JBC moves to draft bill to end depreciation transfers to Capital Complex, flags Centennial building costs

The Joint Budget Committee’s capital construction briefing focused on the Capital Development Committee’s recommended project list and the state’s Capital Complex renovation program. Ms. Ewell (staff) explained the CDC reprioritization — notably removing the Delta fencing project from the top of OSPB’s list and adding the Arkansas Valley continuation and a CDLE testing lab request.

Committee members probed whether adding 288 beds at Delta requires statutory reclassification to Level 2; Ms. Ewell and DPA staff said changing a facility’s security level requires legislation. Senators and representatives debated whether fencing alone would achieve a Level‑2 operational classification and flagged additional costs and legislative steps needed to move beds into service while construction occurs.

The Centennial (1313 Sherman) building was a focal point. Staff described a P3 feasibility study showing conversion to residential use could cost between $91 million and $111 million in construction costs plus $20–$40 million in additional expenses; renovating the whole building for office use could approach $120 million with an unfunded out‑year cost of about $31 million. Members questioned whether the building should be sold, demolished, mothballed or converted and asked for clearer price and ongoing cost estimates.

Ms. Ewell also urged the committee to repeal the annual depreciation/lease‑equivalent (ADLE) payments created in earlier legislation (cited in the packet as Senate Bill 22‑239) that were being diverted into the Capital Complex Renovation Fund. Staff said the ADLE mechanism has proved fragile — payments were paused during the pandemic and funds subsequently redirected to specific projects — and estimated that repealing the mechanism would produce ongoing general‑fund savings of roughly $25.3 million and allow a one‑time transfer of certain balances back to the general fund. The committee voted to move drafting authority for repeal of the ADLE payments and related capital transfer language; the motion to draft passed 6–0.

Committee direction and next steps: staff will prepare draft legislation to repeal the depreciation/lease‑equivalent transfer mechanism and provide detailed numbers on Centennial building alternatives and the fiscal consequences of pursuing both Delta and Arkansas Valley projects. Members also requested a meeting with CDC staff and DPA to reconcile project priorities before finalizing long‑bill action.