Report Prepared by: Julie Nelson, Associate Planner, Planning Department
Title
SUBJECT: First Amendment to the Purchase and Sale Agreement for 2322 G Street
REPORT IN BRIEF
Amend the Purchase and Sale Agreement for 2322 G Street to allow additional time to complete Phase One of the Pro Lube construction project.
RECOMMENDATION
City Council - Adopt a motion approving the First Amendment to the Purchase and Sale Agreement for 2322 G Street allowing additional time for the project to be completed and authorizing the City Manager to execute the necessary documents.
Body
ALTERNATIVES
1. Approve as recommended by staff; or,
2. Approve subject to modifications by the City Council; or,
3. Deny; or,
4. Refer back to staff for reconsideration of specific items (specific items to be addressed in the motion); or,
5. Continue to a future meeting (date and time to be specified in the motion).
AUTHORITY
Charter Section 200 authorizes the City Council to enter into and amend agreements with other entities.
DISCUSSION
On October 20, 2014, the City Council entered into an agreement with Pro Lube Incorporated for the purchase of the property located at 2322 G Street (refer to the location map at Attachment 1 and the agreement at Attachment 2). Pro Lube Inc. planned to construct a new Pro Lube building (with sandwich shop); three other new buildings, and remodel the existing car wash and vacuum center (refer to the site plan at Attachment 3).
The Purchase and Sale Agreement called for the project to be constructed in two phases. Phase One consisted of the remodel of the existing carwash and vacuum center, and the construction of the Pro Lube building (and sandwich shop) and Phase Two would be the remainder of the buildings. Section 9 of the agreement specified that construction was to begin within 15 months of the close of escrow (December 22, 2014). Based on this, construction of the project should start no later than March 22, 2016. However, due to unforeseen delays, Pro Lube Inc, does not expect to be able to meet this timeframe. According to their letter (Attachment 4), the greatest cause of the delay is due to the Phase 1 Environmental Report obtained from the City upon purchasing the property not being acceptable to their lenders. In addition, their contractor, Skip George with Commercial Construction, Pro Lube Inc., has recommended waiting to break ground until after the rainy season. Therefore, Pro Lube, Inc. has requested an amendment to the Purchase and Sale Agreement to postpone the start of construction on the Pro Lube building until June 22, 2016.
In their letter, they estimated the plans for the Pro Lube and sandwich shop building (referred to as Phase 2) would be submitted for building permit review by November 15, 2015, and the Auto Shop and Pro Lube Offices (referred to as Phase 3) would be submitted by December 15, 2015. After consulting with their design team (Golden Valley Engineering), the dates for submitting these plans have been modified. Golden Valley Engineering has committed to having the plans submitted for the Pro Lube and sandwich shop building by December 1, 2015, and the plans for the other buildings by January 3, 2016. Plans were submitted for the remodel of the existing car wash on October 27, 2015 (see plans at Attachment 5).
According to the letter from Pro Lube, Inc., they have already made some site improvements (cleaned debris, demolished the house on the site, and installed security cameras) and they would continue to maintain the property in a clean and operational manner until the time construction begins. Therefore, City staff would not be responsible for any cleaning or maintenance on the site.
The First Amendment to the Purchase and Sale Agreement found at Attachment 6, allows 24 months from the close of escrow (December 22, 2014) for the start of construction. Although this is slightly longer than requested by Pro Lube, given the prediction for a longer and heavier than normal rainy season, additional time may be needed to get the project under way. Staff feels the additional time would ensure no additional amendments would be needed to the agreement. Pro Lube, Inc., their design team, and contractor are committed to getting this project going as soon as possible.
IMPACT ON CITY RESOURCES
There would be no impacts on City resources due to the extended period of time for construction to begin.
ATTACHMENTS
1. Location Map
2. Purchase and Sale Agreement
3. Site Plan
4. Letter from Pro Lube, Inc.
5. Plans for car wash remodel
6. First Amendment to Purchase and Sale Agreement