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Late rent and unsigned leases: Building Authority tussles with New Albany over government offices

Denzinger
The New Albany Police Department has spent decades in the Frank C. Denzinger Criminal Justice Center, which is owned by Floyd County.

The New Albany-Floyd County Building Authority, an independent group that oversees the governments’ properties, says the city of New Albany is not cooperating in discussions over building leases and is repeatedly late in paying rent.

At the Floyd County Commissioners meeting on Tuesday, members of the Building Authority addressed a number of issues it’s having with New Albany regarding properties owned by the Building Authority and the county.

Representatives from the Building Authority said the city has failed to respond to a lease proposal for the current New Albany Police Department headquarters for several months. The city also paid its rent late every month this year, and it failed to vacate its former offices on the third floor of the City-County Building until Dec. 1, more than two months after it had moved to its new City Hall.

Tuesday night’s presentation was prompted by claims made by New Albany officials, including Mayor Jeff Gahan, about the New Albany Police Department’s tenancy in the Frank C. Denzinger Criminal Justice Center. City officials said they were taken by surprise by WFPL News reporting in October on possible county plans to use the space.

But officials for the Building Authority said they tried for months to communicate with the city about the future of the building.

“We've committed to being as transparent as possible with all the players involved,” said Aaron Combs, president of the Building Authority. “We've updated [the city] every month, so when [the city’s comments] came out in the media, we kind of looked at it and said, ‘Did we do something wrong? Was there some place that we failed in communication?’ And if so, we would own that, but we didn't feel that was the case.”

Lease negotiations kick off

The Floyd County government owns the Denzinger building, but the New Albany Police Department (NAPD) has used 9,200 square feet of it as its headquarters for decades. The Building Authority owns the City-County Building and manages the Denzinger building, and it is responsible for collecting rent from the city for both buildings.

Members of the Building Authority said in October the county is considering relocating probation offices to the Denzinger building as part of a government facilities overhaul. That could mean taking over space currently occupied by NAPD.

Last month, Gahan and other officials said the city was “surprised” by the potential plans. New Albany City Council member Jason Applegate said he was caught off guard by the Building Authority discussing the possibility with the media.

“To find out, allegedly, there weren't any conversations with administration before that went out in the media from that side, I was shocked,” Applegate told WFPL last month. 

But emails between the city and the building authority obtained by WFPL show that conversations regarding the future of the Denzinger building started as far back as February. 

On Feb. 11, Building Authority Superintendent Chuck Edwards sent an email to other Building Authority members summarizing a meeting with the mayor. He wrote that Gahan said there were no plans to move the police department “in the near future, but that had been discussed.” 

“I feel blindsided by the comments that they feel blindsided,” Edwards said. “And in fact, I'm disappointed that if they felt so blindsided, why didn't they reach out to the Building Authority office and ask for myself or one of the directors?”

Attorneys for the city and the Building Authority continued to be in touch, negotiating a new lease after the former payment arrangement expired in January when the city failed to pay on time. The initial lease proposal was delivered May 11. The Building Authority set a deadline to finalize the lease in June.

City officials unresponsive

June came and went, with no signature from the mayor’s office. Building Authority representatives sent several emails to the city’s attorney asking when Gahan would sign the lease agreement. But Building Authority Board Member Stefanie Griffith said the discussions went cold around September.

“I think we've gone above and beyond as landlords to help that,” she said. “But going forward, there comes a point where we now have issues that we need to take care of, so we need something from them. Whether it's a signed lease or not, they need to follow through for the taxpayers and for everyone else involved.”

Mayor Gahan argued that the city has rented the building from the Building Authority for years without a lease, so he doesn’t see the need for one now. 

But Building Authority member Scott Stewart said the fact that there isn’t a written lease is exactly why they need one. He said that the lack of such a document has been a “significant oversight,” and the Building Authority is trying to rectify that.

“That's simply not acceptable,” Stewart said. “In any normal business, a tenant and a landlord have a written agreement, and this should be no exception. … Certainly, the Building Authority board, for its part, does not want to be in position to fly by the seat of the pants. It's wrong for the governments involved and certainly is disrespectful to the taxpayer.”

Delays in rent payments

Prior to the delays over the lease agreement, the New Albany-Floyd County Building Authority was already experiencing problems with New Albany regarding rent payments. The Building Authority said late payments cause problems with their budget, since a sizable portion of it depends on rent collection.

