Annandale Advocate, December 17, 2013 "Buyer found? 1922 building could become a data center" by Tom Westman, Annandale Advocate Staff Writer There has been a new development in the issue of what to do with the '22. A firm has come forward with an interest in turning the 1922 portion of the Annandale Middle School into a data center. Last week Superintendent Steve Niklaus, in an email to board members, announced that there was possibly a serious buyer. "A few months ago I showed the 1922 building to two investors who were interested in looking at the building as a possible data center," Niklaus said. "We spent a couple hours touring the building, looking at everything internal and external. "There have been a few other inquiries from these individuals since, but nothing serious; at least nothing they wanted to be public.  "This afternoon (Tuesday, Dec. 10) I received a call from one of the partners informing me that they have an appointment with the Metro West building inspector, who serves the community of Annandale, to tour the building with the intent of identifying any major areas of concern they need to know of if they wish to purchase the building and convert it into a data center."  The unidentified potential investors and the building inspector were scheduled to tour the building at 2:30 p.m. on Wednesday Dec. 18. Following the tour, the investors were to meet with Niklaus, City Administrator Kelly Hinnenkamp, school board chair Jeanette Rieger-Borer and board member Paul Zabinski to discuss the viability of their plan and potential relationship with the school district. "I know everyone would like to know more specifics of this possible use of the 1922 building. However, I do not have anything further at this time, Nicklaus said. Niklaus indicated that from talking with the potential buyer he learned the following: ■ They have experience converting an abandoned school into a data center, which is located in the Twin Cities metro area. ■ They have secured firm pricing for the significant Internet capacity necessary to run a data center. ■ They would invest funds into stabilizing the building for long term use - windows, roof, electrical and possibly the mechanical systems. ■ They would likely need three to six months to finalize the economics of the plan, utilizing grants, private funding or a combination of both. ■ The potential buyers would be interested in talking with the ReUse committee about a possible shared use of space in the building. "Obviously, it would have been far better to have had a finalized purchase agreement with either the ReUse Committee or with this private party by the December meeting," Niklaus said.  "It continues to be in the best interest of the school district to sell the building or demolish it. It appears we will not have either." Three choices Niklaus explained that board members have three possible options to pursue when they meet on Thursday, Dec. 19: ■ Decide that the 22 building is a big liability to the district and it should be demolished. ■ Decide it likes the Annandale Area Community Team plan for a community center and approve an interim lease. ■ After meeting with the potential buyers and seeing a value for the community, the board can decide to give them a limited time to firm up a plan of action. Last December the board voted to schedule demolition of the 1922 building by the December school meeting in 2013 if a buyer was not found. The estimated cost of the demolition would be about $900,000, a figure put forth by Niklaus at the November school board meeting. The district has money left over from the construction of the new elementary school and that can be used for the demolition, but it must be spent by the summer of 2015. There is concern that if the building is not sold and a lease agreement does not work out, the district would be faced again with having to demolish the building but would not have money to pay for it. ReUse reaction "While it is a potential win-win-win for the committee (ReUse), the community and the school district, because it is so preliminary right now we have to go forward as planned, addressing the short-term use of the building as a community center, hoping they (the school board) choose to postpone demolition of the building for at least another year," said Jill Bishop, a 1922 ReUse Steering Committee member. "I think the data center would be good for the community and good for the ReUse Committee," said Rose Mary Nelson, another steering committee member. "We look forward to talking to the data center folks about partnering. It is a wonderful opportunity to save the 1922 building. We do, however, plan to move forward with our community center plans." "In terms of the data center, I believe if a compatible mix use is identified it does become a win-win," said Laura Hood Beckman of the ReUse committee. "The building is being reused and income is generated for the needed upgrades and preservation work. This will be exciting to see how it unfolds." Questions for ACT The proposal from the 1922 ReUse Steering Committee is still on the table and will likely be discussed at the Thursday, Dec. 19, board meeting. The school board has recently submitted questions to the committee about its proposal to lease the lower floor and gym as a community center for two years while investigating fully the best options for long term use of the building.  Answers from the ReUse committee are expected to be presented at the Dec. 19 meeting. Following are examples of the school board members questions: ■ If ACT plans to transform the 1922 building into a Community Center, why not just purchase the building for $1. Why lease it at all when it could be yours to do with as you wish?  ■ Why not have the city purchase the 1922 building for $1 as was done in the Glencoe example you noted? It appeared this was the case with most of the examples presented to the board.  ■ If the proposed lease were approved, the school district would require ACT to pay for any added property insurance expenses on the 1922 building due to the community center use. In addition, ACT would be required to carry its own liability insurance and content insurance and list the school district as an additional insured. This coverage should be for $1,000,000. Do you see any issues with this? ■ The school district has had plans to phase out use of the 1922 building for several years due to the excessive costs associated with continued occupancy of the building. These costs include operational expenses as well as major expenditures to remodel and bring the building up to code. It appears that the reuse study identified nearly the same level of expense for long-term use of the building.  Given this, if ACT leases the building, who will pay for repairs to the mechanical and electrical system or the roof in the 1922 building? The school district could eliminate all its exposure to these large expenditures if the building is no longer part of our operations. ■ If the continued occupancy of the 1922 building under the direction of ACT led to a major expenditure for the school district such as the roof, hazardous materials or mechanical and electrical system failure, it would be possible for ACT, as a non-profit, to simply disband, leaving the school district to absorb the expense. Are there members of ACT who are willing to provide personal guarantees to the school district to cover such a situation in the event something like this should occur?  ■ As you are aware, the school district has until the summer of 2015 to use existing funds to demolish the 1922 building and for construction repairs to the 1954 building to address restroom needs and security entrance needs. If the proposed lease is extended into a second year these funds would no longer be available and the school district would not be assured of having adequate funds in the future to address this need should the proposed community center concept fail. Would ACT or members of ACT set aside funds to complete the necessary demolition and reconstruction if it became a necessity?  ■ None of the current reused schools you have shown examples of appear to be owned or operated by the school district. Does ACT plan to have the City of Annandale or some other outside public entity eventually take ownership of the community center, or will ACT continue to own and run it? What happens if ACT disbands? ■ None of the examples of reused schools shown appear to share common walls, common entrances or common parking with an active school such as AMS. How does ACT propose to handle security, parking or other concerns due to the use of the building for non-educational purposes during and after school hours and on weekends? ■ The estimated expense to bring the building into compliance with all building codes for long-term use are estimated to be in the millions. Given the fact the school district cannot be expected to contribute to this, how does ACT plan to raise the necessary funds? You have noted previous projects that ACT has been successful at, and these are valued by our community, but none is in excess of $50,000. This project would be in the millions. Is ACT prepared to handle this? ■ If the 1922 building is to be transformed into a community center, the heating and air conditioning of the building should be separated from the AMS systems. How long do you anticipate a need to rely on the AMS systems for these needs? ■ Have you investigated any required changes to the 1922 building due to city building code if it is changed from its current E (education) occupancy to a B (business) occupancy, which would likely be required if it is run as a community center?  ■ If ACT chooses to lease the building, why not lease the entire 1922 building, as the second and third floor are of no use the school district or to anyone else if ACT occupies the lower floor? ■ In addition to utility and insurance expenses for operating the building, will ACT support custodial and cleaning expenditures? ■ The majority of uses of the proposed community center in the 1922 building are currently conducted elsewhere in current school buildings. Are the spaces currently used not adequate or unacceptable? ■ A number of the proposed uses of the community center - a fitness area, swimming pool and such are currently provided by private business or by the Care Center? Would the community center compete with them? ■ When would ACT's lease of the 1922 begin? If this is not until the 2014-15 school year there will only be a few months before the school district must make a decision on the demolition of the building or loose the funds that could support the removal and replacement of necessary space in the summer of 2015. What criteria will be used to determine success of the proposed community center operations prior to December of 2014? ■ Does the example of preservation attempts to save the Thayer Hotel provide any examples of what may be ahead for the 1922 building if it is not demolished now while the funds are available to do so?  ■ It was noted in the school board presentation that a large number of residents of the Annandale area wish to have a community center. Is the 1922 building remodeled what they had envisioned as the community center they desire?  The most active community center shown was in Detroit Lakes with the pool, gymnasium and kids play area. Where in the 1922 building would these types of amenities be possible? Would identifying the 1922 building as Annandale's community center of the future possibly eliminate the opportunity to have a new, modern, efficient and less expensive community center in the future?