Junction City approves reduced purchase price for former call center, agrees to support IRB and PILOT evaluation for VA proposal

The Junction City Commission voted to approve an amended purchase agreement for the city-owned former call center and to provide a nonbinding letter encouraging consideration of industrial revenue bonds (IRBs) and a payment-in-lieu-of-taxes arrangement to support Highlands Enterprises’ proposal to bring a U.S. Department of Veterans Affairs clinic to the site.

City staff told commissioners the developer, Highlands Enterprises, requested the addendum to reduce the previously discussed purchase price from $3,750,000 to $3,250,000, citing a decline in appraised value and substantial deferred maintenance. City staff introduced the item as an addendum to a purchase agreement that the commission had previously approved in concept.

The matter matters to the city because Highlands Enterprises says the VA clinic would include primary care, radiology, telehealth, physical therapy, optometry and lab services and could create local jobs. Chris Williams, representing Highlands Enterprises, said the company’s “intention for the building is to work with the VA. That is really the sole purpose we are working towards the purchase agreement.” Williams also said the overall project the company envisions is “around $30,000,000.”

During the discussion commissioners questioned the scope of the developer’s commitments and the fiscal implications for local taxing entities. One commissioner noted that the site previously generated roughly $120,000 in property tax revenue on average over four years. Williams said Highlands Enterprises plans to make required improvements if the VA selects the site, including replacing HVAC, repairing the roof, improving the parking lot and adding square footage to meet VA guidelines.

On financing incentives, the developer requested the city consider both IRBs and a PILOT; the packet included a proposed PILOT figure of $40,000. City staff said IRBs and any PILOT would be worked through bond counsel and that revenues under such arrangements would be allocated among taxing jurisdictions according to the applicable process. A city staff member emphasized that any letter of support would be nonbinding and would not commit a future commission to approve financing or tax agreements.

Commissioners voted to approve the amended purchase price. The motion to accept the amended offer passed by a recorded tally of 4 yes, 1 no. Separately, the commission approved a motion directing staff to draft a letter of support stating the city is willing to encourage and consider IRBs and a PILOT as the financing process moves forward; commissioners clarified the letter would be nonbinding and subject to future approvals.

Next steps outlined at the meeting: Highlands Enterprises will continue to pursue the VA award; the purchase and any financing depend on the VA selection process, bond counsel review and future required approvals. City staff said they will draft the letter of support and forward it to the mayor and city manager for signature if the commission’s motion is carried out.