Up until their move in September, New Albany’s offices had been on the third floor of the City-County Building since the 1960s. The city paid rent to the Building Authority for those offices and the police department in the Frank C. Denzinger Criminal Justice Center.

Building Authority Superintendent Chuck Edwards said invoices have historically been sent twice a year, in December and June. That arrangement ended in January 2021 when the city was late on its payment.

At the time of Edwards’ meeting with New Albany Mayor Jeff Gahan in mid-February, the city had not paid any of its rent for 2021. Edwards said the city made its first payment of the year on March 30, but it only covered January through March, rather than the full six months requested.

After that, the city started paying rent on a month-to-month basis. Edwards said invoices list a payment due date of the first day of each month.

Payment records given to WFPL by New Albany show the city has missed that deadline every month, in some instances by nearly 50 days. Gahan argued the city is not bound to a set due date since there is no lease specifying one.

“Our position is we pay our rent every month,” Gahan said. “The record will support that.”

On Nov. 1, the Building Authority sent a notice to the city terminating the lease on the site and asking for past due rent payment. The city sent an email notifying the Building Authority that it would be moving out on Nov. 28 and gave official notice that it had vacated the space Dec. 1.

Though New Albany’s government had operating at its new City Hall since September, the city was billed for the third floor of the City-County Building in October and November — a total of more than $16,000 — because it failed to remove furniture and give proper final vacation notice.

“If I lived in Floyd County, I would not appreciate that my taxes were paying for a space that was vacant for two months — that the city was continuing to pay rent on it because they couldn't decide when they wanted to move out and vacate the space and move the junk out,” Edwards said.

Gahan said the city hadn’t completely transitioned out of the City-County Building until mid-October.

“There's lots of things that you have to account for when you make the move — how we're going to handle the move, where the stuff is going to go,” Gahan said. “And then you compound that situation with COVID, so that's the explanation for the timeline.”

Future of the Denzinger building

Gahan said he stands by his previous comments that the city was “surprised” by the possibility of the county taking over the Denzinger building, despite the months of correspondence about the property. He said neither the county nor the Building Authority sent notice about them possibly taking the space. 

“So that being said, I don't know what they're talking about,” Gahan said. “Why wouldn't we be surprised?” 

Building Authority president Aaron Combs says they never sent notice because the plans were only a possibility. 

At Tuesday’s meeting, Floyd County Commissioner Tim Kamer asked the Building Authority if it would consider issuing a letter of intent stating it had plans to take over the Denzinger building. But Building Authority president Aaron Combs rejected the idea and said it would be “jumping the gun.”

Combs said the Building Authority must first determine financing options and seek approval from the county before moving forward. He said there’s also a possibility that the county won’t need the space currently occupied by the NAPD.

“I'd love to leave that option open, if that ends up being the best option for all parties,” Combs said. “It was never our intent to just get rid of the police station. Our intent was to have a lease signed in June. Our intent was for them to stay there. It seemed to us that their intent was not to stay there.”

But Gahan indicated that the city intends to construct a new police headquarters, regardless of the county’s plans.

When asked why the city participated in lease negotiations only to stop responding, Gahan said the proposal wasn’t “satisfactory” and the building wasn’t “adequate” for NAPD’s needs. He’d like to modernize and increase the size of the police department.

“We were paying rent to the county for years and years,” Gahan said. “That process is not a good proposition for the city of New Albany. In the future, the New Albany Police Department needs to own their own facility, and the people of New Albany need to own their own police department.”

Gahan said the city is eyeing up to five potential locations for the new headquarters, and construction could start as early as next year. 

Edwards said it’s been more than 200 days since the lease term sheet was delivered, and the city has still not signed it or notified them of plans to build a new police station. He said city officials need to clearly communicate their intentions so the Building Authority can plan accordingly, even if the city moves forward with relocating the police station.

“If it's in 12 months or 16 months, they need to communicate that to the Building Authority, and we need to have a lease for that term for them to be in that building,” Edwards said. “And that's normal business. That's more than reasonable.”

Gahan said he intends to give the Building Authority official notice about its plans to move out of the Denzinger building soon. The city could release more information about the project as early as next month.

John is News Editor for LPM. Email John at jboyle@lpm.org.