Regular 6.
Regular City Council Meeting
- Meeting Date:
- 07/23/2012
- TITLE
- Public Hearing and Galles Building Sale
- PRESENTED BY:
- Bruce McCandless, Asst. City Administrator
- Department:
- City Hall Administration
Presentation:
Information
PROBLEM/ISSUE STATEMENT
On June 11, 2012 the City Council adopted a Resolution of Intent to sell property located at 10 S. 26th Street, also known as the former Galles Filter Building. Staff advertised a public hearing for this date, notified surrounding owners about the possibility of the sale and requested sealed bids from interested buyers. The City received 2 bids on July 13, but neither bidder met all requirements. Staff will continue reviewing the bids and attempt to resolve irregularities and will make a sale recommendation at the Council meeting.
ALTERNATIVES ANALYZED
Council may:
- Approve the sale of the Galles Filter Building located at 10 S. 26th Street; or
- Not approve the sale of the Galles Filter Building located at 10 S. 26th Street.
FINANCIAL IMPACT
The City used Tax Increment Financing to purchase this property in 1999 for $73,786.70, which could have included some relocation payments to the former owners. It was added to property that the City already owned on the block, leaving only the former Arcade Bar, or L&L building in private hands. The intention was to assemble an entire city block of land for redevelopment. Since that time, the L&L sold to an individual who partially restored and redeveloped it into offices and retail space. One half of the block was developed into the skatepark and associated amenities. The remaining ten (10) lots were paved for free, downtown parking. Priorities have changed in the past 13 years and it is no longer feasible to assemble the entire block for redevelopment. Therefore, staff recommends that the Council sell the subjecty property for the highest possible price and retain the remainder of the property for their present uses.
The City Council adopted an informal minimum price of $5/sq ft. minimum for south side City property. Staff recommended that an invitation for sealed bids allow bidders to purchase the building and up to two full lots (130' X 50') in order to accomodate on-site parking, green space or other amenities for future building tenants/owners. If $5/sq. ft. is applied to the entire land area, the minimum purchase price is $32,500. This amount assumes that the building has no value.
The Community Development Division obtained a Broker Property Opinion in early 2011 that valued the property at $59,000 - $75,000. The land was valued at $5.50/sq. ft. (lot 7 only), therefore, the building value was estimated to be $41,125 - $57,125. If the appraised land value of $5.50/sq ft is applied to the available two lots (6,500 sq. ft.), the land would be worth $35,750 plus the building value, equals a total of $76,875 - $92,875.
The City will have some costs if it sells anything more than the building and the original acquisition of the S. 66' of lot 7. Immediately north of the building there is an entrance to the surface parking lot. That entrance would be closed and new curbing would need to be installed along the new east boundary of the parking lot and City land. The estimated cost is $4,000. Community Development Block Grant (CDBG) funds were used to buy lot 17, a lot at the other (west) end of the block and nearest to the L&L building. CDBG attaches some disposal restrictions that may hamper a future land sale. If the City Council wants to maximize its flexibility to entertain future redevelopment proposals for the remainder of the property, the proceeds from this land sale could be used to "buy" lot 17 and thereby consolidate it with others that were purchased through the tax increment district. The original purchase price for lot 17 was $16,125, but if $5/sq. ft. is applied to this property, it is valued at $17,500. There will also be minor legal and transfer costs.
The actual bid price could be higher or lower than these estimates based on perceived competition in the bidding, the estimated rehabilitation costs of the building and how much land is acquired in addition to the building. Regardless of the final net price, staff recommends that the funds be used to restore the adjacent parking lot to its present condition and to "purchase" lot 17 from CDBG and aggregate it with other TIF lots. Any remaining funds could be deposited in the N. 27th Street tax increment district account and used for projects that benefit downtown property and business owners.
The City Council adopted an informal minimum price of $5/sq ft. minimum for south side City property. Staff recommended that an invitation for sealed bids allow bidders to purchase the building and up to two full lots (130' X 50') in order to accomodate on-site parking, green space or other amenities for future building tenants/owners. If $5/sq. ft. is applied to the entire land area, the minimum purchase price is $32,500. This amount assumes that the building has no value.
The Community Development Division obtained a Broker Property Opinion in early 2011 that valued the property at $59,000 - $75,000. The land was valued at $5.50/sq. ft. (lot 7 only), therefore, the building value was estimated to be $41,125 - $57,125. If the appraised land value of $5.50/sq ft is applied to the available two lots (6,500 sq. ft.), the land would be worth $35,750 plus the building value, equals a total of $76,875 - $92,875.
The City will have some costs if it sells anything more than the building and the original acquisition of the S. 66' of lot 7. Immediately north of the building there is an entrance to the surface parking lot. That entrance would be closed and new curbing would need to be installed along the new east boundary of the parking lot and City land. The estimated cost is $4,000. Community Development Block Grant (CDBG) funds were used to buy lot 17, a lot at the other (west) end of the block and nearest to the L&L building. CDBG attaches some disposal restrictions that may hamper a future land sale. If the City Council wants to maximize its flexibility to entertain future redevelopment proposals for the remainder of the property, the proceeds from this land sale could be used to "buy" lot 17 and thereby consolidate it with others that were purchased through the tax increment district. The original purchase price for lot 17 was $16,125, but if $5/sq. ft. is applied to this property, it is valued at $17,500. There will also be minor legal and transfer costs.
The actual bid price could be higher or lower than these estimates based on perceived competition in the bidding, the estimated rehabilitation costs of the building and how much land is acquired in addition to the building. Regardless of the final net price, staff recommends that the funds be used to restore the adjacent parking lot to its present condition and to "purchase" lot 17 from CDBG and aggregate it with other TIF lots. Any remaining funds could be deposited in the N. 27th Street tax increment district account and used for projects that benefit downtown property and business owners.
RECOMMENDATION
A sale recommendation will be made at the City Council meeting.