The City of Bend is preparing to buy one of the largest office buildings in town from a downsizing health insurance provider to serve as a new administrative headquarters — a sudden pivot in long-term plans to accommodate a growing number of staff.
At an upcoming meeting on Sept. 16, the Bend City Council could give staff the go-ahead to close on the $18 million sale, according to a summary posted to agenda materials for the meeting on Thursday. That would include a four-story building with 70,000 square feet of office space and a 300-space parking lot on Conners Avenue in east Bend, near St. Charles Medical Center.
That could obviate the need for a massive 85,000-square-foot, $150 million City Hall construction project the City had been contemplating. But the City is still holding on to the vision for a new City Hall and City Council chambers to help spur economic development in the Bend Central District, although at a smaller scale.
The potential purchase would come more than a decade after Bend first identified the need for a new City Hall, and after multiple studies evaluating potential sites — none of which were the property at hand. At a work session in June, staff and consultants presented analysis of potential properties, and the City Council narrowed its search to two locations.
That’s when Springfield-based Pacific Health Associates, the nonprofit that owns PacificSource health plans, approached the City about purchasing its property on Conners Avenue. The provider has been cutting jobs across the state as it retreats from local insurance markets.
It was an opportunity the City couldn’t pass up.
“This was not in my cards,” Bend Real Estate Director Matt Stuart told the Source. “It was not what we were leaning towards. But the uniqueness and the rarity of this opportunity caused us to go, ‘hey, how does this fit into the bigger picture and is there a strong economic and community benefit to doing this?’”
According to Deschutes County property records, the property with the office building has a market value of $33 million and an assessed value of $12 million.
Pacific Health Associates did not respond to a request for comment. Earlier this summer, PacificSource notified members it would be pulling out of individual markets across the Northwest. Last fall it laid off about 300 employees, including some in Bend.
According to Stuart, the Conners Avenue building is one of only a few office buildings in Bend large enough for the City’s administrative needs. The City believes it could accommodate more than 20 years of workforce growth.
The City first identified the need for a new City Hall more than a decade ago.
If the purchase goes through, City employees working downtown would move over likely sometime in 2029, Stuart said. It’s where the public would go to talk to staff for services like permitting and paying bills, he said.
“It puts everyone under one roof, which we’ve never had,” Stuart said.
Currently, there are 260 City employees working across 50,000 of office space downtown, spread between City Hall, a building next door and an annex office across the street.
But the new building wouldn’t address the need for a Council chambers, Stuart said.
Bend City Hall was built in 1990 and is 25,000 square feet. Sometimes, during popular meetings, attendees spill out of the Council chambers into the hallway.
Still, Bend’s growth has slowed, and the City recently opened a $130 million public works campus in northeast Bend to satisfy some staffing space needs.
An analysis in June said a new City Hall and administrative headquarters would not be needed until 2038.
“We’re OK in the facilities we’re at,” Stuart told the Council during a June 10 meeting. “There’s no rush for us to pull this trigger, because we can live within our means today.”
To stay within its current space, the City would have to spend between $4 and $5 million to buy or continue leasing the downtown office annex after the current lease ends in 2029. Or, it could renovate a transportation building on 15th Street near Pilot Butte for $6 to $8 million. That property was identified as the most feasible site for a new City Hall in a recent analysis.
Bend City Councilor Gina Franzosa told the Source’s she’s not in support of buying the new building because it’s inconsistent with the City Council’s previous direction, and because the matter was kept out of public conversations until now.
“If Council or staff want to change direction, then at the very least I’d want to see this proposal including the bond funding put out for public comment,” Franzosa said in a text message on Friday. “To date, all conversations have been held in executive session and the public has a week to comment before we are being asked to vote.”
Bend Mayor Melanie Kebler didn’t return a phone call on Thursday.
The City plans to issue $25 million in credit bonds to pay for the $18 million building purchase. The extra funds will cover remodeling, estimated at about $2 million, and any other costs, such as furniture, Stuart said.
It’s far less debt than the City planned to issue to build a large new City Hall, Stuart said, which frees up funding for other projects.
For City properties downtown and in the Bend Central District, it could mean redevelopment happening sooner than recently thought. Since 2020, the City has bought up several acres between Franklin Avenue and Greenwood Avenue in the Central District with a new City Hall in mind. That includes about 1.2 acres along 1st Street, adjacent to what will be the landing for the pedestrian and bicycle footbridge spanning the Bend Parkway along Hawthorne Avenue. The City has floated ideas of getting a private developer on board to create a project that could incorporate a new City Hall, public plaza or housing.
“I think we have a good opportunity by this time next year to be in serious talks with a developer about what that might look like,” Stuart said.
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To me it seems like a really good idea? It’s an existing building, it’s more than enough space. It’s less than the cost of building new. Maybe leftover funds could pay for a new southern Crossing bridge to alleviate the issues at the Healy Bridge?
Wouldn’t it be nice if the City Council brought the public into this conversation before making a decision rather than once again rushing forward with an idea about where a new city hall/building should be? Wouldn’t it be better if a new city hall kept the administration and Council chambers in one building? Is the Bend Central District even a realistic idea or just a pipe dream?