Easton City Council Set to Vote on Alpha Building Lease Deal

By Christina Georgiou

Easton City Council is set to vote on a lease agreement
Wednesday that will have the city renting back its
city hall office space from developer Mark Mulligan
at a rate of $13,750 per month for 19 months while
the new city hall and transportation center is constructed
further south along South Third Street.

Easton City Council members are expected to vote Wednesday evening on the deal to lease back space in the Alpha Building to house city hall while the new city hall building and transportation center is constructed further down the block on South Third Street.

City council approved the sale of the Alpha Building earlier this year in March, and it was announced last week that the building will be sold to VM Development principal Mark Mulligan, who plans to convert the building to a mix of residential, office, and commercial spaces under the name Alpha Development Group LP.

The sale price, set at $4 million, is slightly lower than the city valued the building at in March, but Mayor Sal Panto said at a press conference last week that the selling price is higher than the actual appraisal value.

A review of the lease deal reveals that if it is approved, the city will lease back  27,500 square feet used for city office space for a total of $165,000 over 19 months, or at a rate of $6 per square foot, equalling payments of $13,750 per month.

If the city needs to extend the lease due to construction delays at its new facility, it can do so up to three times under the agreement, with extension periods of 90 days each, but the extensions will each come at a higher rate.

For the first potential extension, the city will pay $8 per square foot, totalling $18,333.34 per month. The subsequent two lease extensions, should they be necessary, will cost the city $10 per square foot, or $22,000 per month.

In the event of term extensions, the city would additionally be responsible for paying a $2.50 per square foot charge for common area maintenance. The charge is based on the 27,500 square feet city offices occupy, and comes to $5,729.17 per month during the course of any extensions, the lease agreement states.

The city will be responsible for paying for electrical service for the entire building, snow removal for the premises, and janitorial service and minor maintenance for the space it occupies for both the initial lease term, as well as any term extensions it might require.

Despite the loss of rent from others occupying the building and having to lease back the city hall space, Mayor Sal Panto said during the announcement of the Alpha Building sale last week that the agreement is a good deal for the city, estimating that the city will save about $150,000 in maintenance costs on the building.

Additionally, the building will go back on the tax rolls once it's sold to a private entity and generate revenue to city coffers, an amount that will rise when the building is converted to mixed-use and reappraised by the county at a higher value after it's renovated, city officials have said.

Selling the Alpha Building and occupying the new space will net the city additional revenue and cost savings, for an estimated total of $645,000 annually, City Finance Director Chris Heagele estimated earlier this year.

While nothing is certain until the vote on Wednesday, city council members seem likely to approve the deal, as vice-mayor Ken Brown, Roger Ruggles, and James Edinger attended the press conference announcing the Alpha Building sale last week and voiced support for the move. City council members also unanimously approved the sale of the building in March with little comment.

The lease term will begin on Dec. 1 of this year, if council approves the agreement.

If construction stays on schedule, the city plans to move to the new City Hall and Transportation center in the first half of 2015, city officials have estimated.