The city of Spokane has taken action to exit an agreement to purchase the three-building Premera Blue Cross corporate office campus in East Spokane, says City Council President Breean Beggs.
Beggs says, however, “The city is still interested in it, so it’s not completely off the table.”
Brian Coddington, director of communications and marketing for the city of Spokane, says purchasing the campus, “wasn’t financially feasible after we got to looking at the building.”
Beggs explains that the city exercised use of an exit clause in the purchase and sale agreement of the Premera campus after performing due diligence, which revealed that the property, “wouldn’t work for us under the terms of the agreement.”
The Premera campus initially was considered as an option for a new home for the city’s municipal court system—which includes judicial, court administration, prosecutor, public defender, and probation departments—due to safety concerns and a lack of space at their current locations in the Public Safety Building.
Beggs says the municipal court departments wouldn’t have occupied the entire Premera corporate campus, so additional departments were considered as potential candidates for the move, including the police department and those workers at City Hall that don’t have public-facing duties.
The Premera property is located at 3900 E. Sprague, in East Spokane, about two blocks west of the city’s shared boundary with Spokane Valley, which concerns some business leaders and stakeholders here who said they wanted to keep City Hall in downtown Spokane.
Premera plans to vacate the property and move to a new building to be constructed in Kendall Yards, northwest of downtown. As previously reported in the Journal, construction of the new building originally was expected to begin last fall, but those plans have been on hold and will be revisited sometime this year.
Last August, Amanda Lansford, strategic communications manager for Premera, told the Journal that many of the new building’s details, such as the square footage, construction costs, and development timeline of the project were undetermined. She explained that while the details are under review, the end goal of the project will be to support the company’s flexible workforce strategy.
Beggs contends there was a misperception earlier this year that City Hall would be abandoning downtown Spokane if some departments relocated to the Premera corporate campus.
However, a fee proposal by Integrus Architecture to conduct the Premera campus feasibility study in January states clearly that the study was to determine if the campus could be used as the new home for the courts and a new Spokane City Hall.
As news of a potential City Hall relocation was made public, many community leaders and stakeholders including Dave Black, CEO of Spokane-based commercial real estate brokerage NAI Black, and Emilie Cameron, president and CEO of Downtown Spokane Partnership, pushed back against such a move for lack of public involvement and for the potential consequences on future development and investment opportunities downtown.
Beggs says now, “That was not the goal. The goal was just to move departments that don’t need to be downtown. The city hasn’t always been in that building we’re in right now, and it’s only at about 50% usage currently, so we’re just kind of wasting space and taxpayer dollars.”
Premera’s Spokane campus occupies 5.8 acres of land. Three buildings provide about 103,000 square feet of Class A office space with 491 surface and structured parking stalls onsite for a sale price of $14 million, according to listing information from Spokane-based commercial real estate brokerage Kiemle Hagood.
A representative of Kiemle Hagood couldn’t immediately be reached for comment.
Beggs says the secured, covered parking structure on the corporate campus would help with safety concerns for police vehicles.
The municipal courts and the city police department are currently located in the Public Safety Building, at 1100 W. Mallon, north of downtown Spokane. Beggs says parking there is unsecured and, “(the police) don’t feel safe, and they don’t feel like their vehicles are safe.”
Coddington says a feasibility study to understand the affordability of the Premera campus was conducted by Integrus Architecture PS, of Spokane, and cost about $56,500. He says the study determined that the cost to purchase the property, plus renovation expenses, “was going to be out of the realm of affordability for the city.”
The percentage of usable space at City Hall will remain unclear until a new space utilization study is conducted, but Coddington says there are currently no plans to initiate a new study.
“It remains an open conversation. There are other conversations that are taking priority right now versus the utilization of City Hall,” says Coddington. “It’s not being pursued as actively as some of the other more pressing needs.”
Such needs include the funding and operation of the Trent Resource and Assistance Shelter and future police operations, he says.
“A lot of different things are in the air, and some of those range from immediate need to more of initial conversations about what future uses might need,” adds Coddington.
Beggs contends that further exploration of the potential uses of the Premera campus is needed.
“The other thing we’re exploring is maybe there are other tenants out there … that would rent a substantial amount of space,” he says. “If one building could get leased out on a long-term basis, then that would pay for the building.”
Selling city assets, such as the City Hall building, is another alternative to finding uses for it, Beggs adds.
Although not currently up for consideration, Coddington says selling the City Hall building would involve a formal process, including a declaration of surplus, before any city assets could be listed for sale.
Beggs adds that the City Hall building is worth $20 million to $24 million and likely could get renovated into high-end condos that could fund needed city services.
City Hall has an assessed value of $20.4 million, according to data from Spokane County Assessor’s Office.
The city also could attempt to negotiate a lower purchase price for the Premera corporate campus, says Beggs.
“Even though it was a very good price on the building overall for what you would get, you didn’t really have the use for it,” he says. “The only way it was going to work is if we could move other departments in from other buildings.”
Beggs explains that the estimate to build a new police headquarters is about $60 million, which is nearly 400% more expensive than the cost to purchase the Premera campus.
Coddington says the city’s estimated purchase price for the Premera campus was $12.25 million.
He says, “The city is always looking at opportunities and assets in the community that might be a fit for its future needs, but at this point, there’s no active interest or involvement with Premera.”
Beggs says he still considers the Premera campus a good deal for the city’s needs.
“There’re some possibilities, but nothing imminent,” he adds.
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