The Question of the Courthouse…My Opinion by Jacksonville Review Publisher Whitman Parker

Three years ago, I had the privilege of being a founding board member of the Jacksonville Heritage Society whose mission was to help pick-up the pieces when the historical society determined they could no longer care for four historic properties. One very important part of our mission was to help find tenants and/or caretakers for the Courthouse complex, Beekman House, Beekman Bank and Catholic Rectory. JHS had had high hopes that Britt Festivals would relocate its corporate offices to the Courthouse complex, using the first floor for offices and turning the upstairs floor into a year-round performing arts center.

It’s now three years later… JHS accomplished most of what it set out to do and was dissolved shortly after the City of Jacksonville became the owner of the four properties. All four properties were essentially gifted to the city by Jackson County. The three County Commissioners and Administrator gladly turned over the keys and responsibility for the properties to Jacksonville but provided zero funds to care for them or pay for years of deferred maintenance.

Today, the properties are being cared-for, albeit on a shoestring city budget. While discussing the “gift” with city officials, the County essentially told Jacksonville, “If you don’t take ALL four buildings as-is, you’ll get none of them AND the County will sell them off and deprive you of your rightful heritage.” Unfortunately, the staff and the City Council took the bait. Instead of calling the county’s bluff and demanding funds for deferred maintenance, the city became a property manager and caretaker. County Administrator Danny Jordan emerged smelling like a rose and Jacksonville taxpayers got stuck with the bill. The Courthouse and Beekman House both have serious deferred maintenance issues but it is the Courthouse which represents the largest financial liability and burden.

Ever since the fall of 2012 when the city received the keys, the discussion in and out of City Hall has been, “what should the city do with the Courthouse?” The Courthouse is one of the largest structures in town, with 12,000 square feet on two floors, three outbuildings and the former Children’s Museum. The CM now houses the Art Presence Center, for which the art group pays a nominal rental fee while providing an incredible community resource.

I feel the City Council accepted the Courthouse with too little consideration and reacted to an emotional desire to protect it from falling into private hands. My personal discussion with many locals has revealed one thing: “private hands” is not necessarily viewed as a bad thing and may actually be the best option to preserve the courthouse.

On July 30, the City Council held a study session to formally hear a presentation by PARC Resources, a Bend, Oregon firm with expertise in feasibility studies for historic properties. PARC was hired by the city, using a $6,000 grant to conduct an analysis of the Courthouse property. After receiving a paltry community response, the report reached one conclusion: the Courthouse should be converted into City offices on the first floor with an event and/or performance space on the second floor. A copy of the full report is available on the city website at www.jacksonvilleor.us and makes for interesting reading.

I use the word “interesting” but could easily substitute “leading,” “incomplete,” or even “elementary.” Again, I mean no disrespect… but the report is a glossy one, full of so many “what-if’s” and assumptions that it’s difficult to take it seriously. The city ended-up with an inconclusive, sophomoric white paper report and would have been better-off spending $60,000 on one that included real world numbers and facts.

The PARC report identified a one million dollar renovation price tag with costs for electrical estimated at ($95,000), plumbing ($98,000), ADA access ramp ($65,000), 2-stop elevator ($180,000), HVAC ($88,000), insulation ($18,000) and seismic upgrades ($335,000). Most disturbing, these estimates were not based on a detailed analysis of the Courthouse by any qualified contractors, historic architects, or construction engineers.

The estimate for seismic upgrades worries me most – the figure seems low given the shift in public use of the buildings from a static museum to an interactive municipal office and public events space.

Seismic upgrades to the Old Schoolhouse on the Bigham Knoll campus in 2007-2008 cost $2,000,000. The work was completed by a private contractor on the 19,000 square-foot building and included the installation of extensive steel beams and a new shear wall. However, the $2M price tag did not include demolition costs, installation of all new HVAC ducting or any painting. The project was “private,” and did not require public “prevailing wages” to be paid. “Prevailing” means “union,” by the way. If the city is the project developer, it will be required to pay prevailing wages, driving-up costs by a considerable margin. If one extrapolates building square footage and prevailing wage vs. private wage differences and takes inflation and other factors into consideration, it’s not unrealistic that the Courthouse seismic-only upgrades could reach $1 – $1.5 million. This number would be a far-cry from PARC’s $335,000 estimate.

