This event today is an “Investment In Our Future.”
The decision regarding the purchase of the former Globe Store has been a well thought-out, analyzed and vetted venture.
This project at The Globe is not about Commissioner Patrick M. O’Malley, Commissioner Jerry Notarianni or Commissioner Laureen A. Cummings. It is about serving the 214,000 residents of our community in a convenient one-stop shop housed under one roof in a modern facility.
Professionals from finance, real estate, architecture, engineering and economic development have worked tirelessly to help craft the details to guide the Commissioners in their decision-making process.
The reports that follow will focus on how the project will impact the County’s finances, budget, economic development opportunities, architecture, and building operating systems.
Short History of How We Came to Select the Globe for the County’s Offices
In January of 2008, we started the inventory and needs assessment of all owned and leased County’s offices and storage with the idea of consolidation. This work was completed in October of 2008.
In 2009, the County looked at various sites in downtown Scranton where we could house County offices. We looked at:
The Connell Building
The Scranton Life Building
The Scranton Electric Building
The Boccardo/Cusick site
North Penn Savings/Steppacher sites
JC Penny Building
Fidelity Bank Administration Building
Medical Arts Building
The Adams Plaza
Penn Security Bank Building
The last three sites were for either an addition to the County Offices or for a new building. When we put together the numbers for the addition of 158,000 sq.ft. or a new building of 250,000 sq.ft. the costs were prohibitive. The estimates were $37,920,000 and $60,000,000 respectively. The amounts did not include acquisition or soft costs.
Then in January of 2015, we looked at a large building in Green Ridge but it needed to be renovated and needed a 100,000 sq.ft. addition. We also looked at Bon Ton in the Steamtown Mall, but that was problematic because the County would be sharing a roof, a parking garage, and all of the mechanical and electrical systems with the mall owner.
In July of 2015, we updated the 2008 study by verifying changes in all of the departments. Following this update we looked at the Globe Store to see if it would fit all of the County’s needs. With 255,000 sq.ft., it would take care of those needs.
We also did an existing conditions assessment of the Globe Store. From the assessment and layouts of the departments in the Globe Store building, we had two cost estimates done. The first by Becker & Frondorf and the second one for verification of the first cost estimate by the Quandel Group.
Based on the cost estimates and the other miscellaneous costs, we came to the conclusion that this property is right for the County.
I have been reviewing buildings with John Palumbo since 2011 for a County Consolidation Plan. Of the shortlist of buildings that were identified that met the County’s space needs, from an engineering standpoint, none were as well maintained or had MEP systems comparable to the Globe Building.
We have thoroughly investigated its mechanical, plumbing and electrical components and found that they are in very good condition. Its equipment has been maintained and updated throughout the years. The structural integrity of building is excellent and the building has a relatively new roof that is in great shape.
We completed a Building Engineering Assessment last year and discovered that the former tenant, EDM, completely renovated the building’s infrastructure in 1998, in a $15 million renovation project. This included replacing all of the major components of the HVAC and Electrical systems. This will be a large bonus when renovating the building because the County won’t need to replace the existing components. We will simply be adding to the existing system and not replacing the entire system.
The HVAC system has been maintained by the same contractor that currently does routine maintenance for the County. They are very familiar with the building and this will allow for an easy transition of the maintenance contract to keep the building operating efficiently. As part of the study, we modeled energy usage and believe the systems within the Globe Building are more efficient than most of the County’s other building systems, which will decrease overall energy consumption by the County.
As part of their renovation, the former tenant also upgraded some of the structural components of the building by reinforcing the framing. This allowed the building’s use to be converted from Retail Space to Office Space with high density file space.
The building also has a code compliant fire sprinkler system and fire alarm system. This is not typical for a building of this age and also adds value to the building for the additional safety measures.
After our thorough review of the Globe Building and our previous review of other buildings within the Downtown Scranton Area for the County, we believe this is the right building for the County’s consolidation plan.
As Mr. Durkin’s numbers demonstrate the purchase of the Globe Store will have a positive effect on the County Budget. The savings from the elimination of leases and the ability to bill the state rent for state funded agencies will more than offset the annual debt service to acquire and renovate the building.
In addition the County will realize an estimated savings of $80,000 annually on utility costs once all of the offices are relocated.
After 25 years, the County will have a debt free asset which is owned by the taxpayers of the County.
Over the last 10 years, the County has budgeted and paid over $10,000,000 in lease payments for departments moving to the new building, which equates to approximately 9 mills in taxes.
Based upon analysis of the rents paid to lease the various locations which house offices for Lackawanna County and the additional rents we will be able to garner from agencies of the State, who will be able to reimburse the County for rent in a building with an existing mortgage, we have determined that there will be savings realized by the County if we are able to consolidate most of the County’s offices in one building.
According to our estimates, which have been verified by an independent accounting firm, the County could realize conservative annual savings of $1,156,983, while amortizing the new debt incurred to acquire and renovate the building over 25 years with annual debt service not to exceed $1,115,100.
With economic conditions being what they are, and after having had lengthy discussions with Michael Vind from Financial Solutions, the County’s Financial Advisor, I believe that the interest rate environment is optimal at this time. In addition, in as much as the County received an “A-Stable” favorable bond rating from Standard & Poors at the end of 2015, it is my considered opinion that there will be no more optimum time than right now for the County to finance the Lackawanna County Governmental Center project.
The 100 block of Wyoming Avenue has long been a depressed section of our fair city, functioning as an outdoor transportation hub and a side yard for single room occupancy tenants. The vacancy at the Globe Store had contributed to the current condition.
There have been millions of dollars itemized over the years in Pennsylvania. House bills to help champion the revitalization of this important and central part of our County. No one to date is willing to match and capitalize these dollars to help revitalize the area.
The purchase of this building provides a catalyst in extending the revitalization efforts of the Steamtown Mall and movie theater. Being an integral part of the mall will generate visitors to the County offices as well as County employees helping to patronize and strengthen the ongoing efforts there.
There have been significant discussions with multiple developers to complement and build upon this project to further help reinvigorate the central downtown area. We look forward to this new project being a keystone in the revitalization of a significant part of our central city location and our County seat.
Over the next 18 months, we will work diligently with our economic development partners and the Greater Scranton Chamber of Commerce to bring in additional tenants to lessen the impact of this consolidation and efficiency achieved by this move.