HANFORD – The city of Hanford is in the property management business, but it’s barely keeping its head above water financially on the properties, according to a report prepared recently by city staff.
The report shows the city is collecting annual rents of $295,161 on 14 properties, and spending an estimated $258,420 on insurance, utilities and maintenance costs.
The estimate of $258,420 in expenses doesn’t include upgrades or rehabilitation costs.
The estimated net annual income on all the properties is $36,741.
The properties included in the report encompass such Hanford landmarks as the Old Courthouse, the Bastille, the Carnegie Museum and the downtown Amtrak station.
Some properties are losing money.
One of the most spectacular money losers is the courthouse.
With estimated annual expenses in the 2015-2016 fiscal year of $201,310, the city collected only $102,084 in rent from 12 tenants in the courthouse.
The net annual loss on the building was $99,226 a year.
Other losing propositions included the Amtrak building, which was $13,506 in the red due to unrented space, and the undeveloped portion of Hidden Valley Park, which costs an estimated $2,500 a year to maintain but brings in no income to the city.
The biggest winner for the city is the former post office building currently rented to Rabobank. It brings in $57,887 annually to the city and costs the city nothing in maintenance.
The report was brought up by Mayor Justin Mendes at Tuesday night’s City Council meeting after the councilmen, members of the public and city officials toured the Old Courthouse and the Bastille.
“We spend $260,000 to make $36,000,” Mendes said in an interview. “If it wasn’t for Rabobank, it would be a net loss.”
The tour revealed the run-down state of the Bastille, including the damage done by the previous tenant, Annie Ferla, who operated a bar in the building.
Ferla left a trail of destruction in her wake when she was evicted, ripping out brass rails and sinks and causing more than $10,000 in damage.
The city sued Ferla for back rent and damages and won, but has yet to recover any money from her, according to Jeff Levinson, an attorney with Griswold, LaSalle, Cobb, Dowd & Gin, the law firm that serves as Hanford’s legal counsel.
During the tour, Building Superintendent Randy Shaw talked about flood damage to both the interior and the exterior of the courthouse.
Some of the flood damage was from rain, but other flood damage occurred when HVAC water pipes burst inside the courthouse and inundated parts of it.
The courthouse has an antiquated HVAC system that uses water as a coolant. Most modern air conditioning systems are air-cooled.
Preliminary estimates put the cost to replace the HVAC system at $388,000, but Public Works Director Lou Camara said Tuesday that, adding in the cost of an engineering study, the total cost is likely to be around $500,000.
“This is such an attraction for the community that has such great value,” said former City Councilwoman and current District B candidate Sue Sorensen. “How can you let this history just sit and not be put to the benefit of the community?”
When the council reconvened inside its chambers after the tour, discussion focused on where the HVAC upgrade money would come from.
Camara talked about the possibility of taking it out of the accumulated capital outlays fund, but there’s a lot of skepticism about dipping into that account for the full $500,000.
Mendes said in an interview that the money in the account should be prioritized for continued efforts to expand the police department’s facilities and to eventually add a fourth fire station to Hanford.
The current police station is termite-infested. The department estimates that building a new station will cost in the vicinity of $20 million.
Hanford is currently in the process of building a third fire station.
Mendes has more than once suggested selling the Rabobank building to fund improvements to the courthouse and the Bastille.
Mendes has said that the sale price could be in the $800,000 range. Mendes said that the buyer can legally be required to retain the historical façade of the building so the look doesn’t change.
He repeated the Rabobank building sale idea Tuesday night, but got no response from the other councilmen.
Councilman Gary Pannett said in an interview that he hasn’t ruled out selling the Rabobank building with the proviso that the appearance be maintained.
“I want to make sure that we never let the building deteriorate,” Pannett said.
Vice Mayor Francisco Ramirez said in an interview that the Rabobank building could be sold with the same requirement.
Mendes said the council wants to wait on funding decisions until after the election.