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HomeMy WebLinkAboutAgenda - 11-07-2001-8qORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM A83TRACT Meeting Date: November ], 2001 AMion Age~nd~a2 Item No. D SUBJECT' Lease Sb[us at 501 W. Franklin Street Chapel Hill DEPARTMENT:. Pumhaeing and Centrel PUBLIC HEARING: (Y/N) No Services ATTACHMENT(S): INFORMATION CONTACT: Pam Jones (919) 245-2fi52 Memorentlum TELEPHONE NUMBERS: Hillsborough 772-8181 Chapel Hill 9684501 Durham 6884331 Mebane 376-227-2071 PURPOSE: To consider tenancy of Ue suites at 501 W. Franklin Street that are presently occupied by Coltlwell Banker and the Visitor's Bureau. BACKGROUND: The suite in which Coltlwell 8enker le currently locemd within the referencetl faolity is up for renewal eHeM'rve March 1, 2002. Upon purchase of the building, the BOertl expressetl a tleaire to ukimately eea the building owupied by agencies that had a closer alignment to governmental function. It Is important to recell that the revenue received through the rental of this space figures signigcamty into Me County's tlebt service payment for the building. Several non-profit agencies that hatl previously expressetl somelevel of interest were con+actetl to determine their interest in renting the space. However, the only serous offer tc lease was eaentletl by the Visions Bureau The Visitors Bureau has requested to be wnsidered for tenancy at such time Coltlwell Banker's lean expires. The Vieibrs Bureau Board hsa endorsed the rental oFthe whole space far use by the Bureau antl a Visitor's Center. The BoaN of Commiaaionere approved the incraesetl rent and the renovation costs as pad of the Visitors Bureau 2001-2002 operating butlget. A couple of options regartling the tlispoeition of me apace being varatetl by the Visitors Bureau are being discussed. One potential use of the space being vacatetl is the relocation of [he Human Rights end Relations Department. Discussions are on-going with the Director of that Departmen[tc determine whh greater certainty the advisability of that move.however. The matter will be brought forward for future Boats consideration should the analysis reveal the nwve [o be pendent. The Department would not pay rent. However, the positive revenue stream needed for the 501 property would be maintained In this Instance by not renewing the lease for the builtling in Hillsborough that the Department now osupies. (Sea note on table in Financial Impart section.) Another obvious option would be to re-lease the space on the open market. We have been advised that the market would certainly support the leasing of the Vieilors Bureau space at a rental msl of $14$16 per square toot The fnancialimpact information presented below uses the conservative estimate. The attached memorandum provides additional detail regaNing the options for leasing the large suite tithe Visitors Bureau and re-leasing the suRe presently omupletl by the Vlsltors Bureau. FINANCIAL IMPACT: ENlmafeE SUXeb F1. Per mRFOOt COtl Eetimatetl Annual ReM rent: u Ewell BeOam 38 $W.31 $5C9W.13 Islkls Bureau 1 $a 3e $fa,0]600 Cunenl Mnual revalue $69,]Tl.t3 ion l: Renew COlEwell BanBerbr9 ears. P asumes 9%annual mLA obwall Banger 3 414 ]e 856,31B.3c Ieikfs BUmau I $9.36 $Id,WB.00 nnuelRrvanueo aartl g]oA16.3a tin s:vbnore eumutahee colawell isiM'e BUreeu 381 $1].50 $6]]6].56 Rerent WiM's Bureaus tte I`A $W.W $31,OW.06 Mlnlmum MnualRm'enue0 tin 11 $66,18].50 Oiflarenea behxam CUnenl Mnual Ravmue antl0 Cn2 316.3] Maximum CiReranro baMaanO iEn1b WnP $1630.BA In Nananl HPAmovatlbNelNre Bureaus aw Ne mlhom n6 s. cneron sveelwnuN be e6mineba eleminimum aevin aor sea 61a66 RECOMMENDATION(S): The Manager recommends that [he BOaM take the following action'. 1. Au[horlie the Director of Purohasing and Cen[rel $ervlcea to provide written notice to Coldwell Banker of the County's intent to non-renew the lease at February 28, 2002 and oRer a lease extension through May 31,2002 b allow suf8cienltima for them to relocate; 2. Approve the request ofthe Vleltora BUreeu tc occupy the apace cuoenlly leeaed by Cgltlvrell Bankeq and request that the Director of Purchasing and Central Services prepare a lease for future Commissioner consideration reflecting the temis and conditions cited in the attached mama Memorandum TO: John Link, County Manager From: Pam Jones, Director of Purohasing antl Cen4al Services RE'. Coltlwell Honker's Imminent Lease Expiration at 501 W. Franklin Street Date: October 11. 