Kansas delays energy center project after lawmakers raise concerns

The state delayed plans to build a new power plant for state office buildings Wednesday after lawmakers raised concerns about the project’s cost and financing method.

The Kansas Department of Administration struck a $19.9 million deal with Bank of America in late December to finance the construction of a new energy center to power the Capitol and four state office buildings. The state plans to tear down the Docking Building, which houses the generator that powers the buildings now.

Lawmakers in both parties voiced concern that the agreement for a tax-exempt municipal lease with Bank of America was made without legislative approval. The state would make regular payments, including interest of 2.32 percent, to Bank of America through 2031 as part of a lease-to-own arrangement.

Groundbreaking for the project had been set for Wednesday.

“They (lawmakers) asked for some more time. We followed the proper process, but if they think there’s ways that we can save money I’m willing to let people take more looks at those items,” Gov. Sam Brownback said.

Brownback noted that the deal with Bank of America has already been finalized. He said he was OK with delaying construction temporarily, but not for too long because the state could face penalties from its construction contract.

House Speaker Ray Merrick, R-Stilwell, issued a statement Wednesday, saying there “are unanswered questions about the use of taxpayer dollars in this situation, and the Legislature is committed to making certain there is transparency and accountability in this process. It is also important to remember that it is the legislature’s constitutional duty to appropriate taxpayer dollars, and that is a responsibility I take seriously.”

Rep. Ron Ryckman, R-Olathe, House Appropriations chair, said lawmakers were “appreciative that the governor and the Department of Administration delayed the project to give us the opportunity to provide more oversight and guidance and to ensure more accountability of taxpayer dollars.”

A memo from the nonpartisan Legislative Research Department notes that in October members of the Joint Committee on State Building Construction had recommended the Department of Administration “reconsider the project from the beginning, including not fully deconstructing Docking, based on the increased expenses for the New Energy Service Center.” The cost to build was estimated at $16.3 million.

The committee had instructed the Department of Administration to present alternative plans and indicated it would like to review the lease agreement before it was finalized. Those things did not happen.

Senate President Susan Wagle, R-Wichita, recently said that lawmakers had “serious heartburn” over the deal.

Eileen Hawley, the governor’s spokeswoman, said in a statement that the administration will provide more information to the Legislature soon and looks “forward to finding an acceptable resolution very soon.”

Sarah Shipman, the acting secretary of administration who made the agreement, was slated to appear before the Senate Ways and Means Committee on Wednesday for a confirmation hearing. That hearing was postponed at the request of the governor’s office, said Sen. Ty Masterson, R-Andover, the committee’s chair.

Hawley said there was a miscommunication with the committee about when a vote on the nomination would occur.

This story was originally published January 27, 2016 at 10:29 AM with the headline "Kansas delays energy center project after lawmakers raise concerns."