Two buildings along Second Avenue North are being dismantled to make way for a new federal courthouse downtown, and local agencies are finishing a series of land deals to accommodate the new building.

SBH Inc., a local company hired by the federal General Services Administration, started demolition work on the courthouse site on Oct. 2 and should be finished by mid-February. The federal government has allocated up to $80 million in stimulus funds to build the courthouse.

A large, blue fence encloses the entire site, which is a block long and straddles North 26th Street. Half of the block of North 26th Street between Second and Third avenues North is permanently closed to traffic, and this week, the city of Billings will sell the remainder of North 26th on that block to Yellowstone County for $80,000. The county will use the street for access to the adjacent county parking lot. The county also plans to grant GSA a 44-month easement for $10,000.

Instead of a wrecking ball and trips to the landfill, the demolition project will be green, said GSA spokeswoman Sally Mayberry, and the buildings will be deconstructed from the inside out. Some building materials will be recycled, trees protected and old concrete used as fill on the new site. Last week, scaffolding was up around the old Montana-Dakota Utilities building, and workers were tearing materials off the roof of the old Wells Fargo branch.

SBH will be removing asbestos from the site for the next six to seven weeks. Mayberry said the limestone from the MDU building will be donated to the Yellowstone Art Museum, and the bulletproof glass from the bank will be given to the Yellowstone County Sheriff's Office.

To squeeze a large federal courthouse into a relatively small site, Yellowstone County gave up many of its parking spaces next to the county courthouse. It sold the parking spaces to GSA, and GSA plans to take another 50-foot strip of land in what both sides are calling a "friendly condemnation." The condemnation is on the agenda for Tuesday's County Commission meeting, and is scheduled to close on Oct. 30, said Commissioner Jim Reno.

To make up for the lost parking spaces, the county is using the sale and condemnation proceeds from GSA to buy land to the east. The county bought the land where the DHL building sat along Second Avenue North, and that building has already been demolished.

GSA will pay the county $866,920 for the 50-foot strip of land that runs between the county courthouse and the Sheriff's Office, said Chief Deputy County Attorney Dan Schwarz. With that money, the county will buy three 7,000-square-foot lots behind the old DHL site. That deal will close on Nov. 2, Schwarz said. Two of the lots will be used as gravel parking lots; the third lot won't be affected for now.

Parking near the county courthouse is now a little more complicated. Schwarz's fourth-floor office in the courthouse overlooks the parking lot, and Schwarz watched recently as drivers drove the wrong way through the parking lot and the wrong way on North 26th Street.

Schwarz said people wanting to park next to the courthouse should enter the parking lot from North 26th Street and exit through the alley at the other end of the lot.