Cost, space delay sales

Officials table selling 2 Columbia buildings for at least one year

`It's a risk we're taking'

Profits from other parcels to help fund Ellicott City complex

Howard County

April 23, 2001|By Larry Carson | Larry Carson,SUN STAFF

Howard County officials have decided to delay selling two prime government buildings for at least a year while they plan construction of an office complex in Ellicott City - gambling that the market for office buildings will stay strong.

The county had planned to sell the Gateway building, an 81,000-square-foot structure bought at fire-sale prices during the recession nearly a decade ago, and the twice-as-large former AlliedSignal building - both in Columbia - to help finance construction of buildings in Ellicott City.

But because space in the two buildings is needed until the new ones are ready, the county was prepared to sell them, then lease back the space. That, Robey administration officials have decided, might be too expensive because the space is likely to be needed for a number of years.

The new complex, on a 25-acre parcel of woods on Rogers Avenue near the county government campus in Ellicott City, is supposed to be financed from the sale of surplus properties, and County Executive James N. Robey and his public works director, James M. Irvin, said they hope to raise more than $8 million from the sale of other properties on the list.

"We want this to be cost-neutral," Robey said about the new government complex.

The roughly $500,000 a year Irvin said the county expected to spend renting both buildings back from purchasers would eat up profit from the sales.

"The key is being able to afford the [new] buildings," Irvin said, explaining that the county hopes to get enough money from the sale of other surplus properties to pay for design work, clearing and developing the land, installing underground utilities and building roads into the 25-acre site the county bought last summer. The proposed capital budget calls for spending up to $8.6 million from those proceeds on the project. Actual construction of the first two buildings could be financed by bonds, he said.

The Gateway building, near Route 175 and Interstate 95, was bought in 1993 for $6.3 million. The 172,000-square-foot AlliedSignal building, off Route 108 near U.S. 29, was purchased with 27 adjoining acres three years ago for $7.5 million as part of a deal to keep the firm from leaving Howard County. AlliedSignal opened a building nearby, and the county renamed the old office-warehouse complex the Dorsey building.

The county hopes to sell other buildings, such as the former Ellicott City fire station on Main Street, and on Chevrolet Drive off U.S. 40 in Ellicott City, plus parcels from Cooksville in the western county to the U.S. 1 corridor in the east, Irvin said.

"There's tons of people" interested in buying the nine remaining surplus properties, Irvin said. "The market is still hot," especially for the larger county parcels, Irvin said.

News of the delayed sales was welcomed by several County Council members and Howard Community College officials, who use the first floor of the Gateway building for classrooms.

Councilman C. Vernon Gray, an East Columbia Democrat, said he wants the county to keep the Gateway building permanently because he feels the county eventually will need the space and because it's convenient for people in Columbia.

"It's very accessible for community meetings," Gray said.

Gray has been considering introducing legislation in the council to remove the Gateway building, which could be worth up to $12 million, from the sale, he said.

"Let's do a reality check on costs," said Councilwoman Mary C. Lorsung, a West Columbia Democrat, who said she, too, worried about the leaseback expense if the two fully occupied buildings were sold. "I see that as an added cost to the project," she said.

"It's wise to be cautious," western county Republican Allan H. Kittleman said.

College officials are happy to have more time. "We are excited to be able to stay there," President Mary Ellen Duncan said. "It's the best location for us, and all the [other] options are very expensive."

But by waiting, the county risks losing money another way - if the office real estate market declines.

"It's a risk we're taking - the market could change," Robey said.

Don Barrick, a commercial real estate agent in Howard County with Century 21 H. T. Brown, said the risk is real. "It's a real crapshoot at this point. People are taking longer to make decisions. How long ago was it we had a 37 percent vacancy rate in Columbia? Eight years? That does scare me a little bit," he said.

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