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