COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. No.:         5554-03

Bill No.:          HB 2496

Subject:           Boards, Commissions, Committees, Councils; Economic Development Department; Housing

Type:              Original

Date:               April 7, 2008

Bill Summary:            This proposal requires the MHDC to have its offices and employees in Cole County, and requires the executive director or the chief executive director to reside within 40 miles of Jefferson City.

FISCAL SUMMARY

Numbers within parentheses: ( ) indicate costs or losses.

This fiscal note contains 5 pages.

☐ Estimated Total Net Effect on All funds expected to exceed $100,000 savings or (cost).

☒ Estimated Net Effect on General Revenue Fund expected to exceed $100,000 (cost).

FISCAL ANALYSIS

ASSUMPTION

Officials from the Department of Economic Development - Missouri Housing Development Commission (MHDC) assume that funds for a legislatively mandated move would be paid by the state through the appropriations process. The costs for such a move fall into three categories: breaking the current leases in Kansas City and St. Louis, hiring movers to move the contents of the offices to Jefferson City, and employee relocation expenses.

According to our landlord, in order to get out of the contract, MHDC would have to pay the remainder owed, but we could potentially negotiate a discount up to 8%. As of 7/1/2009, the Kansas City lease (ends 1/31/2012) would have $1,266,062 remaining and the St. Louis lease (ends 7/31/2011) would have $467,787 remaining for a total of $1,733,849. An 8% discount would reduce the amount to $1,595,141.

Using a ballpark estimate received from a Kansas City moving company, the moving costs are estimated at $107,900.

MHDC has an employee relocation policy that allows for a relocation payment of 10% of an employee's salary, if the employee is required to move by MHDC. In order to cause as little disruption as possible to the programs administered by MHDC and the Missourians who depend upon them for affordable housing, it is assumed that MHDC will ask all employees to relocate and provide the relocation payment as an incentive to do so. If all employees were to utilize the relocation expense, it would cost $544,268.

The total expense associated with breaking the leases, moving office contents, and relocation payments would be $2,247,309 to $2,386,017 depending on the discount negotiated on the lease payment.

            •          $1,595,141 to $1,733,849 for broken leases in Kansas City and St. Louis;

            •          $107,900 for movers; and

            •          $544,268 for employee relocation expenses.

Officials from the Office of Administration - Facilities Management, Design and Construction did not respond to our request for fiscal impact.

Oversight is unsure if the State of Missouri will pay the anticipated cost arising as a result of this proposal, or if the MHDC will have to bear the expense through its non-state fund. Therefore, Oversight will range the fiscal impact to the state from $0 (MHDC will pay all expenses through

ASSUMPTION (continued)

it’s Missouri Housing Trust Fund) to the high estimate provided by the MHDC (if expenses will be borne by the state).

FISCAL IMPACT - Small Business

No direct fiscal impact to small businesses would be expected as a result of this proposal.

FISCAL DESCRIPTION

Beginning July 1, 2009, this bill requires the Missouri Housing Development Commission to have its offices and employees in Cole County and its executive director or chief executive officer to reside within 40 miles of Jefferson City.

FISCAL DESCRIPTION (continued)

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Department of Economic Development

     Missouri Housing and Development Commission

NOT RESPONDING:

Office of Administration

    Facilities Management, Design and Construction

                                                                                                Mickey Wilson, CPA

                                                                                                Director

                                                                                                April 7, 2008