Relating to the disposition of real property on the capitol complex, and including effective date provisions

Description

House File 846 authorizes the Director of the Department of Administrative Services (DAS) to dispose of the Wallace State Office Building and adjacent Capitol Complex parking structure. The Bill takes effect upon enactment.

Background

Iowa Code section 8A.321 requires authorization of a constitutional majority of each house of the General Assembly and Governor approval to dispose of any building on the Capitol Complex. Proceeds from the sale of real property are credited to the General Fund. Construction of the Wallace Building was completed in 1978 at a cost of $10.4 million. As of 2023, the building consisted of 187,615 building rentable square feet (RSF) and total rentable office space of 135,112 square feet.

Since 2012, the DAS has made improvements to the Wallace Building, including replacement of elevators; a restroom renovation on the second and fourth floors for Americans with Disabilities Act (ADA) compliance; phased improvements to the heating, ventilation, and air conditioning (HVAC) system; replacement of the common area flooring; and roof replacement. According to the DAS, estimated maintenance costs to the Wallace Building over the past five fiscal years were approximately $3.0 million.

As of February 2025, the DAS has identified future maintenance costs to the Wallace Building of approximately $31.0 million, which includes $22.0 million for HVAC renovations and $9.0 million for replacement of windows; tuckpointing and waterproofing of the exterior; removal of the terrarium; electrical improvement; restroom renovations for the first, third, and fifth floors; lighting improvement in common areas; and auditorium improvements. A portion of these projects are included in the DAS Major Maintenance list. Full renovation costs to the building are estimated at $85.0 million.

In August 2023, the Executive Council voted to approve the purchase of a fully furnished office building at 6200 Park Avenue in Des Moines to house the Department of Inspections, Appeals, and Licensing (DIAL) and the Department of Natural Resources (DNR). As of December 31, 2024, there was $29.0 million obligated from the Iowa Coronavirus State and Local Fiscal Recovery Fund for the State building purchase, completion of short-term and long-term improvements, and relocation of staff. Of that amount, $20.0 million has been expended. As of February 2025, the only agency staff that remain in the Wallace Building are DIAL administrative law judges and employees of the Iowa Department of Agriculture and Land Stewardship (IDALS).

Assumptions

• Future repair and demolition costs are dependent on a variety of factors and may fluctuate.
• The future value of the sale is dependent on a variety of factors and may fluctuate.
• Disposition of the Wallace Building includes the following options:
• Option 1 — Demolishing the building before the sale of the property. According to the DAS, the estimated total cost of this option is approximately $7.0 million.
• Option 2 — Removing the building from Capitol Complex utilities and converting it to a standalone building before the sale of the property. According to the DAS, the estimated total cost of this option is $9.3 million over three years. This includes annual ongoing basic operational costs for the Wallace Building of $150,000 and an estimated one-time cost of $1.8 million for tuckpointing of the building to mitigate moisture and water inflows.
• The current value of the land according to the DAS is listed below:
• The value of the vacant land is approximately $5.7 million.
• The value of the land with the building intact is approximately $5.2 million.
• The value of the parking structure is approximately $3.4 million.
• The remaining DIAL employees will relocate to the building at 6200 Park Avenue in Des Moines at a moving cost of approximately $8,000, according to the DAS.
• IDALS employees will relocate to the Hoover State Office Building at a moving cost of approximately $15,000, according to the DAS.
• The timeline to dispose of the Wallace Building and parking structure is unknown.
• According to the DAS, one-time federal funds will be used to cover the costs of disposal. The source of the federal funding is unknown.

Fiscal Impact

The potential fiscal impact of the disposal of the Wallace Building and parking structure is outlined in Figures 1 and 2. These figures are estimates only, and any future demolition costs, renovation costs, and property sale revenue may fluctuate. Costs and revenues outlined below do not offset one another since they impact different funding sources. Option 1 — Building Demolition Prior to Sale Figure 1 includes the estimated costs associated with the demolition of the Wallace Building prior to sale and the estimated revenue from the sale of the vacant land and parking structure. According to the DAS, total expenses will be funded through one-time federal funds. The source of federal funding is unknown. All proceeds from the sale of real property are deposited into the General Fund.

Figure 1 — Estimated Costs and Revenue of Wallace Building Demolition Prior to SaleBudget Estimate Fund Cost of Demolition -7,000,000$ Federal Funds Agency Relocation -23,000 Federal Funds Total Expenses -7,023,000$ Sale of Land 5,700,000$ General Fund Sale of Parking Structure 3,400,000 General Fund Total Revenue 9,100,000$ Option 2 — Conversion to a Standalone Building Prior to Sale Figure 2 includes the estimated costs associated with removing the Wallace Building from the Capitol Complex utilities and converting it to a standalone building, along with the estimated revenue from the sale of the vacant land and parking structure. According to the DAS, total expenses will be funded through one-time federal funds. The source of federal funding is unknown. All proceeds from the sale of real property are deposited into the General Fund. Figure 2 — Estimated Costs and Revenue of Conversion of the Wallace Building to a Standalone Building Prior to Sale

Sources

• Office of the Governor and Lieutenant Governor
• Department of Administrative Services
• Executive Council August 7, 2023, packet
• Department of Management Coronavirus State Fiscal Recovery Fund Report