Village Hill 1984 State Hospital Redevelopment Strategy Center for Economic DevelopmentNORTHAMPTON STATE HOSPITAL
REDEVELOPMENT STRATEGY
A Project for:
The City of Northampton
David B. Musante, Mayor
Gene Bunnell, Director, Office of Planning & Development
By
i
The Center for Economic Development
School of Management
University of Massachusetts.
March, 1954
i
This project was partially funded by the Massachusetts Department of.
Commerce and Development through a contract with the City of
Northampton.
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ACKNOWLEDGMENTS
This report is the culmination of nine months of study by a research
team from the Center for Economic Development. Samuel Seskin was
Principal "Investigator. Nancy Goff, Project Director, shared the work
of conducting the research and writing the final. report with Jeanne
Armstrong. John Mullin commented insightfully and offered helpful
information. The manuscript was prepared by Cheryl Wood Creeden.
Many others participated in the study or offered useful advice. Tours
of three industrial centers in Chicopee, North Adams and Bennington
provided valuable information about successful operation of such
facilities. We wish to thank the managers of these centers for their
hospitality and information sharing. The many business owners who
participated in the in-depth interviews provided a wealth of information
about Hampshire County and its economy. George Haller of Northampton
State Hospital shared his knowledge of the grounds and buildings on the
site.
We must also acknowledge the contributions of the City of Northampton.
Gene Bunnell, Director of the Office of Planning and Development, was
involved in every aspect of the work. His informal advice and useful
criticisms were important to the study's design and recommendations.
Finally, we thank Lozano-White Associates for their generous sharing of
information. Since our work is an extension of their recent study, the
cooperation of Associate Roberta Leary eliminated much duplication of
effort.
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TABLE OF CONTENTS
I. Executive Summary . . . . . . . . . . . . . . . . . . . 1
A. Findings . . . . . . . . . . . . . . . . . . 1
B. Recommendations . . . . . . . . . . . . . . . 4
II. Purpose of the Study . . . . . . . . . . . . . . . 8
III. Physical Resources . . . . . . . . . . . . . . . . . . 12
A. Reuse Potential of Buildings . . . . . . . . 12
B. Building Types by Reuse Potential . . . . 16
C. Reuse Potential of Undeveloped Land . . . . . 27
IV. Local Market Conditions . . . . . . . . . . . . . . . . 30
A. Office . . . . . . . . . . . . . . . . . . 30
B. Industrial . . . . . . . . . . . . . . . 33
C. University of Massachusetts . . . . . . . . . 36
V. Recommended Redevelopment Strategy . . . . . . . . . . 38
A. Locally Based Development Group . . . . . . . 38
B. Diversity of Tenants . . . . . . . . . . 39
J C. Incremental Process • • 40
VI. Operational Plan . . . . . . . . . . . . . . . . . 42
A. The Entity . . . . . . . . . . . . . . . . 42
B. First Actions by the City . . . . . . . . . . 46
C. Conditions for Acceptance . . . . . . . . . 47
D. Operational Principles . . . . . . . . . . . 48
E. Implementation Phases . . . . . . . . . . . . 51
VII. Operational Budget . . . . . . . . . . . . . . . . 58
A. Introduction . . . . . . . . 58
B. Budget Findings . . . . . . . . . . . . . . . 62
APPENDICES
A. Methodology . . . . . . . . . . . . . . . 69
B. Economic Development and Industrial
Corporations . . . . . . . . . . . . . . 74
C. Funding Options . . . . . . . . . . . . . . . 79.
D. Computations for Budget . . . . . . . . . . . 83
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TABLES
Name Page
I . Reconiiiwii led Resuo of the Site . . . . . . . . . . . . . . . I I
2. Summary Building Types . . . . . . . . . . . . . . . . . . 15
I
3. Structural Characteristics of Mixed Industrial. . . . . . . 20
Type Buildings
4. Hampshire County Economy . . . . . . . . . . . . . . . . . 31
5. Implementation Phases . . . . . . . . . . . . . . . . . 54 I.
6. Projected Revenues & Expenses Years 1 - 5 . . . . . . . . 63
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7. Estimated Capital Needs . . . . . . . . . . . . . . . . . . 66
8. Debt Service Projections . . . . . . . . . . . . . . . . . 68
MAPS
1.
The Site
10
2.
Office 1 Type . . . . . . . . . . . .
. . . . . . . . . 17
3.
Office 2 Type . . . . . . . . . . . . . .
. . . . . . . . . 18
4.
Mixed Industrial Type . . . . . . . . . .
. . . . . . . . . 21
5.
Main Complex 1 Type . . . . . . . . . . .
. . . . . . . . . 23
6.
Main Complex 2 Type . . . . . . . . . . .
. . . . . . . 24
7.
Main Complex 3 Type . . . . . . . . . . .
. . . . . . . . . 26
T EXECUTIVE, SUMMARY
A. Findings
a. The entire state hospital site comprises approximately 500 acres
near the center of downtown Northampton. Previous studies have
recommended that significant portions of the site be preserved for
open space, agriculture or banked for future public development
needs. This report focuses on two areas - Parcels V and VII - and
their -reuse potential for mixed industrial and office development.
(See Section III and Map 1.)
b. At present several buildings on Parcel V, the Main Complex, are
being used by the Department of Mental Health for patient care and
administration. The agency may continue to need these buildings for
many years. Other buildings are vacant and in conditions ranging
from very good to badly deteriorating. (See Sections III.A & B and
V.C.)
c. Nearly 173,000 square feet of building space requires only a
moderate amount of renovation. These buildings could be occupied
almost immediately. Included here are nearly 87,000 square feet of
mixed industrial space for small manufacturing firms, and 19,000
square feet of office space for moderate to large firms. (See
Section III.A.1.)
d. Buildings with higher renovation cost but which could be converted
to offices with relative ease are the larger scale multi-story
buildings with a total. of 170,000 square feet. However, nearly half
of this space is currently being used by DMH for patient care and is
likely to remain so for several years. (See Section III.A.2.)
e. Parts of the main building could be renovated at higher cost to
office use. Containing more than 147,000 square feet, these
buildings could be linked to provide expansion space for occupants
of adjoining buildings or could be developed separately. (See
Section III.A.3.)
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\ f. Buildings least amenable to reuse because of small spaces and high
renovation costs are 172,000 square feet of vacant wards. An
estimated $10 million would be required to renovate these buildings.
(See Section III.A.4.)
g. Undeveloped land which could support new construction falls into two
basic types - the completely open space of Parcel VII and the open
areas surrounding the buildings of the Main Complex. (See Section
III.C.)
h. Parcel VII contains approximately 35 acres of land. Once the
necessary infrastructure was in place, a complex of new industrial
and office buildings could be supported here. The 1972 Master Plan
for Northampton recommended this site for future industrial/
commercial development. (See Section III.C.)
2. Local Market Conditions
a. Hampshire County's economy is strong and predicted to grow at the
most rapid rate of the four western counties. The county is well
positioned to take advantage of the 10,000 non-manufacturing jobs
forecasted to be created here over the next fifteen years.
b. In the next few years, however, current market conditions make it
unlikely that the potential office space on the site could be
occupied immediately. Expansion in downtown Northampton has brought
about a real estate boom that will absorb much of the current demand
for office space. Springfield's downtown building boom has resulted
in several years supply of vacant office space at recent absorption
rates. (See Section IV.A.)
c. Northampton's commercial and housing boom has had negative
consequences for the city's supply of industrial land and buildings.
Raw industrial land is basically unavailable. Industrially zoned
/~J U areas are being developed for residential_ and commercial uses. Due.
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to conversion of older industrial buildin s, the sup 1 of
1 inexpensive industrial space is similarly exhausted. (See Section
TV.B.)
d. The lack of vacant industrial space in. Hampshire County does not,
bode well for the area's future economic growth. In the Center"s
recent survey of county businesses, the most often mentioned
site-related problem was the lack of expansion, capability on the
premises. (See Section IV.B.)
e. The state hospital site, with 35 acres of potential industrial land.
and over 86,000 square feet of usable shop buildings, is a valuable
economic resource. Eight firms interviewed in a random survey
expressed interest in the site. Only one firm responded negatively
because of the site's former use. (See Section IV.B.)
f. The University of Massachusetts' administration is currently
reviewing policies toward space utilization on campus. Many
non-academic functions may be encouraged to move. The school has
begun forging active partnerships with the private sector and
policies toward faculty entrepreneurship have changed. (See Section.
TV.C.)
3. Financial Projections
a. Once 70% of the incubator space is rented, the project will. generate
an annual cash surplus that can be used for purposes, such as
servicing outstanding loans, or providing the means for expanding
the organization's capacity to assist area businesses. (See Section
VII.B.)
b. Approximately $1.6 million can be raised by the development agency
for capital improvements to the site if all surplus revenues from
operations are applied as debt service on a loan. This equals
$18.92 per square foot for renovations of buildings owned by the
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agency and used for incubator industries. Estimates of the total
` capital needed for redevelopment of the entire Main. Complex range
from $6.3 to $11.0 million. (See Section VII.B.)
C. Sale of the industrial park land can generate revenues totalling
$500,000 to $750,000. (See Section VII.B.)
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B. RECOMMENDATTONS
1. Lon _ Term Strategy
a. A locally based redevelopment group should be established witli
responsibility for the state hospital project. This agency should
have wide expertise in the various areas of development and be
staffed by an energetic and creative director. The organization'
should be a joint public/private effort and be empowered to take
responsibility for all the City's industrial developments. (See
Section V.A. and VI.A.)
b. The local agency should retain ownership of 25% of the available
space (mixed industrial and small office buildings). These
buildings should be managed as an incubator industry center and
rented to small industrial, research, and office firms. (See
Section VI.D and VII.A.)
