Star-Journbal Editor
Yes, it's true.
The city did not have a property insurance policy on the Hillsboro Business Development Complex (a/k/a the Old AMPI Building) that was damaged by fire this past Wednesday.
In fact, the building hasn't been insured since the city purchased it in 2002 from Associated Milk Producers, Inc.
Until Wednesday's blaze at 403 N. Ash Street, Dalke said it seemed like a good idea that the city hadn't shelled out $23,000 a year, or more than $113,000 over the past four and a half years, to insure the building.
"Once we get the [repair] estimates, we might have wished we would have had a policy on it," Dalke said. "It was a risk we were willing to take."
After surveying the damage caused by fire the mayor still would like to believe the city did the right thing.
Fire restoration companies inspected the damage Monday and will submit cost estimates to the city council.
Dalke surveyed the damage shortly after the fire. In addition to covering everything with black soot, the blaze burned a hole through the roof. Or, make that two roofs.
Dalke said it's important to understand that AMPI had expanded its facility, as needed, from the time it was built in 1945. As a result, the facility has several different roof sections. The fire occurred in an area where two of these roof sections meet, she said.
According to Dalke, when the city purchased the property in 2002, it paid $75,000 for the land and the natural gas pipeline, which runs underground. The city didn't want the building, but it came with the deal.
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"We didn't see a need to insure the building," Dalke said, "because we saw the value in the land we purchased there."
Other than the southwest corner of the building, which is used to house the police department, and an area on the northwest corner, used for police vehicles and storage, the city has found little use for the mammoth 80,000-square-foot building.
The city leased some space to local businesses, such as Golden Heritage Foods., Inc., but had no big plans for the building, until a few months ago.
That's when the USD 410 board of education asked the city to consider leasing part of the building to the district for its main office, bus parking, and maintenance facilities.
Under the proposed plan, if voters approve the $6.625 million bond referendum on June 5, the repair service garage and 38 buses would be moved from the high school and middle school complex to the facility.
School officials toured the city complex a few months ago and discovered that with about $475,000 worth of remodeling, the district could have the 14,300 square footage it needs without the expense of a new million-dollar building.
Before the fire, the district and the city were in the middle of working out the details of a long-term lease agreement that would benefit everyone.
On Monday, USD 410 superintendent Gordon Mohn expressed hope that the fire would not stop the proposed lease agreement. And Dalke said she hoped the city council will agree to pay for the cost of roof repairs so that if the referendum passes the district can take occupancy.
"The number one issue that I see is that we have said that we would lease to USD 410," Dalke said. "The area they're interested in leasing happens to be the part of the building that caught fire. So we need to get that back into condition, so we can go ahead with our plans."
The district architect who drew up the proposed remodeling plans is scheduled to tour the building Friday, Mohn said. If the architect is satisfied, and the city agrees to repair the damage, the district would prefer to stay on track toward a lease agreement.
Mohn added that he had been somewhat surprised when he toured the damaged building.
"The fire damage wasn't as extensive as I'd expected it to be," Mohn said. "I talked to the mayor a couple of days after the fire, and they felt confident they could get it taken care of. It looks like it's still usable."
The city began to look into the cost of insuring the building about six weeks ago, after the school district requested cost estimates for a long-term lease.
Because insurance costs needed to be factored into the lease agreement, the council asked the city's insurance broker to find out how much it would cost to add the building to its existing property insurance coverage.
The insurance company said it would cost $8.8 million in today's dollars to replace the 62-year-old building. Dalke said the premium costs for so much coverage is sky-high.
"It would have more than doubled the amount the city was currently paying for insuring all of its buildings," Dalke said.
The broker came back to the city council April 10 with quotes showing higher deductibles. But the matter was still under review, and the building was still uninsured at the time of the fire.
After remodeling the police department offices, the district office would move into the space in the southwest corner of the complex.
Dalke said that by Monday the police had already made a clean sweep of the joint.
"They've cleaned up their area and they're back to full business in there," she said. "They did their own cleaning and took care of things. I'm sure in their part of the building you'd never know there'd been a fire."
Whether the city can find an affordable insurance policy for the building remains to be seen.
"Today, things have to be insured for their replacement value," Dalke said. "When you get into older buildings and older homes, the reality is that the numbers are unbelievable."
