Shell Building Profit No Sure Thing

BLYTHEWOOD (Jan. 21, 2016) – As Town Council’s proposed shell building, to be built in the park across from Town Hall on speculation, moves forward, there is no guarantee that the Town will reap a profit or even break even when the 3,800-square-foot building is sold, Ed Parler, the Town’s Economic Development Consultant, told Council members during their monthly workshop Tuesday morning.

“Whether the Town gets back all the money it puts into the shell depends largely on whether we sell the land with the building or lease it over a period as long as 99 years,” Parler said, explaining that the land is currently valued at $130,700 on the Richland County Tax books.

“The cost of the shell will be $456,881, paid for by a grant from Fairfield Electric Company. When you add on the $100,000 – $200,000 it will cost the end user to finish the interior of the building and the $130,700 cost of the land, the sale price could total up to $800,000,” Parler said. “I don’t think it is reasonable to expect that someone will offer that.”

Including the land in the sale will make it difficult to get the full value of the land, Parker said. “There’s no guarantee we’ll get every dollar of that back. We just have to look at this as an economic incentive project.”

Parler told Council that leasing the land is a more favorable option than selling it for several reasons. A lease would lower the purchase price of the project, making the sale more attractive to an end user, and a long-term lease might allow the town to recoup some of its investment. Parler provided a spread sheet outlining various returns the Town could realize from a multiple-year lease. Lease payments of $330/month at 1 percent over 40 years, for instance, would total $158,400. He said a long-term lease could be done without clouding the financing of the building.

Parker said that while a deed restriction on the land would allow Council to limit the kinds of businesses that could operate on the property, a lease would allow the Town to further restrict the use of the property by future owners.

The grant, which was originally to be used by the Town to build a restaurant for Sam Kendall three years ago, must be used for specific economic development projects or the Town must return it plus interest and penalties to Fairfield Electric.

A new timeline for the project is to put it out for construction bids in early February, to award bids in late February or March, begin construction in March, advertise for the sale of the building in April and close on the property in June.

While Council did not vote Tuesday on whether to move forward with the project, it did not stop the shell’s progress, prompting Parler and Ralph Walden, architect of the shell building, to go before the Board of Architecture Review (BAR) on Tuesday evening to seek a Certificate of Occupancy (COO).

BAR members approved the building, but because Walden was not prepared to present lighting, landscape, signage and a site plan, the BAR granted a conditional COO until which time those items were brought to the board.