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.

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."