State treasurer recommends buying Downtown building, ending leases

The state could save roughly $190 million over 50 years by buying the building that houses the Wisconsin Veterans Museum at 30 W. Mifflin St., demolishing it and relocating other state offices along with the museum to a new facility at the site, according to state Treasurer Matt Adamczyk.

The state should buy a Downtown building that houses the Wisconsin Veterans Museum, demolish it and relocate other state offices into a new facility at the site along with the museum, the state treasurer recommended Wednesday.

The move could save roughly $190 million over 50 years, Treasurer Matt Adamczyk estimated, though that figure doesn’t include maintenance costs.

In a letter to the Legislature, Adamczyk said the state should exercise an option to purchase the building at 30 W. Mifflin St. before its lease expires in 2020. The state has the option of extending the lease to 2025, after which it would have to negotiate a new agreement.

Adamczyk said in an interview that a new building would provide a permanent home for the veterans museum. There has been ongoing discussion of merging the veterans museum with the Wisconsin Historical Museum as part of a nearby redevelopment project.

Adamczyk said he doesn’t expect the merger will happen based on conversations he has had, though others said discussions continue.

“The city would much rather have a veterans museum that’s beautiful and that’s going to be there,” Adamczyk said. “This would be a permanency.”

Department of Administration spokesman Steve Michels previously said the Department of Veterans Affairs was still engaging with the developer of the historical museum site project on the possible merger of the museums. On Wednesday, Michels said that hasn’t changed.

The city currently leases space in the veterans museum building while the Judge Doyle Square project and Madison Municipal Building are under construction. City lobbyist Nick Zavos said it was the first time city officials had heard of the idea of the state purchasing the building.

“I don’t know enough of it to comment in any informed way,” Zavos said.

A spokeswoman for Gov. Scott Walker referred comment to DOA.

Michels indicated potential interest in consolidating office space at the veterans museum, but didn’t commit one way or the other.

“DOA’s long-term goal is to consolidate office space and save taxpayers money,” Michels said.

“We will continue to look for ways to find long-term savings and use taxpayer dollars as efficiently as possible,” Michels said.

The state is in the process of consolidating several offices scattered around the city at the new 600,000-square-foot Hill Farms state office building on the West Side. The building cost taxpayers $150 million.

Adamczyk used the $250 per square foot cost of the Hill Farms building to come up with a $41 million cost estimate for a new building at 30 W. Mifflin St.

He is proposing the Legislative Audit Bureau, which leases space at 22 E. Mifflin St., the Legislative Council, Legislative Fiscal Bureau and Legislative Reference Bureau, which lease space at 1 E. Main St., and the veterans museum share a 129,000-square-foot new building.

The current leases for those offices total about $2.56 million a year. Assuming 2.5 percent annual rent inflation, the cost of renting those facilities over 50 years would be $250 million. Borrowing costs to purchase and construct a new building would be about $60 million over 20 years, resulting in the projected net savings of $190 million.

However, Adamczyk acknowledged savings would be less because maintenance is currently included in the lease costs.

“We’re paying a fortune right now and it’s never going to get any less,” he said.

Adamczyk initially estimated the savings would be $217 million, but he reduced the estimate in response to questions from the Wisconsin State Journal about his calculations and assumptions.

His proposal comes two weeks after voters rejected a statewide referendum he supported to eliminate the treasurer position from the state constitution.

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Matthew DeFour covers state government and politics for the Wisconsin State Journal.