When a company seeks to build a new commercial building and is a little cash strapped, they sometimes enter into a deal with the builder on a rent to purchase option. That means, the builder would initially own the building and the rent you pay is deducted from the purchase price of the building when you are ready to buy it. It’s a great deal for the builder because your rent is paying his mortgage, and as the years go by his debt is payed down and he eventually sells the building to you at the market price of the day.
The County of Albany wishes it had anything close to it in the purchase deal of the Family Court Building. Since 2005, the county has been renting the building from Columbia Development for $2.1 million per year. They also have been required to pay the property taxes. Since when does the renter pay the property taxes? Are they not the responsibility of the property owner? Earlier this week the county announced its plans to purchase the building from the developer for $22.8 million. The price was negotiated from a $23.6 million appraisal obtained by the county.
This turned out to be a real sweet deal for Columbia Development. No matter what the building was appraised at, no one will ever know how much it cost to construct it. Estimates have put that number anywhere from $11-$24 million. Because the building was constructed by BBL, the construction arm of Columbia, the original cost of the building is probably closer to the $11 million number, if not lower.
How can County Executive Dan McCoy declare this a win for the county? How can he justify saving the estimated $385,000 yearly property tax bill as a win for the county. As of now the county is in debt for the seven years of rent totaling approximately $15 million plus the $23 million purchase price or roughly $38 million.
This has long been water under the bridge but who was responsible for negotiating that deal back in 2003. Even if you paid the higher of the estimated original construction cost of $24 million, you would be way ahead of the game today.
Columbia Development, who is politically active in and around Albany manages a lot of real estate built by their construction partner BBL. It’s hard to beat the builder/owner. How about the county try to manage this building on their own.
And That is “The Daily Take”