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Lots of sizzle over DHS building, but is there a real steak?

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Illinois

* From the twitters…

Rauner admin paying $2.4M for a 5 year lease on a DHS warehouse with a market value of $1.1M #twill

— IL Working Together (@IllinoisWorking) April 4, 2017

* OK, let’s back up to this SJ-R story from last month…

The Illinois Department of Human Services is taking over the former Barney’s Furniture space on South Grand Avenue East in Springfield.

DHS plans to use the space as a downstate, files warehouse. Five employees will work at the building, which will not be open to the public. Barney’s Furniture relocated last year to expanded space at 1987 Wabash Ave. after 41 years at 2410 South Grand Ave. E.

“The employees will be retrieving, sorting and maintaining files on a daily basis,” DHS said in a statement. “Efficiencies include the consolidation of required (record) retention efforts from other facilities, as well as the maintenance required to the current dispersed warehouse locations.”

DHS has signed a five-year lease at a cost of $478,256 annually the first two years, $487,881 for years three and four, and $497,507 for the final year.

The property was valued at $1.1 million, but it was actually purchased from the Barney’s Furniture people for $750,000 and then leased to the state for a total of $2.4 million over five years. As you might imagine, the news has caused quite a stir in Springfield, and Sen. Andy Manar wanted to get to the bottom of it today.

* Under questioning by Manar, DHS Secretary James Dimas told the Senate Appropriations Committee today that his agency needed a place for file storage because it had lost another space in Dwight. CMS put the lease out for bids and this was the lowest one available, he said.

So, why didn’t the state just buy the building? Because without a capital budget, the state couldn’t purchase it, Dimas said. And without legislative authority, it couldn’t move money around to buy it, either.

Another DHS official pointed out that the owners had agreed to add to the building, which would’ve cost the state money even if it could’ve bought the property, which it couldn’t. The owners are also responsible for things like upkeep.

And considering how horribly late the state pays its bills, it probably has to pay a premium price to rent from anyone.

* So, I dunno if there’s a real scandal here, but it’s something that’s hard to explain and the potential “scandal” aspect is very easy to understand. From a recent letter to the editor in the SJ-R…

Why in the name of decency would the state pay over three times the value of the building over five years just to rent it?

How can the state find money to waste so exorbitantly, when they are 18 months behind paying my company, which is a state vendor, providing deeply discounted services to the people?

Shouldn’t the attorney general investigate such flagrant waste?

Something smells rotten here. But even if it is all legitimate, shouldn’t a government agency be charged with cutting wasteful spending, and instead securing a reasonable deal?

posted by Rich Miller
Tuesday, Apr 4, 17 @ 1:26 pm

Comments

Who benefits?

Comment by Handle Bar Mustache Tuesday, Apr 4, 17 @ 1:30 pm
Just wait if they ever sell the JRTC

Comment by Henry Francis Tuesday, Apr 4, 17 @ 1:37 pm
It’s the Rauner way!

Comment by DuPage Tuesday, Apr 4, 17 @ 1:37 pm
The General Assembly appropriates $0.00 per year for maintenance of state buildings. The General Assembly also appropriates $0.00 per year to buy real estate. It’s a travesty that the armory building sits vacant when it could be rehabed and used for storage or office space.

Comment by KAY-ro Tuesday, Apr 4, 17 @ 1:38 pm
You’re right…maybe it isn’t “scandal.” But it’s utterly ridiculous.

Rauner goes up on TV to tell everyone how “broken” our system is… yet, this kind of stuff happens on his watch.

Why is he immune? This kinda stuff is piling up on the Rauner watch. He’s either not engaged (which I have heard he isn’t) or he flat out doesn’t care - because he can just buy a million-dollar diversion.

There’s really little that has become attractive about his approach to callous, inefficient, stupidity in governing.

Two years and counting. Hammer and Shake!

Pathetic.

Comment by Carhartt Union Negotiating Team Tuesday, Apr 4, 17 @ 1:39 pm
The article references that the building was sold, but who bought it? Who is the state leases it from? A Rauner corporation, possibly?

Comment by Concerned Citizen Tuesday, Apr 4, 17 @ 1:44 pm
The state’s expensive habit of leasing properties has gone on for years. The SJR has an nifty interactive map of properties leased by the state in Springfield: http://extras.sj-r.com/data/state-leases/

Comment by IllinoisBoi Tuesday, Apr 4, 17 @ 1:44 pm
===A Rauner corporation, possibly? ===

Calm down.

