be alleviated in a consolidated building. Six ofthe offices have limited parking; seven are not accessible to thehandicapped; and 11 are not in a major thoroughfare.

It is difficult for a handicapped individualto enter the Probation and Parole Office in Arling­ton. An individual in a wheelchair can enterthrough the back door only with difficulty. Thereis also a serious parking problem in the area.Visitors must park on the street where the numberof spots is very limited.

One standard of accessibil ity onproximity to mass transportation.on a metropolitan transit line.

which the offices score highly isTwenty-seven of the 28 offices are

20

Most of the offices are located in clean and well-maintainedspace. However, a few are in less than desirable facilities.

The director of the Department of SocialServices regional office in Falls Church rated heroffice's cleanliness and upkeep a "2" on a scale ofI to 5 (5 is the highest). The carpet and moldingwere ripped in some spots; the windows, draperies,and stairwells are not kept clean; and staff indi­cate that they have had problems with roaches.

Figure 3 summaY'izes the accessibility, visibility, and phys­ical condition of the 28 offices in Northern Virginia considered forconsolidation. Most of the facilities could be improved to some extentby relocating to a consolidated State office building.

Need for Special Facilities. Many of the offi ces in theNorthern Virginia area are small. For many of these agencies, it isnot cost effective to have special facilities, such as conference roomsor photocopi ers, because they woul d not be used frequently enough tojustify the expense.

The regional office of the Department for theVisually Handicapped in Arlington does not have aconference room or adequate storage space. Sixprofessional staff members share a 225 square footroom, which also serves as a conference room for 24persons once a month.

* * *The Department of Commerce office in Falls

Church does not have a copier or secretarial per­sonnel. The staff must go to a private firm tomake copies. Telephone calls are handled by ananswering service.

Figure 3

ACCESSIBILITY, VISIBILITY, AND PHYSICAL CONDITIONPROBLEMS IN NORTHERN VIRGINIA OFFICES

PHYSICALACCESSIBILITY VISIBILITY CONDITIONS

Agency

Aericulture & Consumer ServicesAir Pollution ControlCommerceCorrections: AlexandriaCorrections: ArlirWton

Lorrcctions: FairtaxCorrections, Regional OfficeGenerar ServicesHealth, Regional OfficeHousing, Fire MarShalIi1/1ustri;iTl ommissionLabor & IndustryRehab. Services, AlexandriaRehab. Services, Falls ChurchRcllah. Services, FaITs ChurchRehab. Services, Falls ChurchRehab. Services, Mt. VernonRehab. Services, Mt. VernonRehab. Services, Rffional OfficeSocial" ServicesTaxationUniv. of Virginia, Cant. EducationVa. Emnlovment Commission

VPI&SU, Graduate StudiesVPI&SU Urban StudiesW-ar Veterans ClaimsWater Control Board

Source, JLARC Facility Analysis

• ••• • •• ••• •• ••

•••

•••• • ••

•

•• ••••••• •••• ••••• •• ••• •••• ••• •• •

•

21

In addition to conference rooms and photocopi ers, typi ca1needs of agencies include access to State vehicles and computer facil­ities, and more storage space. By bringing several offices together atone site, agencies could share these facilities and equipment, and thesmaller offices could have access to additional or improved resources.Table 7 lists the resource needs of the Northern Virginia offices.

------------ Table 7 ------------

NEEDS OF NORTHERN VIRGINIA OFFICES

Need

PhotocopierConference RoomStorage SpaceState CarAccess to Computer FacilitiesMail RoomCafeteriaSecretarial Assistance

Source: JLARC Facility Analysis.

Number ofOffi ces

73322111

22

Bringing agencies together at one site could also reducecosts by reducing the dupl ication of facil ities and equipment. Forexample, 20 agencies have copying machines that could potentially beshared. Savings could also result from shared restrooms, hallwayspace, and lobby areas. Total space needs could be reduced throughmore efficient designs.

Optional Groupings for Consolidation

The JLARC analysis shows that few agencies have overwhelmingprogram-related needs which would preclude relocation. In fact,several offices could benefit from a move to a consol idated site.Nevertheless, there are two offices which should not be considered forrelocation.

The VPI&SU Center for Urban Studies leasesstudio space in downtown Alexandria. In order tohave the program accredited, students must gainexperience in an urban environment. The studio isin an older building in a section of the city whichis undergoing significant revitalization. ThebUilding and the area have historic value and thefacility was renovated to meet the programs needs.

Moving this office to a consolidated site otherthan downtown Alexandria could have substantialnegative effects on its mission.

* * *The Virginia Employment Commission has recent­

ly consolidated most of its offices in the NorthernVirginia area. A single office now serves theentire region. An older warehouse was renovated tomeet the needs of the agency. The lease expires in1989. There is no escape clause in the lease,which costs at least $176, 000 annually or $1. 2million over the term of the contract. It would betoo costly to the state to include this agency in aconsolidated location. Moreover, the agency hasseveral hundred visitors per day to the office.

The remaining 26 offices could potentially be consolidated.However, nine offices serve clients in specific geographic areas ordeal frequently with local agencies. These offices should be con­sidered for consolidation only at sites in the geographic areas wherethey are now located.

The Department of General Services consolidated laboratoriesshould be considered for consolidation only in a newly constructedbuilding. Renovating an existing site to meet the ventilation, heat­ing, cool ing, and special facil ity and equipment needs of the officewould be very expensive.

The Department for the Visually Handicapped office should belocated ina site wi th easy pedestri an access that is near a bus orsubway. Many visitors and employees of the office have visual handi­caps and rely on public transportation to reach the office.

The remaining offices in the JLARC analysis can generally beaccommodated 1n any well-planned site, although there are specialconsiderations regarding the space leased by the University of Virginiaand Virginia Polytechnic Institute and State University for off-campusinstruction. Table 8 illustrates these office groupings and providesadditional relevant information for each agency.

23

Table 8

GROUPINGS FOR CONSOLIDATION

AgencyNo Location Needs

Number ofSquare Feet

FacilityExpenditures

(FY 1982)TotalStall

Agriculture and Consumer Services 871 $ 8,552 3Air Pollution Control Board 1,297 14,466 8Commerce 770 7,320 5Corrections: Regional Office 5,687 63,900 17Gen. Services: Consolidated Labs l 8,550 76,630 34Health, Regional Office 2,400 28,800 17Housing, Fire Marshal 965 6,420 4lndustrial Commission 1,980 8,855 3Labor & Industry 2,000 17,000 16Rehab. Services, Regional Office 2,024 21,012 5Social Services 13,500 151,875 67Taxation 3,371 32,567 51UVA Continuing Education 10,000 112,000 29VPI . Graduate Center 33,316 373,139 56Visually Handicapped' 2,103 26,292 24War Veterans Claims 700 5,760 5Water Can trol Board 4,860 38,925 24

94,394 $993,513 368

Alexandria

23$50,7974,850

Corrections: Probation &. Parole 2,700 $31,797 14Rehab. Services, Area Office 2,150 24,000 9

"

Arlington

Corrections: Probation &. Parole 2,583 $17,784 17

Bailey's Crossroads

Rehab. Services: Area Office 2,313 $22,552 IIRehab. Services .. Area Office 3,304 30,769 20Rehab. Services: Evaluation Center 3,724 34,697 II

9,341 $88,018 42

Fairfax City

Corrections, Probation &. Parole 5,687 $44,208 35

Mt. Vernon

Rehab. Services: Area Office 1,059 $12,627 8Rehab. Services: Evaluation Center 2,220 26,833 3

3,279 $39,460 II

'Considered only for new construction because of the high cost of renovation to3ccommodate special facilities.

~Considered only for ;l site with easy pedestri3n Jccess ;Ind neJT j bus or subw;,ryline because of visually handicapped employees and visitors.

24 SouTce, flARe FJcility An~il\'sis ~ll1d the Fixed Asset llltnrnutioll Sy..;tCIl1.

III. EXAMINATION OF OPTIONS FOR ACONSOLIDATED OFFICE BUILDING

The consol idation of State offices in the Northern Virginiaarea has been shown to be both feasible and desirable at the agencylevel. To be a practical alternative, consolidation must be costeffective. For that reason, consolidation in Northern Virginia shouldbe approached with caution. Although some agencies could benefit, analternative with significant cost savings is not immediately available.Some options could result, under certain circumstances, in costsavings. However, not all options are cost effective and in someinstances savings are unpredictable.

The long-range cost effectiveness of consolidation is depen­dent upon inflation and interest rates that are in a state of flux.Moreover, a unique situation regarding space use by the University ofVirginia (UVA) and Virginia Polytechnic Institute and State University(VPI&SU) greatly affects the space and cost determinations forconsolidation.

Of the 26 offices that have the potential for consolidation,only 13 have no constraints. From one to six additional offices couldbe consolidated with these offices if a compatible location and facil­ity could be found. The 26 offices spend $1,238,780 annually for theirspace. These costs are expected to rise an average of 5.3 percent forthe next 20 years and annual costs could reach $3,324,142 by the end ofthe peri od.

Locating several agencies at a single site could, undercertain conditions, lower costs by making more efficient use of spaceand reducing overall space needs. Three primary options for a consol­idated building were examined: (1) leasing a building to accommodatethe offices, (2) constructing an office building, and (3) purchasing anew or renovated building.

ASSESSMENT OF COST SAVINGS

A consolidated facility should meet the needs of State agen­ci es at a cos t that is 1ess than the sum of expenses for separateoffices. Full occupancy of a consolidated facility has the potentialfor savings to the general fund and a reduction of expenses for thoseagencies with the highest costs and greatest amounts of space.

