$29.9 Million Renovation Unavoidable

Safety, security issues force council's hand
June 30, 2004

An extensive $29.9 million renovation to the 11-story Episcopal Church Center in New York that houses the staff of the national church, a bookstore, chapel and a half-dozen related agencies was approved by Executive Council, meeting in Burlington, Vt., June 11-14.

The decision, approved with a solid voice vote of the 38-member council, came with no debate. But it followed an intensive study of the 42-year-old building that recommends removing asbestos in the ceilings and floors, installing new heating and air conditioning equipment and bringing the building into compliance with the Americans With Disabilities Act and new city fire and safety codes in the wake of the terrorist attacks on the city on Sept. 11, 2001.

The council’s resolution approved a spending ceiling of $31 million for the project, but it asked the church’s officers to continue to search for the most advantageous sources of financing.

At a meeting last February, they council debated the project thoroughly, approved only replacement of the building’s three elevators that will begin this month, and deferred making a final decision until June.

In the meantime, a task force collected more information to make the case that the project must go ahead. “We looked at it all from many ways,” said Josephine Hicks, a Charlotte, N.C., lawyer who led the task force. “It soon became apparent that the renovation could not be done in stages without requiring repetitive construction labor costs that would double or triple the total cost. The needs are so intertwined.”

Safety, health issues
These needs include complying with safety, health and building code requirements, providing an accessible, secure and healthy work place and undertaking urgently needed improvements throughout the building. The renovation is expected to begin in December and continue into late 2005. By reconfiguring staff space, 26,000 feet of space will become available for lease to outside organizations and businesses at fair-market price.

This rental income, estimated initially at $885,000 per year, will help to offset the cost.

A second member of the task force, Thomas Gossen of Wichita, Kan., an architect with a structural engineering background who argued against the renovation last February, said he changed his mind as he collected data on the building and studied its problems. “Basic safety systems are not compliant with safety, health and building codes,” he told council members. “Following 9/11, New York City codes will soon require that all buildings be fully equipped with fire sprinklers.”

The building has virtually no accessible facilities for disabled people and no emergency standby power for exit lighting, elevators, fire alarms and computer servers, Gossen said. “Asbestos-containing fire-retardant insulation is delaminating and must eventually be removed and replaced. Currently, simple maintenance requires expensive asbestos containment and air-quality monitoring.”

Good stewardship claim
“We asked ourselves if this project would help the church’s mission,” said Hicks. “We concluded that it does. It’s plain old good stewardship. “We have an asset,” she said, referring to the building in mid-Manhattan that has had very little maintenance in recent years. “We cannot let it just sit and deteriorate. That’s not good stewardship.”

One year ago, Presiding Bishop Frank T. Griswold and Executive Council decided against relocating the church center staff in a new building on the grounds of General Theological Seminary in New York. Then they were confronted with what to do about the existing building that real estate investors had recommended be retained by the church, renovated and leased if staff offices were to be moved.
Kurt Barnes, the church’s new treasurer, said the facts had won over the skeptics. “We worked with architects and engineers. We honed down the costs.”

He said “worst case scenarios” were developed, using conservative income estimates and the maximum interest that might be anticipated on the loans for finance the renovation. That amount totaled $29.9 million. “Yes, you could defer the project,” he told the council. “But it will cost more, as much as two to three times more.”

It is proposed to finance the project with 100 percent bank financing amortized over 30 years. The annual cost would be close to $1.9 million per year, offset by expected income from leasing space.

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