State panel OKs SandRidge building purchase
The governing board of the Oklahoma Commissioners of the Land Office voted Thursday to approve the $35.5 million purchase of the SandRidge tower in downtown Oklahoma City for use as a state office building.
The Oklahoma Tax Commission, state Tourism and Recreation Department,
Oklahoma Department of Health, and Oklahoma Department of Environmental Quality are lined up to move to the tower, said Keith Kuhlman, acting secretary of the Commissioners of the Land Office. Other state agencies that possibly could make the move include the Oklahoma Water Resources Board, Department of Labor and Department of
Mines he said.
“For the agencies, this is a sea change for them,” Kuhlman said. “To attract that quality of space to attract good employees and keep your good employees happy is just huge.”
Kuhlman said he expects it also to be a major plus for downtown Oklahoma City, bringing as many as 800 employees back to the downtown, which will improve retail sales and attract other businesses.
Officials will now perform their due diligence to make sure everything about the transaction is in order.
“Our intention is to close on Sept. 1 so agencies can start moving in Nov. 1,” Kuhlman said.
The Commissioners of the Land Office expects to operate the building much like a condo, with state agencies buying the floors they will occupy while paying the land office to maintain the building, he said.
The 29-story tower has a 450-seat auditorium, health club and meeting rooms that are expected to be used as common areas by the various state agencies, Kuhlman said.
Kuhlman said the top floor is overly opulent for state office space and will be retained by the agency to be leased to a private tenant that is yet to be determined.
As part of the purchase of the SandRidge tower, the CLO is looking into the possibility of four “land swaps” in which it would essentially sell four acreages that it owns to private developers with the proceeds going into the purchase of the SandRidge tower. If everything works out perfectly, the agency might not have to sink any of its own funds into the sales transaction, Kuhlman said.
Parcels the agency is considering for land swaps in the deal include 33 acres at 122nd and Western Avenue, 640 acres at I- 240 and Eastern Avenue, 40 acres across from the Tinker Air Force Base gate at 44th and Douglas Avenue, and 25 acres at Mustang Road and Northwest Expressway, Kuhlman said.
The SandRidge tower parking garage and additional parking under and near the building will be included in the CLO's purchase — about 1,400 spaces in all, Kuhlman said. State agencies will lease parking spaces for their employees and spaces also will be leased out to private individuals and for event parking.
The ability to profit from the lease of the parking spaces is actually a key component to making the deal financially viable for the agency, whose mission is to manage property and trust funds to provide a revenue stream for common schools and higher education institutions.
Kuhlman said the agency believes that it will be able to obtain a 9.3% yield on its investment, and said he considers that number is conservative.
Joy Hofmeister, the state's schools superintendent, serves on the five- member board. Hofmeister said she's convinced purchase of the building will end up being a good investment that will benefit the state's schoolchildren.
“It's a very smart investment for the state,” Hofmeister said. “It's going to benefit other agencies, as well. Ultimately, it positions the Commissioners of the Land Office in a good place that ultimately benefits all school kids.”
Placing state agencies in the SandRidge tower will cause the property to be taken off the tax rolls, but the land swaps that are expected to be part of the transaction will result in new commercial buildings being constructed that will add to the tax rolls, she said.
“It turns into a very positive thing based on the full package,” she said.
Kuhlman said SandRidge put almost $100 million in upgrades into the building.
The 29-story tower has a 450-seat auditorium, health club and meeting rooms that are expected to be used as common areas by the various state agencies, Kuhlman said.