Savings could result through utilization of open work areasto reduce the total amount of space needed; through reduction of spaceused for non-program purposes such as restrooms, hallways, and stair-

2'i

26

wells; and through sharing of facilities, such as conference rooms,that are currently duplicated and underutilized. The cost of a consol­idated office building and the range of potential savings wouldactually be determined by its location, the agencies included, and thesize of the facility.

Costs of Current Facilities

Costs paid by State agencies for their office space appear tobe reasonable for the Northern Virginia area. The 26 offices in theconso 1i dat i on ana lys is pai d an average of $10.30 per square foot foroffice space in FY 1982. According to the Real Estate Research Centerat VCU, the cost of offi ce space in the Northern Vi rgi ni a area cur­rently ranges from $9.00 to $16.00 per square foot.

Based on inflation estimates made by Chase Econometrics inNovember 1982, rental costs are expected to ri se an average of 5.3percent annually for the next 20 years in Virginia. Local conditionsmay affect the rate of increase as well. In localities where there isa surplus of office space, costs should increase at a slower rate;where there is a shortage, costs should increase at a greater rate.Assuming that increases in the Northern Virginia area will reflect theState average, expenses for office space could approximately double bythe year 1995 (Table 9).

Table 9 -------------

PROJECTED COSTS FOR OFFICE SPACE IN THE NORTHERN VIRGINIA AREA

Estimated 1 Percent IncreaseYear Expenditures From 1982

1982 $1,238,780 01985 1,465,266 181990 1,882,933 521995 2,438,427 972000 3,156,833 155

lChase Econometrics has projected inflation rates until 1991.Estimates beyond 1991 were made by assuming that the lastannual increase (5.3%) would remain constant past 2000.

Source: Chase Econometrics (November 1982) and JLARC.

Square foot costs vary considerably among the offices due tothe location of the office and age of the building (Table 10). All butthree of the agenci es have full- servi ce 1eases that i ncl ude all faci 1­i ty expenses in the 1ease. The other agenci es pay for utili ties,janitorial services, or other costs in addition to rent.

Tabl e 10 ------.-------

SQUARE FOOT COSTS FOR NORTHERN VIRGINIA OFFICES

Cost per Square Foot

Less than $8.00$8.01 to $9.50$9.51 to $11.00$11.01 and above

TOTAL

Number of Agencies

465

1126

Total Amount of Space(in square feet)

11,21523,138

9,34976,432

120,134

Source: JLARC Facility Analysis and Fixed Asset Information System.

Use of Open Work Areas

Over half of the space in agency offices is currently usedfor staff offices and work areas. The most common arrangements areprivate offices for professional staff and open areas for clericalpersonnel, although some clerical staff occupy individual offices(Table 11). Private offices, however, are the most inefficient use ofspace. Open areas with modular furniture allow more flexibility indesign and greater efficiency in space use. Space needs for staffcoul d be reduced up to 20 percent by 1imi t i ng the number of pri vateoffices while providing sufficient areas for confidential work withcl ients or other employees.

The open space concept is bei ng used inmost new offi cebuildings. It is particularly applicable to those State offices in theNorthern Virginia area where the work activities are frequently con­ducted outside of the office. The professional employees in ten of the26 agenci es are out of the offi ce 50 percent or more of the time.ThUS, their work space is often unused.

Reduction of Unproductive Space

Many 1eases are based on gross square feet of space. Thereis variation among agencies, however, in how efficiently space isdesigned. For example, space leased by UVA and VPI&SU for off-campusinstruct i on must have extra-wi de hall s to meet fi re and safety stan­dards. Only about 63 percent of the space leased by these institutionsis used for program or work activities. The remainder, known as theinefficiency factor, is taken up by hallways, restrooms, utilityclosets, and elevator lobbies.

Exclusive of these programs, the other agencies in theNorthern Virginia use about 85 percent of their rented space for work-

17

28

------------- Tabl e 11--------------

CONFIGURATION OF STAFF SPACEIN NORTHERN VIRGINIA

Space PerNumber of Number of Employee

Type of Space Employees Square Feet (Sq. Ft)

Professional Staff:

Private 189 25,156 133Semi-Private 101 7,052 70Cubicles 16 1,289 81Open Area 67 3,881 58

Total 373 37,378 100

Clerical/Administrative Staff

Private 16 2,315 145Semi-Private 8 857 107Cubicles 5 414 83Open Area 47 6,482 138Reception Area 46 8.548 186

Total 122 18,616 153

Source: JLARC Facility Analysis. Based on 26 agencies.

related purposes. For this reason, there can be little reduction incommon space by moving most agencies to a consolidated facility.

Sharing of Facilities

Thirteen percent of the space leased by agencies is for roomsthat potentially could be shared by several agencies (Table 12). Thisspace includes conference rooms, employee lounges, storage areas, mailand file rooms, and rooms for photocopy equipment or other specialpurposes. Many of these facilities are used only on an intermittentbasis and potentially could be shared in a consolidated building. Forexample, more than half of the offices visited by JLARC had conferencerooms. Although preci se records on use were not kept, agency staffindicated that many of the rooms are used at full capacity onlyoccasionally.

The amount of sharing and the resulting savings that couldoccur depend upon which specific agencies occupy a consolidated build­i ng and how these agenc i es currently use thei r space. I n a consol i­dated building, for example, it is conceivable that only one employeelounge and one large storage area would be needed. Conference and copy

------------- Table 12 -------------

COMMON FACILITIES IN NORTHERN VIRGINIA AREA OFFICES

TotalNumber of Number of Percent of Annua1

Agencies With Square Total Leased Cost of~ Rooms Feet Space Rooms

Conference Room 15 4,598 3.8% $46,305Employee Lounge 7 1,421 1.2 14,665Storage Area 17 3,164 2.6 31,829Classrooms 2 6,656 5.5 74,547

Total 15,839 13.1% $167,346

Source: JLARC Facility Analysis.

rooms could be provided on specified floors of a mUlti-story building.An additional benefit of consolidation is that some agencies would gainaccess to facilities, such as conference rooms, that they do not haveat their present sites.

Sharing of Equipment and Services

Another area of potential savings in a consolidated buildingis the sharing of equipment and services. Almost all of the officeshave photocopying equipment or access to it. At a single location,agencies could share photocopying equipment, reducing the number ofmachines needed and providing some agencies with better equipment.

Several other areas of potential sharing and savings could beexplored at a consolidated building. For example, establishing a poolof State cars could reduce the number of vehicles needed. Also, smallagencies that need only part-time clerical assistance could explore thepossibility of sharing personnel. Other areas with potential forsharing include computer facilities, mail rooms, and supplies.

LOCATION AND OTHER SPECIAL CONSIDERATIONS

Several factors must be considered when selecting a locationand determining the size of a consolidated building for State offices.Numerous locations exist, but they vary considerably in terms of urbanor suburban orientation, the availability and cost of land or build­ings, access to mass transportation or major roadways, and the degreeof traffic congestion. The unique circumstances of the off-campusprograms of UVA and VPI&SU can have a major impact on the size, spaceconfiguration, and cost of a consolidated site. These programs account

29

30

for well over one-third of the current costs and space of the 26agencies considered for consolidation.

Potential Locations for a Consolidated Building

Although Northern Virginia does not have a central commercialor offi ce space di stri ct, there has been cons i derab1e deve 1opment ofoffice buildings in recent years. The development has been dispersedthroughout the regi on from A1exandri a in the east to Reston, nearDulles Airport, over 28 miles by car to the west. Currently, there isa surplus of office space on the market, and local economic developmentspecialists indicate that leases can be negotiated below advertisedrates.

Nine areas were identified as potential consolidation loca­tions because they provided a range of sites within, or on, the beltwayformed by Interstate 495 and 95, and in outlying areas. The selectioncriteria included, but were not limited to, relatively quick access tothe interstate highways and other arterial roads, access to bus and/orsubway lines, minimal traffic congestion, and adequate parking.

Some locations would be better suited for certain consolida­tion options. Purchasing a building is probably most viable in themore developed urban areas, whi 1e suburban areas offer the greatestnumber of alternatives for leasing new buildings. The less congestedout lyi ng areas have lower 1and costs for a construction option. Theavai 1abil ity of space and the advantages, di sadvantages, and 1ocati onsof the various areas are shown in Figure 4.

Areas Within the Beltway. Two primari ly urban areas, theArlington Courthouse .area and Alexandria, and a relatively developedarea, Bailey's Crossroads, are located within the Beltway. Location ineither Arlington or Alexandria offers the State the opportunity toparticipate in urban revitalization. However, construction sites arelimited and land is expensive, ranging from $40 to $50 per square foot.A considerable amount of leasable space is available in Arlington, butadvertised lease rates are relatively high--from $14 to $25. Masstransit is very accessible, but access to highways is not as convenientas in other locations.

Bailey's Crossroads is accessible to both mass transit andmajor roads. It is unique in that three service offices are located inthe area and could be considered for consolidation along with the 13offices without geographic constraints. Leasable space is available ina moderate range of $9 to $18. Construction sites are limited,although the cost of land is relatively low--$5 to $6.

Areas on the Beltway. Three areas located on the Beltway areprimarily suburban: the Merrifield/Oakton area near Interstate 495 andRoute 50; Tysons Corner near Interstate 495 and Route 7; and theSpringfield area near the interchange of Interstates 95, 395 and 495.These areas have good access to interstates but limited mass transit.Both lease and construction sites are available in the Merrifield/

Oakton area in moderate to hi gh cost ranges. Tysons Corner is con­sidered to be a prestigious but expensive location. Springfield has aconsiderable amount of leasable space, but few construction sites.

outlying Areas. Relatively uncongested areas outside of themetropolitan core are the Newington area along Interstate 95, Reston/Herndon near Du 11 es Ai rport, and Fairfax Ci ty. These areas havesevera1 potential 1ease or construction sites, but trave 1 time andmileage is greater than for other areas. The Newington area is southof the metropolitan core and readily accessible to the geographic areasserved by most of the State offices. Much of the travel done by agencypersonnel is to Richmond or the western parts of the region's servicearea. The Reston area is west of the metro area and not easily acces­sible to the rest of the region. Fairfax City is also not easilyaccessible by major roads or mass transit.

