Government South Orange Towns

South Orange Moves Forward on Sale of Village Hall, Approves Financial Deal

In what seemed like an unlikely outcome even just one year ago, the South Orange Village Board of Trustees tonight unanimously approved financial and redevelopment agreements for the sale of historic Village Hall, which will now become a restaurant, bar and banquet facility.

According to a timeline presented tonight, the new facility should open in mid-2017.

Landmark Hospitality will pay $1.2 million for the property; total costs for the construction, liquor license, purchase, landscaping, contingency, etc. will bring the project’s costs to about $6.5 million for Landmark.

For its trouble, Landmark will benefit from a 20-year payment in lieu of taxes — or PILOT — on the improvements to the property. Landmark will pay full land taxes on the property from the closing date (see chart for breakdown of minimum PILOT payments).

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Before voting, the Trustees and the public heard a presentation by Village President Sheena Collum, Village Administrator Barry Lewis, and Village Redevelopment Counsel Joseph Baumann. (See presentation here.)

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Collum started with an overview of actions taken by the governing body regarding the building starting in 2008, when, she said, the building was already suffering from years of “deferred maintenance.” In 2011, the Village looked at selling the building for adaptive reuse — only to receive poor response.

The Village then moved forward with renovation and asbestos abatement. Meanwhile, in October 2013, the municipal administrative offices moved from Village Hall to 76 South Orange Avenue.

By June 2014, Collum said that the “economy was bouncing back” and the governing body felt that it could continue renovation while entertaining possible adaptive reuse and sale. Adaptive reuse bids were received in January 2015 and renovation bids in March. “We had all the information in front of us,” said Collum. Of the two viable proposals (there were three bids initially), Landmark offered $700,000, but the town negotiated the price to $1.2 million; South Orange Hotel Group’s purchase proposal was for $1.1 million.

Village Administrator Barry Lewis revealed that the four viable renovation bids ranged from $5.621 million to $7.777 million.

A working group was formed to analyze the proposals; meanwhile, the Village hosted public meetings in the spring at which the developers presented their proposals to the public. The town then designated Landmark and moved forward to hammer out the deal.

Collum explained that there were five main criteria for evaluating the proposals:

– historic preservation of building
– developer track record of historic renovations
– land use considerations (“That corner in particular is a tough and challenging corner. We wanted to create an active corner…. We felt that village hall offices were a less intense use of the corner … quiet at night.”)
– likelihood of success (finances and backing of the proposers)
– village cost scenarios

Collum noted that the Village also had to consider the fact that it has many costly municipal building renovations ahead of it — including the Baird, where the recreation department is located.

Collum noted that Landmark’s second floor concept would use the historic meeting room as a banquet area. “The fact that they will be able to preserve this room is really wonderful.”

Village Administrator Barry Lewis then presented several spreadsheets and charts showing cost projections and economic analysis comparing the three options of leasing, renovating or building new Village administrative offices. The immediate benefits of leasing were eye-popping; however, Lewis noted, they were still substantial even 30 years out — with the Village realizing a savings of $3.3 million over a 30-year period from leasing offices over renovating Village Hall.

Village Redevelopment Counsel Joseph Baumann then took the Trustees through a painstaking explanation of the financial agreement — including an exhaustive review of the clauses in place to protect the Village financially and otherwise, and to preserve the building.

Baumann told residents, “You should be really pleased with your leadership,” calling the agreements a “well-thought-out and transparent process. It really was a model process.”

Of note: Baumann said that during construction, Landmark will need to use an offsite location for their contractors to park. Landmark will be required to present their surveys, reports and studies to the Village. “We will have those records if we have to take this project back,” said Baumann, who noted there would be no forgiveness on Village fees. Landmark would also be required to procure certain insurances, and “They will have regular progress meetings with the town and regular progress reports. This is not just a hand-over-the-keys thing.”

Baumann also noted that the Village retains the right to use the image of Village Hall on all its letterhead and materials.

There followed a lengthy discussion about all the legal and financial precautions in place should Landmark default, suspend construction, sell the property or if some other calamity should ensue. Baumann also noted that the Village has right of first refusal if Landmark ultimately decides to sell the property.

A perpetual historic easement is in place to protect the building’s exterior. There are also parking easements to allow Landmark use of 37 spaces in Lot A and the ability to access that lot through Lot B.

Finally, Baumann said that the PILOT was necessary: “This couldn’t happen unless the Village was willing to do a PILOT…. The financials, the numbers just simply don’t add up.”

Trustee Deborah Davis Ford noted how she had changed her mind about the sale of Village Hall and commended the Trustees: “We were at one point where the board was divided. I’m really proud of this collaborative body here and we should be an example to other bodies…. We we are receptive to different points of view.” Davis Ford said she was swayed when she was assured that the exterior of the building would be preserved.

Trustee Steve Schnall credited Village President Collum: “There was a point where we were going to go in another direction if it wasn’t for your leadership. You pushed hard. Thank God for your persistence, your grit and your leadership for taking us here because this does look very good.”

During public comments, Amy Dahn, commissioner on the South Orange Historic Preservation Commission, expressed concern about the fate of several interior items at Village Hall: “What is happening to the historic oak horseshoe table? What is the status of the walk-in safe?” Dahn also asked what was happening with historic documents, a time capsule that “should be” behind the historic founders plaque — “That should be Village property” —and wondered if state grants must be repaid.

Lewis explained that one federal grant was going back but the town was working to repurpose a state grant. He said that Landmark anticipated leaving the dais [oak table] in place, but he had no idea about the time capsule. He assured Dahn that documents would be properly secured and promised to follow up regarding other items.

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