With DOR headquarters in limbo, state site on Lakeland may get look

With downtown Jackson’s Landmark Center sunk as the future home of Mississippi Department of Revenue, a state-owned parcel north of Smith-Wills Stadium on Lakeland Drive could be atop the list of new options.

The 7-acre parcel won top ranking in a site-selection study done last year by national real estate company Cushman & Wakefield.

The tract between the Educational Research Center along Ridgewood Road and the Mississippi School for the Blind and Deaf is part of the old asylum property owned by the state.

It’s not clear what state lawmakers will ultimately do. They stunned supporters of moving the DOR headquarters to the Landmark Center by refusing to let the House vote on legislation by Sen. David Blount that cleared the Senate easily.

They cite House Speaker Philip Gunn as the force behind killing the measure and say he wants to keep the DOR and its 500 employees in the tin warehouse in Raymond next to his Clinton district. The department has occupied the building for 15 years.

The current Department of Revenue headquarters is housed in a tin warehouse in Clinton.

In an Associated Press report last week, Gunn said money concerns led him to do what he did. It’s cheaper to keep the HQ where it is, he told AP. “It’s simply dollars and cents,” he said.

In its report ranking the Landmark Center as the top choice for using an existing building as the new DOR home, Cushman & Wakefield said buying the nearly 350,000 square-foot Capitol Street office building would save the state $19 million over building new, as is now the apparent top option. The buildings owners had agreed to sell the building for $14.1 million. That price represents about $40 a square foot compared to the $250 to $300 a square foot price for building new, Cushman & Wakefield said.

In building on raw land, state officials are expecting a total building cost of around $40 million.

The former Mississippi Power equipment staging warehouse at 1577 Springridge Road has been deemed substandard and no longer suitable for the DOR. The agency’s spokeswoman, Cathy Waterbury, told the AP last week rain water on the tin roof and the parking lot was pooling. On some occasions, the pooling water from the parking lot flows into the building, making some rooms unusable, according to Waterbury.

Also, the warehouse has been cramped as the workforce at the DOR has grown. Waterbury told AP staff occupies 36-foot cubicles when the standard is 80-foot to 100-foot cubicles.

She said the DOR is “disappointed” that legislators killed the department’s moving plans.

Revenue Commissioner Ed Morgan, who oversees the DOR, said he doubts it is practical to invest money in fixing up the aged warehouse when the DOR is certain to move out at some point soon.

But where they would move to or when they could move is unclear.

In the meantime, the Deviney Co., owners of the warehouse, is responsible for making the building usable, said Kevin Upchurch, executive director of the Mississippi Department of Finance & Administration, which oversees facilities the state uses.

“The landlord has the responsibility to make sure the roof doesn’t leak and the walls don’t leak,” Upchurch said in an interview Wednesday.

Billy Deviney, the landlord, has not returned calls seeking comment. The Deviney Co. did invite email questions Thursday but after receiving them replied that any information about lease extensions or repairs to the building would be “proprietary” and thus it will not comment.

The lease with Deviney expires in June 2014.Upchurch said the state has received a half dozen extensions and he expects another can be obtained.

“It’s routine unless the landlord decides” he wants the DOR out.

Some commercial real estate professionals think the landlord could exert leverage for attractive terms, considering that the DOR has no where to go.

As for any repairs, Upchurch said the DOR could send a written demand to have them made. “If he doesn’t provide them, we provide written notice and get out,” Upchurch said, but then added: “But then where do we go?”

John Barton, a senior executive with Parkway Properties and representative of the New York real estate trust that owns the Landmark Center, said the owner is a motivated seller and ready to make a deal. That eagerness to move the property could mean the Landmark will be unavailable should the Legislature have a change of mind next year, Barton said.

Meanwhile, the Lakeland Drive parcel with the top ranking from Cushman & Wakefield is minutes from the Capitol campus and just a short drive from Interstate 55 and has “relatively good ingress and egress,” the study said.

With its abundant tree covering the property has the potential to provide a well -landscaped setting. Further, its proximity to high-end residential neighborhoods should ensure future stability, according to Cushman & Wakefield.

Challenges cited in the study include the cost of improving access from Lakeland Drive and could add to early morning traffic congestion along Lakeland Drive.

A site on Lakeland Drive and Ridgewood Road won a second-place ranking in the study. It’s part of a campus of state-owned buildings and, like the property north of the baseball stadium, is a short drive to the Capitol.

Available land for expansion is limited, however, the study notes. Building there would “require a clear-cut, leaving a building in a sea of asphalt with very few trees, if any, around the perimeter,” Cushman & Wakefield said.

Like the other Lakeland Drive property, the second-choice site would add to morning traffic congestion, the study said.

What both Lakeland Drive sites have in common – and make them enticing – is close proximity to the State Data Center situated between Lakeland Drive and Eastover Drive.

The closer the revenue headquarters is to the Data Center the more speed and efficiency will be achieved in telecommunications and data transmission operations, said Waterbury, the Revenue Department spokeswoman, in a interview last year.

“We need to be closer to the Mother Ship. It enhances our telecommunications all around,” she said.

That’s important, Waterbury added, when you process 100,000 automobile tags a year and 900,000 vehicle titles, in addition to millions of tax returns.

Cushman & Wakefield based the study on erecting an approximately 200,000 square-foot building in the $39 million price range.

The real estate firm estimates building on the parcel north of Smith-Wills Stadium would run $43.8 million, or $209.82 a square foot.

In addition to the Lakeland Drive sites, the study looked at these state-owned parcels:

>> Mississippi State Fairgrounds;

>> Land north of Memorial Stadium;

>> Old Farmer’s Market area;

>> Sun and Sand/Barefield property downtown;

>> Hinds County Tax Parcel 429-10, a 7.3-acre site on North State Street.

>> Property on Elton Road formerly designated to be the home of the state Fire Academy.

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