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Title:
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Authorization to Enter into Contract with Equus Group, Inc. for Sale and Redevelopment of City-Owned Property at 135 N. 2nd Ave. (Ordinance S-45119)
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Title
Authorization to Enter into Contract with Equus Group, Inc. for Sale and Redevelopment of City-Owned Property at 135 N. 2nd Ave. (Ordinance S-45119)
Description
Request to authorize the City Manager, or his designee, to enter into a disposition and redevelopment agreement, and other agreements as necessary (Agreements), with Equus Group, Inc., or its City-approved designee (Developer), for the sale and redevelopment of the Ellis Building at 135 N. 2nd Ave. (Site); and for the City Treasurer to accept funds. The Project will generate one-time sales proceeds revenue of $2.25 million for the General Fund.
Report
Summary
In December 2015, City Council authorized the relocation of employees from the Site and for the sale of the building through a competitive solicitation process. The Site, the former Human Resources Building, became vacant in June 2016 and the City entered into a contract with the successful proposer in February 2017. Due to certain circumstances, in January 2018, the parties mutually terminated the contract in May 2018. At the end of July, eight offers were received and reviewed by the Community and Economic Development Department (CEDD). Upon review and analysis of the offers, CEDD began negotiations with Developer. The Developer and City agreed to proposed business terms on Sept. 19, 2018. Staff and the Developer have negotiated the following business terms:
Enter into Agreements by Dec. 28, 2018. This period shall also be the due diligence period for the Developer.
Close escrow by Dec. 28, 2018, which will include the Developer purchasing the Site and the City transferring title.
Purchase price will be $2.25 million.
Accept a 10-year deed restriction on the Site to remain a primarily office use.
City will disconnect the Site from the City's chilled water system.
City will work with Developer to provide 140 parking spaces for the Project, at market rates, in mutually agreeable parking facilities for a term not less than seven years.
Developer will complete the project within 24 months from close of escrow.
Additional terms and conditions as required by the City.
Should the Developer identify a serious defect during the due diligence period, or finalize the parking agreement, which will make the project unfeasible, the parties may terminate the Agreement.
Contract Term
The Developer will have until Dec. 28, 2018 to perform due diligence efforts, enter into the Agreement and close escrow. The Agreement will conclude upon the completion of construction of the improvements to redevelop the Site, which is expected to be no more than 24 months. The deed restriction will be for 10 years from the close of escrow.
Financial Impact
The Project will generate one-time sale proceeds of $2.25 million to the City. This purchase price will be used to pay off any remaining debt on the Site and the remainder will go to the General Fund.
Concurrence/Previous Council Action
The City Council approved the issuance of the RFP at the Dec. 16, 2015 meeting.
Location
135 N. 2nd Ave.
Council District: 7
Department
Responsible Department
This item is submitted by Deputy City Manager Deanna Jonovich and the Community and Economic Development Department.