Space crunch may force city to buy building it's leasing

The city of Las Vegas might be buying a building it has been leasing for development services for the past three years at 731 Fourth Street.

The Real Estate Committee Monday recommended the City Council look into purchasing the property and determining the most economic financing for the purchase -- bonds or cash.

The city had previously balked at buying the building, since the proposed arrangement would have meant a 20-year lease, with the ability to buy the building for $1 at the end of it.

Sources at City Hall have said that 20 years is too long a commitment for the city to make. By then a new city hall could be built, or the planning and development department could outgrow its Fourth Street location.

Finding space for the city's 2,500 employees has forced the city to spread out departments among several buildings in downtown Las Vegas.

"In a perfect world, we'd have a new City Hall," said Las Vegas Mayor Jan Laverty Jones.

Though the building was previously offered to be sold to the city for $4.8 million, the city decided not to make the purchase under the recommendation of a Coopers & Lybrand study that said the city shouldn't pay more than $4.3 million. Instead the building was sold to Arnold Kramer, senior vice president of United Municipal Leasing Corp.

Then Kramer offered the city a 20-year lease to replace the city's existing five-year agreement. Once again, the city decided against it, this time because of the possible negative influence the deal would have on the city's bond rating.

City attorneys have unsuccessfully tried to block the sale of the building to Kramer in District Court and he's threatened to sue the city for its attempts.

Officials at City Hall said they're working on negotiating with Kramer to renew the city's lease when it's up in 3 1/2 years. But even then, the longer-term issue of housing the city's services remains unsolved.

The existing City Hall, located in downtown Las Vegas, is 25 years old. Recently remodeled and rewired for current computer systems, millions have already been invested in it.

"The questions also is, do you have a buyer for the building that's now City Hall?" Jones asked. "Where would you put the new one? With all of our challenges, a new City Hall is not one of my priorities."

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