What are the cost savings for renting vs. buying? +
Avoiding Costly Budget Overruns: When a local government rents from a third party instead of building and operating independently, it avoids all construction liability and cost overruns leading up to and during construction. Additionally, once the space is delivered and the municipality occupies the building, it saves on operations and maintenance costs over the term of the lease. Over 20-30 years, this saves the local government a significant amount of money and allows the municipality to work in a properly maintained building while spending funds elsewhere.
Consolidating Space and Financing: When many entities are consolidated into one building, local governments can increase efficiency by avoiding travel between multiple locations. Local areas improve because the tax base expands and city centers are revitalized.
How often are municipal buildings replaced? +
The lack of proper operations, maintenance, and reinvestment into their buildings often means that local government facilities last only 15-20 years, at which point, the building needs to be completely renovated. In a leased space, the tenant can require that the building be maintained to a high standard by a third party, extending the life of the building significantly.
Are there any upfront or additional costs? +
No. Aside from nominal upfront costs associated with conducting a needs analysis and issuing an RFP, all costs, liabilities, and construction overruns are borne by the private developer. The local government only enters into an annually appropriated lease, saving design, construction, maintenance, and other facility-related costs.
Does the project have to be built in a new location? +
No. You can renovate at an existing location or rebuild in a separate area.
Are demolition costs included if there is a rebuild over an existing building? +
Yes. All costs, including demolition, are included in future lease payments.
What happens to the old building if the new project is in a different location? +
Typically, older buildings are sold in these cases, but they can still be occupied while the new building is being constructed, and municipalities retain ownership of the existing property until it is sold. Building sales value is based on location, current state of care, and historical significance. The properties can be repurposed and put back on the tax base at the enhanced use value.
What if 100,000 sq. ft. is too much space? +
There are some options for building at a smaller square footage, however many local governments find that the spatial needs of multiple organizations quickly add up.
Who else—other than the municipality—uses the space when mixed development occurs? +
Typical establishments that accompany local governments in mixed development projects are coffee shops, cafeterias, and restaurants. However, the potential of the space to bolster underserved and underdeveloped city centers is tremendous. In some cities, shared urban spaces include grocery stores, pharmacies, and even movie theaters.
What happens at the end of the lease? +
A standard lease length is 20 years, at which point, local government tenants have several options:
- If they are happy in the current space, they can extend the lease.
- If they need more space, they can move to a new location or rent additional offices.
- If they are downsizing, they can move to a smaller location, or rent out part of the space.
- If they need a new layout, they can renovate the space.