Comment by Rich Miller Tuesday, Apr 4, 17 @ 1:46 pm
I did a parcel search for the new owner of address and it lists “Climate Controlled Holdings LLC.” They’re benefitting for sure. Whomever they retained to negotiate that purchase and subsequent lease certainly made a nice profit.

Comment by Regulator Tuesday, Apr 4, 17 @ 1:46 pm
To Oswego Willy’s point from Friday, here we are again talking about something Manar is saying. Good policy and politics in the mix here. Did any repubs come to DHS defense? I bet not. Dems should be following Manar on his stuff and screaming loudly about this.

Comment by Say what? Tuesday, Apr 4, 17 @ 1:46 pm
A building has a market value of $1.19M but you could buy it for $750,000! Great deal, but instead in Illinois logic we pay $2.4M in leas payments for this same building to store paper!! Really, that’s more important than seniors getting a hot meal, people with MI getting support services, children getting foster care REALLY!! There was not a single place in all of Illinois’ current buildings that these files could be stored..at least until we have a budget. I don’t buy it..there were better decisions that could have been made it was just the Rauner way..all about me and what I want and to heck with everyone else.

Comment by justpeachy Tuesday, Apr 4, 17 @ 1:47 pm
If the landlord will be responsible for maintenance and build-ons, I don’t see what the problem is. The costs for that over 5 years isn’t cheap.

Comment by Anonymous Tuesday, Apr 4, 17 @ 1:48 pm
It seems to me, that the best type of “procurement reform” you could have would start with a signed budget.

Comment by Ducky LaMoore Tuesday, Apr 4, 17 @ 1:50 pm
Who’s the lucky owner?

Assuming the purchase was financed, the state is covering the mortgage, taxes, insurance, utilities and upkeep, plus the owner retains the tax benefits and gets a healthy profit to boot.

Weren’t state lease deals such as these part of the Cellini business plan back in the day?

Comment by wordslinger Tuesday, Apr 4, 17 @ 1:50 pm
“Calm down.”
Right who would every think of someone rentin’ stuff to the state at inflated prices?
Never happen…not in the good old state of Illinois
Just ask some of George’s pal

Comment by Annonin' Tuesday, Apr 4, 17 @ 1:51 pm
Might we perhaps give some collective thought to digitizing old DHS records?

Sure, it’d be a mammoth project. And it’d probably take years.

Butcha gotta start somewhere. (And in fairness — maybe DHS has already begun.)

Perhaps the DHS clerks can be empowered — yes, empowered — to add digitization to their ongoing tasks of “…retrieving, sorting and maintaining files on a daily basis”. As they can reasonably fit it in, of course.

At some point decades hence (am I an optimist? Or a pessimist?), the paper will be gone.

And the cost of warehousing will drop to…..practically zero.

I’m outta here.

Comment by Third Reading Tuesday, Apr 4, 17 @ 2:02 pm
“Who’s the lucky owner…”

According to sos website Climate Control Holdings LLC’s Registered agent is Thomas Storniolo. Thomas Storniolo is listed on linkedin as controller/Secretary of New Frontier Holdings.

Anybody remember who founded New Frontier…

Comment by Lloyd Dobler Tuesday, Apr 4, 17 @ 2:02 pm
With the outrage over purchasing a $30,000 car would you want to kick the hornets nest of buying a building?

Comment by Rogue Roni Tuesday, Apr 4, 17 @ 2:02 pm
===With the outrage over purchasing a $30,000 car===

And the outrage was contrived and phony, but I see your point.

Comment by Rich Miller Tuesday, Apr 4, 17 @ 2:04 pm
Third Reading-

I was thinking exactly the same thing. Buildings full of paper records-assuming that’s the case here–that’s so 20th. 19th, really. Can hardly believe it.

Comment by Cassandra Tuesday, Apr 4, 17 @ 2:07 pm
If CMS is as prompt paying the rent as they are other bills this won’t seem like such a good deal to the landlord in a couple months.

Comment by Leave a Light on George Tuesday, Apr 4, 17 @ 2:09 pm
Why did they lose the space in Dwight? I’m pretty sure CMS refurbished part of the prison and hired staff just for this purpose, did they open the prison back up?

