AMHA and AMHI Issue Joint Statement On Building Commission Findings
Monday, May 10, 2004
In 2003, the American Morgan Horse Institute established a Building Commission to address long-range issues regarding the Shelburne Building owned by the AMHI. The building (approximately 13,000 Square feet) is owned by the American Morgan Horse Institute. The American Morgan Horse Association leases its office space under a 20-year lease with AMHI. This lease is now in year 17. Per the terms of the lease 53% of the square footage (6890 square feet) is allocated to AMHA with the balance of the square footage retained by AMHI to house the National Museum of the Morgan Horse and account for the common areas, reception area and conference room of the building.
The lease between AMHA and AMHI provides for AMHA to pay monthly rent, 53% of the actual ongoing utilities (excluding taxes and insurance) and have obligation for maintenance and repair of the internal components of the building.
The intent of this Commission was to identify the infrastructure needs of the building over the next five years as well as to identify the strategic decisions that AMHI as owner and AMHA and NMMH as tenants needed to address.
This Building Commission was composed of seven individuals – three Trustees from the AMHI, three Directors from AMHA and a representative of the Council of the National Museum of the Morgan Horse. The strategy of the members of this Commission was simply driven by the AMHI’s belief that it was only fair to involve the two tenants of the building (AMHA and the NMMH which is a Committee of the Institute) in the development of its final report.
The Building Commission study used external services to provide a detailed inspection of the building and professional projections of anticipated infrastructure needs that will be likely in the near future for this now 17-year old commercial structure. This projected infrastructure investment needs in excess of $225,000 over that timeline. Under the terms of the lease agreement, a considerable portion of that amount would be borne by the AMHA with the remaining portion being borne by the AMHI.
The fundamental question that the AMHI Board of Trustees had to address was whether the AMHI should be in the business of owning commercial real estate at all. After a review of the Building Commission Report and a subsequent discussion as to both the realities and obligations of building ownership and the AMHI Charter, the Board of Trustees voted unanimously that the AMHI should NOT be in the business of owning commercial real estate and to initiate a strategic initiative to sell the building within three years thus allowing AMHI to be much better positioned to accomplish its charter without the management and economic obligations of building ownership.
The Board of Trustees also established a subcommittee of its Trustees to work with the National Museum of the Morgan Horse to develop an exit strategy from the building that would also accomplish its expanded outreach goals to address both its significantly important archival initiative to preserve the history of the Morgan Horse and to provide expanded display opportunities to promote the Morgan Horse through its history and traditions to the general public.
While AMHI does not presume to make strategic decisions for the AMHA, AMHI well realizes that the physical facility requirements of any office including those of AMHA have changed dramatically over the last seventeen years. At the same time, the Board of Trustees of AMHI has a fiduciary responsibility to manage the assets of the Institute in a fiscally responsible manner to best further the mission of the Institute. This does present an ongoing challenge for AMHI. On one hand the fiscal side would indicate that the rentals currently received from AMHA are significantly ‘below market’ for the allocated floor space. However, as individual members of AMHA we are also well aware that AMHA likely only needs about 50% of its allocated space in that building.
We are, therefore, requesting that AMHA to immediately initiate a review of its long-term office space strategy and to work with AMHI to insure a smooth transition during this three-year period.
The AMHA has been informed that the AMHI has decided to exit the ownership of the building in Shelburne, Vermont where the AMHA is presently located. In response to this, the AMHA will look into its options. No decision has been made on the plans for the future location of the AMHA's offices. Additionally, the AMHA has a three year lease and this will be honored.
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