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City wants lease approval for industrial property

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A long-time tenant of the Roswell Test Facility has agreed to a $49,000 rent increase, according to city documents. (Lisa Dunlap Photo)

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The search for a buyer for the Roswell Test Facility on East Second Street did not yield a viable offer, so the city of Roswell wants to get approval for a renegotiated lease with the long-term tenant instead.

The pending lease with A.O. Smith Corp., a company based in Milwaukee, Wisconsin, does include a substantial jump in rent of almost $49,000 in the first year.

“What we have been doing with all our lease agreements is bringing them up to the standard market rate,” said Todd Verciglio, the property technician for the city. “We have worked with them to make that increase.”

The lease for four sites at the property at 3801 E. Second St. is on the consent agenda for the Roswell City Council meeting scheduled for 6 p.m. Thursday at the Roswell Convention Center, 912 N. Main St.

The Legal Committee of the council recommended the lease agreement during its April 29 meeting. If the item remains on the consent agenda, the lease agreement would pass without discussion once the city council approves the entire meeting agenda.

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Under the pending agreement, A.O. Smith would pay $57,667 the first year, with rent increasing significantly over the next four years so that it would end the initial five-year term paying $100,547.

It had been paying $8,692 a year under the existing lease that ended Oct. 31, Verciglio said.

The company also would have the option to renew the lease four times for five years each time. Rental rates would increase by 3%, or by the Consumer Price Index rate, whichever is greater, from year six forward.

A.O. Smith tests its own water heaters and boilers and products, as well as its competitors’ products, at the facility, according to city staff.

A request for information from the company was not returned by press time.

City Manager Joe Neeb said that A.O. Smith has been a “great partner.” He said that the city will use the increased rent to improve the site, with the plan that additional tenants would be able to use the site in the future and bring in more revenues for maintenance and improvements.

“The intent is to reinvest in our properties so that we can keep these buildings sustained,” Neeb said.

The Roswell Test Facility was originally a federal property. It was opened in 1963 or 1964 by the Office of Saline Water, part of the U.S. Department of Interior. The federal agency used it to work on converting saline water into potable water.

The Office of Saline Water was disbanded in 1974, and some of its staff and resources became part of the Office of Water Resources Research. The federal government closed the facility in 1984 and gave it to the city, but without providing the city any funds to maintain it.

The city issued two Requests for Proposals looking for a potential buyer for the site, the first in November 2019 and the second in March 2020. The site was appraised at $150,000.

City employees said at the time that a sale was wanted to reduce city maintenance costs and to return the site to property tax rolls. A viable offer was not made in 2019, according to city staff when asking for authorization to release the second RFP. Some entity did make an offer after the March 2020 bid process, a former city employee told city councilors, but it did not meet the necessary requirements for a sale.

Lisa Dunlap can be reached at 575-622-7710, ext. 351, or at reporter02@rdrnews.com.

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Lisa Dunlap is a general assignment reporter for the Roswell Daily Record.