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September 23, 2010

2

Camp says Experian purchase is “forcing a round peg in a square hole”

by Deena Winter

The Beutler administration’s proposal to buy the Experian building will be up for public debate on Monday, and I expect Councilman Jon Camp to put up a pretty good fight against this $8 million purchase.
Or should I say, lease-purchase — sort of like a rent-to-own deal.
So the Beutler administration wants to buy this behemoth of a 355,000-square-foot building in northwest Lincoln, which has been on the market for several years. City officials say the city would save some $500,000 in rent over 15 years and perhaps save some Experian jobs. About 140 people work there, down from a peak of 1,200 in Lincoln and Seward.
Camp says it’s a bad deal. Here’s why:
• There was no public request for proposals for building space (for sale) that is apparently needed by the city.
• The city would lose about $150,000 in annual property taxes being paid by Experian.
• Experian would lease its portion of the building for five years at $180,000 annually, so Camp says they sell the building and get out of maintenance costs for about $30,000 more per year than they were paying in property taxes.
• Camp thinks Experian will be less likely to keep the 142 jobs in Lincoln once it sells the building and only has a five-year lease.
• He also said it’s “rather presumptuous” for the Beutler administration to present the council with legislation to buy the building — complete with borrowing documents and architectural plans, as if it’s a done deal.
• He questions the cost of managing such a large building, when only 54,000 square feet will be used by the city to start.
Camp says the purchase should have been discussed more publicly rather than “behind closed doors.”
“Transparency was to be the hallmark of the Beutler administration,” he said via e-mail.
He says the city could have tried to get better lease arrangements on its existing space, a lower price for the Experian building, or other, cheaper space.
We’ll see if Camp can persuade any of his colleagues to buy into his arguments.

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2 Comments Post a comment
  1. Jane H Kinsey
    Sep 23 2010

    City continues to spend money like there is no tomorrow.
    It is interesting why Jon Camp is protesting this when he has approved all other recent expenditures. Is he going to lose rental income on his buildings?
    It is good that he is protesting because it is a bad idea anyway.
    When are these people going to realize that all governmental finances
    are in trouble and spending money is not wise?

    Reply
  2. Ed Patterson
    Sep 23 2010

    A LJS article “City of Lincoln to buy Experian building for $6.5M” by Nancy Hicks Sept 7, 2010 stated that Experian would be renting a portion of the building for $380,000 (rather than the $180,000 quoted here by Ms. Winter) and neglected to supply the information that the Experian lease expires after only 5 years while the City of Lincoln’s payment obligation extends for 15 years. With the information provided by that article, and focusing on the extremely low purchase price, I made the following comment in favor of the purchase:
    ———-
    Ed Patterson said on: September 7, 2010, 6:45 pm
    This appears from every angle to be heads up management, even in dark times for city finances.

    The $6.5 million dollar purchase price is about $18 per square foot, while it costs ballpark $150 per square foot to build new office space, starting from scratch. The 20 acres that comes with the site, could potentially allow coordinated onsite expansion in the future, avoiding the kind of leased city office space sprawl that we have today.

    Cash flow wise, on contractually obligated annual payments, before and after the move, the City appears to be about $50,000 to the good. Detracting to some extent from this picture, over the next several budget periods, cash will likely need to be found to remodel the interior of the Experian Building for the various new City occupants. I can see some reuse of modular furniture for a few years coming. LOL
    ——–

    Now with the information supplied here by Ms. Winter, the following analysis indicates that the purchase decision is not nearly so cut and dried as it appeared from the LJS article. (This reminds me iof the $25,000,000 arena taxation exposure that we thought we were lined up to get at one time.) It will be interesting to hear what Councilman Camp has to say on behalf of the Taxpayers Monday.

    City Annual Cash Impact (+ or -):
    Lease/Purchase Payments by the City to Experian for 15 years (-) $700,000
    Lost Property Tax from Experian (-) $22,500
    (The total annual property tax is about $150,000, while $22,500 is the City’s 15% share. This is a good example of why all these separate taxing authority budgets, sacred cows included, should be merged under a single taxing authority, to get responsible decision making, for in this case the other $127,500 in tax revenue that is ‘irrelevant’ to the City of Lincoln.)
    Annual Rent Saving by the City (+) $370,000
    Rent from Experian to the City (first five years only) (+) $180,000
    (This was stated at $380,000 in the LJS article by Nancy Hicks cited above. If Ms. Winter’s blog version of this is correct, City of Lincoln taxpayers would have been more than paid off in the first year employing Ms. Winter and her blog full time.)

    Subtotal City Annual Cash Impact (-) $172,500
    Subtotal end of 5-years when Experian Leaves (-) $352,500

    Reply

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