Off-Campus Program Considerations

Any comprehensive assessment of space used by State agenciesin the Northern Virginia region must take into account the space leasedby the University of Virginia (UVA) and Virginia Polytechnic Instituteand State Uni vers i ty (VP I&SU) for thei r off-campus instruction pro­grams. These two agencies lease space in the same office building insuburban Fairfax County, at a rate of $11.20 per square foot. Thisrenta1 rate is among the hi ghest for State faci 1it i es in NorthernVirginia. The leases run through 1986.

Obviously not all of this space is used for offices. Butbecause annual expenditures for this space are 39 percent of all leaseexpendi tures for the 26 offi ces, all or part of the program spaceshould be considered for consolidation or for cost reduction by anothermeans to save State funds.

Because the present space represents such a high proportionof the potentially consolidatable space in Northern Virginia, the costeffect i veness of a consol i dat ion opti on wi 11 be dramati cally affectedby the inclusion or exclusion of these agencies. However, off-campusinstruction may not be compatible with the other uses of a State officebuilding. Moreover, it may not be practical to tie the cost effective­ness and space configuration of a consolidated building to educationalprograms that may be more subject to expans i on or contraction thanprograms of a purely administrative nature.

Space Use. The current space leased by the two universitiesis not only expensive, it is also the least efficiently used due, inpart, to the nature of the programs. A total of 43,316 square feet ofspace is leased at an annual cost of $485,139.

Of the total amount of space, almost one-third is for 19classrooms, two laboratories, a library, and a bookstore (Table 13).Another one-third is for faculty and administrative offices. Almost 40percent of the total amount of space leased is for common areas such as

31

Figure 4

ON

'" POTENTIAL LOCATIONS FOR A CONSOLIDATED BUILDING

5.9 miles

D.C.

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Part A

Geographic Locations

Source, jLARC Representation

Location

Part B

Description of Locations~--------~~~

~.i ~~!O'.... •...'''i

fq;1!

~.:.,. ~ ~d' ~ ~~ Advantages Disadvantages

Inside BeltwayArlinglOn

(Counhousc Areal2,500,000 r 525,000 405,000 r $14 $2.1 ($42 - $46 ( • Good acceS!:iihi\ilY by m;lss lIilnspollalion

• Considerable amounl of leasable spilce• High COSls• Congesled, limiled parking• NO! easily ;Iccessible by aUlD• Limiled SilCS for conslruclion

Alexandria 2,.115,000\ 448,000 o $15 $251 $40 $50 I • Good accessibilily by mass IIanspoIlil.llOn

• Urban revila!iz,llion• High COSIS• Congcsled• Limiled parking• Limiled siles for cOnslIuclion

50,000 I $9 - $18 I $5 - $6Bailey's ClOssroads

Along BeltwaySpringfield

2,250,000 I 246,000

1,896,000 I 203,000 190,000 I $8 - $18 S3 - $5

• Good accessibililY by mass IIansp0nil.llOn• Cenlral in region

• Good accessibililY [0 inlerSl<lICS• Considerable amount of leasable space

• Congesled• Limilcd siles for conSlrUClion

• Limiled siles for conslruclion• Poor ;ICCCSS by mass lIanspOIl;llion

Mcrrifield/Oaklon

2,502,000 I 149,000 315,000 I $\0 - $161 $4· $8 • Considerable amounl of Sp;lCC avai\;Ible• Siles available for conSlrUClion• Goori ;Iccessibi\ilY 10 inleISlales,

• Expensivc• Limiled acccss by mass lIansponalion

Tyson'sCorner

3,331,000! 1,048,000) 667,000) $11 $20 1 $10 $151 • Considerable amounl of space available• Good accessibililY 10 inlcISlales• Siles available for conslIuclion

• Expensive• Limilcd access by mass lransponil.lion

OutlyingNewinglon 1,770,000! 233,000 o $11 $141$2.50 $51 • Relalively inexpensive

• U ncongeslcd• Siles ;Iv;lilable for conslIuclion

• Poor ,1ccess by m;lss II;lnsponalion• NO! cemral 10 popu\;llion

F,1irfax CilY 2,689,000) 303,000 I 2.30,000 1$12 $171 $7 $10 I • Considerable amoum of sp,1ce avaiL1ble• Siles available for conslIuclion

• Poor access by rn.1SS lr;lnspoIl,11ion and aUlO

RCSlOn/Herndon

6,094,000 790,000 75,000 I $10· $19 $3 $5 • Considerable amoum of space being developed• Siles ,1V,1ilable for conslruclion

• NO! cenlIal lD regioll• Poor acccss by m;lss lransponil.lion and aUlD

8::

'Spacc in blocks grcalcr lhan 45,000 squil.rc feCI

Sources, Bbcks Officc Leasing Guide (Fall 1982), Fairfax Coumy Econllmic DevelopnlcmAUlhorily, Arlinglon Coumy Depallmem of CommunilY Developmenl Akxandri;l Real ESlalcAssessmenl Office, F:lirfax Cily Planning Dep;lIlmcnl

34

Table 13

SPACE USE BY UVA AND VPI&SU(in square feet)

Tota1 Space Staff Offices Student Other CommonLeased & Work Areas Areas* Rooms Areas**--

UVA 10,000 4,931 1,679 608 2,782

VPI&SU 33,316 7,530 11,306 1,100 13,380

TOTAL 43,316 12,461 12,985 1,708 16,162

*Classrooms, library, bookstore, and laboratories.**Hallways, restrooms, mechanical closets, and other common areas.

Source: JLARC Facility Analysis.

hallways, restrooms, and mechanical closets. Since the facility isused for classes, hallways are required to be at least six feet wide toaccommodate large numbers of students. Therefore, a significant amountof space is taken up in hallways.

Both universities offer courses primarily during the eveninghours to accommodate persons who are worki ng. UVA teaches coursesprimarily at locations other than the leased building, such as localschools and business and governmental offices. In contrast, VPI&SUholds most classes in the building. According to the director of theprogram, staff and students prefer the "campus-l ike" atmosphere thatthe buil di ng provi des. Si nce most of the courses at the center areheld at night and on weekends, a considerable amount of space is notbeing used a large part of the day at significant cost.

status of the Programs. Although UVA and VPI&SU can beexpected to continue offering programs in the Northern Virginia region,those program offerings are subject to change by factors such as reduc­tions in State funds, higher tuition rates, and the increasing capacityof schools within the region to meet student needs. A study completedin March 1982 by the State Council of Higher Education, at the requestof JLARC, addressed the question of proliferation of off-campus grad­uate programs. The Council expressed concern that competition betweeni nst i tut ions wi 11 i ntens i fy as regi ona1 i nst i tut ions deve lop and as ananticipated decline in enrollment growth rates takes hold.

Therefore, the Council recommended that UVA and VPI&SU phaseout their Northern Virginia programs in graduate level education.Thei r programs can cont i nue in bus i ness, pub 1i c admi ni strat i on, eco­nomi cs, and mathematics only as long as there is suffi c i ent studentdemand to warrant sharing these programs with George Mason University.Specialized programs such as computer science, architecture, and

engi neeri ng programs wi 11 continue to be the provi nee of VPI&SU andUVA. SCHEV expressed some concern, however, that tuitions would haveto rise to offset the loss of the high-enrollment education programs.

Given the high cost of current off-campus space, UVA andVPI&SU, with the assistance of SCHEV, should assess alternative andless expensive space options for programs offered by non-residentschools. Several alternatives should be examined. One option is toexplore the potential for sharing existing instructional facilitieswith other educational institutions in the Northern Virginia areaincluding George Mason University and Northern Virginia CommunityCollege. Virginia Commonwealth University currently uses facilities atGeorge Mason for its courses at no cost. Another opti on is to usefacilities of local public schools to a greater extent. UVA currentlyuses local secondary schools for many of its courses at minimal or nocost. A third option is to explore the acquisition of a vacated publicbuilding, such as a school.

As a supplement to its study of off-campus programs, SCHEVshould examine the use and cost of facilities for administrative andinstructional purposes. Under its statutory responsibilities forensuring economical and coordinated continuing education programs(Section 23-9.10 of the Code of Virginia), SCHEV should also considerdevelopment of policies and standards regarding space acquisition anduse for off-campus programs.

Although the off-campus programs may not always be suitablefor consolidation in an administrative office building, alternativesfor including the space should be examined when consolidation decisionsare made. The consolidation options developed in this report will showthe impact of (1) considering consolidation without including the twouniversity programs; (2) including both offices and student areas suchas laboratories and classrooms in the consolidated site; and (3) in­cluding only administrative and faculty offices in the consolidatedsite on the assumption that instructional space will be located else­where. If instructional space is included, it should be made availableto State agencies for conference space, training, and other uses.

OPTIONS FOR CONSOLIDATING STATE OFFICES IN NORTHERN VIRGINIA

Three primary options for establishing a consolidated officebuilding were examined as part of this review: (1) leasing space forthe agencies; (2) constructing a new building; or (3) purchasing andrenovating an existing building. Options for leasing sufficient spacefor State offices are fairly broad in the Northern Virginia area.Numerous new offi ce developments cou 1d potenti a11y accommodate Stateagencies. In addition, several general locations in the NorthernVirginia area would be suitable for construction. However, land costsare hi gh, rangi ng up to $50 per square foot in some of the hi gh lyurbanized areas. Opportunities for purchasing an existing bUilding aresomewhat limited.

