More thoughts about the Verizon lease

Sam Judge is a fair and able businessman. I think he will recognize that if the City doesn’t rent his Verizon building someone else will. I suggest that the City Council formally ask him to release the City of Troy from the lease signed by the Mayor on November 11, 2008.
If Mr. Judge agrees, he might be allowed to keep the rent paid thus far as compensation for his costs and inconvenience of having his property off the market for the past four months.

If an agreement is not reached with Mr. Judge to cancel the lease, the City Council should vote to overturn the resolution of August 12, 2008 and explain that the City Council expected to have the ability to review the lease negotiated between the Mayor and Mr. Judge prior to the lease being signed. The Mayor acted in bad faith and against the understanding of several members of the Council by executing the lease without first presenting it to the City Council for concurrence.

The City Council has authority to allocate funds. Any expenditure over $5000 requires City Council approval. If there are no approvals from the City Council to award construction contracts to make the $500,000 improvements to the Verizon Building, the contracts cannot be awarded. If there are no approvals for the City to award other contracts in support of the move, such as relocating phone/data lines, hiring a moving company, awarding insurance coverage required by the lease etc. the move cannot happen and the lease is invalidated by “government actions or restrictions”.

The City is paying rent for the Verizon Building now without occupying it. How that happened needs to be addressed. The Fixed Rent is $25,644 per month. It is reported that the Additional Rent, which includes the payment of taxes and fees adds about another $5 - $6,000 per month. Total payment for a building the city will not occupy for several more months is over $30,000 per month. This is done even though Section 2.05 of the lease states: “No Fixed Rent will be due or payable during the fit-up period”. Are we not in the “fit up period”? How and why are these payments being made? What if we spent the same amount to improved in the current City Hall?Spending $30,000 per month would solve most of the problems of the building.

If the City awards the construction contracts for the Verizon Building we will be improving someone else’s property to the tune of $500,000. What if the City used that same $500,000 to replace the roof of the current City Hall? There would be no need to relocate. There would be no need to demolish the current building and there would be no need to wonder in three years whether to rebuild a new City Hall at the Monument Sq. site or continue to rent for up to 4 more years at a total cost of $1,374,850 in rent alone.

Costs for the first term only:

Rent for 3 years $923,184
Taxes, Fees, Ins. $216,000
Demolish City Hall $900,000
Fit Up Verizon $500,000
Moving Costs $100,000 (est.)
Total Cost $2,639,184

If you add the Fixed Rent for the additional four-year option period the total cost of the rental of the Verizon Building will exceed $4,014,034. However, when the lease is over and the options are over the City can buy the Verizon Building for an additional $6,300,000. Grand Total for the Fixed Rent for seven years and purchase of the Verizon Building = $10,314,034. *None of these calculations include the cost of utilities or required maintenance.

During the course of the lease the City of Troy will be responsible for paying all taxes, water and sewer fees and all other governmental fees “of every kind and nature” associated with the building. However, if the City wants to challenge the assessment of the building it may do so under the terms of this lease (Section 5.05). – Imagine the city challenging its own Assessor and Board of Assessment Review to reduce the assessment of its rented property. Why should the city have to deal with this issue at all when it doesn’t pay taxes or other governmental fees of any “kind or nature” at it's present location?

Don’t let anyone tell you there are no options to reverse this agreement now that it is signed! There are options!

Any contract can be cancelled with the agreement of both parties. Try that first.

It is common practice in governmental contracts (especially NYS OGS contracts) to include language, which allows the government to terminate a contract if there is no allocation of funds by the legislative authority. Why there was no such language in this lease is a question to be answered. Perhaps the City Council could solicit the opinion of the State Comptroller or the City of Troy Supervisory Board as to the suitability or financial soundness of this entire proposal. They may be able to advise as to cancellation as well.

The City of Troy, could sublet the space with the approval of the landlord. The lease states the landlord’s approval for a sublease should not be unreasonably withheld.

There is ample money available from local, state and federal funding sources to fix the existing City Hall, redevelop the waterfront, build new parking facilities and redevelop a good portion of the property for commercial growth. Relocating to the Verizon Building and demolishing City Hall should not be the first steps in the process. I hope this proposal is finally killed and we get on with fixing City Hall and keeping it at Monument Square.

Opportunity Knocks

Every once in a while Opportunity knocks in local government. It has happened to Troy before with Environmental Bond Act money, Transportation Bond Act funds, Build Now New York initiatives, unexpected Distressed City aid, and now, with the federal economic stimulus package. In each case the City of Troy has been presented an opportunity to identify projects or programs which meet the funding objectives of the program while addressing city priorities and needs.

