Project Analysis and Feasibility Report (2)

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Franklin Building (January 14, 1998) QuesNon: Should the county sell or retain the Franklin Building if built? The Franklin Building was purchased in 1985 in order to provide space for county being displaced by the state courts. It contains appro~umately 24,000 nsf of class ~ retaiUoffice space and 23 on-site parking stalls. Current occupancy includes a priv District Attorney offices, the T~-Treaswer and Assessor's Department. As of Jaz the balance owed on the certificates of participation (COP) is $435,000 . The inte the COP's is 10%. The building has an estimated value of $1,300,000. The question addressed in tlus report is whether the Franklin Building should be sc as future expansion space. The question is relevant because Courthouse Square, a designed, does not contain enough office space to meet the county's 20 year space The county's facility needs for the downtown campus (see attached e~ibit) indica Courthouse Square may be up to 15,000 nsf short of ow long range needs. Theref retain ownership of the Franklin Building and lease out the unused space, this spa< reclaimed in the future for county use. What are the advantages of retaining ownership? If the Fra.nklin Building was sold, it would generate a"one-time" cash return, mv of approximately 5755,000. This revenue could be used to offset Courthouse Sqi facility expenses. However, if the county retained ownership and leased the buil~ open market, in the first year at full occupancy, it would generate excess revenue Over a 10 year period, the county could realize income of $1,905,0001. These rE estimates are based on the following: • A lease rate in 1999 of $1.25/ sf. Square is attomey, y 1, 1998, rate on ~d or retained presently s that ~e, if we can be expenses, ~ or other ; on the $158,000. • Operating and maintenance (O & Nn plus debt service is projected at $.75 sf. • An annual inflation factor of 4% per year for O& M and lease revenues • Refinance COP's from 10% to 8% The option to retain ownership is not only fmancially sound but, it provides the unty with inexpensive office space for future expansion and a source of long term revenue of~set other county facility expenses. 1 Assumptions used to generate this analysis have not been verified by a licensed real te professional. ~ Sources used include assessment records, leasing report from C. Spence Powell & Associates an facility records. Leasing expenses and property taYes have not been fully factored into this analysis.