City Hall sneak peek

preview of this week’s lead story, on the City Hall buy/sell deal:

City Hall Buy/Sell:

Good wash, or bad “bath”?

By Tom Scanlon

Editor, North Coast News

It was going to be a great “flip.”

The plan was for Ocean Shores to sell its old City Hall for about what the new one would cost.

“It’s going to be a wash,” then-Mayor Mike Patrick put it.

Turns out to be a $308,000 bath.

That $308,000 is the total deficit of the transaction, when you factor in moving costs, rent paid on the new building of $4,000 per month, modifications on the new building . . . and the old city hall building selling for $115,000 less than hoped.

The $308,000 deficit was paid off, partially through real estate excise tax money, partially as part of a $5 million bond  established primarily to build the new Fire Department station.

Though this may sound like another mini-disaster, for a city that suddenly found itself facing a gigantic debt, some feel this might be a pretty good deal, in the long run.

They argue that the old City Hall was an “eyesore,” and had to be replaced, sooner than later. Fixing it up, this argument goes, would have just been pouring good money into a bad building. 

If so, the moving costs were a necessary evil. Ditto, some would say, for the rent money; anyone who has bought a house while selling an existing residence knows it is very rare that the two happen simultaneously. That was what was hoped would happen with the City Hall transactions, but potential buyers for the old building fell through. 

And the fact that the old City Hall had to be discounted by about 20 percent to sell it?

Not great, but it was sold in six months; not a bad length of time, for that price tag on a less-than-perfect project. 

And, while some fault Patrick, then-City Manager Rich McEachin and City Council for charging ahead with the idea, imagine if the city would 

have waited until this year to try to sell its old home.

In 2008’s gloom-and-doom market? Good luck.

The coming year is not looking so hot, either, so perhaps getting the buy-sell deal done in 2007 was a wise way to go . . .

The new City Hall is surrounded by undeveloped lots, several of them for sale. It the neighborhood is developed, it will certainly boost the assessment of City Hall.

Patrick stands by the deal, even if it didn’t shake out precisely as planned.

“We got a nice city hall for a little less than $300,000,” he said last week “That’s a good deal. We needed a better working environment for our employees, and we got that. 

“I’m very happy with the deal.”

Lillian Broadbent isn’t.

The local activist rips the move as “Mr. McEachin’s fairy tale plan. He had buyers and sellers for everything, no fees, no charges.

“From the beginning the New City Hall was a fiasco,” she continues, in an email. “First we paid for appraisals (old and new…although new had been on the market for some time with no interest). It was declared that we had a buyer for the old city hall (good job, no real estate fees) and proceeded with a purchase agreement for the new city hall at full appraised value. The seller was Mr. McEachin’s former employer, National Recreation Properties Inc., who he worked for while employed by the city of Ocean Shores as police chief (see letters in McEachin’s file).

“We then purchased the new city hall at full value, paid for the renovations required, new phone systems, etc., purchased the used furniture and had moved in . . . the buyer for old city hall ‘backed out.’ Now we have two (City Halls) and have already moved. There is no money to complete the transaction with NRPI, but since we are all friends we arrange to ‘lease’ the new city hall at approximately $48,000 per year. What a bargain!”

After the sale of the old building and lot at a discounted price, she continues, “The lease payments, renovations, moving costs, etc. have already been paid for out of city funds, but we still don’t have enough to cover the purchase price, so while we are issuing fire station bonds we tack ‘a little’ on to cover the shortfall. . .

“I was in total agreement that purchasing a fairly new building in Ocean Shores was a better investment than paying prevailing wage to construct a ‘new’ city hall. Unfortunately the shoe didn’t fit.

“Will this turn out to be a good investment in the long run? 

Unlikely.”

Larry Phoenix, another local activist, was in deep disagreement with Broadbent on the Weatherwax issue. On the City Hall transaction, he is somewhere between the Broadbent fury and Patrick’s insistence that it was a good deal.

 Phoenix feels the move was justified: “The old city hall building was poorly located, an eye-sore, in a state of bad repair, and an unhealthy and unsafe place for city employees to work.”

Though he notes you can’t predict how the real estate market will fluctuate, he still thinks the deal could have been handled better: “ I think the city could have gotten a better purchase price on the new building. . .   I would have preferred that the city hall been re-located to the city corp yard so that all city facilities are centrally located (better access to government).  

“I think they could have built a new building there at a lesser cost then what they paid for the new one . . .

“As for the cost of this transaction, well it is what it is.  I still think our government acted in the best interest of Ocean Shores.   

  “It was an expensive but necessary move. In hindsight, they could have made a better decision.”

Meanwhile, the City faces a few more potential “flips.” As the aforementioned fire station is being built, the process of selling the old one has begun.

Mayor Dean Bunkers said he is waiting for an appraisal of the current fire station. “Once I get an appraisal, you’ll see a ‘for sale’ sign on it.”

No one has promised anything close to a “wash” on this one. The new fire station will cost nearly $5 million; the old one is expected to sell in the low six figures.

And then there’s the Permit Center, which most agree is in sorry shape. Some thought it should have been packaged with the new City Hall, but that didn’t wash out.

McEachin did not respond to an interview request for this story.