City College administrative building leased for millions
By Erin Schwab
City College’s Board of Trustees approved a $53 million deal on Oct. 13, with a developer to lease 33 Gough St.
All members of the board present voted in favor of turning the current administrative building at 33 Gough Street into housing units with the requirement that 33 percent of the units be affordable, which is more than the 25 percent city law requires.
The college trustees selected in June 2015 Equity Community Builders and Integral Urban (ECB), an Atlantic based firm, to work on the project.
The board determined four or five years ago that 33 Gough Street was not being utilized to its full potential and since it is located in a residential area, it has potential for development.
“The planning department wanted to rezone to build high rises in that area which makes the property value even more because if they raise the height level that increases the value of the property and the amount of revenue that can be generated by it, if you add floors,“ City College Marketing Director Jeff Hamilton said.
The college will receive $11.5 million upfront once the lease disposition and development agreement is signed, and once the entitlement of the building occurs.
The lease will be for 75 years plus a 25-year extension option. During that time the college will receive 15 percent of the rent.
“There is a guaranteed minimum of $400,000 per year regardless of the rents,” Hamilton said. ”The downside is if the rental market drops significantly in five or 10 years, then our rent will drop because it is a given percentage of the total rent. But, there is a floor of $400,000 per year that we get no matter what.”
He added: “Anything above that, we share 15 percent of the rent received. Over time there may be years where the colleges gets a million or two million dollars in rent because of the way in which rent grow over time.”
Prior to voting to approve this project, the Board of Trustees had an opportunity to review a report by Kayser Marston Associates who was hired, according to Trustee John Ruzzo, “to take an unbiased third party view of the lease agreement.”
Currently, there are 80 administrative staff working at Gough Street that will be affected by this deal, but no academic courses are held there.
“There is a plan to move the Gough Street departments and people to the Ocean Campus and integrate them with the Ocean family,” Vice Chancellor Ronald Gerhard said.
Gerhard spoke of temporary housing used in adjacent to the Multi Use Building until an assessment of needs has been complete for the Gough Street staff.
The revenue from the lease of Gough Street will be used to offset the college’s deferred capital maintenance issues. The college currently has approximately two million square feet of classrooms, offices and other facilities spread across 11 campuses that are expensive to maintain.
An example of where the money could be spent is City College’s 750 Eddy Street. The old Civic Center location was unexpectedly closed prior to the Spring 2015 semester due to seismic reasons — the building was not earthquake proof.
“We are right now in the internal process in partnership with the board to determine what the options could be for 750 Eddy,” Hamilton said. “There is also the possibility, that in addition to academic mission, there might be housing that could be added to it so you would have the same footprint for the Civic Centre campus then you might also have housing. This is all exploratory. Nothing has been determined, but the housing could potentially provide revenue to support the mission of the college.”