2001 Purpose: The purpose of Nis memorantlum is to tllscuas options regeMing Ne use of apace currently leased from the County by Coldwell Banker at 501 W. Frenklin Street, Chapel Hill. This matter is time senstliva in respect to the notice that we should give Ne tenant Rwe choose not to renew [heir lease. Background As you are aware, the largest rental suite at 501 West Franklin SVeet Is the only one with street-front exposure antl is occupietl by Goltlwell Banker. Their lease expires Febmary 28, 2002. When the County purohasetl this property, which is atllacenl b the Bkills Development Center, the Hoam of Commissioners expressed a tlesire [o see the property eventually convert [o rent-paying public pupose tenants. Various suites have became available tluring Ne approximately six years in which the County has ownetl Ne property, howeveq no eligible agency has chosen to relocate to this space. WN the Impending opportunity to move the overall site tenancy closer N the BcaN's long-term wishes, in April 2001 I contacted the Town of Chapel Hill, Ne Orange County Visitors Bureau, Orange Community Housing, Inter-feiN Council end Habdat for Humanly, b feet their Interest in the leased apace. Inter-Faith Council inquiretl about the apace in passing, but has not shown further interest since that time. Wilhthe excepgon of the Visitors Bureau, the others declined. The Vislror's Bureau has expressed Mmiel Interest In occupying the suite at such time Coltlwell's lease terminates. Per my conversations with Joe Blake, they have a need for adtlitional space b accemmotlate not only their existing operation, but also Ne eventual integration of a Visitors Center with the Bureau. Further, Ne street-front location woultl be e real boos[ to the visitors ease of access, which is ctlticel for effegive Bureau service tlellvery. I[ is my belief and untlerstantling Nat the Visitors Bureau Boartl has formally supported this posi4on antl is preparetl to exewte a lease for approximately 3800 square feet of space. Since Ne subject was tliscussetl in the context of the Visitors Bureau budge[ end since the eoartl of Commissbners approvetl the renovation end incresaetl rent footle In the VielNr'e Bureau budget, l presume that [he eoaM would entlorse the use of the space for the Visitors Bureau. However, prior to giving fornal notice to Coldwell Banked walledbwnfiim that assumption. O io Coltlwell Banker Sul[e Optlone In my opinion, the following options are available fo us In leasing [his space: 1) Lease the space to the Visitors Bureau ae par their request. s) Were the Boartl [c support Nls position, It Is sbgges[etl that we begin [he Visitors Bureau lease at $72.50 per square foot, which is a IMIe less Nan marlcet for that area, but In view of the upfit work [hat the Bureau will pay for, I [hlnk a fair one. bj We woultl anticipate asking the BOaN to approve alease for the space as with any other agency. The lease woultl recommentl a 3% annual cost of living Increase, thereby relsing the cos[ per square foot to approzlmately $12.88 In year two antl $13.26 in year three 2) Allow Coltlwell Banker N extend their lease Nr a period not to exceed three years. e) As a point of information. Coltlwell Banker wrrentty pays around $14.31 per square foot. They have requeafatl several upgratlea to the apace Nrough our agent, Steve Manton, If the County chooses N let them renew their lease. We would likely spend several thouaend dollere if we honored their request. b) Exercising this option woultl not appear to further Ne County'slang-term tlesire tc see the building used by non-profrf agencies wdh similar business Interests Existing Vlsltor's Bureau Suite Options If the Visitor's Bureau relocates N the Coltlwell Banker suite, the County will neetl N re-let their existing rentetl space in the building. Opgons that have been idenlifetl in that regartl are as follows: 1) One option woultl be to market the space antl rent @ out [o whomever shows interest in paying the rent. As referenced earlier, we have already solicitetl statements of interest in the apace for non-profit groups who have previously shown interest antl hatl no takers. 2) Another opHOn is to consider esfabllshing [he satellite oRico of the Human RigMS antl Relations Oepatlmenf (HRR)as rewmmendetl In the Space Study a[[hls location. That option is presently being tliswssetl with Annede Moore, Director of Human Rights antl Relatlons/COmmission for Women, however no resolution has been reachetl. The reasoning far Nis action is as follows: e) A substantial number of the clients servetl by HRR are resitlents from Ne southern part of [he County antl HRR recogn¢es that there is aservico neetl in the area. b) The specifications for the satellite office would closely correlate [o the Franklin Street location being Proposed (accessible, adequate parking, adequate space, etc). This move would not replace the Space Stutly recommentletion Net their Hillsborough location be moved to the Whidetl Builtling at such time expansion may be constructetl. However, the Chapel Hill once would sane as their sole location during the pedotl of lime between expiration of the lease at their current location (December 1, 2003) antl the Whlttetl