City of Alexandria, Virginia
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MEMORANDUM
DATE: SEPTEMBER 4, 2013
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
FROM: RASHAD M. YOUNG, CITY MANAGER /s/
DOCKET TITLE:
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Introduction and First Reading. Consideration. Passage on First Reading of an Ordinance to Sell City Property at 200 North Royal Street.
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ISSUE: Consideration to sell City-owned real estate at 200 North Royal Street.
RECOMMENDATION: That City Council pass the ordinance on first reading, and schedule it for second reading and final passage at Council's hearing on Saturday, September 21, 2013.
DISCUSSION: Staff recommends that City Council authorize the City Manager to sell 200 North Royal Street to Murray Bonitt for $1,250,000 contingent upon 9.06 approval.
The property at 200 N. Royal Street was initially listed at $1,400,000; appraised at $1,200,000; and assessed at $1,127,916. After actively marketing the sale of the property, Realtor Christopher Campagna provided General Services with a summary of the three initial offers that were received from potential buyers with offers ranging from $1,127,916 to $1,200,000, or 14 to 19 percent below the list price. Following a discussion with City staff regarding the offers, the decision was made to issue a counteroffer of $1,250,000 on behalf of the City to the three offerors. Following the receipt of counteroffers, which resulted in offers ranging from $1.2 million to $1.25 million, and additional interest and inquiries from other potential buyers who had not yet submitted an offer, the decision was made to provide all of the potential buyers the opportunity to submit their best and final offers with a deposit of 5 percent per the City's Real Estate Disposition Policy, no later than Wednesday, December 5, 2012 at 3:00 p.m. On December 5, 2012, the City received best and final offers from three potential buyers ranging from $800,000 to $1,350,000. Based on the highest offer and with regard to price only, staff recommended that the City accept TTR Sotheby's International Realty's offer of $1,350,000. However, during the process of reviewing the contingent contract with TTR Sotheby's, the managing partner at TTR Sotheby's informed the City's real estate agent that they were formally withdrawing their offer to purchase 200 N. Royal Street as the costs and timeline to renovate the building exceeded their original estimates.
Subsequent to the withdrawal of Sotheby's offer and per Section III.E(4) of the City's Real Estate Disposition Policy, staff recommended that the City Manager move to the second highest bidder, McEnearney Commercial (representing Katherine Austin-Barnes) for $1,250,000. The City then entered into a contingent contract with Ms. Katherine Austin-Barnes on May 21, 2013 which allowed for a study period of 60 days. Following the study period as well as an extension of that study period for an additional 21 days, Ms. Austin-Barnes assigned the contingent contract to Mr. Murray Bonitt which was permissible under the terms of the contingent contract. Mr. Bonitt has indicated that he will forego any additional study period and is ready to move to closing upon completion of the real estate disposition process pursuant to Section 9.06 of the City Charter. The sales price of $1,250,000 will remain the same.
The property is zoned CD- Commercial Downtown, which allows for residential, commercial or mixed uses. The proposed use of the property by Mr. Bonitt is to use the building for commercial office space which remains consistent with that permitted in the zone. As a result, this item is not required to go back to the Planning Commission as part of the 9.06 approval process. At its meeting on February 5, 2013, the Planning Commission, by unanimous vote, found that the proposed sale and resulting change of use is consistent with the City of Alexandria Master Plan pursuant to Section 9.06 of the City Charter. At the Planning Commission meeting on September 3, 2013, staff will inform the Planning Commission of the change in buyer. As there is no change in the zoning or use of the building, no additional vote is required.
BACKGROUND: 200 North Royal Street (Elder Crafters also known as 405 Cameron Street) is a three-story townhouse-style building, owned by the City and located at the corner of North Royal Street and Cameron Street. The property is zoned for CD-Commercial Downtown, which allows for residential, commercial or mixed uses and is a building that will require significant renovation for any future use.
The upper two floors of the building were formerly used by the City as the administrative offices for the Office of Historic Alexandria (OHA) and Information Technology Services (ITS) training classrooms and most recently as office space for the Department of General Services. The ground level retail space was formerly leased to Elder Crafters of Alexandria.
At the May 26, 2009 legislative session, City Council declared 200 N. Royal Street surplus property and authorized the City Manager to seek bid offers as described in the City Real Estate Disposition Policy.
Following a public solicitation for the sale of the property for a period of thirty days, no responses to the solicitation were received and as a result staff recommended, as allowed for in the City Real Estate Disposition Policy, to sell the property through a real estate agent to ensure a greater reach for marketing the property. In order to proceed with that process, the Department of General Services issued and received responses to a solicitation to provide realtor consulting services for the City from local realtors. A staff interagency interview panel selected three qualified realtors that would be chosen for City real estate sales projects via a rotating selection process. Based on this process, an award was made to Christopher Campagna of Tartan Properties (later Braddock Commercial Real Estate Services) in November, 2011 to sell 200 N. Royal Street.
FISCAL IMPACT: The net proceeds after commission and closing costs are anticipated to be $1,137,500 based on acceptance of the highest offer. Per the adopted City Real Estate Disposition Policy proceeds will be designated as a source of funds in the City's Capital Improvement Program.
ATTACHMENTS:
Attachment 1: Information on Proposed Ordinance
Attachment 2: Proposed Ordinance
Attachment 3: Planning Commission February 5, 2012 Docket #5: Case #2013-0001
STAFF:
Jeremy McPike, Director, Department of General Services
Alfred Coleman, Deputy Director, Department of General Services
Michael Stewart, Division Chief, Department of General Services
Nelsie Smith, Director, Office of Management and Budget
Al Cox, Historic Preservation Manager, Planning and Zoning
Bryan Page, Deputy Director, Real Estate Assessments
Eric Keeler, Division Chief, Office of Housing
Val Hawkins, President and CEO, Alexandria Economic Development Partnership (AEDP)