AGENDA #4e
MEMORANDUM
TO: W. Calvin Horton, Town Manager
FROM: Bill Letteri, Public Works Director
SUBJECT: Operating Expenses for Town Facilities Leased to Other Agencies
DATE: March 18, 2005
This memorandum responds to a request for information regarding the operating expenses at Town owned facilities that are leased to other agencies.
BACKGROUND AND DISCUSSION
The Town of Chapel Hill currently owns the following four buildings that are leased to other agencies: Old Chapel Hill Library, Old Municipal Building, Old Post Office and Carolina Sport Art Gymnasium.
Old Chapel Hill Library. The Chapel Hill Museum is located in the old Chapel Hill Library at 523 East Franklin Street. This 12,800-square-foot building is leased to the Chapel Hill Museum at no cost. The term of the lease is for 10 years expiring on September 3, 2006. The Chapel Hill Museum is responsible for all operations and maintenance costs. The Town agreed to replace the roof on this building at no cost to the Museum in the fall of 2002. This $59,275 project was funded by a 10-year installment loan. Debt service payments averaging about $7,500 per year are budgeted for this loan through fiscal year 2013-14. The Museum agreed to reimburse the Town for air conditioning system repairs completed in July 2000 for about $11,200 and February 2004 for about $6,900. The repayment agreement term is for 15 years and requires an annual payment of $756 for the July 2000 project and $460 for the February 2004 project, for a total annual payment of $1,216.
Old Post Office. The Town of Chapel Hill acquired the Old Post Office at 179 East Franklin Street in 1979 for a purchase price of $250,000. Concurrent with this purchase, the Town entered into a 25-year lease of about 3,000 square feet in the building for the continued use of the U.S. Postal Service for an annual lease cost of $1.00. Upon the expiration of this lease in 2004, the Town entered into a new 10-year lease with the U.S. Postal Service beginning on August 15, 2004 and expiring on August 14, 2014. The terms of the new lease include an annual lease payment of $15,140. This amount is intended to recover the cost of utilities, custodial service and routine building maintenance. The Town also receives about $36,000 per year in facility fees paid by Orange County to support the presence of the district court in Chapel Hill. The Town leases a portion of this building to the Franklin Street Teen Center at no cost. The most current lease agreement expired on August 31, 2004 and has not yet been renewed. One Town function is supported in this building. About 900 square feet in the basement is used for archive storage of various Town of Chapel Hill records. Near-term capital maintenance costs for this building include roof replacement in fiscal year 2004-05 with an estimated cost of $130,000 and a major renovation in fiscal year 2007-08 with an estimated cost of $1,500,000.
Old Municipal Building. Some portion of the Old Municipal Building at 100 West Rosemary Street has been leased to the Interfaith Council for use as a shelter for the homeless since July 1985. This building was renovated for long-term use as a shelter for the homeless in 1990. The total project costs of $614,934 were funded from a variety of sources, including community development funds, contributions from the Interfaith Council and a North Carolina Housing Finance Agency grant. In 2004, the Town completed a $450,000 project to replace the roof, replace the windows, restore the exterior wood trim and repaint the interior of the building. This $450,000 project was funded by a 10-year installment loan. Debt service payments averaging about $50,000 per year are budgeted for this loan through fiscal year 2013-14. The most current lease agreement expired on August 31, 2004 and has not yet been renewed. The terms of the lease require the Town to pay for all utilities and maintenance costs on this building.
Carolina Sport Art Gymnasium. The 6,000-square-foot building at 2200 Homestead Road was built as a private gymnasium in 1974. Carolina Sport Art has operated in the building for approximately 23 years. On June 25, 2001, the Council approved a Special Use Permit application for the Vineyard Square development that included a requirement that the developer deed a 14.91 acre recreation area to the Town. The recreation area included the building being used by Carolina Sport Art. Ownership of the land and building was transferred to the Town on December 23, 2002. On January 13, 2003, the Council authorized the Town Manager to execute a lease with Carolina Sport Art in order to allow them to continue operating a gymnastics school in the building. The current two-year lease runs from January 1, 2005, until December 31, 2006. The terms of the lease include an annual lease amount of $13,800 and require the tenant to pay all utility bills and provide for routine upkeep of the grounds. The Town is responsible for all building maintenance. A $29,000 project to replace the siding on this building was completed in December 2003.
REVENUE AND EXPENSE SUMMARY
The following table summarizes the revenues and expenses for the facilities discussed above.
|
Cost Element |
Old Library |
Old Post Office |
Old Municipal Building |
Carolina Sport Art |
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
Routine Maintenance |
$0 |
$25,000 |
$15,000 |
$3,000 |
|
Capital Project Debt Service for FY 2004-05 |
$8,000 |
$0 |
$58,000 |
$0 |
|
Gas |
$0 |
$3,900 |
$9,600 |
$0 |
|
Electricity |
$0 |
$9,500 |
$8,200 |
$0 |
|
Water/Sewer |
$0 |
$1,400 |
$12,000 |
$0 |
|
Custodial Contract |
$0 |
$18,800 |
$0 |
$0 |
|
Property and Liability Insurance |
1,310 |
1,750 |
930 |
780 |
|
Totals |
$9,310 |
$60,350 |
$103,730 |
$3,780 |
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
Capital Project Reimbursements |
$1,216 |
$0 |
$0 |
$0 |
|
Orange County Facility Fees |
$0 |
$36,000 |
$0 |
$0 |
|
Rent |
$0 |
$15,140 |
$0 |
$13,800 |
|
Totals |
$1,216 |
$51,140 |
$0 |
$13,800 |