|The City received three proposals for lease / option to purchase of a building to serve as the new Police Department Headquarters. The winning bid was able to provide the most cost-effective option that also happens to best meet the needs of the department. The proposal can be described as follows:
It will be located at the former Dan River Mills executive office building located at 2291 Memorial Drive. There will be a combination of historic restoration of the existing building and new construction. The total cost is expected to be $17 million, which will be financed. In order to capture the best price for the City, the following structure is needed:
1. The developer plans to use historic tax credits to lower the cost of the renovation of the existing building. This property will be subdivided from the rest of the property and the plan is to lease that portion for a period of fifteen years with a First Right of Refusal on the property beginning in the eighth year of the lease. The lease payment for this portion of the project will be $965,091.48 per year. Due to the requirements of the Federal Historic Tax program, the property has to be owned by the developer for at least five years.
2. The developer will build an additional building adjacent to the existing building on a separate lot for $8,000,000. The developer will owner-finance the cost of construction under the following terms: $2.9 million upfront payment toward specific tenant up-fits and $546,885.12 per year for seven years with a $2,798,299.08 balloon payment on the first day of year eight.
Should the casino referendum pass, the City will use $5,924,000 from the initial $20 million payment from Caesars to pay towards specific tenant up-fits for the new construction and to set aside two years of lease payments. After the initial two years, the City will use gaming tax revenue proceeds to pay lease/purchase payments.
Should the referendum fail, the structure of this agreement will likely change and the City Council would need to determine whether it is willing to raise taxes to cover the cost.