County signs two leases with Regional Utilities

[wrobert]

County signs two leases with Regional Utilities | county, leases, regional - Local News - WaltonSun.com


Interesting story. But what is being said in this report and what is written in the lease is not the same. According to the lease, the rent on the D5 office has gone from 1800 a month to over 9k.

 

[Matt J]

Wow $12 per square foot. That's pretty steep considering what most commercial property is currently renting for. I've seen commercial property renting for around $1 to $2 per square foot.

Thank you BCC for showing us that even in hard economic times money can be wasted with ease. Did they even shop around for commercial space or was this just decided on a whim? Further, when will I see the drop on my water bill since Regional Utilities has now become a property manager?

 

[idlewind]

Wow $12 per square foot. That's pretty steep considering what most commercial property is currently renting for. I've seen commercial property renting for around $1 to $2 per square foot.

Thank you BCC for showing us that even in hard economic times money can be wasted with ease. Did they even shop around for commercial space or was this just decided on a whim? Further, when will I see the drop on my water bill since Regional Utilities has now become a property manager?

The way I read the article, no money is changing hands, only accounting entries, thus no money is being wasted. In fact, the county is saving the money it was paying for office space. The goal in this instance seems to be to save money.

 

[Interested Girl]

The article in the Sun got the story wrong. The D5 office was leased at a cost of $1800 per month. For Simple maths sake lets assume that 12 x 1800.00 is $21,000 a year in real money. For 4 years the lease expense would be $84,000.

Regiona utilities needed space for a new water tank and offered the County $100,000 for the property. That offer was Cash not in-kind services. Bank the cash and in four years we would have still had $16,000 left. I see no savings there - no reduction in expense, but I definitely see an increase in cash.

Now take the other offer for a lease. We get a 9600 sq ft building for $108,000 payable in cash, in-kind services or any other means agreeable to Regional utilities. We pay the first years lease expense with in-kind services of the donation of land. Lease payments are "paid" - year two through four are left with funds due and a lease that says it can be paid in Cash, in-kind services or some other means agreeable to Regional utilities. What do we pay it with ? Do we pay in cash ? Do we pay with inkind services ? Do we find another parcel of land they need ? Whichever we choose and they accept must be value received. The in-kind services must have a value of $108,000. Whichever we choose we have in one way or another incurred a cost with a value of $108,000.

The true cost for the office will have cost the taxpayer an additional $348,000 over the cost of the D5 Commissioner staying where she was.

With this kind of "cost savings" as defined by the County Administrator no wonder they are 7.5 million short in revenue next year.

The goal as defined by the previous poster was not met !!

 

[idlewind]

The article in the Sun got the story wrong. The D5 office was leased at a cost of $1800 per month. For Simple maths sake lets assume that 12 x 1800.00 is $21,000 a year in real money. For 4 years the lease expense would be $84,000.

Regiona utilities needed space for a new water tank and offered the County $100,000 for the property. That offer was Cash not in-kind services. Bank the cash and in four years we would have still had $16,000 left. I see no savings there - no reduction in expense, but I definitely see an increase in cash.

Now take the other offer for a lease. We get a 9600 sq ft building for $108,000 payable in cash, in-kind services or any other means agreeable to Regional utilities. We pay the first years lease expense with in-kind services of the donation of land. Lease payments are "paid" - year two through four are left with funds due and a lease that says it can be paid in Cash, in-kind services or some other means agreeable to Regional utilities. What do we pay it with ? Do we pay in cash ? Do we pay with inkind services ? Do we find another parcel of land they need ? Whichever we choose and they accept must be value received. The in-kind services must have a value of $108,000. Whichever we choose we have in one way or another incurred a cost with a value of $108,000.

The true cost for the office will have cost the taxpayer an additional $348,000 over the cost of the D5 Commissioner staying where she was.

With this kind of "cost savings" as defined by the County Administrator no wonder they are 7.5 million short in revenue next year.

The goal as defined by the previous poster was not met !!

I do not follow your math. How can no cash paid out equal to $348,000?
Under the previous arrangement we would have paid out IN CASH $84,000. The new deal is a trade out. At most I can see a "cost" of $16,000, but for 4-5 times the office space. The old D5 office was tiny, that will not be a problem now. There is also the benefit of using a previously unoccupied building that the county owns. We all know what standing emply does to a building.

 

[wrobert]

I do not follow your math. How can no cash paid out equal to $348,000?
Under the previous arrangement we would have paid out IN CASH $84,000. The new deal is a trade out. At most I can see a "cost" of $16,000, but for 4-5 times the office space. The old D5 office was tiny, that will not be a problem now. There is also the benefit of using a previously unoccupied building that the county owns. We all know what standing emply does to a building.

How does the government "create" dollars? If they have to give $384K in trade out, what is it that they are giving? How do they create this value?

 

[Interested Girl]

In-kind is like a barter system where no direct dollars are exchanged but the transactions has incurred costs on both parties to the transaction. In the case of the Regional Utilities building they determined that 108,000 was the value for the exclusive use of the building for a year.

The county paid the first years lease by an in-kind exchange of the land for the new water tank. That land had a book value that was an asset of Walton County. They would have established the "value" through an appraisal process. The cost to the county was the decrease in the book value of the fixed assets.

In the following years their must be a "meeting of the minds" on how the county will pay its annual lease payment. If they pay in cash it is a direct reduction of their cash account. They might agree that Regional Utilites needs a dump truck and the county could pay a portion of its liability through a "in-kind" transfer of the vehicle. No cash has changed hands but the county has an "actual cost" of the in-kind exchange of the "appraised value of the vehicle". They would decrease their fixed assets by that amount. The taxpayers of Walton County paid for that truck and its "value" is just as real as money in the bank. Another example might go like this - Regional Utilities needs its parking lot paved and Walton County agrees to pave it through in-kind services. That paving project would incurr labor costs, materials cost etc. that would be paid by the BCC budget.

The County does not "own" the regional utilities building. It will some day when the bonds in question are paid off and then the deed would change from Regional Utilities to Walton County. With outstanding bonds of 40 million and an annual bond payment of 1 million dollars as quoted in the Sun - that day is a long way off and the building in question will probably not even exist.

 

[Matt J]

I do not follow your math. How can no cash paid out equal to $348,000?
Under the previous arrangement we would have paid out IN CASH $84,000. The new deal is a trade out. At most I can see a "cost" of $16,000, but for 4-5 times the office space. The old D5 office was tiny, that will not be a problem now. There is also the benefit of using a previously unoccupied building that the county owns. We all know what standing emply does to a building.

Why does the county need additional office space when they are shrinking? Have you been to the annex lately? Seems like there's plenty of wide open space to me.

Exactly how much space does a County Commissioner and their assistant need for an office?

 

[wrobert]

Why does the county need additional office space when they are shrinking? Have you been to the annex lately? Seems like there's plenty of wide open space to me.

Exactly how much space does a County Commissioner and their assistant need for an office?

Based on the latest lease, a smidgen over 9000 sq ft.

 

[idlewind]

Why does the county need additional office space when they are shrinking? Have you been to the annex lately? Seems like there's plenty of wide open space to me.

Exactly how much space does a County Commissioner and their assistant need for an office?

Ok, you have me there. I surrender.
s/France