Proposal:

Modify Contingency Purchase/Sales Agreement for Real Property Located at 9150 Flair Drive, El Monte, California

Synopsis:

On March 14, 1997, the Board authorized the Chairman to sign the Modified Contingency Purchase/Sales Agreement with Commercial Development International/West, Incorporated (CDI/West) for the real property located at 9150 Flair Drive, El Monte, California. Subsequent to this authorization, staff was informed that the City of El Monte opposed locating the County of Los Angeles, Department of Public Social Services (DPSS) in the Flair Business Park. On May 27, 1997, the El Monte City Council withdrew their opposition to siting DPSS in the Flair Business Park. This unexpected delay necessitates extending the performance dates in the Contingency Purchase/Sales Agreement with CDI/West to October 1, 1997.

Committee:

Administrative, June 20, 1997, Recommended for Approval

Recommanded Action:

Authorize the Chairman to sign the modified Contingency Purchase/Sales Agreement for the real property located at 9150 Flair Drive, El Monte, CA 91731

James M. Lents, Ph.D.
Executive Officer

Background

Since the AQMD Headquarters operation moved from the El Monte facility in October, 1991, staff has been involved in efforts to secure a buyer for that property. In closed session at the January 12, 1996 Governing Board meeting, staff presented three proposed purchase offers to the Board for consideration. The Board directed the Executive Officer to complete negotiations with Commercial Developments International/West, Incorporated (CDI/West). Negotiations were completed, and on October 11, 1996, the Board authorized the Chairman to sign a Contingency Purchase/Sales Agreement with CDI/West. On March 14, 1997, the Board authorized the Chairman to sign a modification to the Contingency Purchase/Sales Agreement with CDI/West to provide the additional time for Los Angeles County to conclude its evaluation process of CDI/West and another competitor’s site proposal. However, subsequent to this authorization, staff was informed that the City of El Monte opposed locating DPSS in the Flair Business Park. On May 27, 1997, the Council of the City of El Monte reconsidered their position removing opposition to DPSS in the Flair Business Park.

Staff reviewed this situation and discussed the following options with AQMD’s legal and outside real estate counsel as well as with CDI/West:

1. Allow the agreement to terminate and return the 9150 Flair Drive, El Monte property to the "for sale" real estate market;

2. Modify the agreement to provide:

• that the performance date be extended from June 1, 1997 to October 1, 1997;
• that CDI/West pay a non-refundable extension fee of $10,000 per month for August and September 1997, the fees to be applied against purchase price at closing;
• that the AQMD receive and evaluate other purchase proposals for the 9150 Flair Drive, El Monte property up to the extended performance date of October 1, 1997, and that these proposals be considered only, and if, CDI/West is unable to enter into an agreement with Los Angeles County on or before October 1, 1997;
• that CDI/West deliver an additional deposit of $250,000 into escrow on October 1, 1997 to conclude negotiations with the County bringing the total deposit to $300,000;
• that CDI/West pay a non-refundable extension fee of $20,000 per month for October, November and, if needed, December 1997 to conclude the agreement with the County, the fees to be applied to purchase price at closing; and
• that, if approved by the Board, reaffirmation of all other terms of the agreement.

This action is to modify the agreement as described above. CDI/West’s proposal to Los Angeles County for a build-to-suit lease was reviewed and is considered by staff to be an excellent proposal and that the additional time requested preserves the greatest opportunity for the AQMD to sell the real property.

Resource Impacts

No change. The proceeds from the sale of the real property will be used to reduce long-term debt producing savings of approximately $4 million in total interest expense.

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