The day after GE Capital announced what had long looked to be inevitable—that it would be closing down its Billings operations and laying off 60 people—Steve Arveschoug was working on what comes next.
Arveschoug is the director of Big Sky Economic Development, the agency that built a 40,000-square-foot “Center of Excellence” for GE Capital in 2009.
On Tuesday, Arveschoug was working on what he calls “the moving-forward plan” that he will present to the Big Sky board of directors on Dec. 8. That meeting, open to the public, will start at 7:30 a.m. in the ground-floor conference room of the building that houses the agency, at 222 N. 32nd St.
There are lots of details to work out, Arveschoug said, but his focus will be on finding a new tenant or tenants for the GE Capital building at 3333 Hesper Road, which cost $9.3 million to build and which is part of the Transtech Center business park.
GE Capital has already agreed to continue monthly payments through January 2021, the end of its lease with Big Sky Economic Development. At that point, Arveschoug said, his agency will have a building worth $10 million to $11 million, with only about $2 million in debt remaining on it.
By then the agency will also have a building maintenance reserve of about $1.2 million. That money has been set aside specifically for use in retrofitting or redesigning the building to fit the needs of a new tenant, Arveschoug said.
Conceivably, he said, the building could be divided into as many as three separate units, though he thinks the best solution would be to find a single tenant interested in using the whole building.
“It’s a great facility and it’s a real asset to the community,” Arveschoug said. “It’s important to see that.”
GE Capital has agreed to leave all equipment and furnishings in place, he said, so that it can be marketed as a turn-key operation available for a quick turnaround. Arveschoug said several prospective tenants have already toured the building, since it has been known for almost a year and a half that GE Capital would probably be pulling out of Billings.
In April 2015, Arveschoug said, General Electric announced that it was divesting itself of GE Capital. In October of that year, GE announced that it planned to sell the North American portion of its commercial distribution finance and vendor finance businesses, as well as portion of its corporate finance business, to Wells Fargo for $30 billion. The Bank of Montreal bought GE Capital’s transportation-finance unit.
Arveschoug said GE Capital has “transitional service agreements” with Wells Fargo and the Bank of Montreal, under which each of those companies has about 50 employees doing work for them but still working in the GE Center on Hesper Road.
Wells Fargo already has a large office complex in Billings that could absorb those workers, and Arveschoug said he has been talking to the Bank of Montreal about possibly leasing the GE Center, if it is thinking of expanding its Billings presence.
“I don’t know yet where they’re headed,” he said.
GE Capital still has about 60 employees of its own working in the building and expects to lay them off when it closes by the end of 2017.
Arveschoug said it is important to note that GE simply made a business decision regarding the future of the company, and the closing of the Billings operation was not a reflection on the city or workers here. General Electric CEO Jeffrey Immelt once spoke of the “world-class work force” in Billings, Arveschoug said, and Jeffrey Bornstein, the company’s chief financial officer, was closely involved in the decision to open a center in Billings.
Since GE announced plans to divest itself of GE Capital, Big Sky Economic Development, other local officials and all three members of Montana’s congressional delegation have had two conference calls with Bornstein and Immelt.
Arveschoug said early talks with GE were aimed at exploring whether the company couldn’t somehow continue to have a presence in Billings, and as that became more and more unlikely, talk turned to finding a “third-party opportunity” for the GE Center.
“We believe GE is interested in helping us create that opportunity,” he said, because the company “does want to make this a positive for the community long-term.”
Another factor that could make the property attractive, he said, is that “the footprint we have there is expandable.” There is room and the building was designed to accommodate a 25,000-square-foot expansion. In fact, before GE started thinking of moving away from GE Capital, Arveschoug said, he was working with company officials about just such an expansion.
Arveschoug said Big Sky Economic Development used to own most of the land that now houses the Transtech Center. Over time, most of the land was sold to private developers and property owners, and the only portion of the business park that the agency hung onto was the parcel on which the GE Center sits.
That happened before he joined the agency, Arveschoug said, but he thinks it was a wise decision then and represents a good opportunity for the city now. At its peak, he said, GE Capital employed 200 people at the Billings center and put $95 million into the local economy through direct and indirect impacts.