Chapter 5

We arrived at the first of the two buildings we were to tour a few minutes early. The agent, Gus Frost, had shown up even earlier to turn the lights on and prepare the building for our tour.

After introducing ourselves, Gus said, “I suggest we start at the top floor.”

Madge said, “Sure. We want to see all of the floors, the basement, and the rest of the property, so it really doesn’t matter where we start. The top floor is a good starting point. Hopefully, it will be warmer out here when we finish with the interior of the building.”

Gus took us on a tour of the building pointing out a number of features that we might have overlooked otherwise. We liked him as a person, and he was a very good salesman. During the tour, it was apparent that the building’s dimensions and layout were adequate for at least two subsidiaries per floor, and if they were small companies like JAMP Leasing would be, we might be able to have three LLCs on some floors. The flip side of that was, we were expecting Minnus Enterprises LLC to be a very large company with offices in many countries, so it would likely require an entire floor, and possibly part of another floor. Once it got large enough, we may want to buy a dedicated building for Minnus Enterprises.

At the end of the tour, Madge thanked Gus for guiding us through the building and pointing its features out to us. It was still cold when we looked at the exterior of the building, parking lot, and the rest of the landscaped area that was part of the property. We had decided to drive through the neighborhood after our tour, but first, we found a coffee shop where we could talk.

Phyllis said, “I liked it. The only things that I disliked were a few cosmetic items that we can fix before we move in.”

Alicia said, “I agree. The framed in offices were decent sizes and in good condition. We may need to build offices in the open areas, if necessary. I know we are trying to avoid cubicle dividers, but we could use them to create larger than normal offices. We will have to repair a few dings and paint almost everything before we move in. The parking lot should be adequate for our initial needs, and there is room on the property for building a small parking garage.”

Madge said, “I was a little concerned about the parking lot’s size also. A small multilevel parking garage would resolve that problem. We could also reinforce its roof to allow hovercars to land and take off. When we drive around to check out the area, we will want to make sure that our neighbors are far enough from us to not be a problem.”

I asked, “What sort of problem were you thinking of, Madge?”

“This seems to be a very quiet neighborhood, so hovercars flying overhead and an increase in traffic could cause complaints, Jeb.”

Alicia said, “I agree. The people in the neighborhood won’t appreciate a lot of cars and trucks driving through their neighborhood going to and from our building. We need to look for routes that can be used by our employees to get to work without driving through a dense residential area. Although from what I have seen so far, the area doesn’t seem like a dense residential area.”

I said, “I agree with everyone’s remarks. I will have no problem with this building if we don’t find a problem with the neighborhood. So if we decide this building is our first choice, how much should we offer as an opening bid to buy it?”

Madge said, “I tried to run the comps using a few office buildings in Snohomish and the surrounding area. However, most of the office buildings sold in the Seattle area within the past three years are less than thirty thousand square feet in size. That makes them poor choices for making a comparison.

“There was one building that is roughly three hundred thousand square feet that was sold a year ago for forty one million dollars. I used the square footage price of that building to make an estimate of this building’s value. We didn’t tour that building, so I don’t know if it is comparable to this building. But the descriptions seem similar; however, it is located in Everett and that makes a difference. My calculated value was slightly less than sixteen million, so the asking price of sixteen point five million is not unreasonable. I also took a look at the assessed value of office buildings in Snohomish, and the per-square-foot values were about the same as this building.

“The building has been on the market for more than a year, so the owner may be willing to accept a lower sale price just to sell it. I think we should make an opening offer of fifteen million. We can assess the owner’s response and go from there.”

We finished our coffees and went for a drive through the area surrounding the building. It was a low density neighborhood, and we didn’t see anything to indicate there would be a problem for us if we bought the building. According to our Rand McNally Road Atlas, there were secondary streets that provided access to Highway 9 without driving through the residential areas, and Highway 9 allowed access to the other local highways. From the farm, we could take the Lowell Snohomish River Road to Highway 9 and then head north to the exit closest to the building, which would be about a ten mile drive for us. We went home using that route and there were a few homes along the route, but they were a good distance from the road.

It was late in the afternoon by the time we got home. My wives headed to the kitchen to start fixing dinner. I went to the office to call Edgar.

Once Edgar answered the phone, I said, “It’s Jeb, Edgar. We have some work for you if you are interested.”

“I’m always interested in new jobs, Jeb. What do you need?”

