The Lester Group is buying Martinsville’s YMCA property for $750,000 — a move the company says it made to help the Y pay for a new building at another location.
The Martinsville-based Lester Group, with primary interests in lumber products and real estate, is set to take ownership of the three-acre property on Starling Avenue as of Dec. 29. The Y will stay for three years rent free, according to the sale agreement.
The Lester Group decided to buy the lot due to its location next to the Virginia Museum of Natural History, said Andrew Palmer, the company’s vice president of properties. The YMCA plans to break ground on its new building — to be constructed at the Five Points Intersection — in April or May of 2027.
“We thought that us buying this property helps the YMCA hit another milestone with the money that they need to build a new Y,” Palmer said.
Palmer said the company wants to be a good community partner, and that’s what led to the decision to allow the YMCA to stay in the building rent free.The YMCA will cover any other expenses, including water, sewer, electric, gas, taxes, insurance and maintenance, he said. After the Y vacates for its new building, The Lester Group will most likely tear down the building, Palmer said.
“We don’t have a full plan today of what we’re going to do with that building,” Palmer said. “We’re looking for the highest and best use of redevelopment opportunities with it.”
The Lester Group will not be relocating its office, which is in the clock tower building on Commonwealth Boulevard. But it will be commercial development, Palmer said, adding that the company isn’t sure what that will be yet. The Lester Group should know its plan by the time the YMCA vacates the building, Palmer said.
The city’s current tax assessment on the property is $5.2 million, said Ruth Easley, the commissioner of revenue. The Lester Group’s Palmer said he doesn’t know why the sale price was considerably lower. Brad Kinkema, the CEO of the YMCA, said the property was appraised at about $750,000.
“The assessed value can be whatever it is, the question is what can you get in a market,” Kinkema said. “No one would ever pay $5 million for this property. That would never happen in a million years.”
Significant swings between the values of government assessments and private appraisals can happen. There was a recent gap between the assessment and appraisal of the Hotel Roanoke & Conference Center.
The Lester Group’s Palmer said the company believes the Y property is a good buy, and the price was one of the reasons.
Right now, the YMCA does not pay a real estate tax because it is a nonprofit organization, Easley said. Once The Lester Group, a private company, closes on the building, the property will no longer be exempt to real estate taxes, Easley said.
Palmer said over the next three years, the Y will pay real estate taxes, not The Lester Group, according to the sale agreement.
“Obviously we’re not happy about that, but we understand that it won’t be in our possession or ownership anymore,” Kinkema said. “It is what it is.”
Easley estimated it will cost about $22,000 in real estate taxes from when The Lester Group takes the title in December to June 30. Beyond June 30, 2027, it depends on what the city council sets as the tax rate in the spring, Easley said.
Kinkema said the YMCA plans on asking for a review of the assessed value, which could also change the cost in real estate taxes.
The YMCA is paying real estate taxes at the new Five Points location, too, Kinkema said. It is considered “other use,” since the organization isn’t using it for any programs yet. There will be a few years during which the Y pays taxes on both properties, even though the nonprofit organization is exempt from real estate taxes under state code.
The Y talked to different groups who were interested in the property, Kinkema said, but nothing came to fruition. The deal with The Lester Group met all the requirements, he said.
“To not take that offer or take it seriously and pursue it would’ve been irresponsible because there aren’t a lot of people looking for a 30-year-old community center that want to buy it and then pay money to repurpose it,” Kinkema said.
He said it’s important to have a plan to repurpose the property, so the Y doesn’t own two buildings. Plus, the money from the property sale can go toward the new YMCA.
In addition to the $750,000 property sale, the YMCA was recently awarded a $1.25 million state community development block grant. That brings the YMCA fundraising to $21.5 million out of a $28 million goal.
The $1.25 million will go toward the early learning center, which is currently located at Smith Memorial United Methodist Church in Collinsville. There isn’t enough space for the early learning center in the current building, which is one of the reasons that the Y chose to construct a new building rather than renovating its current facility.
The Lester Group and the YMCA reached a tentative sale agreement in January, Palmer said. A feasibility study was then conducted.
“All of the boxes are being checked,” Palmer said.