Comment by Anonymous Tuesday, Apr 4, 17 @ 2:15 pm
Please let it be a scandal that removes him from office… please let it be a scandal that removes him from office.

Comment by Anon Tuesday, Apr 4, 17 @ 2:16 pm
(Tips cap to - Say what? -)

To the Post,

It’s the monies being compared to the normalcy of what could be acceptable and being viewed by an exacerbated view of “waste, fraud, and abuse” because fur the past two years Illinois has had no budget and it’s tough to explain to those hurt most this “sizzle” without it being “tin-eared” except when you can take a step back and try to see things beyond “gotcha” politics.

Same with the Mendoza SUV… same here.

Comment by Oswego Willy Tuesday, Apr 4, 17 @ 2:17 pm
I think the GOP should assign a tracker to whomever signed this lease! Stalk them out in the parking lot.

I mean if they do it over a used car, they probably should do it for this as well…

Comment by How Ironic Tuesday, Apr 4, 17 @ 2:24 pm
So you lay off 120 nurses to save 4 million and spend 2.5 on pod building to store papers?

Comment by So tired of political hacks Tuesday, Apr 4, 17 @ 2:28 pm
This wouldn’t have happened if we had a budget.

Thank you Rauner supporters who think magic happens when their persistent rascal bought the Mansion.

Bad governors who don’t do their jobs end up wasting everyone’s money.

Comment by VanillaMan Tuesday, Apr 4, 17 @ 2:31 pm
You can’t tell me that of all the buildings the state owns or leases you can’t find enough space to store records. How about combining DNR and Ag. I thought there was space out there.

Comment by Onfire Tuesday, Apr 4, 17 @ 2:32 pm
Not to get all micro, but who negotiated this idiotic deal? Even if the state couldn’t buy it, renting this warehouse SHOULD NEVER COST 2/3 of its purchase price annually. That’s just a horrific deal and there is an individual and a department that approved this idiocy. That is the real scandal.

Comment by Chicago Cynic Tuesday, Apr 4, 17 @ 2:41 pm
If you want a boring, but enlightening, read, google the DCFS records retention schedule. The amount of paper required to be kept is staggering. Start looking at how much space in Springfield is dedicated to keeping old paper, that is the real scandal.

Comment by 100 miles west Tuesday, Apr 4, 17 @ 2:46 pm
Paging the Procurement Policy Board. Paging Ed Bedore.

Comment by Smitty Irving Tuesday, Apr 4, 17 @ 2:46 pm
Maybe Uihlein can buy the building for Proft and the likes so that they can all create their own FAKE NEWS out of Springfield as well.

Comment by Just saying.... Tuesday, Apr 4, 17 @ 3:01 pm
Look on the bright side. At least it stayed on the property tax roles in Springfield instead of being removed from property taxes. /partially s

Comment by RNUG Tuesday, Apr 4, 17 @ 3:02 pm
I know of a whole bunch of free State buildings that are lightly used (2 weeks a year). They’re called the State Fairgrounds.

Surely we can do without a butter cow or vacuum cleaner sales for $2.5 million.

Comment by Sir Reel Tuesday, Apr 4, 17 @ 3:14 pm
The state owns a 3-story building at 5th and Capitol that is sitting mostly empty. The Herndon Building.

Comment by HeadShaking Tuesday, Apr 4, 17 @ 3:16 pm
Keep following the money! There is a story. Dig a little dealer.

Comment by DCSouth Tuesday, Apr 4, 17 @ 3:25 pm
“Might we perhaps give some collective thought to digitizing old DHS records?”

Storing and retrieving data, access to this data, securing the data, going to require IT expenses.

Just sayin’

Comment by a drop in Tuesday, Apr 4, 17 @ 4:07 pm
–Anybody remember who founded New Frontier…–

The google says a guy named Nate Laurel. Into a lot of stuff.

http://www.chicagobusiness.com/section/40-under-40-2014?recipient=Laurell

Comment by wordslinger Tuesday, Apr 4, 17 @ 4:12 pm
wordslinger, I am pretty sure he meant New Frontier Management, not New Frontier Holdings, which is (was?) a Cellini company.

Comment by Juice Tuesday, Apr 4, 17 @ 4:17 pm
Thanks, Juice, that would make sense, when you’re shakin’ things up.

