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2/7/2013 6:00:00 AM
Kingman could lose $500K on downtown building
The Kingman City Council will attempt to sell this building, formerly the home of the Development Services department, for at least $350,000 – less than half of what it was purchased for in 2009.
The Kingman City Council will attempt to sell this building, formerly the home of the Development Services department, for at least $350,000 – less than half of what it was purchased for in 2009.
Doug McMurdo
dmcmurdo@kdminer.com

The City Council on Tuesday agreed to sell an aging downtown building for $500,000 less than what the city paid for it about four years ago.

Blame it on the Great Recession.

The city bought the property in an $875,000 cash deal early in 2009 and used it to house the Development Services department.

On Tuesday the Council voted 7-0 to sell the building for at least a minimum bid of $350,000 - the current value of the building based on a formal appraisal.

"We're going to advertise for bids next week," said Development Services Director Gary Jeppson on Wednesday. Jeppson said the bids will be brought to the City Council by mid-March. The hope is that a retail business buys the property.

Located at the corner of Beale and Fourth streets and built in 1941, the building was leased in 2006 to accommodate a busy and expanding Development Services department.

At the time, said Jeppson, 20 planners and building inspectors worked for the department. In 2005, when the building boom was at full bore in Kingman, more than 950 plans were submitted for single-family homes.

By 2011, the year the department moved out of the building, construction throughout the U.S. came to an abrupt halt. In Kingman, building plans had dwindled to 35 and staff was cut in half.

The city initially wanted to lease the building in an effort to save its investment. The Legislature effectively thwarted that goal when lawmakers enacted a property lease excise tax of $2.51 per square foot. The tax applies to any public building sold for retail purposes.

That translates to an annual tax of about $22,000 for the 8,741 square foot property.

"The tax was prohibitive," said Jeppson. "This is all about the drop in property value."

The building remained vacant from July 2011 to last fall. The Kingman Unified School District uses it to house its online learning program. District officials were aware the city had plans to possibly sell the building.

Last month, school district Superintendent Roger Jacks told the Kingman Daily Miner the district would find another home for the program.

"We're flexible enough to choose another location if that's what we have to do," he said at the time.

While Council members appeared to be stunned by the dramatic drop in the building's value, they also seemed to think there was no better option.

"Number one, we're incurring the cost of an empty building," said Councilman Richard Anderson.

He also said the building could be a revenue producer for the city and for whoever buys the property.

He also noted that downtown merchants have advised the Council the building is in a "prime" commercial location.

JC Penney was a tenant for years.

Councilwoman Erin Cochran said it is unlikely the property would ever regain its former value.

"The bad thing is, we can't lease it," said Mayor John Salem.

Councilwoman Janet Watson, perhaps best summed up the situation: "It's not worth nearly what it was," she said, "but we can all say that."

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Reader Comments

Posted: Wednesday, February 13, 2013
Article comment by: V Stokes

Here's an idea....

Sell the building (instead of just letting it sit there and fall apart) and use the money for the quiet zone that many seem to want? If it's not enough to cover the total cost...then the rest should be made up from donations and contributions from individuals and local businesses. Perhaps the quiet zone will indeed do what many say...help rejuvenate business and investment in downtown. I know Flagstaff has all sorts of active businesses and the tracks run just 50 ft away.

Any money from the sale is "found" money anyway. It hasn't been put in the budget.

I get credit for the idea if anyone on council picks it up and runs with it.


Posted: Monday, February 11, 2013
Article comment by: Sign Me Up

Can't see a "sit in" having much effect. However is there a recall petition against those council members who are still on the council?

Posted: Monday, February 11, 2013
Article comment by: Ahh Business

Now watch that ex-councilman buy it back (making 1//2 mil), holding it for a couple year, then selling it back to the city for $1m.

Posted: Monday, February 11, 2013
Article comment by: we the people

Who is up for a "sit in" downtown and insist "No, you aren't giving away our building" (this time)???? Lets ruin the money trail FOR ONCE!!!!!!!!!!!

