A Penthouse View of Historic Market Street for Chester County Elected Officials . . . Rent $3.1Million per year

Based on Chester County’s recent lease negotiation with a private developer, no one would believe that we are facing the same economic challenges as the rest of the country.

The administrative offices of Chester County are moving from West Chester’s historic courthouse to a new privately owned 6-story office building on W. Market Street starting on March 18. Why the move . . . did they outgrow the courthouse office space . . . did they tire of their historic offices and long for the ‘new-car smell’ of new offices? 

The county’s elected officials including commissioners, county controller, county treasurer, county solicitor, Recorder of Deeds will be leaving their courthouse offices behind for this new location.  The lower 2 floors are parking for county employees and the upper four floors is office space in the new building. The Tax Assessment office will move to the third floor and the County commissioners and row officers will enjoy offices on the sixth floor, overlooking historic Market Street.

We do know the price tag for their new digs.  The county is paying $3.1 million in rent for the first year; increasing by $31K each year for the length of the 20-year lease. The lease option is $37 million for the first 10 years.  At that point, the county could purchase or extend the lease for the remaining 10 years.  I am not sure how this lease agreement would work . . . the county will not own the building but will pay rent.  I don’t see any economic or tax benefit to this arrangement.  If the county needed more office space, why not either renovate existing county-owned space in the courthouse or use bond money to build an office building.  At a minimum, the county would benefit from ‘owning’ rather than ‘renting’ their office space.

The county’s elected officials including commissioners, county controller, county treasurer, county solicitor, Recorder of Deeds will be leaving their courthouse offices behind for this new location.  The lower 2 floors are parking for county employees and the upper four floors are offices in the new building. The Tax Assessment office will move to the third floor and the County commissioners will enjoy offices on the sixth floor, overlooking historic Market Street.

As an aside, I did some research on the property owner of the new office building . . . J. Loew & Associates, a commercial real estate developer from Downingtown.  Based on the vast availability of office space listed on their website, J. Loew appears somewhat overextended with their available rental commercial real estate. In a quick analysis, I counted that the developer currently has over 30 office buildings, warehouse and retail complexes available for lease.  In addition, some of the available office space is very large corporate office buildings in the Great Valley. 

I guess a 20-year lease agreement with the county of $3.1+ million a year helped ease some of the pressure for J. Loew & Associates.  Think about it, the company finances and builds the Market Street office building in West Chester, rents it to the county at a profit and [if the county decides at the end of 10 years] turns around and sells it to the county for a profit.  Savvy business negotiating.  Also when researching J. Loew & Associates, I discovered another interesting fact.  The business partner of J. Loew & Associates, Eli Kahn, donated $25K to the Chester County Republican Committee over the last four years.  All so very interesting.

Many of our Chester County officials were elected on campaign pledges of no tax increases and many of those individuals seeking election or re-election continue similar austerity promises.  How will these same individuals now rationalize this lease agreement?  Are taxpayers going to pay for our elected official’s penthouse view of historic Market Street?

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  1. Pattye – Some more facts would be nice. How many square feet did they lease? What operating expenses are included in the lease? What are there plans for the space they are vacating? What would it have cost for the County to build a suitable alternative in a similar location?

    Owning is not always better than leasing; particularly when the real estate markets are depressed. Lowe & Associates can build a building far cheaper than a government agency.

    I think it would be appropriate to do some additional research before implying that the Commissioners did something imprudent and before implying the Eli Kahn is getting paid-off for donations to the Chester County Republicans. It may be the case but there is not nearly enough information in your post to jump to that conclusion.

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    Pattye Benson Reply:

    Sorry. The new 6-story building has 123,500 sq. ft. It is my understanding that the commissioners hope to sell the vacated North Wing and the Mosteller Wing of the courthouse to private developers. I should have mentioned that in the post — but frankly, I find it troubling that parts of the historic courthouse will be sold. In my perfect world, I would want the courthouse to remain intact and necessary retrofitting for the county officials to remain in that space. Since the county owns the courthouse, why not work with what you have? This is all water over the dam — this decision was made in 2008. I attempted to access the 2008 County Commissioners minutes but unfortunately there was an access problem through the library system. I apologize if you found my research lacking on this subject.

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    PanhandleModerate Reply:

    I am basically a fan of your research; it is far more in-depth than I would be inclined to do. I may have misread your post but I felt that it implied malfeasance without support for the implication. If the rent and square footage are as indicated that would reflect a rental rate of $25+- per square foot, which is well within the realm of reason for nice suburban office space. (I have no knowledge about the quality of the office space or the operating expense structure.) Depending on the condition of the existing office space this deal may have saved the taxpayers lots of money over renovating in place which is very expensive and time consuming. Unfortunately sometimes “working with what you have” is just not feasible.

    Thank you for all you do to keep us informed.

    [Reply]

    From the West Reply:

    I find it troubling that parts of the historic courthouse will be sold

    *****

    Pattye — the county will retain the historic courthouse section. The rest is to be sold. As you probably know, there is a “connector” b/t the historic section and the rest, so splitting is fairly easy.

    [Reply]

    Pattye Benson Reply:

    FTW – Yes, the plan calls for the county to remain ownership of the 1846 Courthouse, alhtough early on there was discussion about offering the Courthouse along with the North Wing and Mosteller Wing to developers. The North Wing is a 5-story structure just north of the Courthouse and Mosteller Wing on Gay & Church streets is what is proposed to be sold. The suggestion is to develop the lower level of th Mosteller Wing as mixed-use — retail, restaurants and offices. I did read one HARB report from 2009, that discussed requiring developers to include historic facades in their plans so as to blend with the 19th century courthouse. I appreciate that it will be faily easy to seperate these buildings from the Courthouse and sell them; I’m just concerned for the historic footprint of the area. And I do understand that it is probably cheaper for the county rent an office building than to take on the project of renovating the North Wing . . . and like I said, it is water over the dam as all this was decided several years ago.

