Hennepin County officials want to buy the landmark Thrivent Financial building in downtown Minneapolis for $55 million, an acquisition that would be one of the county’s priciest in years.
The proposal was on the County Board’s agenda Tuesday, but some commissioners expressed concerns and postponed a vote until at least next week to get more information.
Commissioner Mike Opat said that the county already had enough space for employees and that he didn’t see the need for additional property.
The project laid out by county administrators includes the purchase, for an additional $11.5 million, of 332 parking stalls and related spaces adjacent to Thrivent. That property is slated for a mixed-use development.
As reasons to buy the building, County Administrator David Hough cited a desire to consolidate or end leases on some of the county’s 129 properties, as well as a growing space problem. He noted that the building is just a block from the Hennepin County Government Center and connected by skyways.
“I’m not surprised by the board’s reaction, because we are talking about a lot of money,” said Hough. “But I would be negligent if I didn’t bring this opportunity forward.”
The 17-story dark pink Thrivent building, with its dramatic sloping glass wall, was built in 1981. If the county deal goes through, Thrivent plans to build a new headquarters just across 5th Avenue S. on property it already owns. While the new building goes up, the company would stay for three years and pay rent to the county.
Thrivent has been planning a workplace redesign that would involve significant disruption for its employees, said Randy Boushek, Thrivent’s chief financial officer. Sale of the building would allow the company to develop options to support its future needs, reduce workforce disruption and continue to be an important part of the development of downtown’s east end, he said.
“This opportunity allows us to continue to align our workforce and services to meet the changing needs of our members as we continue to fulfill our mission,” Boushek said. “Thrivent and Hennepin County have agreed to a fair price for our building, and this opportunity creates mutually beneficial results for both organizations.”
The sale wouldn’t affect a planned development on the half-block of parking behind the building, property that Doug Hoskin and Tony Janowiec of Interstate Parking Co. and Minneapolis-based developer Hempel Cos. are under contract to purchase from Thrivent.
Planned there is a six-story building that would include 87 housing units, 4,700 square feet of street-level retail and an adjoining 7 ½-level parking ramp with underground parking and room for 750 vehicles, according to city documents. Hennepin County would buy 332 of those parking stalls.
The Thrivent deal has been in the works for months, said Hough, involving many county employees and a real estate consultant hired by the county.
The county would pay $105 per square foot, a very good deal, he said, given that new construction would cost $325 per square foot. The last building bought by the county was the 18-story 701 Building across the street from Thrivent, in 2011 for $25.8 million.
The Thrivent purchase would be paid off by general obligation bonds over the next five years. “We don’t see these types of deals come along very often,” Hough said.
Although Hough and others had private conversations with commissioners about the deal, Tuesday’s meeting was the first time they met to discuss it.
Opat raised initial concerns, saying that he wouldn’t vote to approve the purchase and that he was “sorry” to see it come before the board. He noted the county’s recent $9 million sale of the Century Plaza building, which the county had bought with the idea of expanding.
“This is a solution in search of a problem,” Opat said. “We don’t have a problem with our office space. We are the custodians of the taxpayer’s money. This transaction should end right here.”
In answer to Opat’s question about who would move into the building, Hough ticked off examples including the Family Justice Center, Hennepin County Medical Center staff and possible consolidation of mental health services.
Opat challenged the need for more space to handle an increasing staff level. The county, with 9,000 employees, has grown by 800 employees since 2007, but he said that doesn’t indicate a trend.
“If you hire 50 people, it would take an entire floor in the Government Center to find space for them,” Hough said.
Commissioner Jeff Johnson also said he wouldn’t vote to approve the deal. Board Chairwoman Jan Callison said she needed more information about potential cost savings and what properties would be affected. Hough said the county already plans to sell one downtown property and get out of three lease agreements.
Staff writer Nicole Norfleet contributed to this story.