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HomeMy WebLinkAboutItem 02 Chamber of Commerce/Depot Foundation Update AGENDA ITEM SUMMARY Meeting Date: September 10,2007 Meeting Type: Work Session ~ Department: City Manager's Ice . Staff Contact: Gino Grimaldi < S P R I N G FIE L D Staff Phone No: 726-3700 .J C IT Y C 0 U N C I L Estimated Time: 15 Minutes ITEM TITLE: CHAMBER OF COMMERCE/DEPOT FOUNDA nON UPDATE. ACTION Council is asked to discuss the issue and provide staff with direction regarding the REQUESTED: future ownership of the Depot and the po.ssibility of contributing $15,000 to repair the Depot. ISSUE STATEMENT: The Chamber ofCo.mmerce and the Depot Foundation are in the process of making decisio.ns regarding office space for the Chamber of Commerce operatio.ns and the need to make an estimated $43,000 in repairs to the Depot. Council guidance is needed regarding the future ownership of the Depot and the . po.ssibility of contributing $15,000 towards the repair of the Depot. ATTACHMENTS: DISCUSSION/ FINANCIAL IMPACT: Attachment I - Council Briefing Memorandum. The Chamber is looking at four options regarding the future of the Depot and office space for their operation. The four options are: 1. Fix the heat pumps at the Depot for an estimated cost to the Chamber of $23,000. The Chamber would remain in the Depo.t and the Depot would continue to be owned by the Depot Fo.undation. 2. Fix the heat pumps plus do other repairs to the Depot including repairs to. the roof, painting, dry rot repair and removal of carpenter ants. Total cost is estimated to be $43,000 plus $10,000 to $15,000 of in-kind donations from area businesses. The Chamber would obtain a bank loan to make the repairs. They are requesting $15,000 from the City to help with the cost of repairs. The Chamber would set up a $6,000 per-year sinking fund for future repairs. The Chamber would want to assume ownership of the Depot to secure the bank loan. 3. Move the entire Chamber operatio.n to the Royal Building, currently under construction by St. Vincent de Paul. This w'ould most likely result in a transfer of ownership of the Depot to the City. 4. Perform the repairs noted in option 2. House the Visitor Center portion of the Chamber in the Depot and move the remainder of the Chamber operation to. the Royal building. The Depot continues to be Springfield's Visito.r Center for the foreseeable future but other uses could be considered. The Chamber would assume ownership of the Depot. See Co.uncil Briefing Memorandum for additional details. Ownership and funding options are also included in the Briefing Memorandum. MEMORANDUM City of Springfield Subject: September 6, 2007 Mayor and Council m Gino Grimaldi, City Manager "*!5 CHAMBER OF COMMERCE / DEPOT FOUNDATION UPDATE COUNCIL BRIEFING MEMORANDUM Date: To: From: ISSUE: The Chamber of Commerce and the Depot Foundation are in the process of making . decisions regarding office space for the Chamber of Commerce and need to make an estimated $43,000 in repairs to the Depot. Council guidance is needed regarding the future ownership of the Depot and the possibility of contributing $15,000 towards the repair of the Depot. BACKGROUND: The Depot is a very significant building in Springfield. It was Springfield's first (-1890) major commercial structure built at South 7th Street adjacent to the Southern Pacific main rail line. After Southern Pacific boarded it up in the 1970s, there were years of discussion about saving the building. Eventually, the City relocated the Depot and moved the Depot in the late 1980s. The City purchased the properties, tore down buildings, removed five leaking underground storage tanks, and readied the site with paving and parking. Years of volunteer efforts improved the interior and exterior of the building and the private, nonprofit Springfield Depot Foundation formed to finish the renovation in preparation for subsequent use. The Foundation's by-laws included a reversion of the building to the City should the Foundation dissolve. In 1990, the Springfield Chamber of Commerce proposed to rent office space (about 900 square feet) in the Depot and provide some measure of income and insurance to cover basic costs, day- to-day security-by-occupation, minor maintenance, and oversee rental of the facility to the public. The Depot is on the National Register of Historic Places and this designation severely limits the things that can be done externally to the building. In the early 1990s, the original members of the Foundation left or retired and the Chamber's ~xecutive Committee, plus Dan Egan as Secretary and Tom Griggs as Treasurer became the Board of the Depot Foundation. Current Chamber President Dean Huber is the President of the Foundation. ' The Chamber has spent at least $30,000 out-of-pocket for repairs that the Foundation could not fund (e.g., hot water heater repair, plumbing repairs, painting, new carpeting, painting the rail car). The Chamber pays $.81/sq. ft. for 900 square feet of office space. Rental income received by the Foundation covers the cost of utilities, insurance and property taxes. DISCUSSION: The Chamber is looking at four options regarding the future of the Depot and office space for their operation. The four options are: 1. Fix the heat pumps at the Depot for an estimated cost of $23,000. The Chamber would remain in the Depot and the Depot would continue to be owned by the Depot Foundation. 