Audit: Historical Society broke state rules in lease agreement

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BY NANCY HICKS / Lincoln Journal Star

The Historical Society agreed to spend about $500,000 in tax dollars renovating space the agency leased without the required approval of the state’s Department of Administrative Services, according to an audit report.

In addition, the society did not submit a request to DAS before looking for space to rent outside the Capitol and did not get the DAS director’s approval of the lease, as required by state law.

The department does not have enforcement power when agencies violate lease laws, but the state has stepped in to renegotiate this lease with the Lincoln Children’s Museum, said Doni Peterson, DAS deputy director. 

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The society reviewed the particulars of the lease and costs with the state budget office when the lease was originally negotiated, said Michael Smith, society director.

But Smith conceded the lease should have been developed by DAS, not the society.

Jeff Jensen, building division administrator for the state, said he didn’t know whether the renovation and lease costs are reasonable, but the almost seven-year-old lease is not a typical state lease, he said.

The state usually seeks proposals from a number of landlords, rather than negotiate with a single landlord, he said. And the state would not generally sign a 20-year lease as this one is, he said.

The state is trying to bring the lease into compliance and arrange for better space for storing archeological objects owned by the U.S. Bureau of Reclamation, Jensen said.

The museum’s basement storage area under a parking lot is susceptible to leaking — and it places artifacts at risk, auditors reported.

In 2001, the society agreed to pay more than $536,000 to renovate third-floor office space and basement storage space at the Children’s Museum, 1420 P St., according to the audit.

State tax dollars are paying for all but about $38,000 of that cost, according to the audit.

The society also was required to pay $84,000, plus interest, for its portion of the costs to install a central boiler and chiller system over the first 10 years of the lease, according to the audit.

Last fiscal year, the society paid $116,400 to lease 27,081 square feet, or $4.29 per square foot, Jensen said.

The agency receives $181,414 annually from the U.S. Bureau of Reclamation to pay for staff associated with the archeological artifacts, Smith said.

The museum has been cooperative and is working with the state, even though the agency has a signed agreement, Jensen said. 

Reach Nancy Hicks at 473-7250 or nhicks@journalstar.com.