The PARC report failed to accurately assess the substantial restoration cost to bring this structure up to code, thus enabling the City to move its municipal offices into the first floor and to convert the 2nd floor into an event and/or performance space. Before moving further down this path, the City needs to retain a qualified historic architect and engineer experienced with masonry buildings. A “current conditions” structural analysis of the 1880’s Courthouse should include an analysis of the integrity of the masonry materials, bricks and sandstone block foundation.

A complete report would include detailing what improvements are required including the roof, windows, 2nd floor, ADA bathrooms, elevator, plumbing and electrical systems, HVAC system and office space improvements required by staff. At a minimum, the City should provide a detailed interior space floor plan showing what offices will be relocated to the Courthouse. Based on this analysis, the City and community would have a better idea of what the full restoration cost would be along with the ongoing maintenance and deferred maintenance costs to sustain the buildings.

A proper report would include a use and structural analysis of the Children’s Museum, now housing Art Presence gallery, the annex buildings, and the grounds/landscaping maintenance costs. The City has hinted about relocating the Visitors Center to the Children’s Museum but has offered no cost/benefit analysis at this time. It seems likely that significant seismic modifications would be required for the CM, since it would also be used for public purposes.

Once the full cost for the Courthouse complex restoration is identified, only then can the City Council and community evaluate the benefits and cost for moving forward… based on real cost numbers. The result may lead the community to embrace the project. On the other hand, it may determine that alternative uses for the building are preferable, include selling or leasing the building to the private sector.

I found the PARC report disturbing on another level: it offered no “out of the box” ideas on attracting a major tenant or buyer for the Courthouse. Here’s my idea: The city should hire a PR or real estate marketing firm to conduct a nationwide search – concentrate on finding a “white-collar/high-tech” company with 20-50 employees to relocate here. In this case, think of Bigham Knoll – Cutler Investment Group and Ashland Partners each occupies a floor of the old school house. To attract such a party, the city should re-zone the Courthouse block to a General Commercial zone. To start, “think local” and market the “Courthouse Corporate Complex” to graduates from the University of Oregon, Oregon State University and Southern Oregon University who graduated within the past 30 years. All should be members of corporate or private boards of directors, CEO’s, CFO’s, GM’s and have an ownership interest in a company. The marketing concept could be, “Move your company to Jacksonville…come home to Oregon.” You never know…there could be a CEO willing to invest $4-$5 million into a new, state-of-the-art corporate business complex – in a special small town where his/her employees have always dreamed of living and working. In such a case, the new Courthouse owner would insure the building is cared-for, would return it to the tax rolls and would pay the city a fair market price for a building it was gifted. The city could invest the proceeds in other projects.

I admit there’s a need to examine the current state of city offices. They are crammed and need to be expanded. I frequently visit with staff and am impressed with how they manage in such tight quarters. However, other options should be explored before calling the movers. One option is expanding the current Miller House itself. The Miller/Sampson lot is large enough to accommodate an addition to the east side. Or, a breezeway could be built off the back of the Miller House leading to a new, one or two-story building behind it. If you recall, the city purchased the Hinger House behind City Hall for the Police Department, arguing that consolidating city services on the same block was advantageous. Another option for city offices includes leasing privately-owned office buildings for the Planning Department. At this time, there are three houses/buildings within a 60-second walk of City Hall already being used as offices by private companies. And, although it’s viewed as taboo, if push came to shove, the City could demolish the “Community Center/Sampson House” and build an office annex on a lot it already owns.

