2001 NS Purchasing - Terradotta.com Lease Status at 501 W. Franklin Street, Chapel Hill

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5 Leased space at 110 S. Churton Street 1) As you know, HRR is housed in leased space at 110 S.,Churton Street. The lease for that space expires on December 1, 2003. When the lease expires, we would not anticipate recommending it for renewal for a number of reasons, including, but not limited to the following: a) First, the Human Rights/Commission for Women function that was originally moved to this location found the space suitable for their operation. However, with the significant growth of the department over the past few years and the evolution of their function, the facility serves neither the department nor their clients adequately. b) Further, the OPC Family Counseling Center that occupies the upper floor of the building has also outgrown the space and is seeking alternative rental space. Tom Maynard, OPC Executive Director advises me that they will secure and pay for the leased space on their own. c) Yet another issue associated with this leased premises is that part of the approximately $63,000 annual lease payment for this location includes the Landlord's responsibility to pay costs of utilities. Four times during the past year, services have interrupted due to his non-payment of bills. Although we have counseled the landlord numerous times regarding the unacceptability of this type of behavior, our efforts have been only marginally successful. The latest episode of water service interruption occurred less than 30 days ago. For these and other reasons, I believe it prudent to not renew the lease at its expiration. Additional Fiscal Considerations 1) By the end of the lease period for 110 S. Churton Street (Dec 1 2003), the annual lease amount will be in excess of$65,000. It may be worth reminding ourselves that the revenue derived from the rented space at 501 W. Franklin St. serves to support debt service payments for the entire facility. Although we would not charge rent for the space occupied by HRR, the significant expenditure reduction would lessen the impact of any lost revenue. 2) In addition, you may recall that the Skills Development Center (SDC)financing had two components. One portion of the loan for the SDC side was deemed public purpose and therefore borrowed at a lower rate, while the loan on the 501 portion of the building carried a higher rate because its primary occupants were not public purpose. If the Board chooses to allow the Visitor's Bureau and HRR to locate in this building, that public/private balance will swing to the public side and 1 am advised by the Finance Director that refinancing the loan at a lower rate can occur, thereby saving additional money over the remaining life of the loan.