O C. The agency should oversee the disposition of the balance of the
buildings to the private sector. (See Sections VII.A and VII.E.)
d. The project as a whole should provide for a range of business
tenants - large and small, innovative and traditional, office and
industrial. This diversity will strengthen the,development's
likelihood of success and will take into account the variety of
building types and vacant land that exist. (See Section V.B. and
VT.D.)
e. A long range site plan for the project should be developed once
information about the viability of marketing the main buildings is
known. The site plan should incorporate both Parcels V and VII and
include selective demolition and new circulation patterns. (See
Section VI.E.)
f. The redevelopment process should be incremental, phased in over a
~i(J long time horizon to provide needed flexibility to take advantage of
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unforeseen opportunities. (See Sections V.C and VI.D.)
g. The overriding long term goal of the development should be
operational self-sufficiency. The facility must be run as an
economic enterprise that charges rents and fees.that cover its
expenses. (See Section VI.D.)
h. To enable the project to-operate at all, a significant initial
public subsidy will be needed for capital improvements. (See
Section VI.D.)
i. The development agency responsible for securing and managing the
grounds and maintaining parking lots and roads on the site should
collect a management fee from businesses occupying the premises.
(See Section VII.A.)
r~\ k. The public's involvement and investment implies that the development
of the site should generate an economic benefit to the region.
Reuse of the site by firms seeking to sell their products or
services outside the region should be a priority. In addition,
special consideration for new businesses should be provided. (See
Section VIII.D.)
2. Short Term Strategy
a. The City can expedite the redevelopment process prior to site
transfer by developing local support for the project, establishing a
base of technical information, determining the level of potential
involvement of other public agencies such as the Land Bank,
beginning the site transfer process, insuring continuing provision
of heat, and obtaining capital improvement funds. (See Section
VI.B.)
b. Buildings should be acquired from the state at a nominal cost with
sufficient funds for essential improvements to secure the buildings
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against deterioration for five years. Proceeds collected by the
local agency from building sales should be pledged to reimburse the
state for the building repairs. Any surplus should be split between
the local group and the state. (See Section VI.C and VII.A.)
c. The City can assist in defraying certain operating expenses,
especially early in the development by donating staff time and
showing flexibility over property taxes. (See Section VII.A.)
3. Marketing Strategy
a. The City should retain a highly qualified broker/marketing agent to
ascertain the demand for the Main Complex in the national real
estate market. A non-local user, such as a national or
multi-national firm, should be sought to establish a regional
headquarters for administration, research or training. With
knowledge of the consultant°s findings, the development agency can
make an informed decision on whether to demolish, bank or renovate
Cj individual portions of the building. Portions of the Main Building
with the least potential for reuse should be demolished. (See
Section VI.A.)
b. The redevelopment effort should include outreach to the University
of Massachusetts. Suitable space for offices, laboratories, and
production and research facilities is needed off campus for "think
tank" institutes, public agencies, university faculty establishing
their own business ventures, and for joint private sector/university
research projects. (See Section IV.C:)
C. Outlying, small buildings on the site should be marketed especially
to local firms. Space should be rented in a manner that leaves room
for firms to expand on premises, without moving out. (See Section
IV.B.)
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II. PURPOSES OIL THE STUDY
The overall purpose of this project has been to recommend to the City of
Northampton an economic development strategy for reuse of the
Northampton State Hospital site. Such a strategy must be cognizant of
continuing use of the site by the Department of Mental_ Health, the
economic marketplace in the area, and the city's determination that the
reuse,p.lan must strengthen the economic base of the region. The study
focuses on the economic context within which a redeveloped hospital site
would operate, especially in terms of the manufacturing and business
services sectors of the region.
The groundwork for this undertaking was laid in a previous study by
Lozano, White and Associates of Cambridge. Their report provides useful
information, particularly in the areas of site planning, physical
resources and potential renovation costs. The Center's work builds
directly on this previous study in examining the reuse potential of the
two major parcels designated by Lozano and White as most appropriate for
development (see Map 1 and Table 1):
- Parcel V Main Complex
80 acres
430,000 square feet interior
- Parcel VII vacant land
35 acres
The Center's study relates the physical characteristics of Parcels V
and VII to the needs of the local manufacturing and services sectors.
The existing and projected markets for industrial and office space in
the western Massachusetts region are examined in relation to the
availability and cost of such space at the hospital site.
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Several criteria were applied in selecting the economic development
strategy. Some of these had been previously articulated in the Lozano
and Wl:ii_te study, while others were developed from conversations with
city officials in the Planning Department. `fhe Centers pl-opo"Od
redevelopment strategy is designed to:
- Create a stable employment base;
- Provide space for small industries;
- Generate state and local tax revenues;
- Preserve buildings with architectural and historic
significance;
- Maintain local control over development;
- Minimize bureaucratic process and effects of DMH
uncertainties;
- Facilitate efforts between cooperative public and private
sectors of the community.
O The recommendations that follow outline an implementation strategy based
on current political and economic realities. Recommendations are made
regarding:
- Who should be responsible for the redevelopment project;
- What reuse scenario should be followed;
- How the process should be undertaken and financed;
- When the elements of the plan should be implemented.
MAP 1 - THE SITE
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TABLE 1: RECOMMENDED REUSE OF THE SITE*
Parcel
Current Use
Recommended Reuse
Size
1
The Drumlin
open space
open space
110 Acres
IA
& B
agricultural
agricultural
210 Acres
II
open space
municipal
development
6 Acres
ITI
recreation
open space
10 Acres
B
Community Gardens
gardens
gardens
4 Acres
IV
county jail
county jail
30 Acres
V
Main Complex
DMH
administration
industry/offices
84 Acres
VI
The Hillside
open space
open space
25 Acres
VT:r.
open space
private development
21 Acres
Map 1 and Table I from Lozano, White and Associates, "Northampton
State Hospital Reuse Plan", March, 1982.
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TII. PHYSICAL RESOURCES OF NORTHAMPTON STATE HOSPITAL
The entire State Hospital site comprises approximately 500 acres near
the center of downtown Northampton. Previous studies have recommended
that significant portions of that total acreage be preserved as open
space, maintained in agricultural. use, and/or banked for future
development needs or construction of publicly owned facilities. The
accompanying map and table diagram the parcels into which the State
Hospital site is divided and summarize the previously recommended reuses
of each parcel (see Map 1 and Table 1). This report focuses on Parcels
V and VII and their reuse potential for mixed industrial and office
development.
A. Reuse Potential of the Buildings on the Main Complex, Parcel V
Taken as a group, the buildings on the Main Complex, Parcel V, offer
a spectrum of possible mixed industrial and office reuses. The schedule
of availability for reoccupancy varies from almost immediate to long
range; the costs of renovation range from minimal to $60 per square
foot. Modest industrial firms, small research institutes, moderate to
large commercial firms could all be offered quarters that would fit
their needs and budgets.
As Table 2 and the accompanying maps show, the buildings on this parcel
can. be categorized according to their reuse potential into six building
types: Mixed Industrial, Office 1, Office 2, Main Complex 1, Main
Complex 2, and Main Complex 3. Buildings are grouped according to their
potential for reuse, physical scale and characteristics, and relative
need for rehabilitation. At present, some buildings within each type
are being used by the Department of Mental Health, which may continue to
need them for the forseeable future. Other buildings are vacant. It
should be noted that these square footage figures are the total gross
interior space, including basements where they exist.
1. Buildings that could be occupied almost immediately with least cost
IJ of rehabilitation include those of Mixed Industrial, Office 1, and
Main Complex 1 types. Taken together, these equal more than 86,000
square feet of office space and nearly 87,000 square feet of mixed
industrial space. By size and character of firms that could be housed,
these types include nearly 87,000 square feet for small industrial
firms, 19,000 square feet of office space for small firms or institutes,
and 67,000 square feet of office space for moderate to large firms.
Once the question of delivery of heat has been resolved with DMH, the
major cost of reusing Main Complex l type space will be repair of the
roof. The maintenance and renovation requirements of Mixed Industrial
and Office 1 types must be determined on a building by building basis.
The structures of the Mixed Industrial type are a particularly "mixed
bag". Some, such as the Maintenance and Paint Shops, will require
virtually no renovation while others, such as the Red Barn and Butler
Building, are not currently heated and are best used as storage
facilities. The Piggery and Coach Barn will require moderate
rehabilitation for reuse as industrial spaces.
2. Buildings that could be occupied quickly with somewhat higher
renovation costs are included in the Office 2 type. These larger
scale, multi-story buildings total 170,000 square feet of space that is
recommended for multiple offices housing one or more firms per building.
The two buildings of this type that are currently vacant are the Male
Attendants' Home and the North Employees' Home (total 45,000 sq. ft.).
The Nurses' Home has already been converted to office use, but is
currently occupied by DMH. Almost one-half the space of this building
type is contained in the Haskell Building (80,000 sq. ft.) and is
currently being used by DMH for patient care.
The Mixed Industrial, Office 1, Main Complex 1, and part of Office 2
types can be used to stimulate reuse activity and generate cash flow
during the early phase of site development.
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3. Buildings that can be reused after renovation at higher per square
foot cost are grouped in the Main Complex 2 type. Containing more
than 1.47,000 square feet, these parts of the current Main Complex
Building housed a variety of uses. They could be developed separately
to provide office and related spaces, or they could be linked to provide
expansion space for Main Complex 1. The reuse potential for this
building type could be significantly improved if parts of the Main
Complex Building are demolished (see D. below) and replaced by
structures that supplement the offerings of Main Complex 2.
Part of Office 2 type (Haskell, South Employees' Home, Nurses' Home) and
Main Complex 2 contain nearly 250,000 square feet of currently occupied
space that could be converted to office and related uses and integrated
into the longer range development plan for the site, once DMH has
vacated them.
4. Buildings that are least amenable to reuse because of-small spaces
and high renovation costs are grouped in the Main Complex 3 type.
