Salem Superior Court and Court Commissioner Building Redevelopment Analysis - November 8, 2017 SALEM SUPERIOR COURT /
COUNTY COMMISSIONERS BUILDING
REDEVELOPMENT ANALYSIS
11|08|2017
Background on Buildings
•Salem Superior Court Building (SSCB)
•Built between 1861-1891
•39,500 gross square feet
•Italianate and Romanesque Revival styles
•Architecturally significant interior spaces
•County Commissioners Building (CCB)
•Built in 1841
•15,600 gross square feet
•Greek Revival style
•Few remaining interior spaces in original form
•Both buildings listed in the National Register
•Within Federal Street National Register Historic District
SALEM SUPERIOR COURT / COUNTY COMMISSIONERS BUILDING – REUSE ANALYSIS 11|08|17
Importance to Salem’s Downtown
•Signature gateway buildings
•Architecturally significant
•Preservation key community
value
•Part of Salem’s long history as
judicial seat
•Located directly across the
street from MBTA station and
proximate to shops,
restaurants, retail, cultural
sites, and institutions
SALEM SUPERIOR COURT / COUNTY COMMISSIONERS BUILDING – REUSE ANALYSIS 11|08|17
Superior Court – Historically Significant Spaces
SALEM SUPERIOR COURT / COUNTY COMMISSIONERS BUILDING – REUSE ANALYSIS 11|08|17
Numerous Stakeholders
•Elected officials, Administration and Finance, DCAMM,
Secretary of the Commonwealth, Registry of Deeds, Mass
Historic, City of Salem, Salem Redevelopment Authority, Salem
Partnership, Salem Historical Commission, Historic Salem, Inc.,
residents and abutters, development community
•Varied interests
•Shared commitment to preservation and reuse of the buildings
SALEM SUPERIOR COURT / COUNTY COMMISSIONERS BUILDING – REUSE ANALYSIS 11|08|17
Summary of Studies to Date
SALEM SUPERIOR COURT / COUNTY COMMISSIONERS BUILDING – REUSE ANALYSIS 11|08|17
2008 Salem Superior Court / County Commissioners Building:
Reuse Feasibility Analysis (GLC Development)
2012 Salem Superior Courthouse & County Commissioners Building:
Feasibility of Real Estate Options (GLC Development) –
update to 2008 study
2013 Salem Superior Court & County Commissioners Building:
Existing Conditions Study (Perry Dean Rogers)
2013 Salem Superior Court / County Commissioner’s Building:
Reuse Feasibility Analysis Update (GLC Development) – update
to 2012 study
2015 Salem Superior Court Re-Use for Southern Essex Registry of
Deeds Study (Goldman Reindorf Architects)
Summary of Studies to Date
SALEM SUPERIOR COURT / COUNTY COMMISSIONERS BUILDING – REUSE ANALYSIS 11|08|17
•Multiple reuse analyses (GLC/Stantec) examined potential reuse opportunities
of for-sale residential, for-rent residential, office, institutional and mixed uses
and included costs and possible fit-out scenarios
•Polling of state agencies (2009) – Salem State University sole respondent, but
no funding / program
•2014 - Legislation proposed to transfer property (with District Court building)
to the Salem Redevelopment Authority – only District Court passes
•2015 - Study looking at variations of locating the ROD in either or both of the
buildings - included a cost estimate to renovate and restore the building for use
by the Registry and shell space for an unidentified future tenant. Total project
cost: $50.62M.
•2016 – Legislation is passed for disposition of the Superior Court / County
Commissioners Building specifying Registry of Deeds in Superior Court spaces
Key Points of Legislation
•SSCB and CCB to be conveyed to Salem Redevelopment
Authority (SRA)
•Specific spaces to be used by Registry of Deeds (ROD) (18-
20,000 SF)
•ROD “condo” to be owned by the Commonwealth
•Commonwealth to pay amount commensurate with the cost of
constructing or leasing the space
•Amount determined annually “at the discretion of the Secretary
of the Commonwealth.”
