Item No: 5F.
Meeting Date: February 13, 2012
From: Raymond S. Sharp, Public Works Director
Subject: Obtain City Commission direction to staff relating to possible acquisition of property located at 1325 West Main Street
Discussion item only to obtain City Commission direction
During the initial stages of streetscape design activities for West Main Street, it became apparent that there is insufficient right of way for a full gateway feature on the south side of Main Street at US Hwy 27. In the process of establishing contact to evaluate the possibility of obtaining a landscaping easement for this corner, Mr. Joe Shipes has brought a possibility to the city’s attention.
In brief, the property owner has declared bankruptcy, and the property has been in foreclosure proceedings for some time. Approximately $250,000 is presently owed on the property. Mr. Shipes has proposed to the bank that, in return for $50,000 of sponsorship benefits at various Partnership events, the bank would transfer the ownership of the site to the city. The bank responded that their “best offer” would be to accept $25,000 in sponsorship and $25,000 in cash.
Presumably as part of their due diligence proceedings, the bank has conducted both a Phase I and a Phase II Environmental Site Assessment on the site. These studies have been provided to the city, with the bank’s permission. Staff has reviewed the studies and discussed the matter with the consultant which conducted the studies. The studies indicate significant hydrocarbon contamination on the site.
Mr. Shipes also coordinated a meeting of city staff and a representative of FDEP who is instrumental in cleanup efforts in this district. FDEP has indicated that there may be funding available to assist in the cleanup activities. The consultant agrees this may be an option to offset the costs.
In discussion, the consultant provided an estimate of cleanup costs. Given the type and extent of contamination, the minimum cost of site cleanup is estimated at $350,000, over a three-year period. There is a possible FDEP grant program which could be applied to this site under which as much as $400,000 can be applied to cleanup activities. Under the worst-case conditions, the maximum cost of site cleanup is estimated at $750,000. There may be other programs which would fund this higher amount.
Staff has directed the consultant to prepare an assessment of the site conditions, refine the expected costs of cleanup and further refine availability of FDEP and Federal funding for the cleanup.
The consultant has suggested that a forensic analysis may be in order to better characterize the compounds and sources of the compounds. Such an analysis may be useful because of other contaminated sites known to be in the area. If the site contamination can be shown to have originated from another site, then the financial responsibility for that cleanup rests with that other site and not with 1325 West Main Street site. It is possible that FDEP may fund such a forensic analysis. Staff has directed the consultant to investigate this option further.
The City Attorney has also conducted some preliminary inquiries into the acquisition process. It appears that the city could acquire the property directly through several mechanisms, should that be appropriate. He is prepared to discuss this in greater detail. Should the city acquire the property, it would be responsible for site cleanup, albeit with the possibility that most, if not all of the costs would be covered by FDEP or Federal grants and incentives.
If the city acquires the property, under present land development codes, the site could not be sold for commercial redevelopment because it is too small; it could be combined with another site. It may be that the site is best used as an enhanced gateway feature with a small, landscaped park included in the streetscape design.
In summary, it seems prudent to consider a contract for a possible acquisition, with a lengthy (nine month long) due diligence period including a suitable contingency that will allow the city to explore funding options with FDEP with the intent that the cleanup will be completely funded by FDEP and/or Federal funding and opt-out of the contract if cleanup costs are prohibitive. The Commission and the City Attorney will certainly wish to include further contingencies, and should discuss them. Since the City may be willing to undertake the task of exploring funding options and further analysis, it seems reasonable to suggest that the $25,000 cash payment which the bank requested in its “best offer” is better spent on the City’s efforts to obtain funding for the cleanup.
It is also prudent to engage the services of the same consultant who performed the Environmental Site Assessments throughout the due diligence period, since they are already thoroughly familiar with the site and will be able to offer the most cost-effective services for that reason. Should the Commission direct staff to conduct further investigations of the sort described above, we will use this consultant for that reason. Staff has used this consultant for other projects; in the course of completing their work they have demonstrated that they are very cost-effective, proactive in protecting their client’s interests, and highly professional.
I am prepared to answer further questions if any arise during Commission discussion.
Staff requests that Commission discuss this matter and provide direction to staff regarding future activities relating to this site.
To date, the consultant services requested by staff has a cost of $4,000, funded through the City Manager’s Contingency Account. Future costs are to be determined, based upon the actions directed by the Commission, and will be reported to the Commission.
Department: Public Works
Prepared by: R. Sharp
Attachments: Yes____ No X _
Advertised: ____Not Required ______
Attorney Review : Yes___ No ____
Reviewed by: Dept. Head rss
Finance Dept. __________________
Deputy C.M. ___________________
City Manager ___________________
Account No. 001-1221-512.99-90
Project No. ___________________
WF No. ______________________