COMMITTEE SUBSTITUTE

FOR

Senate Bill No. 437

(By Senator Tomblin, Mr. President)

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[Originating in the Committee on Finance;

reported February 27, 2003.]

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A BILL to amend and reenact section four, article six, chapter five of the code of West Virginia, one thousand nine hundred thirty-one, as amended; and to amend and reenact section forty, article three, chapter five-a of said code, all relating to requiring that the Legislature's joint committee on government and finance approve certain provisions of real estate, any lease-purchase agreement and any construction of new buildings or acquisition of buildings, office space or surrounding grounds by the building commission or the secretary of administration; tax exemptions not affected by leasebacks; exemptions available to private entity who is a party to the leaseback; leasebacks to be considered public improvements; and personal liability of a private entity who is a party to a leaseback.

Be it enacted by the Legislature of West Virginia:
That section four, article six, chapter five of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; and that section forty, article three, chapter five-a of said code be amended and reenacted, all to read as follows:
CHAPTER 5. GENERAL POWERS AND AUTHORITY OF THE GOVERNOR,

SECRETARY OF STATE AND ATTORNEY GENERAL; BOARD

OF PUBLIC WORKS; MISCELLANEOUS AGENCIES, COMMISSIONS,

OFFICES, PROGRAMS, ETC.

ARTICLE 6. STATE BUILDING COMMISSION.
§5-6-4. Powers of commission.
(a) The commission has the power may:
(1) To Sue and be sued, plead and be impleaded;
(2) To Have a seal and alter the same seal at pleasure;
(3) To Contract to acquire and to acquire, in the name of the commission or of the state, by purchase, lease, lease-purchase or otherwise, real property or rights or easements necessary or convenient for its corporate purposes and to exercise the power of eminent domain to accomplish those purposes;
(4) To Acquire, hold and dispose of personal property for its corporate purposes;
(5) To Make bylaws for the management and regulation of its affairs;
(6) With the consent of the attorney general of the state of West Virginia, to use the facilities of his or her office, assistants and employees in all legal matters relating to or pertaining to the commission;
(7) To Appoint officers, agents and employees and fix their compensation;
(8) To Make contracts, and to execute all instruments necessary or convenient to effectuate the intent of, and to exercise the powers granted to it by this article;
(9) To Renegotiate all contracts entered into by it whenever, due to a change in situation, it appears to the commission that its interests will be best served;
(10) To Construct a building or buildings on real property, which it may acquire, or which may be owned by the state of West Virginia, in the city of Charleston, as convenient as may be to the capitol building, together with incidental approaches, structures and facilities, subject to the consent and approval of the city of Charleston in any case as may be that is necessary; and, in addition, to acquire or construct a warehouse, including office space in the warehouse in Kanawha County for the West Virginia alcohol beverage control commissioner, and equip and furnish the office space; and to acquire or construct, through lease, purchase, lease-purchase or bond financing, hospitals or other facilities, buildings, or additions or renovations to buildings as may be that are necessary for the safety and care of patients, inmates and guests at facilities under the jurisdiction of and supervision of the division of health and at institutions under the jurisdiction of the division of corrections or the regional jail and correctional facility authority; and to formulate and program plans for the orderly and timely capital improvement of all of the hospitals and institutions and the state capitol buildings; and to construct a building or buildings in Kanawha County to be used as a general headquarters by the division of public safety state police to accommodate that division's executive staff, clerical offices, technical services, supply facilities and dormitory accommodations; and to develop, improve and expand state parks and recreational facilities to be operated by the division of natural resources; and to establish one or more systems or complexes of buildings and projects under control of the commission; and, subject to prior agreements with holders of bonds previously issued, to change the systems, complexes of buildings and projects from time to time, in order to facilitate the issuance and sale of bonds of different series on a parity with each other or having such the priorities between series as the commission may determine determined by the commission; and to acquire by purchase, eminent domain or otherwise all real property or interests in the real property necessary or convenient to accomplish the purposes of this subdivision. The rights and powers set forth in this subdivision shall not be construed as in derogation of any rights and powers now vested in the West Virginia alcohol beverage control commissioner, the department of health and human resources, the division of corrections or the division of natural resources;
(11) To Maintain, construct and operate a project authorized under this article;
(12) To Charge rentals for the use of all or any part of a project or buildings at any time financed, constructed, acquired or improved, in whole or in part, with the proceeds of sale of bonds issued pursuant to this article, subject to and in accordance with such any agreements with bondholders as may be made as provided in this article: Provided, That on and after the effective date of the amendments to this section, to charge rentals for the use of all or any part of a project or buildings at any time financed, constructed, acquired, maintained or improved, in whole or in part, with the proceeds of sale of bonds issued pursuant to this article, subject to and in accordance with such any agreements with bondholders as may be made as provided in this section provided, or with any funds available to the state building commission, including, but not limited to, all buildings and property owned by the state of West Virginia or by the state building commission, but no rentals shall be charged to the governor, attorney general, secretary of state, state auditor, state treasurer, the Legislature and the members of the Legislature, the supreme court of appeals, nor for their offices, agencies, official functions and duties;
(13) To Issue negotiable bonds and to provide for the rights of the holders of the negotiable bonds;
(14) To Accept and expend any gift, grant or contribution of money to, or for the benefit of, the commission, from the state of West Virginia or any other source for any or all of the purposes specified in this article or for any one or more of such those purposes as may be specified in connection with the gift, grant or contribution;
(15) To Enter on any lands and premises for the purpose of making surveys, soundings and examinations;
(16) To Invest in United States government obligations, on a short-term basis, any surplus funds which the commission may have on hand pending the completion of any project or projects;
(17) To Issue revenue bonds in accordance with the applicable provisions of this article for the purposes set forth in section eleven-a of this article; and
(18) To Do all things necessary or convenient to carry out the powers given in this article.
(19) (b) The power and authority granted to the state building commission pursuant to this section and sections seven, eight and eleven-a of this article to initiate, acquire, construct, finance or develop projects; to issue revenue bonds; or to exercise the power of eminent domain with respect to any project, shall terminate terminated on the effective date of this section: Provided, That nothing herein in this section shall be construed to affect the validity of any act of the state building commission prior to the effective date of this section or to impair the rights of bondholders with respect to bonds or other evidence of indebtedness issued prior to the effective date of this section. Following the effective date of this section, the secretary of administration may exercise any power expressly granted pursuant to this article with respect to any project or facility previously constructed or acquired, any existing contractual obligations, and any outstanding bonded indebtedness. Refunding bonds for any outstanding bonded indebtedness are authorized, subject to the provisions of article two-e, chapter thirteen of this code. The West Virginia economic development authority provided for in article fifteen, chapter thirty-one of this code is designated to act as the governing body whose authorizations and determinations are required for the purpose of refunding bonds.
(c) Any purchases of real estate, any lease-purchase agreement and any construction of new buildings or other acquisition of buildings, office space or grounds resulting therefrom, by any state agency in an aggregate amount equal to or in excess of the sum of five million dollars (exclusive of interest and financing costs) shall be presented by the secretary of administration to the joint committee on government and finance for prior review and approval: Provided, That any sale-leaseback or like kind exchange undertaken by the state shall not be subject to the requirements of this subsection.
CHAPTER 5A. DEPARTMENT OF ADMINISTRATION.

