SUBJECT:
Title
A Resolution of the Board of Trustees of the Town of Erie Approving a Purchase and Sale Agreement with Regency Realty Group, Inc., for the Purchase of Approximately 19.41 Acres of Vacant Land in the Erie Town Center Area
Body
DEPARTMENT: Administration and Economic Development
PRESENTERS: Malcolm Fleming, Town Administrator
Julian Jacquin, Economic Development Director
TIME ESTIMATE: 15 minutes
only required for non-consent items
FISCAL SUMMARY:
Cost as Recommended: $4,000,000 plus additional costs for legal and due diligence
Balance Available: $4,000,000 (General Fund Reserves)
New Appropriation Required: Yes
STAFF RECOMMENDATION:
Recommendation
Approve the Resolution
End
SUMMARY AND BACKGROUND OF SUBJECT MATTER:
Regency Realty Group Inc. (Regency), which owns the 19.41-acre parcel at the NW corner of Erie Parkway and County Line Road, participated in the Town Center design charrette and made positive statements about the Town Center PD adopted by the Board. Other developers in the Town Center, including Ranchwood, Four Corners LLC, and CDG either have development plans in the Town’s development review process or have secured permit approvals and have infrastructure under construction on their sites. However, due to other priorities Regency has not actively pursued developing their parcel.
The Town Center PD provides for a grocery store, hotel and civic uses as anchors on the Regency parcel. These uses will support and stimulate development of the entire Town Center. For these reasons, Town staff has been actively working with Regency for over two years to influence development on that site. Early in 2021, representatives from Regency suggested they would be open to an offer from the Town to purchase their property. After discussing strategy regarding this matter in executive session on March 23, 2021, and based on Board direction, the Town engaged consultants to complete a site-specific market analysis, land value analysis, financial feasibility analysis and gap evaluation, and summary of development scenarios/strategy options. Based on review of that information with the Board and additional strategy considerations in executive sessions on August 10, 2021, September 14, 2021, and October 12, 2021, staff extended to Regency a Letter of Intent (LOI) to purchase the Regency property, contingent on Board approval of a Purchase and Sale Agreement (PSA).
In December 2021, Town staff and Regency reached tentative agreement on the general terms of the LOI. After discussing those terms with the Board in executive session on December 14, 2021, and receiving the Board’s direction to proceed with the proposed strategy, staff the Town Attorney and Town staff have been working with Regency’s representatives to prepare a proposed PSA for the Board’s consideration. That PSA is what staff is asking the Board to approve.
The general terms of the PSA include:
• Purchase Price: $4,000,000, cash at closing
• Earnest Money: $100,000, which earns interest credited to Erie and the full amount shall be applied to the Purchase Price at closing.
• Inspection/Due Diligence: Erie shall have 45 days following the delivery of all the items called for by the Contract to be delivered to Erie by Seller to complete its physical and financial inspection and due diligence investigation of the Property and investigate the title.
• Closing Date: 14 days after completion of the Inspection and Due Diligence period.
Town staff recommend this purchase because:
• Delay in developing this site results in $520,000 in lost revenue to the Town each year (consultant estimate)
• Town needs land for proposed civic uses
• The offer price is supported by analysis of comparables
• Town will partially recoup expenditure by selling non-civic property to a motivated developer
• Continued delay on the Regency property is an impediment to the success of surrounding developments
• Regency is a willing seller
• Acquisition enables Town to control the site and engage other developers who are interested in developing property consistent with the Town Center PD
• The property is a valuable asset that will retain, if not increase in value
• Buying the site will expedite development of Town Center
Fiscal Impact:
• Funding is available because:
o Year-end surge in revenue: $3.5 million in new/previously unbudgeted revenue
o Year-end savings: $2.4 million savings from lower than budgeted expenditures
• +Revenue -Expenditures = Net $5.9 million better than estimated in 2nd supplemental budget.
o Available Reserves: Current projection is 110% of Non‐capital/non‐debt expenditures = $28.7 million total and $14.1 million after subtracting 25%/$7.1 million Operating Reserve and $7.5 million GF Stabilization Reserve
Board Priority(s) Addressed:
ü Attractive Community Amenities
ü Engaged and Diverse Community
ü Prosperous Economy
ü Well-Maintained Transportation Infrastructure
ü Small Town Feel
ü Safe and Healthy Community
ü Effective Governance
ü Environmentally Sustainable
ü Fiscally Responsible
ATTACHMENTS:
1. Resolution
2. Purchase and Sale Agreement