HomeMy WebLinkAbout08-06-1985 Item C13 - Accept Offer from Godfrey for Credit Purchase of 1330 Buchon Streetit tz =)I
ctty oF san Luls oBtspocc!lJNctL FIEPcIFIT
MEETING DATE:
ITEM
prepared by: David E1 I 1otoFROM:rPu
David F. Romero
city property at 642 Emily Street and 1gg0 Buchon
SUBJECT Sale of the
Street
Godfreyrs bid for a credit purchase ofStreet.t h
By
CAO RECOMMENDATION:
Mark J
Buchon
resolution accept
e property at 1330
BACKGROUND
After colnpletion of the new corporation yard, the water utility yardat 1330 Buchon Street and the street maintenance yard at 642 EnilyStreet were partially vacated and became available for sale. InNovenber 1984, bids were solicited for the Buchon Street property.Because the three bids received were relatively low compared to the$130,000 appraised value, the council rejected the bids in February1985 and directed staff to advertise later. In early April the ciiyreceived an unsolicited bid for a $120,000 cash purchase of the BuchonStreet property, but this bid was rejected because other potentialbidders nay have been precluded fron submitting better bids.
rn May 1985, the council authorized saLe of the Emily streetproperty ' With that authorization, staff initiated advertisenent ofthe Enily street property and readvertised the Buchon streetproperty. substantial advertising space was purchased in theclassified ads of atl rnajor California newspapers and the WaIl StreetJournal. In additlon, written sale offerings were mailed to all landdevelopers listed in the san Luis 0bispo county yellow pages. Thecity clerk opened bids on Juty 1 1 , 198b.
No bids were received for the Emity street property. staff hasreceived word that three or four parties are planning to submit Iatebids on this property. If late bids are received, staff wiIl preparean agenda repont for the 8/20/Sd council meeting. If no Iate bids arereceived or if the late bids are unacceptable, comnunity developmentstaff will continue negotiations with Southern pacific Railroad totrade the Emij.y Street property for the parking area at the Antrakstation which is needed for the internodal grant project.
The following five bids
Buchon Street property:
(in order of magnitude) were received for the
1
2
r)
4
5
Mark J. Godfrey (credit sale)
Robak Construction Company ( credit sale )Robak Construction Cornpany ( cash sale )Islamic Center of San Luis 0bispo (cash sale)Mr. & Mrs. G. F. Kroneberger (cash sale)
from Robak Construction "are contingentunrestricted approval for continued use
$135,550
$132,500
$120,000
$100,604
$ 85,100
upon the buyer
of the property as a
Both bids
obtaining
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Emi ly Street/Buchon Streetpage two
property sale
construction yard and office space for ancable television construction company. "
underground utility and
The bid
of City
fron Islamic
Required Use
Center of San Luis Obispo "is subJect to approvalPermit" for Islamic Center.
F I SCAL IMPACT :
In order to compare the credit sale bids to the cash sale blds, staffcalculated the present and future values of all the proposed. saIes,based on an interest rate of 77% (the cityrs current average rate ofinvestment earning) conpounded monthly over five years.
The present values of the cash sares are the cash payments. Thepresent values of the credit sales are the suns of the down paymentsplus the present values of the rnonthly payments plus the presentvalues of the balloon paynents.
The future values of the cash salescash payments plus interest at thevalues of the credlt sales are thethe vaIues of the down payments andinterest at the end of five years.
are the values of the originalend of five years. The, future
sums of the balloon payments plus
the periodic monthly payments plus
The results (again in ord.er of magnitude):
Robak Construction Company ( credit sale )Mark J. Godfrey (credit sale)
Robak Construction Company ( cash sale )Islamic Center (cash sale)Mr. & Mrs . G. J. Kroneberger ( cash sale )
1
2
3
4
5
present
value
$135,586.43
$132.173.10
$120,000.00
$r00,604.00
$ 85,100.00
future
*ve I qe_
$234,417.48
$228,516.13
$207,469.80
$173,935.80
$162,443.60
The Godfrey bid, the apparent high bid at the bid opening, becomes thesecond high bid after the present and future value analysis. Thisoccurs because of differences in credit terns proposed by Godfrey andRobak. Godfrey proposes a ro% interest rate, monthly payments ofinterest onIy, and a balloon payment of the financed principal at theend of f ive years. Robak proposes a rz% interest rate, a 1s yearamortization, blended nonthly paynents of principal and interest, anda balloon payneut of the outstanding principal at the end of fiveyears. Robak's higher interest rate and rnonthly principal paynentsnake its proposal slightly more financially attractive to the city.
LAND USE
Although
CONTINGENC]ES:
Robakrs bid is nost financially advantageous to the city, the
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crty o[ san Luls oBtspo
GGIIJNCIL AGIENDA FIE]'GIFIT
Enily Street/Buchon Street property salepage three
contingency requiring continued use of the property as a constructionand utility yard presents a problem. Because the Buchon Street yardhas never been completely vacated by water utility field crews andbecause it has been used as a construction yard by sidewalk repaircontractors, public works staff believes that the existingnonconforming use has not yet ceased and could possibty continuewithout a use permit. But when the planning commission, as requiredby state law, nade its deternination that sale of the Buchon Streetproperty would conform to the city's general pIan, it stipulated thatany future use of the property nust conform to the existing zoning,medium-density residentlal (R-A), which does not a]1ow constructionand utility yards. The question arises r would the additionalfinancial advantage to the city of accepting Robak's bid outweigh thedisadvantage of allowing a nonconforming use of the property as aconstruction and uti I ity yard? Staff's answer is no .
Godfreyrs bid does not require any land use contingencies.
STAFF RECOMMENDATION:
Staff reconnends that the council by resolution 1) accept Mark J.Godfrey's bid for a credit purchase of the property at 1330 Buchonstreet 2l direct staff to prepare alr documents required andadminister the city's obligations before the crose of escrow g)
authorize the nayor to execute all docunents required to consunmatethe sale and transfer the property 4\ direct the city clerk to refundthe deposits of the unsuccessful bidders.
If the council accepts Godfreyrs bid, he has 60 days to either open a30-day escrow or decline purchase.
CONCURRENCES I
The finance director, city attorney and community development directorhave reviewed this agenda report and concur with its findings andrecommendations. A11 agree that a conforning use is nore advantageousthan add i tional f inanc ia 1 va lue . The c i ty attorney does not foreseeany lega1 problens in accepting a bid which is slightty lessfinancial Iy advantageous than another, if there are otherconsiderations outweighing cost.
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