The Montgomery County Commissioners are exploring the possibility of selling the county's headquarters and leasing back the office space, which they say could bring in tens of millions of dollars in revenue.
One Montgomery Plaza, on Swede Street in Norristown, is quite literally crumbling, encircled in scaffolding and nets to keep pieces of concrete from falling onto sidewalks and pedestrians below. An estimated $17-18 million in repairs are needed, according to Chief Finance Officer Uri Monson.
Last week, the commissioners put out a Request for Proposals to see if anyone is interested in buying the property. The buyer would be responsible for repairs, and would have to lease the building back to the county for a period of 20 to 30 years.
Money for the building repairs was approved in this year's Capital Fund Budget, but Commissioners Chairman Josh Shapiro said the sale-leaseback idea is worth exploring.
"Do you borrow the money, do the repairs and own the asset? Or do you sell the asset, and then essentially, using your operating dollars, pay a lease payment," Shapiro said.
If the building is sold, it would also boost the tax base of Norristown, where some of the most valuable plots of land are occupied by county buildings.
“I think Norristown would be happy to gain a building on the tax rolls,” said Commissioner Leslie Richards, who is working with borough officials on revitalization efforts.
Monson estimated that the base value of the building could be "somewhere in the $60 million to $80 million range." But he noted that the bidder would subtract the cost of repairs and the loss of rent for two to three years during construction.
Shapiro said the county will have to vacate the building during construction, no matter who owns it. It's unclear where those workers will go for the two-to-three year period, which according to the RFP could begin as early as January.
The building is 218,000 square feet spread over 10 floors, plus another three floors of underground parking. It was built in 1974.
If a sale goes through, the county would pay off any debt associated with the building and the leftover money would go to the general fund.
"There’s a strong fiscal argument to be made for a sale-leaseback option," Shapiro said. "Obviously, a final determination will have to be made based on who ultimately bids on this and what offer they put on the table."
Shapiro said the sale-leaseback idea came up during a previous RFI period, in which the commissioners sought bids, proposals and ideas for how best to use their real estate assets.
"There were no specific offers or bids in that regard, but it seemed like a nice concept," Monson said.
Bids are due July 1.