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North Dakota’s most costly leased building largely unused

BISMARCK, N.D. (AP) — North Dakota taxpayers are on the hook for nearly $3 million in rent over the next two years for unused office space for a state agency that intends to allow most of its more than 400 employees to work from home indefinitely.

The North Dakota Information Technology Department’s 85,000-square-foot leased space in a newly remodeled, privately owned office building in north Bismarck is unoccupied, except for about a dozen employees, said Greg Hoffman, the agency’s director of administration.

It is the largest and most expensive leased office space in the state, North Dakota Capitol Facilities Manager John Boyle said.

Boyle said each lease has an “appropriation clause” that allows the state to get out of it if the Legislature doesn’t provide funding.

Hoffman said agency officials inquired about having lawmakers cut funding for the lease but were told by the state attorney general’s office that would cause a “legal battle” with the building’s landlord, who lives in Fargo.

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Liz Brocker, spokeswoman for the attorney general’s office, said her agency would not comment on legal strategy with a state agency. Attorney General Wayne Stenehjem did not return telephone messages.

Most state employees have returned to their offices since being told to work from home last spring as the coronavirus pandemic took hold in the U.S.

Gov. Doug Burgum allowed most state government offices to reopen to the public in a limited capacity last May. Burgum had said some 7,000 state employees at about 1,600 facilities across North Dakota had been part of a “remote workforce” under his orders since March 2020 due to COVID-19.

Hoffman said the agency favored “teleworking” even before the coronavirus pandemic hit and will continue to do so. The agency began allowing people to work remotely while its rented space underwent a two-year renovation, beginning in 2018.

The Republican governor has promoted working from home as a way to cut costs and “promote workplace flexibility as a recruiting tool,” Burgum spokesman Mike Nowatzki said.

Nowatzki did not know how many North Dakota state employees are currently working from home. Boyle estimated 70% of the 1,800 employees at the state Capitol have returned to their offices.

Shawn Riley, who heads the Information Technology Department, has sometimes worked remotely from his home in southeast Minnesota since Burgum hired him 2017 — with the governor’s blessing, Nowatzki said.

It has not hampered Riley’s ability to do his job or communication with the Burgum administration, Nowatzki said.

“The governor has been in hundreds of hours of online meetings with Shawn,” Nowatzki said.

Riley told The Associated Press he has spent “90%” of his time in North Dakota since being hired, including officing in person.

Nowatzki said the governor is aware of the agency’s near-vacant space. He said it could be made available to other agencies, if needed.

The leased space for the agency would occupy more than eight floors of the 19-story state Capitol building in Bismarck.

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In addition to leading the state’s cybersecurity efforts, the agency supports the information technology needs of state government, K-12 education and higher education.

The Legislature this year approved a $275 million two-year budget for the agency, and increased of its workforce from 402 people to 479.

Included in the budget is funding for the agency’s palatial digs, at about $2.9 million over the next two years.

Documents obtained by the AP show the state pays more than $10 million in rent for agencies at about 170 locations statewide, at an average rate of $13.33 a square foot.

The IT agency’s original 10-year lease expires in 2025.

Hoffman said the agency will still need some “physical space” but “I don’t think we’ll be asking for as much in the future.”

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