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Prime Property

In a hot real estate market, some governments are seeking to cash in on their city hall.

When you hear the words "city hall," chances are you think of a large granite building with pillars out front, symbolizing both the fortitude and permanence of local government. Among the leaders of some municipalities, however, the words are conjuring up a different image: dollar signs. As far as they are concerned, city hall is just another piece of real estate.

Nowhere is this sentiment stronger than in Port Richey, Florida. Perhaps that's because granite and pillars haven't been part of the civic picture there anyway. For 25 years, the city hall in this small, Gulf-coast town was located in a two-story building that was essentially an "island" in the parking lot of a strip mall. Over time, most of the mall became vacant, and city officials found themselves surrounded by a suburban slum.

The city began shopping its site around to national retailers, and finally scored when Wal-Mart decided last year that the strip- mall/city hall parcels would make a great place for a 220,000-square- foot superstore. Although the city might have gotten as much as $300,000 for its building, the mega-retailer wanted to bulldoze the entire 34-acre lot and start from scratch. So local officials settled on swapping city hall for a 2-acre plot that Wal-Mart didn't need.

The plan then was for the city to build new offices on that property, just west of a Denny's restaurant. But as city employees moved into a temporary location in March to make way for the demolition crews, Port Richey officials began calculating again--this time that the would-be city hall site might itself fetch a pretty penny. They figure that land near a Wal-Mart could sell for more than $500,000, which could be used as a down payment on a new building elsewhere. Pawning off city hall makes good business sense for Port Richey: Not only will the suburban slum disappear, but the city will also get hefty fees and tax revenues from the superstore.

Port Richey isn't alone in valuing its city hall (or some portion thereof) in terms of a real estate agent's three favorite words: location, location, location. City officials in Hazel Park, Michigan, tried to sell voters on the notion of selling city hall after a developer offered $1 million for its prime downtown site. The city made plans to move into a more spacious building nearby, but in a June ballot, voters soured on the idea. "This property is very valuable for commercial development," says city manager Joe Young. "We thought it could be better used for tax-generating development."

In Washington, D.C., where the city is planning to move its Department of Motor Vehicles office from downtown into a rebounding neighborhood, Mayor Anthony Williams has said that cashing in on a hot downtown real estate market is part of the reason.

Unfortunately, some places have decided to put their city hall on the block under less positive circumstances. The sale of city hall in Perris, California, a few years back is a case in point. Employees had been in their new digs for only two years when the city fell on hard times. Its budget deficit was large enough that it could no longer afford the $12,500 monthly payment on the new building. So Perris sold its new city hall to the local school district at a $250,000 loss, and staff moved back into their old, cramped quarters.

At least Perris has a city for the hall. Last year, the 40 residents of Peerless Park, Missouri, decided to disincorporate and be absorbed into St. Louis County. All of the town's assets, from city hall to Post-it notes, had to be liquidated. The city hall, which was a converted ranch-style house (the city council met in the living room and "executive sessions" were held in a bedroom), sold to a developer for $195,000. Most of the money will be used to pay off Peerless Park's bond obligations. After that, says Dudley McCarter, the court- appointed trustee for the former city, "there'll probably be $15,000 or $20,000 left. That goes to the county."

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