City Hall to move to Newcastle Professional Center by end of year
February 7, 2011
By Tim Pfarr
Council turns down offer to use both floors of current building
UPDATED — 5:25 p.m. Feb. 10, 2011
So long, 13020 Newcastle Way.
The City Council has voted to move City Hall to the 7,500-square-foot second floor of the Newcastle Professional Center, 12835 Newcastle Way, by the end of the year. City staff recommended the move, which will cost $250,000.
City Manager Rob Wyman said it is the state of the current facility that prompted the recommendation. The city’s lease with current landlord Jim Denton expires at the end of the year.
The City Council voted 4-3 at its Feb. 1 meeting to allow Wyman to sign a five-year lease with dentist Dr. Geoffrey Strange, who owns the Newcastle Professional Center.
However, Denton submitted a revised lease offer to the city Feb. 4, in which he offered to allow City Hall to occupy both floors of the building, which would double City Hall’s size.
The council held a special meeting Feb. 7 to discuss Denton’s new offer and possibly rescind its previous decision. However, the council was still in favor of moving, with Councilmen Bill Erxleben and Rich Crispo and Councilwoman Carol Simpson dissenting.
The city will pay rent at its current site through the end of the year, and it will not be required to pay rent in the Newcastle Professional Center until next year.
The city has rented its City Hall space above Newport Manufacturing for 15 years.
A new home
Wyman signed the lease with Strange immediately after the Feb. 7 meeting. Next, the city will hire an architect to design the layout of the new office space.
The three tenants on the second floor of the Newcastle Professional Center will move to the third floor of the building to make space for City Hall. The city will then have the second floor remodeled to accommodate its offices and Council Chambers.
Wyman said he was unsure of when City Hall would make the move, but it would likely be later in the year, possibly in September.
The King County Sheriff’s Office will also use space in the building, in which it will have “hot desks.” At those desks, any King County Sheriff’s deputy will be able to file reports while they are in the area. The sheriff’s office will pay about $17,000 annually for the space.
The new City Hall will also be full service, meaning utilities and some operational costs — such as garbage collection and janitorial services — will be included in the monthly rent.
The parking lot would include 27 spaces for employees and visitors during working hours, and as many as 63 spaces for after-hours City Council meetings. Overflow parking would be at Valley Medical Center, 7203 129th Ave. S.E., which would provide about 60 more parking spaces.
City Hall now has 17 spaces in its parking lot and about 20 overflow spaces available at Precision Auto Craft east of City Hall.
City staff members said the new location will allow them to better interface with the community, advertise city meetings in the building’s lobby and increase attendance at city meetings.
They also said it would improve the city’s image, which is adversely affected by appearing to be operated out of an industrial facility. Furthermore, the move would allow for a new tenant to occupy the current City Hall spot and possibly contribute to sales tax revenue.
Mayor John Dulcich manages the corporation Newcastle Investments, which owned half of the Newcastle Professional Center from its construction in 2007 until March 2008. The corporation sold its half of the ownership to Geoffrey Strange, who had owned the other half.
The corporation is still active, according to the Secretary of State, but Dulcich said the corporation no longer does business. He said neither he nor Newcastle Investments has an interest in the Newcastle Professional Center.
The split decision
The proposal to move elicited an emotional debate from the City Council.
Deputy Mayor Steve Buri said it would be a good time to make the move, given the economy.
“Ultimately, it’s a question of whether it’s a sensible investment,” he said. “This is not just an additional expenditure.”
Councilman Sonny Putter said the move would give the city a more professional look, as he said some have commented that City Hall looks temporary.
“For too long, we’ve felt like this city is a temporary city,” he said.
Councilwoman Lisa Jensen said it would be easy to say no to the move, but that moving was the right decision, as it would put City Hall in a central location, near the soon-to-be Newcastle Library.
Dulcich said the move is a logical one, as employee productivity would increase in a nicer location.
However, Crispo said voting against the move was simply a matter of priorities. He said it would be more beneficial to residents to use the money it would for the move for things such as additional street maintenance.
Simpson said she likes the new facility, but a $250,000 moving bill was simply too hard to swallow.
Erxleben said the city is just one more road failure from falling into the red.
“Anyone who has looked at our budget analysis for the next five years has seen that we’re headed for deep trouble after 2013,” he said.
“This is not the time,” he said about the move.
The $250,000 the city will pay for the move will fund repairs to the current City Hall building and redesign and remodeling of the new site.
At the current building, the outside stairs and wheelchair lift need replacement. Inside, a wall needs to be repaired or replaced, as does the carpet, which is torn in spots and trips employees.
“We have a significant number of people who almost face-plant around City Hall on a regular basis,” Wyman said.
It will cost about $100,000 to make the pertinent repairs to the building, which the city is required to make before vacating. If the city had taken Denton’s offer, he would have paid for half of the repairs.
To pay for the move, city staff brought forward two options. Both options call for a $25,000 draw from the city’s Surface Water Management capital projects fund. One calls for the remaining $225,000 to come from the Real Estate Excise Tax fund, and the other calls for it to come from the city’s cumulative reserve, which requires a supermajority of two-thirds of the council to use.
Excise taxes from home sales fund the REET fund. It is typically used to fund transportation projects, such as road maintenance and sidewalk construction. If the city were to use this money to pay for the move, the REET fund would run out of money in 2013, according to the city’s projections.
If the city were not to fund the project using the REET fund, the REET fund would dry up in 2014.
Wyman said the city’s projections are very conservative, but if the REET fund were to run out of money, the city would need to cut back on capital projects or transfer money to it from a different city fund.
The city’s cumulative reserve fund has $1.5 million. It is reserved for capital purchases or unforeseen operating costs. The city has never drawn money from the fund to pay for capital purchases.
Rent in the new building will increase steadily for the next five years, rising from $22 dollars per square foot in 2012 to $28 per square foot in 2016. The cost of renting the space through 2016 will be $882,705, about $78,000 more than the city would pay if it had extended its current lease for five years.
Other options passed up
City staff also considered other alternatives to the city’s lease, such as constructing a new building, which it considered to be too expensive. Wyman said there was no other office space available in the city.
In Denton’s revised lease, he offered to drop the city’s rent from $13.20 per square foot per year to $9.75 per square foot per year. After 2016, the rate would’ve increased by 2 percent per year.
Using both floors of the building for the next five years would cost $1.15 million, but the lower floor could have served as a maintenance facility. In addition to paying for half of the building repairs, Denton said he would also pay as much as $50,000 to help remodel the downstairs.