TALLAHASSEE, FL (WTXL) -- The city of Tallahassee will consider selling several acres of land near Railroad Avenue for a new grocery store.
The city entered into an agreement with Summit Holdings XV, LLC and is recommending that commission approve the sale for $2 million. This sale of the unused 3 acre parcel is expected to help the developer continue its negotiations with a regional grocery store tenant to develop an urban grocery store on this site.
The council is expected to talk about this sale at Wednesday's city commission meeting.
History/Facts & Issues
*Information from Agenda Item
The City and Leon County purchased the property located on Railroad Avenue in 1992 to facilitate restoration of rail service in Tallahassee. The City and County agreed to split the property in 1996 leaving the City with 4+- acres of vacant property. This is the same parcel that was considered for the "Arts Exchange Redevelopment" which never came to fruition. A portion of the property was utilized for development of an access road to serve the redevelopment of this area from the rear leaving a surplus parcel of 3.01 acres. Staff began to receive inquiries regarding the potential sale and development of the site in 2012.
Per the City Manager’s direction, staff released a Request for Proposals (RFP) on January 29, 2014, for the sale and development of the City’s remaining 3.01 acres. The RFP had a minimum bid of $1,600,000 and would be evaluated for price, strength and experience of the development team and proposed development plan.
No bids were received in response to the first RFP, and a second RFP was released on March 16, 2014. Triad Incorporated was the only respondent to the second RFP with a bid of $1,600,100. A staff committee consisting of Mark Beaudoin, Roxanne Manning and Michael Parker met to review Triad’s proposal. The staff committee recommended rejecting the proposal as being insufficient in detail and consideration. The principal for Triad, Kent Deeb, subsequently revised his proposal and submitted an offer of $2,000,000 on August 7, 2014.
On August 26, 2014, the Real Estate Committee recommended execution of the contract for $2,000,000 subject to an appraisal indicating a value of less than or equal to the contract amount. An initial appraisal of the parcel by J.P. Brown, MAI, resulted in a value indication of $2,250,000. A second appraisal of the parcel by Chip Johnson, MAI, resulted in a value indication of $1,940,000. Staff recommends the sale at $2,000,000 even though this is at the lower end of the range established by the two appraisals because this is grocery store development while many of the comparable sales used were developed with student housing. The Committee agreed with staff’s recommendation to allow the purchaser to continue due diligence and negotiations with an anchor tenant for the proposed development before seeking Commission approval. The contract with Triad Incorporated was executed on August 29, 2014. Mr. Deeb subsequently assigned the Purchase and Sale Agreement to Summit Holdings XV, LLC later that same day.
On April 6, 2015, a regional grocery store tenant selected this site to pursue negotiations for a free-standing urban grocery store on Gaines Street. On April 14, 2015, the purchaser extended the due diligence period for an additional 60 days as allowed by the contract with payment of $5,000, which is non-refundable and not applied against the purchase price.
In order to finalize the site plan and complete a ground lease with the tenant, the buyer is requesting two additional extension options of 60 days and 79 days, respectively. The purchaser will pay non-refundable extension fees that are not applied against the purchase price, in the amount of $5,000 for the second (60-day) extension and $7,500 for the third (79-day) extension. If both options are exercised, the extension period will terminate on November 1, 2015. Closing will occur within 30 days of the end of the extension periods. If there are any changes to the proposed use or tenant, staff will bring this back to the City Commission for approval.
The Real Estate Committee met again on May 12, 2015, to review the final appraisals and proposed contract extension. The Committee recommended approval of the contract extension but wanted to add language to the contract amendment that ensured the City would have approval of any changes to the proposed use or tenant. This language has been added to the contract amendment. Property Management staff recommends approval of the sale to Summit Holdings XV, LLC in the amount of $2,000,000 and contract amendments to allow sufficient time to finalize their agreement with the tenant.