Penney building proposed as new city offices

June 19, 1994|By Donna E. Boller | Donna E. Boller,Sun Staff Writer

Two brothers plan to buy the vacant J. C. Penney Co. building on West Main Street in Westminster and renovate it for offices with the help of state, city and bank loans.

Robert and David Max of Pikesville then would lease about one-fourth of the space to the city government for finance, housing, community development and personnel offices. The brothers own the Winchester Exchange building on East Main Street, which houses offices and retail stores.

Consummation of the plan depends on a $160,000 state loan, a $50,000 city loan and private financing. The loan application to the state Department of Housing and Community Development estimates the project cost at about $500,000.

Mayor W. Benjamin Brown has handled negotiations with David Max. He touted the idea as "our opportunity to put our actions where our mouths are . . . to bring City Hall closer to Main Street."

But three City Council members want a closer look before signing a lease.

"I would like some public input on this issue," Councilwoman Rebecca A. Orenstein said. "I personally don't think this decision has had enough public exposure."

Councilman Stephen R. Chapin Sr. said he would like more information on how the deal would be structured and what the terms of the lease would be. "I think this is a big enough issue that we need to have a work session on it," he said.

David Max said the Penney building is an attractive investment because "it will revitalize an important part of downtown." He said he has had inquiries from other prospective tenants, but did not want to disclose additional information.

"There are four different parts of this deal and all four have to fall into place. If one dies, it all dies," he said.

Westminster needs office space to relieve crowding at City Hall, where the second-floor hallway is jammed with overflow filing cabinets and two construction inspectors share cramped attic quarters. Department heads have no room for staff meetings.

The council dropped plans to move the finance department into the Longwell Municipal Center after learning in April that renovations would cost more than three times the $350,000 budgeted. But the council has not talked about long-term solutions to its space needs or whether to abandon a "government campus" proposed in a 1991 space study.

Council members express no interest in building a new city government office. No consensus exists on whether the city should buy rather than lease an existing building.

Council President Kenneth A. Yowan argued against buying the Penney building because Westminster currently plans to rent only part of the space. "Then we'd be in the position of leasing to somebody else," he said.

The building contains 15,650 square feet, according to the state loan application. Westminster plans to lease about 4,500 square feet.

Ms. Orenstein said she's not sure that leasing is preferable to owning an office building.

Councilman Damian L. Halstad endorsed renting as "less drastic than buying."

"I prefer to spend money incrementally if we have to at all," he said.

Mr. Chapin said the possibility of occupying another building "is a valid question. Maybe there's a better alternative, maybe not. But we need to look at it from a macro standpoint and do what's best for the taxpayers."

The Max brothers' plan for the Penney building "is certainly a viable improvement to downtown Westminster," said David Schultz, chief of technical assistance for DHCD's community assistance administration, which reviews loan applications. He said he needs additional information before starting to review Westminster's application.

Mr. Schultz said the loan program helps close the gap between the amount a private developer can borrow from a bank and the amount needed for a renovation project in an urban renewal area.

Lending institutions tend to be conservative about projects in urban renewal areas, Mr. Schultz said. "We're bringing about the project by sharing the risk," he said.

The state requires community participation. Westminster's $50,000 loan to the project would come from a fund the city created with federal community development block grants. The city has lent money from the fund to renovate apartment buildings and buildings that mixed apartments and commercial uses, said Karen K. Blandford, city housing director.

Mr. Brown said that tapping the fund for the Max brothers' project would not cut off other prospective borrowers.

Ms. Blandford was unable to give an exact figure, but said the fund contains between $150,000 and $200,000.

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