DATE: Tuesday, September 9, 1997            TAG: 9709090253

SECTION: FRONT                   PAGE: A1   EDITION: FINAL  

SOURCE: BY TOM HOLDEN AND JO-ANN CLEGG, STAFF WRITERS 

DATELINE: VIRGINIA BEACH                    LENGTH:  139 lines

CORRECTION/CLARIFICATION: ***************************************************************** Unclaimed Freight is a discount furniture store in Virginia Beach, not a freight warehouse, as described in a story Tuesday about a city of Virginia Beach purchase for its Community Services Board. Correction published Wednesday, September 10, 1997. ***************************************************************** BEACH BUY BECOMES A COSTLY SURPRISE A FORMER HOTEL THAT THE CITY BOUGHT FOR $12 MILLION TO HOUSE THE COMMUNITY SERVICES BOARD MAY NEED TO BE RAZED AND REBUILT.

The plan was simple, even if it was an expensive one.

With its annual rent costs topping $522,000 a year, the Community Services Board last year asked the city to buy a six-story hotel, a nearby freight warehouse and a piece of land to serve as the central site for the CSB, which provides services to the city's mentally ill, mentally retarded and substance abusers.

The hotel and warehouse would be renovated. The city would get its own building. The CSB could stop paying rent, consolidate its various operations, and it would cost $12 million.

The City Council gulped, but said OK.

On Monday, the CSB decided that the hotel and warehouse could not be reasonably converted for its use, and that it would be better to tear down the hotel and warehouse and start from scratch.

Total cost: $17.2 million.

According to CSB's architect, Paul Finch & Associates, and the Public Works Department, the two buildings were filled with potential financial pitfalls that were not apparent in an initial assessment done by CMSS Architects.

Among them:

A more expensive heating and air conditioning system would be required than originally thought.

Because it was a hotel, converting it to office space meant extensive plumbing renovation at a cost higher than expected.

The building needs a new roof.

The warehouse has structural problems, including a floor that is six inches higher in the front than it is in the back.

An unexpected need for turning lanes on Bonney Road and the likelihood of a new traffic signal. The signal alone would cost at least $100,000.

Together, those figures represent a 43 percent increase in the project cost approved by the City Council last December.

``It was like getting hit by a truck,'' CSB Executive Director Dennis I. Wool said when he learned the new figures. ``It was a huge disappointment. We thought we had an opportunity for a creative application of land use with the hotel. It was something we had worked on for 15 months, and then we found out that it would cost us far more than we could afford.''

The CSB voted 9-1 Monday to ask the City Council to finance the additional costs through the sale of revenue bonds and dipping into the board's contingency fund.

City Council members contacted Monday evening expressed concern over the escalating cost.

``I'm intrigued by the idea that they're coming to us at this late date saying that it's going to have to be torn down,'' said Councilwoman Louisa M. Strayhorn, who represents the Kempsville Borough. ``We should not be facing any great surprises like this.

``I'm very much in favor of what they're trying to do. They came in and gave figures, gave us a good selling job. Somebody must have had something wrong in the first place,'' she said.

Strayhorn indicated that she was as concerned about the sale of bonds to fund the project as she would have been about an outright request for additional funding. ``A bond is against (the city's) debt level regardless of what type of bond it is,'' she said.

Blackwater representative John A. Baum said he was aware that the CSB was having problems with plans for renovations, but that he is willing to listen to staff's recommendations.

``It was great in the first place that they were putting everything together in one place, but of course I never like to learn about cost overruns,'' he added. Pungo Borough's Barbara M. Henley, upon hearing of the increased costs, said, ``Good gosh. I'm sorry to hear this. I was hoping that everything was going smoothly with that because we had not heard anything from (the CSB) for several months, not since the vote in fact.''

Henley cast the sole vote against the project when it came before the council on Dec. 3. At the time, she said, the city had not completed its negotiations for all of the land it would need.

``We did not have a willing seller on the part of Unclaimed Freight,'' Henley said. ``I was not comfortable if we got into condemnation suit of the possible escalation of costs.''

For 27 years, the Community Services Board has leased commercial office space in Pembroke.

The agency receives 25 percent of its financing from the city and employs about 400 people who served 8,000 citizens at more than half a dozen sites throughout the city last year.

Its greatest concentration of office space is in the Pembroke Office Park, where the CSB leases 40,000 square feet of space. Citywide, it leases 79,000 square feet. One of the sites, the Wildwood Clinic in the Hilltop area, is owned outright by the city. The CSB also expects to sell it, raising $500,000.

Another, the Detox Center, is located in temporary buildings on the grounds of the Open Door Chapel on Virginia Beach Boulevard. The CSB retired its debt on those buildings several years ago and pays no rent for the use of the land.

The CSB also runs the Skillquest center, a day program for mentally challenged adults, and Beach House, a nonresidential rehabilitation program for adults suffering from mental illnesses.

Altogether, the rented space will cost the CSB $522,164 for the current fiscal year.

``We expect that would increase to $710,000 per year by the time the new building is completed,'' said James P. Duffy, the CSB's director of finance and administration.

Paying for the new building would cost $1.189 million a year. The building would be 105,000 square feet, 95,000 of which would be built immediately and 10,000 reserved for later use.

Duffy said that the difference between that figure and the $1.189 million annual cost of debt retirement would be offset partially by more efficient use of support and transportation services once all programs were combined in a single location.

``And,'' he added, ``in 20 years we would own the building instead of just collecting rent receipts like we've been doing for the past 27 years.''

Duffy said that increased costs for maintenance and utilities should be more than offset by the fixed rate of the mortgage as opposed to escalating costs of rental space.

The new complex will house counseling, case management, treatment and prevention services as well as the Recovery Center-Detox program currently located on the grounds of the Open Door Chapel. Two-day support programs, the Skillquest center and Beach House also will be located at the Bonney Road site.

CSB member Forrest Sullivan cast the lone vote against the plan Monday, arguing that the Beach House program should be housed in a separate building from other clients. ILLUSTRATION: Photo

Dennis I. Wool

Color photo

D. KEVIN ELLIOTT/The Virginian-Pilot

This former hotel property on Bonney Road, once a Days Inn, was

bought in order to consolidate several sites where the Community

Services Board operates.

Map

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