2. Fix the heat pumps plus do other repairs to the Depot including repairs to the roof, painting, dry rot repair and removal of carpenter ants. Total cost is estimated to be $43,000 plus $10,000 to $15,000 of in-kind donations from area businesses. The Chamber would obtain a bank loan to make the repairs. They are requesting $15,000 from the City to help with the ATTACHMENT I - PAGE 1 cost of repairs. The Chamber would set up a $6,000 per-year sinking fund for future repairs. Under this scenario the Chamber would want to assume ownership of the Depot in order to secure the bank loan and to recognize the investment of Chamber resources in the building. The Chamber would be responsible to keep up the integrity of the building, the building systems, and the appearance of the building. The entire Chamber operation would remain in the Depot. In accordance with the by-laws establishing the Depot Foundation, transfer of ownership of the Depot cannot take place without the approval of the City of Springfield. 3. Move the entire Chamber operation to the Royal Building, currently under construction by St. Vincent de Paul. This would most likely result in a transfer of ownership of the Depot to the City. The membership of the Board ofthe Depot Foundation is the same as the Chamber Board. They would have little interest in the Depot if the Chamber vacates the building. If the Foundation ceases to exist, ownership of the Depot transfers to the City. 4. Perform the repairs noted in option 2. House the Visitor Center portion of the Chamber in the Depot and move the remainder of the Chamber operations to the Royal building. The Depot continues to be Springfield's Visitor Center for the foreseeable future but other uses could be considered. The Chamber would assume ownership of the Depot. In terms of ongoing operating costs for the Chamber, the options are listed in order of operating costs with Option 1 being the least expensive and Option 4 being the most expensive to the Chamber. Dan Egan is recommending that the Chamber Board move forward with option 4. The Board has not made a fmal decision at this time but they have indicated a preference for option 4. Dan Egan has indicated that if the Chamber were to assume ownership of the Depot, the Chamber would be open to an agreement that would give the City a voice in the future of the Depot should the Chamber decide to vacate and sell the Depot at some time in the future. The Chamber would agree to a conversation with the City about the current and future use of the building on a regular basis and consult with the City if any use for the building (other than the use as it is today) is contemplated. The City Council should discuss the following issues in order to assist the Board of Directors of the Chamber of Commerce and Depot Foundation with their decision making: Ownership Does the City Council have an interest in transferring ownership of the Depot to the Chamber of Commerce? The actual transfer would need to be in accordance with state laws regarding the disposal of city property. Th~ property would need to be declared surplus and a public hearing regarding the transfer would be required. Does the City Council have an interest in assuming ownership of the Depot and leasing the Depot to the Chamber? If the Council has an interest in assuming ownership of the building it is recommended that staff be directed to evaluate the condition of the building, provide an estimate of needed repairs, annual operating costs, annual operating revenue, and possible funding sources for repairs prior to the City Council making a fmal decision regarding assuming ownership of the Depot. Funding Does the City Council have an interest in providing the Chamber with fmancial assistance for ATTACf. IMENT I - PAGE 2 the repair of the pepot? This question does not need to be answered if the City Council has no interest in transferring ownership of the Depot to the Chamber because the Chamber cannot obtain the loan needed to fully fund the repairs of the building without obtaining ownership of the building. RECOMMENDED ACTION: Council is asked to hold discussion on this issue and provide staff with direction. ATTACHMENT I - PAGE 3