Flathead County has a tentative deal to buy the State Farm Insurance building along South Main Street for future expansion of the county courthouse campus.

Building owner Conrad Adam has accepted the county’s offer of $500,000 for the two-story office building, County Administrator Mike Pence said.

“We can’t pay more than the appraised value,” he said.

The county offered to buy the building a year ago for $490,000 based on a market assessment but couldn’t reach a deal at that time, Pence added.

The county will draw the money from its payment-in-lieu-of-taxes fund — money the county gets from the federal government to offset property tax losses due to non-taxable federal lands.

Commissioner Pam Holmquist said the State Farm building “has some challenges” if the county were to renovate it for county office space.

“Basically we need the property,” Holmquist said.

Pence also acknowledged the difficulty in retrofitting the split-level building.

“We know the cost to renovate it will be significant,” Pence said. “You have to question if it would be better to start fresh” and remove the building.

The county already owns other lots south of the courthouse complex.

The site south of the courthouse was one of two locations studied in a preliminary architectural report for a new Agency on Aging facility. County property north of the fairgrounds was recommended as the preferred site, but Holmquist and Commissioner Gary Krueger favored the property south of the courthouse.

However, a decision about where to build a new Agency on Aging building hasn’t been made. The commissioners have earmarked $2 million for the project for fiscal year 2015, planning to use $550,000 in payment-in-lieu-of-taxes revenue and possibly a Community Development Block Grant.

Holmquist said she questioned the decision to put the AOA facility in the 2015 budget.

“If we can do something sooner, fine,” she said. “We’ve got to start building some buildings, but when and how we don’t know yet.”

The preliminary architectural report noted the county would need to buy additional home sites south of the courthouse for parking and future expansion if the Agency on Aging complex were built in that location.

Commissioner Cal Scott estimated earlier this year that four homes near the State Farm building would cost about $600,000, not including demolition or removal costs.

Features editor Lynnette Hintze may be reached at 758-4421 or by email at lhintze@dailyinterlake.com.