HomeMy WebLinkAboutItem A: Disposition of 858 Pearl - atts A and B
ECC
UGENE ITY OUNCIL
AIS
GENDA TEM UMMARY
Work Session: Disposition of 858 Pearl Street Property
Meeting Date: December 8, 2010 Agenda Item: A
Department: Planning and Development Staff Contact: Denny Braud
www.eugene-or.gov Contact Telephone Number: 541-682-5536
ISSUE STATEMENT
The council is being asked to approve the sale of the 858 Pearl Street surplus property to Master
Development.
BACKGROUND
In June 2009, the City of Eugene declared the 858 Pearl Street real property as surplus, per Eugene
Code 2.864. Legal notice of the surplus real property sale and request for offers to purchase was
provided in July 2009. The notice indicated that the property would be sold at fair market value to the
buyer whose offer was acceptable to the City Manager, with no other special conditions or evaluation
criteria applied to the sale. Section 2.872 of the Eugene Code provides that a proposal for the sale of
property that is acceptable to the City Manager shall be presented to council for its action.
In July 2009, the City received offers from Network Charter School and Master Development. On
September 30, 2009, council authorized the City Manager to enter into an agreement with Network
Charter School for a two-year lease with an option to purchase the property for $1.5 million. An
agreement with Network Charter School did not materialize following council action.
Master Development approached the City with an updated offer to purchase the property. The
proposed purchase price is $1 million ($700,000 cash paid at closing and $300,000 to be repaid from
the net cash flow that is generated after the owner’s target return on investment has been realized). A
detailed outline of the proposed terms is included in Attachment A.
Master Development proposes to convert the upper floors to residential apartments and renovate the
ground floor for retail and office uses. They anticipate creating approximately 15 new housing units.
The updated appraisal in May 2010 indicated a fair market value of $1.2 million for 858 Pearl Street.
The value conclusion was based on a commercial office use.
RELATED CITY POLICIES
Development of the vacant 858 Pearl building addresses many goals for Eugene and downtown,
including promoting activity in the core and supporting sustainable development. This project is
supported by the Downtown Plan; Downtown Vision; and Growth Management Policies. Increased
downtown development is specifically identified as a Sustainable Development outcome in the 2010
Eugene City Council Vision, Goals and Outcomes.
Z:\CMO\2010 Council Agendas\M101208\S101208A- and attsA and B.doc
COUNCIL OPTIONS
1.Authorize the City Manager to enter into a purchase and sale agreement with Master Development
for the disposition of the 858 Pearl Street property consistent with the outline of terms included in
Attachment A.
2.Modify the outline of terms included in Attachment A and authorize the City Manager to enter into
a purchase and sale agreement with Master Development for the disposition of the 858 Pearl Street
property consistent with the modified terms.
3.Do not approve the disposition of the 858 Pearl Street property at this time.
CITY MANAGER’S RECOMMENDATION
The City Manager recommends the disposition of the 858 Pearl Street property to Master Development
consistent with the outline of terms included in Attachment A.
SUGGESTED MOTIONS
Move to authorize the City Manager to enter into a purchase and sale agreement with Master
Development for the disposition of the 858 Pearl Street property consistent with the terms and
conditions included in Attachment A.
ATTACHMENTS
A. Outline of Terms for Disposition of 858 Pearl – Master Development
B. Map – 858 Pearl Property
FOR MORE INFORMATION
Staff Contact: Denny Braud
Telephone: 541-682-5536
Staff e-mail: denny.braud@ci.eugene.or.us
Z:\CMO\2010 Council Agendas\M101208\S101208A- and attsA and B.doc
ATTACHMENT A
Outline of Terms
Disposition of 858 Pearl Street – Master Development
Property: Land (approximately 4,560 sq. ft.) and building (approximately 18,240 sq. ft.) located at 858
Pearl Street (map and tax lot number 17-03-31-14-2700).
Purchase Price: $1,000,000
Payment of Purchase Price: $700,000 cash shall be paid in full at closing. The balance of $300,000
shall be paid as follows:
Annual payments equal to the annualized earnings (on the 858 Pearl property) in excess
of 14%, total payments not to exceed $300,000. Annualized earnings formula shall be
defined and accepted by Buyer and Seller, and included in the Purchase and Sale
Agreement.
In the event that Buyer sells the property, the unpaid balance will be due and payable.
In the event that Buyer refinances the property and cash is advanced in the transaction,
the unpaid balance will be due and payable.
Due Diligence Period: Upon the execution of a Purchase and Sale Agreement, Buyer will have a
period of 100 days in which to review property information and to conduct on site testing to determine
the condition of the property.
Deposit: Once the Due Diligence Period has expired, Buyer shall deposit into escrow non-refundable
earnest money in the amount of $25,000. Earnest Money will be credited toward the Purchase Price at
closing.
Environmental Condition: During the Due Diligence Period, Buyer will be able to perform
environmental investigation to satisfy itself of the environmental condition of the property. The
investigations must be scheduled with the Seller and the results provided to the Seller for review.
Based on the information provided in the environmental assessment, Buyer may either move forward
with the purchase of the site or rescind the offer to purchase the site.
Purchase and Sale Agreement: Following City Council’s approval of terms, Buyer and Seller shall
enter into a formal Purchase and Sale Agreement.
Financing: Prior to the closing of the sale, Buyer shall demonstrate that all financing necessary for the
project has been secured.
Closing Date: The closing of the sale shall occur no later than nine months after the signing of the
Purchase and Sale Agreement.
Purpose: Buyer is proposing to reuse the existing building. The initial reuse of the building shall not
include demolition unless a concurrent construction project is ready to proceed immediately following
demolition.
Z:\CMO\2010 Council Agendas\M101208\S101208A- and attsA and B.doc
Multi-Unit Property Tax Exemption (MUPTE). The property is within the MUPTE boundary.
MUPTE tax exemptions must be approved by the Eugene City Council. If determined to be eligible
under the MUPTE program requirements, Seller agrees to process a MUPTE application for City
Council consideration.
Sidewalk Access During Construction. Seller has requested the use of the public sidewalk area for
construction staging. Seller will work with Buyer to secure the necessary permits (at Buyer’s expense)
required to use public right-of-way during construction. Buyer will use its best efforts to retain
pedestrian access along the sidewalk fronting Pearl Street.
Parking. Seller will provide 25 designated, reserved parking spaces within three blocks of the
property, which would be paid for by Buyer.
Condition of Title: Seller shall deliver the Property to Buyer with clear title free of any and all
encumbrances and exceptions except those as may have been approved by Buyer in its sole discretion.
Seller, at Seller’s cost, shall provide Buyer with standard form of owner’s policy of title insurance in
the face amount of the Purchase Price insuring clear title in Buyer’s name subject only to the approved
exceptions.
Condition of the Property at Closing: Buyer is purchasing the Property as is in its current condition.
Buyer’s expectations concerning the Property are to be based solely on the basis of Buyer’s own
inspection and investigation of the Property.
Z:\CMO\2010 Council Agendas\M101208\S101208A- and attsA and B.doc
Z:\CMO\2010 Council Agendas\M101208\S101208A- and attsA and B.doc