Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

Since city council sold the St. Vincent de Paul building in downtown Glendale to C Plus D Industry in September questions have arisen about the deal. In 2008 the city purchased the building and a nearby parking lot for $735,000 with the goal of future redevelopment. For ten years it sat vacant, slowly continuing to deteriorate. At the time of purchase, no one on city council expected to recoup the purchase price and innately acknowledged that the city would have to incentivize any resale of the building.

Councilmember Ray Malnar and I submitted an Op Ed to the Glendale Star on this subject. Here is the link: https://www.glendalestar.com/glendale-star/st-vincent-de-paul-building-package-bow-deal-or-down-heel-deal .

In a recent news story Cheryl Kappes, owner of the Country Maiden, said she would have bought the building. Another downtown property owner, Richard Vangelisti, expressed the same sentiment. Keep in mind the true cost of the building is not just the $25,000.  It is the sales price plus the cost of the renovation and a commitment to do so promptly.  In the ten years, from 2008 to 2018, anyone could have approached the city and made an offer on the property. No one did. They may have thought about it but they never took that first major step of contacting the city with a written offer. Such an offer to purchase the property would have included a commitment toward making a significant investment to renovate the building resulting in a tax revenue producing business downtown. C Plus D Industry took that chance by making an offer that could have been rejected. They were the first to try. Now that it has been sold, suddenly there are cries of a lack of “transparency.”

What exactly did the city sell for $25,000? It sold a 60 year old building requiring total restoration with no dedicated parking. According to a Facility Management Group analysis submitted to the city in October of 2017, “It is a building that requires complete restoration. Everything but the roof structure, exterior walls and floor slab will need to be replaced.”

The Facility Management Group analysis offers an estimate of $1,225,000 to renovate the 7,000 square foot building. It goes on to report that an estimated $1,750,000 would be required to tear the building down and build a new 7,000 square foot building.

In a report prepared by Lisa Amos, Glendale’s Real Estate Program Manager, dated June 15, 2018, “If this building were in good condition and had parking, @ $40/sq ft, it could list for $280,000.” But it’s not in good condition, is 60 years old, requires a complete renovation and has no parking.

It is unrealistic to expect a retail or office developer to purchase a building with no parking spaces. Ms. Amos, in her report, states that, “Demolition was estimated at $5.00/sq ft = $35,000.” Her conclusions were, “City contribution to improvement of building condition, including new build, will not yield return at sale” or “Demolish and sell land or accept nominal sale price if Buyer accepts ‘as is’ including no parking.”

What did the city accomplish with this sale? It avoided renovation at a price of $1.2M; it avoided tearing down the building and constructing new at a cost of $1.7M; and it avoided demolition costs of $35,000.

What does the city get for selling the building for $25,000? Keep in mind, C Plus D Industry came to the city and offered to buy the building ‘as is’ while committing to renovate the building to code at a substantial cost to them, not the city. They will maintain a small showroom expecting a minimal amount of local foot traffic and will sell on site but their primary focus is on the manufacture and sale of high end furniture nationally.

An added benefit is that the city has collected zero taxes on this property for many years. Current city estimates are that C Plus D will increase taxes collected from just this one project in downtown Glendale by 10%.

C Plus D are not professional investors. As part of their commitment to the city, they must renovate within 6 months bringing it up to code. The sale is not final until they receive a Certificate of Occupancy. The city estimate to renovate is over one million dollars. That’s at city cost. C Plus D expects the renovation to cost them between $350,000 and $500,000. They won’t be paying city prices to renovate and they will also contribute sweat equity.

Keep in mind the city is not selling its parking lot which was part of the original 2008 $735,000 purchase price. Lastly, according to Ms. Amos in the above cited report, the assumption is that once the building is renovated and if it had parking, it could be listed for $280,000. Without dedicated parking, the sale price would obviously be lower than that figure.

Senior management and city council concluded that this was a good deal for Glendale’s taxpayers. There was no special treatment for the buyer.  The property was sold for what it was worth. It was simply a business opportunity brought to the city that senior management and city council concluded was a good deal for Glendale’s taxpayers.

As for transparency, city land sales are rightly, according to the state’s Open Meeting Law, a subject for discussion in city council executive sessions. In a recent news story Councilmember Turner said, “It’s not always just about getting the highest dollar. But we can have a process that is open, transparent and still accomplishes our vision.” In the same story Councilmember Aldama said, “The city should be transparent in everything it does and everything it does should benefit the citizens. In hindsight, I don’t feel this sale benefits the citizens.” Their comments are disingenuous and provocative.  Both of these gentlemen know that land transactions are subjects for executive session to protect the city’s position.

© Joyce Clark, 2018         

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