During the PARC presentation, it was noted that the city would welcome Britt Festivals to the Courthouse re-development project as a “partner.” After discussing the matter with Donna Briggs, Britt’s Executive Director, I learned that Britt would only be interested in using a city-owned events center as a shoulder and off-season venue but would not be participating in venue development costs. I’ve asked around and have determined a concert venue could cost at least $500,000 – another portion of the project that must be fully investigated before moving forward. It’s worth noting that the main reason the city needs to include a public events space in the Courthouse project is that it can’t get nearly as many public grants without “public space” in the mix.

Finally, as I write this op-ed, there are wild land and forest fires burning throughout Southern Oregon. Three weeks ago, a major house fire on South 3rd Street might have been a major disaster had it not been for the 3-minute response from our in-town fire department. For me, if the city is going to spend Urban Renewal or other public dollars on a project, the fire station should be job #1. In the event retrofitting is not cost-effective, I believe the vast majority of residents would back building a new fire station. Only after addressing this most-pressing issue should the city explore spending resources of any kind on the Courthouse or any project.

Again, it is time to slow down. If the city is to be taken seriously about utilizing the Courthouse for city offices or any other uses, it first needs to present a full-blown, professional analysis to the citizens addressing every aspect of the project. I appreciate you taking the time to read my comments on the matter and welcome polite feedback.

A letter from Russ Kennedy

To: City Council of Jacksonville

Mayor Paul Becker

Administrator Jeff Alvis

From: Russ Kennedy

Cc: Many Jacksonville residents

August 5, 2013

Subject: Proposed move of City Hall to Courthouse site

COURTHOUSE/ CITY HALL PROPOSAL

I attended the City Council study session held on July 30 where Bob Irvine , the PARC consultant, discussed the report entitled “Community Preferences for the Historic Courthouse: A White Paper.”

The thrust of the report was in support of spending approximately $1,000,000 ($83 per square feet) to refurb the 12,000 square feet Courthouse site for a new City Hall. I completely disagree with almost all aspects of the report and I submit that any refurb of the Courthouse will cost closer to $2,000,000 ($167 per square feet) because—

  • The building is 129 years old and the deferred maintenance costs will be much higher than the estimates used in this report. There have been many subterranean surprises in the Jacksonville building history but no comment has been made in this report concerning this very high risk factor!
  • The proposed budget of $70,000 for contingencies is totally unrealistic!
  • The present City Hall occupies 1,800 square feet for 8 employees and the proposed use of the 12,000 square feet of the Courthouse is far more than the City Hall needs. Including the other 3 buildings on this site, pushes the Courthouse complex footage to approximately 18,000 square feet of space for the City Hall complex.
  • The report does not address the use of 3 other buildings located at the Courthouse site —
    • Children’s Museum  — approximately 3,000 square feet
    • Hanley Building – approximately 1,500 square feet
    • Ferguson Building —  approximately 1,500 square feet
    • The rehab of these 6,000 square feet of facilities if done in the next few years could, easily cost  $300,000 to $600,000.  The City Council does not have a plan to address these adjacent buildings.  The City Council should not proceed, under any circumstances, with a plan for the refurb of only a portion of the Courthouse site.
  • The report states that the 1st floor of the Courthouse will be used as the new offices for the City Hall.  This 1st floor space is 6,000 square feet  in contrast this with the present space of the City Hall of 1,800square feet for 8 employees.  The present space is crowded but a  3 times increase in space is not justified; particularly when the report is glaringly lacking in headcount projections for the next 5 years.
  • The report makes no mention of the occupancy cost of the present City Hall versus what costs will be at the Courthouse site. What are the costs of utilities, maintenance, etc. presently incurred, versus, what will be the obviously much higher costs for the greatly expanded facility?  We need additional analysis of the impact of this cost differential.
  • In addition, a projection of occupancy costs should be made for at least the next 5 years for the Courthouse facility compared to the same costs for the present City Hall facility.  The costs of this new facility will, obviously, be much higher!  How much?
  • No interest costs are in the project proposal for the additional financing needed by debt financing.  Why was this overlooked?
  • No discussion was held at the July 30 study session concerning the seismic analysis performed by the firm of KPFF.
    • The seismic report is an extremely crucial part of the project profile because of  the building age of 129 years.  The City Council was remiss by not having a complete report submitted at the study session by a representative of the KPFF firm.  Has every member of the City Council reviewed this critical seismic document?  I doubt it!
  • The report used a seismic upgrade of $30 per square foot – why not use $35 per square foot that the firm stated as the high end?
  • The report is glaringly lacking in a summary of the “high risk” factors facing the project which should include a” high and low” dollar amount for each risk identified.

