News
Friday May 28, 2010
Lottery search ends after 19 years
A new home in the City Center West building comes after long wait  
by Ry Rivard
Daily Mail Capitol Reporter
Advertiser
CHARLESTON, W.Va. -- The West Virginia Lottery agreed Thursday to purchase the 13-story City Center West for $21.5 million, ending the agency's decade-long search for a new headquarters.

The deal will move lottery employees from the cramped quarters they have at the old Steak and Ale on MacCorkle Avenue across the Kanawha River from downtown Charleston and a converted warehouse near the Amtrak station to the premier tower.

Officials believe the new location also will be more convenient for lottery winners to pick up their winnings. City Center West sits near the intersection of Interstate 77 and Interstate 64, beside Charleston Area Medical Center's Women and Children's Hospital.

But most importantly, the deal ends the search for a new headquarters that began in 1991, said Lottery Director John Musgrave.

Earlier this year, there was talk of moving lottery personnel to the South Charleston Technology Park, but that fell through.

In 2003, Charleston and Kanawha County officials went to court in a successful attempt to keep the lottery jobs in the city after state officials tried to move headquarters to Putnam County.

Musgrave said sealing the deal was a "great day for the West Virginia Lottery."

"We felt this building has enough in it that meets the lottery's needs and more," Musgrave said.

The lottery will need to use about 70,000 square feet of the building, which has about 130,000 square feet of usable space. Other state agencies, likely from the Department of Revenue, also are expected to set up shop in the building.

To renovate the building, the lottery commission expects to spend "several millions of dollars" modifying it to comply with standards specific to public buildings and to make the building more energy efficient, Musgrave said.

But the commission is buying the building from General Corp. at a lower price - $21.5 million - than the corporation's president, Ed Maier, had hoped.

In early March, Maier had said he would not sell the building for less than $22 million.

"I never offered to sell this building for $22 million," Maier said at the time. "That would be stupid of me. They have an appraisal for more than that."

General Corp. had the building appraised for $25 million, Musgrave said. The state had three appraisals, one for $16.2 million, another for $22 million and an internal appraisal by the state Real Estate Division of $18.8 million.

"I think I would say, 'You have to understand an appraisal is simply one person's opinion as to what a piece of property is worth at a certain point in time, and that's all it is,' " Maier said. "You don't know the value of a property until a deal is consummated."

Maier will have six months to move out of the building, Musgrave said. Ten tenants who have leases for a variety of lengths occupy about 40 percent of the building.

Musgrave said he plans to allow them to continue with their current leases, which allows the state to collect rent. A decision has not been made about what will happen when the leases expire.

While the deal marks an important move for the Lottery Commission, it also illustrates the limits of the private market in the Kanawha Valley.

Maier said he would not have sold the building if he could have filled it up in the next year.

"As a citizen of the state, I have been concerned for several years that new businesses are not moving into the Kanawha Valley," he said. "That is one of the reasons, unfortunately, I decided to sell for the price I did, because I didn't think we would be able to lease it up very quickly."

Maier also is having trouble filling City Center East in Kanawha City, which he said is less than 40 percent occupied.

Charleston Mayor Danny Jones said City Center West will be a "great home" for the lottery and a state purchase of private property is "better than no moving and no shaking."

But the deal will take another chunk of property off the Kanawha County tax books.

The takeover of a private building by a state agency means the building becomes exempt from property taxes. In the past three years, about 370 properties appraised at $62.5 million have been exempted of taxes because government, non-profits or religious organizations now own them.

That figure does not include the City Center West deal or the tech park, whose tax exempt status could deprive the county of as much as $700,000 in annual tax revenue.

Jones said some of the tax-exempt properties, like the hospitals, still generate revenue even if they don't pay property taxes.

"A lot of their employees pay taxes under the user fee, so it's not perfect, but it's where we are," he said.

Thursday's deal also marks a shift for the state into the high-end real estate market.

City Center West is one of Charleston's six "Class A" towers, which are considered premier properties. The others are Chase Tower, BB&T Square, United Center, Huntington Square and Laidley Tower.

Right now, the state doesn't own much high-end property, except for the Capitol building and one other Class A property that is being rented out, said Diane Holley-Brown, a spokeswoman for the state Real Estate Division.