Offices identified in the feasibility analysis were selectedfor each option so as to meet their specific requirements and to maxi­mize cost savings through more efficient use of space and reduction ofovera 11 space needs. For the 1ease and purchase opt ions, break-evensquare foot rates were estimated below which consol idation would becost effective. Current facility costs and estimated costs for theconstruction option were projected over a 20-year period. This per­mitted a comparison of the long-term costs.

Leasing a Consolidated Office Building

In the Northern Virginia area about eight million square feetof space is currently available or under construction for leasing. Anaddit i ona1 26 mi 11 i on square feet has been proposed by deve 1opers.However, to make leasing a consolidated building cost effective, theState would have to locate space within a fairly narrow price range.

Agencies for Consideration. At least 13 offices, withoutgeographic or program constraints, could be considered for consolida­tion at a single leased site:

Agriculture and ConsumerServices

Air Pollution Control BoardCommerce

Corrections: Regional Office

Health: Regional Office

Housing: Fire Marshal

Industrial Commission

Labor and Industry

Rehab. Services:Regional Office

Social Services

Taxation

War Veterans Claims

Water Control Board

36

Up to six additional agencies could be part of a consolidatedfacility depending on location and compatibility of functions. The UVAand VPI&SU off-campus programs could be included at any location if itis determined that the educational activities are compatible with otherState agency functions. The Department for the Visually Handicappedcould be included if the site were on a metro transit line. In addi­tion, up to three service offices could be included if a facility wereleased in the geographic area that they serve. Three service agenciesare located near Bailey's Crossroads, two are in Alexandria, two arein Mount Vernon, one is in Arlington, and one is in Fairfax City.

Range of Building Sizes. Space needs in a consolidatedleased facility could range between 37,000 and 82,500 square feet. Thesmallest size could accommodate 13 State offices under a design whichmaxi mi zed space savi ngs and requi red agenci es to share common facil­ities. The largest size would accommodate 19 offices and duplicate theamount of space they currently use. Thi s range of space needs wascalculated on the basis of the location of the consolidated building,the agencies to be included, and the possible office configurations.

Table 14 shows several different combinations of agenciesunder different space configurations and their space needs. Althoughit does not cover every possible alternative out of the 26 officeswhich could be consolidated, it illustrates the range in space require­ments that would be necessary in a leased consolidated site. Includingor excluding the UVA and VPI&SU off-campus programs in a consolidatedbuilding will greatly affect the size and potential costs, since thesetwo programs represent a significant portion of the space in NorthernVirginia. Space needs are shown for three possibilities; excludingthe programs entirely; including only administrative and facultyoffices and assuming that classrooms will be located elsewhere; andincluding both offices and classrooms.

Analysis of Alternatives. I n order for a 1eas i ng opt i on tobe cost effective, square foot costs in a consolidated site must beless than the current average square foot costs plus moving and refur­nishing expenses. For purposes of this analysis, moving expenses were

------------- Tab 1e 14 ------------

RANGE OF SPACE NEEDS FOR CONSOLIDATIONALTERNATIVES IN A LEASED BUILDING

Space Needs (sguare feet)

Maximizing DuplicatingNumber of Space Current

Alternatives Offices Reductions Space Use

l. Agencies withoutgeographic or programconstraints 13 36,800 40,800

2. Same agencies as #1 plusadministrative andfaculty offices of UVAand VPI&SU off-campusprograms 15 47,800 55,100

3. Same as #2 plus UVAand VPI&SU class-room and othereducational space 15 64,700 72,000

4. Same as #3 plusVisually Handicappedand three serviceoffi ces 19 74,500 82,500

Source: JLARC Faci 1ity Analysi s.

38

estimated to be $70 per employee plus an additional proportional amountfor non-staff space, such as conference rooms. The cost of refurnish­ing offices could be up to $3,100 per employee, depending upon theusefulness of existing equipment and the extent of office redesign.

A "break-even" lease rate at which consolidation would bereasonable was determined for the minimum number of 13 consolidatableagencies and the maximum number of 19 agencies. For each alternativethe rental rate was calculated based on (1) duplicating the amount ofspace currently used by the agencies, and (2) maximizing space reduc­tions through the sharing of facilities and the use of open officedesigns.

Since agencies would require less total space in a consoli­dated building than they lease under separate arrangements, square footrates in a consolidated building could be higher than current rates andstill be cost effective. The break-even point is the rate at whichannual lease expenses in a consolidated facility equal the sum ofexpenses in the current separate offices. All figures are based on1982 dollars. However, taking into account the need to amortize movingand refurnishing expenses will increase the break-even rate to someextent and further narrow the cost-effective range.

LEASING ALTERNATIVE ONE:Minimum of 13 Agencies

Since the 13 agencies have relatively little unusable spaceat their current locations, they would require approximately the sameamount of space in a consolidated building. The break-even point wouldbe at about the current rate of $10.03 per square foot.

Reconfiguration of space through sharing of facilities andopen office design could reduce space needs to 36,800 square feet. Therental rate could then be up to $11.03 per square foot to break even.

Rental rates would actually have to be lower, however, toabsorb movi ng expense of approxi mate ly $25,000 and the costs of anyrefurni shi ng necessary to accommodate to new or reconfi gured space.Therefore, the cost effectiveness of consol idating the 13 agencieswould be marginal at best.

LEASING ALTERNATIVE TWO:Maximum of 19 Agencies

The 19 agencies currently have an average annual cost of$10.56 per square foot. To duplicate their current usable space wouldrequire 82,500 square feet of space. Taking into account only leaserates, space woul d have to be found for 1ess than $12.13 per squarefoot to make the option cost effective. Reconfiguration of space usecould reduce overall needs to 74,500 square feet, and rates could go upto $13.50 per square foot. Agencies could incur moving expenses of$41,500 and refurnishing costs of up to $964,000. Amortized over a20-year period, these expenses would average 61 cents per square footannually.

The flexibility in this alternative is gained by includingthe administrative, faculty and instructional space of the off-campusprograms. Flexibility would be curtailed if the schools were found notto be compatible with this consolidation option. Total annual savingswould depend on how far below the break-even point a consolidated sitecould be leased for.

Considerations. Tab 1e 15 shows the potential for savi ngs atdifferent lease rates under both alternatives. The cost savings likelyto result from leasing a consolidated office site appear to be marginalin commercial space because of the relatively few agencies that can beconsolidated and the relatively efficient use of space by thoseagencies.

------------ Table 15 ------------­

POTENTIAL ANNUAL SAVINGS1 AT A LEASED SITE19 Agenci es 3

Duplicating Ma)<1m1ZingSpace Space Reduct; on

13 Agencies2Duplicating Max1m1z1ng

Space Space Reduct; onProspectiveLease Rate

$ 9.0010.0011.0012.0013.0014.00

$34,652ooooo

$74,25237,452

652ooo

$262,451179,95197,45114,951

oo

$334,451259,951185,451110,951

36,451o

~ov1ng and refurnishing expenditures are not included and would reduce the savings.3Current average lease rate ;s $10.03Current average lease rate ;s $10.56

Source: JLARC Facility Analysis

Should the State wish to establish a more centralized Statepresence by consolidating selected agencies, it may be possible toeffect some costs savings or to break even under certain circumstances.Properties are available for lease at prices within the State's range.Moreover, economi c deve 1opment speci ali sts be1i eve that 1eases can beobtained for less than advertised rates due to a current oversupply ofoffice buildings. The State may also be able to negotiate favorableterms for a long-term lease, since a fairly substantial amount ofsquare footage is involved.

It is also possible that a publicly owned facility, such as aschool building, may become available for lease or purchase at a lowerthan commercial rate. A leasing alternative which could be explored inmore detail is using school buildings which have been closed due todeclining enrollments.

Fairfax County, for example, currently has four vacant schoolbuildings, two of which are partially leased for office space. Becausethe properties are owned by a local government and are not taxed,

39

leasing rates are potentially lower than similar commercial space. TheCounty currently charges $5.75 to $6.25 per square foot for full ser­vice leases, but the tenant pays for renovations. The four buildingsare relatively small, however. The largest is 43,000 square feet, witha usable area of approximately 35,000 square feet.

The County is also studying the need to close an intermediateschool. The buildings being considered are relatively large (over100,000 square feet) and are possible sites for a consolidatedfacil ity.

Construction of a Consolidated State Office Building

The second option exami ned by J LARC was construction of anoffice building. Because of limited parking and high costs for land inhighly urbanized areas of Northern Virginia, a construction optionshould be considered only in relatively uncongested suburban locations.

Agencies for Consideration. At 1east 14 offi ces coul d beincluded in a construction option. In addition to the 13 officesconsidered for leased space, the Department of General Services' Con­sol idated Laboratories could be considered for a construction option.It was not considered for leasing because of the potentially high costof renovations to accommodate the unique needs of the agency. The 14agencies include:

Air Pollution Control

Agriculture and Consumer Services

Commerce

Corrections: Regional Office

General Services: ConsolidatedLaboratories

Health: Regional Office

Housing: Fire Marshal

Industrial Commission

Labor and Industry

Rehabilitative Services:Regional Office

Social ServicesTaxation

War Veterans' Claims

Water Control Board

As with the 1eas i ng option, up to six addi tiona1 offi cescoul d be part of a conso 1i dated fac i 1ity dependi ng on 1ocati on andcompat i bi l.i ty of f.unc.t i o~s. The yVA and VPI&SU off-campus programscould be 1ncluded 1f 1t 1S determ1ned that the educational activitiesare c?mpati b1e wi ~h other State agency functions. The Department forthe V1sually Hand1capped could be included if the site were on a metrotransit line. In addition, up to three service offices could be in­cluded if the site were in the geographic area that they served.