SECOND FLOOR PROPOSAL

In addition to the report discussed above, Bob Irvine also presented his report entitled “Economic Analysis Of Event & Community Space On The Jacksonville Courthouse Second Floor.”

  • This “Second Floor” report is woefully inadequate and does not present a viable business plan. On the face of this report it does not make economic sense. 18 pages are devoted to trying to come up with a justification for the use of the Second Floor. But take a look at the big picture. The second floor has 6,000 square feet of space and using a $100 per square foot value, equates to  a real estate  value of $600,000 and the report indicates approximately $4,000 of annual income from the use of the facilities by “outside parties.”  This equates to an imputed measly return on investment of less than 1%.  It doesn’t make sense!  Just think of the complexities the City will have if there are 50 to 100 events per year for a paltry $4,000 of net income with a return on investment of less than 1%.
  •  A “Second Floor – alternative proposal – somewhat “tongue-in-cheek”— Bob Irvine’s 18 page proposal to develop the 6,000 square feet Second Floor generates net income of roughly $1,000 to $4,000 for each of the first 5 years. Why not install 3 vending machines for sodas and snacks in a 40 foot square feet of space on the Second Floor which would generate equal or better income than the consultant’s proposal and leave the remaining 5,960 feet vacant?
  • A viable plan must be developed for the second floor or, alternatively, scrap the project!

CAPITALIZATION STRATEGY

A third report presented by Bob Irvine entitled “Jacksonville Historic Courthouse – Capitalization Strategy was also presented to the City Council.

  • This report does not include the estimated interest cost for debt financing.  Not only is it omitted in this report but also the estimated interest costs are not included in the project costs summary and should be.
  • In view of the comments concerning the lack of economic viability of the “Second Floor” proposal (see above), there will not be, as the report states —  “a good chance of attracting grant funds for the Second Floor”; thus a financing shortfall of possibly several hundred thousand dollars.

NO TIMELINES/ CRITICAL DATES

  • The study makes note of a dozen critical factors but is conspicuously absent with any timelines or critical dates which should include such items as –
    • Study completion date
    • Council approval date
    • Debt financing completion date
    • Grant monies subscription date (This easily could take 1 or 2 years and, may be unsuccessful. In which case what are the contingency plans? There are none specified; in which case the project is “dead-in-the- water”!
    • Construction start date
    • Old City Hall date to put on market for sale
    • Move date to new City Hall

HOW SHOULD JACKSONVILLE CONTROL “SPACE”COSTS?

In almost any business the costs associated with headcount and space will account for 75% of all costs.  If the City Council expands the City Hall space from a present  ______ square feet to a 12,000 square feet facility, I will guarantee the City Hall headcount and space will expand to fill the 12,000 square feet of space in the next 5 years!  The City of Jacksonville does not need a 12,000 square feet City Hall!

 STUDY SESSION

The study session held on July 30 took about one hour with only 2 or 3 brief comments by Council members at the very end.  I strongly believe that the Council did not do their homework prior to the meeting and were not tuned in to the short -comings noted above.  In addition, I noted that not one question was asked concerning any of the financial information included in the reports.

I spent one hour attending the study session and this memorandum lists a dozen critical factors that must be addressed.  I think the City Council must have been asleep at the study session if they could only come up with 2 or 3 brief comments!

Posted August 6, 2013