Posted: Monday, February 11, 2013
Article comment by: c thru em

HA HA HA "attempt to sell it",,,,,,,they mean the council will attempt to give it away! What are some things they could help a business with? Is a tire store out of the question? BS BS, they will just keep renting buildings from the GOBs. Pretty good little (or big) hustle they have going on. These buildings look alot like some in Flagstaff. They would NEVER allow these shananagins up there!!!!! But then look at the success they have had.

Posted: Monday, February 11, 2013
Article comment by: The Fox Hound

This is a classic example of mis -management and poor reporting. No where in this story is the name of the person who sold this building to the city or the names of the elected officals who made the decision to buy this building at the top of the market. At that time real estate had been booming for over 7 years. Yet our elected officals thought it would be a good idea to pay cash for what they now discribe as and aging building. Another question comes to mind why the need to sell the building at this time when the market is at the bottom. We paid cash there is no debt to pay. Even if it sits empty it would be better to do that than to take a lose we don't need to take. Im sure it won't be long before someone in the city govt needs the space. Of course we wouldn't have to build a brand new building which would reward local contractors. Poor reporting and poor mangement we need to do better.

Posted: Monday, February 11, 2013
Article comment by: anonymous anonymous

Ironic a county with fiscal geniuses, republicans losing the publics money? Guess this loss and the inability to pay fire fighters, keep schools funded proves the GOP fiscal expertise is a myth!

Posted: Monday, February 11, 2013
Article comment by: Thai Mai Shu

It would be a simple task to "follow the money" as all one has to do is look for ex city council member Jim Baker.

Lucky for him to find a buyer for such a white elephant wasn't it.


Posted: Monday, February 11, 2013
Article comment by: Truth Seeker

The VERY curious issue of this purchase is the timing. The market for development and new home building was well into its downturn.

Spending that kind of money begs the question, WHO was the seller?? Someone benefitted handsomely from the purchase?


Posted: Sunday, February 10, 2013
Article comment by: owner no secret

I believe if you check the records you will find the building was purchased from a ex councilman. Ms Watson stated that it was better to buy the building instead of continuing the rent and she is probably right.

Posted: Sunday, February 10, 2013
Article comment by: Check your archives

The city bought this building from a previous sitting council member. THAT'S why the city paid such a high price for it to begin with. As other posters are saying, follow the money.

Posted: Sunday, February 10, 2013
Article comment by: Let's Go, Miner

There are some great questions that Why Was the Building ... asks. Is the Miner going to do some real journalism and get the answers its readers deserves?

Posted: Saturday, February 9, 2013
Article comment by: vock canyon

so, why not have the library extention that is housed on Gordon St at the cost of some $2000. per month move in there? the floor is concrete and will meet the needs of the weight requirements for the books. Not only will it save $2k per month, it will allow the city to keep the building. Yeah, I know, city vs. county, but something should be able to be worked out.

Clearly the city over paid for the property, I wonder who owned the building before the city bought it? Or should I say which employee(-:


Posted: Saturday, February 9, 2013
Article comment by: the first time and not the last time

hey all stop your crying as you vote the good old boys and girls back in what comes around goes around !

Posted: Friday, February 8, 2013
Article comment by: Our Own Fault

@ jack a lope

The problem is that they haven't done proper assessments or appraisals in about 10 years also and that's our own fault for letting them continue to do them from the air. I just paid to have one done and the appraisal I had done came in at $40,000 higher than the one the county did, figure that out.


Posted: Thursday, February 7, 2013
Article comment by: R .

Construction came to an abrupt halt well before 2011, let's try more like 2008-2009 which is when the city bought this building. Why on Earth would they have purchased this building in 2009 when property values everywhere were plummeting lower and lower every day? Somebody should have to pay for this loss out of their salary!
And let me tell you something else, the city may have agreed to take a $500k loss but that doesn't mean that it's going to bring $375k offers...they'll be lucky if they don't lose $650k on the deal. But hey, it's only the taxpayers money, right?


