12/31/2007

Money pit on North Queen: Lancaster PA Newspapers, 11/11/07

Too late to undo county office project that has budget, legal problems

By Helen Colwell Adams

The conversion of the former Armstrong building to county offices is running late and over budget, but the newly elected county commissioners think it's too late to pull the plug on the project.

"I have said I would walk away from this project in a heartbeat if it were feasible," Republican Scott Martin said last week.

But he and the other two commissioners-elect, Republican Dennis Stuckey and Democrat Craig Lehman, agreed that the county probably could not recoup its investment in 150 N. Queen St. if the new commissioners halted the work.

Through the end of October, the county had spent more than $25.4 million, including the $8.3 million paid to the building's owner through eminent domain, and county Administrator Mark Esterbrook estimated another $13.5 million is needed to finish the renovations.

If no additional expenses pop up, that would put the project about $3.5 million over the original total of $35.4 million for purchase and remodeling.

That doesn't include an estimated $38 to $40 million to renovate the county courthouse at 50 N. Duke St.

The Armstrong building could end up to be even more expensive; former owner Dr. Ira Trocki has sued in federal court, contending the $8.3 million is far below the actual value of the property.

Trocki said last week that he would have rented the entire building to the county for $3 million a year, the same price that Armstrong World Industries paid before moving out.

"Their interest payment [on the renovation costs] is going to be more than what they're going to pay me in rent," Trocki said, "and they wouldn't have to go to court."

Commissioners Dick Shellenberger and Molly Henderson, who voted along with former commissioner Pete Shaub to take the property by eminent domain, last week said they still think 150 N. Queen was the best option for a county government desperately in need of more office space.

Even though the job will "take us a little longer than we anticipated," Shellenberger said, "I think it was the right move."

Lehman isn't so sure.

"It may be one of those things that it's simply too far down the road to turn back now," he said.

"I hate to say that. I really do."

Growing pains
Space problems at the courthouse, mostly related to the rapid expansion of Lancaster County Court offices, led to the commissioners' decision late in 2004 to take 150 N. Queen by eminent domain.

The commissioners said at the time that their other option was building offices on land the county owns on Sunnyside peninsula — an unattractive alternative because it would have taken hundreds of county workers out of downtown and would have blocked a planned housing development on the Sunnyside property.

But troubles have plagued the project, from Trocki's lawsuit to a series of complications with the renovations — holes in floors and walls, fires, fumes and other safety concerns — that led the city fire department to shut down work in May.

Tenants in the building went to court, resulting in the county paying $753,000 so far for safety monitors, lease terminations, legal fees and relocation costs. County workers whose offices are already at 150 N. Queen — about 300 now — also complained about conditions.

Some county offices were scheduled to move into new space this month and in December, but because the renovations aren't finished, the timetable has been pushed back.

"A new master schedule will be forthcoming in the next two weeks," Esterbrook said.

About 15 offices, and another 400 employees, are shifting to 150 N. Queen to make room for court expansion; two new judges are joining the bench in January. Esterbrook said moving expenses are budgeted at $150,000 in 2007-08.

He said the court will "work with us to accommodate new judges temporarily until the fifth floor can be made available for temporary use by the judges." The commissioners, controller, Congressman Joe Pitts and the district attorney now have offices on the fifth floor of the courthouse.

With $25.4 million spent through October and an estimated $13.5 million remaining to finish the work at 150 N. Queen, the total would be $39 million, about $3.5 million more than the original estimate.

Once the other county offices have relocated, renovations must be done at the courthouse itself. Esterbrook said estimates for that work are $38 to $40 million.

The newly elected commissioners questioned the project during the campaign. Last week, they said the county probably has no option but to finish the relocation.

"It's difficult to halt the project with the money we've sunk into it," Stuckey, the current county controller, said.

"It's certainly something I will be taking a close look at," Lehman said. "It seems to me at this point … that it's probably too far along to backtrack."

"I've always had my doubts about the project," Martin said.

He suggested that a public-private partnership to redevelop buildings on the first block of East King Street, with a long-term lease for the county, could have kept properties on the city tax rolls and been more efficient in terms of proximity to the courthouse.

"If there was a way it could be worked out that [150 N. Queen] could be returned, and be a return on our investment as well … I would definitely be open to discussing that," he said.

"The bottom line is, we're accountable to the taxpayers."

Friendly, not so friendly?
Henderson and Shellenberger, though, contend that for the square footage available at 150 N. Queen, the cost of the project is reasonable.

On a tour of projects funded with county contributions before Tuesday's election, Henderson repeated what she had said in other campaign appearances: that the eminent domain proceeding was a "friendly" takeover.

Henderson said Trocki asked for his assessment to be lowered prior to the takeover, contributing to the $8.3 million compensation, which she said was the legally mandated average of three appraisals.

"He is the one who set the bar lower," she said. "That figured into the ultimate price years later."

Trocki hotly contested Henderson's assertions, saying last week that he didn't fight the eminent domain process because his lawyers said it was an unwinnable battle.

Instead, he is arguing the county undervalued the building, which he bought for $12.1 million in 1998.

He also said the county offered a settlement of the assessment appeal, which he said was originally filed by Armstrong. He now believes the assessment settlement of $8.3 million was a tactic to drive down the value of the property — along with leaks to news media about plans for eminent domain, which Trocki said succeeded in scaring away tenants.

"No tenant wanted to move in and then get thrown out shortly thereafter," he said.

Trocki said he had been negotiating with county officials about leasing space in the building ever since Armstrong World Industries, which had been renting the entire structure, filed for bankruptcy and notified Trocki it was moving out.

The county needed about 50,000 square feet then and much more later, Trocki said, so he agreed to $11.50 per square foot, plus covering all renovation and cleaning costs, with the understanding that when the lease was up for renewal, the county would pay market rates.

Trocki also said he discussed selling the building to the county for $20 million, although he said he might take $18.5 million.

He said he had the building under agreement of sale for $15 million, and had another pair of buyers, Pat Egan and John Meeder, willing to give him a slightly better deal, when the eminent domain action occurred.

"They still went ahead and eminent domained," Trocki said, and ended up paying Egan nearly $1 million to terminate his lease and relocate.

Trocki's attorneys said "it was highly irregular that an agency would take a building for the exact same use it has," and he suggested it's the first time such an eminent domain taking has happened in Pennsylvania.

The renovation costs, he said, are "absolute craziness."

Trocki is asking for another $10 million-plus in the federal lawsuit.

"We hope somebody will be reasonable and get this over with," he said.

"... It was not a friendly eminent domain."


Lancaster PA Newspapers: http://local.lancasteronline.com