40

option,Range of Building Sizes and Costs. As with the 1eas i ng

the costs and potential savings in a constructed building

depend on the number of agencies included, their space needs, theconfiguration of space, and the degree of sharing. The constructionoption was analyzed for various alternative sizes ranging from 58,000to 116,000 square feet. The smallest size could accommodate 14 Stateoffices under a design which maximized space savings and requiredagencies to share common facilities. The largest size would accom­modate 20 offices and duplicate the amount of space that they currentlyuse. Table 16 shows the estimated construction and annual costs forthe smallest and largest building. Costs would range between the twoestimates depending on the alternative being considered.

------------- Table 16 -------------

PROJECTED CAPITAL AND OPERATING EXPENSESFOR A CONSTRUCTED BUILDING

Type of Expense Size of Building

Capital Costs:Land and Site DevelopmentConstruction (@ $80/sq. ft.)A&E Fees (@ 6%)

TOTAL

Interest (@ 9%)

$1,880,0004,640,000

390,000$6,910,000

$6,530,000

$2,150,0009,280,000

690,000$12,120,000

$11,340,000

$ 672,000 $1,17.3,000122,000 24'~, 000

70,000 139,000

70,000 139,000

$ 934,000 $1,695,000

Annual Operating Costs(FY 1985):

Capital Costs1

Utilities (@ $2.10/sq.ft.)Janitorial & Maintenance

(@ $1.20/sq. ft.)Management, Security, andMiscellaneous (@ $1.20/sq.ft.)

TOTAL

lCalculated by taking one-twentieth of total capital and interestexpenses.

Source: Means Cost Data, DEB, and Black's Official Leasing Guide.

Construction costs of a consolidated office building wereestimated using Means Cost Data, a construction estimating guide.Construction costs are estimated to be $80 per square foot plus land,site development, and architectural fees. Interest expenses are basedon a 9 percent rate, which the Department of Treasury has indicated tobe the current rate for general obligation bonds. Construction costswere estimated to range between $6.9 million and $13.8 million depend­ing on the size of the building.

41

42

In order to estimate annual costs in a constructed facilityversus current 1eas i ng arrangements, annual operat i ng expenses wereestimated, including one-twentieth of the capital cost of the newbuilding. However, this is a conservative estimate because capitalcosts are spread over only 20 years rather than the accounting depre­ciation standard of 30 years for buildings. Operating costs of thefacility were estimated using standard square foot guidelines formaintenance, janitorial, utility, and other routine expenses. Buildingmanagement expenses were a 1so i ncl uded in the operat i ng costs. Inaddition, moving costs were included in the first year of operation,and the costs of various alternatives for refurnishing were also in­cluded.

Annua 1 costs were projected for twenty years us i ng November1982 Chase Econometrics inflation estimates. These projections werecompared to anti ci pated increases in current 1eas i ng expendi tures todetermine the long-range impact of the construction alternatives.However, inflation projections and interest rates are in a state offlux and could change significantly in the future. Further examinationand detailed financial study of this option would be necessary, usingthe most current. data avail ab1e at the time of the ana lys is.

CONSTRUCTION ALTERNATIVE ONE:Minimum of 14 Agencies

Two options were considered for construction of a building tohouse the 14 agencies without geographic or program-related restraints.Costs were estimated for a 58,000 square-foot building that wouldreduce space savings through open office design and sharing of facil­ities and equipment and a 64,000 square-foot building which wouldduplicate the current amount of space used by the agencies.

Projecting current lease costs and estimated costs of a newlyconstructed building for the 14 agencies over a 20-year period revealsthat it would not be cost effective to construct a building for onlythe 14 agencies. Cumulative costs in a constructed facility would be$3.6 million more over 20 years in the smaller building and $6 millionmore in the larger building.

The costs and benefits of adding the three service agenciesand the Department for the Visually Handicapped were also estimated.However, this option was also found not to be cost-effective.

CONSTRUCTION ALTERNATIVE TWO:14 Agencies Plus Administrativeand Faculty Space of Off-Campus Programs

Two options were considered for constructing a building thatwould include the administrative and faculty space of off-campus pro­grams of UVA and VPI&SU with the 14 agencies. It was assumed thatinstructional space would be located elsewhere. An 82,000 square-footbui 1di ng woul d be needed to dup 1i cate ex i st i ng space, and a 72,000square-foot building would be needed under a design to reduce spaceneeds.

Project i ng current 1ease costs and costs of a newly con­structed building over a 20-year period shows that it would not be costeffective to simply duplicate current space. Costs in a new facilitywould be $1.1 million more than current leases over 20 years. If spaceuse coul d be reduced suffi ci ent ly, there cou 1d be a $2.8 mi 11 ionsavings from the smaller building. However, the cumulative break-evenpoint would not be until 1999, which makes the projected savings verytenuous.

CONSTRUCTION ALTERNATIVE THREE:14 Agencies Plus Administrative andInstructional Space of Off-Campus Programs

Two options were considered for including both the adminis­trat ive and instructi ona 1 space of the off-campus programs ina con­solidated building. A 103,000 square-foot building would be needed toduplicate existing space, and a 93,000 square-foot building couldaccommodate a reduced space design.

Projecting current lease costs and costs of a newly con­structed building over a 20-year period shows that, even with theinstructional space, a building that duplicates existing space is notcost effective. Costs in a new facility would be $1.8 million morethan current leases over 20 years.

Savings from a space reducing design would be about $2.1million, but the cumulative break-even point would be in 2001, makingthe projected savings tenuous at best. Greater savings could not berea 1ized through space reduction because cl assroom and other i nstruc­tional space is not subject to the same reduction as office space, andhallways must be maintained at six-feet widths to meet safetystandards.

CONSTRUCTION ALTERNATIVE FOUR:Maximum of 20 Agencies

Two options were cons i dered for construction of a buil di ngthat would house the maximum number of 20 agencies. Under this option,three service agencies and the Department for the Visually Handicappedwere added to the core of 14 agencies and the administrative and in­structional space of the off-campus programs. To duplicate existingspace, a 116,000 square-foot building would be needed. Under a spacereducing design, a 106,000 square-foot building would be needed.

Project i ng current 1ease costs and costs of a newly con­structed building for 20 years shows that the larger building wouldcost $2.3 million more over the period. A smaller building with itsspace savings could save $1.6 million over 20 years, but the cumulativebreak-even point would not be until the year 2003.

43

Other Considerations. As shown in Table 17, constructionwould be cost effective only when part or all of the space leased byUVA and VPI&SU were included and only for space reducing designs.

------------- Table 17

POTENTIAL TWENTY-YEAR COST SAVINGS1

CONSTRUCTION VS. CURRENT LEASES

Alternat i vesNumber ofOffices

DuplicatingSpace

MaximizingSpace

Reductions

1. Agencies withoutgeographic or programconstraints

2. Same agencies as #1plus administrativeand faculty offices ofUVA and VPI&SUoff-campus programs

3. Same as #2 plusUVA and VPI&SUeducational space

4. Same as #3 plusDepartment of VisuallyHandicapped and threeservice offices

14

16

16

20

($5,970,400) ($3,570,000)

($1,133,400) $2,802,300

($1,804,600) $2,131,200

($2,346,500) $1,589,200

44

1Figures indicate the difference between total costs in a constructedfacility and total costs of current leases. () indicates that costsin a constructed facility are projected to be higher over 20 years.

Source: JLARC Analysis.

Potential savings of up to $2.8 million are possible for afacil ity that inc 1udes part or a11 of the off-campus programs. How­ever, the projected cost savings are somewhat tenuous because thecummulative break-even points would not occur until after 1999 forthose options which appear to be somewhat cost effective.

Construction estimates and projections are intended to begenera 1 parameters for compari ng current arrangements wi th an ownedfacility. Actual costs could be greater or less depending on the siteselected, land costs, specific design of the building, and agencies

included. A major factor would be the determination of whether theoff-campus programs should be included in a consolidated building.

Prior to further consideration of a construction option, theDepartment of General Services would have to conduct a detailedanalysis of potential sites, agencies to be included, space, and anti­cipated costs. Specifically, DGS would have to determine:

• what the specific costs of construction will be to meetneeds of agencies.

• what the routine operating expenses wi 11 be, and themost efficient means of providing building services.

• how the costs in the proposed facility compare over timeto current 1ease arrangements. Long- range projectionsshould utilize the most current information available oninterest rates and inflation estimates.

• who will be respons i b1e for buil di ng management, i n­cluding routine maintenance, janitorial services, andsecurity.

• what the parking needs of the agencies are and how theneeds can be met. DGS should ensure that sufficientshort-term parking is available for visitors. Dependingon the site, employee parking could be arranged byleasing or purchasing sufficient land in the vicinityand providing subsidized parking for workers.

• how much refurni shi ng woul d be necessary, and the re­1ated cost.

Purchasing a Building for Consolidation

According to economic development specialists in NorthernVirginia, there are relatively limited options for purchasing an exist­ing facility for use as a consolidated office building. The realestate market is volati le, depending on economic conditions and newcommercial development. The availability and cost of buildings forpurchase cannot be predicted in advance.

