On October 14, 2019 the City Commission held a work session to discuss the potential acquisition of the USPS property on New York Avenue. The back up provided by Commissioner Cooper at the work session is attached.
On October 28, 2019 the Commission adopted Resolution number 2224-19 supporting that acquisition. Attached is a copy of that Resolution.
City Manager Knight opened a dialogue with the USPS representatives and on December 27, 2019 the USPS representative provided the attached LOI for the City's consideration.
The LOI sets forth the following parameters for the proposed acquisition:
* The City must provide replacement facilities at locations approved by the USPS at the City's cost for both the retail and carrier buildings. At the end, the USPS must own both facilities.
* There is a Fair Market Value adjustment the city would have to pay if the appraised value of the replacement properties do not exceed the value of the current property.
* Requires a $25,000 non-refundable deposit (Project Initiation Fee) upon execution of the LOI to cover the costs of its internal planning efforts.
* Also upon signing the LOI the City would pay a $50,000 Cost Deposit to cover the USPS costs to comply with operational, financial, legal and regulatory requirements. If costs exceed this amount an additional deposit may be required.
* Upon identifying the location of the replacement properties the City would be required to remit an additional $25,000 (Project Continuation Fee) for the additional internal planning efforts of the USPS. At this point the parties would agree to a Purchase and Sales Agreement (PSA).
* City is responsible for site design costs.
* City is required to pay for equipping the new facilities if the USPS determines its existing equipment cannot be used.
* City would pay the cost of moving the operations to the new facilities.
There are other provisions in the LOI but the above are the major ones.
Also attached is a memo from the City Attorney reviewing the LOI. As of this writing a counter proposal has not been offered.
It is difficult at this stage to put a definite total cost for the acquisition. To get a better idea of the total costs the commission would need to approve the LOI and move forward to the PSA level. To do so would require the $25,000 non-refundable deposit mentioned above and the $50,000 Cost Deposit. The city would then need to locate sites acceptable to the USPS for the replacement facilities. At that point a more firm cost could be established.
At the October 14, 2019 work session we discussed a range of probable cost of $4.6 to $8.8 million. Those numbers assumed there would be no land acquisition for the retail component.
Should the Commission decide to approve the LOI there are three options for funding the first deposits. The CRA, General Fund Reserves or Parks Acquisition Funds.
It is important to note that we would not be committing to the entire purchase. At the PSA approval stage the Commission would have the option of stopping the process if the price is higher than it is willing to pay.