Nearly an hour before city leaders were supposed to vote on purchasing the Grand Forks Herald building Monday night, a developer also interested in purchasing the property requested they wait.
The Grand Forks Jobs Development Authority, a decision-making entity for the city also known as the JDA, ultimately decided to vote on the matter next Monday, April 22, after City Attorney Howard Swanson told members they hadn't published a public notice early enough.
Before the JDA's advisory committee recommended last week the group proceed with a purchase for $2.75 million, local developer Mike Kuntz said he and contractor Craig Tweten had been working on their own purchase agreement for the building from Forum Communications Co., the Herald's Fargo-based parent company, since last summer.
Kuntz and Tweten signed a purchase agreement for the building in May 2018 as Communication Central Building, LLC. Their offer was largely dependent on whether the two developers could attract the right tenants to not only rent space, but to help fund a community space on the first floor.
The city of Grand Forks had been one of the duo's most ideal tenants, with Kuntz even telling the Herald in December his plans would be a "disaster" without the city's cooperation.
"I personally have been in hundreds of meetings on this project to keep the key stakeholders together, to keep the concept together, and really drive hard for a successful project," Kuntz said Monday. "I'm a little disenchanted with the way it came together at the end here. (We had) a private solution (and) we felt like we were a little maneuvered around by the public sector here."
In renderings Kuntz showed JDA members, his community space would include an e-library and a high-tech conference room.
Kuntz also told the JDA he had personally paid for the legal work that went into negotiating leases with Grand Forks Public Schools, which moved a branch into the Herald building earlier this year.
Members of the JDA, which includes all seven Grand Forks City Council members and the mayor, said on Monday buying the building would cost less money in the long run than renting from Kuntz.
"As the primary future tenant, it makes sense for us to be our own landlord," JDA President Bret Weber said Monday, who went on to use a hypothetical example: "It would not make sense for us to sell City Hall to the private sector. The result would be the taxpayers having to pay for both a public building and private property."
If the city does ultimately purchase the building, the city would create a collaborative community space on the first floor of the Herald building with financial help from UND and the Grand Forks Public Library. The city would move some of its staff into the building's offices, and as landlord the city would lease other office space to Forum Communications, Grand Forks Public Schools and the Grand Forks Region Economic Development Center.
The Herald remains in the building. Publisher Korrie Wenzel said that no matter who ultimately purchases the building, the Herald will stay on as a renter on the second floor for the foreseeable future.
However, if the city decides against purchasing the building, it has the option to rent office space from Kuntz and Tweten.
The best deal
According to Kuntz, the city would spend $1.3 million renting space from him over a 10-year period, less than half of the $2.75 million the JDA plans to spend on buying the whole building.
Vice President Jon Ramsey, of Assurity Finance and Development, told the JDA the city would ultimately spend less money purchasing the Herald building than it would renting. According to his estimates, if the city was to buy the Herald building for its original appraised value of $3.2 million, Ramsey said the city would actually earn $1.7 million over a 10-year period from collecting rent.
With the city planning to buy the building for $450,000 less than that, Ramsey said the city will likely save even more money by just purchasing the building. Ramsey is a member of the JDA's advisory Growth Fund Committee, which recommended last week the city buy the building from Forum Communications.
"Based on the numbers that I've seen for an estimate, we would be paying significantly more money to a private sector, to a private business, then we would just buying the business," said JDA and City Council member Danny Weigel. "I have to look back at the taxpayers that I represent, and say is this a good financial decision? Renting this space?"
Before Ramsey shared the aforementioned analysis, Kuntz told JDA members an analysis Ramsey had shared earlier this year on purchasing the building was "flawed" because it used outdated rent rates from him and Tweten. Ramsey said Tuesday afternoon he plans to show JDA members next Monday a more accurate analysis with updated rent rates from Kuntz.