Vancouver reaches $18.5 million deal on City Hall sale

? What: The Vancouver City Council will hear details on a proposed purchase of the former Columbian building for a new City Hall at the cost of $18.5 million.

? When: A workshop will be held Monday at 5:30 p.m.; the end of the 6 p.m. consent agenda meeting includes time for general citizen communication. A public hearing and vote is set for June 14.

? Where: City Hall, 210 E. 13th St.

? For more information: Visit the city’s website at www.cityofvancouver.us.

The city of Vancouver has reached a contingent agreement with Bank of America to purchase the former Columbian building and surrounding land downtown for $18.5 million.

With 300 administrative employees in five buildings across the city, which require a total of $2.45 million in rent and maintenance, the move is expected to save $1 million a year, City Manager Pat McDonnell said Thursday.

“There’s about 15 full-time employees in a million (dollars of) savings,” McDonnell said. “This is really beneficial to keeping our operating programs.”

The $18.5 million sale would include a total of 5.14 acres: $17.6 million for the building and an additional $900,000 for the parking lot at Sixth and Esther streets and vacant land to the south of the building.

The city expects to spend another $5 million to remodel the interior for its use, broker fees and other costs associated with the move.

The Columbian forfeited the building, at 415 W. Sixth St., to Bank of America earlier this year as part of its bankruptcy settlement and does not have a financial stake in the sale.

The deal is contingent on approval by the city council. Councilors will hear a first reading of the ordinance on Monday, and a public hearing and vote on the sale will be June 14.

For two years, the city has been eyeing the building as part of a long-term plan to consolidate into one City Hall.

The city’s proposed purchase price is 57 percent less than the $41.5 million that Downtown Vitality Partners (owned by the Campbell family, which publishes The Columbian) listed the building at in 2008, 44 percent below appraisal and 29 percent below its $22.7 million assessed value.

McDonnell said the recession is exactly why the city should jump on a land deal: “I have to come back and say that this is, in fact, why we’re getting this building the way we’re getting it.”

The city already has $14.9 million in its capital fund for the sale, including $5.2 million from the sale of two other city-owned buildings and other savings. By law, the money must be used for buying or building facilities; it cannot be used for general fund line items like police or firefighter salaries, Assistant City Manager Eric Holmes said.

An additional $10.5 million bond will be taken out, and paid back over the next 25 years.

Employees could begin moving into a new City Hall as soon as early 2011, as renovations are complete and leases expire at the city’s rented locations.

“I anticipate very little opting out of leases,” McDonnell said.

The sixth floor and part of the fifth floor — about 28 percent of the 118,000 square foot building — is currently leased, and Holmes said the city plans to continue renting out that space. The city expects to earn about $500,000 a year in rent from those spaces.

The remaining four floors can house about 340 employees, which would “meet our needs for more than the next decade,” he said.

Employees may park in the nearby parking lot and in the underground garage at VancouverCenter at Sixth and Washington streets, McDonnell said.

Also up in the air is what the city will do with unoccupied first floor space facing West Sixth Street, originally envisioned as commercial space. A police presence or retail shops are options, said the city manager.

“We’ve got some pieces now we’ve got to solidify,” he said.

In a report provided to the city council on Thursday, staff noted that using the capital money for a new City Hall does limit other potential uses, like a new fire station.

McDonnell, however, said that funds set aside already would only pay for a portion of a new fire station.

He also added that building a fire station would be “a one-time expense with no ongoing budget savings.”

In a budget document last month, McDonnell proposed a total of $3.3 million in operational cost reductions to help fill the projected $10 million deficit in Vancouver’s 2011 budget. A total of $1 million of those costs are through facility consolidation.

Right now, Vancouver leases five buildings at an annual cost of more than $1.7 million, with an additional $344,000 in operating costs at its rented Esther Short Building. It owns City Hall at 210 E. 13th St., but leases the land from the Vancouver school district, and spends $365,000 on operational costs there.

The city said it expects to save in maintenance and energy costs in the newer building. Campbell broke ground on the former Columbian building in March 2006 and it is certified as “gold” under the Leadership in Energy and Environmental Design rating system.

The city hired Eric Fuller & Associates of Vancouver to broker the deal, and McDonnell said he has also has been consulting with a volunteer panel of real estate and business leaders, who helped advise on the negotiations.