The city of Bismarck came another step closer to purchasing the former Worker's Compensation Bureau building after voting 4-1 Tuesday night to make an official offer.

City Administrator Bill Wocken says the city needs additional space to house offices for planning, engineering and inspections, creating "one-stop shopping" for development. The nursing department possibly could be relocated there as well. The Worker's Compensation building fits the bill because of its close proximity to the Civic Center.

"We need to have some space to do what we do for our programs," he said.

However, the move to purchase the building has local developers Joe Hauer and Lee Mitzel, of J&L Development, frustrated. They began looking into purchasing the building in January, but their offer of $1.5 million was declined without a counter offer. The building has a listing price of about $2.5 million. The city's market value placed on the property is $2,420,200, and the taxable value is half of that.

Hauer says if the city buys the building, another property will be taken off the tax rolls. "The city is in competition with private business," he says, a factor in high commercial property taxes. According to Hauer, 52 percent of commercial property in Bismarck is already off the tax rolls, leaving fewer individuals to "pick up the tab." However, Kathy Maier in the city's assessing office says that number seems "out of line." State law does not require that public property be valued, so no definite figures are available.

But the city says regardless of which building it buys, it will be taken off the tax rolls. Because the city wouldn't need all 55,000 square feet available at the Worker's Compensation building, Wocken said some areas may be rented out, and tenants would pay taxes on the space they rent, putting taxable income back into the community. He explained buying the building is the least expensive option for the city.

"We have the same reasons you'd buy a home rather than rent. It's the best bang for the buck."

Charlie Whitman, city attorney, said it's possible that a building that is not on the tax rolls would be purchased by a private entity if the Worker's Comp building is take off the market, and the equation would even out.

If the deal between the city and owners of the building, S&R Inc., goes through, financing for the purchase would come internally, Wocken said. A number of options, which he didn't specify, are available. Officials say taxpayer money won't necessarily be involved - Director of Finances Sheila Hillman said any fees or service charges aren't taxpayer related and neither is the interest earned on existing money.

"I'm not saying that's what we're going to use but those are other sources," she said.

Money was placed in the budget both this year and last to make renovations on a purchased building. In the case of the Worker's Compensation building, a lot of work would be done to meet the city's needs.

Hauer also raised concerns that the city hasn't publicly discussed the possibility of buying the building enough. However, Whitman, Wocken and Commissioner Sandi Tabor said the item has been placed on agendas and talked about at several open meetings. According to 2003's city commission minutes so far, the issue was discussed twice this year, most recently on June 10, when Wocken requested that Hillman, Tabor, Mayor John Warford, Investment-Finance Officer Dennis Schlenker and himself be placed on a team to further negotiations for the purchase of the building. Tabor moved that the to let the staff begin negotiations for the buiding. The motion passed.

"It's not like we just woke up one day and said 'let's buy the Worker's Comp building,' " Tabor said.

Initially, she wasn't in favor of pursuing the building's purchase, but after looking at other options, she is comfortable that if the price is right, the building would serve the city's needs both immediately and for long range planning with the Civic Center.

Connie Sprynczynatyk was joined by Tabor, Warford and Bryce Hill in voting to go forward with negotiations but said the purchase wouldn't come without challenges. Dave Jensen was the lone opposing vote on the commission, a move he credited to his frugality.

"I hate to see the city own half the buildings in downtown Bismarck. I'm opposed to spending the money period."

Matt Reichert is the real estate agent for J&L Development and other downtown business owners. He says that both the city and his client have valid points regarding the Worker's Compensation building.

"If you talk to (Wocken) he says he has 'I have to get the best option I can for the city,' and I agree with that" but "if you're a building owner or investor, which is who I represent, you definitely have the opinion that they're competing. Both sides have very valid points, you have to choose which one you like."

(Reach reporter Angie Buckley at 250-8255 or angiebuckley@ndonline.com.)