Rivera’s take on School Department odyssey

LIKE MANY PROBLEMS IN LAWRENCE, the problem with the School Department headquarters and the lease at 237-255 Essex St. is old and complicated. This month, a 28-plus-year-old problem was resolved when the city entered into an agreement to settle a lawsuit with the owners of 237-255 Essex St. and to purchase the building behind City Hall. Like anyone who has purchased a home knows, a lot can happen from the time an offer is made until the transaction closes. This path, while long and winding, was actually a low-cost process that ended in a win for the City of Lawrence.

The issues with the 237-255 Essex St. facility was one I inherited. The cost of rent and maintenance at that site was the stuff of legends around our city and something I had to deal with on day one. At that time, the city had spent over $6 million on rent alone during the previous 16-plus years. After adding in the average expenses for utilities, taxes, and maintenance, the cost to the city to house the School Department was close to $10 million. While the lease terms entered into by a prior administration allowed the city to purchase the building, the city never did. Similarly, the city did not do as much as it should have to keep up the building. The combination of these two factors made this lawsuit inevitable.

The last thing I wanted was to get into a long, drawn-out court battle. All I wanted was to reduce the costs the city was paying. My first instinct upon seeing the amount of money the city previously spent to house the School Department was to try to acquire the building for as little as possible, even as a gift. Shortly after my suggestion of gifting the building to the city, the owners sued the city. To clarify, the lawsuit was based on the claim that the city failed to invest in the upkeep of the property over the previous 10 years, as was mandated by the lease. It was also about how that lack of maintenance hurt the building’s property value.

By the end of 2014, the city was in litigation and the lease was ending, so we moved the School Department to the basement of the old high school. The cost of the move was $50,000, and it was either move or continue to pay the high cost of the lease. Since the move, we have saved $570,000 just in lease payments.

My motivation all along was to get the most savings for the city as possible and provide a home for the School Department, so we did just that. We conducted a search for space with less expensive leases, and looked for a property to buy. We knew from experience it would be better to own than rent. We actually found a building at 370 Essex St. that would meet our needs and we then received the City Council’s approval to buy the property and borrow $8 million to rehab that building.

During that process, the lawsuit advanced and a jury delivered a verdict against the city. The jury presented two figures for the judge to choose from: 1) the amount it would take to fix the things the jury thought the city had a responsibility to fix [$2.5 million] or 2) the loss in value because of lack of repairs ($800,000). Since the city was found in breach of contract it would have to pay as much as $500,000 in legal fees as well. If the judge chose the higher amount, the city would have appealed, and if it chose the lower amount the owners would have appealed. The likelihood of an appeal was high, so the judge encouraged us to reach an agreement. We did just that. For $3.5 million, we settled all lawsuits and purchased the property.

The fact that we had received approval to borrow $8 million to buy and fix 370 Essex St. allowed us to pay the settlement, purchase the building , and eventually fix the building without any net new dollars being committed. The City Council voted last week to move that money for that purpose.

Along the way, we bought the property at 370 Essex St. This is not a waste. This will allow us to control the redevelopment of that site, which is enhanced by the fact that the city owns an empty lot directly next to it. Marketing these two properties together will allow the city to get its initial investment back and to improve a large parcel in our downtown. Not bad for an unintended consequence.

So, yes, money was spent defending the city from a lawsuit that was inevitable; moving the school department; buying, designing and planning the rehab of a property that we stopped work on. Yes, we plan to move the School Department back into the offices at 237-255 Essex St. It may seem a long way to go to end up where we started. The reality is, we wanted to cut the total annual cost for the city and we have. We wanted to own the property instead of rent and we will.

Sometime in the near future when we fill the offices at 237-255 Essex St. and we save tons of money on leases and maybe even get some rental income, it will all have been worth it. Now this investment of $3.5 million to own the property and the cost to fix it will save us from wasting another $10 million in the future and having nothing to show for it. To the taxpayers of our city, we have solved a 28-year-old problem and have made an investment on the future.

Daniel Rivera is the mayor of Lawrence.