“We have two things for you, Edgar. The first job will be painting some offices and some minor repair work in an office building we are going to buy. We found two possibilities and we looked at the first one today. We will be looking at the second building tomorrow morning. I suspect we will buy the one we saw today, but we will make the decision of which to buy tomorrow. The second job is to demo one of the outbuildings on our farm, and replace it with a small office building.

“We plan to use both buildings for a long time, so quality work is more important to us than speed. We should be able to close on the office building in about a month. Do you have any openings around that time for doing some minor repairs and painting in the building?”

“Let me check the schedule, Jeb. What type of repair work will need to be done, and how many offices do you need painted?”

“We noticed a few minor dings in the walls, Edgar, but nothing major. We should be able to get by with painting a dozen offices for now. We can paint the remaining offices as we need them and when you have an opening in your schedule.”

“Okay. All of my painting crews are busy for the next six weeks, and the workload drops off after that. I can break one of my crews free when they finish their current job. Do you have a set of plans for the office building you want us to build?”

“No plans yet, Edgar. We are still in the concept stage for that task. If you will have your architect give us a call, we will work with them to design what we want built. There’s no hard deadline for completing construction. However, we’ll want to use the building as our satellite office, so we don’t want to let the completion date slide out too far.”

“Okay, Jeb, I understand. I’ll check with my architect and have her give you a call. You are on my calendar for a painting crew seven weeks from now. If your date slides, let me know and I can assign your crew to assist my other crews until you need them. Anything else, Jeb?”

‘No, that’s all for now, Edgar.”

I checked Alicia and my bank account balances to confirm my recollection of having an adequate balance to pay cash for the building. The total balance would be sufficient, and leave us with an adequate reserve until we completed the sale of the properties we were selling to JAMP Enterprises.

The normal crew arrived for dinner, and the rest of the evening was pretty much like prior evenings. Madge said she wanted to check on a few things about the second building and disappeared for about an hour.

When she returned, she said, “I don’t think we are going to like the second building, or the area it is in. It appears that the area is rundown, and unless the building is in exceptional condition, it is overpriced. I took the opportunity to prepare an Offer Letter for the first building, just in case.”

When asked for details, Madge said, “I am not certain if what I found is accurate, so I don’t want to discuss the details. Let’s just wait and let the area and building speak for themselves.”

On the way to the second building we noticed that the area was not as well-kept as the area around the first building. There were also unkempt young people on a few street corners. The agent, Gil Mantooth, was late and it seemed like he spent an unreasonably long time to find the circuit breaker box and to turn on the building’s lights.

He took us to the top floor. The elevator was extremely slow, and at times, I didn’t think it would make it. The top floor was in a state of disrepair. Holes in the wall, dirty walls, dirt and litter on the floors, and broken floor tiles. The next two floors we toured were in a similar condition plus we also saw the remains of a few cockroaches. What made the situation worse was, according to Madge, the owner’s asking price was almost ten dollars per square foot higher than the asking price of the first building. We told Gil that we had seen enough and weren’t interested in the building. He didn’t seem to be surprised.

When we got into the car, Alicia asked, “Madge, did you bring that Offer Letter with you?”

“Yes, and I think I should give Gus a call to see if he is in his office and has a few minutes to see us. If he is, then we can sign the letter at his office and give it to him.”

Enroute to Gus’s office, I said, “The condition of that building caused me to realize we need a building maintenance group to maintain our buildings and their equipment. This group should include janitors, people to make minor repairs, and others that I can’t think of at the moment.”

Madge said, “I agree. The dirt, litter, and cockroaches disgusted me. I’ve never heard of an agency that would show a property in that condition to a potential buyer. The agent could at least have had someone sweep the floors and repair the worst of the damage.”

Gus was available, and we only had to detour about four miles to get to his office. Alicia and I signed the Offer Letter as JAMP Enterprises’ representatives and Madge presented it to him. Gus smiled as he read the letter. I think he was expecting an offer from us and that it would be lower than the asking price. On prior occasions, Madge had told us that a reduced offer price was a common negotiating tactic. She had also told us that a higher than expected asking price was a second negotiating tactic. I suspected Gus’s smile indicated, he knew what the owner actually wanted for the building and had played the negotiation game before.

That evening Gus called, and Phyllis answered the phone. Gus told her the owner countered our offer with an offer price of sixteen million. We all looked at Madge. She nodded and we nodded back. Phyllis asked Gus when he would be available for us to sign the counter offer. We now had a 9:30 appointment tomorrow morning at his office.

