Columbus will get a new health department. The price tag? Millions more than planned

Columbus Council voted 8-2 Tuesday night to close on the $2.5 million purchase of the former Virginia College building, which will become home to Columbus Health Department services as early as July.

The move was necessitated, according to city staff, by an impending increase in rent for space the department occupies at the Health and Human Services building on Comer Avenue.

The city’s current lease expires June 30, and staff are now working under a tight deadline to renovate the Virginia College building and move the offices over.

Councilors may not have been not given all of the information necessary to make an informed decision about the purchase, as the city manager says his office never received a copy of the proposed new lease.

Councilors were also notified within the last week that an updated estimate for renovation costs to the new building would be $2.15 million more than the original estimate for a total of almost $4.5 million.

Inconsistencies around lease agreement

The Comer Avenue building was built 25 years ago to house the Health Department as well as other services like New Horizons and DFCS, and until 2016 was owned by the Medical Center Hospital Authority/Columbus Regional Healthcare System.

The building is now owned by Family Holdings Sub LLC, represented by Tracy Sayers with Pezold Management. Sayers said Tuesday the city never contacted him to discuss the lease, and that the city manager’s office has been providing inaccurate figures to council despite him sending a copy of the proposed lease to the city in November.

A copy of the 10-year lease provided to the Ledger-Enquirer shows an increase of $57,335 to the base rent at a cost of $6 per square foot of space leased. The lease provides an option to renew for another 10 years at the same rate.

The city currently pays a yearly base rent of $166,631 in addition to $156,503 in “common area charges” per year, which includes services such as maintenance and janitorial services, according to Deputy City Manager Pam Hodge. That would be a yearly payment of $323,134.

At Tuesday’s Columbus Council meeting, Hodge said the Health Department was notified in August 2016 that the rent would be increasing in 2020, and that Sayers provided the Health Department in October 2019 with a market rate study showing office and professional space going for $10 to $20 per square foot.

This resulted in her providing to council an estimated rent increase between $482,000 and $950,000 during a January 14 meeting.

Sayers said he was shocked when he saw the numbers presented in the January 14 presentation to council.

“The city should have told the real facts. Putting up that $482,000 to $950,000 number...I don’t know where that number came from, it never came from us,” Sayers said.

On Tuesday, Hodge told council the proposed lease would increase the combined rent and common area charges by $152,389 for a total of $475,523.

“This proposed lease agreement has not been submitted to the city manager’s office so we’re understanding it would be $6 per square foot, but that has not been formally submitted to the city manager’s office for consideration,” she said.

Part of that increase is estimated to be $60,000, Hodge said, passed on to the tenants for two years that the building was inadvertently not assessed property taxes by the city.

Renovation costs

The relocation project will be financed by a bond issued through the Columbus Building Authority in the amount of $5 million, with half to go toward the purchase of the Virginia College building and half to renovation expenses.

The Virginia College building is located on Veterans Parkway. Totaling 70,140 square feet, it was constructed in 1975 and renovated in 2011. It has been vacant since Virginia College abruptly closed its doors in 2018.

Councilors were notified by city staff via email on Thursday that the construction costs would likely be $4.65 million compared to the original estimate of $2.5 million.

According to Hodge, the new anticipated renovation cost is higher than initial projections due to:

• Re-evaluation of functions moving from the current site on Comer Avenue to the Virginia College building on Veterans Parkway

• More clinical and educational services moving to the Veterans Parkway location

• Clinical space being more costly than office/administrative space

• Inability to reuse existing floor plan configuration for clinical space

• Escalated renovation schedule to meet June 30, 2020 deadline

For the increased expense, Hodge proposed using $1.1 million that is budgeted for debt service in 2020 but not needed. It became available due to restructuring of a previous bond.

In addition, $150,000 would come from OLOST Infrastructure projects and $900,000 from OLOST Infrastructure reserves.

The renovation budget is currently $4,485,807 with Barnes Gibson Partners Architects contracted for design and build services.

Owning vs. renting

Hodge compared the cost of staying in the Comer Avenue building versus moving to the Veterans Parkway building.

She said that the city’s initial contribution of over $2.7 million to construct the Health and Human Services building combined with the amount of rent paid in the past 25 years totals to $9,815,299.

Continuing to rent for the next 20 years would cost the city an estimated $9.5 million, she said, while owning the building would cost $7,250,000 over 20 years, and the citizens would own the building once the debt was paid off.

After an hour and a half of discussion, the closing was approved with District 8 Councilor Walker Garrett and District 9 At-large Councilor Judy Thomas voting in opposition.

During discussions Thomas said she did not think a shuttle should be necessary to take citizens to the new building and had questions about why Hodge had included the city’s past expenses in the comparison of how much the city would spend when renting versus owning.

Garrett had questions too about the cost of a shuttle as well as if the Virginia College building had been inspected for mold. The contractor for the project told Garrett that he did not believe there was mold or mildew in the building but that it had not been tested.