After reviewing the list of projects submitted by the City of Troy for stimulus funding, I recognized many of the projects as the same ones included in the Capital Program and Budget prepared during the Pattison Administration. This is not criticism of those projects but a realization of the difficulty that exists in trying to solve many of these very important and extremely expensive projects. It also points out the necessity of local governments to conduct comprehensive planning, budgeting and to always have “shovel ready” projects in place for the times these funding opportunities arise.

Most of Troy’s water and sewer projects however were first identified by John Buckley and Dick Casey when they were Commissioner’s of Public Utilities. These projects are not designed, not bid and certainly not shovel ready. For example: It took years to plan, design, bid and install the 102nd St. sewer project. That project was peanuts compared to some of the projects on the Troy list.

Most of Troy’s projects are wishes which are not “shovel ready” and will not be considered eligible for stimulus package.

I suggest that the City scrap its fictional wish list of projects for a series of projects which are closer to really being accomplished such as:

The South Troy Road
South Troy Industrial site preparation (already included in the city’s list)
The Beacon Center for Rivers and Estuaries
The CBD -South Troy Biketrail
The Poestenkill Trail project
The CBD Traffic Control Upgrade
The Ingalls Ave Fishing Pier
The Redevelopment of Congress Street all the way to Pawling Ave. including the Congress, Pawling, Brunswick Rd. round-about. (Although not on the first Troy list, this project was added by the state to theirs’ and presented to the City Council on Thursday evening. It should be supported and expanded to include the eastern part of Congress St. as well – plans exist for this).
The Lansingburgh Village Project
The 111th Street Park and Boat Launch Building a parking structure at Hutton and River Streets to support the private sector development planned by First Columbia in the Hedley District.

I also suggest that the City will never be granted $17 million dollars to build a new City Hall at the same site where they propose to demolish their existing City Hall. It is a “pipe dream” project which isn’t ready for design much less construction. Rather, the City should use money planned for redeveloping the Verizon Building to replace the roof at City Hall and then apply for energy efficiency money from the stimulus package to upgrade the windows, heating and other energy inefficiencies of the present building. That project could be ready to go in short order and could be eligible for stimulus funds.

Yesterday President Obama told mayors from all over the country that they should take care to apply for projects that can be implemented immediately. The City of Troy should use this rare opportunity to complete projects which have been on hold for years.

Troy has an overwhelming need for sewer, water, road, bridge, building repair and redevelopment . The stimulus package can be a great help to addressing some of our need. But as President Obama said “we need this plan to work” and cities which don’t cooperate will be called to account. With a little more thought and planning many of the projects I listed could be constructed.

Fix City Hall!! Don't Move!!

I hope the City Council will use the cost of the recent bids for construction at the Verizon Building as a basis to reverse this extremely poor idea of moving City Hall from its present location.

There are things about this deal I just can't believe right thinking people would agree with. How this project has gotten this far is beyond me.

The City taxpayers are paying rent of $30,000 per month for a building we aren't occupying? I would never advise my real estate clients to do this.

Did the City Council authorize the payment of rent when they authorized the Mayor to sign the lease? If not, how are these payments authorized?

City taxpayers will pay $600,000 for renovation of someone else's building for 3 years occupancy? This is on top of the $900,000 3 year lease. Cost for these two elements alone total over $1.5 million. I think it is highly likely that a project like this will also have unexpected or unanticipated costs that will surface once work begins. Change orders and more cost.

Once completed the Verizon Building will not have a room suitable for a Council meeting? The NYS Office of Court Administration manages the City Court and Rensselaer County manages the County Building and Courthouse. Will these entities allow the use of their facilities? Without cost? I think not. (In fact it was the vagabond nature of City Council meetings back in the 1970's that contributed to the need to build City Hall in the first place.)

What about the additional costs for relocating phones, computer, changing letterhead, providing parking (if you use the 5th Ave garage for City workers you reduce the supply of parking to support redevelopment of Proctor's, Quackenbush Building etc.)

All this so City Hall can be demolished with NO concrete proposal or developer to rebuild or redevelop the Riverfront site? No plans for a City Hall to be relocated back to the Riverfront IF the new development ever happens. Once we demolish the City Hall building we don't have a backup plan when all these "promises" fade away. (See "The Hole in the Ground" from Urban Renewal days).

As I see it the City Administration has a pot of $1.5 million available to make improvements. Why not put a new roof on City Hall (estimated cost $500,000) and demolish the upper parking deck then use the balance of funds to replace the carpet and upgrade the insulation of the windows etc. With some good planning and judicious investment, saving the existing City Hall at its Riverfront site will prove to be a much better long term solution for the City and for the taxpayers.