WE CAN'T AFFORD DECISIONS LIKE THIS

Wondering what you can do to help us spend tax dollars wisely?  Well, please read the following link: http://www.salemnews.com/local/x1248734585/Council-says-no-to-a-lower-lease-at-annex, which appeared in Saturday’s edition of the Salem News outlining our current lease dilemma and then contact your city councillors to help turn this issue around.

As you may know, the City of Salem has rented space for a City Hall Annex that houses various municipal departments since at least 1986.  For many years, these offices were located at One Salem Green, the building directly behind City Hall which is currently owned by Salem Five Bank.  In 2000, the City entered into a 10 year lease agreement with the former owner of the building located at 120 Washington Street. We rent approximately 20,000 square feet for $382,000 per year and the 10 year lease expires at the end of this month (February).  We have 5, one year options we can use if we want to extend the lease.  Rather than simply extend the lease under the current terms, we opted to put out a Request for Proposals (RFP) to investigate the potential for new lease space and/or better terms under our current lease.  It’s a renters market and we wanted to take advantage of that fact. 

Keep in mind, that under state law, the city can not simply enter into a lease agreement for space without soliciting proposals from interested parties, nor can we simply negotiate with our current landlord or any other property owner for better terms, without going through a public bid process.  This helps to keep the “politics” out of leasing space and ensures an open and fair process is used before expending taxpayer dollars to lease public space.  The City can establish criteria for space needs and proposed terms, such as proximity to City Hall, length of term, etc. all of which must be spelled out in the RFP. 

In August, the City put out an RFP for lease space.  We received two proposals in response.  One from our current landlord and one from the owner of 10 Federal Street. Thus, we had two options to evaluate for our space needs.

The proposal from our current landlord was $42,000 less than our current rent.  In addition, the landlord included as part of their proposal some repairs/renovations to the current premises (new rugs, painting, upgrading HVAC systems).  Over five years, we would be able to save more than $200,000 off our current rent. The proposal from the owner of 10 Federal Street was more expensive ($370,000 vs. the 120 Washington St proposal of $340,000 per yr.) and would also entail additional costs to the city, such as moving expenses and connecting the new site to our data system via fiber optics.  The 10 Federal St. proposal included a contribution of one months rent to help offset some of these expenses, however that amount would not cover all of the costs of moving and data connection.

Since under the new terms the space at our existing premises was $42,000 less expensive per year (not to mention the savings on moving and data costs), a Committee comprised of the Building Inspector, Planner, Purchasing Agent and Solicitor recommended staying at 120 Washington Street.  This recommendation was submitted to the City Council for their approval on December 9^th.  While the space at 120 Washington Street is not ideal, a short term lease will provide the City with the time and the impetus to put a plan together for how best to accommodate our space needs moving forward for the long term.  Several options exist, from the state owned District Court building which is expected to be available in 2013, to city owned land at the MBTA lot or Church Street, to leasing space or buying an office condo somewhere else in close proximity to City Hall.  While there is no shortage of ideas on where the City should be long term, it will require time to build consensus on a location (a 2/3 majority of the Council must agree on a space) and implement any plan-either in existing space or in something new that will have to be built.  It will also require another RFP process.  So, in the meantime, we’d like to take advantage of the $200,000+ savings that come from the new lease terms.  If we don’t approve the new lease, we’ll have no choice but to exercise our one year options and pay $42,000 more per year for the same 120 Washington Street space we currently rent. 

I seriously doubt we’ll have Council consensus on a new location that will be ready and available to us within the next three years, so why not save money while we explore these options?  Honestly, given the cost savings involved, I never thought this would be a controversial matter.  The only reason we didn’t simply extend the lease under the one of the five year options, was to try and save some money.  We did that, now we need to take advantage of the savings.