Predominantly former wards, these sections contain 172,000 square feet
with closely spaced bearing walls. At Lozano and White's estimated cost
of $60/square foot, more than $10 million would be required to renovate
these buildings. Estimated demolition is not inexpensive either. At
$6 - 10 per square foot, $l to $2 million would be required.
Unless, for example, a large corporation can be found to renovate and
occupy all or most of the Main Complex Building, the demolition and
replacement of the Main Complex 3 type will be part of the long range
development of the site.
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TABLE 2:
SUMMARY BUILDING TYPES
r
Recommended
Squar
e
Type
Condition
Characteristics
Reuse
Foota
ge
Office 1
Fair to
Small scale,
Small offices,
19,334
S.F.
Good
houses, on
office for
periphery of site
single firm or
research insti-
tutes
Office 2
Fair to
Large scale, multi-
Multiple offices
170,333
i
S.F.
Good
story masonry
buildings
surrounding Main
Complex
Mixed
Poor to
Shop buildings
Industrial and
93,629
S.F.
Industrial
Excellent
serving Main
Storage
Complex
Main Complex
Fair to
Multi-story
Offices
67,256
S.F.
Good
masonry buildings,
large scale
central portion
of Main Complex
Main Complex 2
Fair
Farthest sections
Mixed offices
147,366
S.F.
of Main Complex
Multi-story,
masonry buildings
Main Complex 3
Poor
Remainder of
None at present
172,063
S.F.
Main Complex, small
spaces used as
patient rooms
TOTAL
669,981 S.F.
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B. Existing Building Types on Parcel V by Reuse Potential
n Office 1
Characteristics: Relatively smaller scale and square footage, more
intimate interior, located along periphery of Main Complex site and
buffered from other land uses, amenable to quick reuse for offices at
relatively low cost.
Recommended reuse: Offices for single firm per building, possibly for
more if firms are quite small and compatible.
Listing:
Building
Recreation Building
Superintendent's House
33 Prince Street
39 Prince Street
37 Prince Street
TOTAL,
Comments
interior repairs
needed
used for offices
II I It
used as a residence
Library
Size
3,468 sq. ft.
4,154
5,088
3,312
3,312
19,334 sq. ft.
Characteristics: Relatively large scale and square footage,
multi-story, amenable to renovation for offices at moderate per square
foot cost.
Recommended Reuse: Multiple office space for one or more firms per
building.
Listing:
Building
Haskell
Male Attendants' Home
South Employees' Home
Nurses' Home
North Employees' Home
TOTAL
Comments
used for patient
care
vacant
used as a residence
used for offices
vacant
Size
80,320 sq. ft.
31,040
14,558
29,836
14,579
170,333 sq. ft.
r J ( J -16-
to
"TAIL 2:
Existing Buildings with
Reuse Potential:
Office 1 Type;
~I
J~ecreat
n
Bldg. -
IN
t
0
Inn
ISRlc
I
rInn 3:
Existing Buildings with
Reuse Potential:
office 2 Type;
P
Mixed Industrial
Characteristics: Utilitarian out-buildings of Main Complex, small. to
medium square footage, interiors range from operational to disrepair,
amenable to quick reuse as production and/or storage space at low cost.
Recommended Reuse: Utilitarian production space with associated storage
and office space for small firms.
Listing:
Heated, amenable to reuse as production/office space.
Building Comments
Maintenance and Paint in use
Shops
1884 Storehouse in use
New Garage in use, office/garage
Grounds Shop
Piggery partially heated
1900 Coach Barn some rehabilitation
Subtotal
Heated, vehicle or other storage:
Firehouse Subtotal
Unheated, vehicle or other storage:
Butler. Building
Red 1874 Barr_
Subtotal
TOTAL
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Size
27,376 sq. ft.
25,747
5,287
6,232
6,293
15,518
86,993 sq. ft.
1,087 sq. ft.
3,280 sq. ft.
2,269
5,549 sq. ft.
93,629 sq. ft.
TABLE 3:
STRUCTURAL
CHARACTERISTICS
OF MIXED INDUSTRIAL TYPE
BUILDINGS
Exterior
Building
Walls
Roof Windows
Weather tight?
Maintenance &
Brick
Composite large
Yes - in use
Paint Shops
1.884 Storehouse
Brick
Shingle some large,
Yes - in use
New Garage Concrete
Blocks
Grounds Shop Brick
Piggery Brick
1.900 Coach Barn Brick
Firehouse Brick
Butler Building Metal
Red 1874 Barn Wood
with
Brick
foundation
some bricked
up
Metal
Office half
Yes - in use
has large
Slate
Small
Yes
Slate
Numerous
Yes
small
New
Yes
Yes
Shingle
Flat
No
Yes - in use
Metal
Metal
No
Yes - in. use
Shingle
Yes
Yes
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Wai tenance
& P i t 'no
Sho s
rZed
/ 884
to ehouse---
f New
Garage
Coach
Barn
MAP 4:
Existing Buildings with
Reuse Potential:
Mixed Industri4l Type
m
o ~
n~
r
,
/ Main Complex _1
Characteristics: Central section of Main Complex, institutional scale,
muati-story, currently used as administrative offices, apartments,
auditorium, classroom, storage; amenable to immediate similar reuse.
Renovation cost variable depending on elegance of design.
Recommended Reuse: Office space for medium to large firm.
Listing
Main
Building
A
Main
Building
B
Main
Building
C
Main
Building
D
Main
Building
E
Main
Building
F
Main Complcx_ 2
Characteristics: Located at north and south ends and behind central
r section of Main Complex; previously used as apartments, kitchen, dining
room, infirmaries; amenable to mixed uses related to offices with
moderate rehabilitation.
Recommended Reuse: Mired office use and/or link with Main. Complex J. to
house an expanding firm.
8,760 sq. ft.
24,000
14,780
17,112
1,428
1,176
67,256 sq. ft.
Listing:
Building
Comment
Size
Orloiider Building
Main Building G
Main Building II
Main Building I
South Infirmary
North Infirmary
kitchen/dining room
apartments
apartments
vacant
vacant
53,762 sq. ft.
7,434
4,272
9,108
38,185
34,605
147,366 sq. ft.
-22-
Mlc
MAP 5:
Existing Buildings with
Reuse Potential.:
Main Complex l Type
Main
Buil ings
A -
i
a
D6 -
W5
iviain
Buildings
G, H, & I
r--J
z
North
Infirmary
JOrlander
Bldg.
tic
MAP h:
Existing Buildings with
Reuse Potential:
Main Complex 2~Type
I
Main Complex 3
Characteristics: Remainder of Main Complex, least amenable to reuse
because of small spaces and high renovation costs, most likely to
require demolition and replacement.
Recommended Reuse: None at present
Listing:
Building
Comment
Size
First Hall South
Second Hall South
Third Hall South
Fourth Hall South
Fourth Hall Passageway
First Hall North
Second Hal]. North
Third Hall North
Fourth Ball North
()U
vacant
11
if
if
n
if
n
-25-
21,672 sq. ft.
27,131
1.9, 905
17,844
731
26,052
18,01.2
21,740
18,976
172,063 sq. ft.
*99
glo
MAP 7:
Existing Buildings with
Least Reuse Potential:
~y_pe
Main Complex-IT
i
I ~
~I
Fi st
thr ugh
Fourth
No th
Ha 1-1 s
i,
I
i
v~~J \ II
Fi st t rough
F urth
outh Ha is
C. Reuse Potential of Undeveloped Land
\ Undeveloped land on these two parcels which could support construction
of new industrial and/or office facilities falls into two basic types:
the completely open space of Parcel VII, and the open areas around and
between the building: of the Main Complex on Parcel V.
Located south of, and across the street from, the new Hampshire County
jail, Parcel VIJ. contains approximately 36 acres of land. The 1972
Master Plan for Northampton recommended this site for future industrial
or commercial development. Sewer, water, and electricity to serve the
new jail have been laid along Rocky Hill Road which is the northern
boundary of the parcel. An abandoned B & M Railroad line borders the
parcel to the south. Access to the parcel would be along Rocky Hill
Road, or possibly along the old railroad right of way. The Lozano and
White study describes an access route from I--91 that bypasses downtown
Northampton by way of Clarke Street and the railroad right of way. With
its sloping southern exposure, the parcel enjoys a panorama of the
L Holyoke Lange and offers definite possibilities for energy-saving solar
design and construction. Once the necessary infrastructure is in place,
Parcel VII could support a complex of newly constructed buildings,
thereby providing one range of the spectrum of facilities that this
report recommends.
It is strongly recommended that Parcel VII be considered as a crucial
part of the mixed industrial/office redevelopment of the State Hospital
site, and that any development of that parcel be an integrated part of
the overall physical redevelopment and marketing strategy of the
project. Consequently, it is recommended that Parcel VII 1re developed
in the early years of the redevelopment project only if an immediate
tenant is found whose needs cannot be met by existing facilities on
Parcel V. If such a case were to arise, construction for this tenant
could lay the first sections of the infrastructure needed by Parcel VII,
but it would be imperative that this early construction be designed and
sited so as to leave open options for further construction to support
later phases of the project.
I~
-27-
For example, it is likely that some of the Mixed Industrial type
buildings on Parcel V that house small production firms during early
phases will he demolished during the final phase of the project; in
order that these firms not be eliminated from the spectrum of firms
served, it will be necessary to provide alternative facilities very
possibly on Parcel VII.
