By Evelyn Pyburn
The prolonged search by Commissioners for a solution to meet Yellowstone County’s space needs for future growth will be resolved with the purchase of the Miller Building in downtown Billings. County Commissioners voted two to one, to proceed with purchasing the building following months of due diligence and an appraisal that came in less than expected.
The decision ends considerations of both city and county officials of jointly developing the Stillwater Building into some kind of arrangement for a centralized local governmental facility.
Commissioner Denis Pitman voted against the purchase saying he wanted to continue exploring the possibility of the county remaining in the Stillwater Building and finding a way the county could partner with the city.
The prospects of pursuing a joint tenancy in the Stillwater Building seemed to strengthen with the news from City Administrator Chris Kukulski that the city had a “handshake” agreement on a price for the Stillwater Building of $17 million with owner Joe Holden of WC Commercial. The County currently has a lease agreement for offices on the third floor of the Stillwater Building, which has four years remaining.
County Commissioner John Ostlund pointed out that the $17 million agreement on the Stillwater Building could not be accepted by the county since state law prohibits the county from making a purchase in excess of appraised value, and the appraisal on the Stillwater building was $13.5 million.
Ostlund urged action on the Miller Building because their Memorandum of Understanding for first right of refusal on the property ends July 1, 2021.
On March 2, 2021, the commissioners offered a non-refundable $33,750 to owner, Miller Trois, LLC (Norman Miller) to take the property off the market until July 1, in a vote that Pitman also opposed. Last fall, the Board approved on the consent agent a contract with Cushing Terrell to analyze the suitability of the property for the County’s future needs. The property inspection found that the property would be sufficient to meet the county’s needs.
An appraisal ordered by the county placed a value of $4,375,000 on the Miller Building on May 21, 2021 – – $125,000 less than the county’s offer in the MOU to pay $4.5 million or the appraised value, which ever was less. Ostlund voiced concern about losing the opportunity to purchase the Miller Building which he believes would greatly diminish their options going forward. He said that the building is in very good condition, with new elevators, parking and more than sufficient space to house all county departments, excluding the courts, which would remain in the Courthouse. The inspections and assessments of the building unveiled no issues that would result in uncertainties or contingencies in the proposed purchase.
Pitman urged that the county work with the city and do what is best for the community. “We have other options,” he said, citing the possibility of building next to the jail or near MetraPark or other spaces in the community not necessarily downtown. He said “we could continue to rent or condo or purchase other property. “We need to have an open discussion on what a partnership would look like.” He noted that there are other costs associated with acquiring the Miller Building, such as hiring more maintenance staff. And, with the county purchasing the Miller Building and if the City purchases the Stillwater building that would be taking two buildings off the tax rolls rather than just one, Pitman pointed out.
Commissioner Don Jones said that the county has spent considerable time – since 2018 when they launched their search for more space – exploring all kinds of options, and this is the point to which it has led. Jones also said that he preferred the Miller Building as opposed to the much larger space available with the Stillwater option, since government has a tendency to grow to fill the space it has and he is opposed to unnecessary growth in government. He likened it to “build it and they will come.. but, we will grow.”
He also pointed out that with either option it will be awhile before the county would be needing the space and with the Stillwater that would mean holding an empty shell of a structure while the Miller Building is occupied with renters who would continue paying rent to the county and in essence helping to defray the cost of acquiring the building.
The County’s Finance Director, Kevan Bryan reported that the County has the capability to completely remodel the building for its use as existing leases term out in the Miller Building. He said that the expansion can be accomplished with no tax increase or need for debt on the County’s part.
Bryan said he would advise the commissioners to look at the numbers over the issue of cooperating with the City. He said, “…we respectfully disagree that the decision here boils down to whether we want to share a physical facility with the City of Billings, or that this shows taxpayers that we in local government can work together. Who can oppose us working together?” Both the city and the county seek the same things, he explained, “efficiencies of operations, common purpose and the wise spending of tax dollars. While the thought of a combined administrative facility on the surface has promise, it’s not necessarily a guarantee of any advantage to either governmental entity, or the taxpayers themselves.”
Bryan reminded that the county’s needs are for long-term space for the inevitable growth of the district and justice courts and the departments that work with the courts. The goal is to keep those services located in one building while moving most other county functions other than the Sheriff’s department to a “Yellowstone County Administration Building.”
The Miller Building presents a “very, very long-term solution for the County,” said Bryan. He said the county tried to work out the possibility of purchasing two floors of the Stillwater building, but its owner sought a selling price “well above market value,” which the county “would not and could not entertain.”
In discussions between city officials and county officials, Kukulski urged the county to postpone their decision and to explore the Stillwater option further. Without the county’s interest in partnering in some manner with the city the potential of the Stillwater deal isn’t as promising, pointed out Kukulski and Mayor Bill Cole, both of whom noted that the final decision is up to the City Council. Kukulski said that the matter would be on the City Council agenda on July 12.
In response to a comment that the city ownership would somehow impact the county’s lease, Kukulski said that the city wanted the county to remain. He said that he was sure the city and county could come to some acceptable arrangement in either leasing or condo-ing the floors of the five story building. He did note that the city has its own due- diligence to do on the Stillwater Building in making sure they understand what would be needed to remodel it for city offices, including using the basement for the City Police.
Ostlund said that the county had been attempting to negotiate with Holden for what has come to be years without success and he didn’t want to delay the matter any longer. He further questioned how it would be beneficial to the city to pay more for space than what they would later lease or sell it to the county.
The Miller Building is a six-story, plus basement building, located on 3rd Avenue between 28th and 29th Streets, downtown. It was the former Security Trust & Savings Bank Building.
The Stillwater Building, located at 316 N. 26th, in downtown Billings, is the former James F. Battin Federal Building, which stood vacant for several years until it was purchased for $3.2 million in 2017 by Holden, who has removed asbestos and prepared it to remodel on a build-to-suit basis for future tenants, the first of which was the county two years ago. Holden also built an adjacent parking garage.