City purchase of old buildings is not sensible public business

Normally the editorial page is not where we see advertising. However, I think it’s important citizens know the city of Grand Junction is buying distressed properties willy-nilly and readers with decrepit buildings, haunted houses or unexploded World War II munitions on their property should hustle down to City Hall and see what kind of deal they can cut.

Don’t know how much the property is worth? Doesn’t seem to be a problem. I’d like to say this is a once-in-a-lifetime opportunity but I’m guessing it’ll come along again, unless something happens at the next election.

Burned down property? Don’t despair. It apparently is a hot commodity.

You may recall that last week City Council members decided they wanted to acquire the burned-out White Hall building located at Sixth and Rood.

The place has stood for several months since a mysterious fire and despite vague threats from government officials about forcing the building to be condemned and torn down if owners didn’t take some action. However, nothing happened. At least not that we know of.

At the May 16 City Council meeting, it was announced that council was open to trading the work needed to reclaim the property for the deed. Interestingly, I noticed the story failed to mention what most of us think are bedrock business principles: What will it cost and what is it worth?

I am told that the property did not carry fire insurance, which means that unless deep pockets are available in ownership, prying money out could present a predicament.

I also note the property is held by a limited liability company and not individually, which can create another layer of difficulty to access whatever assets might be held by the company’s principals.

During public discussions of the acquisition Councilman Tom Kenyon said that “some conversations are difficult to have as some parts are confidential.”

I understand. Often, I wish purchases I make at the electronics store were confidential from my wife, but it doesn’t work for me.

Later, the city attorney indicated that there has been an agreement structured that would authorize exchange of the property for the remediation and payment of back taxes. Nowhere did I see mention of any appraisal of the property as is or after remediation, nor did I see an indication of the cleanup cost.

Cleanup can be an expensive matter in the case of an old building, some of which, in this case, has been in place since the 1920s. For example, very possibly the debris contains asbestos, which requires a complex and expensive method of extraction during demolition. This can involve a hazardous materials environment for the workers, a government-specified packaging requirement and fees associated with depositing the hazardous waste in a landfill.

My misgiving is that this cost could exceed the market value of the property. Moreover, the city seems to be planning on transferring the title to this property directly to the Downtown Development Authority, a quasi-independent government organization.

The director of that group has already indicated he thought the remaining portion of the structure might be “preserved.” That may prove interesting, since during this process I assume they will have to apply for a new building permit, which could require a great deal of updating of the property to existing building codes. If the structure contains asbestos, it could present an interesting conundrum.

The transaction purports to be based on the speculation that the asset would be fairly marketable, a supposition that seems belied by the sales history of the property prior to the fire.

But no matter, the spending continued. At the same meeting, the council authorized a $1 million loan to the Downtown Development Authority to purchase yet another old church property at Fourth and Grand Avenue. This was done as a bridge loan until the DDA can issue bonds because this is evidently quite the desirable property, having only been on the market for several years with no takers.

The plan is purportedly to utilize a mixed-use type development — perhaps llama breeding, laser tag and glassblowing. Mixed-use development has worked so well in ... wait, it’ll come to me.

Much of this seems silly, spendthrift and perhaps inscrutable, but it is clearly not open or perhaps even sensible government.

Rick Wagner writes more about politics at his blog, The War on Wrong.


COMMENTS

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I don’t know the details of the transaction, apparently Rick Wagner doesn’t know them either. Having said that, there is a cost to leaving a burned out building in the middle of downtown. It drives down surrounding real estate values, which have already been diminished by the economic downturn. Those lower values translate into lower property taxes. There are also “opportunity” costs associated with having a city that is blighted. I’d like to know the whole story before I pass judgment. Maybe you can do a follow up story that shows us who paid who for what, and what financing was used to make the transaction work. I do know from my work in economic and community development that CDBG grant money (money from the federal taxes that all citizens of the city pay)is frequently used to cure blight. If we can enhance our downtown by returning some of the money we all pay in federal taxes, the deal starts to make a lot more sense.

I wish the City had as much interest in the empty commercial properties that drive down property values and invite vandalism in the rest of Grand Junction as it does in downtown…

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