After breakfast, we all headed to Gus’s office. He was ready for us, and it only took a couple of minutes to sign the paperwork and receive a copy.

With a quizzical look, Gus said, “I was expecting you to counter the owner’s offer.”

Madge said, “Sixteen five was not an unreasonable offer, and we felt sixteen million was well within the range of reasonable. By the way, which Title Company do you use?”

He replied, “Trapp Title Insurance.”

Madge smiled and said, “So do I.”

As we were about to get in the car, my cell phone rang. After I answered it, Shane said, “I think we need to get together today for I have some good news for you. Are you available this morning?”

We had nothing important scheduled, so I said, “Sure. We just finished some business in Snohomish and were about to head home. We can meet you there in about half an hour.

When we were gathered around our dining room table, Alicia asked, “What’s the good news, Shane?”

Shane replied, “Several things, Alicia. I received notice from the state that Cotton’s two Certificate of Formation applications for the creation of the two LLCs have been approved.

“Since you now have four LLCs, I addressed the items you need to do in regards to your five LLCs. To start with, I filled out the paperwork for you to apply for a Federal Tax Identification Number for each of the LLCs. Just sign the forms and I will mail them in.”

Shane handed me five forms, so I signed them, and returned them to him.

Shane said, “Now these forms are your LLCs’ Business License Applications. Sign the forms and I will mail them in, also.”

I signed and returned the forms to him.

“Here are the initial Annual Reports you are required to submit. Sign them and I’ll mail them.”

I did so and Shane put the reports in a large envelope with the forms I had previously signed. He put the envelope in his briefcase.

Shane said, “Jeb, the documents you signed fulfill your requirements with the State Government and the Federal Government. However, we have one final item to discuss – your Operating Agreement for JAMP Enterprises. As I explained, it is advisable, but not mandatory.

“Based on our talks, I have been working on a draft of the Operating Agreement, and think it will be ready for the first review next week. Since your subordinate LLCs are parts of JAMP Enterprises, I don’t see the need for each LLC to have an Operating Agreement. Once you review the draft, we can discuss your changes and I’ll update the document accordingly. I will then provide you with a final review copy. If necessary, I will incorporate any further comments, and if the comments are minor, I will file it with the state. If the comments are significant or if you want to review the final document, I will provide you with a final review copy before filing it with the state.

“Alternatively, you could have an Operating Agreement for each LLC. That would be a good idea if the individual LLCs are to be operated differently. If that is true, I can make copies of the first Operating Agreement and we can tailor them for Minnus Enterprises LLC; JAMP Leasing, LLC; JAMP Financial, LLC; and JAMP Management, LLC. Once that is done, I will file those Operating Agreements with the state.”

I said, “For now, let’s just do one Operating Agreement. If one or more of the other LLCs is to be managed differently, we can tailor what we have to the LLC’s needs.

Phyllis said, “You are staying for lunch, aren’t you, Shane; we insist.”

Shane smiled and said, “Phyllis, you do realize that I am not yet one of your employees, so I will bill you for my time and effort dealing with your legal needs. Am I still invited to stay for lunch?”

Lunch today was soup and sandwiches. Shane enjoyed his meal and we enjoyed our conversation with Shane. After Shane left, we decided to update our schedule. We had already added subtasks for the items Shane had taken care of for us, so we marked them as complete. We were in the final stage of buying a headquarters building, and we had set up Building 3 to be our temporary office. Now we had to add tasks for building a satellite office and for buying and remodeling the office building. Once we finished that, we would talk about what else we would address this week, and work on those tasks.

Lillian arrived right on time this morning. The first thing on the agenda was a brief tour of Building 3. Brief, because it was rather cold outside, and we had forgotten to buy heaters. We returned to the house, and updated her on the tasks we needed her to accomplish. One of those tasks was to extend a job offer to Shane.

Lillian then filled us in on what she had to do immediately in addition to what we tasked her with. Even to us, some of what she said was obviously more important than the tasks we gave her, but we did stress that hiring Shane was a priority.

We allowed her to organize her tasks according to her priorities. After all, managing the HR Department is what we hired her to do. Once we finished our conversation, we all headed for ‘Phil’s Computers and Supplies.’ We were expecting to buy a large amount of equipment, so Paul arranged for one of Mike’s box trucks to follow us to Phil’s and bring back our purchases.

