Report Prepared by: Frank Quintero, Deputy City Manager
Title
SUBJECT: Approval of a Proposed Purchase and Sale Agreement with MAIPG1, LLC, for a ±1.60-Acre Site in the Airport Industrial Park for $104,544.00 Located at 2080 Grogan Avenue Also Known as APN 059-030-026 for the Construction of an Industrial Building
REPORT IN BRIEF
Council will consider the terms contained in the Purchase and Sale Agreement for the disposal of a 1.60-acre site formerly known as the Merced County dog pound in the Airport Industrial Park for $104,544.00 for the construction of an industrial building.
RECOMMENDATION
City Council - Adopt a Motion:
A. Approving the terms of the Purchase and Sale Agreement with MAIPG1, LLC.; and,
B. Appropriating $6,273.00 from the proceeds of the sale to pay for Real Estate Commission; and,
C. Authorizing the City Manager or Deputy City Manager to execute the necessary documents.
body
ALTERNATIVES
1. Approve as recommended by Staff; or
2. Approve, subject to conditions as specified by the City Council; or,
3. Refer to staff for reconsideration of specific items as requested by the City Council; or
4. Defer action until a specific date; or
5. Deny the request.
AUTHORITY
Charter of the City of Merced, Section 200; Merced Municipal Code Section 2.36.20
CITY COUNCIL PRIORITIES
City of Merced 2021-2022 Adopted Budget, Section 7, Economic Development - Airport Industrial Park, Goals - “Continue working with developers interested in speculative building projects on all properties in the Airport Industrial Park.”
DISCUSSION
Staff has been in negotiations with representatives from MAIPG1, LLC, for the purchase and development of 1.6-acres in the Merced Airport Industrial Park. The subject site consists of one whole lot located at 2080 Grogan Avenue, and is also known as Assessor’s Parcel Number 059-300-026 (Attachment 1). The developer agrees to purchase the subject site for $104,544.00 subject to the terms and conditions contained in the Purchase and Sale Agreement in its “as-is” condition (Attachment 2.)
PROJECT
The proposal presented is based upon staff’s understanding of the scope of the anticipated project. The purchaser is proposing to construct a 16,000 square-foot warehouse with a 1,200 square-foot office (Attachment 3). The developer will be responsible for providing on-site parking, lighting, storm basin, and landscaping. Given that the subject site is located adjacent to the Merced Yosemite Regional Airport, the land use is required to comply with the Merced County Airport Land Use Compatibility Plan.
For several years, the subject site served as the headquarters for Merced County Animal Control. When the Animal Control Division terminated its lease from the City and moved to the Castle Aviation and Commerce Center, the site and facility became a source of blight. Neighboring businesses expressed concern about the poor condition of the facility and activities taking place on the site. The City demolished the building but did not fully clear the site of pavement and other debris. Subsequently, the subject site became campground for the unhoused, and household appliances and furniture were being left on the parcel. The developer intends to clean the site as part of the project.
COUNCIL PRIORITY
Prior to the Great Recession, several City-owned lots were sold to contractors, industrial service providers, and manufacturers with the last transaction taking place in 2006. Council directed staff to assertively work with developers to construct speculative buildings given the shortage of such industrial space.
PROPOSED TERMS
Key proposed sales terms include the following:
Land
Purchase: The price for 2080 Grogan Avenue is $104,544.00, subject to
adjustment for actual parcel size.
Parcel Size: ± 1.6-acres
Easements: The City shall retain any public utility easements running along
Grogan Avenue.
Due
Diligence: The Buyer has requested a 270-day period following the mutual
execution of the Purchase and Sale Agreement.
Deposit: The Buyer shall deposit a sum of $5,000.00 into escrow within 7-days following the mutual execution of the Purchase and Sale Agreement. The deposit shall become non-refundable.
Final
Payment: $99,544.00, all cash, paid upon close of escrow.
Commission: A commission of 6% will be paid.
Title
Company: The Buyer has requested Stewart Title Company located in Glendale, California.
Escrow: Escrow shall open within 10 business day of an executed Purchase and Sale Agreement, and close within 270 days.
Closing
Costs: Buyer and Seller to split escrow fees 50/50 as is customary in Merced County.
Protective
Covenants: Sale of the property is subject to the Protective Covenants - Merced Airport Industrial Park adopted April 1972 and reinforced through grant deed drawn by the City Attorney’s Office.
SURPLUS PROPERTY
At the City Council meeting of November 1, 2021, Council adopted Resolution 2021-102 of the City Council of the City of Merced Declaring Certain Properties as Exempt Surplus Land and Directing the City Manager to Follow the Procedures Set Forth in the Surplus Lands Act for their Disposition. The subject site located at 2080 Grogan Avenue was included in the properties identified as example surplus land. The California Housing and Community Development Department review period closed officially on December 15, 2021 without any comment from the Agency. Therefore, the property may be sold for industrial use.
LAND USE COMPLIANCE
The proposed project is consistent with the Light-Industrial (I-L) Zoning District and General Plan designation of Industrial (IND). All new construction projects within the Industrial Zoning Districts are subject to Site Plan Review.
IMPACT ON CITY RESOUCES
The transaction does not require any financial adjustment from the General Fund. Typically, revenues for Airport Industrial Park transactions are used for Industrial Park improvements or Airfield Improvement Projects.
ATTACHMENTS
1. Location Map
2. Purchase and Sale Agreement
3. Site Plan