RD362 - Department of General Services: Center for Innovative Technology Disposition Quarterly Report – October 1, 2016

Executive Summary:
Item 428 U.1. of Chapter 780, 2016 Acts of Assembly, requires the Department of General Services (DGS) to provide quarterly reports, beginning with the initial report due October 1, 2016, to the Chairmen of the House Appropriations and Senate Finance Committees and to the Governor on the Department’s progress to determine disposal options of real property located in Loudoun and Fairfax Counties owned by the Innovative and Entrepreneurship Investment Authority (IEIA) and improved with the Center for Innovative Technology (CIT) complex.

The Innovation and Entrepreneurship Investment Authority is a political subdivision of the Commonwealth tasked with promoting economic development in the technology sector by attracting and retaining high technology jobs and businesses in Virginia. The Center for Innovative Technology is a non-profit corporation created in 1985 to support the objectives of the IEIA.

Property was donated to the Commonwealth for the construction of a campus complex for CIT operations. The CIT complex includes two connected buildings, including the “Midrise” and an iconic “Tower” building constructed on an underground parking facility.

The Commonwealth issued bonds to finance the construction of the CIT complex. Over the years, revenue from subtenants in the Midrise building was put toward the Midrise operating expenses. The current CIT complex operating budget shows $120,000 net income due to the Commonwealth from Midrise leases.

Final payment on the Midrise bonds occurred on May 1, 2014. The same year, the Acts of Assembly directed that the Authority transfer ownership of the Midrise to the Department of General Services (DGS), as manager of the Commonwealth’s real estate portfolio. This transfer has not yet been formalized because of the interconnectivity of the facility. DGS considered its ability to dispose of the Midrise Building without disposing of the remainder of the complex, but due to the joined nature of the buildings, this presents significant property management and legal hurdles, including sharing of access, utilities, operational expenses, facilities and property management responsibilities. In addition, splitting the Midrise building from the remainder of the complex likely will diminish the overall value of the property. Item 428 U.1. of Chapter 780, 2016 Acts of Assembly declared all of the IEIA property surplus to the needs of the Commonwealth and the transfer of title for the Midrise is no longer necessary.