CBID considers buying Fort Smith city offices

Commissioners with the Fort Smith Central Business Improvement District (CBID) are interested in helping Fort Smith city offices remaining downtown. The focus of that interest could cost around $4 million.

The commissioners once again discussed the possibility of the CBID purchasing the building at 623 Garrison Ave., which is used as the Fort Smith City Hall, and then leasing it to the city much like the CBID does now with the Blue Lion.

Fort Smith-based Southland Management Group owns the building. Aaron Littlefield III is listed as the manager for Southland. Littlefield is active in fuel service and fuel delivery businesses in the area.

Deputy City Administrator Jeff Dingman told the CBID Board in July that while a potential for the city to purchase a building in another area of the city had presented itself, there was wide sentiment that city hall should remain downtown. A potential also exists for the city own its leased space at 623 Garrison, providing the owner is willing to sell to the city, Dingman said in July.

It was discussed then that the sale could potentially include the CBID as the entity who might finance the purchase and renovation of the building based on contracted revenues from a property lease agreement with the city, much like the current arrangement at the Blue Lion building. The CBID board authorized Bill Hanna, board chairman, and Dingman to initiate discussions on the feasibility of such a project.

The building was appraised at $3.98 million earlier this year. According to Dingman, it was last purchased for approximately $3 million.

At the board’s regular meeting Thursday (Aug. 15), the commissioners again discussed the feasibility of the purchase. Commissioners expressed the desire to do whatever possible to keep the city offices downtown. Fort Smith Director Christina Catsavis told the board she wants to keep the city offices downtown and worries about what message it would send if the board of directors opted to move the offices out of the downtown area.

“I have been talking to the owner (of the building) but have nothing specific to put in front of the CBID yet,” Hanna said. “To clarify, we are looking to purchase and lease back to the city.”

The building at 623 Garrison has about 60,000 square feet of usable space, Dingman said. The city uses approximately 34,000 square feet of the building for city offices. The Fort Smith Board in March approved an option for a five-year lease of the space, with rent at $33,500 per month – $1,000 more than the rent charged in the lease that expired Feb. 29 for this year – and $34,500 a month in 2025. Rent will go up $1,000 a month each year through 2028. City Administrator Carl Geffken said this is the same increase in rent the city has paid annually in the past.

The city occupies all of the third, fourth, and fifth floors of the building along with office space and a vault on the first floor and the breakroom and bathrooms on the second floor. There is more space available on the first floor and the second floor and the entire sixth floor in the building.

“We had the chance to lease the entire building (earlier this year). That would have been a huge financial commitment. We don’t need the entire building yet,” Fort Smith Director Lavon Morton told the CBID board Thursday.

The lease the city signed has an option for the city to add space to the lease in the future if needed.

At the time of the lease negotiation, the board was presented with two options of the lease. The other option was to rent the entire building for $32,500 a month from March to August of this year and $47,766.81 per month for the remainder of the lease through August 2029. Both options included a provision for an option to buy the building after five years.

Dingman said if the city were given the option to lease the other space at a reasonable price, they could move into those spaces without renovation.

“People are crammed. They would welcome the opportunity to move into the vacant areas as (they are). Ideally we would reconfigure them later,” Dingman said.

The CBID board agreed that the best option is to attempt to purchase the building and then lease the property to the city on a lease-to-own basis. Any decisions regarding renovation would not come until a future date, the board agreed.

The CBID board requested a letter of intent about the purchase price and lease specifics for the city be ready to review at the September CBID meeting.