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4/5/2013 6:00:00 AM
Kingman sells downtown building at a $500K loss
The Development Services building.
The Development Services building.

Doug McMurdo
Miner Staff Reporter

KINGMAN - Werner Fleischmann submitted the lone bid to purchase the former Development Services building in downtown Kingman from the city.

The City Council on Tuesday voted 7-0 to accept the bid from Fleischmann Arizona Investment Corporation, which offered $350,000.

The figure met the City Council's minimum requirement and equals the building's current appraised value.

The city purchased the building early in 2009 for its then-appraised value of about $875,000 to house Development Services.

If only one bidder would get involved, the City Council is probably pleased it was Fleischmann, who is in the middle of restoring downtown's historic Brunswick Hotel and has roughly half a dozen other downtown properties he intends to restore.

"Werner's trying to improve the downtown area and attract businesses and tourists," said Steve Wagner of ReMax Prestige Properties. "He's from Switzerland and understands the European interest in the Old West is strong."

Wagner, Fleischmann's agent, said he is uncertain what his client plans to do with the former city building located on the corner of Beale and Fourth streets - except that he's actively searching for a tenant.

Fleishmann's priority, however, is the Brunswick Hotel. He's still looking for people to run the hotel, restaurant and bar, said Wagner, and the restoration is in full swing.

While the city likely will never recoup the roughly $500,000 it lost on the building, Wagner believes changing its use from a government function to some sort of retail operation could serve a couple of purposes.

"The idea is to take buildings used for office space in the area's only real destination, Kingman's downtown and put in retail that will produce sales tax revenue for the city and attract people to downtown at the same time," said Wagner.

Wagner said Fleischmann is thinking about building a handful of condominiums on the second floor of the 8,741 square-foot building that was built in 1941 and used to be home to a JC Penney outlet.

"Hopefully, his actions will inspire some of the other downtown property owners to fix up their properties," he said.

The city moved Development Services out of the building in 2011 after the effects of the housing market crash hit home.

The city initially leased the building starting in 2006 when construction was booming and the city's Development Services department was expanding.

In 2005, more than 930 building plans were submitted to the department. By 2011, the number of plans dwindled to 35 and staff was cut in half.

The City Council hoped to lease the building to a private party to recoup its investment, but the Legislature enacted a punitive $2.51-per-square-foot property lease excise tax on publicly owned buildings leased for retail purposes.

The tax alone amounted to $22,000 annually, making it cost prohibitive to prospective businesses.

In addition to the building, the property includes a small garage and a fenced picnic area. The parking lot, according to city staff, sits on a separate parcel, but traditionally has been used with the property.

The City Council was able to sell the property without voter approval because both the building and its appraisal fell under the $500,000 statutory threshold.

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Reader Comments

Posted: Thursday, April 11, 2013
Article comment by: John Gonzales

Also the first thing out of the Mayor mouth is we need more taxes and that that. That all he can come up with. Mr. Mayor take a drive down to gasoline ally on any day of the week, look at all the cars and trucks coming into town and stopping for gas and food. If you want more taxes look for a way to tax these poeple. The gas stations there doing a killing. Don't ask for more taxes when you sell building like this for a big lost. A $500,000.00 dollar lost!!!!!!!!!

Posted: Thursday, April 11, 2013
Article comment by: The Fox Hound

Hey some people think I'm crazy but at least my idea is free enterprise. The building would make a nice bar and poker club. Give people a reason to stay and play in Kingman. Just might create a job or two. Or does that just make to much sense.

Posted: Wednesday, April 10, 2013
Article comment by: Sucker Born Every Second - It Was The City of Kingman's Second

So the city paid Jim Baker almost $900,000 for a building that needed significant remodeling in order for the city to put 15-16 employee in.

