SalemNews.com, Salem, MA

January 10, 2013

Council again mulls annex lease

By Bethany Bray
STAFF WRITER

---- — SALEM — The lease of 120 Washington St., an issue that has stirred controversy in the past, will come before the City Council tonight.

Mayor Kim Driscoll hopes to sign a three-year lease of the City Hall Annex at 120 Washington St. To do so, she’ll need a two-thirds vote of the City Council, or eight councilors.

The board will convene for its first regular meeting of 2013 at 7 p.m. at City Hall, 93 Washington St.

The city has taken one-year extensions of its lease of 120 Washington St. after Driscoll’s proposal to sign a five-year deal with the building owner was rejected by the City Council. At the time, Driscoll said the five-year lease would save the city $42,000 per year.

The issue came to a boiling point in March 2011, when the council invoked a rule that blocked the mayor from addressing the council in support of the lease.

The annex, a stone’s throw from City Hall, has housed various city departments, including licensing, planning and community development, since 2001. The city’s initial, 10-year lease of the space expired in February 2011.

This fall, the city requested proposals for annex office space but received only one reply: RCG, the landlord of 120 Washington St. The request sought a 20,000- to 25,000-square-foot space located 700 feet or less from City Hall.

Signing the proposed three-year lease for 120 Washington St. would save the city $65,000 in rent and give officials time to find a new, long-term office space, Driscoll said.

City-owned land downtown, vacant court buildings on Federal Street or other properties could all be possibilities, she said.

“I don’t think anyone has a desire, myself included, to stay at 120 Washington St. long-term,” Driscoll said. “I’m proposing a three-year lease to (have time to) review all the possibilities. ... We do need to get moving on it — take advantage of savings while we explore alternatives.”

The three-year lease would also bring a few upgrades to 120 Washington St.: The proposal asks the landlord, RCG, to install new flooring, repaint walls and renovate the elevator.

The lease starts at a monthly rent of $30,500 and increases by $1,000 for each of the second and third years.

The lease, which would begin March 1, has the option to extend the agreement for up to seven, one-year terms beyond the initial three years. This gives the city flexibility, Driscoll said, in case a new space isn’t ready at the three-year mark.

Driscoll and Richard Viscay, the city’s finance director, sent councilors a letter this week urging their support of the lease of 120 Washington St.

“If we had renewed this lease back in 2010, when we originally put this out to bid, we would have saved over $114,000 in lease payments and another $122,400 in estimated real estate taxes,” Viscay wrote.

Bethany Bray can be reached at bbray@salemnews.com and on Twitter @SalemNewsBB.

PROPOSED LEASE OF ANNEX

First year’s rent: $366,000, or $30,500 per month

Second year’s rent: $378,000, or $31,500 per month

Third year’s rent: 390,000, or $32,500 per month

Rent, if the city were to continue on its year-by-year lease extension: $32,782 per month (a total expense of $35,776 with real estate tax reimbursements and HVAC maintenance charges)

Source: Richard Viscay, Salem finance director