Parcel V contains a number of open areas around and
of the Main Complex; thus, buildable land on Parcel
dominated by existing construction and circulation.
which the Main Complex is sited contains more than
currently covered by a building. Roads and parking
significant portions of this buildable acreage.
among the buildings
V is currently
The plateau on
70 acres of land not
lots occupy
During the medium to long range phases of redevelopment selective
demolition and new circulation patterns can capitalize on the potential
offered for new construction that _links together and/or supplements
existing elements of the Main Complex. For example, if it is decided
that the 172,063 square feet of Main Complex 3 type buildings should be
demolished, this would clearly make room for construction of new
facilities that link or supplement the remaining Main Complex 1 and 2
types. For the sake of grouping compatible land uses, it may be that
implementation of the long term site plan will include housing small
production firms in a mixed industrial cluster on Parcel VII; the
utilitarian buildings on Parcel V used by such firms during the early
phases of the project could then be demolished and replaced by
facilities to house and support the cluster of activities that have been
attracted to Parcel V. Viewed and developed together, the open spaces
of Parcels V and VII will serve to rill out the broad spectrum of
facilities that can be offered by the redevelopment project.
In addition, it is strongly recommended that the long range site plan
for the redevelopment project balance the opportunities provided by open
spaces for constructed facilities with the importance of meeting human
needs by increasing the safety, comfort and beauty offered to the people
who work on the site and to the larger community of Northampton. Safe
and convenient circulation for cars and people, buffering incompatible
-28-
activities, providing comfort and beauty, complementing the stature of
architectural elements, cutting energy costs through judicious planning
of shade and solar exposure these and other vital functions are
served by careful treatment of open spaces. In the long run, the uses
and design of spaces that remain open will play a companion role to the
reuse and design of buildings in the overall marketability of the entire
site.
11
~
l
-29-
IV. LOCAL MARKET CONDITIONS
A. Office Space
Hampshire County's economy is strong, and growing. The Western
Massachusetts Economic Study, recently completed, included a prediction
that the county's economy would grow at the most rapid rate of any of
the four in the western region (Hampshire, Franklin, Hampden,
Berkshire).
Much of this growth is predicated on the fact that the county's economy
is best positioned to take advantage of the large number of
non-manufacturing jobs likely to be created in the region, because its
workforce is already oriented toward non-manufacturing (i.e. the
servicing and retail sectors).
The forecast contains an estimate of approximately 10,000 jobs in
services, government, finance (insurance/real estate and wholesale
trade) to be created in Hampshire County during the next fifteen years.
At an estimated 250 square feet of space per employee, this suggests
that a total of 2.5 million square feet of new working space will be
required, in the county over the next fifteen years. An average of 150
- 175,000 square feet per year for all types of office space will be
absorbed each year.
For a summary of the county's projected growth, see Table 3.
But in the short run (5 years), current market conditions make it
unlikely that all the potential office space at the site could be
occupied if it were to become immediately available. In the 430,000
S.F. Main Complex, the Central Administration Building alone has the
capacity for 70,000 square feet of office space. Expansion in downtown
Northampton has brought about a real estate boom in recent years, with
developments underway that will create 100,000 square feet of new or
r 1
J ` J renovated office space. According to a.recent article in the Daily
-30-
OJ/ _LL/ 1Y
TABLE 4:
HA TSHIRE
COUNTY ECONOMY
WESTERN MASSACHUSETTS
ECONOMIC STUDY DECEMBER FORECAST
RESULTS FOR HAMPSHIRE
COUNTY
EMPLOYMENT TABLE
(IN THOUSANDS OF PEOPLE)
1971
1976
1981
1986
1991
1996
MANUFACTURING
8.279
7.886
7.835
8.453
8.746
9.020
AS % OF U.S.
.045
.041
.039
.042
.043
.043
DURABLES
2.813
3.247
3.096
3.465
3.694
3.909
LUMBER(24)
.291
.173
.144
.140
.125
.110
FURNITURE(25)
.028
R
R
R
R
R
STONE,CLAY,ETC.(32)
R
.016
.063
.087
.112
.122
PRIMARY METALS(33)
.371
.796
.818
.978
1.1448
1.259
FABRICATED METAL(34)
.366
.320
.434
.467
.523
.575
NON-ELEC MACHINE(35)
R
R
.206
.203
.221
.225
ELECT. EQUIPMENT(36 )
R
R
R
R
R
R
.
TRANS. EQUIP.(37)
R'
0.000
_
0.000
0.000
0.000
0.000
INSTRUMENTS(38)
R
.588
.049
.049
.049
.049
MISC. MANUF.(39)
1.115
.913
R
R
R
R
NONDURABLES
5.466,
4.639
4.739
4.988
5.051
5.111
FOOD(20)
.311
.299
R
R
R
R
TOBACCO MANUF(21)
.135
R
0.0001
0.000
0.000
0.000
TEXTILES(22)
1.096
.812
R
R
R
R
APPAREL(23)
R
R
.332
.315
.289
.270
PAPER(26)
1.716
1.329
1.297
1.403
1.440
1.445
PRINTING(27)
.268
.376
.564
.671
.724
.800
CHEMICALS(28)
.805
R
.646
.543
.483
.455
PETRO PROD(29)
0.000
.010
.005
.005
.005
.005
RUBBER(30)
.345
R
.778
.970
1.101
1.207
LEATHER(31)
R
0.000
0.000
0.000
0.000
0.000
NONMANUFACTURING
31.758
35.563
40.248
45.468
50.820
54.436
AS % OF U.S.
.054
.054
.053
.054
.055
.056
MINING
R
.021
.004
.005
.005
.006
CONT CONSTRUCTION
1.477
1.050
R
R
R
R
TRANSPORT + PUB UT
.932
1.046
R
R
R
R
FINANCE, INS,+ RE
.748
1.017
1.270
1.544
1.706
1.836
RETAIL TRADE
4.907
6.781
7.890
9.356
10.714
11.492
WHOLESALE TRADE
.508
.620
.778
.971
1.155
1.264
SERVICES+
R
9.450
11.462
14.165
15.801
16.727
GOVERNMENT
13.894
15.578
16.640
17.061
18.896
20.502
FEDERAL
1.944
1.912
2.190
2.379
2.483
2.555
ST AND LOCAL
11.950
13.666
14.450
14.682
16.413
17.946
NON AG WAGE+SAL EMP
40.037
43.449
---48-.083
53.921
59.566
63.457
AS % OF U.S.
.052
.051
.050
.052
.053
.053
PLUS AGRICULTURE
.857
.814
.864
.937
1.015
1.072
U
TOTAL EMPLOYMENT
40.894
44.263
48.947
54.858
60.581
64.528
AS % OF U.S.
.052
.051
.050
.052
.053
.053
-31-
Hampshire Gazette, this is likely to rent for $10 - 12 per square foot
and will absorb much of the current demand for such space. With this
expansion, Northampton's sum total of office space will be approximately
500,000 square feet. Thus, redevelopment of the entire Main Complex for
office use would nearly double the supply of Northampton's downtown
office space.
Other developments in the area have added and will continue to add to
the supply of prime office space. In Amherst, a recently proposed
downtown development would have generated over 35,000 square feet,
estimated to lease for $12 - 14 per foot. This would have provided a
20% increase in Amherst's office space inventory at a cost nearly double
the current average rent.
The impacts of such a scale of development are uncertain, but one effect
could be for tenants to vacate the older, less attractive space in favor
of the newer, driving down rental prices on the lower end. While the
Amherst proposal was not approved by the town, it demonstrates the
positive outlook of investors and real estate developers toward that
area.
Twenty miles to the south, Springfield's downtown building boom has
resulted in a seven year supply~of vacant office spaceat recent leasing
levels. The downtown area contains more than 370,000 square feet of
unoccupied office space renting at an average cost of $15.50 per square
foot.
It appears unlikely, therefore, that current market conditions in the
Valley could quickly or easily absorb all the office space being
developed now in the Northampton area, in addition to that which is
potentially available at the state hospital site. There is little
public benefit to adopting a development strategy for the hospital whose
effect would be to undercut the private market. Instead, appropriate
action should be to supplement the private market by filling in any
obvious gaps. Since there may well be a surplus of office space in the
valley-for the next few years, the most reasonable actions for a site
-32-
developer of office space to take at the hospital would be the
following:
1. Selectively "bank" for long term future use space in
the Main Building by securely sealing it to prevent
further deterioration.
2. Add additional renovated space gradually as demand for
office space in the region begins to meet supply.
3. Seek a non-local user, such as a national or multi-
national firm to establish a regional headquarters for
administration, research or training at the site.
(See Operational Plan).
4. Selectively demolish portions of the Main Building with
the least office potential (approximately 172,000 S.F.).
B. Industrial Space
The situation in terms of industrial space is quite different. Given
the higher return to investors, Northampton's commercial and housing
boom has had negative consequences for the city's supply of industrial
land and buildings. Raw industrial park land is basically unavailable
in the city. With the industrial park at near capacity and the
remaining vacant industrially zoned land without sufficient utilities to
support industry, other industrially zoned areas are being developed for
residential and commercial uses - specifically off Damon Road and in the
Conz Street area.
The supply of inexpensive industrial space is similarly exhausted in the
city due to conversion of older industrial buildings to commercial and
residential uses. This trend has been in evidence for the past few
years, especially in the Florence and Leeds sections of the city.
-33-
Ten miles away in Amherst, space in a new building in an office/research
r _ park can be leased for $6 - $8 per square foot. The supply of such
space is limited however, as evidenced by the recent move of Amherst
firm to South Deerfield because of insufficient space. And as the area
economy continues to grow, additional industrial development land will
be required.
In contrast, industrial space exists in more abundance in Hampden
County. The Springfield-Chicopee-Holyoke area contains a variety of
former mill buildings that have been subdivided to lease for $1 - 3 per
square foot. In Westfield, over 100,000 square feet of industrial space
is available at rents ranging from $3.50 to $12.00 per square foot.
Much of this space is located in an industrial park, and most of it is
ready for occupancy.
Due to demand, the lack of industrial space in Hampshire County clearly
does not bode well for the area's future economic growth. In the
O Center's recent survey of county businesses, two findings are rather
startling. First, eight firms (26% of the total) report that their
current,production space is inadequate to their reeds. These firms
range in size from 4 to 500 employees and are not concentrated in any
particular industrial sector (2 are service firms). Secondly, the most
often mentioned site related problem was the lack of expansion capacity
on the premises (42% of all problems cited).