The size of a building to accommodate State offices would bethe same as a constructed building and depend on location, number ofagencies i ncl uded, use of space-savi ng des i gns, and amount of facil i tysharing. The cost of a building would depend on its age, location,amount of land, and proximity to other services and development.Renovation expenses would be variable, affected by the condition of thesite, needs of the agencies, and configuration of space.

45

46

Although the avail abil i ty of offi ce buildi ngs for purchaseare limited, other alternatives could be examined. For example, astructure that was built for purposes other than office space could bepurchased and renovated to meet the needs of State agencies.

The Virginia Employment Commission is leasinga 15,000 square foot building that was formerly awarehouse. The owner renovated the structure tocreate offices, conference rooms, reception andclaims areas to meet the needs of the agency. TheVEC has a seven-year lease for the space at aninitial rate of $11.75 per square foot.

The Department of Genera 1 Servi ces coul d exami ne the fea­sibility of purchasing and renovating an existing facility for use as aconsolidated office building. As with the construction option, DGSwould have to assess costs, needs of the agencies, and building manage­ment responsibilities, and ensure that there is sufficient parking forvi s itors and employees. Additionally, the department shoul d contactthe Fai rfax County Department of Education regardi ng purchase or long­term lease of their vacant school buildings.

CONCLUSION AND RECOMMENDATIONS

At this time, consolidation of State offices in the NorthernVirginia area does not appear to be cost effective. However, consoli­dation could create a State presence in the area with the potential forimproved services and more efficient use of space. Services to thepUblic could be enhanced by improving the visibility, accessibility,and conditions of current offices.

Cost effectiveness would depend on the site, the agenciesincluded, and the space design. Savings for the alternatives examinedare apt to be marginal, at best. Given the non-financial benefits ofconsolidation, however, the State should remain alert for cost­effective opportunities, such as vacated public buildings.

Recommendation (1). The Department of General Servicesshould be alert to opportunities for cost-effective consolidation andco-location of offices in Northern Virginia. The Secretary of Adminis­tration and Finance should charge the department with responsibil ityfor more carefully monitoring the real estate market in NorthernVirginia to identify sites with significant potential for long-termcost savings through lease or purchase. When buildings of appropriatesize and price become available, DGS should initiate detailed siteanalyses and take appropriate steps to consol idate offices identifiedin thi s report.

Recommendation (2). To overcome problems in the visibility,accessibility, and conditions of existing facilities, DGS should

monitor the termination of leases and assess opportunities to correctthe deficiencies which exist. When current leases expire, the depart­ment should assist the agencies in improving existing space or, to theextent poss i b1e, correct i ng these prob 1ems and achi evi ng economi es by1ocat i ng offi ces together. Economi es cou 1d be achi eved through moreefficient office designs and by sharing common facilities andequipment.

Recommendation (3). Regardless of any action taken to con­so1idate offi ces, UVA and VPI&SU (with the ass is tance of the StateCouncil of Higher Education) should explore opportunities available inNorthern Virginia to obtain less expensive instructional space fortheir off-campus programs in Northern Virginia. Several alternativesshould be examined, including (1) sharing facilities with George MasonUniversity and Northern Virginia Community College; (2) using thefacilities of local pUblic schools to a greater extent; and (3) explor­ing the potential for acquiring a vacated school building.

Supplementary to its study of off-campus programs, SCHEVshould examine the use and cost of facilities for administrative andinstructional purposes. And, under its statutory responsibil ities forensuring economical and coordinated educational programs (Section23-9.10 of the Code of Virginia), SCHEV should also consider develop­ment of policies and standards regarding space use, acquisition, andleasing for off-campus programs.

47

48

Appendix A:

Appendix B:

Appendix C:

IV. APPENDIXES

Senate Joint Resolution 29

Technical Appendix Summary

Agency Responses . . . . .

Page

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APPENDIX A:

SENATE JOINT RESOLUTION 29

Requesting the Joint Legislative Audit and Review Commission to studythe feasibility of consolidating certain agency offices in variousareas of the Commonwealth.

WHEREAS, many state agencies maintain offices throughoutVirginia to serve the citizens of the Commonwealth; and

WHEREAS, many of these agencies operate out of single officesthat are often under-equipped and would benefit from a consolidation ofservices into one central and easily accessible location; and

WHEREAS, such a consolidation could have many conceivableadvantages, including the placing of state agencies in one visible andidentifiable location; the sharing by departments of conference, copy­ing and other common facilities; the ability of employees of one agencyto become familiar with other state services; and the potential savingsto the Commonwealth through the cost effectiveness achieved by such aconsolidation of state agencies; now, therefore, be it

RESOLVED by the Senate, the House of Delegates concurring,That the Joint Legislative Audit and Review Commission is requested tostudy the desirability and feasibility of consolidating state agenciesthat operate out of s.ingle offices throughout Virginia into one centraland easily accessible location. The Commission is also requested tostudy the cost effectiveness of consolidation and possible sites forlocating the consolidated state agencies.

The Joint Legislative Audit and Review Commission shallcomplete its study in time to submit recommendations to the 1983 Ses­sion of the General Assembly.

APPENDIX B:

TECHNICAL APPENDIX SUMMARY

JLARC policy and sound research practice require a technicalexplanation of research methodology. The full technical appendix forthis report is available on request from JLARC, Suite 1100, 910 CapitolStreet, Richmond, Virginia 23219.

The technical appendix includes a detailed explanation of themethods and research employed in conducting this study. The followingspecial methods are covered.

1. Office Inventory. The first step in each regional studywas to develop an inventory of all State facilities in thearea. The purpose of the inventory was to i dent ify allState facilities and to eliminate those which would not becompatible in commercial office space.

The inventory was developed from several sources, includ­ing automated data systems and telephone directories.Staff at selected facilities were surveyed by telephone todetermine the nature of the facility.

2. Facility Analysis. Each facility classified as "officespace" was visited by JLARC staff. At each site, theoffice director was interviewed about special location andphysical plant needs. In addition, detailed informationwas collected on facility expenses, space and equipmentuse, facility needs, and the visibility, accessibility,and physical condition of the office.

The data were computeri zed to permi t ana lys i s of agencyspace needs in a consol idated building and to developdifferent groupings of agencies or "scenarios" which wouldbe compatible at a single site. Space needs at a consol­idated building were computed in two ways: (1) duplicat­ing the current space use and (2) minimizing space require­ments by using efficient office designs.

3. Cost Analysis. Each consolidation scenario was analyzedto compare costs in a consolidated facility with the costsof current offices. Three primary options were examined:(1) leasing; (2) construction of a facility; and (3) pur­chasing a building.

Costs in a consolidated facility were estimated usingadvert i sed rates for the 1eas i ng option and constructionand operating cost guidelines for the construction option.In order to assess long-term effects, costs were projectedover 20 years us i ng i nfl at i on estimates made by ChaseEconometrics.

51

S2

APPENDIX C:

AGENCY RESPONSES

As part of an extensive data validation process, each Stateagency involved in JLARC's review and evaluation effort is given theopportunity to comment on an exposure draft of the report.

Appropriate technical corrections resulting from the writtencomments have been made in the fi na I report. Page references in theagency responses relate to the exposure draft and may not correspondto page numbers in the final report.

-The following agency responses are included herewith:

-Department of Agriculture and Consumer Services

-Department of Commerce

-Department of Conservation and Economic Development

-Department of General Services

-Department of Housing and Community Development

-Department of Rehabilitative Services

- Department of Taxation

- Virginia Employment Commission

-Virginia Polytechnic Institute and State University-­Research Division

- Virginia Polytechnic Institute and State University-­College of Architecture and Urban Studies

S. MASON CARBAUGHCOMMISSIONER

COMMONWEALTH of VIRGINIADEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES

P. O. Box 1163, Richmond, Virginia 23209

January 4, 1983

Mr. Ray D. PethtelDirectorJoint Legislative Audit

and Review CommissionSuite 1100, 910 Capitol StreetRichmond, Virginia 23219

Dear Ray:

RAYMOND U. VAUGHANDEPUTV COMMISSIONER

Thank you for your letter of December 28 concerningyour exposure draft on Consolidation of Office Space inNorthern Virginia.

This is to advise that we have no comments or factualcorrections to submit.

Sincerely,

]J'

1· .....:/ ("1,7~.

S. ason CarbaughCo missioner

pbh

cc: Mr. D. W. Zipperer

BERNARD L. HENDERSON, JRDirectof

COMMONWEALTH of VIRGINIADepartment of Commerce

2: SOUTH NINTH STREET. RICHMOND, VIRGINIA 23219~3991

January 5, 1983

Mr. Ray D. PethtelDirectorJoint Legislative Audit and Review CommissionSuite 1100, 910 Capitol StreetRichmond, Virginia 23219

Dear Mr. Pethtel:

We have reviewed the exposure draft of Consolidation ofOffice Space in Northern Virginia, prepared by the JLARC -­staff. We have found no factual errors in the report rela­tive to the Department of Commerce.

I will note, however, that the Department has plansto combine two of our regions which would result in closingour Northern Virginia facility. The closest office theDepartment would maintain would be in the Fredericksburgarea.

I appreciate the opportunity to examine this draft,which appears well prepared.

Singerely,

'h t_~L~··JlrvCBe~~-L. Henderson, Dr.