Posted: Monday, April 8, 2013
Article comment by: just one voice

Kingman is a small town, and was even smaller "back in the day". Chances are good that a local big fish owned and sold that building, since the small fish didn't (and still don't) own properties that large. Chances are also good that everyone involved the deal knew each other. Smoky backroom politics or just business? In today's economic reality, who cares? It's spent money, and maybe a lesson learned. The bright side: we have a non-local big fish who is willing to look forward and invest in our town's future. We need more non-local big fish, and hopefully this will encourage other outside investors to take action where our local owners don't seem to be able to. Look at downtown Flagstaff as an example of what can be done.

Posted: Sunday, April 7, 2013
Article comment by: Thai Mai Shu

The City of Kingman purchased the old JC Penny building from a former city council member by the name of Jim Baker.

The old Arnold Plaza building is sitting empty and is owned by the COUNTY, not the city.

It is full of asbestos and therefore it must be abated before it can be demolished. It would cost more to raze the building than it is the experts say.

Posted: Sunday, April 7, 2013
Article comment by: Down Towner

If Mr. Fleischmann is open for suggestions, a grocery store/market would be an asset to the residents in the down town area. Something simple like maybe Trader Joe's. Something that goes along with the ambiance of downtown, something "retro-quaint".

Posted: Saturday, April 6, 2013
Article comment by: nuzzelfut fuzzelnut

Yea, some real educated scholars worked overtime putting this " smells more than just fishy deal" together. In the upstream of an economic crisis , RE falling at record rates, purchase the building from ???who knows, then make an extreme tax burden NOT rent to any business, so that it sits vacant long enough to "proove" it needs to recoup losses, then sell it to the ONLY bid , and happens to be a huge developer invester that has big ideas for Kingman. Give me a break.

Posted: Saturday, April 6, 2013
Article comment by: janice palmer

hmmmm.....sounds like some of the vegas sweetheart deals. you know back room ???

Posted: Saturday, April 6, 2013
Article comment by: Indeed We Need to Petition Council to Sell Golf Course

I'll certainly sign that initiative. Okay, who has it?

Posted: Friday, April 5, 2013
Article comment by: no problem

We'll just vote in some new tax, fee, charge, levy, or movement and in no time the stupid taxpayers will replace this half mill "downturn".

Posted: Friday, April 5, 2013
Article comment by: It's Time to Follow with Golf Course Sale

It is very curious why the city refuses to even do a preliminary assessment of the value of the golf course land. Why?

Posted: Friday, April 5, 2013
Article comment by: Sell Golf Course

The city is strapped for money - accepted. Now it decides to push for the sale of a building that should never have been bought - certainly not for the price. It then decides to sell it for a 1/2 mil lose - brilliant.

Why has it not looked at selling the asset that might bring a good return for its investment - the golf course. Yea, we the voters are more than willing to pay the cost to put it on the ballot. Before doing so however the city must assess the estimated value.

Posted: Friday, April 5, 2013
Article comment by: Kingman's Downtown is Unique with Possibilities - Worth Investment

Arnold Plaza is county. I suspect it will be an empty lot soon.

The city's General Plan calls for government buildings - state, local, federal to be "encouraged" to be in the downtown. Yet the city itself continues to add departments out of the downtown.

Mr Fleischmann has it right - there must be more housing added downtown. The city must find a way to stimulate housing there - get all those empty lots developed with housing. Kingman's downtown has potential yet with the county constantly fighting it - demolition of the Old Hospital and most probably the Arnold Building and then building the new building on Keno has done much harm. The city also needs to get the police department back downtown and look at building a new complex - yea, like that is going to happen with no money. Look at grants, look at private/public partnership, etc..

The problem is the mindset of this community - no government, no taxes, no investment, no forward thinking, nothing but staunch Republicanism that is not only bringing this community down but the entire nation. You must spend money to make money. We all, collectively must invest in our community through taxes. Oh gaud, I said the T word. The T word in a Republican enclave. Tank goodness we have Mr F.

Posted: Friday, April 5, 2013
Article comment by: Also Curious

Yea, who did the city buy the building from?

