Hotelier Richard Boyles has acquired a historic downtown Eugene landmark, but he doesn’t plan to make it a hotel.

Boyles bought the 85-year-old Schaefers Building on the southeast corner of 10th Avenue and Willamette Street last month for $3 million from the Lane Council of Governments.

Senior and Disabled Services, an LCOG division, remains a tenant, occupying the first and second floors. The 12,000-square-foot third floor is vacant and available for lease.

Boyles’ Hotel Investment Property 2 LLC acquired the Schaefers Building as part of a 1031 tax exchange, which allows it to defer capital gains taxes from last year’s sale of the Fairfield Inn & Suites in Central Point.

The purchase is Boyles’ first investment in downtown Eugene.

“I’ve always had an interest in historic buildings, and the Schaefers Building is unique in its architectural style,” Boyles said. “It’s a solid building in a good location with a tenant in place and opportunity for another.”

Boyles’ management firm, InnSight Hotel Management, operates 11 hotels in Oregon and Washington, and is involved in three others in different stages of land use or building approval.

His firm’s hotels include Courtyard by Marriott, Holiday Inn Express, Holiday Inn and Comfort Suites, all in Springfield, and The Residence Inn in Eugene.

The Schaefers Building, near the historic Downtown Athletic Club and McDonald Theater, is on the National Register of Historic Places and is a Eugene city landmark.

Designed by Eugene architect Truman Phillips and built in 1929, the building is a modernistic art deco structure with a decorative brown brick exterior.

The city of Eugene, Lane Council of Governments and Eugene Water & Electric Board are working on a pilot project to bring more fiber optic lines and lower cost, higher speed broadband service to downtown buildings by October. The fiber optic lines will run in existing EWEB electrical conduits down Willamette Street to LCOG’s Internet exchange in the basement of LCOG’s Park Place Building, at 859 Willamette St.

Tenants in the Schaefers Building could take advantage of the additional Internet capacity once the fiber optic lines are “lit” by private Internet service providers, officials say.

The sale of the Schaefers Building helps LCOG financially by eliminating mortgage payments of nearly $200,000 a year, said the agency’s executive director, Brenda Wilson.

Most of LCOG’s 240 employees work for Senior and Disabled Services. The division is funded by state and federal dollars and runs programs for senior citizens and disabled people, such as senior meals and abuse and neglect reporting.

In addition to downtown Eugene, Senior and Disabled Services operates from rented offices in Cottage Grove, Florence, Veneta, Junction City and Oakridge.

LCOG also employs planners, technology experts and other specialists who work on a contract basis for local governments and nonprofit groups around Lane County, including cities, public utilities, and school and park and recreation districts.

Wilson became its executive director in 2012. With the backing of the agency’s board of directors, she laid off employees, put the Schaefers Building up for sale and made other changes to fix a budget imbalance. For example, LCOG had borrowed money using the Schaefers Building and its two other buildings as collateral.

Some of the loan proceeds went to making improvements for LCOG tenants in the buildings, but the agency also used some of the loans to pay for its ongoing operations.

LCOG bought the Schaefers building in 1991 for $2.1 million.

However, the habit of using the building as collateral had left LCOG owing $2.5 million on the building by the time of the sale, Wilson said.

LCOG was faced with refinancing the debt or paying it off in early 2017.

“It was too much,” Wilson said. “Now we have five loans on two buildings compared to seven loans on three buildings.”

LCOG also is attempting to sell an office building at 244 A Street in Springfield, next to City Hall.

The Oregon Department of Transportation rents the building, but the state agency is looking for a new home in the area, Wilson said.

LCOG is asking from $3 million to $3.5 million for the two-story, 31,000-square-foot building, Wilson said.

“We have made the necessary cuts,” she said. “We have stabilized the organization. Now, I’m working to get the organization out from under these loans.”