expansion proposetl in the Stutly. The Whittetl expansion was proposetl in the Study as a Level 3 prged (tlevelopmentwlthln ]-10 years). Lesaatl space et 110 5. CM1UMn Street 1) Ae you know, HRR is housed In leased space x1170 S.Churton Street. The lease for Met space expires on December 1, 2003. When the lease expires, we would not enficipate recommentling it for renewal for a number of reasons, inGUtling, but not limitetl to the following: a) First, the HUman Rights/COmmiasion for Women function that was odginally movetl to Mis location found the space suitable for [heir operation. However, wdh the sign~wnt growth of the tlepartmenl over fha pas[ few years and [he evolu[bn of their function, Me Facility serves netther [he department nor their dients atlegualely. b) Further, the OPO Family GOUnseling Center Mat occupies Me upper goor of the builtling has also outgrown the apace end is seeking alternative rental space. Tom MayneM, OPC Executive Director advises me that they will secure and pay for the leasetl space on their own. c) Vet another issue associated wtth this leasetl premises is that Dad of the approxlmstely $63,000 annual lease payment for this location indudas the Landlord's responsibility to pay costs of utilities. Fcurtimes tludnq the past year, services have intermp[ed due to his non-payment of bills. Although we have counseletl Me landlprtl numerous times regarding the unacceptabillN of this type of behavior, our efiode have been only marginally successful. The latest episotle of water service intenuptbn ocarred less than 30 days ago. For these antl other reasons, I believe A Dtudent to not renew the lease at its expiretion. Adtlitional Fi¢eel Consldera[lons 1) By the and of the lease period Por 110 5. Chudon Street (Dec 1 2003), Me annual lease amount will be in excess of $65,000. It may be worth remintling curselves that the revenue derived from the rented space at 501 W. Franklin St. serves to support debt service payments for Me entire facility. AlMOUgh we would not charge ren[(orthe space occupietl by HRR, the eignificent expentliture reduction would lessen the impact of any lost revenue. 2) In atldigon, you may recall that Me Skills Development Center (SDC)fnencing hatl two components. One portion of the loan for the SDC side was deemed public purpose and therefore borrowed e[ a lower rate, while the loan on Me 501 podion of [he bulltling canted a hgM1er rere beceuae tts pdmary ocwpants were not public pupose. If Me eoartl chooses to allow the Viei[Or'e Bureau antl HRR M locate in this buiMing, that publiGpdvate balance will swing to Me public side antl I am advised by [he Finance Director Met refinancing the loan at a lower rete can ^cdrq Mereby saving addfiional money over the remaining Ilfe of Me loan. 3) The following table is inlentletl to tlepic[[he vatlous optons antl [heir wnesponding fnancial Impact: stinu~BU$ea .FL rS Uarv FONLOtl eGmtletl AnnYBI Ren! rtenl'. CdtlrvellBmker 3e9 E1d 31 $54)W.13 Isibh BUreeu 150 $93 $W,W00A Cm2nl Mnual nryEpue $E9,]]].13 0 On l: RMax COIUwall Benkerhr3 ms.p szYm¢59M dnnYilCOtA GdMrell ea~kaf 304 g14.i $56,348.31 Ieibfe BUreeu 15A $9.3 $14%OW noel Revenue tlonl S]a,41B.31 on 9:Yeifore BUnwtekee COldxellB a Iflbre BUreeu 301 $125 $4]]8].50 Re+<mNdiara B9redur k¢ 15AC steer szl wA.oo Midlmamnddaal RaadYaq Md II feeaasw OiRerenskeM1reen Lmrem Mnual Recenue antl0 lion2 $103] Maumum 0iflererce beMSnO 'onlb Wn3 $163081 In fpeevenf HRR movNN Nsllefe Bureau 5 ace, Ne renthom 11c 6. LM1UM1On BfrMf vroultl~ellminefetl elemblmum aevlnAeW $AA,01200 Basetl cn my evaluation of ihevarious options available to us, I would make the follcwing remmmentlaticnsmyoo antl the ecartl: i) Coltlwell Benkar. e) Glve them written notice of our intent to noo-renew their lease at Febmary 28, 2002. b) Offer them an extension of[he lease through May 31, 2002 if they need the additional time to upN new space antl relocate. 2) VisRofs Bureau. a) Approve[he Vlshor's Bureau requestb occupy the current Coltlwell Banker suite. b) Oevelapalease for BOCC approval that esbblishes a$12.50/square foot rentemount, with a 3%ennuel escalation end they pay for upflt. Thla lease woultl be broughtb the BoaN by the antl of November. 3) Work wdh Human Rights and Relefions regaNing the pros and cons of relocating to 501 West Franklin Street 4) In the absence of an acceptable solution for FiRR at the 501 site, place the suite on the open madcet and request the preperly agent to begin seeking a tenant. In the interest of providing suffmien[ response time to Coltlwell Benkeq we neetl to tlecitle the status oRheirlease extensicn within the nex[tew weeks. To Shat entl,lwoultl reques[[hat [he item be calentlaretl for the November ] Boartl meeting. In the meanflme, shoultl you have questions crwmments regaNing this issue, linvitb you to call me directly. Thanks, John.