Spencer Lofton still believes that those which lease the South Hamilton Elementary Building will not only pay for their portion of getting the building up to code but fixing the water line problem so that there is sufficient water in the event there is a fire. Currently the water pressure is insufficient to fight a fire.
What Spencer doesn’t seem to take into account is that the Lessee/Renter of such space needs to be assured that with all the additional costs to set up shop, there will be sufficient profitability to overcome the initial expense to fix the building and be charged for the water lines plus any inventory.
A good rule of thumb for most businesses is that the business valuation should be no higher than 3 times the annual net profits anticipated.. Will the business provide a reasonable return on the investment, given the risk that the building is not owned by you, yet you are being charged for fixing your leased space. If your business does not receive the profits anticipated for the future, will you be able to break the lease and still be fine knowing that you have expended a tremendous amount of money to fix the building before you moved into it. In other words, as an active owner will the business provide the return on your investment and compensate you adequately for your time and money invested?
Besides the fact that your lease from the School Board may only be for a specific period one to five years and possibly a clause that if the Board decides to sell the property to someone else, will that cost additional funds and rental costs from a new owner….or the new owner may decide that all tenants may be evicted with a sixty day notice.
We know that the schools in this district are insured with the AIG under a special program for “schools”. Now it was determined that the Town would have to pay the School’s portion of the insurance through the School Board with AIG. However, with the Town renting it to other tenants which are not “schools”, the occupancy of the School Board’s policy would have to change to a “Lessor’s Risk”, thereby changing the policy premiums from what they are now.
Secondly, the School Board would require the same limits of liability from each of the Tenants as the current AIG policy covers, but with respect to each of the Tenants occupancies. And as such the School Board, et al would have to be included as Additional Insureds with an increased Fire Damage Limit in the event the tenant may be responsible for a fire.
So the new Tenant will have to look at Plumbing and Electrical Costs and Insurance Costs along with the Rent the Town elects to charge for the space which I believe Spencer indicated an amount that was less than $8.00 a square foot.
If the Town itself leases the building for police or for the office, the current FMIT policy limits are insufficient to provide the requirements of the AIG or the School Board.
But let’s look at some other problems we face in White Springs.
We do not have a valid Fire Department because there are no volunteers in the nearby area of White Springs since Stacy asked Kevin Pittman to resign. We have to depend upon Genoa.
We do not have an adequate Police Department because it has been neutered. Our police department will do nothing about thefts and will do nothing about the drug problems and other crimes in the Town. If the Sheriff’s department will not be able to respond, we have nothing.
Our Town has only about 800 people and if many of the people could not Pay Steve’s garage for repairs and tires, how do you expect these people to have the money to buy goods.
Mayor Lofty mentioned we should have a fitness center. In most little Town’s they have a strip mall which includes a fitness center, a grocery store and a small restaurant. We have two restaurants in White Springs and for as many drugs as our flowing in White Springs, who will take memberships of a fitness center? Those who are in agriculture or construction already have enough work which keeps them physically fit. Plus our citizens are mainly older where a recreation center would be a better choice for them to play games from cards to pool or billiards tables, zumba Classes or other exercises, but affordation among the citizenry is a problem. Many are on welfare and the older ones on Social Security. Who can afford the fitness center?. And if there are insufficient people who purchase memberships, will the owner be able to have the appropriate trainers and equipment required to pay him or her for their investment? Plus the insurance is more expensive for a fitness center.
A drop off laundry or dry cleaner certainly will not get a lot of business either, which is another idea of Lofty’s.
So what one needs to do is decide what do the Citizens really need in Town that they do not have now? Is there something which would draw people from Jasper, Jennings, Lake City and other areas to come to White Springs? If there is not a draw from other areas, will our citizenry keep the Town open. Currently we have 3-4 restaurants, for which such a small town certainly cannot sustain forever. Most people find Fat Belly’s as being the most charming with the best food and so visitors frequent Fat Belly’s. If Franklin’s Pizza and Cuban Sandwich restaurant would not have burned down, it would have been the perfect alternative to Fat Belly’s and welcomed by even those in Jasper. So, we know we don’t need another restaurant other than a Pizza and Italian Restaurant.
It would be nice to have a clothing or furnishings outlet stores like a Bealls Clothing or Home Outlet. Yet we have competitors to Bealls in Lake City and other Bealls outlet stores in Live Oak. Why would one wish to fix up a building and yet purchase inventory for a store. Furthermore, any new renter should ask Dollar General what their overall profitability is, and how much merchandise is actually stolen since our Police Department doesn’t really take care of our stores in Town. No other department store would consider SHE because there are no windows for showrooms.
Unless you know who buys from you and why they buy from you, you will be flying blind,”
There is also such a thing as “Stress Testing”. What happens to cash flow if sales are below your expectations or costs, which is what happened to Stormant’s Store Family Traditions. Or if your costs run above your projections. In fact Bankers often see if you’ll be able to pay them back if profits are off by 25 percent so a Tenant running a business at SHE would have to make certain they run similar scenarios to make certain renting SHE would be a profitable venture.
It’s easy for Lofton to say, all costs will be transferred to the Lessee, but if the Lessee doesn’t find the area or the additional costs of fixing SHE an advantage to overall profitability, this idea of Mayor Lofty is just Pie in the Sky.
Moving our Town offices, in my opinion, and from the facts presented, is ridiculous and will cost the citizens much more money than needs to be paid out.
The only tenant in my opinion would be to rent the Gymnasium for a FLEA Market. People in this area love FLEA markets and it would mean multiple tenants in one space selling different wares which most people love to shop for. Markets are the thing I love to go to in other Cities. There can be anything from fine arts, to tools and household items and beauty items, watches, coats, clothing, and gifts. That is something people look to stop for and if you do not believe it, check Ocala
The Market of Marion is spectacular and something we could do in White Springs. It’s a real farmer’s market from the freshest fruits and vegetables by local farmers to dogs, cats, birds, antiques and collectibles, auto parts mattresses, children’s clothes, toys, jewelry with special events with food and fun for the entire family.
A flea Market would be fantastic and there could be food fun and entertainment. Check out the internet site. I have mentioned this once before on the blog, but those of you on the committee do not believe the simplest of things could bring the biggest rewards and profits in the long run. Everyone loves a flea market and SHE has the appropriate parking spaces for people.
If White Springs wishes to shift all of the expenses to the Lessees/Tenants, why would you wish to rent space in a building which is not owned by you. A Tenant not only would have to pay rent but would have Plumbing and Electrical Costs, High Sewer and Water Costs, Insurance Costs, payroll costs and No Fire or Police Department with no assurances of a continual lease from the School Board before the property is sold..
Think wise and start a Flea or Farmers Market which would at least bring people into town.
Karin for the blog