HomeMy WebLinkAboutItem 02 Booth Kelly Business Plan Update AGENDA ITEM SUMMARY Meeting Date: 10/7/2013
Meeting Type: Work Session
Staff Contact/Dept.: Jim Polston/DPW Staff Phone No: 541-726-3652
Estimated Time: 15 Minutes
S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Financially Responsible and Stable Government
Services ITEM TITLE: BOOTH KELLY BUSINESS PLAN UPDATE
ACTION REQUESTED: Discuss the options as presented and provide Staff direction on our recommendation to continue with Option #1 maintaining the status quo when
operating the facility over the next 3 – 5 years.
ISSUE STATEMENT:
Prior to the merger of the Development Services and Public Works Departments
into a single unified department, the roles and responsibilities for the management
of Booth Kelly were split between the two departments. The creation of the Department of Development and Public Works (DPW) has consolidated
management of Booth Kelly in one department and provided us with an opportunity
to develop an interim or short range (2-5 year) business plan for Booth Kelly as a bridge until Council decides upon a clear path for the long-term development or
redevelopment of this significant City asset.
ATTACHMENTS: Attachment 1: Council Briefing Memorandum Attachment 2: Booth Kelly Complex map.
Attachment 3: Chart of Booth Kelly occupancy types
DISCUSSION/ FINANCIAL
IMPACT:
The City of Springfield currently owns and operates the Booth-Kelly Center, which
includes a number of large industrial and commercial warehouse, storage,
manufacturing and office spaces. Some but not all spaces are currently renting to Springfield businesses. However even with many positive attributes Booth Kelly,
like many industrial and commercial spaces in the area, suffers from unoccupied
space, deteriorating infrastructure and increasing operating costs. These facts, along with the interest the Budget Committee expressed in Booth Kelly at its May
21st meeting are the reasons for this update to Council on the efforts to create a business plan for the Booth Kelly facility for this transitional period, or at least until the industrial/commercial market rebounds from the current doldrums and allows
for more robust reinvestment. If Booth Kelly is to continue to function effectively until a major redevelopment
takes place, an interim plan to provide needed preservation and maintenance is necessary. Regardless of which option is eventually chosen by Council, City Staff
will continue to work together in an attempt to ensure continued success of the
facility. Currently staff from the Office of the Director and the Operations Divisions is working as a team to maintain and operate the facility. Operations staff
is overseeing the maintenance, preservation and capital improvements at the
facility. Staff from the Office of the Director oversees tenant needs and works to continually attract new tenants while working with existing tenants to maintain our
existing leases.
Staff would like to discuss some possible business and management options with
Council and get some direction on how they would like us to proceed.
M E M O R A N D U M City of Springfield
Date: 9/3/2013
To: Gino Grimaldi COUNCIL
From: Len Goodwin, DPW Director BRIEFING Subject: Booth Kelly Business Plan Update MEMORANDUM
ISSUE: Prior to the merger of the Development Services and Public Works Departments into a single unified department, the roles and responsibilities for the management of Booth Kelly were split
between the two departments. The creation of the Department of Development and Public Works (DPW) has consolidated management of Booth Kelly in one department and provided us with an opportunity to develop interim or short range (2-5 year) business plan for Booth Kelly as a bridge until
Council decides upon a clear path for the long-term development or redevelopment of this significant City asset.
COUNCIL GOALS/
MANDATE: Provide Financially Responsible and Innovative Government Services BACKGROUND: The City of Springfield currently owns and operates the Booth-Kelly Center, which includes 17 acres of land and over 200,000 square feet organized into 26 large industrial and
commercial building spaces (including three parking areas). Three quarters (or 20) of the spaces are
either rented or there are active negotiations for rental. The monthly income from Booth-Kelly facilities is now about $37,000. Once a very productive lumber mill, Booth-Kelly is adjacent to the former
Springfield Mill Race Pond and near historic Downtown Springfield. However even with these positive features Booth Kelly suffers from unoccupied space, deteriorating infrastructure and increasing operating costs.
These facts, along with the interest the Budget Committee expressed in Booth Kelly at its May 21st meeting are the reasons for this update to Council on the efforts to create a business plan for the Booth
Kelly facility for this transitional period, or at least until the industrial/commercial market rebounds from the current doldrums and allows for more robust reinvestment.
DISCUSSION: A combination of economic factors both with the City’s financial resources and the
community as a whole has contributed to the deteriorating conditions in the Booth Kelly facility through scaled back maintenance funding and delays in improving tenant spaces. If Booth Kelly is to
continue to function effectively until a major redevelopment takes place, an interim plan to provide
needed preservation and maintenance is necessary. Regardless of which option is eventually chosen by Council, City Staff will continue to work together in an attempt to ensure continued success of the
facility. Currently staff from the Office of the Director and the Operations Divisions is working as a
team to maintain and operate the facility. Operations staff is overseeing the maintenance, preservation and capital improvements at the facility. Staff from the Office of the Director oversees tenant needs
and works to continually attract new tenants while working with existing tenants to maintain our existing leases. Staff is working across boundaries, to identify and implement creative strategies to maximize the positive impact that this facility has on the community.
