Ptoposal:

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

Synopsis:

On October 11, 1996, the Board authorized the Chairman to sign the Contingency Purchase/Sales Agreement with Commercial Developments International/West, Incorporated (CDI/West) for the real property located at 9150 Flair Drive, El Monte, CA. The real property is in escrow and CDI/West has been negotiating an agreement with Los Angeles County. However, to allow Los Angeles County sufficient time to complete its evaluation process, CDI/West requests extending the performance dates in the Contingency Purchase/Sales Agreement to June 1, 1997.

Committee:

Not Applicable

Recommended 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. The real property is in escrow and CDI/West has been negotiating a build-to-suit lease with Los Angeles County. However, prior to the conclusion of these negotiations, another proposal was received by Los Angeles County prompting the County to initiate an evaluation of the two proposals, i.e., CDI/West and the new proposal. CDI/West informed AQMD staff in February of this situation and requested a modification to the agreement to provide the additional time for Los Angeles County to conclude its evaluation process.

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 March 1, 1997 to June 1, 1997;
• that CDI/West pay a non-refundable extension fee of $10,000 per month for March, April, and May 1997, the fees to be applied against purchase price at closing;
• that CDI/West deliver an additional deposit of $250,000 into escrow on June 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 June and, if needed, July 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 modifiy 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. Sale of the real property will result in the reduction in bond obligations and will provide budget savings beginning in FY 1999-00 of approximately $365,000 annually through the year 2009, saving approximately $4 million in total interest expense.

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