  2. Spending other peoples money is easy for politicians and school boards. 7.5 million to BUY a building for the T/E School Admin folks (plus huge condo fees each month) with no idea what to do with the old ESC facility. Oh buy several storage sheds and tear down the old building. All just because there was money in the Facilities reserve fund.
    Show me a family or business that can buy property without having some plan to dispose of the old property.
    County or township – makes nary a difference.

    [Reply]

    Kevin Grewell Reply:

    Papadick – this is not for your benefit, since I know you will never get the point because you don’t want to, but for the benefit of readers of this blog, here is an answer to your comment:

    For the umpteenth time (and without getting into great detail) the old building was shot and the district would have spent as much or more either building a new one on site or renovating the old one and bringing it up to current codes. Locating the administration elsewhere keeps the ESC property available for future educational use, which was prudent in light of uncertain future enrollment growth. For example, it was expected (still is, I believe) that the state will eventually mandate all-day Kindergarten. The ESC site could be used for a Kindergarten center. That is only one possible use. There was a designated use or “plan” – that was to keep the land available for future educational needs and enrollment growth, not to lock it up forever as an administrative building. We had a very good idea what we were going to do with the ESC.

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    Additional Perspective Reply:

    If you don’t know the facts, the decision to move the administration from the old ESC looks wasteful. But it’s important to take the time to actually research the situation.

    At a recent meeting, Pete Motel read a statement explaining how the old ESC would be used. In particular, he noted that it is the only site the school district owns that could be used for a new school should one be needed in the future. It would be irresponsible for the district to assume that a new school will never be needed. Simply ask the BOS or the T/E planning commission. There are new houses being built in T/E all the time.

    If the district sold the ESC or if they had renovated the building for administrative use, they would not be able to use it for a school in the future.

    Would you prefer that the district sell the land now and then have to tear down people’s houses to build a school in the future? That would cost considerably more money and really anger the people who lost their homes. And can you imagine the legal bills?

    There are not that many 15+ acre lots available in T/E that do not have open space restrictions on them. The old ESC is not 15+ acres but is grandfathered in the state law that requires lots of that size.

    [Reply]

    Kevin Grewell Reply:

    Thanks, “Additional Perpspective”. It may or may not have been the best decision – time will tell. Certainly valid points can be made for and against. What I object to is Papadick’s repetitive assertions that the board had no idea what it was doing with the land, had no reason to support the move, etc., when that is not true and I have pointed this out many times. Reasonable people can disagree on whether the move was a good one or not, but the claim that the board had no idea what it was doing is just not valid.

    By the way, there is a 15 acre parcel in Chesterbrook but it presents many difficulties and may not be usable as a school site – wrong place, political opposition form Chesterbrook residents (huge fuss over development of four flat soccer fields) and too much concentration of schools in one area (to be fair to Chesterbrook residents, they do have enough schools and school impact already).

    The former ESC site is small, but your point re “grandfathering” is probably correct. The high school is on a plot of land far smaller than current regulations would allow. But when it was up for expansion, the state did not stand in the way – in a case of necessity the state won’t stand in the way – for one thing, they don’t want to be responsible for forcing the school district to purchase or condemn land elsewhere and take the political heat for that.

  3. Pattye —

    Do you know if there are other factors at play here?

    What other rented gov’t space will be consolidated into this new office? How much did that all cost?

    What were the estimates to bring the current offices up to spec vs. what the revenue from a sale may be?

    If you don’t know, no big deal. I just think it is unfair to jump off on rants about wasting tax dollars when we don’t know the whole picture.

    [Reply]

    Pattye Benson Reply:

    The decision on the county move was made in 2008. I am certain there is more information available if you (or someone else) wanted to research the “estimates to bring the current offices up to spec. vs. what the revenue from a sale may be”. The lease is signed.

    I know that everyone is not interested in my opinions or the topics I choose to write about on Community Matters. I try to be fair and objective when I write but Community Matters is my opinion. I offer readers the opportunity to weigh in with their opinions and comments and encourage this dialogue, even if I may not necessarily agree.

    I was simply surprised by the county’s $3.1 million/yr. lease on office space in West Chester. I’m sure that much study and rental vs renovation costs went in to the decision to lease the space. I do not think I was on a ‘rant about wasting tax dollars’.

    [Reply]

    From the West Reply:

    Pattye —

    sorry…didn’t mean you were ranting. others. my bad.

    thanks for the info.

    [Reply]

  4. Like here, I would guess J. Loew and Assoc. are big GOP benefactors.

    ****

    Actually, the project is a combined effort between Loew and Zukin. Zukin is one of the county’s biggest Democrat contributors.

    That said, both of these companies are two of the biggest commercial developers/realtors in the area, Zukin, in particular, focuses much of his business efforts on the West Chester Area.

    Things might not be quite as sinister as you always try to make it seem, John.

    [Reply]

    From the West Reply:

    your retort is nothing more than “Yea..well the D’s do it too…”.

    ********

    Sorry, John, my point was when you decide to make a point like you did about Loew, you should also do the other side up-front.

    I don’t think in terms of “the D’s do it too…”; I think in terms of if you want to make a point that doesn’t seem hyper-partisan by leaving out one side, you point out the “misdeeds” of both sides.

    As I see on this blog, you will call out both sides, but often only after called on for an example. Your default setting seems to be blame the GOP first and, if called upon, give a Dem example.

    [Reply]

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