Comment by wordslinger Tuesday, Apr 4, 17 @ 4:21 pm
Governor Quinn had a heavyweight tasked with cleaning up leases. Sounds like the next governor will have to do it again.

Comment by Last Bull Moose Tuesday, Apr 4, 17 @ 5:08 pm
I hope everyone keeps following the money on this. I know for a fact the state of Illinois has many abandoned buildings (state mental faculties, old state police districts, IDOT garages, etc) that could have been used for storage. Plenty of open property to put up a large storage shed/building that would be a fraction of the cost. No lets not get a budget or do things right. This is why the state has no money except for the connected few.

Comment by ejpp Tuesday, Apr 4, 17 @ 5:12 pm
Digitizing these records, paying for the server storage and providing access will cost a lot more than $2.4 million. doesn’t matter because DHS has tried for years to get an approp to do that and hasn’t been successful.

Comment by LTSW Tuesday, Apr 4, 17 @ 6:47 pm
I was exposed to a similar situation years ago and the deal made no sense. However, if the state owned the building they would have been required to staff it with a full compliment of operating engineers. This would have added nearly $1 million in annual operating costs. All of a sudden, the lease cost seemed like a good deal.

Comment by Portman24 Tuesday, Apr 4, 17 @ 7:10 pm
Gov. Jim Thompson used lease awards to payback political allies. Two of his big fundraisers were Bill Cellini and Frank Mason. After Thompson left, governors could either buy the Cellini/Mason budings, or pay to move. Both options required money. The State has been broke ever since Thompson. The Cellini/Mason leases are still in place and ever growing aided by friends and family who buy different buildings.

Comment by KAY-ro Tuesday, Apr 4, 17 @ 7:30 pm
Is anyone surprised by this story?

Comment by One of the 35 Tuesday, Apr 4, 17 @ 7:37 pm
== Is anyone surprised by this story? ==

No, not if you’ve been around …

Comment by RNUG Tuesday, Apr 4, 17 @ 7:47 pm
Paging the Legislative Audit Commission…MANAR? Do it man!

Comment by Oh, Please! Tuesday, Apr 4, 17 @ 7:47 pm
We should get DoIT to change their focus from self-promotion to solving real problems like digitizing records. Instead of touting futuristic items like block-chain we need pragmatic solutions to today’s problems.

Comment by Anonymous Tuesday, Apr 4, 17 @ 8:08 pm
KAY, your last post is full of uh, syrup.

First of all, I don’t think you would find wide agreement that “the State has been broke since Thompson.” Fewer would agree this alleged insolvency was caused by a handful of real estate leases in Springfield.
Further, “after Thompson left, governors could either buy..the buildings, or move.” Absolutely incorrect. Give me one example. You may be thinking of a couple attempts by the State to purchase a group of buildings in the 90s. There were no forced choices, though. The Blagojevich/Quinn team made a point of relocating out of several former Cellini/Mason developed properties. For example, the Mason-built Lottery offices at 2nd and Madison now occupied by HSHS Healthcare, or the Cellini project at Hay-Edwards School that ended up as a windfall for District 186. Of course, Todd Renfrow’s falling down garage at Fourth and Jefferson has seldom been without a State tenant. Why, right now it’s leased to DHS for storage. Take a look at the Sj-R’s chart of lease detail and you might see some friends and family, just not the ones you think.

Comment by Arthur Andersen Tuesday, Apr 4, 17 @ 10:29 pm
Advocates of using the Armory should recall that the State Police moved out due to asbestos and water contamination issues which have not been subsequently addressed.

Comment by Arthur Andersen Tuesday, Apr 4, 17 @ 10:36 pm
Just because the bldg is leased doesn’t mean that the structure is maintained. I know of several DHS offices in Northern IL that were abyssmal. At our office, the landlord would visit the office once per year, and acted concerned (i.e weeds outside and inside problems)… but little action.

Comment by Top of the State Wednesday, Apr 5, 17 @ 8:31 am
== Advocates of using the Armory should recall that the State Police moved out due to asbestos and water contamination issues which have not been subsequently addressed. ==

There were also some weight limitations / load bearing issues that would make sections unsuitable for records storage.

Comment by RNUG Wednesday, Apr 5, 17 @ 9:03 am

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