In addition, recent growth trends are interesting. During the past
economic recession (here measured as 1980 - 1983), twenty firms (65% of
the sample) grew at a relatively stable annual rate below 8.5%. Indeed,
growth for nearly half of these companies was negative. The industries
represented here were primarily in the durable manufacturing area.
Conversely, four companies more than doubled their number of employees
while two others expanded by approximately 20% each year.. Half of these
expanding companies are in the business services industry while the
others are small non-durables manufacturers.
-34-
A final survey question asked about perceptions of the state hospital
site as a. location for business. Significantly, only one firm responded
negatively in terms of the site's former use. The other negative
responses were concerned with the physical problems of traffic,
inadequate utilities and the remote location. On. the other hand, eight
firms expressed interest in the site for reasons that included the
vacant land, the remote location and the variety of buildings.
It thus seems obvious that the NSH site, with over 86,000 square feet of
usable shop buildings and 35 acres of vacant potential industrial park
land, is a valuable economic resource to the city and the county. To
best take advantage of the site industrially, the following
recommendations are in order:
1. The site should be industrially developed in. such a way
as to provide for a range of types of space - from
higher cost "industrial park" space to inexpensive
"incubator" space.
2. Space should be developed for small -industrial users
(1,000 - 3,000 S.F.).
3. Space not currently needed in the real estate market
should be banked for future development.
4. Space for growing firms should be as flexible as possible
so that changing needs can be accommodated.
J J
-35-
C. University of Massachusetts
Another Hampshire County industry with significant space requirements is
the University of Massachusetts. Currently, the University owns 9
million square feet of academic, administrative, dormitory and
miscellaneous space on campus. While this total is sufficient for the
school's requirements, it is poorly distributed due to changing needs.
Further, many research facilities are obsolete, and there is a lack of
"swing space" for temporary relocations during renovations. Current
policies toward space utilization are being reviewed at the highest
levels of the University administration. While the commitment to
maintaining dormitories, classrooms and academic research on the Amherst
campus is undisputed, many non-academic functions may be encouraged to
move elsewhere. Currently state and federal agencies occupy 70,000
square feet of office and laboratory space on campus.
Other University developments have even greater significance in regards
to area real estate. The school has begun forging active partnerships
with the private sector for its own vitality as well as to encourage the
economic development of the state. In these relationships, either a
private company will purchase the research capacities of a University
project, or the two groups will work jointly on research. Frequently,
this involves construction or renovation of research space, either on
campus or nearby, and the funds involved can be significant. For
example, a recent proposal for $4 million would require utilization of
6,000 square feet of research space not available on campus. In
addition, the University has received an allocation of $6 million from
the state for expansion of research in polymer science. Their funds may
be used for expansion of facilities on and/or off.-campus. Important to
note with these proposals is their potentially short duration, which
implies that space developed for such purposes must be easily adaptable
to a variety of similar uses over time. The functional areas most
involved in these projects are the engineering sciences - electronics,
biotechnology, polymers and food science.
-36-
Two other developments are notable. First, the University's policies
toward faculty consulting and general entrepreneurialism are changing to
reflect a more encouraging attitude. In addition, the administration is
examining the benefits of research clusters or institutes as opposed to
individual faculty research applications. Both of these developments
have positive impacts in the potential for off-campus facilities.
In sum, the University may be a resource to redevelopment of the state
hospital site, if attention is paid to the following areas:
1. Office and laboratory space for those state and federal
agencies currently utilizing on campus resources;
2. Office and production space for University faculty seeking to
establish their own business ventures;
3. Office space for University "think tank" institutes;
'13
UU
4. Research and prototype construction space for joint private
sector/University projects that are of a short to medium term
nature. This space must be adaptable to different uses and
divisible in several ways for projects requiring greater or
lesser amounts of space.
-37-
V. RECOMMENDED REDEVELOPMENT STRATEGY
There are 3 key features of our recommended strategy for redevelopment
of the state hospital site:
A. That there be a locally based industrial development group
that combines the strengths of the public (city and state) and
private (civic and business leaders) sectors and that
eventually carries responsibility for the city's entire
industrial development effort;
B. That it be a mixed use redevelopment to take advantage of the
diversity of spaces on the site by accommodating a range of
tenants - industry/offices, innovative/traditional, small/large,
young/older, and growing/stable;
C. That an incremental process be followed, phased in over a long
time horizon and correlated with DMH's long term site plans and
the state's site transfer process.
A. Locally Based Development Group
A locally based group will be attuned to the needs of community
residents for jobs and of businesses for industrial/office space. In
addition, if it is tied to the local political process (with appointment
by the Mayor for example) its actions will be in concert with
Northampton's other economic development efforts. For two reasons, this
local group should not be simply another organ of government. First,
the realities of the marketplace are best known to private sector
financiers, realtors and business leaders. Of greater importance
however, is the flexibility of response,accorded to those not
accountable to th.e political process on a daily basis. A private group
can often make decision far more quickly than a government agency in
terms of approving leasing arrangements, choosing rehabilitation
J contractors or dealing with private sector financial bodies.
-38-
It is also recommended that the organization be empowered with
n responsibility to coordinate the city°s entire industrial redevelopment
effort. There are two overiding benefits to this strategy. First, the
hospital. site will be developed as part of an overall city wide
strategy, and not simply as an end unto itself. In addition, a business
considering expansion or relocation will be able to deal with the one
local development- entity knowledgable about the entire range of
industrial opportunities in Northampton and empowered to offer
attractive options and negotiate terms for the city. This will
eliminate duplication of effort by public agencies while more
efficiently serving the needs of businesses seeking relocation.
B. Diversitv of Tenants
The recommended reuse provides for a range of business tenants large
and small, innovative and traditional, office and industrial. This
scenario takes into account the variety of buildings and open spaces on
the site, as well as the likelihood that DMH will require some presence
on Parcel V for the next ten years.
In many ways, the fact that the entire site will not be available for
redevelopment at a single moment is a positive one. Since local. market
research has identified no single reuse or potential tenant with a need
for such a magnitude and diversity of space, a range of users must be
found. Utilizing the incremental development process described below,
those buildings requiring less renovation can be leased early on. This
will provide the beginnings of a modest cash flow to offset operating
expanses while establishing the credibility of the development
organization and the identity of NSH as an industrial site.
. ,1
One of the keys to success of the other industrial reuse projects
examined by the Center (see Appendix B) is the flexibility of space
available for a variety of industrial tenants. The diversity of tenants
adds financial stability and strength to the overall project. These
projects are characterized by a range of large and small "accordian"
spaces; that is, the size of the space can be changed to meet the
-39-
tenants' evolving needs. At Northampton State Hospital (NSH), the redevelopment gi
attract a wider range of prospective tenants with a menu of different
kinds of space and a range of rental prices. For instance, the. 35 acres j
of open land on Parcel VII can be used as, incentive to attract growing
firms who wish to lease existing space for several years, but whose long
term plans call for specialized plant construction. Part of the land
I
can be set aside for such expansions with the remainder sold anal/or
leased for other industrial park development.
C. Incremental Process
Any strategy for redevelopment of Northampton State Hospital must take
into account the current difficult political, economic and
administrative environment, as well as the realities of the real estate
marketplace and the complexities of the physical resources at the site.
By phasing in development over a long time horizon, the proposed
strategy provides flexibility to meet the above challenges as they
unfold and to take advantage of unforseen opportunities as they might
arise.
The Department of Mental Health (DMH) presents particular uncertainties
to a redevelopment strategy. The agency is in the process of
determining its long term facilities needs at NSH. Although the debate
over deinstitutionalization has essentially been resolved in favor of
greater community centered care, there are questions that remain
concerning the time frame involved in moving to such a system and the
size of the patient population that will always require a secure
treatment facility.
DMH currently occupies the entire Memorial Complex and parts of Parcel
V, (Haskell, Nurses, South Employees Home, Central Administration and
several of the small shops behind the Main Building). At this writing,
plans are to abandon the Memorial Complex altogether when the total
patient population is reduced from its current 250 to 115, and to move
all patients into Haskell. As deinstitutionalization continues, a new
secure treatment facility will be constructed to care for the projected
-40-
60 patients who will always require a secure setting. This f acil:i:ty will
be self-contained and it may be located on Parcel- II, freeing the
Haskell Building and small shops for some other use. It is likely that
the Memorial Complex would be freed up in. 2 to 3 years, but the entire
process of moving all patient care off off Parcel V could well take ten
or more years to complete.
-41-
VII. OPERATIONAL PLAN
A. The Entity
The redevelopment of Northampton State Hospital from a publicly owned
patient care facility to an economic enterprise furthering economic
stability through the private industrial sector is no small undertaking.
For the venture to succeed, it must be the responsibility of a
redevelopment entity with expertise in many arenas, including:
- industrial site development
- industrial site marketing
- management of industrial space
- negotiating the political process
- establishing credibility with financial community
- reconciling the requirements of business with such
community issues as employment and quality of life
Further, this group should be empowered with responsibility for all the
city's industrial development. The advantage of this "one game in town"
approach is the efficiency gained by a coordinated and integrated
strategy wherein one body is aware of all the development activity
occurring in the city. Prospective tenants know who to approach for
information on available sites, and accountability is enhanced when
responsibilities are so clearly delineated.
The City should expect that the development will proceed with a sense of
real accountability to the public. However, there are compelling rea-
sons to remove the project from the direct daily control of the city
government. First, the long term time horizon is in conflict with the
usual shorter completion periods of municipal projects. In addition, to
ensure equity in negotiating with prospective tenants and contractors,
the daily authority and decision making process should be outside the
political sphere. The City should be involved in the project's overall
planning and implementation strategy, but the actual development should
be carried out by a group entrusted by the City with that particular
responsibility.