SALEM SUPERIOR COURT / COUNTY COMMISSIONERS BUILDING – REUSE ANALYSIS 11|08|17
SALEM SUPERIOR COURT / COUNTY COMMISSIONERS BUILDING – REUSE ANALYSIS 11|08|17
Registry of Deeds Program Needs
•Space Requirements from Legislation
•“The condominium estate or other real estate holding interest,
determined satisfactory by the secretary of the commonwealth,
shall consist of the superior courthouse library, the 3 court rooms
and the clerk's office comprised of approximately 18,000 to
20,000 square feet of space for the Essex south registry of
deeds…”
Current
Lease (net
usable sf)
Program
Need* (net
usable sf)
Estimated
Program
Layout in SSCB
(net usable sf)
Program
Layout
in SSCB (gross
sf)
Actual Space
Allocation
(gross sf)
39,093 sf 17,769 sf 20,332 sf 34,000 sf 39,500 sf
*2015 Goldman Reindorf Study
SALEM SUPERIOR COURT / COUNTY COMMISSIONERS BUILDING – REUSE ANALYSIS 11|08|17
Plan Room - Storage
Records Storage
Recorded Land –
Public Books
Plans from Goldman Reindorf Effort
•Point A
•Sub Point 1
•Sub Point 2
•Point B
•Sub Point 1
•Sub Point 2
•Point C
•Sub Point 1
•Sub Point 2
SALEM SUPERIOR COURT / COUNTY COMMISSIONERS BUILDING – REUSE ANALYSIS 11|08|17
Plans from Goldman Reindorf Effort
•Point A
•Sub Point 1
•Sub Point 2
•Point B
•Sub Point 1
•Sub Point 2
•Point C
•Sub Point 1
•Sub Point 2
SALEM SUPERIOR COURT / COUNTY COMMISSIONERS BUILDING – REUSE ANALYSIS 11|08|17
Stantec Analysis – Summary of Findings
SALEM SUPERIOR COURT / COUNTY COMMISSIONERS BUILDING – REUSE ANALYSIS 11|08|17
ROD in SSCB / private office use in CCB: Not Feasible
•current market rents ($16/sf) insufficient to cover CCB TDC
ROD Use in SSCB / market-rate residential in CCB: Not Feasible
•5,500 sf non-marketable remaining office space in SSCB.
Residential Use in both CCB and SSCB: Feasible with Open Shop
•HDIP may allow developer to build some affordable units
toward 10% City goal
Key Assumptions
•State historic tax credits for SSCB and CCB
•Federal historic tax credits for CCB only
•Housing Development Incentive Program tax credits for market rate
housing – reviewed at three levels
•Commonwealth lease & acquisition space
•Leased during tax credit period (5 years)
•Sale in Year 6
SALEM SUPERIOR COURT / COUNTY COMMISSIONERS BUILDING – REUSE ANALYSIS 11|08|17
Commonwealth Costs
SALEM SUPERIOR COURT / COUNTY COMMISSIONERS BUILDING – REUSE ANALYSIS 11|08|17
Commonwealth Annual Rent and Operating Costs
COM Share of Debt Service/Annum $1,271,000
7% Return on Developer's Equity for COM $85,000
Operating Expenses est. $10/sf $363,000
TOTAL ANNUAL EXPENSES $1,719,000
Commonwealth Acquisition Costs
Sale Proceeds - Bal. of mortgage $19,057,000
Equity Repayment $1,208,000
Return on Equity @ 10% $121,000
Tax Credits Return $217,000
TOTAL PURCHASE PRICE to COM $20,603,000
Commonwealth Costs (impact of having FHTCs)
SALEM SUPERIOR COURT / COUNTY COMMISSIONERS BUILDING – REUSE ANALYSIS 11|08|17
Current
Lease
Program
Need*
Program Layout in
SSCB—No Fed HTCs
Program Layout in
SSCB—Full Fed HTCs
Annual
Rent &
OpEx
$643,079 $1,719,000
(for five years)
$1,421,000
(for five years)
Net Square
Footage
39,093 sf 17,769 sf 23,621 sf** 23,621 sf**
Rent &
OpEx/sf
$16.45/sf $47/sf $43/sf
All expenses
included
All expenses included All expenses included
•$20,603,00 purchase in
year 6
•$145,360 ongoing
operating expenses
•$16,870,000 purchase
in year 6
•$145,360 ongoing
operating expenses
*2015 Goldman Reindorf Study
**Net SF for Full SSCB (39,500 gsf)
Impact of HDIP on Feasibility
SALEM SUPERIOR COURT / COUNTY COMMISSIONERS BUILDING – REUSE ANALYSIS 11|08|17
Full HDIP $1M HDIP No HDIP
ROD and Office n/a n/a Not feasible
ROD and Residential Not feasible Not feasible Not feasible
All Residential Not feasible Not feasible Not feasible
All Residential Open Shop Feasible Feasible Not feasible*
*Construction costs would have to be reduced by 5%, or rental rates would
have to be $3/sf for this to become feasible
Full HDIP $1M HDIP No HDIP
ROD and Office n/a n/a 0.67% ROE
ROD and Residential 10.07% ROE 7.29% ROE 3.47% ROE
All Residential -7.35% ROE -11.11% ROE -14.87% ROE
All Residential Open Shop 18.42% ROE 13.54% ROE 8.66% ROE*
Discussion
SALEM SUPERIOR COURT / COUNTY COMMISSIONERS BUILDING – REUSE ANALYSIS 11|08|17
•Status with state partners
•Resources – Commonwealth’s contribution to ROD build-out scenario
•Process
•Timing