High costs derail Rye Town's move to spaces rented from Port Chester
Thursday, June 05, 2014 12:00 PM
Rye Town relocation timeline
October 2012..............Rye Town hires realtor to determine value of 10 Pearl St and feasibility of selling it
July 2013....................Supervisor Joe Carvin authorized to execute sale of 10 Pearl St and parking lot to Dominick Neri,Peter Shapiro and Anthony Tirone DPA Joint Ventures and negotiate lease with Village of Port Chester to rent space at 222 Grace Church St and 350 North Main St
August 2013 ...............Town hires Gary Gianfrancesco and Arconics Architecture to design the new office space
December 2013..........Contract of sale amended and Neri named the sole purchaser
Jan 1,2014................Original date town expected to move out of 10 Pearl St
May 1, 2014................First rent payment due to Port Chester, which has so far been waived by the village
May 20, 2014.............. Split vote 3-2 by board regarding hiring contractors to build-out 222 Grace Church St
June 2, 2014...............Town meets in closed-door session with Port Chester
June 17, 2014.............Next town meeting scheduled when board expects to make a decision about the move
Aug 26, 2014 .............Ten-week date after June 17, the possible move-in day to Grace Church Street if contracts are approved by the town at the June meeting
The plan to relocate Rye Town offices and help out taxpayers with the sale of 10 Pearl St. is not as smooth sailing as local officials had initially expected.
When the town sold 10 Pearl St. and the parking lot across the road last summer for about $1.5 million, the plan was to be moved out by January 2014 and into their newly-rented space from the Village of Port Chester. Various stumbling blocks pushed the move-out date forward about six months, but it was not until the most recent roadblock that the transition came to a sudden standstill.
Both the cost to build out 222 Grace Church St. for the majority of the town's operations and the price to outfit a section of 350 North Main St. for the town court are significantly higher than originally projected. While the total for the court renovations was estimated to be $50,000, with the town and village splitting the cost and Port Chester picking up the difference if the number went up a little higher, the actual bids went up more than a little. In fact, the best deal is three times the initial projection.
For 222 Grace Church St., the difference between the estimation and the actuality is even worse. By taking into account the sale, the net cost to the town was supposed to be $75,000. Instead, the best price-after two rounds of bidding-came in at a net to the town of $383,000.
"It's 500% more costly that what we anticipated," said Town Supervisor Joe Carvin at their meeting on May 20.
"I got in front of the whole community and said this is the number," he added. "I feel a deep embarrassment that I got up in front of everybody and said $75,000."
A split board
Both Deputy Supervisor Bill Villanova, who personally has spent a lot of time investigating and working on the move, and newcomer Tom Nardi voted in favor of going forward with the move at the May 20 meeting. "It costs a little bit more money than what we estimated. It does not devalue and it does not change the benefit to the town. It doesn't change the benefit to the public," Villanova said. "I still think this is a very worthy and fair-minded project that will benefit the Town of Rye today and the residents of the Town of Rye to come."
As he and Nardi were in the minority, however, the relocation was put on hold so that alternatives could be thoroughly researched and conversations could be had with Port Chester regarding both renovations. Carvin said he believed that the lease with Port Chester would likely be the final outcome, but that to be transparent and do their due diligence would take a little more time. "I think we owe it to our constituents as a good fiduciary to evaluate every opportunity," he said.
The lowest bidder, Peter A. Camilli & Sons, Inc. of Pleasantville, agreed to hold the price until July 13. If the town does decide to go forward with the current plan to renovate 222 Grace Church St., it will take about 10 weeks for the construction.
Why the high costs
In the first round of bidding, the lowest cost was actually $660,000, way above even the current proposal.
One reason for the extreme discrepancy between the estimated price and the actual bids is that the initial project was called a tenant fit-out, which implies a typical office arrangement that utilizes existing space.
What Rye Town actually needs is more complicated and involves a completely new and self-contained HVAC system and an electrical system. "The electrical number was probably the worst number in the whole process," added Gary Gianfrancesco, the architect the town hired. "It has been a long road and a winding road at times, but we think this is about as good as it gets."
The initial $75,000 estimate was also made before a location was chosen, said Town Facilities Manager Bishop Nowotnik. At that time, the town had hoped the selected landlord would pick up some of the moving expenses, which did not end up happening although Port Chester did decide to give the town a rent credit instead.
It was also put forth before an architect had been hired, Carvin added. After that, the guesstimate went up to about $128,000.
Another reason for the cost difference, Nowotnik said, has to do with prevailing wage, which is determined by a tribunal in Albany and required for all municipal contracts over $1,500. Unlike the private sector where prices have become more competitive, union pricing and benefits have gone up. "So now you have a scenario with the prevailing wage job that will add 50% or more to the contract pricing just because it's being done by a municipality that requires it as opposed to a private business doing it," he explained.
Dissolution and the municipal center
Behind the scenes are also two issues that could impact the town's move. For several years, Carvin has been pushing to dissolve the Town of Rye and eliminate that level of government. While the issue is currently stalled as officials argue over what to do with the Rye Neck section of the town located in the Village of Mamaroneck, the dissolution could mean that any move would not be needed in the long-term.