-42-
This model has worked in Northampton in the past. Recently, the
Northampton Development Corporation, a LDC (Local Development
Corporation) comprised of business leaders, bankers and government
officials, assumed responsibility for renovating the historic Hotel
Northampton. The group gained experience and credibility in undertaking
this successful project, and the City could build on their knowledge by
seeking their involvement with a new development entity.
This report recommends the formation of an
Industrial Corporation (EDIC) to undertake
state hospital site on behalf of the City.
in Appendix A, an EDIC has wide ranging poi
and manage industrial real estate projects
unemployment.or blight.
Economic Development and
the redevelopment of the
As is more fully described
,aers allowing it to develop
in areas of substantial
The composition of an EDIC is such that it has strong ties to the
municipality and the private development community through mayoral
appointments of persons experienced in finance, real estate and industry
to the EDIC Board of Directors. Thus linked with both the political
process and the local private sector, the EDIC operates within a
framework of credibility to others in the worlds of finance and
development, of familiarity with local problems and issues, and with the
support of elected officials providing assistance in the delicate
political negotiations that are certain to be a part of any redeve-
lopment project of this magnitude.
Of course, other development organizations could also undertake the
project. For example, a municipal Redevelopment Authority (RA) has many
of the same powers and local advantages of an EDIC, including the
ability to develop commercial and residential uses which an EDIC lacks
(see Appendix A). One crucial difference between the groups.is that the
RA serves as an intermediate owner and developer, having no authority to
manage property. Because some parts of the state hospital site are
likely to remain in public ownership over a long term - common parking
and open space areas and buildings for incubator -industries - the RA may
not be the optimal structure for the development entity.
-43-
Another agency that could develop the site is the Massachusetts
Government Land Bank., as recommended by Lozano and White. The Bank's
[unction is to smooth the way for future development, and so their
involvement is early in the project. The Bank serves to assemble and
prepare the site, demolishing unusable buildings, making necessary
infrastructure improvements, and accepting proposals from private
developers for final development. The final proposal must be approved
by the local City Council.
There are both advantages and difficulties in utilizing the services of
the Land Bank. On the positive side, the Bank has the credibility and
experience with the state legislature and the Division of Capital
Planning and Operations (DCPO) to traverse the complexities of the
state's site transfer process. Further., it has acquisition funds
available as well as capital for the improvements and building
demolitions that will be necessary, regardless of what development group
undertakes the project. Finally, the Bank is familiar with the
l Northampton State Hospital project and has expressed its interest in
involvement at an as yet unspecified level.
The potential difficulties in utilizing the Land Bank must also be
noted. Because the Bank's interest in a site is of a short term nature,
it seeks proposals from others for final development. While the City
Council has veto power over any proposal approved by the Land Bank, it
is unlikely to use this power, except in very extreme cases. Veto power
is a negative force; far better is the positive input that comes from a
proposal being designed and implemented by a locally based group.
Although an EDIC (or other public/private development group) is eligible
to submit a proposal to the Bank, there are no guarantees that the
proposal will be selected, or that the criteria for selection will
reflect local values.
The Land Bank has undertaken several projects throughout the state over
the past few years. Public officials in western Massachusetts are
cautious in their praise of the Bank, citing time consuming
inefficiencies in the development process and disappointment in the
-44-
j
level
of success of
the projects.
In
eastern Massachusetts, Lozano and
White
cite several
projects with
more
positive reviews.
In conclusion, this report recommends that the City consult with the
Land Bank to determine their level of interest in the project.
Discussions should be held to appraise the Bank on the kind of long term
development that the City seeks for the state hospital site, and the
type of development/management body to undertake it. Finally, City
officials should contact other municipalities with Land Bank projects to
learn first hand of their positive and negative experiences.
Should a local development body be established, it will be critically
important that it be staffed by a competent, experienced and creative
personnel. The redevelopment of the state hospital site is more than a
full time job, and responsibility for it must go to an individual with
industrial development, promotion and project management capability.
The first: activities undertaken by its Director must be in the political
arena to expedite the process of site transfer and to establish the
group's credibility as a competent agency that will accomplish its
goals. In addition, contacts with potential funding sources must be
established (see Appendix C).
At the same time, the organization can begin planning for a long term
:solution to the difficulties of reusing the Main Complex of buildings,
with over 385,000 square feet of mixed office, apartment and dormitory
space in good to poor condition. Because it seems inevitable that many
of these buildings must be demolished at great expense unless some use
is identified, we recommend that a top notch industrial real estate
marketer be hired to evaluate them in terms of the non-local market.
The consultant's task will be short term and specific. It will involve
travel and contacts with national and multinational firms to assess the
suitability of the Main Complex for redevelopment as a corporate
1 facility of some type - research, regional headquarters, conference and
training center, etc. This kind of development is a "'long shot", but
-45-
with the substantial historical preservation tax credits that may be
available, there is a potential for such corporate interest.
Determining the level of that interest is beyond the scope of this
study.
With knowledge of the consultant's findings, the development group can
then make an. informed decision on whether to demolish, bank or renote
the individual buildings comprising the Main Complex. Further, if the
information is gathered early enough, the developers can work during the
state's transfer process to encourage maintenance and repair of Main
Complex buildings that meet their priorities and seek public funds for
demolition of those that are beyond repair or for which there is no
possible reuse.
B. First Actions By the City
There are a number of specific tasks that the City can begin to
accomplish to expedite the redevelopment process at the state hospital.
They are listed below.
1. Begin local political process of organizing the development entity.
2. Maintain contact with state transfer process to ensure that
opportunities for expediting building acquisitions are met.
3. Work toward zoning changes to allow industrial redevelopment to
occur on Parcels VII and V.
4. Negotiate arrangement with DMH for purchase of heat f.or newly
acquired buildings.
5. Begin process of determination of historic status for eligibility of
site improvements for tax credits.
6. Determine need for environmental impact statements.
-46-
/ 7. Develop inventory of structural capacities of industrial buildings
and the utilities available so that specific uses for each building
can be assessed.
C. Conditions that Should be Met Before the Development Entity Assumes
Control of the Site
The development of the site will be an incremental process that will
take a number of years to accomplish and will generate only a modest
cash flow during its early phases. The lower the development's initial
capitalization costs and resulting debt load, the greater will be its
viability. In light of this, it is important that when the local group
assumes control of and responsibility for the site, the buildings are
either reusable in the short range or at least capable of being "banked"
for future reuse without requiring costly repairs just to keep them
weather tight. What financial resources the local group has at its
disposal during the early years will be required for the experienced and
\J creative staff, marketing, and minor rehabilitation costs. If they were
to be faced with having to sink large amounts of money into shoring up
buildings such as the Main Complex 2 type that are probably not
immediately reusable, the development effort will be strangled before it
can get underway.
It is therefore recommended that as part of its commitment to the reuse
of the Northampton State Hospital, the Commonwealth turn over to the
redevelopment entity buildings that meet the following minimum criterion
of repair: that each building be of a structural soundness and weather
tightness so as to stand unused for 5 years without significant
deterioration. A project must be funded to repair roofs, install dry
shut offs, and repair such damage as has already occurred to vacant
buildings. Potential sources for funding such work are included in the
Appendix.
l Another significant step that the Commonwealth can take to strengthen
the initial redevelopment efforts relates to the heating of buildings on
-47-
Parcel V. The existing buildings were constructed as part of a single
institution and therefore their heating system depends upon a single
source: the State Hospital's power plant. The Lozano and White study
determined that the power plant has sufficient equipment of good
capacity and in good repair to continue to perform its task for the
foreseeable future, but that the delivery network to the various
buildings and the distribution system within buildings is in many cases
outmoded and in need of repair. So that the project will not have to
undertake the immediate construction of a new ideating system, it is
recommended that:
1. Necessary upgrading and repair of the heat delivery system be part
of the basic maintenance performed before the transfer of buildings
takes place; and
2. Prior to the transfer of the site, an equitable agreement be reached
whereby the state will be reimbursed for the costs of continuing to
provide heat to the buildings of Parcel V as they are reused during
the early phases of redevelopment.
D. Operational Principles
There are several basic principles by which the development entity
should strive to operate the redeveloped Northampton State Hospital.
Those included. below were a part of the operations of the successful
projects the Center investigated as a part of this study. (See Appendix
A).
1. First, the overriding long term goal of the. development must he
operational self-sufficiency. This can be achieved only if the
facility is run as an economic enterprise that competes in the real
estate marketplace for tenants, and charges rents and service fees
that cover its fixed and variable expenses. It must also be noted
that the development has a long time horizon and critics should not
l 1'~
U ~ expect a break-even situation in its first few years. Finally, the
-48-
purpose of the redevelopment is to provide an additional economic
resource to the area that complements the offerings of the private
C, sector without undercutting the real estate market. The project
should be operated with a focus toward filling in gaps in the area's
supply of industrial and office space. Currently those gaps exist
in the low range rental of flexible industrial space and in the
availability of small industrial spaces.
2. To enable the project to charge rents that are both competitive and
cover operational costs, significant public subsidy will be needed.
Without such assistance, the renovations and improvements to
infrastructure that must be undertaken will generate an unreasonable
debt service that cannot be covered by revenues from operations.
3. Another means of lowering the financing costs is through joint
development with private developers and investors. For example, the
Main Building may be eligible for historic preservation status,
which implies a host of tax credits that are irrelevant to a tax
( /1 exempt group but of potentially significant consequence to a
profit-making venture. Thus by selling the buildings, the local
group may reduce the level of capital improvements it needs to make,
while the private developer can lower the cost of financing by
enjoying significant tax savings.
4. It is very important that the site offer a range of building types,
sizes and raw land to accommodate the variety of business needs that
exist. The needs of prospective tenants can then be accommended
more easily as well, so that a quick response to the market is
possible. Since the Center's local market research indicated no
single pressing need for a particular kind of space, maintaining
flexibility in offering a range of choices is a realistic response.
