DECEMBER 2012

WOLF BUILDING (Circa 1893)

45 North 2nd Street, City of Easton Purchased 1986 for $912,000 Houses
Area Agency on Aging Children and Youth HS Information and Referral/Emergency Services Veterans Affairs

52,171 Square Feet Estimated Future Capital Cost $3.3M

2

BECHTEL BUILDING (Circa 1962)

520 E. Broad Street, City of Bethlehem Purchased 1993 for $763,000 Houses
Developmental Program (MR) Drug and Alcohol Early Intervention Health Choices Mental Health Weights and Measures Juvenile Probation Satellite Office

27,882 Square Feet Estimated Future Capital Cost $1M

Bechtel Building Wolf Building Courthouse TOTAL

70 173 3 246
4

CONSOLIDATE NORTHAMPTON COUNTYS HUMAN SERVICES, AND OTHER COUNTY OFFICES, INTO A COST EFFECTIVE, STATE OF THE ART, CENTRALIZED FACILITY
5

ONE STOP SHOPPING FOR CONVENIENCE OF CLIENTS MORE EFFICIENT LAYOUT NEW FACILITY OFFERS LOWER OPERATIONAL COSTS PROVIDES CENTRAL LOCATION FOR EMPLOYEES & CLIENTS NEGATES EXPENSIVE CAPITAL REPAIRS TO WOLF & BECHTEL BUILDINGS PLACES WOLF & BECHTEL BUILDINGS BACK ON TAX ROLLS PROVIDES ADDITIONAL SECURITY FOR DHS EMPLOYEES & CLIENTS PROVIDES AN OPPORTUNITY TO HOUSE ADDITIONAL COUNTY OFFICES INCLUDING A DISTRICT MAGISTRATE
6

Steve DeSalva, Director Public Works Tom Dietrich, County Council Doran Hamann, Chief Fiscal Officer Tom Harp, County Administrator Ken Kraft, County Council Ross Marcus, Director Human Services Ken Mohr, Mohr Management Resources John Stoffa, County Executive
7

Access - Easy Access to Major Highways Facility - Modern, Energy Efficient, easy to maintain Mech. Sys. Human Services - Improve Operational Productivity / Efficiency Parking - Clients / Visitors Parking Onsite Site - One Human Services Site Space Future / Growth Cost - Avoided Capital (e.g. Wolf & Bechtel Building repairs, etc.) Cost - Lease / Purchase Cost - Operational (current & future) Human Services - Improve Client Service Human Services - Optimal Layout / Adjacencies / Situation Project Timeframe - 1 year Sale Wolf & Bechtel Buildings Security Employees Access - Public Transportation (e.g. Bus route, etc.)
8

SOLICIT PROPOSALS

LVEDC BROKER / DEVELOPER PROSPECT ALERT SEARCH 34 COMMERCIAL REALTOR/BROKER SITES

RESULTS

26 PROPERTIES IDENTIFIED, 10 ELIMINATED (OUT OF COUNTY), 2 WITHDRAWN PROJECT TEAM RANKED 14 PROPERTIES SHORTLISTING 3 (ONE EXISTING BUILDING & TWO BUILD TO SUIT)

SHORT LIST DRILL DOWN

SOLICITED DETAILED APPLES TO APPLES LEASE TERMS ON SHORT LISTED PROPERTIES CONDUCTED COST & TERMS COMPARISON ANALYSIS TOURED ONE (1) EXISTING BUILDING INTERVIEWED SHORT LISTED DEVELOPERS RANKED SHORT LISTED PROSPECTS
9

2801 EMRICK BOULEVARD BETHLEHEM TOWNSHIP

10

2801 EMRICK BOULEVARD BETHLEHEM TOWNSHIP

11

12

LOWEST COST ALTERNATIVE

SHORT LISTED COST COMPARISON

#16 - 2800 Baglyos Circle, Bethlehem Township

Annual Increase: Rent Cost Total SF =66,800 3.0% $ Year 1 901,800 Year 15 $ 1,364,053 Average (15 Years)

Rent Cost / SF / Yr

$ 13.50

$ 20.42

16.74

#21 - 2801 Emrick Blvd., Bethlehem Township

Annual Increase: Rent Cost Total SF =66,375 2.5% $ Year 1 773,269 Year 15 $ 1,092,609 Average (15 Years)

Rent Cost / SF / Yr

$ 11.65

$ 16.46

13.93

#23 - 1455 Valley Center Parkway, Hanover Township

Annual Increase: Rent Cost Total SF =48,418 $0.55 every other year $ Year 1 Year 15 Average (15 Years) 702,061 $ 888,470

Rent Cost / SF / Yr

$ 14.50

$ 18.35

16.30

#24 - 3370 Highpoint Blvd., Hanover Township

Annual Increase: Rent Cost Total SF =60,000 $0.55 every other year $ 14.50 Year 1 Year 15 Average (15 Years) $ 870,000 $ 1,101,000

