For years, the state has been paying Saints and Pelicans owner Tom Benson and his family for 19,000 square feet of Poydras Street office space that has sat empty, even as former Attorney General Buddy Caldwell rented offices for employees elsewhere in the New Orleans area.
With a new governor and attorney general — and with the State Capitol wracked by a historic budget crisis — the state will no longer be paying for a vacant floor in Benson Tower.
Attorney General Jeff Landry told lawmakers this week that he plans to move his New Orleans staff this summer into the ninth floor of Benson’s high-rise office building near the Mercedes-Benz Superdome. It’s space the state has been paying for under a 2009 agreement with Benson but that Caldwell never used.
Because employees of the Attorney General’s Office have been working out of rented space in downtown New Orleans and in Kenner, the move is expected to save the state about $339,000 a year.
“That is money that is being burned at a high rate,” Commissioner of Administration Jay Dardenne told lawmakers when the issue came up at a hearing in Baton Rouge this week.
Shortly after taking office last month, Landry met with the Division of Administration and was told about the empty space, which had been set aside for the Attorney General’s Office.
“Recognizing the savings to the state, the attorney general immediately agreed (to move),” Landry spokeswoman Ruth Wisher said.
The Benson deal dates back to 2009, when Gov. Bobby Jindal’s administration cut a deal with Benson to keep the Saints in New Orleans. As part of an incentive package, the deal included a promise that the state would rent 320,000 square feet of space in Benson Tower.
The building, then known as Dominion Tower, had been owned by a California real estate investor. Benson purchased it after the deal was finalized.
The agreement required the state to rent 17 of the 26 floors in Benson Tower, at a cost of about $8 million a year, from Zelia, a company owned by the Benson family.
While other state agencies moved into the tower, filling all but the floor reserved for the Attorney General’s Office, Caldwell resisted the move.
A 2014 audit report blasted the agreement, noting not only that the state was paying for unused space but that the whole deal involved paying Benson above-market rates.
Caldwell said in response that Benson Tower did not meet his office’s needs. In particular, he said, the tower did not provide 24-hour access to parking, and his office could not afford the cost of moving its employees.
This week, Landry told legislators that the move would not be a significant problem for his office and that the Benson Tower offices were actually cheaper per square foot than the space the office has been renting.
“It’s only about a four-block move. We’re not going real far,” he said.
After learning about the empty offices, several lawmakers pointed to the situation as exactly the kind of waste that needs to be cut from the state budget.
“We have to be fiscally responsible,” said state Rep. Blake Miguez, R-Erath.
While the move means the state will no longer be paying for an empty office, there has been little discussion about changes to the underlying agreement with Benson.
“It doesn’t expire until 2025. The state is stuck in this agreement until then,” Dardenne spokesman Cody Wells said.
Landry’s office won’t move until this summer, which means the savings will be seen in the budget year that starts July 1 and won’t aid with solving the $900 million shortfall the Legislature is trying to close to keep state government running through June.
At this point, the Division of Administration has not identified any other offices that could be consolidated, though it has asked state agencies to consider looking to their leases as the state grapples with the shortfall.
“Every department and every state agency is looking at ways to reduce costs, cut waste and streamline operations. Utilization and leasing of office space is part of that task,” Wells said.
Follow Jeff Adelson on Twitter, @jadelson.