5. Several of the successful industrial developments that we visited
have on-site management. This allows for greater interaction and
understanding between tenant and landlord. The benefits to this are
obvious - the landlord knows how the businesses are faring, and can
-49-
anticipate needs for additional. space. On the other hand, if a
business is not doing well, having an amicable relationship with the
landlord can help to resolve potential difficulties.
6. The public's involvement and investment implies that the development
of the site should generate some kind of benefit to the region. One
major objective of the city is that reuse of the site strengthen the
economic base of the area. Given the traditional- importance of the
manufacturing sector to the local economy combined with the current
shortage of industrial space in the city, reuse of the site by
manufacturing firms is a priority.
tenants, the criteria by which they
their leases must take into account
generation and increasing the regio;
activities that lead to creation of
requirements that can be. met by the
The means used to attract
are selected, and the terms of
the public benefits of job
zal income stream. In sum,
stable jobs with skill
local workforce should be
encouraged at the site.
/ 7. Special consideration for new businesses should be provided as well.
Young, growing firms face particular problems, including the need
for small inexpensive space as well as frequent cash flow crises.
The FDIC can provide space for these emerging firms (so called
"incubator space"). The space requirements for these firms is
generally small. in the range of 1,000 - 3,000 square feet.
Inexpensive rents ($1 - $3 per square foot) can help ease the cash
flow burden in the first years of a firm's life. While the space
need not be elegant, it should be flexible to different kinds of
itses because the expectation is that a single firm would grow out of
its space over a period of years so it could be leased to another
new firm. Here too is the advantage of maintaining a variety of
building types of the site. The growing firm could move to larger
quarters nearby with less disruption to its operations than if it
needed to leave the area.
} 8. Respect for the architectural integrity of the buildings implies
J that building and landscape design principles will be employed to
-50-
enhance the amenities at the site. It is appropriate that the
development organization be committed to developing an attractive
site suited to the kinds of tenants it aspires to. bring to the site .
and the city.
E. Implementation Phases
Because of the large scale of the site, the complexities and
uncertainties of the scale-down of DMH activities there, and the
magnitude of required rehabilitation and infrastructure costs, the
redevelopment of the Northampton State Hospital site will have to take
place in incremental phases over a long period of time. This section of
the report describes the overall scenario in the sequence of
implementation phases that are recommended by the Center.
This strategy of phased implementation incorporates the following
elements that are crucial to the success of the redevelopment project:
- The interrelated and mutually supportive roles to be played by
the Commonwealth and its agencies, by the city, and by the
redevelopment entity;
- a flexible time line that can accommodate the uncertainties of
the scale-down of DMH activities on. the site;
- short, medium, and long-term planning that takes advantage of
the parts of the site that are available for reuse now and
builds toward coherent and productive reuse of all of Parcels
V and VII as they become available;
- af.lexible framework within which the redevelopment entity can
maneuver to take advantage of market opportunities that arise
and to meet specific needs of the local economy;
- an orderly sequence of operational objectives to guide the
redevelopment entity as it uses its authority and flexibility
to determine the specific tactics of the redevelopment
project;
- a correlation of necessary major expenditures with the phases
of the implementation sequence that require such expenditures;
- an outline of potential funding sources to support each phase
of implementation.
-51-
The chart that follows provides a graphic illustration of the
incremental development sequence that is recommended. Divided into five
phases of activity, there are actions that can be taken immediately by
the City to promote redevelopment of the site, although it may be many
years before all is completed.
The first stage of activity is defined as preparatory. During this
time, the City is the primary actor, involved in clearing the way for
future site transfer and development. Such local actions include
ensuring that proper zoning is in place, that sewer/water and electrical
hookups are sufficient for industry and establishing the basis for
historic renovation tax credits. In addition, discussions can be held
with state officials over heat sharing and the condition of buildings
prior to transfer can be held.
In phase two, a local development entity (here named an EDIC) is
established and empowered to take responsibility for the city's efforts
n in redeveloping the site. The agency's Board of Directors is appointed
/ and an executive director hired to do its work. This individual's first
task is to work with the state transfer process and to locate sources of
public and private funds for early site improvements.
During phase three, the agency is beginning to market the site to
private developers and industry. Buildings are sold "as is" so the
agency need not bear the cost of expensive renovations. In addition,
the agency hires a real estate marketing expert to text the interest of
national and multi-national firms in purchasing the main administration
buildings. Minor renovations to the mixed industrial and small office
buildings are undertaken, so that these incubator industry spaces can be
rented.
In the fourth phase, buildings requiring more extensive renovations are
marketed. Discussions with Drib are held to determine that agency's
long-term facility needs so that a long-range site plan can be
_ developed for the Main Complex. This site plan can incorporate the
findings fo the real estate expert as to the viability of marketing the
-52-
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I
VII. OPERATIONAL BUDGET
A. Introduction
This section projects the financial implications of the reuse project.
Included here is a five year operating budget for the local agency
responsible for managing the site, as well as a sketch of a capital
budget for building renovations and site improvements to Parcel V, the
Main Complex. No expenses or revenues are projected for development of
Parcel VII, the vacant land, assumed to be developed in years subsequent
to this five year time frame.
This scenario estimates the effects of a privately focused development
strategy. The public development entity's primary function is to
acquire, redevelop and market the buildings of the Main Complex to the
private sector, either to private developers or industrial users. The
scenario assumes the agency would be able to acquire the property from
the state for a nominal price. In addition, the state would make
available sufficient funds for those capital improvements, such as
repairing roofs and windows and draining pipes, necessary to secure the
buildings until they can be sold. The agency would oversee these
repairs and then undertake a five year marketing program to sell the
buildings directly to private industries or to private developers. In
the latter case, the developers would be responsible for final
renovation and subsequent leasing or sale to industrial users. Proceeds
collected by the public agency from building sales will be used to
reimburse the state for the funds provided for repairs, with any surplus
split between the local agency (as commission) and the state as the
nominal acquisition price.
In this way, the local agency would not need to carry a heavy debt
burden pending building sales. The cost of more substantial
renovations, including individual heating systems, would be borne by the
individual purchasers. The buildings would be in a secure position
until such time as they can be sold, and the state's funds would be
\J provided as a zero interest loan, not as a direct grant.
-59--
Finally, the public agency would not relinquish total control of the site after
the sales. Approximately 25% of the available space will be held by the
agency to be rented as an incubator center to small growing local
companies. Necessary improvements to these shops and small office
buildings are not extensive, although heating system replacements may be
called for in buildings connected to the central heating plant.
The assumptions made in preparing the budget projections were developed
using conservative estimates of`space availability, condition, and
renovation cost. It is assumed that the local agency°s primary focus is
to sell the buildings on the Main Complex to private industries, while
maintaining the shops (Mixed Industrial type) and small office buildings
(Office 1 type) to rent to small local companies.
In total, the local agency will be responsible for slightly over 350,000
square feet of building space on the Main Complex. Incubator space
accounts for 25% of this, with the remaining 265,000 square feet to be
sold. This scenario assumes that DMH will continue to occupy an
\ additional 145,000 square feet of administrative and patient care
facilities on the site over the five year time horizon. (In the longer
term not projected here, these buildings - Haskell, South Employees, and
Nurses - will be available for private development.) Not counted in any
of these figures is approximately 172,000 square feet of the Main
Building which appears to be unsuitable for renovations. Demolition of
this part of the building is assumed. The cost is assumed to be borne
by the state.
Over the long term, the local agency will be responsible for securing
and managing the grounds and maintaining parking lots and roads on the
site. For these services, a management fee will be collected from
businesses occupying the buildings. These revenues are assumed to be
assessed on a per square foot of occupancy basis.
Revenues from renting incubator space were estimated using a weighted
average of $2.99 per square foot of occupied space based on estimates
of the amount of space available for offices (at $5.00 per square
-60-
n
foot) and
industrial
(at $2.50
per square foot)
rental.
This rate is
slightly
low for the
area, but
is being used for
several
reasons.
First, the state hospital site is not yet perceived as a prime
business location, and the lower rents may help attract business to
the site. Second, there is a public benefit to maintaining low rents,
to encourage small businesses to grow and remain in the area. Thus,
unlike a private developer with requirements for a profit line, the
public entity returns its "profit" to the community by means of
maintaining rents at the low end of the spectrum.
It may be possible to reduce expenditures beyond the levels shown in the
budget. For instance, the City can assist in defraying operating
expenses, especially early on in the development. Administrative
support to the development entity can be provided in a donation of the
staff time of city employees or direct payment of salaries. Of greater
importance, however, is flexibility in dealing with property taxes. For
example, EDICs are authorized to negotiate 121A tax agreements, and in
doing so can reduce a great deal of uncertainty in knowing its legal
obligations ahead of time. For this reason, no property tax liability
is shown in the operational budget.
In the operational budget, no capital expenditures are assumed.
Instead, after operational expenses are covered, a net income figure
remains that can be used for interest payments on some unknown capital
improvement budget. With careful planning, the high costs of financing
can be reduced by timing borrowings to correspond with expenditures over
time.
The capital needs projections shown in Table 7 are very preliminary
estimates. A realistic capital budget must be prepared with more
complete architectural and engineering information than is currently
available. Each line item requires scrutiny. For example, the
renovation cost estimate of $60 per square foot by Lozano and White is
several years old. Yet when compared with the $40 per square foot cost
of new local construction, the earlier estimate seems high.
-61-
In a similar vein, more information is needed about the heating system.
/ Heating the site has been an increasingly expensive proposition for DMH.
Currently DMH is paying $1.80 per square foot for heat (compared to 45~
at the Bennington Industrial Center). Because a single power plant
heats the entire hospital site, some arrangement will have to be made
between the developer and the state for purchase of heat. The budget
included here uses the $1.80 per square foot cost of heating all the
gross rentable space controlled by the development group in the first
years. They will be responsible'for the cost of heating the unoccupied
portion of this space, and this is reflected in-the operating budget,
although a state subsidy is assumed to cover part of the cost.