BLHJr:ns

cc: The Honorable Betty J. Diener

54

:0 W. WALKEROirector~ALO F, MOOREOeputy Olrector

OIVISIONS,RESTRYfTER CONTROLNEO LANO RECLAMATIONNERAL RESOURCES.LT WATER SPORT FISHINGATE PARKS~GINIA STATE TRAVEL SERVICE

MEMORANDUM

COMMONWEALTH of VIRGINIADEPARTMENT OF CONSERVATION AND ECONOMIC DEVELOPMENT

1100 Washington BuildingCapitol SquBre

Richmond, Virginia 23219(804) 788-2121

December 3D, 1982

BOAROHENRY T. N GRAVES, Luray

CheirmanAOOLF U HONKALA, Midlothien

Vice CheirmanFRANK ARMSTRONG, ilL Win cheslerRICK E, BURNELL, Virginia BeechWILBUR S, OOYLE. MartinsvilleBRUCE B, GRAY, WaverlyMILOREO LAYNE, WilliemsburgJOHN E. MUNSEY, GrllndyFREOERIC S REEO, Manakin-SabolJAMES RONCAGLIONE. ViennaSHELTON H SHORT, III, Chase CllyCLINTON V, TURNER. Richmond

TO:

FRCM:

SUBJECT:

Mr. Mark Willis, JLARC D~rector

Fred W. Walker r,.....;~

December 28, 1982 Draft: Consolidation of Office Space inNorthern Virginia

Per Mr. Pethel's December 28 letter we have two CClIlIlIents on thereferenced draft:

1. The conclusions and recornrendations do not affect our Depart:rrent, and

2. For consistency and clarity, table 4, page 17 could be improved whereit references "Forestry" in the listing under Excluded FranConsolidation Recorrtnendation. Instead of "Forestry" insertConservation and Econanic Development - Division of Forestry.

If you need any further information on this subject, please let usknow.

RJD/ec

,'~,~'?,.;,.\<COMMONWEALTH of VIRGINIA

Department of General ServicesDivision of Engineering and Buildings

805 EAST BROAD STREETROOM 101RICHMOND 23219

MEHORANDUM:

TO:

THROUGH:

FROM: ,t:"o""

RE:

TELEPHONE804 786-3263

January 13, 1983

Mr. Ray D. Pethtel, Director ;/ .,)Joint Leg:i.s1ative Audit & Review commission/ /';/

Mr. H. Douglas Hamner, Jr., Director.'§' )__ ,..,f..., ./L"~~-'.'fDepartment of General Services '--c-' 1··' .'., ,/,}. Stuart Barret, Director ~lf~ .Division of Engineering & Buildings

Exposure Draft -- Consolidation of Office Spacein Northern Virginia

Based upon a cursory review, we previously provided toyou a couple of comments on the statistical =ntent of the noted report.Since that time, we .have made further evaluation and offer the following:

Pg. i., First Paragraph: We do not have precisestatistks on the number of separate locations shown as1,200; however, we do have fairly accurate information onthe number of expense leases which is currently around1,200 =mpared to the 1,500 stated. The FAIS BuildingInventory indicates total value of owned buildings to be$3.8 billion =mpared to the $2.7 billion stated.

Pg. v., "Re=mrnendation (1)": Within our resources, wewill attempt to obtain notke of availability of buildings asthey become available. We are establishing a contact withthe State Department of Education to obtain notice ofproposed school closings. We will try to establish propercontact..s for information on buildings other than publicschools and pursue favorable opportunities.

Pg. v., "Re=mmendation (2)": We have ordered acomputer listing by geographic location in termination dateorder for all leases. We will use this list as a basis formatching up agencies with leases having =mmon

56

OFFICE OF THE DIRECTOR' DIVISION OF ADMINISTRATION' DIVISION OF ENGINE~~I~? _& _B_U~L.~~~?~ ... ~~.. ~.,-.-

-2-

termination dates. We will en=urage these agencies toobt:ali1 =rnmon space for co1=ation where it appearsfeasiblE. In addition, we will try to have agencies settermination dates on new lEases to =incide withterminations of other active lEases to ac=mmodatematching up for future co1=ations. we plan to beginrequiring that lEases terminate only on the last day of acalEndar quarter.

Pg. v., "Re=mmendation (3) ": We will work with theState Council of Higher Education for Virginia inattempting to avoid situations similar to the VPI - UV AproblEm.

Pg. 8, "Locating & Acquiring Office Space": In order topreclude unnecessary rentals, our procedures requirethat any additional State function proposed to be housedin newly rented space must be evaluated and approvedthrough a preplanning justification. Additionally, forcontinuation of existing lEase5, the head of the agencymust certify that no space presently owned or lEasedunder the =ntrol of that agency would satisfy the need.We evaluate the proposal to lease space againstinformation we have on other availablE State oontro1Jedspace. As you are aware, no new buildings may beacquired without review by the Department of GeneralServices and approval by the Governor, or through aCapital Outlay appropriation. Although this =mbinationof safeguards does not give the tight central controladvocated by some, it does provide some assurance thatagency lEasing is reasonablE.

In the second paragraph, reference is made to submittalof lEase proposals to Cabinet Secretaries. Due tocurtailment of Cabinet Secretarial staff, this procedurehas been stopped. The proposals (space questionnaire)now flow to the Division of Engineering & Buildings.

Pg. 21, First Full Paragraph: Although there is nost.atutory obligation for it, we have administrativelydecided to include in the Standard Lease Form anobligation for general =mpliance with handicappedstandards. This form is now =mplEte. A =py isattached. We had previously been seeking compliancethrough lEss formal means.

The report in several places refers to some substandardfacilities. Each agency estab1i.shes the minimum acceptablE standard.Due to staff restraints, the Division of Engineering & Buildings does notfield evaluate proposed facilities. We do generally require that agencieslEase the acceptablE space bearing the lEast rental =st. This isobviously in the interest of the Commonwealth, assuming the agency hasestablished proper standards.

::17

58

-3-

The Division of Engineering & Buildings staff forStatewide real estate, managed by the Asr,istant Director, is composed ofone Property & Fac::ili:ties Coordinator for leased property, and oneProperty & FaciJities Coordinator for State-owned property. Thesepeople are currently swamped with implementation of long standing dutiescompounded by several recently increased responsibilities. With thecontinuous flow of income and expense leases, transfers among agenc:ies,surplus property disposals, deeds, easements, and review of all realestate purchases, little time is available for field evaluations and fortime-consuming attempts to coordinate and consolidate acq11isitions byindependent agenc:ies.

We have requested an additional position for a Real EstateAcquisition & Disposal Coordinator. Although the main duties of Urisposition would be in the owned property area (especia11y to acceleratethe surplus saJesJ, we plan to use it as a swing position to devote tothe most important real estate matters at a given time. This positionwould possibly help in the area of lease coordination but obviously if wedevote much of its iliae to leases, the surplus disposal effort would beproportionately diminished.

We appreciate the insight regarding field conditionsprovided by the report. Since we rarely visit field offices, we seldomhave independent observations on :leased space utilization and conditions.

P:lease be assured that we will imp:lement to the full extentof availab:le resources the recommendations contained in your report.

JLARC Note: The FiJred Asset Information System was being implementedduring the course of this review. Some data in the systemare incorrect and the Department of General Services hasbeen working to identify and correct erroneous informa­tion. The statistics in this report, as well as the JLARCreport on the Roanoke region, are based upon informationin the System as of June 14, 1982. Completely accurateinformation will not be available until all data problemsare identified and corrected.

SENE DISHNERlECTOR

COMMONWEALTH of VIRGINIADEPARTMENT OF

HOUSING AND COMMUNITY DEVELOPMENT

January 6, 1983

'JAN 7 'lqfl3

Mr. Ray D. PethtelDirectorJoint Legislative Audit and

Review CommissionSuite 1100, 910 Capitol StreetRichmond, Virginia 23219

Dear Mr. Pethtel:

Fourth Slre~l Oll,c!! Building205 North Fourth $l1eetIlichmo"d, Vl1glnla 23219IB0417B6·157!)

The staff of the Department of Housing and Community Developmenthas reviewed your agency's draft report "Consolidation of Office Spacein Northern Virginia" and concur with contents of the report. Weappreciate the opportunity to review the draft report.

NJB/1m

~Neal J. BarberDeputy DirectorDivision of Administration

BOARD OF REHABILITATIVE SERVICES

COMMON\VEALTH of VIRGINIA

THE REV. CONSTANTINE N, DOMBALlS, CHAIRMAN, RICHMONDE, WARREN MATTHEWS, VICE CHAIRMAN, SOUTH HILLW, WAYNE CUNNINGHAM, LYNCHBURGJOHN J. HAWSE, WINCHESTERHUGH PENN NOLEN, ALBERTALEROY SMITH, M,D" RICHMONDHARRY A. WELLONS, VICTORIA

Department ofRehabilitative Services49()I FITZHUGH AVENUE POST OFFICE BOX 11045

RICHMOND, VIRGINIA 23230-1045

(804) 257-0316

January 12, 1983

Mr. Mark Willis, Project DirectorJoint Legislative Audit Review COll1ll1issionSuite 1100, 910 Capitol StreetRichmond, Virginia 23219

Dear Mr. Willis:

ALTAMONT DICKERSON, JR.COMMISSiONER

This letter is a follow-up to our telephone conversation of yesterday.The Report of Consolidation of Office Space in Northern Virginia hasbeen carefully reviewed and I all1 enclosing ll1y COll1ll1ents.

I concur that if at all possible consolidation of office space should bedone. This ll1ay be even ll10re ill1portant in Northern Virginia becauseof the cost of space. Office space used by the Departll1ent of Rehabili­tative Services has been carefully selected because of the unique needsof our disabled population. Accessible parking, entrances, bathrooll1s,transportation, and easy evacuation in case of ell1ergencies, arenecessities that ll1ust be considered. In ll10st instances, leasors willll1ake these accoll1ll1oda tions but will ultill1ately reflect the ill1prove­ll1ents in a rent increase. However, there are tax incentives availablefor this purpose, also.

