Wichita making last-ditch effort to sell state building

The Wichita Public Building Commission has voted to put the Finney State Office Building up for sale in a sealed-bid auction, in what will likely be the final attempt to unload the downtown building before tearing it down.

The vacant building at 130 S. Market and 230 E. William will go on the market next week.

Prospective purchasers will have 30 days to submit their bids and another 30 days to close the sale. Bidders will have to put up 10 percent of their bid immediately as “earnest money.”

If the building is sold by sealed bid, the city won’t be able to tell the new owner what to use it for.

The bidding process is the latest attempt by the city to sell the Finney Building since Gov. Sam Brownback’s administration decided to move the state offices situated there to private-sector rental spaces about three years ago.

In March 2016, the city put out a request for qualifications seeking proposals for someone to come in and develop the building as an educational center.

Developer Glenn Ferguson, the only one who responded, proposed to redevelop it to house classrooms and offices for college satellite campuses, along with restaurant and retail space and student-housing apartments.

Ferguson planned to invest at least $25 million in the renovation and asked for about $3 million in city support, including $1 million from the Public Building Commission and $2 million from the City Council. The council’s contribution would have been paid back over 10 years from increased property tax proceeds.

The City Council rejected that plan. The vote came after some council members had held private talks with another developer who wanted the building, while the city staff was officially negotiating with Ferguson.

The second prospective developer has not been publicly identified.

Building’s value

Council member Janet Miller has expressed concern that the outside meetings between council members and the second developer tainted the process.

“I’ve really gotten very uncomfortable with the way this process has played out,” she said in the April 11 meeting. She said it made it difficult to fairly consider Ferguson’s plan “when there’s another one being considered, at least by some folks.”

She was on the losing end of the 4-3 vote to reject Ferguson’s plan.

The Public Building Commission manages the Finney Building and can sell or demolish it without council consent. However, the commission was created by the City Council and could be dissolved by it.

On Wednesday, commissioners decided not to set a minimum bid for the building. They did, however, reserve the right to reject all the bids if they aren’t high enough.

The building’s tax appraisal value is about $2.8 million, but it’s expected to sell for less because it will need substantial renovation to meet current standards for commercial, office and/or residential space.

Ferguson offered $100,000 for the building, but that’s not indicative of its market value because it was part of the bigger package deal of city subsidies.

Decision time

Commissioners said they are approaching the day when they will have to sell the building or give up and demolish it.

The estimated cost of tearing down the building is about $1.2 million. The Building Commission has about $1.27 million in the bank right now, said Nicole Babcock, city controller.

It has been costing the commission about $15,000 a month in utilities, insurance, security and other expenses just to keep the empty building from deteriorating while its fate is decided. Commissioners expressed concern they won’t have enough left to demolish the building if the process of trying to sell it drags on much longer.

Assistant City Manager Scot Rigby said the cost of mothballing the building is dropping because officials have now turned off the air-conditioning system. In addition, he said, the commission could recover about $19,000 in tax refunds and $60,000 in insurance refunds if it sells or demolishes the building in the next two months.

Prospective buyers will be offered the opportunity to participate in a group walk-through to evaluate the condition of the building, he said.

Constructed in 1927 as a department store, the building housed Innes, Macy’s and Dillard’s stores over the next 60 years. But the traditional downtown stores couldn’t compete with malls on the city’s fringes, and Dillard’s finally left downtown in 1988.

Determined to fill the empty building, the city and Sedgwick County jointly acquired it and convinced the Legislature and then-Gov. Joan Finney to lease low-price space for a variety of state departments with Wichita operations.

At its peak, it held about 700 state workers.

This story was originally published April 27, 2017 at 6:58 AM with the headline "Wichita making last-ditch effort to sell state building."