ARTICLE 3. PURCHASING DIVISION.

§5A-3-40. Selection of grounds, etc.; acquisition by contract or lease; long-term leases; requiring approval of secretary for permanent changes.

(a) The secretary shall have has sole authority to select and to acquire by contract or lease, in the name of the state, all grounds, buildings, office space or other space, the rental of which is necessarily required by any spending unit, upon a certificate from the chief executive officer or his or her designee of said spending unit that the grounds, buildings, office space or other space requested is necessarily required for the proper function of said the spending unit, that the spending unit will be responsible for all rent and other necessary payments in connection with the contract or lease, and that satisfactory grounds, buildings, office space or other space is not available on grounds and in buildings now then owned or leased by the state. The secretary shall, before executing any rental contract or lease, determine the fair rental value for the rental of the requested grounds, buildings, office space or other space, in the condition in which they exist, and shall contract for or lease said those premises at a price not to exceed the fair rental value thereof of those premises.
(b) The secretary is hereby authorized to may enter into long-term agreements for buildings, land and space for periods longer than one fiscal year: Provided, That such long-term lease agreements shall may not be for periods in excess of forty years, except that the secretary may, in the case of the adjutant general's department, enter into lease agreements for a term of fifty years or a specific term of more than fifty years so as to comply with federal regulatory requirements, and shall contain, in substance, all of the following provisions: (1) That the department of administration, as lessee, shall have has the right to cancel the lease without further obligation on the part of the lessee upon giving thirty days' written notice to the lessor, such with the notice being given at least thirty days prior to the last day of the succeeding month; (2) that the lease shall is to be considered canceled without further obligation on the part of the lessee if the state Legislature or the federal government should fail to does not appropriate sufficient funds therefor for the lease or should otherwise act otherwise acts to impair the lease or cause it to be canceled; and (3) that the lease shall is to be considered renewed for each ensuing fiscal year during the term of the lease unless it is canceled by the department of administration before the end of the then current fiscal year.
(c) Notwithstanding any other provision of this code, any purchases of real estate, any lease-purchase agreement and any construction of new buildings or other acquisitions of buildings, office space or grounds resulting therefrom, by any state agency in an aggregate amount equal to or in excess of the sum of five million dollars, exclusive of interest and financing costs shall be presented by the secretary of administration to the joint committee on government and finance for prior review and approval.
(d) Real and personal property taxation exemptions, exemptions relating to transfers of real property, exemptions relating to transfers or real property, exemptions from the payment of business and occupation, franchise and licensing taxes and exemptions from taxation relating to operations or facilities owned, leased or exchanged by the state that are set forth elsewhere in this code and available to the state and its spending units shall not be affected by any transaction in which, for the purpose of obtaining financing, the state, directly or indirectly, leases or otherwise transfers the property to a private entity whose property would not otherwise be exempt and immediately thereafter enters into a leaseback or other agreement that, directly or indirectly, gives the state or its spending units the right to use, control and possess the property. Notwithstanding anything in this code to the contrary, the exemptions from taxation described in this subsection available to the state and its spending units shall also be available to any private entity that is a party to a leaseback, exchange or other agreement that, directly or indirectly, gives the state or its spending units the right to use, control and possess the property. Any real or personal property that is acquired for the benefit of the state as provided in this section shall at the time be considered a public improvement of the state and shall be insured against hazards and other liabilities as are similar properties and public improvements within the state. Any private entity that is a party to a leaseback, exchange or other agreement that, directly or indirectly, gives the state or its spending units the right to use, control and possess the property is exempt from any personal liability relating to the use, control or possession of the property.
A spending unit which is granted any grounds, buildings, office space or other space leased in accordance with this section may not order or make permanent changes of any type thereto to the property, unless the secretary has first determined that the change is necessary for the proper, efficient and economically sound operation of the spending unit. For purposes of this section, a "permanent change" means any addition, alteration, improvement, remodeling, repair or other change involving the expenditure of state funds for the installation of any tangible thing which cannot be economically removed from the grounds, buildings, office space or other space when vacated by the spending unit.