The county is set to spend about $2.9 million in a package real estate deal that includes the former Bank of America building in Nevada City and 13,000 square feet of office space located above Friar Tuck’s.
“This is a lease versus buy decision,” Deputy County Executive Officer Joe Christoffel said. “Instead of paying rent, we’ll pay a mortgage.”
Pending approval by the Nevada County Board of Supervisors, the county will spend $655,000 on the former Bank of America building at 201 Commercial St. and pay $1.4 million for the office space at the corner of Commercial and South Pine streets.
The county will spend about $750,000 on the Bank of America building in renovations aimed at making the space suitable to house the district attorney offices. Planned upgrades include the installation of an elevator, the enclosure of the mezzanine and various interior renovations.
The county plans to expend another $60,000 to provide the probation department offices with new carpet.
The four price tags with attorney fees and closing costs bring the total cost of the real estate transaction to about $2.9 million. The sum will be borrowed from a singular lending entity over a 20-year period with an interest rate of a little more than 4 percent, Christoffel said.
Currently, the county spends about $375,600 annually on renting commercial space for the probation department and district attorney personnel. By purchasing the buildings, the county will expend about $220,000 per year with the prospect of owning the buildings outright, Christoffel said.
The immediate savings amount to about $155,000, but county financial staff believe the savings will average about $200,000 over the 20-year debt service period. Past rental agreements between the county and Gary Tintle and his business partners contained yearly escalators that correspond to the consumer price index, which measures the cost of household goods.
When asked why the county chose to borrow funds instead of use cash and save about $117,000 on interest, Christoffel said the reserve cash balance is not adequate enough for a nearly $3 million expenditure.
“Cash is king, and the board wants that in reserve for other specific things,” he said.
The board is tentatively slated to approve the transaction in April, with the district attorney employees set to occupy the former Bank of America building in January 2014.
Leverage ends in ‘win-win’
The county paid about $650,000 for the old Bank of America building despite the property being appraised at $900,000, according to Tintle, who along with his partner, Ken Baker, owns the parcel.
Tintle also owns the 13,000 square feet of office space that houses the probation department. The county used the potential of vacating the office space as leverage in driving the price of the Bank of America property down, Tintle said.
The county laid out other options during the deal, including buying office space in Whispering Pines near the offices of Public Health and Behavioral Health.
“They were trying to scare us,” Tintle said. “We were put in a tough spot.”
Ultimately, Tintle acceded to the county’s wishes, saying the package deal was a win for everybody.
Tintle said it’s important to keep downtown vital, and having the county housed in downtown Nevada City was important in the town’s effort in urging the state to renovate the courthouse.
Nevada City officials also gave their blessing on the county purchase, passing a resolution that supported the retention of court services in Nevada City in early January. Bank of America vacated the building in March 2012 amid the city’s struggles to retain the Nevada County Courthouse in Nevada City’s downtown historic district.
“If (the county) moved away, we would lose the reasoning for having the courthouse in Nevada City,” said Nevada City Manager David Brennan when the real estate deal was announced. “It just weakens our position as a city to retain the courthouse.”
In 2008, the county opted for a five-year lease at the district attorney’s current office, which is set to expire in the early summer of this year.
To contact Staff Writer Matthew Renda, email email@example.com or call 530-477-4239.