A state panel voted Wednesday to approve a lease-purchase plan for a new, 120,000-square-foot Nevada government building despite an argument from one panel member that the financing plan violates the wishes of voters.
State Controller Kathy Augustine voted against the plan while other state Board of Finance members, including state Treasurer Brian Krolicki and Gov. Kenny Guinn, supported it and said they're convinced it's proper and will save the state money over time.
The state's lease payments for the new Department of Conservation and Natural Resources building, to be located just south of the Nevada Capitol in Carson City, will total about $72 million over 27 years. At that point, the state will own the building.
Krolicki said that straight rent rather than a lease-purchase would be "money down the drain" because it would total about $73 million over the 27 years - and the state would never own the structure.
Board members were told that with the lease-purchase deal, the state would wind up owning a building with a projected value of as much as $119 million.
Augustine, echoing earlier criticism from Secretary of State Dean Heller, said the plan appeared to circumvent a 1994 vote by Nevadans against lease-purchase agreements. She added the plan "kind of opens the gate" to more government growth.
But Krolicki said the 1994 vote didn't prohibit the deals, and a decision by the state Supreme Court two years ago made clear that lease-purchase arrangements by the state are proper.
"I would take this deal any day of the week," said Krolicki, adding it will save the state money "and that's the bottom line."
Guinn, who chairs the Board of Finance, said such financial arrangements aren't counted against the state's limit on bonded indebtedness - and are "100 percent risk-free for the state."
The governor also told Augustine the state lacks enough bonding capacity to use that option rather than a lease-purchase for the structure, and the project has "nothing to do" with the size of state government.
The proposal, already endorsed on a 2-1 vote by the state Board of Examiners, now must go to the Legislature's Interim Finance Committee for another approval. From there, it'll return to the Board of Finance for final action.
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