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VOL. 129 | NO. 151 | Tuesday, August 5, 2014

City Mulls Plan to Buy Former State Building

By Amos Maki

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It would be cheaper and more efficient for the city of Memphis to lease and then buy the vacant Donnelley J. Hill state office building across Main Street from Memphis City Hall than to continue leasing multiple properties spread across town, consultants and city officials told City Council members Tuesday.

The Donnelley J. Hill State Office Building, center, sits next to the county administration building at Civic Center Plaza Downtown.

(Daily News File/Lance Murphey)

Universal Commercial Real Estate and CB Richard Ellis Memphis – the consultants the city hired to conduct an independent analysis of the former state building – delved into the costs of the proposed 15-year, lease-to-own offer from the state and, importantly, whether the building was in any condition to be used.

A consultant previously hired by the state, Jones Lang LsSalle, at one point described the building as “functionally obsolete.”

Kevin Adams, CEO of CBRE Memphis, strongly denied the building was unfit for use.

“It’s a very well-maintained building by the state,” Adams said.

The proposed deal, which could come before the full council for a final vote Aug. 19, calls on the city to pay $2.2 million over the 15-year lease term – or about $192,000 a month – at which point the city would take ownership of the building. The city would also be responsible for operating costs, such as utilities. The deal would save the city around $8 million over the 15-year term, mostly from leases the city is paying now, the consultants said.

Memphis Light, Gas & Water division has agreed to rent hundreds of currently unused parking spaces to the state to help seal the deal. Previously, the state wanted the city buy the building by paying for parking spaces needed for state workers.

The building, which is still owned by the state, could act as a second hub of city government a stone's throw from City Hall, especially the Memphis Police Department, which is bursting at the seams in space leased from Shelby County at the Shelby County Corrections Center at 201 Poplar Ave.

“We have been in the building and we are working with (the city and consultants) and we are completely satisfied,” said Rowena Adams, deputy chief with the Memphis Police Department.

According to numbers provided to the city, Memphis pays around $1.4 million a year in rent to Shelby County government for the space it rents at 201 Poplar.

Housing and Community Development director Robert Lipscomb described a potential move to the state building as a cost-saving measure and one that could help improve the efficiency of city government by locating most government operations in a central district.

“It's a great deal for taxpayers,” said Lipscomb. “You're consolidating your decision making, you're consolidating your real estate and you're saving money.”

The Donnelley J. Hill building was home to hundreds of state employees, from a variety of agencies, who have been moved to rented space at the One Commerce Squarer skyscraper on Main Street, leaving the old state building a vacant shell in the heart of Civic Center Plaza.

PROPERTY SALES 36 154 6,546
MORTGAGES 34 94 4,129
BUILDING PERMITS 201 554 15,915
BANKRUPTCIES 43 126 3,396