After the $68-million purchase of the former Thermo Fisher building last summer, the city said it would offset the cost by selling vacated city buildings and surplus property and would not need to raise taxes.
A year later, some of those properties have turned out to be hard to sell. The United Bank building at 115 N. 3rd Street is currently 35% occupied and is breaking even, but will need half a million dollars in maintenance in the next year.
The city tried to sell it last September in a sealed bid process, but didn’t receive a single offer. Now, the city is planning a decade-long lease of the fifth floor of the United Bank building to the General Services Administration, a federal government agency, for $498,000 dollars a year.
At Tuesday’s council meeting, Economic Development Director Aubrey Parsley said the city will need to add security improvements to the building and part of the 2nd Street parking deck for the tenant. That will cost the city $1.8 million up front, but the tenant will pay much of it back once they occupy the space.
"With these lease terms, it's considerably more valuable to have that cash flow versus to have that vacant office space and resale in our estimation,” Parsely said.
Council voted in favor of leasing out the property, and staff suggested the tenant might even make the property more favorable for buyers.
The council also voted unanimously to put 10 surplus properties up for sale, most of them being undeveloped land in the north section of downtown.
This year, the city ultimately passed a budget that raised taxes by 6.3%. Councilman David Joyner announced before the first reading that he would vote against the budget, criticizing the purchase of the Skyline property for lacking public buy-in and the city for reneging on its promise not to raise taxes after the acquisition.
Councilman Luke Waddell, who had been critical of some of the details of the Skyline deal — including the decision to occupy the penthouse floor. He eventually supported the purchase, but put forward a proposal to mitigate the tax increase, including pausing the city's annual contribution to its affordable housing fund until the balance was spent down. However, his budget amendment didn't garner enough support to pass.
That budget eventually passed narrowly, 4-3 with Salette Andrews and Luke Waddell joining Joyner in dissent during the final vote.
[Note: This article has been updated for context around the passage of the budget.]
