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For sale signs

A sale sign sits in front of the James F. Battin Federal Building.

Sold! For $3,275,000.

Bidder 3’s offer for the former James F. Battin Federal Building in downtown Billings held for two hours when the online auction by the General Services Administration closed at 12:59 p.m. Monday.

The sale drew six bidders and ended, under GSA’s rules, when two hours passed without a higher offer.

GSA accepted the offer, Sally Mayberry, a GSA spokeswoman in Denver, said Monday afternoon.

The successful bidder will now have five days to provide an additional 10 percent deposit to proceed with the sale, the agency said. When the deposit is received, GSA will transfer the title within about 60 days. GSA has said the buyer’s name would not be released until the title is transferred.

The apparent winning bid came after a dayslong battle between two bidders identified only as 3 and 6.

The competition turned hot Monday when bidder 3 made a bold move, upping the offer by $395,000 — the biggest jump of the sale — to $3 million. Bidder 3 and 6 then battled back and forth, twice submitting offers at times separated by mere ten-thousandths of a second.

The contest between the two bidders ramped up late last week when GSA shortened the bid interval from 24 hours to two business hours. Offers and counter-offers flew within minutes of each other in $25,000 increments as the countdown clock showed only minutes remaining before a close.

The minimum opening bid was $1 and the first bid, submitted on April 23, was for $113, followed by a second offer for $25,113. GSA set the bid increment at $25,000.

Six bidders participated in the sale, but when the price hit the $1 million mark, the battle for the building came down to a contest between bidders 3 and 6.

The five-story, 48-year-old building at 316 N. 26th St. went on the auction block after years of problems with asbestos contamination led to the construction of a new courthouse and a new office building to house federal employees. The building is 221,000 square feet and has a 56-space underground parking garage.

Local and state government agencies all passed on opportunities to buy the building, so GSA declared it surplus property.

Because of the health hazards of asbestos, a new owner could be responsible for cleaning up the contamination, a process that is expected to be difficult and expensive.

Billings developer Marty Connell, who renovated the former Pierce Packing Plant into the Kairos Center and is president of the East Billings Urban Renewal District, was pleased with the price for the building.

“It sure validated my point that it’s worth some money. That’s still a pretty good value of a building most people said had a negative value. I think this is good for the community,” Connell said.

Connell tried unsuccessfully to get city and county government interested in buying the building for local services. Connell’s team bid $325,509 but dropped out as the offer headed toward $500,000 and beyond.

Connell complimented GSA’s auction, saying the agency ran a “fantastic” sale. The process, he said, was efficient, even “diabolical,” because there was no way to figure out who was bidding or why. Bidders could set a bid amount and use an automatic system to submit offers, which is why some bids were submitted at nearly the same time, he said.

“I’m dying to know who bidder 3 is. Everyone is using their Ouija board,” Connell said.

Connell also called the asbestos issue “a red herring” and said he didn’t think it was a big deal. While a buyer would not have to abate the building as long as it was kept safe, Connell said he couldn’t imagine a buyer not doing it.

How much would it cost?

“I’ve heard so many figures, it’s scary,” he said. One figure was about $10 million, he said. “I think that’s ridiculously high,” he said. Half that amount or less would be more realistic, he added.

GSA marketed the courthouse on its website as “a unique opportunity to acquire a significant building in the Central Business District of Billings” and gave several tours for prospective buyers. The agency also said it as offering the building “as is, where is.”

Money from the sale goes to the Federal Buildings Fund, which operates, maintains and repairs owned and leased federal buildings.

The new courthouse, located a block south at 2601 Second Ave. N., cost $80 million and opened last fall. The building houses the U.S. Courts along with the U.S. Marshals Service, U.S. Attorney’s Office, U.S. Probation Office and GSA. The project was funded through the 2009 American Recovery and Reinvestment Act.

The new office building is nearly complete at 2021 Fourth Ave. N. and will house about 400 employees with the U.S. Department of Interior. The 111,000-square-foot building is costing about $30 million. The Boyer Co., of Salt Lake City, is constructing the building and will lease it back to the GSA for at least 20 years.



Federal Court, Yellowtone County Reporter

Federal court and county reporter for The Billings Gazette.