Over the years the City has commissioned several studies and plans, some more, some less optimistic
than the others. Most recently, University of Oregon students, as part of the Sustainable Cities Year,
devoted significant effort to developing a number of exciting concepts for the future redevelopment of the facility. All of these concepts retained the existing saw tooth building, now leased by Greenbrier for
rail car rebuilding and outfitting. This is a positive approach which retains much of the current rental
ATTACHMENT 1 - 1
value as part of a rehabilitation of the facility. Many of the proposals contained some fundamentally
sound ideas, which, in many cases, were accompanied by some fanciful suggestions which, though
probably not feasible in just that form, lead to some possibility of creative redevelopment. Although the proposals were not intended to be refined to the level where cost estimation was feasible, staff believes
that in every case the idea would have involved multi-million dollar expenditures. We believe parts of
many of the proposals can form elements of a new facility, but the consensus of the group was that the City presently lacked the resources to pursue those solutions – which would involve a complete rehab
of the facility.
At this point Staff does not believe it is in the City’s best interest to consider spending large amounts of
money on a long term redevelopment until there has been an opportunity to update the Booth-Kelly Refinement Plan (or perhaps incorporate the facility into an updated Downtown Refinement Plan), so
that a concept for redevelopment can be considered as part of that process. For the time being, staff
recommends that the City adopt a sensible, financially oriented, attainable strategy to keep the facility operating and viable until it is timely to consider major development or redevelopment. Consistent
with this perspective there are reasonably few options for Council to consider that maximize
productivity of the facility in the near term.
Some of the most feasible options to consider range from simple (least expensive) to the increasingly complex with major financial impacts including: 1. Status quo approach to operating the facility with minimal investments by finding tenants
preferring low-cost space over extra amenities or who are willing to make improvements for a fair low-cost space. 2. Selective focus on improving certain buildings/suites into flexible rental space for
incubator/business development purposes. 3. Selective removal of the most deteriorated structures to create space for potential redevelopment.
4. Selective addition of structures on a build-to-suit or Request for Proposal (RFP) basis. 5. Removal of all structures and prepare site for total redevelopment.
Each of these options will be explored in more detail in the following paragraphs along with the pros and cons of each option. However, some common activities should occur regardless of the option
selected by Council. Foremost among these is in FY 2014, to select an architectural and/or
engineering consultant to study and evaluate the condition of each structure at the facility. This work will analyze the condition of each building’s structure, envelope, and major systems and prioritize
facility needs in continuum from safety or dangerous issues through simple aesthetic upgrades. Energy usage/savings shall also be considered so staff will have current, accurate information to make better, cost effective decisions that will support any selected option and to assure that the facility is operational
and code compliant.
Staff will also work to leverage funds if and when possible to supplement City funds in making needed
improvements. Some possible resources include:
• Apply for and use grant monies to help create business opportunities and do environmental
cleanups if needed, continue holding special events and increase energy efficiency.
• Include environmental, beautification and recreation improvement to the site, if possible, as
future phases of the Mill Race project.
• Continue to improve partnerships and work with agencies such as Willamalane, the University
of Oregon, Lane Community College, Chamber of Commerce and NEDCO to help advance
Booth Kelly.
ATTACHMENT 1 - 2
1. Status quo approach to operating the facility with minimal investments by finding tenants preferring low-cost space over extra amenities or who are willing to make improvements for a
fair low-cost space. a. Maintain existing tenants
i. Continue to review all lease agreements to assure that both the City and Tenants are fulfilling lease requirements. Perform work or make changes as necessary.
ii. Continue to allow and/or encourage tenant repairs that benefit the facility as well as the practice of trading in-kind work for rent subsidies. iii. Make reasonable improvements to help retain occupancy or perhaps allow tenants
to expand. However, some type of minimum cost-benefit ration needs to be established to assure an appropriate return on investment. b. Attract new tenants
i. Look for good tenants that value our pricing structure over some of our shortcomings at the site. ii. Offer incentives.
iii. Make minimal improvement to the facility.
Pros
Minimizes expenses for improvements and staff time Allows time for economy to rebound and the vacancy shuffle in the area to end.
Cons
Reduces likelihood of measurable increase in: Occupancy
Job growth Revenue No solution to intermittent site access due to the railroad crossing
Limited funds to improve facility 2. Selective focus on improving certain buildings/suites into flexible rental space for
incubator/business development purposes. a. Allow business and innovation development by providing a flexible portfolio of spaces, services, and business assistance to new and developing concepts and companies.
i. Provide “loft space’ or “open campus” spaces to encourage and allow shared use that can balance two seemingly divergent objectives: promoting social interaction
and preserving privacy for unencumbered work and creativity.
