State lawmakers plan to look more closely at the cost and size of the controversial new State Data Center during a legislative hearing this week.
Several House Democrats say a recent consultant’s report for the Office of Financial Management raises questions about the future use of the building that require review. Republicans also have said they want a better airing of how planners for the state’s $255 million project, which includes nearly 260,000 square feet of office space, might have missed the mark on the size of the data center portion.
The state-funded report by Excipio Consulting LLC said the 50,000 square feet of data space in the Department of Information Services’ complex is far more than the state needs. The project also has 259,833 square feet of office space that will house headquarters for DIS, the Department of Personnel and some state budget-office functions at a much higher $44-per-square-foot rate than the agencies now pay.
The primary purpose of the hearing will be to learn about overall operations of DIS and cost effects of the data center on other agencies, said Rep. Zack Hudgins, D-Tukwila, chairman of the House General Government Appropriations and Oversight Committee.
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“There are a number of us on the committee, and in the Legislature, who are very concerned about the data center,” Hudgins said. “We’re looking at the numbers and the impact the data center has on the budget.”
The committee discussion begins at 8 a.m. Tuesday in Hudgins’ committee and is expected to draw testimony from DIS acting director Mike Ricchio and Stan Marshburn, deputy director for the Office of Financial Management.
Higher rents for space in the new building may drive up the cost for services charged to other agencies by the tenants – including the Department of Personnel – that are to move into the structure. Marshburn said Friday that costs also will go up short term for agencies served by DIS.
But after five years, DIS will have lower costs than it charges today for data services done for other agencies. In part, that is because the agency is shrinking and the governor’s budget proposal calls for cutting 61 staff positions July 1. However, Marshburn said, tenant costs for space in the new office building will be higher than today – about $30.4 million through fiscal year 2017, according to the consultant.
Longer term, the data center part of the project will go into the “black,” Marshburn said. And overall savings from DIS operations will outweigh overall costs for rent and equipment purchased for the data center by $1.9 million in fiscal year 2016. Tenant rental costs also will drop in 30 years after the state takes ownership of the structure under its lease-to-own arrangement, which has been the state’s experience with other large state-owned projects, Marshburn said.
DIS spokeswoman Joanne Todd said the agency leaders “look forward to exploring the facts about the new state data center with Rep. Hudgins and the committee.” She disagrees that the center is over-size, saying the agency always planned to leave half of the data-hall space vacant for future needs and will need the rest of the space in the short term.
Recent technological advancements allow more processes to be consolidated on computer servers, allowing them to operate more efficiently and handle more work, a process dubbed “virtualization.” That is a big part of Excipio’s assumptions that the state won’t need as much space as it designed.
Todd pointed to caveats in the Excipio report that say the state is not likely to meet the ideal level of “virtualization.”
But long term, she said the state could have excess space in the two data halls that DIS wants to fully outfit and use – an assessment Marshburn agrees with.
“We feel that, yes, virtualization is going to take a while. It’s going to take less of a footprint (eventually). At the beginning it will take more,” she explained. “The idea that we will be able to just go into that small of a footprint at the beginning is something that was new” from the Excipio report.
Marshburn said the study was done for OFM after Democratic Rep. Reuven Carlyle, a project critic from Seattle, put in a budget proviso requiring a closer look at the agency’s business plan. Carlyle wants to look at potential excess space and see what benefits the state can accrue from it for taxpayers – perhaps by leasing it to private companies and using proceeds to cut state costs for the facility – and OFM is working toward that, according to Marshburn.
Hudgins said the committee “shouldn’t spend too much time looking backward” but said that doesn’t mean lawmakers won’t delve deeply into what happened on the project sizing. He said some committee members want him to consider a second session, depending what is learned this week.
“I see this as a starting point. This is a long session. We’ll have a lot of time. If we find indications this wasn’t done properly, we’ll look into it further,” Hudgins said.
The overall project is about $30 million under budget and remains ahead of schedule, letting the state take it over in July, according to Todd. DIS also produced a timeline that explains how it arrived at its decision to build the data-center portion of the project as large as it did.
Both the House and Senate have inserted language into a pending supplemental budget that would bar the agency from purchasing equipment for the data halls at least through June. And Rep. Hans Dunshee, a Snohomish Democrat and project critic, said he plans to add language to an information services bill that will require agencies to move their data operations into the new building as needed.