Rooke investigates city's leases, real estate agreements
Date: 2/22/2010
Feb. 22, 2010By G. Michael Dobbs
Managing Editor
SPRINGFIELD -- City Councilor Timothy Rooke announced at his Finance Committee meeting on Wednesday that he would seek support among his colleagues to rescind the money in the city budget to pay for the rent at the former Federal Building where the School Department was supposed to move.
Rooke was warned, though, if successful, his efforts might trigger a lawsuit by MassDevelopment, the quasi-public development agency that bought the building for redevelopment.
Rooke's meeting had an agenda that updated councilors on the status of the Mason Square Library, whether or not the city had written a lease for the South End Community Center building as well as seeking answers to questions on the lease of the former Federal Building.
Assistant City Solicitor Patricia Donovan of the Law Department briefed Rooke and fellow councilors Jose Tosado, Melvin Edwards, John Lysak and Michael Fenton on the agreement made by the Finance Control Board with MassDevelopment. She explained the city has no cancellation clause in the contract and noted the release of a Request for Proposal (RFP) to seek a competitive rent could trigger a lawsuit from MassDevelopment. A negative judgment against the city would probably result in the city having to pay MassDevelopment the full 10 year's rent on the lease, regardless if the city had moved the School Department there or not.
Donovan added MassDevelopment pushed hard in negotiations for the clause against cancellations.
When Rooke said he would seek a way to amend the appropriation for the former Federal Building lease and asked what would happen, Donovan answered, "I expect the city is going to be sued."
Rooke has been critical of the decision of the Finance Control Board to enter into an agreement to lease the building despite two votes from the City Council and one vote from the School Committee to seek a location for the School Department's offices -- currently on State Street -- in the most affordable office space in the city through an RFP.
The School Department now has a line item in its upcoming budget for $572,000 to cover the first year's lease. Finance Director T.J Plante said the money came from $300,000 in new revenue and $200,000 in positions left vacant by retirement. He did not say from where the other $72,000 was coming.
The city was supposed to start paying rent to MassDevelopment beginning Feb. 9, but will be asking for a postponement of the rent until the city actually moves into the space, which is anticipated in June, according to Donovan.
Rooke has questioned if the fee per square foot of $10.56 includes the cost of the build-outs to the space. Plante said a study presented at the Dec. 17, 2009 School Committee meeting showed that other Office A space in downtown ranged from a rent of $18.50 to $12.50 with the former Federal Building having the most affordable rate.
Rooke disputed the accuracy of the report by explaining the former Federal Building is not Office A space, but Office B, which rents between $8 and $10 per square foot in Springfield.
"We're the laughing stock of the business world," he said.
Rooke then asked other members of the financial team how they would respond if an RFP showed the city could save substantial money by selecting a different location.
"We'd say, 'Do it,'" City Comptroller Patrick Burns said.
"Except we are where we are," Lee Erdmann, the city's new Chief Administrative and Finance Officer, quickly added, referring to the lease without a cancellation clause.
Donovan said the current rent rate holds for the first three years and then would increase. The city could not sublet the space without MassDevelopment's permission and MassDevelopment could sell the building during the city's 10 year lease; however, the new owner would be required to live up to the terms of the existing lease.
Rooke has asked the state Inspector General to review the lease and how it was created. That investigation is ongoing.
Mason Square Library Rooke asked for clarification on the belief expressed by some concerned community members the Urban League had 30 days to vacate its location on State Street -- taken by eminent domain for the return of a full service library to that part of the city.
Neighborhood residents believed once the city had filed the deed to the property, the Urban League had 30 days to leave and they wondered why the organization was still in the building.
City Solicitor Edward Pikula explained that was a misconception. Pikula said the Urban League would not be asked to leave until May with the re-opening of the building as a library coming in November after renovations and repairs, including the installation of a new furnace and a new roof.
The city is obligated to use a relocation expert to work with the Urban League to find a new location and to facilitate the move, Pikula explained.
He said "we're bending over backwards" to ensure the Urban League has no cause to sue the city.
He added the city has suggested several location to the Urban League and there have been suggestions from city residents as well.
Pikula admitted the pace of the relocation effort has not been as fast as he would have liked. He likened the efforts to keep the process moving forward to "shuttle diplomacy."
"It's going slower than we would like," he added.
The funding for the renovations will come partly from the Springfield Museums Association, which sold the library building to the Urban League, and from the Library Foundation, Pikula added.
Although the city cannot charge rent to the Urban League, it is allowed by law to require a use fee for the building while they are there. Pikula said that amount has to be reached through negotiations, which should start soon.
Kat Wright, a member of the Mason Square Library Advisory Board and an activist for a new library, told Pikula there are many people in the community who would volunteer to "help them [the Urban League] pack."
"I would," she added.
Rooke said he would ask for updates from the Law Department on the status of the library and share them with the media.
South End Community Center Rooke has been calling for a new lease with the South End Community Center (SECC) since about three years ago when he and others discovered the community group was subletting the city-owned building and not turning over $45,000 in rent to the city.
Pikula explained the history of the relationship between the city and the organization and the rent for the building has been $1 a year. In exchange, the SECC has been providing necessary programs to the youth of the South End.
Under the new agreement, the SECC will continue to pay $1 and will be required to use the rent money for programs authorized by the city.
Pikula said the lease was signed by the city in July but was signed by SECC officials in December.
Rooke said he would have preferred a lease in which the rent money would be placed in the city's general fund, but he was pleased a lease was finally in place.
