The Stillwater Negotiation Committee recommends approval of the purchase and sale agreement for the Stillwater Building for $13,500,000.

In August 2019, the City of Billings issued a Request for Proposals (RFP) for law and justice/city hall facilities to accommodate the City's current and future facility needs.  Several proposals were received and the RFP committee selected to investigate the Stillwater Building located at 316 N 26th Street based on the suitability of the building to meet the City's needs for the foreseeable future (50+ years). Once the Stillwater Building was selected, the city administrator created a negotiation committee that included council members, Boyett, Purintgon, Joy, Shaw, Neese, as well as Iffland, Zoeller, Iverson and architect Randy Hafer.

The City entered into a negotiation and due diligence phase, ultimately resulting in negotiating a proposed buy-sell agreement for the City to purchase the entire building in its current state for $17 Million. When adding the current purchase price and build-out costs we anticipated the project cost, at $17 Million purchase price, would total between $28 and $30 Million over the next 3 years. Construction costs for a new mid-rise office building are estimated at $325-375/sq ft based on 2020 statistics. A new building to meet the City's 20-year anticipated space needs would cost a total of $39-$45 Million.

The City of Billings hired a number of experts to inspect the Stillwater Building.Those experts provided their reports to the City. The Inspection Reports recommend repairs and replacements that total approximately $7 million. The City has evaluated those recommendations and has determined, at a minimum, the cost of the repairs that would be required prior to occupancy totals $3,541,500. By deferring the remainder of the recommended repairs, this would place the immediate cost of the building at more than $20.5 million, at the $17 Million purchase price. The Purchase and Sale Agreement for $17 Million was subsequently terminated by City Council on August 23, 2021.

Negotiations continued after the termination of the Purchase and Sale agreement with WC Commercial at Mr. Joe Holden's request. Mr. Holden offered $13,500,000 for the Stillwater Building. This offer was taken to the negotiation committee for further consideration. The committee recommended a counter offer of $13,500,000 with some contingencies to be fixed or repaired which was rejected by WC Commercial. The other counter suggested was $13,000,000 without the fixes and repairs. This offer was also rejected. WC Commercial indicated the offer of $13,500,000 was the last, best and final offer. This offer was discussed with the negotiation committee, which recommended approval to the full City Council. 

At the September 27, 2021 City Council Meeting, Council voted to table a decision on approval or disapproval of the purchase and sale agreement until the October 11, 2021 meeting due to a number of errors in the contract documents. Staff and legal council were instructed to correct the errors and bring the documents to the next work session on October 4, 2021 for further review by council. 

Any questions that City Council has from the October 4th work session can be covered on the October 11th meeting.

City Council may:

• Approve entering into a Purchase and Sale Agreement with WC Commercial for the Stillwater Building with a purchase price of $13,500,000;
• Not Approve entering into a Purchase and Sale Agreement with WC Commercial for the Stillwater Building with a purchase price of $13,500,000; or,
• Provide staff with further direction

Anticipated cost to purchase and build ranges from $28-$30 million. Anticipated sources and uses of funds is provided for Council consideration:

Sources
Excess General Fund Reserve	$       20,350,560
Departmental Build out Contribution (30%)	3,439,363
ARPA Funds for Public Safety Build out	5,810,077
Total Estimated Sources	$       29,600,000
Uses
Stillwater Purchase Price	$       13,500,000
Infrastructure Upgrades	3,500,000
Architecture Costs	1,200,000
Estimated Build out	10,000,000
Contingency @ 12.5%	1,400,000
Total Estimated Uses	$       29,600,000