While it is beyond the scope of this study to examine alternatives to
the current heating system, it is clear that something must be done to
lower the cost. The reasons for the high cost must be determined:
leaks in the delivery system, lack of insulation or an inefficient
heating plant may all be culprits. A partial solution might be to sever
particular buildings from the central system and install individual
heating units in each.
-62
B. BUDGET FINDINGS
( n 1. Once 70% of the incubator space is rented (year 4), the project will
generate an annual cash surplus that can be used to pay property
tax, to service outstanding loans or provide the means for expanding
the organization's capacity to assist area businesses. (See Table
3)
2. The working capital deficit that will accumulate in years 1 - 3 can
be offset by profits generated in subsequent years. Revenues in the
early years will be insufficient to cover costs, especially in the
areas of personnel and fuel. Public subsidy can reduce this
deficit. (See Table 3) .
3. After year 5 annual surplus from operations will total approximately
$166,000. If all of this is applied as debt service to a capital
improvements loan, these funds could generate $1.6 million (at 10%
for 20 years). This equates to $18.92/square foot for renovations
of buildings owned by the public agency that will be used for
incubator industires. (See Tables 3 and 5).
4. Estimates of the total capital needed for redevelopment of the Main
Complex range from $6.3 to $11.0 million. Assuming that outside
funds can be found to cover the costs of demolition and securing the
buildings to be sold, the organization must raise a total of $3.3 to
$5.4 million for renovations and site improvements on the remainder
of the property. (See Table 4)
5. If the organization is able to borrow $1.6 million, the additional
$1.9 to $4.3 million needed for renovations must be raised
elsewhere. Debt service for this loan cannot be covered from
operational revenues.
6. Sale of the industrial park land can generate $500,000 to $750,000
in revenues, which could be used to offset some renovation expense.
On the other hand, these funds might best be reserved for debt
service on improvements to the industrial park itself.
-63-
TABLE 6: PROJECTED REVENUES & EXPENSES*
YEARS 1 - 5
YEAR 1. 2. 3 4 5
EXPENSES
PERSONNEL
Director
Site Manager
Maintenance
Secretary
Security
$
40,000
0
17,500
9,000
7,500
$
40,000
0
17,500
12,000
7,500
$
40,000
0
17,500
12,000
7,500
$
0
15,000
17,500
0
7,500
$
0
15,000
17,500
0
7,500
SALARY TOTAL
$
74,000
$
77,000
$
77,000
$
40,000
$
40,000
OFFICE
2
Promotion,Travel
$
17,500
$
7,500
$
5,000
$
3,500
$
1,500
Telephone
2,000
2,000
1,500
1,500
1,000
Supplies
500
500
500
500
500
Legal
3,000
3,000
3,000
39000
1,000
Accounting
1,500
1,500
1,500
1,000
500
OFFICE TOTAL
$
24,500
$
14,500
$
11,500
$
9,500
$
4,500
OPERATIONS3
Utilities-common reas
$
59000
$
8,000
$
10,000
$
12,000
$
15,000
Fuel-common areas
0
30,987
50,725
19,849
9,938
Insurance
10,000
12,000
15,000
15,000
18,000
Maintenance/Repair
8,000
10,000
12,000
12,000
15,000
OPERATIONS TOTAL
$
23,000
$
60,987
$
93,362
$
58,849
$
57,938
GRAND TOTAL EXPENSES
$121,500
$152,487
$181,862
$108,349
$102,438
REVENUES
$
Rents5
49,822
$ 87,191
$124,560
$174,383
$202,519
6
Management Fees
13,343
26,688
40,032
53,375
66,719
TOTAL REVENUE $
63,165
$113,879
$164,592
$227,758
$268,698
SURPLUS (DEFICIT)
58,335)
38,608)
17,270)
$119,409
$166,260
Accumulated net surplus
after 5
years = $171,456
* 1983 constant dollars
-64-.
NOTES TO TABLE 6.
(For computations, see Appendix D)
Total incubator space available for rent by local agency:
Years 1 - 4 98,020 square feet
Year 5 84,579 square feet (after sale of
Orlander Building)
Office 1 type 19,334 square feet
Mixed Industrial 65,245*
Orlander 13,441**
98,020 square feet ,
* Representing 75% of total shop space because of assumed need by DMH
for 25% of such space.
Includes first floor of the building - kitchen and dining room,
NOTE 1 By year 4, Director no longer involved with management or marketing of
NSH site. This function has been taken on by part-time site manager.
Director salary paid from other sources, as organization becomes
involved in new projects.
NOTE 2 Includes additional $10,000 in Year 1 for industrial real estate
consultant to market Main Complex nationally.
NOTE 3 Provision for property tax is not included here because of
uncertainty over the assessed valuation of the property. The
agency and the city will need to negotiate.a tax agreement based
on operating revenues or surplus.
NOTE 4 Fuel costs of unrented and common incubator space computed
assuming the state will subsidize the cost of heating space not
rented as follows:
Year 1 State pays 100% of cost
Year 2 " 75% of cost
Year 3 it 50% of cost
Year 4 if 0% of cost
Cost per square foot of heating
Years l - 3 $1.80 (current cost as per DMH)
Later years .0.50 (renovations take effect)
-65-
(~^l NOTES TO TABLE 6 continued
NOTE 5 Years 1 - 4 Year 5
Space available to rent 98,000 S.F. 84,579 S.F.
Net rentable space (85%) 83,317 71,892
Year Occupancy Rate Rented Space
1 20% 16,663 S.F.
2 35% 29,161
3 50% 41,659
4 70% 58,322
5 90% 64,703
Weighted average rent of $2.99 per net rentable square foot in
years 1 - 4, $3.13 per square foot in year 5 ($5.00 per S.F. for
office, $2.50 for Orlander and mixed industrial).
NOTE 6 Management fee estimated at $0.25 per square foot of space sold
to private companies. Assume 20% of total space sold each year,
so at 5 years, 100% or 266,877 square feet have been sold.
Not shown are estimates of commissions from building sales,
because of uncertainty of market value of buildings.
-.66--
TABLE 7: ESTIMATED CAPITAL NEEDS
Square
Cost Range per
Low
High
Footage
Square Foot
Estimate
Estimate
Acquisition
523,5191
$02
0
0
Demolition
172,0633
$6-104
$1,032,378
$1,720,630
Sealing
Buildings 5
253,4366
$5-107
$1,267,180
$2,534,360
Renovations for
8
9
6
0
40
6
0
Incubator Space
98,020
$20-30
0
$1,9
0,4
$2,9
,
0
Site Improvements 10
$1,000,000
$2,000,000
TOTAL PHYSICAL IMPROVEMENTS
$5,259,958
$9,195,590
Soft Costs
10%11
1,051,992
1,839,118
TOTAL CAPITAL NEEDS
$6,311,950
$11,034,708
-67-
NOTES TO TABLE 6 continued
NOTE 5 Years 1 - 4
Year 5
Space available to rent 98,000 S.F.
84,579 S.F.
Net rentable space (85%) 83,317
71,892
Year Occupancy Rate
Rented Space
1 20%,
16,663 S.F.
2 35%
29,161
3 50%
41,659
4 70%
58,322
5 90%
64,703
Weighted average rent of $2.99 per net
rentable square foot in
years 1 4, $3.13 per square foot in
year 5 ($5.00 per S.F. for
office, $2.50 for Orlander and mixed i
ndustrial).
NOTE 6 Management fee estimated at $0.25 per
square foot of space sold
to private companies. Assume 20% of t
otal space sold each year,
so at 5 years, 100% or 266,877 square
feet have been sold.
Not shown are estimates of commissions
from building sales,
because of uncertainty of market value
of buildings.
_ NOTES TO TABLE 7.
i
* Total space sold here is 266,877 square feet.
NOTE 1 All Parcel V Buildings except:
Haskell Building
S. Employees Home
Nurses Building
25% of usable shops (unspecified)
These are assumed to be in use by DMH for the foreseeable
future.
NOTE 2 Assume no acquisition cost from one public entity to another.
Proceeds from sales are to be returned to the state as
repayment of acquisition cost. Agency may keep 5% as
commission. This income is not shown in the accompanying
budgets because of the uncertainty of building values.
NOTE 3 Main Complex 3 type
NOTE 4 Estimate from Lozano and White
NOTE 5 Includes such repairs to roofs, heating systems etc. to make it
possible for buildings to stand unoccupied for up to 5 years. Does
not include space being renovated for incubator rental.
NOTE 6 All Parcel V buildings except:
Space being kept by the agency for rental (see notes to Table H).
Space assumed to be needed by DMH (see note 1 above).
Space to be demolished (see note 3 above).
NOTE 7 Estimate from Northampton. City Planner
NOTE 8 Includes buildings to be retained by public development entity:
75% of usable shop buildings (DMH using 25%)
Office 1 type
Orlander Building, kitchen and dining room
NOTE 9 Estimate from Lozano and White and Center for Economic
Development
NOTE 10 Estimate by Center for. Economic Development
NOTE 11 Estimate by Center for Economic Development to include legal,
accounting, and brokerage fees.
-68-
TABLE 8: DEBT SERVICE PROJECTIONS
ANNUAL
PAYMENT
INTEREST
RATE
LOAN
TERM
CAPITAL:IZAT ION
$ 50,000
10.0%
20
years
$0.5
million
$100,000
10.0%
25
years
$1.0
million
$100,000
8.8%
20
years
$1.0
million
$150,000
10.0%
25
years
$1.5
million
$150,000
8.8%
25
years
$1.6
million
$166,000
10.0%
20
years
$1.6
million
$166,000
8.8%
20
years
$1.7
million
$200,000
10.0%
20
years
$1.7
million
$250,000
10.0%
20
years
$2.3
million
i
J
-69