Commissioner opposes contract, calls county lease a ‘sweetheart deal’
NORRISTOWN >> Montgomery County Commissioner Joe Gale Thursday challenged a six-figure contract that would work for external repairs on a building that the county leases.
The discussion during this week’s Montgomery County Board of Commissioners meeting stemmed from a $147,707contract that was presented for “masonry repairs” to fix the exterior wall of the Montgomery County Human Services Center at 1430 DeKalb St. in Norristown.
According to Montgomery County Property Records, the county initially sold the building in January 2014 to SHDC DeKalb Investors, L.P., of King of Prussia, for $17.5 million.
Solicitor Josh Stein said that same year the county entered into a 15-year lease with the King of Prussia company. Eight years into the 15-year lease, according to Stein, the term is set to end in 2029.
While Gale acknowledged “the county is con
tractually obligated for this agreement,” he’s been previously critical of other contracts associated with the building.
“The amount of rent that we pay is expensive, and also when you compare to what we sold the building for, it’s clearly a sweetheart deal for that landlord, and I’ve never heard of an agreement with real estate where someone sells a building, then rents the building they were in, and then pays for physical repairs to the building,” Gale said. “I could see paying for fit-outs of office space, such as adding cubicles, but when you’re fixing masonry repairs on the exterior of a wall, that’s benefiting the landlord, not the tenant, and the landlord should be responsible for the cost of that physical improvement.”
Gale then went on to question the “politics” surrounding the sale of the Norristown building.
“And in my opinion, this sales leaseback agreement, when it was done was clearly a stunt to fill a budget gap when Commissioner [Josh] Shapiro was here on the board, and instead of cutting spending, or raising taxes, because it was an election year, an election year was approaching, he thought it would be beneficial to sell a county building and enter into this sales leaseback agreement clearly to fill that budget gap for political expedience, and also the landlord of the building was also a generous campaign contributor to Commissioner Shapiro at that time,” Gale said.
“So I’m tired of seeing politics being played with county assets and county taxpayer dollars,” he continued. “This is an example of it, and I will continue to oppose physical improvements that we’re doing to a building that we do not own.”
After Gale concluded his comments, Montgomery County Commissioners’ Chairwoman Val Arkoosh sought counsel from Stein on the matter.
“Mr. Stein, could you just clarify what would happen to the county if we did not pay a contractually obligated fee?” she asked.
“So just as a reminder that this was the sale of the building was done under an RFP,” Stein said. “So it was a competitively bid process, and the terms were the ones that were negotiated following.
“That process, if we were in violation of those we would be in breach of the lease, we would be responsible for those, as well as damages including interest, and other costs associated including the legal fees it would take to get that money from us,” he continued.
“So presumably the landlord would sue the county?” Arkoosh asked.
“Oh, absolutely,” Stein replied.
“The language of the contract is clear that we’re responsible for our portion of capital improvements to the building, including changes to the state of the structure such as masonry or HVAC,” Stein went on to say. “We are responsible for our percentage of that, as well as the other tenants in that building are responsible for the remaining percentage.”
“So just to clarify, every tenant in that building is making a contribution towards the cost of these repairs?” Arkoosh asked.
“Yes, toward the capital; towards the capital repair also,” Stein said.
To which Gale jumped in: “So, it’s a sweetheart deal for the landlord?”
“I’m not sure I understand,” Stein said.
“In my opinion, it’s a sweetheart deal for the landlord,” Gale said.
“My experience is that it’s not the case,” Stein said.
Eventually, the six-figure contract item was separated from the overall 11item package. It was approved in a 2-1 roll call vote, with Gale as the sole dissenter.
“In my opinion, it’s a sweetheart deal for the landlord.” — Montgomery County Commissioner Joe Gale