1. Provide areas for groups to be able to work together easily with large surfaces.
2. Provide a layout that provides adequate isolation for working alone
ii. Provide shared utilities (power, water, high speed Wi-Fi) iii. Provide services (reception, security, office equipment)
b. Partner with appropriate organizations and businesses i. Regional Acceleration Innovation Network (RAIN) ii. Makerspace
iii. Hackerspace iv. UO v. Sprout!
vi. Bring vii. NextStep viii. Food Carts
ATTACHMENT 1 - 3
There are a number of vacant spaces at Booth Kelly that could easily be modified for these
purposes with minimal investment. While the income from this type of use will not be high it does
offer several benefits.
Pros
Some income is higher than no income Creates a potential for higher occupancy rate for advertising purposes
Tenant presence creates more security and reduces vandalism Occupancy brings people who will shop and dine in Springfield Grows businesses and potentially feeds them into bigger full rent spaces
Cons Requires capital investments to provide amenities Relies on new and unproven businesses
No solution to intermittent site access due to the railroad crossing 3. Selective removal of the most deteriorated structures to create space for potential
redevelopment. This concept would likely require the development of a Request for Proposals to determine the level of interest and the amount of space required. This is an extension of what was
accomplished when the City first took ownership of the facility.
Pros Reduced capital, maintenance and operating costs
Partially prepares site for new development spaces Cons Loses short-term opportunities for leasing income and bringing jobs to the site
Community perception of the loss of “historic” or “iconic” properties Cost to demolish buildings
Costs associated with uncertain site conditions (unconsolidated fill, USTs)
• Environmental cleanup
• Extra construction costs due to site conditions No solution to intermittent site access due to the railroad crossing
4. Selective addition of structures on a build-to-suit or Request for Proposal (RFP) basis. This concept would likely require the development of a Request for Proposals to determine the level of
interest and the amount of space required.
Pros Expands the marketability of the site by not limiting it to existing structures
Expands the number and type of business that could use the site
Cons Does not directly benefit existing structures with occupancy or renovations Cost of construction if we build-to-suit with potentially a long payback periods
Costs associated with uncertain site conditions (unconsolidated fill, USTs)
• Environmental cleanup
• Extra construction costs due to site conditions No solution to intermittent site access due to the railroad crossing
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5. Removal of all structures and prepare site for total redevelopment. This concept will require
the development of a Request for Proposals to determine the level of interest and the amount of
space required. This is a re-extension of what the City considered when it first took ownership of the facility.
Pros Reduced capital, maintenance and operating costs
Prepares site for new development spaces
A large new, major employment center could greatly benefit the community Cons Loses short-term opportunities for leasing income and bringing jobs to the site Community perception of the loss of “historic” or “iconic” properties Unknown length of time for redevelopment to occur
Places a “bet” on full redevelopment schemes Cost to demolish buildings Costs associated with uncertain site conditions (unconsolidated fill, USTs)
• Environmental cleanup
• Extra building costs due to soil conditions
No solution to intermittent site access due to the railroad crossing
RECOMMENDED ACTION: Staff recommends Option #1- Status quo approach to operating
the facility with minimal investments by finding tenants preferring low-cost space over extra amenities or who are willing to make improvements for a fair low-cost space. However, even the status quo recommendation requires that we work with architectural and/or engineering consultant
to evaluate the condition of each structure at the facility and receive recommendations about required repairs and improvements. It is possible that this information could lend credence to
implementation of Option #2, as feasible and provide Council with more information to use in
future evaluations of the remaining options.
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Storage 115
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ATTACHMENT 2
Booth Kelly Tenants Legend
as of September 18, 2013 Vacant Space
Lease Pending
Occupied Space
Suite Tenant Business Type
110 Vacant Warehouse
112 Vacant Warehouse
115 Eugene Ballet Company Scenery Storage
120 Northwest Door and Sash Manufacturing
127 Vacant Warehouse
135 Dorman Construiction Office
140 Greenbrier Rail Services Storage
145 Springfield Museum Storage
147 Foster and Adoptive Parents Assoc.Office
153 Vacant (1st floor)Office
155 Vacant Warehouse
165 Ditch Project Studio/Gallery
170 Eugene Ballet Company - Costumes Storage
175 Head Start of Lane County Storage/Shop
Parking lot Head Start of Lane County Bus hub
182 Design Services, Inc.Manufacturing
185A Mathews Woodworking Manufacturing
185 Dorman Construiction Construction
188 Vacant Warehouse
195 Greenbrier Rail Services Rail Car Services
200 Vacant (2nd floor)Office
230 Vacant (2nd floor)Office
300 Forefront Designs Inc.Manufacturing
400 Inclusilife Inc.Kitchen
Parking lot LTD Park and Ride
Note: Booth Kelly Monthly Income approximately $37,000.00
ATTACHMENT 3