Posted: Thursday, February 7, 2013
Article comment by: Edward Tomchin

Boy, this deal stinks all the way to high heaven. If there is a decent investigative reporter in the house, you might want to start following the money trail and dig out the well-situated crooks winding up with the loot.

The real estate market is picking up. Hold on to the building rather than taking a near 50% loss on it with those profits going into the above people's pockets would be far more rational (if anyone gave a damn about saving local taxpayer's money.) Follow the money. Follow the money.


Posted: Thursday, February 7, 2013
Article comment by: Retrieve Shovel and Start Digging

Great article McMurdo. This is what happens when prior run-away inept city leadership gets coupled with a developer brass-ring grabbing frenzy.

Financial collapse, bursting bubble -- just a couple of the now accepted metaphors describing own own local lemming cliff projects. Now that would make a great subdivision name, wouldn't it?

No one ever asked where the jobs were that are required to put folks in homes on a reasonable basis -- forget that minor detail.

Love the downsizing math the city uses for trimming development services. 20 heads for 950 building plans back then, equals 10 heads for 35 building plans now. Can you spell thumb-twiddling at $20 bucks an hour?

While you're peeking under the covers down at city hall there Doug, take a gander at the $1 million a month in inter-fund transfers that are an absolute must-have in order to keep this city functioning. Really good stuff.

Never mind the obscene acts being heaped on rate and taxpayers, that's just old and replayed news -- pretty much accepted as just the way it is in these here parts.

Likely that they will come up with a new and creative taxpayer surprise to cover their losses -- did I just hear a call for a city revenue work session? Sure would like to see truth in labeling applied there.


Posted: Thursday, February 7, 2013
Article comment by: Bob Bob

This is typical of how things are done in Kingman. All you have to do is follow the money, who made out on this 875K scam ?

Posted: Thursday, February 7, 2013
Article comment by: jack a lope

did any body whining actually read the article.
if you have lived here, ten years or more, and own a house, take a look at your assessed value over the past ten years. what was your houses evaluation 5 years ago, what is it worth now, according to the statements we all just received.
go out today and try and sell any property for what is sold for 5 or 8 years ago


Posted: Thursday, February 7, 2013
Article comment by: Reggie In Valle Vista

Baloney. When the City leased the building they thought the payments were too high. So rather than renegotiating the lease, as Vice Mayor Robin Gordon said, it just makes sense to buy it. People told,the Council it was not worth the buyers price at the time, they did not listen and way overpaid, even at the inflated values at the time. The City put over $100,000 worth pf improvements in also, knowing the building was not in good shape. The Council was told
they would never get its value out, but they ignored the advice. Thus were we are now..


Posted: Thursday, February 7, 2013
Article comment by: Why Was That Building Bought for $875,000

What council members were there that agreed to $875,000. Please leave now. Who was responsible for assessing the value of that building at $875,000? If they are on city payroll, fire them. If a private company appraised it at $875k, add them to a "never-do-business list". This nonsense must stop. I'd also like to know which well-connect individual made almost a million from the sale of that building to a stupid city.

Posted: Thursday, February 7, 2013
Article comment by: Join The Crowd

Join the Crowd! Maybe they shouldn't of done a drive-by appraisal like they do the rest of the properties in town. A few more "good deals" like that out to put Kingman on the map, "a Ghost town map"!

Posted: Thursday, February 7, 2013
Article comment by: Just A Tax payer

Here we go again the clowns in charge don't ever seem to have any problem blowing OUR MONEY !! If I ran my budget the way these clowns run the city,county,nation I would be living in a box under a bridge some place. They NEVER seem to learn anything other than now we must raise the tax rate to make up for our POOR SPENDING HABITS. As all goverment "workers" bet they are NEVER late to work on pay day.



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