City approves sale of former Rec Center
City Commissioners voted unanimously during their Jan. 6 meeting to approve the sale of the former Community Recreation Center to the current lessee of the property.
City staff recommended that commissioners approve the sale to the lone bidder for $800,000, which required an affirmative four-fifths vote.
Proceeds from the sale will be used to offset the cash deficit in three Park and Recreation department enterprise funds: recreation, Multi-Sports and Aim High Big Sky.
There’s a deficit in the city fund for the previous city-run recreation center and Jessica Compton, interim Park and Rec director, said the proceeds would help close out that fund since the city is no longer operating the stand alone recreation center.
City Commission considering sale of former Rec Center
During the Jan. 6 meeting, staff said it was taking some time to finalize the buyer’s financing and didn’t need to set any deadlines for that with their motion.
Commissioner Joe McKenney said that because the city didn’t use a real estate agent to sell the property, the city might not have received as many bids as it could have.
He asked David Dennis, city attorney, if the city could use a real estate agent to sell property in the hopes of broader marketing.
Dennis said yes, but the city would have to issue a request for proposals for the marketing and then still follow the competitive bidding process required in city code.
McKenney voted for the sale but told his fellow commissioners to keep in mind the option to use an agent for any future sale of city property and make a determination of whether to do so at that time.
When commissioners and staff discussed the potential sale and issuing a request for bids during a September meeting, McKenney, who is a real estate agent, said that the city could hire an agent to sell the property but that has an additional cost and since the city also has a legal department, it would be appropriate to sell the property itself without an agent.
Bids were due by 10 a.m. Nov. 19 when they were opened in the Civic Center and the one received was from the childcare facility currently leasing the building for the minimum bid of $800,000.
Laurie O’Leary, the current lessee, attended the bid opening and said that she didn’t have approved financing yet, but was confident she’d be able to get it.
The city opened the bidding process in late October for the building and O’Leary said a month wasn’t enough time to secure approved financing.
The city had required that each bid include “evidence of the bidder’s ability to complete the purchase, such as a bank statement, loan commitment, or other proof of funds.”
City receives one bid, from current lessee, for former Rec Center [2025]
On Nov. 21, staff told The Electric that they were recommending that commissioner accept the bid, working with O’Leary to give her time to secure financing and that the bid would be on the Dec. 2 commission agenda.
According a city letter accepting the bid, the city gave O’Leary another 30 days to provide a lender commitment letter.
O’Leary told The Electric before the November bid opening that she’d requested a lease extension and been denied.
City Commissioners approved a lease amendment for O’Leary’s operation in June 2024 giving the entity full access to the property for $7,000 monthly through the remainder of the agreement, which expired Dec. 31.
City accepting bids for sale of former Rec Center [2025]
The building was originally built in 1950 as the DeMolay Youth Center, with additions in 1959 and 1961, for a total land area of 45,000-square-feet with a two-story structure of 16,654-square-feet above grade and a 15,312-square-foot basement, according to the city.
The city purchased the property from Don Pencoske, doing business as Northwestern Systems, a sole proprietorship.
The date on the warranty deed is Feb. 14, 1997, according to the city and there are no requirements in the buy-sell or warranty deed referencing DeMolay.
It’s zoned C-5 central business periphery and is being sold as-is and contains asbestos and lead-based paint material, so abatement/management would be required during renovation or demolition, according to the city’s invitation to bid, and a 2024 roof estimate provided to the city was $170,000. The appraiser noted the building has about 20 remaining years of economic life.
City moving forward with plan to sell former Rec Center [2025]
City Manager Greg Doyon walked commissioners through the sale process during their Sept. 2 work session.
He said the city retained McKay-Rowen Associates for $4,200 to perform the appraisal.
Using that, Doyon said staff recommended setting the minimum bid at $800,000 and following the process detailed in city code to sell the property that was formerly called the DeMolay Memorial Building.
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“As the commission knows, this process is a little clumsy,” Doyon said. “I really don’t like this portion of the code.”
Doyon asked the city attorney’s office to review the code for possible revisions for clarity, saying the city has been criticized in the past about its process for the sale, lease or trade of city-owned property.
As the city was building the new Aim High Big Sky aquatic center, Doyon said he was planning to close the Rec Center since the facilities were being combined in the new building in Lions Park.
Early on, Doyon said, they considered retaining the old Rec Center to lease a revenue source, but after further consideration and needs, it’s “probably just best that the city disposes of that building.”
He said the city doesn’t make that decision lightly and discusses it with departments to to ensure there’s no future city use for the property.
Doyon told commissioners in September that he was asking them to allow him, by consensus, to issue the request for bids and then make a decision based on the response.
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There’s a tenant in the building currently who is aware the city is putting it out to bid, he said in September, and anticipates that party would submit a bid, but there would be other interest.
To sell city property, the code requires that the city take the highest responsible bid, with few exceptions, and a four-fifths affirmative vote by commissioners after a public hearing.
Parkland would require a recommendation from the Park and Recreation Advisory Board, but Doyon said he didn’t think that applies in this case.
The commission could require a development agreement for the sale, but Doyon isn’t recommending that in this case.
Commissioner Joe McKenney, who is a real estate agent, said that the city could hire an agent to sell the property but that has an additional cost and since the city also has a legal department, it would be appropriate to sell the property itself without an agent.
City approves rec center lease for daycare [2023]
Commissioners, by consensus, said in September that staff should move forward with the process of drafting a request for bids.
The Rec Center is currently leased by the Community Early Education Center, a local company.
The lease was initially approved in January 2023 through Dec. 31, 2025 for $1,500 monthly.
Commissioners approved a lease with A Child’s World LLC in January 2023 for certain areas of the building to operate a daycare and included access to the outside play area and gymnasium upon availability.
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In June 2023, commissioners approved an amendment to the lease agreement for A Child’s World to expand its current location on the first and second floors for an additional 58 cents per square foot.
In October 2023, Commissioners ratified a merger agreement between A Child’s World and Community Early Education Center, which is the surviving entity.
After that, the Community Early Education Center wanted to expand to provide more jobs and childcare programming and in January 2024, commissioners approved a second amendment to the lease agreement.
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That amendment added leased space on the main floor for $850 monthly for kitchen space and $812 monthly for the dining area.
The Community Early Education Center again wanted to expand within the city’s Rec Center and an amendment approved during the June 4, 2024 meeting gives the entity full access to the property for $7,000 monthly through the remainder of the agreement.
The childcare agency assumed responsibility of paying all building utilities, and maintain and repair the building at its own expense.
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All of the other terms and conditions of the January 2023 contract remained in effect.
The city has had an agreement with A Child’s World since November 2003 for use of certain areas in the Rec Center.