CMS officials wanted to know if Thompson would waive a state conflict-of- interest law prohibiting state officials such as Becker from doing business with the state.
Such waivers are somewhat routine in Illinois, but the request was unusual because CMS officials had not yet advertised the state`s desire to rent office space in Peoria, records show.
But Becker, a member of Thompson`s Governor`s Club, a circle of campaign contributors whose donations totaled at least $1,000, already was being considered for a state contract for space in the 16-story office building he was constructing in downtown Peoria.
Months later, the state published an advertisement for new Peoria space, specifying narrow geographic boundaries that essentially reduced the competition to Becker`s building. Another developer, Diane Cullinan, who had a downtown site under construction next to the state`s targeted area, expressed interest but later halted talks after much of her building was leased.
Negotiations with Becker, the lone landlord under consideration, lagged for several months. But in January 1991, the deal was completed within a week- the final one of Thompson`s tenure.
Thompson waived the conflict-of-interest law for Becker, noting that his proposal-the only one that had been on the table for four months-was the best of two submitted. Yet records show that neither Cullinan nor anyone other than Becker had submitted a formal proposal.
The Becker deal stands to be worth more than $9.3 million over the next 10 years if the state renews the lease after the first five years. IDOT offices fill about one-third of the building, which Becker built with a $3.2 million Peoria city bond and private loans of $8 million.
”It was a very good deal because I am doing much better with the rest of the leases,” Becker said. The IDOT lease, he said, helped him charge higher rates for the lower floors. By August, shortly before IDOT moved in, two-thirds of the complex had been rented, Becker said.
The lease also carried the promise of revitalizing Becker`s adjacent properties: a twin-story condominium and a small office complex that have been suffering from high vacancy rates.
Whether the deal was as good for taxpayers as it was for Becker is another question.
State officials maintain the Becker lease is less costly than building a Peoria headquarters.
They point to a January 1991 study conducted by an outside consulting firm that concluded that over a 10-year period, the state would pay about $11.4 million for construction, operating costs and debt service on a new building, compared with slightly less than $10 million in lease costs in the same period.
But the study was based in part on the consultants` assumption that the state would have to acquire land for the project, records indicate.
”We are not aware of other state-owned space in the Peoria area that would be suitable for the (IDOT) space needs,” the study stated. ”Also, we did not examine the cost of buying and renovating an existing facility. . . . Additionally, we did not address the availability of bond funds to finance the construction of a potential facility.”
Three years earlier, IDOT had proposed building a Peoria regional headquarters and materials-testing labs on a 34-acre site owned by the state on the city`s west side.
The price tag at the time was $7.16 million, said Richard Adorjan, an IDOT spokesman.
The General Assembly refused to appropriate funds for the project, so the state decided to lease. Adorjan said IDOT was never told about the 1991 study comparing the costs of leasing with the costs of a new building.
CMS officials say they never considered the 34-acre site for building because it was ”too rural,” Bartletti said.
The site is 9.3 miles from Peoria`s downtown, said a CMS spokesman. IDOT`s main headquarters in Springfield is about four miles from downtown.
IDOT`s former Peoria headquarters, a sprawling brick structure with 36,000 square feet on the city`s north end, will continue to house materials- testing labs, but the site soon will be largely abandoned.
The IDOT lease was not Becker`s only deal with the state.
Soon after signing the IDOT lease in Peoria, Thompson aides signed a $1.1 million lease for the Illinois Department of Employment Security to move into a building owned by Becker`s business partner, Russell Waldschmidt. Less than a year later, Waldschmidt sold the building to Becker`s son, George Raymond Becker Jr.
Later in 1991, the General Assembly restored funding for leased office space for the Illinois Industrial Commission in another Becker-owned building. The five-year lease is worth about $41,000 annually.
Becker`s construction company also has been a successful competitor for state road building jobs. In 1987 and 1989, his company was the low bidder on two contracts worth nearly $2 million for paving and resurfacing state highways near Peoria, an IDOT spokesman said.
Becker and his partner, Waldschmidt, said Becker`s status as a confidant to the Thompson administration played no role in landing the leases.
But administration sources said Thompson`s aides demanded that the transportation agency lease be signed before Thompson left office. Some top administrators had favored putting the lease on hold, a common practice during transitions, since it would bind Edgar`s administration to the pact. Their concerns, however, were overruled by Thompson`s key aides, according to interviews.
Even after Thompson left office, he continued to turn to his old friend for favors. Several months after Thompson left the Executive Mansion, the developer lent his private airplane to the former governor to fly to Jackson, Miss., for a Republican Party function, according to a Thompson spokeswoman.
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CMS officials have been at loggerheads with the state Auditor General`s Office for more than a decade because of their insistence that state law does not require leases to be competitively bid.
State purchasing laws, a hodgepodge of more than 100 provisions adopted over the years, make no mention of leases. And a 1981 report by state auditors found that 96 percent of the state`s leases were awarded without bids.
CMS has argued that because leases are not specifically included among the goods and services required to be competitively bid, they are exempt from bidding. State auditors have argued that because leases are not listed among the exemptions, they must be bid.
”There is no way to competitively bid real estate,” said the CMS`
Bartletti.
”Simply put, there are no two real estate parcels in the world that are alike. Real estate is exclusive by definition. There is only one parcel at a certain intersection. Location is everything in real estate,” he said.
Among the state purchasing reforms to be proposed in the General Assembly`s spring session will be a requirement to bid leases competitively, said state Sen. Judy Barr Topinka (R-Riverside).
The proposed reform, Topinka said, is prompted largely by ”the scandal” created by a lease state officials signed in 1989 to rent the shuttered St. Anne`s Hospital on Chicago`s West Side.
State officials needed the building to house patients from the Illinois State Psychiatric Hospital, which had to be closed for extensive renovations. Taxpayers will end up paying $16.1 million for a four-year lease of the hospital, including costs of transferring patients, mainly because the lease failed to shield the state from huge repair bills.
The state could have bought the building for $3 million.
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Tomorrow: The bond boondoggle.