We purchased a large amount of computer equipment, and the truck’s driver and his helper loaded our purchase into their truck. We also discussed my concern with Phil’s technical support staff that our laptops did not have the signal strength to reach our broadband modem in the house. We arranged an appointment for a technician to visit us at the farm tomorrow afternoon to evaluate our needs.

On the way home, we and the truck stopped at Home Depot. We bought four fifteen hundred watt electric floor heaters, which were added to the truck’s load.

According to the salesman, we may need one of Edgar’s electricians to add a dedicated circuit for the heaters. The heaters and dressing warmly should be adequate until we can move into our new building.

Lunch was an experience for Lillian. The entire breakfast club joined us for they wanted to meet her. We invited our driver and his helper to join us, but they declined. I think they felt uncomfortable eating with high-ranking officers. Needless to say, we had a long, enjoyable lunch. Lillian seemed to enjoy John, Mike, and Simon’s company.

After lunch and with the help of Simon, Paul, Aaron, Vert, and Relpt, our purchases made their way from the truck to Building 3. Simon, Vert, and Relpt had me give them the keys to Building 1, so they could get a hammer, a couple of one by four boards, a level, and some nails, so they could hang the white boards. Paul, Aaron and I unpacked and installed our heaters, and we turned them on to take the chill off the room.

Lillian and my wives unpacked our computer equipment and moved it to the desks. It didn’t take long for Lillian to connect her desktop, monitor, keyboard, and mouse. While we disposed of the packing materials, Lillian started loading the software programs she brought with her into her computer. I made a mental note to find out what programs she needed and to buy her the latest versions of the software she used. Standardization of software was another thing we had to consider for our LLCs. Hopefully, we can get a group license for the programs our LLCs would need at a reasonable price. I made another mental note to add an IT Department to our organizational chart.

The technician did visit us and he determined that we needed either a hardline connection to the modem or a repeater. We decided on an Ethernet cable between the house and Building 3’s wireless RF Switch, which was connected to our broadband modem. The cable would be routed through flexible conduit that was to be buried four inches deep. We would have buried the conduit deeper, but this was a temporary solution for the next two or three months. The technician and two helpers returned the next day and did the work.

We were enjoying a rest day a couple of days after we signed the counter offer on the building we were buying.

Lunch would be ready shortly. Simon, Paul, and Aaron joined me in the living room.

Paul said, “We finished all the tasks you gave us a couple of days ago. Since then, we have been looking around for something else to do. We took care of a few items, but haven’t found anything else to do since then. Is there anything we can help you with?”

I thought for a few moments and said, “I can’t think of anything, Paul. We have a lot to do in the coming weeks, but nothing that you could help us with. When was the last time you three took a vacation?”

Simon said, “It’s been more than a year for me.”

Paul and Aaron agreed it had been a long time for them also.

I said, “What if you were to take some time off, and go do something. If we need you for something we can always give you a call.”

The three of them looked at each other with small grins on their faces.

Aaron said, “I wouldn’t mind sitting on your dock and fishing for a few days. What about you, Simon?”

Simon said, “I haven’t fished since I was a boy. It might be fun.”

Paul said, “From what I remember, there is room on that dock for three, so I’ll join you.”

I said, “After lunch we can grab the outbuilding keys and go out to Building 2. It has a good assortment of fishing gear, but I never looked at it closely. Use whatever you want.”

I had gone out to Building 2 with Simon, Paul, and Aaron. After they selected fishing poles and other equipment, they headed for the dock. I remained behind and was going through our sporting goods to find some workout equipment. Alicia was in the house when the phone rang. She answered the phone, and said, “Connor residence. Can I help you?”

“Yes. This is Elba Hart, and Edgar asked me to call you when I had some time to talk with you about designing a small office building on your farm. I was wondering when you would have some time for me to look at the location and discuss the project with you.”

“Hold on a moment, Elba, and I will check with the others.”

After a short conversation with Madge and Phyllis, Alicia said, “We have all of this afternoon open, Elba. We will be tied up for the rest of the week and all of next week. Can you make it today?”

“Yes, I have a few items to take care of, but that should take less than an hour. I will need your address.”

Alicia gave Elba our address and told her to look for the farm that resembled a military installation. She explained what she meant by military installation.

Phyllis came looking for me, she said, “Jeb, Edgar’s architect called and she will be here in about an hour.

“What’s so interesting about all of this sports equipment?”

“Well, I was thinking of starting a work out regime, and was wondering if there was any equipment out here. So far I found a bench for working with weights, but I haven’t found a set of weights, yet.”