OFFICE OF ECONOMIC DEVELOPMENT SPENDS $47-THOUSAND ON UNOCCUPIED OFFICE SPACE

Tuesday, August 4th, 2009
by Todd Shepherd

The Office of Economic Development (OED) was created by the General Assembly with the simple, if not obvious task of promoting economic development. But sometimes obvious and simple tasks don't always remain that way.

In 2008, the OED created a grant of $47,000 to spend on office space that was occupied by...no one.

The office space is a part of the “Advance Colorado Center,” (ACC) in the Denver World Trade Center office building downtown. According to the OED, the ACC was begun in 2004 and is known as a “business incubator.” In particular, the ACC is meant to “enhance Colorado's entrepreneurial climate and accelerate economic development in the state by providing a common space for the offices of key emerging industry associations.” The “common space” portion of the ACC definition is what caused the OED to feel compelled to spend thousands on unoccupied, but high-end office space.

The OED argues that the four sub-groups (*see list below) of the Advance Colorado Center must have adjacent workspace to maximize their efficiency. When asked if spending $47,000 on unoccupied office space was a justifiable expense, OED Deputy Director Alice Kotrlik said by email, “It was not an option to not make the previously negotiated and required lease payments.” Kotrlik added that, “[a] certain percent of unoccupied space (vacancy rates) are common in any type of shared real estate project, including incubators, involving tenants.”

The ACC was asked to market the unused space. However, when the unoccupied space was offered at market rates to other non-profits, the OED couldn't find any takers.

“This is a perfect example of how, when government dips into work outside their core activities, they are still insulated from having to make market decisions that affect their bottom line," said Dennis Polhill, senior fellow at the Independence Institute. "Some business would rather move than throw away $47,000, but when it's taxpayer money, what the heck?”

*The four non-profit entities comprising the overall ACC are, Connect Organization for Responsible Economy (CORE), Colorado BioScience Association (CBSA), Colorado Software and Internet Association (CSIA), and the Colorado Association for Manufacturing and Technology (CAMT).