An ordinance authorizing the city to purchase the Cromwell Building on behalf of the Little Rock Convention and Visitors Bureau will go before Little Rock's Board of Directors tonight.
Originally the property at 101 S. Spring St. was to be purchased by the Advertising and Promotion Commission with $2.85 million being financed through the city. Now the city will purchase the building with money from its general fund, and a decision on when and how the commission will reimburse the city will be made at a later date.
The building is intended to house offices for Little Rock's Convention and Visitors Bureau, plus commercial tenants not affiliated with city government. The visitors bureau occupies the fourth floor of the Cromwell Building, and it will act as a landlord for remaining space.
"An arrangement between the city and A&P will be worked out to assure the city is not just buying the building and giving it away," City Attorney Tom Carpenter said. "There will be an agreement between the city and commission that will result in the city not taking on the full cost of the building."
Similar agreements exist between the city and visitors bureau for property in the River Market and the Statehouse Convention Center and parking lots downtown.
Removed from the original draft of the ordinance was a section outlining that the Convention and Visitors Bureau would reimburse the city's general fund with its own general revenue.
Advertising and Promotion commissioners voted last month to purchase the building for $3.35 million. Hank Kelley of Flake and Kelley Commercial told the commission that ownership of the building could result in $4.88 million in revenue over the next 20 years.
Initial analysis on the debt service was compiled using a $500,000 down payment and a 2 percent interest rate, although it could be higher depending on state tax law. Interest rates on short-term financing through the city would have to take into consideration the mix of tenants in the building and their tax statuses.
The ordinance being considered authorizes the city to solicit loan proposals from at least three banks. Visitors Bureau Chief Executive Officer Gretchen Hall told commissioners last month that if the commission did not buy the building, the organization would spend about $4.3 million in rent over the next 20 years, starting with its current annual lease rate of $155,000.
Hall said she is "comfortable" that the purchase will go through.
"I think everything is progressing fine," Hall said, adding, "I'm not aware of any challenges."
The Bank of England offered $3.35 million for the property in July. That triggered a right-of-first-refusal clause in the Convention and Visitors Bureau's lease, giving the Advertising and Promotion Commission the opportunity to buy the building.
Bank of England executive Brad Canada previously said the bank might consider expanding outside of downtown or the city of Little Rock if the Cromwell Building was not available.
Canada referred questions to attorney Bob Hardin of Hardin and Grace law firm. Hardin said he had not discussed next steps with Canada.
Hardin said the city had made a "prominent" modification to the ordinance in taking out the section outlining that the commission would be responsible for paying for the building.
"Unfortunately, it's a holiday weekend. We received this late on a Friday night," Hardin said. "Since then, I'm not certain what course of action that anybody on this side would be interested in pursuing. That could change."
Metro on 09/06/2016