"There are too many unknowns and you couple that with the fact if we do dissolve why are we spending this money right now and shouldn't we save it and disperse it to the taxpayers?" asked Town Councilman Bob Nioras.
Villanova countered that the dissolution is not going to happen anytime soon and should not play a part in the decision to move. Staying at 10 Pearl St. is not a feasible option, as it has mold and is falling apart, he added.
The town could sell it and rent the space, Nioras responded, requiring only the renovation of the parts they actually use, not the whole building.
The other issue lurking in the background is the possibility of a new municipal center that Port Chester officials have been kicking around. If the village builds a municipal center in the Irving Avenue and Poningo Street corridor, both the offices at 222 Grace Church St. and the police and courts at 350 North Main St. would relocate. Investing in a building where they will be for potentially only a couple years will not allow the town to recoup the renovation costs.
While the dissolution issue was pushed to the side, alternate possibilities to either move to a different place or try to bring down the cost at 222 Grace Church St., as well as plan for the uncertainty regarding the municipal center, were addressed by town officials in the two weeks following that May meeting.
Greg Arcaro, a consultant to the town, and Nowotnik put together a list of eight alternatives that included possible ways to cut down on space at 222 Grace Church St. by eliminating offices.
"The savings wasn't desirable enough to justify the reduction in footage," said Councilwoman Christina Collins.
Other possibilities involved converting Crawford Mansion into office space-an issue as that is not allowed in the agreement with the executors of the will and the Crawford heirs would have to agree to change it-or building a new structure on the section of the park adjacent to Ridge Street, which is allowed but could cost upwards of $2.6 million.
"To me it would make more sense to make the investment into something we own," said Nioras, who supported looking into those options further.
Selling 10 Pearl St. and then leasing space, as suggested by Nioras at the previous meeting, was also considered, but Dom Neri, CEO of Neri's Bakery Products, Inc., who purchased 10 Pearl St., does not want to take on the risks inherent in the current building. Renting at 800 Westchester Ave., a concept initially looked into before Port Chester was chosen, was also revisited even though the functionality of that proposal is still questionable. As all other scenarios to deal with the court are significantly more expensive, regardless of what the town does, they plan to lease that space from Port Chester.
Leasing from P.C. still the favorite
Despite the new-and sometimes old-options, renting space at Grace Church Street from Port Chester still seems the favorite, although Nowotnik and Town Attorney Paul Noto will be investigating the Crawford Park possibilities and a walk-through by some of the town board of 800 Westchester Ave. is also going to be arranged.
Town and village officials met in a closed-door session on Monday, June 2 to address the higher costs for the court renovation, 222 Grace Church St. and the possibility of a new municipal center. Although nothing has officially been finalized and a new lease will need to be drawn up, the two government bodies have come up with a couple workable solutions to their problems.
First, Rye Town agreed to help out the village with the court costs. At its heart, the initial agreement had been a 50-50 split and consequently, the town offered to chip in another $50,000. In return, the village said a rent credit for that same amount could be spread out over the 10 years of the lease.
Similarly, the rent credit for 222 Grace Church St. would be increased from $95,000 to $145,000.
Finally, in regards to the municipal center, the village, understanding the town's need for a safety net, agreed to build a safeguard into the a new lease. If the village creates a center, the town will move with them. If the move happens within five years, the town will also get a $400,000 recapture credit, in addition to incorporating the unamortized rental credits already agreed upon. "For the first five years we're in the new space, we have a $400,000 credit that we can use against either a condo purchase or future rent," Carvin said.
If the municipal center is finished after five years and the village and town relocate, the credit will be reduced by $80,000 each year and in the 10th and last year of the lease, there would be no credit.
Although he voted two weeks ago to go forward with the move as it was, Villanova is extremely pleased with the results of the past two weeks, especially the $400,000 credit.
'We want them to be with us'
Port Chester Deputy Mayor Saverio "Sam" Terenzi said that the number had not been finalized yet, but that a rent credit amortized over 10 years if a center is built is certainly on the table. "Nothing's in stone," he said. "It's going to be a friendly negotiation. In the long term, they want to be with us; we want them to be with us."
If a municipal center is built, however, Terenzi said that 2,700 sq. ft. have already been allocated for the town and that the courts will also be housed in the Irving Avenue structure.
"If the new location doesn't happen, then we'll all be there," he said, referring to Grace Church Street.
Regardless if the town moves to Grace Church Street and North Main Street or a future municipal center, the town's costs per year will decrease. "Their overhead is going to go tremendously down," Terenzi said.
Terenzi, in addition to serving on the village board, is also the town's accountant and said the cost to maintain 10 Pearl St. is outrageous. He estimates that the town only uses about 2,000 sq. ft. but pays $100,000 each year. "That's $50 a foot and we're not paying rent. That's just the operating costs," he said.
While he, too, was disappointed in the high bids, Terenzi still thinks moving is a wise call. "In the short term it's going to eat up some cash, but five, six years down the road, it will lower the operating costs," he said.
Although the town should have started paying rent to Port Chester on May 1, the village has agreed to forgo the current payments. "In view of the obvious need to renegotiate the lease, they put that on hold," Carvin said. Similarly, Neri has been working with the town and told them he understands if they need more time.
The town expects to vote on a decision at their next meeting on Tuesday, June 17.