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DGS explains FERF rent changes, deferred‑maintenance strategy and scale of leased space
Summary
DGS told the committee a $266,100 FERF rent reduction reflects agency moves under 'Project Tetris,' while a $2.1 million appropriation covers market rent increases; officials said the state holds about 320 leases and spent roughly $52 million in contract rent in FY25.
Department of General Services officials explained several budget lines tied to facilities and leases on Feb. 23, telling the committee the Facilities Revolving Fund shows both a modest base reduction and a larger appropriation for rising rent costs.
"So on the reduction side, that is a result of I mentioned project Tetris earlier," Michael Winston said, describing moves that shrink agency footprints and lower rent. He said two recent moves—Treasury out of the Andrew Jackson Building and a smaller South Central Regional Health Office—account for the $266,100 reduction. Winston added the $2.1 million increase is tied to a $1 per square foot rate increase in the FERF intended to raise revenue to keep up with deferred‑maintenance needs.
Deputy Commissioner John Hall estimated the state holds roughly 320 leases statewide across all 95 counties and reported FY25 contract rent at about $52,000,000. Hall also identified a private landlord in Murfreesboro (Mr. Pedego) as having the largest number of leases with the state (about 30). DGS said it maintains annual inspections, a running log of deferred‑maintenance items, and uses non‑recurring funds periodically to address capital maintenance needs.
Committee members asked follow‑up questions about the rental rate increase and the status of deferred projects; DGS said the rate study and ongoing maintenance practices support the requested adjustments.