Posted: Friday, April 5, 2013
Article comment by: Same Old Thing

Article comment by: John Salem

If you want to sell the golf course you may start an initiative and a petition drive to sell it.

It is an asset worth more than a $500,000 so it must go to the voters for sale approval.

Why the difference here, Mr. Mayor?

Posted: Friday, April 5, 2013
Article comment by: Mr E.

isn't this the old J.T.P.A building?.. that is a historical site to me, its where I and many many other individuals gathered required job skills as juveniles before we were legally able to acquire jobs, this building was the foundation of my work ethics when I first moved to this town years ago.. such a shame its not in operation anymore, hopefully whoever purchased it will put it to the same use for the new generation

Posted: Friday, April 5, 2013
Article comment by: R .

"...but the Legislature enacted a punitive $2.51-per-square-foot property lease excise tax on publicly owned buildings leased for retail purposes."

And who exactly is "The Legislature?"

Posted: Friday, April 5, 2013
Article comment by: Jack A.Lope

UMMMMM lets see, let a 75k building just sit and rot, like Arnold Plaza. or sell it for at least something that will at the very least generate property tax.

Probably should have just let it rot and fall down to keep some of the posters happy.

in the mean time, lots of ideas can go into that building.

BTW CITY GOVT AND PLANNERS. PLEASE HIRE A FORTUNE TELLER WITH A GOOD BIG CHRYSTAL BALL so he/she can tell you everything that is going to happen at least 7.5 years down the road and any given moment. YOU MUST know exactly when to invest and when not to.
of course some will want you to project at least 25 years out in which case you will need 3 fortune tellers and an elf.

Posted: Friday, April 5, 2013
Article comment by: Oh Ya

It's no wonder why they want to have a tax hike! Maybe the sale of the golf course will recoup some of this small loss. Sell the thing already!

Posted: Friday, April 5, 2013
Article comment by: Jon Mullinix

Mr Fleischmann's Has an interest in Kingman, I hope that the people that live here appreciate His vision of old town restoration and the old west, I have lived in kingman for two years now, I see a lot of opportunities to make it very attractive to tourists and to create more jobs for the young people here instead of some of them not having work opportunity, and some of them turn to crime . Kingman has a good future and can become a attractive city.

Posted: Friday, April 5, 2013
Article comment by: Jon Mullinix

I think that Kingman is lucky to have Mr. Fleischmann's interest in restoring Kingman old downtown section. I saw what happened in San Diego's old town section being restored from a slum area to a very prosperous tourist area in the 1960's, and still is today, I think that if the city would look at making some one way streets to direct the tourist that visit the museum and Mr. D's nice place, through old town , down Beal st, It would be a boom for old town, I hope that the city officials will give it some thought..

Posted: Friday, April 5, 2013
Article comment by: Proud Kingmanite

You gotta love this guy! He's so intent on bringing an economic and aesthetic revival to our town, and that's refreshing (considering how many people just whine about it).

Thanks, Mr. Fleischmann! Best of blessings to you and I'm looking forward to seeing what you can do with our downtown area!

Posted: Friday, April 5, 2013
Article comment by: who did the buy from????

Who owned the property in 2009???????? Check ex city council person, just asking. Should be news worthy while the raise your sales tax.

Posted: Friday, April 5, 2013
Article comment by: Dave In Golden Valley

The Council was warned numerous times when they first contemplated buying the building it was overpriced, and the appraisal was grossly inflated. But the, then vice mayor said it just made sense. The previous owners made off like bandits.

Posted: Friday, April 5, 2013
Article comment by: vock canyon

Clearly there is fraud here.

Who was the building purchased from? Was it a city or county employee or some other inside friend? $875k in 2009? That is 2 years after the big RE price drop.

I think that this needs to be investigated by the State attorney general.

Can we recover the funds from the city council members that voted for this? I think it is time to hold folks responsible for their awlful decisions.

The people of kingman are clearly the losers here. Are our water bills going to go up again to pay for this outragous loss?

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