On Page 24, you indicate there is no sign for the Departll1ent's officelocated in the office cOll1plex at Baileys Crossroads. I had our RegionalDirector, Mr. Bill Burnside, go to the site and check this out. In thelobby of the building there is a directory and our nall1e and roo ll1 nUll1berare on this directory. I would appreciate that appropriate changes bell1ade in the statell1ent on Page 24.

We will cooperate in any way possible.

Sincerely,

Altall10nt Dickerson, Jr.

60cc: David Fink

COMMONWEALTH of VIRGINIADepartment of Taxation

Richmond, Virginia 23282

January 5, 1983

Mr. Ray D. Pethtel, DirectorJoint Legislative Audit and Review CommissionSuite 1100, 910 Capitol StreetRichmond, Virginia 23219

Dear Ray:

JAN 7~.i

We have reviewed the study of office space in Northern Virginia.The comments and figures concerning the Department of Taxationare correct, but we do feel the chart on page 9 should showa need for parking, security and access for the handicapped.

Sincerely,

15katState Tax Commissioner

aac

61

RJPh G. CantrellCommillllioner

COMMONWEALTH of VIRGINIAVirginia Employment Commission

703 East Main Street

January 10, 1983

Mr. Ray D. Pethtel, DirectorJoint Legislative Audit and Review CommissionSuite 1100, 910 Capitol StreetRichmond irginia 23219

JAN 11 ..

P. O. Box 1358Richmond, Virginia 23211

62

My staff and I have reviewed the exposure draft on the Consolidation ofOffice Space in Northern Virginia. There is a small item in the reporton Page 26 that is incorrect. The chart on that page (Figure 4) indicatesthat our Northern Virginia office is neither visible nor identifiable.This building features a permanent sign and is clearly visible and iden­tifiable from the street.

I appreciate your sharing the report with us; I found it informative andinteresting.

Sincerely,

Y?~Commissioner

JLARC Note: At the time JLARC staff visited this office (September 23,1982), there were no signs'on the outside of the buildingindicating that the VEC was located in the facilitg. Weunderstand that a permanent sign has been subsequentlginstalled.

RESEARCH DIVISION

VIRGINIA POLYTECHNIC INSTITUTE AND STATE UNIVERSITY

BlarkJburg, Virginia 24061

OFFICE Of THE DEAN (703) 961· ')281

January 11, 1983

Mr. Ray D. Pethtel, DirectorJoint Legislative Audit and

Review CommissionSuite 11, 910 Capitol StreetRichmond, VA 23219

Dear Mr. Pethtel:

This will confirm our telephone discussion of January 10. Your letterof December 28 that covered the draft "Consolidation of Office Spacein Northern Virginia" was received at the University after it waspossible to return any written comments by the January 14 due date.Indeed, the document was received after January 3, the date whencomments and questions were to have reached Mr. Willis of your staff.

At first glance, the report seems reasonable in tone and recommenda­tions. But I think the report is appropriate for a more thoroughreview than the very quick reading I have given it. I will arrangefor such a review and will forward to you any comments that result assoon as possible.

C;;:lY~~David P. RoselleDean of Research andGraduate Studies

mrw

63

64

Clll.I.l'lii OF AHCHITECTIJRE AND URBAN STUDIES

VIRGINIA POLYTECHNIC INSTITUTE AND STATE UNIVERSITY

Blacksbur~, Vir~inia 24061Office of the Dean (703) 961-6415

,".,.,

JJanuary 11, 1983

Mr, Ray D. PethtelDirectorJoint Legislative Audit and Review CommitteeSui te 1100910 Capital StreetRichmond, Virginia 23219

Dear Mr. Pethtel:

Thank you for the opportunity to review the exposure draftof the Commission's Report on the Consolidation of OfficeSpace in Northern Virginia. In our brief review of thereport we found 2 points that related to our Alexandria Cen­ter that you may wish to correct.

1. In Table 4, page 18, the number of employees should becorrected to 3.5. The College has three faculty and ahalf-time secretary working at the Center this year, aswell as 52 advanced undergraduate and graduate stu­dents.

2. In Figure 3, page 19, the Center is identified with alocation preference "near a major highway." A betterpreference would be a location "on Metro transit line."

3. The College is concerned that the students and facultyin residence at the Center have convenient access topUblic transit to ease their access both to the Centerand to other institutions and facilities in the metro­politan area.

One additional comment, the College is aware of the lack ofany exterior sign at the street entrance to the Center whichwe have assumed is the reason that Figure Four (page 26)notes the Center is not visible or identifiable. We havebeen working with the developer of the revitalized buildingto acquire a sign and have only recently received theauthorization to install an appropriate sign. I am certainthat by the time the final draft is complete the sign willbe installed.

Page 2

Again, thank you for the opportunity to comment on thereport. We are pleased that the staff recognized the uniqueneeds of the College in its decision to locate the Centerwhere it did and that the nature of our activities in Alex­andria require studio space not easily consolidated withoffice space of other State agencies. Your staff is to becommended on their work.

Ide

cc: President William E. Lavery

65

JOINT LEGISLATIVE AUDIT AND REVIEW COMMISSION

Research Staff

John M. BennettL. Donglas Bush, Jr.

Suzette DenslowLynn L. GrebensteinStephen W. Harms

Gary T. HenryClarence L. Jackson

Kirk JonasR. Jay Landis

Sarah J. LarsonPhilip A. LeoneJohn W. Long

Joseph H. MaroonBarbara A. Newlin

Ray D. PethtelCynthia Robinson

Robert B. RotzMary H. SchneiderWalter L. Smiley

E. Kim SneadRonald L. Tillett

Glen S. TittermarySusan L. UrofskyMark D. Willis

William E. WilsonR. Shepherd Zeldin

Administrative Staff

Deborah A. ArmstrongVivian L. DorroughSharon L. Harrison

Joan M. lrbyBetsy M. JacksonPatricia L. JordanDavid W. Porter

Interns

Florence R. HainesCarolyn C. TedholmGeraldine A. Turner

RECENT REPORTS ISSUED BY THEJOINT LEGISLATIVE AUDIT AND REVIEW COMMISSION

The Virgini<1 Community College System, March 1975Virgini;., Drug Ahllsc Control Program, Octoher 1975Working C;.,pital Funds in Virgin];:" Fehruary 1976CcTt;.,in Fin<'l11ci.11 :l1ld Geller;.,] M;.llwgc111cnr Concerns, Virgini., Institute of M':lTinc Science, JIlly 1976W.:/tcr Resource M.:In.lgcmcnt in Virgin i." Septemher 1976Voc;.ltional Rchi.lhilit;.ltion ill Virgin;." Novemher 1976Management of Swtc-Owncd Lind in Virgini", April 1977Marine Resource M.:l1wgcmcnt Programs in Virgini'I, June 1977Sunset, Zero-RIse Budgeting, Evaluation, Septemher 1977Usc of State-Owned AlTer.JEt, Octoher 1977The Sunset Phenomenon, Decemher 1977Zero-Base Budgctingt Decemher 1977Long Term Care in Virginia, March 1978Medical Assist.mce Progr.lms in Virginia, An Overview, June 1978Virginia Supplemeru<l1 Retirement System, October 1978The C",ph'll Oud.1Y Process in Virginia, October 1978Camp Pendleton, November 1978lnp.uient C.lTe in Virgini"" January 1979Outp.uient Care in Virginia, March 1979M.m<lgement .l11d Usc of Swte-Owned Vehicles, July 1979Certificoue-of-Need in Virgini.I, August 1979Report to the Gene""l Assemhly, August 1979Virgini.1 Polytechnic Institute and StMe University Extension Division, September 1979Dcinstitution'llization .md Community Services, September 1979Spec;'ll Study, Feder'II Funds, December 1979Homes for Adlllt.s in Virgin;'I, December 1979Management .l11d Use of Consukmts hy St.ue Agencies, May 1980The General Relief Progr'll11 in Virginia, September 1980Federal Funds in Virginia, October 1980Federal Funds: A Summary, January 1981Methodology for", Vehicle Cost Responsihility Study, An Interim Report, January 1981Org.miz.uion .l11d Administration of the Department of Highways and Tr.lw;portation, An Interim Report,

January 1981Title XX in Virginia, January 1981Organization .md Administr.ltion of Soc i.,] Services in Virginia, April 19811981 Report to the General AssemhlyHighway <lnd Tr.msportation Programs in Virginiol: A Summ<lry Report, November 1981Org.mization and Administration of the Department of Highw.lys and Transportation, November 1981Highway Construction, Maintenance, and Transit Needs in Virginia, November 1981Vehicle Cost Responsibility in Virginia, November 1981Highway Fin'l11cing in Virginia, November 1981Publications .md Public Relations of State Agencies in Virginiol, January 1982Occup.uion.11 and Professional Regubtory Boards in Virginia, January 1982The CETA Program Administered hy Virginia's Balance-of~Swte Prime Sponsor, M;lY 1982Working C.lpit.ll Funds in Virginia, June 1982The Occupational <lnd Professional Regulatory System in Virginia, December 1982Interim Report, Equity of Current Provisions for Allocating Highw.1Y Construction Funds in Virgini:.I,

December 1982Consolidation of Office Sp.lce in the Roanoke Area, December 1982Staffing .md M.mpower Planning in the Department of Highways and Transportation, January 1983Consolid.uion of Office Space in Northern Virginia, January 1983Interim Report, Local M.md.ltes .md Financial Resources, January 1983Interim Report, Org.miz.uion of the Executive Branch, January 1983The Economic Potential and Man.lgement of Virginia's Seafood Industry, January 1983Follow-Up Report on the Virginia Dep.lTtment of Highways and Transportation, January 1983