What will Happen with Battin Building?

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Created on Wednesday, 23 May 2012 09:15

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What to do with the Battin Building?

It's a concern that local governmental entities should be concerned about even if they don't submit any proposals for its use, emphasized Steve Arveschoug, Director of Big Sky Economic Development (EDA), as he advised his board members to "pass", on making any proposals to acquire the building. His recommendation was unanimously accepted by the board members of EDA and the Economic Development Corporation at their meeting last week, with several commenting that they would like to see the property returned to the private sector and go back onto the tax rolls.

Arveschoug advised that the city, county and EDA meet with the Congressional delegation "to explore options for federal support of the remediation of the federally-owned Battin building. This needs to be considered whether the building goes for a public use or private –sector use," said Arveschoug.

County Commissioner Bill Kennedy, too, worries about what the outcome will be, now that it seems no public entity will acquire the building. He worries that the community will be left with another Pierce Packing-kind of situation.

The Pierce Packing property became a property of the county, at one point, for unpaid taxes, after previous owners abandoned it, when it was determined that the cost of cleanup exceeded its value. The problem was eventually resolved when a private developer acquired the property and invested in its clean up, but it sat for years as a looming useless concrete hulk in mid-town Billings.

Laden as it is with an expensive asbestos abatement issue, the cost of mitigating the Battin Building may well exceed the value of the property, leaving even a private sector development questionable. Should the property be put out for bid to the private sector, as the federal government plans; and should a private developer fail in financing the abatement of the property, it could be abandoned and become the problem of local government, as is the case with a number of properties in the county, which are plagued with contamination issues.

A week prior to the action of Big Sky Economic Development, Yellowstone County Commissioners also voted, two to one,  to "pass" on an invitation from the General Services Administration (GSA) to submit a letter of interest in the building, which will be vacated with the completion of a new federal courthouse and a new federal office building.

Kennedy, the dissenting vote, urged his fellow commissioners not to reject, out- of –hand, the offer without exploring all options, including a proposal to utilize the building as a complex for law enforcement and court services for both the City of Billings and Yellowstone County.

Commissioners Jim Reno and John Ostlund voiced concerns about the cost of abating asbestos, remodeling the building, and maintaining the building. The Battin Building is the current home of the Federal Courthouse and other federal offices, which will move, in about a year, to the new Federal Courthouse and another federal office building also under construction.

GSA sent letters, several weeks ago, to all local governmental entities informing them of the federal government's intent to divest themselves of the property, and asking for letters of interest by May 21. The letter explained that federal law requires that the property be offered first to public programs for homeless people, then to local governments, before being auctioned off to the private sector.

Commissioner Ostlund asked Director of Finance Scott Turner about costs of maintaining the building. Turner said that based upon annual maintenance costs of $700,000 for the courthouse, which is less than half the size of the federal building, he estimated that the annual maintenance costs of the federal building would be about $1.5 million. He went on to say that the multi-millions of dollars that it is expected to cost to mitigate the asbestos, does not include what could be another $10 million to remodel the building and to conform it to the needs of the courts and law enforcement. "Remodeling costs are typically higher than the cost of building new," he said.

There is also the problem of no parking space available to serve the building.

Kennedy's remarks dovetailed those of Billings Mayor Tom Hanel, who spoke to the commissioners before they voted, asking them to postpone making a decision until after the city council voted on the matter. Hanel said that council members indicated an interest in exploring options during discussion at a work session.

With both the county and BSED opting out, that leaves the city without any prospects for partnering with another agency. The city council is waiting for a recommendation from staff before deciding on the matter.

City council woman, Jani McCall, who also serves on the EDA board, said that the City Manager Tina Volek is going to ask the GSA for a year's extension on their deadline for letters of interest. The GSA asked for responses by May 21.

Kennedy and Hanel, both, thought there might be possible grants or other federal funding available to help mitigate the cost. If the fact finding efforts revealed the project is "far beyond our capability," said Hanel, there would still remain the option of bowing out. Kennedy urged meeting with the Congressional delegation to ask for federal assistance in dealing with the building and the asbestos problem.

Ostlund said that he didn't think that Yellowstone County needed to take on the project of cleaning up "220,000 square feet of contaminated waste that the federal government is moving out of." Or, to expect earmarks from a federal government that already has a sixteen trillion dollar deficit.

He went on to point out that while there has been talk of consolidating city and county law enforcement and courts, there is no plan.  Ostlund said that he would rather build a new building to serve the local needs that had a plan "from the get go," rather than "revolve around something the federal government wants to get rid of."

Commissioner Reno said that the federal government told the Billings Gazette they were going to get rid of the building, "as is" and "where  is." "We don't have the space need," he went on to say, pointing out that one-eighth of the county courthouse is still available for use.

"Even if the building was given to us in great condition," said Reno, "we couldn't afford it." As far as making available the extra space to the private sector through leases or condos, Reno said he is not interested in competing with the private sector.

Reno went on to ponder, how "the building is too contaminated for federal employees, but it is good enough for local government employees? Or, for the homeless?" " How callous," he said.

Arveschoug said that initially he envisioned forming some kind of public-private partnership that would include BSED, the city and county, and perhaps a private investor, to develop the building, but because of the uncertainty of how they would cover the cost of remediation and re-development, estimates for which have been placed as high as $30 million, he abandoned the idea.  "It's a very expensive undertaking," said Arveschoug.

He told his board members, "We are willing to provide some assistance as needed, utilizing our traditional economic development tools," should either the city or a private developer put forward a plan.

Arveschoug reported that should the building be put up for auction they have already had calls of interest from private sector developers.

An EDA board member pointed out that the building is ideal for a data center. "There isn't a better location."

EDA board member, Carl Siroky, Mechanical Manager of Phillps 66 Refinery, pointed out that asbestos is safe as long as it is left undisturbed. "You can manage it," he said, suggesting that that could be the "best solution" for a private sector develop.

Another board member, however, Debbie Singer, of Northwestern Energy, said that much of the asbestos in the building is in the utility systems and any effort to update them to improve their energy efficiency would necessitate dealing with much of the asbestos issue. The situation is similar to that of the Northern Hotel, she said.

It was further noted that if the building became private its property taxes would help fund the tax increment finance district in which it is located, and that the revenues in the tax increment district could be used to help finance its development.

Another BSED board member, Scott Chesarek, said most emphatically, "The city needs to stay out of it."

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