At the July 20 Board of Trustees meeting, Director Nancy Levin shared a financial summary from IFF, the nonprofit real estate company hired to do an assessment of the Coventry Peace Campus for the purpose of creating a model for the tenants to operate the building.
IFF presented their findings to the Board of Trustees at the January 2020 Committee meeting. The tenants met to discuss with the Library Board following the Jan. 21 Regular Board meeting.
Three documents were provided to the Library following the January Board Meeting at which IFF gave their presentation. The tenants disputed the IFF conclusions and were given an opportunity to meet with the library Board of Trustees in February. They were not convincing.
These documents are 1. a Facility Assessment, 2. a Space Plan, and 3. a memo addressed to Deanna Fisher with the subject “Coventry PEACE Campus Draft Operating Pro Forma.” These documents were provided to the library directly from IFF.
On November 18, 2019, IFF provided the CPC with five models demonstrating the need to raise more revenue from lease rates, finding new tenants for the Family Connections and Urban Oak spaces as well as creating revenue from the former Coventry Day Care spaces. IFF recommends a property manager and/or a site director—two roles that the library has been performing in a somewhat limited capacity. It informs tenants of additional expenses such as property insurance, building maintenance and utilities-calculating them on a square foot basis. IFF states that Current Lease Rates project a deficit of $151,025 in year one of any new tenancy in 2020.
The report states: “The Breakeven model demonstrates a need for lease rates closer to $9.50 SF in order to cover basic facility operating expenses.”
With an Increased Lease Rate model showing tenants not employing a site director or a property manager, tenants paying $4.50 /SF and any new tenants paying $12.50 /SF and added revenue of $10,000 in Event Space Rental and with an additional $35,000 in fundraising there would be a surplus of $22,809. The report states “But this model does not sustain debt service, as it would be expected that any fundraising beyond a breakeven point would be used for Capital Improvements, not to fund debt.”
Needed capital improvements
IFF anticipates a capital investment budget of $1,197,733 over five years. Admittedly this would be in a dream world.
At the very least, the event space (formerly Coventry Day Care) would require the installation of a kitchen and updated bathrooms in order for it to be rentable — an investment of approximately $30,000. Lighting and flooring for that space would require at least an additional $5000-10,000.
More importantly, the HVAC system serving the entire building is limping along and a full replacement would cost $110,000. The HVAC is much more of a concern than the roof which can be repaired or replaced in sections deferring most of the cost. IFF details improvements that would solely benefit Ensemble Theater that should not be born by the rest of the tenants, although they have not shown any financial capability to do so. We are aware that the tenants have applied for a number of grants for their combined organization but they have not been successful in creating operating support for the building. IFF, while capable of providing loans, also chose not to support this project. Why should the library?
On a recent phone call with Robin Toewe, Director of Real Estate Solutions for IFF, she shared with me her assessment of this CPC project. She said “It is a simple equation. You must bring in more revenue than operating expenses. The tenants have three ways to do this. 1. Rent 2. External Grants. And 3. Foundation grants-which usually requires a grant writer working fulltime.”
The original lease agreements with the tenants from June 2018 always anticipated and stated that repayment of all costs incurred by the library was necessary.
The Letter of Intent sent to the tenants on June 2, 2020, requires additional revenue and one governing entity. It was rejected.
The Letter of Intent sent on June 30, 2020 also requires additional revenue and one governing entity. It also requires a debt payment of $25,000 to start the process of repayment of their debt.
The tenants have not shown the capability to provide the necessary revenue to pay for their continued occupation of the building. We provided them with two years and favorable terms to create a successful operation. They paid for experts to assess the situation and then wholly rejected their advice. They had the benefit of library staff support.
What is next?
We need to move on. We are happy to have the park and the parking lot for use of all people in an area that sorely needs free parking and green space. It has been remarkable witnessing the use of the park since the pandemic made indoor activities dangerous.
The library must deal with COVID-19 related budget cuts as well as its own community strategic interests. We interrupted our Master Planning in March when the state was placed on a stay-athome order. We will work on replacing the playground at Coventry PEACE and enhancing the park for use by all. We will complete the renovation of the Coventry Library Branch needed now more than ever for social distancing and air handling. Noble Library Branch was bursting at the seams, especially with families, when the shut-down was ordered. They too need a better HVAC system as well as meeting rooms.