The Marion City Council agreed at its Dec. 10 meeting not to accept bids for the city-owned Arlie’s Paint Body &?Glass building and land for under $200,000.
The unanimous decision came after Mayor Mary Olson asked City Administrator Doug Kjellin about agricultural leases and other city contracts.
Olson asked if Kjellin had anything new to report on the property.
“Nothing is on the (Dec. 10) agenda,” Kjellin said, adding that perhaps Barry Linnens, president and owner of Cottonwood Valley State Bank, who was present at the meeting, would like to talk about it.
Kjellin said, “We still have an offer on the table (of $130,000 in cash and no financing). If we can’t come to an agreement on the lease purchase or outright cash purchase of the building agreement then (Linnens) will be under a time constraint to do something with the contents within the building.”
Kjellin asked Linnens if it would be favorable for the city to say whether it is interested in the offer of $130,000 so the bank could pursue it.
“Our position is we wanted to try and package this to benefit everyone in the community,” Linnens said. “It would behoove everybody to try to do this as a unit because once you have an empty building, you have an empty building—it is just part of the market.
“I had three or four (people) looking at the property, but not knowing how to price it because know one came to me with any numbers.”
Olson asked if Kjellin and Linnens were working together on this.
“Not necessarily,” Linnens said.
Kjellin said the problem is the building is on municipal ground and he cannot quote figures because it would be negotiating ground owned by the city.
Kjellin said all he told Linnens was the city will need to refinance this in June 2013.
Linnens said this is difficult for everyone and Kjellin has done what he can.
“From the aspect of trying to sell this property—when an interested party says, ‘What will it take to buy it?’ we don’t know.”
If someone wants to pay the full price of $237,000, he said, that would work, but no one has offered it.
Councilor Jerry Kline asked what is inside the building.
Linnens said it was mostly body-shop equipment.
“That’s quite a bit of assets right there,” Kline said.
Kjellin wanted to make it clear that the city’s interest is the land and building only.
Councilor Jerry Dieter said even if someone wanted to pay $130,000 cash, it still leaves the city short $107,000.
Olson asked if the city could consider someone making a large down payment and then making payments on the rest.
Kjellin said an extended payment plan wasn’t going to work.
“We say give us a down payment and we will finance the rest of the $200,000,” he said. “The debt load would still make the business unprofitable.”
Olson said that could depend on the type of business.
“It might take off and go,” she said.
But Kjellin said the issue would still be about the price the owner would need to pay to get that asset and the funding required to keep money flowing to make it over an extended period.
After listening to the discussion, Councilor Todd Heitschmidt made the motion that the city should not consider anything less than $200,000 for the building.
“The toughest thing for a municipality to do is to have these discussions—normally done behind closed doors—talked about (in open session),” he said.
Given the situation, Linnens needs to know because he is an interested party on two fronts, Heitschmidt said.
“One is our loan or lease with him, and personal property his institution owns,” he said. “We have to give some direction.”
In other business, the council:
– by concensus, approved a request by Police Chief Tyler Mermis to remodel a small space at the Marion Police Department to handle juvenile intake. He said the Marion County Sheriff’s office no longer had space to do it.
– heard from Kjellin the city’s water plant passed inspection by the Kansas Department of Health “with flying colors.”
– agreed not to include Marion City Library in the yearly audit. According to City Clerk Angela Lange, the library keeps its own financial statements and as long as its budget is below $275,000, an audit is not required.
– learned Kjellin would be at the Kansas Power Pool’s annual meeting Thursday.
City employees will and the city offices will be closed Monday and Tuesday, Dec. 24 and 25, for the holiday. The next council meeting is Dec. 26.