Greenwood may invest $3.5M to renovate, rent old city hall

Greenwood's success as a commercial landlord has officials considering spending about $3.5 million to turn the old city hall into a taxpayer-owned office building.

Greenwood is negotiating to rent a large portion of the city's former headquarters to Collaborating for Kids, a local company that provides therapy, tutoring and other services to children with special needs.

A lease deal makes sense because it allows the city to keep control of the historic building at 2 N. Madison Ave., corporation counsel Krista Taggart said.

"The city wants to be able to control the use of the building so that use fits in with plans to revitalize downtown," Taggart said. "We want a user in who will bring people downtown, generate traffic, that kind of thing."

Greenwood tried to sell the three-story, red-brick Polk Building last summer but couldn't find a suitable buyer, Taggart said.

Wealthy factory owner James T. Polk opened the building in 1920 as a community center. It had a gymnasium, library, auditorium and swimming pool, but it fell into disrepair until the city turned it into offices in the mid-1980s.

The building needs a lot more work, including evicting a colony of bats that made a home in the long boarded-up gym.

City Controller Adam Stone said early renovation estimates range from $2.5 million to $3.5 million.

Commercial developer J. Greg Allen said Greenwood has a good chance of recouping the investment.

He said the city needs to lease enough space to generate about $250,000 a year. "I see that as doable," he said.

Selling the building as is doesn't make sense, Allen said, because the city would be forced to unload it at a big discount.

By investing tax money into the building and leasing space, Allen said the city will likely break even or turn a profit over time.

"The thing you don't want to do is let that albatross sit there," Allen said. "It doesn't cut off your costs."

Taxpayers have been rewarded to the tune of more than $150,000 a year in rental income after Greenwood moved into the City Center last year.

The city is earning more than $13,000 a month by leasing unused office space to two local businesses and PNC Bank.

"It's helping us offset all of our operating expenses," Mayor Mark Myers said. "We're saving the city money by having tenants in this building."

Greenwood bought the former Presnell Building out of foreclosure a few years ago, knowing the building had more office space than it would need.

"We're effectively using all the space," Myers said. The leases are for five-year terms so the city can reclaim the space if it needs to expand.

PNC Bank is leasing the 12,000-square-foot building next door to the City Center for $8,300 a month.

The PNC lease agreement expires in 2016 but gives bank owners the option to extend until 2020.

If PNC chooses to stay, monthly rent increases to $9,300 in 2017 and $10,300 in 2019.

Christian Maslowski, president of the Greater Greenwood Chamber of Commerce, said the lease agreements show that the city is finding creative ways to bring in revenue without raising taxes.

"This is just another example of a local taxing district thinking about how it can make up for what it has lost under tax caps," Maslowski said.

Call Star reporter Vic Ryckaert at (317) 444-2701. Follow him on Twitter: @VicRyc.