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Item 1.D.
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| City Council Regular | |
| Date: | 08/23/2021 |
| Title: | Notice of Termination of Purchase and Sale Agreement - Stillwater Building |
| Presented by: | Gina Dahl |
| Department: | Legal |
| Presentation: | No |
RECOMMENDATION
Staff recommends terminating the Purchase and Sale Agreement dated July 13, 2021 between the WC Commercial, LLC as “Seller” and the City of Billings as “Buyer”.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
On July 12, 2021, Council approved the Purchase and Sale Agreement of the Stillwater Building. The Agreement provides that the due diligence period expires sixty (60) days after the effective date (July 13, 2021), which is September 11, 2021. Additionally, the Agreement requires the parties to close on the property no later than September 15, 2021. The Notice of Termination is being provided pursuant to Section 8 of the Purchase and Sale Agreement, which provides in pertinent part:
Buyer, in Buyer’s sole judgment, may elect to terminate this Agreement following Buyer’s inspection and assessment, with or without cause. If Buyer chooses to terminate this Agreement, Buyer must notify Seller in writing within sixty (60) days of the Effective Date of this Agreement (the “Due Diligence Period”).
The City of Billings hired a number of experts to inspect the Stillwater Building.Those experts provided their reports to the City. The Inspection Reports recommend repairs and replacements that total approximately $7 million. The City has evaluated those recommendations and has determined, at a minimum, the cost of the repairs that would be required prior to occupancy totals $3,541,500. By deferring the remainder of the recommended repairs, this would place the immediate cost of the building at more than $20.5 million.
City Administrator Kukulski and Assistant City Administrator Kevin Iffland met with Joe Holden on August 18, 2021 to discuss moving forward based on presented information. Mr. Holden was not interested in reducing the $17 million price. He did indicate he may provide the City with another option, which may include build out of three floors.
Buyer, in Buyer’s sole judgment, may elect to terminate this Agreement following Buyer’s inspection and assessment, with or without cause. If Buyer chooses to terminate this Agreement, Buyer must notify Seller in writing within sixty (60) days of the Effective Date of this Agreement (the “Due Diligence Period”).
The City of Billings hired a number of experts to inspect the Stillwater Building.Those experts provided their reports to the City. The Inspection Reports recommend repairs and replacements that total approximately $7 million. The City has evaluated those recommendations and has determined, at a minimum, the cost of the repairs that would be required prior to occupancy totals $3,541,500. By deferring the remainder of the recommended repairs, this would place the immediate cost of the building at more than $20.5 million.
City Administrator Kukulski and Assistant City Administrator Kevin Iffland met with Joe Holden on August 18, 2021 to discuss moving forward based on presented information. Mr. Holden was not interested in reducing the $17 million price. He did indicate he may provide the City with another option, which may include build out of three floors.
ALTERNATIVES
City Council may:
- Approve; or,
- Not Approve
FISCAL EFFECTS
No fiscal effects based on this decision.
SUMMARY
Staff recommends terminating the Purchase and Sale Agreement dated July 13, 2021 between the WC Commercial, LLC as “Seller” and the City of Billings as “Buyer”. If Council does not approve this termination, there will not be sufficient time for Council to take action on any issues or to terminate the Agreement prior to the expiration of the due diligence period on September 11, 2021. If this amendment is not approved, Council will lose the right to terminate the contract as provided for under section 8. of the Agreement.