Ver­i­zon ren­o­va­tion costs rise

The Colonial - - FRONT PAGE - By Carl Rotenberg

The cost to ren­o­vate the for­mer Ver­i­zon build­ing into a po­lice sta­tion and Con­shohocken Bor­ough of­fices has risen by $1,520,329 from the orig­i­nal con­struc­tion pro­posal to $13,145,000 — a 13 per­cent in­crease.

Bor­ough coun­cil mem­bers met with of­fi­cials from Key­stone Property Group of Lower Me­rion Feb. 6 to dis­cuss project fi­nanc­ing while the bor­ough and KPG waits for a $4.31 mil­lion state Re­de­vel­op­ment As­sis­tance Cap­i­tal Pro­gram grant to sub­si­dize part of the project, said Bor­ough Man­ager Fran­cis Mara­bella.

A re­quire­ment that work­ers on the pub­lic con­struc­tion project must be paid pre­vail­ing wage rates and additional costs to get state ac­cred­i­ta­tion for the po­lice sta­tion boosted the project costs, Mara­bella said. The area for se­cured, po­lice ve­hi­cle park­ing and the sally port for trans­fer­ring po­lice sus­pects from the ve­hi­cles was en­larged to meet ac­cred­i­ta­tion re­quire­ments.

Bor­ough of­fi­cials planned to sub­mit the busi­ness plan for the RCAP grant Feb. 10 to the state Of­fice of the Budget.

It is un­cer­tain when the RCAP money will be re­leased by the state, Mara­bella said.

Coun­cil mem­bers dis­cussed whether to bor­row $10 mil­lion to fi­nance the early ren­o­va­tion costs with a bank loan or a 30-year bond is­sue. A fi­nan­cial ad­viser, Con­cord Pub­lic Fi­nance of Lan­caster, Lan­caster County, was hired Feb. 6 for a $22,500 fee to pre­pare fi­nan­cial in­for­ma­tion for the loan and ne­go­ti­ate with bank in­sti­tu­tions.

Coun­cil also hired the law firm Fox Roth­schild to de­ter­mine whether the pro­posed $10 mil­lion loan will be tax ex­empt for IRS pur­poses. The Whit­pain firm will charge $350 per hour.

The ex­penses for both ad­vis­ers will be paid out of the fi­nanc­ing pack­age, Mara­bella said.

“De­ci­sions on the façade of the build­ing and the to­tal space re­quire­ments for the po­lice sta­tion and the bor­ough of­fices have to be firmed up

be­fore site plans are sub­mit­ted to the plan­ning com­mis­sion,” Mara­bella said.

Coun­cil will hold an­other spe­cial meet­ing, open to the pub­lic, at 7:30 p.m. Feb. 17 to con­tinue work­ing on the Ver­i­zon build­ing ren­o­va­tion project.

The four-build­ing de­vel­op­ment agree­ment ap­proved by the Mont­gomery County Re­de­vel­op­ment Author­ity Dec. 20, 2013, con­tains tight dead­lines for KPG to ren­o­vate the build­ing in a 12-month pe­riod.

The $200 mil­lion KPG plan by the Lower Me­rion de­vel­oper was selected by Con­shohocken Bor­ough Coun­cil in mid-Septem­ber over a com­pet­ing pro­posal by Brandy­wine Realty Trust of Rad­nor, and coun­cil ap­proved the agree­ment in late De­cem­ber.

The 32-page agree­ment gives KPG 90 days to in­spect the for­mer Ver­i­zon build­ing at Fourth Av­enue and Fayette Street, al­though it con­tains a pro­vi­sion al­low­ing the ex­ten­sion of the in­ves­ti­ga­tion pe­riod for an­other 90 days if en­vi­ron­men­tal prob­lems in the va­cant build­ing re­quire more re­search.

KPG is ob­li­gated to pay Con­shohocken 8 per­cent of the $3.25 mil­lion bor­ough pur­chase, an an­nual pay­ment of $260,000, to com­pen­sate the bor­ough for the orig­i­nal build­ing pur­chase. KPG does not have to make pay­ments un­til it has cash from the build­ing leases af­ter “op­er­at­ing ex­penses, any mort­gage pay­ments and re­quired re­serves” are paid. If the re­turn on prior in­vest­ment is not suf­fi­cient, it will ac­cu­mu­late over time and be paid later to the bor­ough, ac­cord­ing to the agree­ment.

The new bor­ough build­ing will have a new façade, roof and build­ing sys­tems, a sep­a­rate, sally port en­trance for the po­lice depart­ment, an el­e­va­tor and an au­to­matic sprin­kler sys­tem. In ad­di­tion, the ground floor will be de­mol­ished to make room for park­ing spa­ces.

Bor­ough of­fi­cials are limited to a $1 mil­lion budget for the in­te­rior con­struc­tion of the 20,000 square feet of bor­ough space, cal­cu­lated by a cap of $50 per-square­foot in the agree­ment.

A 30-year lease agree­ment for the po­lice sta­tion and of­fice space must be ap­proved by coun­cil and KPG. The lease will set a monthly lease pay­ment and guar­an­tee the bor­ough can pur­chase the en­tire, ren­o­vated Ver­i­zon build­ing for $1 at the end of the 30-year term.

KPG agreed to com­plete con­struc­tion one year af­ter con­struc­tion work be­gins. Com­ple­tion of the build­ing can be de­layed up to six months by KPG with writ­ten no­tice to Con­shohocken.

KPG also agreed to build an 18-story, 200-room ho­tel at the in­ter­sec­tion of Fayette and Elm streets, an eight-story park­ing garage to re­place an ex­ist­ing three­story garage and a new, 16-story, 200,000-square­foot of­fice build­ing at the in­ter­sec­tion of First Av­enue and Fayette Street. The old Wash­ing­ton Fire Com­pany fire­house will be de­vel­oped to pre­serve the ex­te­rior façade.

KPG must de­velop the ho­tel, garage and of­fice tower within 24 months of the start of the agree­ment. Ren­o­va­tion of the fire­house can be de­layed, by a KPG re­quest, with two, six-month pe­ri­ods. Both par­ties agreed the de­vel­op­ment “may oc­cur in phases due to the large and com­plex na­ture of the pro­posed de­vel­op­ment.”

Mont­gomery Me­dia staff photo / BOB RAINES

The Cot­tone fam­ily will be fea­tured on the HGTV episode of “Beach­front Bar­gain Hunt” at 8 p.m. Feb. 16.

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