By Paul Collins
The state says it won’t pay rent to the New College Foundation for a few months for space New College Institute occupies in the Building on Baldwin to cover the cost of a technology upgrade.
The Virginia Department of General Services has spent an estimated $56,185.28 for the upgrade and contends that the foundation, which owns the building, has violated its lease agreement with VDGS because it did not provide the upgrade that NCI said was needed.
The foundation disputes that contention.
The NCI Board of Directors heard a report about the matter at its meeting Thursday. No one from the foundation spoke to the NCI board Thursday.
Several letters concerning the matter were included in the NCI board’s agenda package.
Holly Law Eve, director of VDGS, wrote to Patrice Newnam, chair of the foundation, a letter dated June 14 that described the evolution of the situation:
» Under the lease, the foundation (landlord) “has agreed, at its expense, to keep (i) ‘… all equipment and non-trade fixtures (exclusive of equipment and non-trade fixtures owned by tenant or by occupant), in good working order and to perform any required repairs, replacement and maintenance and (ii) keep ... all equipment of every kind or nature affixed to or serving the premises in good repair, condition and working order.” (The Department of General Services is the tenant, and NCI is the occupant.)
» In a letter dated Sept, 27, 2017, the Department of General Services notified the foundation of its failure to maintain the premises pursuant to the lease. Despite the foundation’s initial response dated Oct. 5, 2017, offering to address equipment failures, NCI continues to experience failures of equipment and operating systems.
» In correspondence dated Dec, 14, 2018, Jan, 31, 2019, Feb. 21, 2019, March 19, 2019 and March 20, 2019, representatives of the Department of General Services and NCI have communicated to the foundation that certain technology equipment, including servers and polycom equipment (computer hardware) is not working properly and needs to be replaced.
» “The failing computer hardware continues to affect operations at the premises including inoperable security video, polycom and phone systems, data management and financial management systems.”
» The computer hardware is owned by the foundation and “is an integral item of equipment that the foundation has leased to the Virginia Department of General Services “as part of the premises to the lease.”
» Despite the communications, the foundation “has failed to repair or replace the computer hardware. Further, the landlord [foundation] by its letter dated March 21, 2019 advised it would table all funding requests, including specific request to fund necessary replacement of failing computer hardware, until after the building purchase matter with the commonwealth is resolved.”
» The Department of General Services (DGS) is exercising its right under the lease to “proceed to make, or cause to be made, such … repair and maintenance, at the landlord’s [foundation’s] expense,’ with DGS being entitled to “deduct the cost thus incurred in fulfilling the landlord’s obligations … from future rent payments and/or collect the cost from landlord in any manner provided by law.”
» Accordingly, NCI “will take immediate action to make necessary repairs and/or replacements of computer hardware and deduct that portion of expenses directly related to equipment the landlord [the foundation] Is required under the lease to maintain, the amount of which is estimated to be $56,185.28.” The actual amount that will be deducted from rent payments will begin in July.
The foundation disputes the contention that it violated the lease.Deborah Kaufman, executive director of the foundation, responded with a letter dated June 21:
“New College Institute submitted a funding request for technology upgrades in amount of $55,169.48, which the foundation board acted on at its April 17, 2019, meeting. It was communicated by NCI’s executive director that the matter was not an emergency. The board decided to table the request until the building purchase issue is resolved.
“The foundation has been responsive to all equipment failures that have been communicated and our vendor has resolved all issues. Some of the problems encountered are due to operator error and NCI personnel improperly reconfiguring systems. The Baldwin Building has working telephones, security cameras, internet, lighting, HVAC, plumbing, advanced manufacturing equipment, and Polycom (computer hardware), etc.
“The foundation (landlord) is not responsible to provide the ‘most robust and expandable option;’ however, if NCI requires more storage capacity for its data and financial management systems or other areas, that would be the organization’s responsibility. The foundation will consider supporting NCI with these upgrades as stated in April.
“It appears that NCI and the Department of General Services [are] attempting to force a funding request by claiming a lease violation which we dispute. We will refer the matter to our counsel.”
When asked how operations were affected, Richard Hall, vice chair of the NCI board, said at the meeting, “We have servers on order. We had to cut back numerous items that are running to maintain critical services. … DGS instructed us to buy the equipment, which we did in May.”
Among other business at Thursday’s meeting, the NCI board:
Heard a brief report about three new academic degree programs for fall 2019 to students at NCI: Averett University’s master in applied data analytics, Radford University’s master in social work and Virginia Tech’s doctorate in education leadership.
A budget of $2,632,835 for fiscal 2019-20, up from $2,592,059 for this year.
Paul Collins is a reporter for the Martinsville Bulletin. Contact him at 276-638-8801, ext. 236.