Rent Cost / SF / Yr
NOTE:

$ 14.50

$ 18.35

16.30 13

All $/SF/Yr include Tenant Improvements at $20/SF, 15 Year Term, Non Prevailing Wage

LOCATION
DHS CLIENTS
33.1% BETHLEHEM ZIP CODES 30.3% EASTON ZIP CODES

DHS EMPLOYEES
29.1% BETHLEHEM ZIP CODES 17.7% EASTON ZIP CODES
14

ACCESS
AUTO
BANGOR Market & 1st Sts BETHLEHEM Main & W. Broad Sts EASTON HELLERTOWN 3rd & Main & Water Sts Northampton Sts

2801 Emrick Blvd. Bethlehem Twp. Wolf Building N. 2nd & Church Sts., Easton Bechtel Building 520 E. Broad St., Bethlehem

16.5 Mi / 24 Min

6.4 Mi / 15 Min 5.3 Mi / 13 Min

8.9 Mi / 14 Min

14.0 Mi / 25 Min 16.6 Mi / 25 Min 0.6 Mi / 3 Min

12.2 Mi / 20 Min

22.4 Mi / 33 Min

0.9 Mi / 4 Min 10.2 Mi / 22 Min 4.1 Mi / 10 Min

Source - Google Earth

PUBLIC TRANSPORTATION LANTA Bus Routes101 & 220 Service Emrick Blvd.
15

Landlord: Term:

Polaris Properties, Inc.

15 Years + 2 - 5 year options to renew + 1 4 year 10 month option to renew

Option

to Purchase At End of Every 5 Years

depreciation

First 15 years - Purchase at 7.5% Capitalization Rate Second 14 years 10 months - Purchase at straight line

from Cap Rate in year 15 to $1.00 at end of lease

Square

Feet 66,375 Gross SF Stories 3 Acreage 5.36 Parking Spaces 256 Delivery Date 4th Quarter 2013
16

Lease rates 15 years (final rent based on actual tenant improvements & NorCo contribution to tenant improvements)
$0/SF

Tenant Improvement $10/SF Tenant Improvement $20/SF Tenant Improvement $30/SF Tenant Improvement $40/SF Tenant Improvement $50/SF Tenant Improvement $62.50/SF Tenant Improvement
Lease

$11.15 / SF/ Yr $12.25 / SF/ Yr $13.35 / SF/ Yr $14.45 / SF/ Yr $15.55 / SF/ Yr $16.65 / SF/ Yr $18.00 / SF/ Yr

Rate Escalation 2.5%/Yr

17

Triple

Net NorCo pays: Taxes, Utilities & Insurance Tenant Improvements: Approved by NorCo, completed by Polaris Construction Utilizing Prevailing Wage Tenant Improvements: Partially paid for by NorCo from Wolf & Bechtel sale proceeds Operating Expenses by NorCo or Landlord as agreed on a year to year basis:
Repairs & Maintenance Lawn Care & Snow Removal Custodial & Trash Removal

18

REVENUE
Sale

$2,800,000

of Wolf & Bechtel Buildings

EXPENDITURES
Tenant

$2,800,000

Improvements (Portion) Furniture, Fixtures & Equipment Professional Fees Contingency

19

DHS

2012 ANNUAL BUDGET OF $130M (excluding Gracedale) ESTIMATED ADDITIONAL ANNUAL COST $160K (0.12%) - $300K (0.23%) OF EXISTING ANNUAL BUDGET (excluding Gracedale) COST SHARED PA DHS REVENUE NORTHAMPTON COUNTY
20

DHS

ADDITIONAL

(This approach creates an incentive for DHS and DFA to seek cost savings)

Bechtel

& Wolf Capital Repairs Savings (10 Years) $4.3M @ 3.5% for 10 years = $508K / Year Savings = $32K / Year +/County Tax Revenue = $42K / Year +/-

Utilities

Northampton

Bechtel

& Wolf Buildings 2801 Emrick Blvd. Building

Lease Excess Space Revenue = $108K / Year +/Relocate DJ Office 03-02-03 Sub Lease approximately 5,000 SF

BASED ON EARLY BUDGET ASSUMPTIONS FOR ILLUSTRATIVE PURPOSES ONLY!

21

Improved Employee Performance & Morale Improved Client Service and Convenience Space Available for other Value Added County Services Space Available for Future Growth
256 Safe, Convenient Parking Spaces Insurance Exposure / Savings Eliminates County Construction and possibly Maintenance & Repair
22

December 2012 - Approval & Implementation County Council review & act on lease agreement County Executive & Developer execute lease agreement Establish space planning committee to design layout Plan project budget & financing December 2012 November 2013 Design, Build, & Move Complete Building Design Construct Building Order & Install Furniture, Fixtures & Equipment Move In 4th Quarter 2013
23

24

QUESTIONS

25