Architect: School district got good deal on building

Monday, June 6, 2005 | 11:12 a.m.

Edward Vance, executive vice president of JMA Architecture Studios, says "if anyone should have sour grapes" about the Clark County School Board's $14.5 million purchase of a four-story office building, it's he.

Vance's firm was planning to bid on a proposed expansion project at the Clark County School District's current headquarters on Flamingo Road at Eastern Avenue. JMA staff had gone so far as to draw up a few potential designs, pro bono, Vance said.

Those expansion plans are now on hold, as district officials determine which departments and divisions could move into the new building and free up space at the Edward Greer Education Center. They must also determine how much money remains readily available in a fund set aside by the School Board specifically for non-school facility improvements.

But Vance said he's far from grouchy about the situation.

"The School Board made the right decision and I would have done exactly the same thing," Vance said. "Those are my tax dollars, too. People are freaking out (about the purchase) but the truth is they got a hell of a deal."

Some School District critics have suggested the purchase of the 66,645-square-foot building at 5100 W. Sahara Ave. was too costly and included unnecessarily lavish touches such as marble floors in the lobby and private bathrooms for several offices. The district's cost works out to $217.50 per square foot, excluding the three-story parking garage.

The property was built in 1996 and purchased two years later by Larry Townes of Townes Telecommunications Inc. for $7.5 million, according to county records. Townes named the building after his son, Larry Glen Townes, who died several years ago. District officials have said they will keep the building's name.

Two appraisers, one hired by the district and one by the seller, both put the building's value at $15 million. Townes kicked in office furnishings, worth more than $150,000 as part of the deal.

John Restrepo, principal of the real estate research firm Restrepo Consulting Group LLC, said he's not shocked at the property's price tag. Rather, it's the critics who question whether the district was on the winning end of the deal that have him puzzled.

In addition to considering a property's physical structure, appraisals also consider re-sale potential and the cost of building something similar from scratch, Restrepo said. While the West Sahara building is vacant and the district has no plans to become a landlord, the fact that the property is located in a highly visible and desirable area increases its future potential to generate revenue, Restrepo said.

It's also unlikely that the district could replicate the West Sahara property, even without the top-grade flooring and extra features, for less than $200 per square foot, Restrepo said. And that doesn't include the cost of buying a 2.5-acre lot or replacing the three-story parking garage, Restrepo said.

With garages costing between $10,000 and $12,000 per stall to build, the district's 288-space structure would run at least $2.9 million, Restrepo said.

One of the buildings used as a comparison by the district-hired appraiser was City Center Place on South Fourth Street. The property sold in November for $29.48 million, or $283.60 per square foot.

JMA built the 103,951-square-foot building in 2002 for $110 per square foot, Vance said.

That amount didn't include buying the land for the complex, engineering and design fees or permits, Vance said. When those "soft costs" are added the price per square foot was probably closer to $220, he said.

And given the soaring cost of construction materials and fierce competition for labor, the project would only be more expensive today, Vance said.

"The price of steel and concrete is absurd right now," said Vance, whose firm has built numerous schools and facilities for the district over the years. "And with a ready-to-go building they (the district) don't have to worry about costs escalating when they can't even find a contractor to do the work. I'm calling guys on $100 million projects they should be drooling over and they're saying, 'Sorry, I'm busy."'

The School District's labor costs are typically higher than those for private construction because state law requires "prevailing wage" be paid on public sector projects, said Walt Rulffes, deputy superintendent of operations for the district.

The West Sahara purchase came after several years of discussion, numerous property tours and consideration, Rulffes said. Plans to add a second story to the 41-year-old "Ed Shed" on Flamingo Road were briefly considered but the idea was eventually discarded, Rulffes said.

"We figured we could do it for $5 million but we'd still have an old building underneath with all of its problems and limitations," Rulffes said.

He acknowledged that some of the buildings the district visited over the past few years were cheaper per square foot than the Sahara Building but said they would have required expensive remodeling before being ready for use.

Rulffes said he would recommend to the School Board that the first employees to be relocated to the Sahara property be those working in leased office space, paid for out of the district's general fund.

Relocating those three departments -- student accounting, internal audit and a computer services division -- would eliminate $405,521 in annual rent payments, said Matt LaCroix, assistant director of real property management for the district.

The district also spends more than $500,000 annually in other funds for rented offices. The West Sahara building's available space, along with the vacancies it will create at the "Ed Shed," should help the district eliminate the bulk of those leases, LaCroix said.

The school district paid for the building outright, using money set aside for construction of offices and other non-school facilities.