RD550 - Report on the Feasibility and Cost-Effectiveness of Using Offender Labor for the Demolition of State Buildings – November 2016

Executive Summary:
Item 80 G. of Chapter 780, 2016 Acts of Assembly (2016 Appropriation Act), directs the Department of General Services (DGS) to examine the feasibility and cost-effectiveness of using Offender labor to assist with demolition of vacant buildings on state property. Accordingly, this report finds:

• Use of Offender labor to assist with demolition of vacant buildings on state property is feasible. The state is acting as a responsible steward of resources when it demolishes its vacant buildings. One option to undergo such demolitions is use of Offender labor, through the Virginia Department of Corrections’ (VADOC) Environmental Services Unit (ESU). VADOC ESU recently completed the demolition of two correctional centers and is preparing to undertake a third; once this third project is complete, VADOC ESU will have the capacity to conduct demolitions for other agencies.

• Cost-effectiveness for use of Offender labor is indeterminate. Due to the potential complexity of demolition projects and the small sample of two completed projects by VADOC ESU, there is currently insufficient data to make a statistically sound comparison of VADOC ESU’s costs to those of the private sector. However, due to the additional benefits to the community realized by utilizing VADOC ESU—namely providing job training to Offenders so that they can become tax-paying citizens upon release—this report recommends that agencies consider the use of VADOC ESU in undergoing demolition projects and provide every opportunity for VADOC ESU to bid on such projects.

• There is an inventory of vacant state buildings that are eligible for demolition. 54 buildings statewide are currently slated for demolition; this is generally aligned with the 73 demolitions per year for which DGS’s Bureau of Capital Outlay Management (BCOM) issued permits in FY 2014, FY 2015, and FY 2016.* These 54 demolitions do not include buildings that are vacant but for which agencies do not indicate a plan to demolish. One such agency, the Department of Behavioral Health and Disability Services (DBHDS), cites a lack of project funding for why they have been unable to demolish any of their 130 vacant buildings. If funding is made available, demolition of DBHDS’ vacant properties—specifically those at Central State Hospital—merits consideration as a pilot project for use of VADOC ESU on non-VADOC properties.

• Funding is needed to undergo demolitions. Many agencies forgo demolitions because they lack up-front funding for project costs. Any savings from avoided out-year building maintenance costs are typically insufficient to repay demolition costs, so without a separate nongeneral fund source or authorization to fund a demolition as part of a capital project, agencies are left only with operating funds to support demolition costs. Due to increasing and competing demands on limited operating budgets, agencies will likely continue to forgo demolishing their vacant buildings unless an additional funding source is provided for this purpose.

A combination of a dedicated funding stream for agencies to undergo demolitions, along with consideration of VADOC ESU as a tool for actualizing the demolition will allow the state to realize the myriad of benefits from clearing its properties of at-risk vacant structures.
*Analysis does not include building on campuses of institutions of higher education for which Building Official responsibility is delegated locally in accordance with a Memorandum of Understanding for Higher Education Management Agreement