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State pays $32M in leases annually; 39 of its 569 leased properties are in Jefferson City

by Ryan Pivoney | January 9, 2022 at 6:40 a.m.
One of several buildings leased by the state of Missouri to house commissions, agencies and departments is this one at 3417 Knipp Drive in Jefferson City, which is occupied by the Missouri Gaming Commission. (Julie Smith/News Tribune photo)

While some Missourians might be worried about the ebbs and flows of the housing market, the state of Missouri largely doesn’t.

State government agencies operate out of a staggering number of leased properties spread across all 114 Missouri counties. In Jefferson City, some also pay well over property valuations over the course of several-year stays.

The state of Missouri owns a total of 46 properties throughout the state, 27 of which are located in Jefferson City.

By contrast, the state leases 569 properties, 39 of which are located in Jefferson City. It pays more than $32 million each year to rent the spaces it operates from across the state.

In its documentation of state-held leases, the Office of Administration often lists multiple leases for a single property to differentiate which state agencies are using the space.

On paper, the state has 1,061 leases, but they’re divided among the 569 properties.

The state maintains an average of about five leased properties per county, but the distribution ranges from a single leased office within a county to several dozen pieces of property.

Of the 39 state-leased properties in Jefferson City — the most of any area in the state — 28 are office buildings, six are parking lots, four are warehouses and one is a piece of land used by the Missouri Highway Patrol.

All but three of the state leases held in Jefferson City have expired, according to OA’s data.

How long they’ve been expired varies. Some are a couple years old and others are well overdue, such as a parking lot lease paid to the City of Jefferson that expired in 1996, according to OA data.

Chris Moreland, communications director for OA, said in those cases, the state is still paying the listed rate, “but it is possible the current leases have not been updated.”

Moreland said the state began looking to trim the number of leases it has around 2004, but still adds a lease if there’s a need.

“The process is dependent upon the situation,” he said.

Moreland said factors like remote work availability and cuts to the state workforce are taken into consideration when reviewing state leases.

In July 2020, Gov. Mike Parson cut 500 state jobs to help balance the budget after the COVID-19 pandemic sidelined revenue income and created budget shortfalls. Roughly 300 state employees were let go, mostly concentrated in the Department of Social Services, and the other 200 were vacant positions that were eliminated.

Moreland said the only lease he’s aware the state has eliminated recently was at 1621 E. Elm St. in Jefferson City. The property caught fire last November and was a total loss.

The Missouri Department of Social Services has the most leases of any state agency with at least 163 properties being rented for office space, parking, warehouses, and day treatment or residential space.

Twelve of the DSS-leased properties are in Jefferson City, the most of any state agency.

On average, DSS pays $135,562 per leased office space in the Capital City, which comes out to roughly $7.50 per square foot.

The department’s cheapest lease, for 14,515 square feet of office space located on Wilson Avenue, costs $26,062.72 annually and houses one family support division team, according to data from the Office of Administration.

The department’s most expensive office space lease, located on Knipp Drive, costs $360,200 each year and houses six department divisions across 39,539 square feet.

In addition to office space, many state departments also lease parking space for employees.

DSS, for example, has 12 parking leases in Jefferson City and pays an annual total of $33,679.38, which is an average of $2,807 per leased lot.

Throughout Missouri, the state spends $32,632,969.66 leasing property each year, including $1,471,898 on parking lots alone.

Locally, Richard A. Howerton Properties and Development Inc. receives the most in annual lease payments from the state.

Founded in 1993, the commercial real estate company owns seven of the 39 properties the state leases in Jefferson City and makes an annual total of $1,661,252.92 from the state.

Two of those properties are 920 and 930 Wildwood, neighboring office spaces used by the Missouri Department of Health and Senior Services for several years.

The state pays $440,400 each year for the 60,000-square-foot office at 930 Wildwood, which is about $7.34 per square foot.

At 920 Wildwood, another 60,000-square-foot office, the state pays an annual rate of $449,117.65, or $7.49 per square foot.

The building at 920 Wildwood has an assessed value of $1,942,980 and 930 Wildwood has an assessed value of $110,400, according to 2021 tax bills. Together, their assessed value is $2,053,380.

In the nearly five years since the leases expired in 2017, the state has paid a total of $4,447,588.25 to rent the two properties.

Cole County Collector Larry Vincent said the sizable difference in property valuation is because 920 Wildwood includes a large portion of 930 Wildwood. He said the assessed value of both properties has been the same since 2005.

Howerton paid $128,168.66 in real estate taxes for 920 Wildwood and $7,282.53 for 930 Wildwood last year.

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