Monroe Community College and Winn Development are at odds over the college’s lease at the Sibley Building. The lease has expired and Winn is pressuring the college to make a decision. The two sides released lengthy statements about the talks on Thursday. It’s rare to see such a high stakes negotiation play out in public.
Here are the statements. Do think one side has a better case?
MCC’s Statement
MCC’s lease at the Sibley Building expired December 31—but we’ve been trying to negotiate a new lease since March 2011. In fact, in March, we reached an agreement with Rochwil Associates, owner of the Sibley Building, that would have increased our current $3.1 million/year rent by $200,000 in 2012, $100,000 in 2013 and another $100,000 in 2014. In April Rochwil indicated to us that lease terms must be approved by the Winn Companies and directed that further conversations regarding the lease be with Mr. Gilbert Winn.
“We have tried to reach a deal with the Winn Companies. It hasn’t worked—because they are demanding a rent increase of nearly 30 percent. They have offered three proposals:
• Six-month lease at a rate of $4 million/year with no building improvements.
• Five-year lease at a rate of $4 million/year with no option for an early termination.
• 10-year lease with rates beginning at $3.35 million/year and concluding at $3.8 million/year, and a $6.4 million penalty if we terminate the lease in 2015. (The termination penalty declines each year past 2015.)
“The Winn Companies’ proposals are simply unacceptable and not justified by the current real estate market.
“In late December, Winn Companies sent to us a notice of lease termination and a notice to quit the premises. They have also said they're interested in having us remain in the Sibley Building. We believe Monroe County's students and taxpayers deserve more reasonable costs. To pay $4 million per year is simply unacceptable and not justified by the current market.
“At its Feb. 6 meeting, the MCC Board of Trustees will discuss all options and is expected to come to a decision on the best way forward for taxpayers and MCC students. The faculty, staff and trustees of Monroe Community College are in clear agreement that we must put students first as we chart the future of the downtown campus.
“We prefer not to discuss our contract negotiations publicly. We are sharing these facts to correct the Winn Companies’ misrepresentation of our efforts and the current situation.”
Winn Development Statement
Over the past year WinnDevelopment has been working diligently to enter into a lease renewal with MCC for its current space in the Sibley Building. During this period we have received numerous comments from MCC on issues it would like to have incorporated in a lease renewal, including security improvements, building improvements, tenant fit out improvements and an option to purchase the space in the future, and have responded positively to all of these requests. Winn has been urging everyone to complete this negotiation by year end to ensure that the downtown campus would maintain uninterrupted operations. It is now January 12th and the downtown campus has been put in limbo as a result of the lack of urgency to reach agreement over the past 10 months.
In order to provide MCC with flexibility given the inherent uncertainty of its $72 Million redevelopment plan, two options were presented to MCC:
1. A 10 year lease renewal at $3,350,000 annually for the first five years, and $3,800,000 for years 6 – 10. Because MCC has expressed its desire to move to Kodak in 4-5 years we also included the option for MCC to terminate the lease early by paying a standard One Year lease termination fee - NOT the $6,400,000 referred to in the MCC statement.
This rent proposal is actually $300,000 cheaper over the first three years than the proposal desired by MCC in its previous negotiations with Rochwil, and $1,000,000 cheaper than such desired proposal extrapolated over five years. Simply put, the 10 year lease proposal saves money for the college over their previous negotiations.
2nd Option under consideration:
2. A 5 year lease renewal at $4,000,000 per year. This lease rate is still in line with the market place and significantly less costly than any competing newly fit out space that could be secured. The higher annual rate on the 5 year lease (as opposed to the 10 year option) is a direct function of the shorter term of the lease and the difficult situation such a short term commitment creates for the Sibley Building’s future redevelopment ability. A lower rate which saves the college over a $1 Million is available in the 10 year option which is why we offered it.
The rents in both the 10 year proposal and the 5 year proposal are market rate for space of the type, size, location and lease terms proposed. Indeed, the cost to fit out and lease new space would be millions of dollars more expensive than what is available at Sibley.
Winn remains eager to have MCC remain a long term occupant of the Sibley Building if its new campus idea does not gain funding. In addition, even if the College is able to secure legislative approval for their desired $72 Million move to Kodak and site control of the Kodak buildings, either lease proposal allows for continued operations of a downtown campus in the interim.
We hope to reach a swift resolution on this important lease renewal.
