City seeks approval of building upgrades

Washington is seeking permission from the N.C. Local Government Commission to issue an installment-purchase contract to pay for improvements to the city-owned building occupied by Impressions Marketing Group.

The City Council, during its meeting Monday, authorized filing an application with the commission to obtain that permission. The commission is charged with keeping an eye on local governments’ fiscal matters.

The planned improvements are the result of a protracted lease negotiation between the city and Impressions.

In February, the council approved a lease with Impressions for the city-owned property that the company occupies (the former Hamilton Beach site on Springs Road). Impressions has been leasing that property from the city since 2006.

The lease is for five years, with an option for Impressions to renew for two additional years. There’s also a provision for Impressions to extend that extension for two years.

Impressions will pay a base rent at the rate of $392,736 annually. It also will pay additional rent at the rate of $176,731 annually under terms of Exhibit A (improvements to the leased premises), which is part of the lease document. The total annual rent comes to $569,467.

The agreement requires the city to obtain financing in the amount of $769,566 for building-improvement projects. If the city is unable to secure that financing, its obligations for improvements to the property are as follows:

• Up to $457,430 for roof replacement/repair;
• Up to $26,061 for an interior fire-protection system;
• Up to $82,800 for an exterior fire-protection system;
• Up to $100,000 for other repairs.

“The supplemental rent in the Impressions Marketing Group … lease is adequate to service the debt of this financing,” reads the resolution adopted by the council Monday.

“Typically, we’ve used 59-month financing to get under the LGC’s five-year window. That’s typically the reason we’ve done that on nonproperty-type improvements, but for all property improvements, they require LGC approval regardless of the term, whether they be one year or 30 years,” Matt Rauschenbach, the city’s chief financial officer and assistant city manager, told the council Monday.

In August 2008, the Washington Daily News reported that a memorandum from the city manager to the council and then-Mayor Judy Meier Jennette stated that negotiations had “essentially been completed” with the Beaufort County Committee of 100, Impressions and Hamilton Beach regarding the sale of the building to the Committee of 100, leasing the building to Impressions Marketing Group and continuing environmental-contamination responsibilities on the part of Hamilton Beach.

That proposal has not been fully realized.