COUNTY ADMINISTRATOR 220 NORTH MAIN STREET, P.O. BOX 8645 ANN ARBOR, MICHIGAN (734) FAX (734)

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1 COUNTY ADMINISTRATOR 220 NORTH MAIN STREET, P.O. BOX 8645 ANN ARBOR, MICHIGAN (734) FAX (734) TO: Wesley Prater, Chair Ways & Means Committee THROUGH: Robert E. Guenzel County Administrator FROM: Greg Dill Facilities Director Curtis N. Hedger Corporation Counsel DATE: August 4, 2004 SUBJECT: Approval of Sales Contract to Sell County-Owned Property at 543 N. Main Street in Ann Arbor to BH-543 N Main, LLC, a Michigan Limited Liability Company BOARD ACTION REQUESTED: Administration and Facilities request that the Board of Commissioners approve the Sales Agreement between Washtenaw County and BH-543 N Main, LLC, a Michigan Limited Liability Company ( BH-543 N Main, LLC ) to sell the Countyowned property at 543 N. Main Street in Ann Arbor to BH-543 N Main, LLC for $280,000. BACKGROUND: On May 7, 1997 Washtenaw County purchased the property at 543 N. Main Street for $260,000. The building on the property was used as a warming shelter for women. Later, the County paid $20,000 to replace the roof on the building. After the building on the property was no longer used as a warming shelter, it was used by the Shelter Association of Washtenaw County for office space. The building on the property is currently vacant. Pursuant to the County s Policy on the Sale of Real Property, the County Administrator, in consultation with the Facilities Director, Corporation Counsel and Board Leadership, decided to sell the property pursuant to a sealed bid process. Geoffrey L. Baker submitted the only bid in response to the process. Mr. Baker informed the County that the

Main Street in Ann Arbor to BH-543 N Main, LLC, a Michigan Limited Liability Company BOARD ACTION REQUESTED: Administration and Facilities request that the Board of Commissioners approve the Sales

2 building on the property contained less square footage than originally indicated by the appraisal and City of Ann Arbor s assessor s card for the property. The County confirmed that the building contained approximately 500 square feet less than was originally believed. Although no sales agreement was ultimately reached between the County and Mr. Baker as a result of the sealed bid process, the parties continued to negotiate the sale of the property. As a result of those negotiations, the parties agreed, contingent upon approval by the Board of Commissioners that the County would sell the property to BH-543 N Main, LLC, a Michigan Limited Liability Company managed by Mr. Baker for $280,000. DISCUSSION: The property at 543 N. Main Street is currently not being used by the County and sits vacant. The County s casualty insurance for the property carries a $250,000 deductible. Thus, in the event of a catastrophic loss to the building, the County would not be able to recover the true value of the property from the insurer. In addition, the County has now learned that the building on the property is approximately 500 square feet smaller than originally believed. This, of course, lowers the overall value of the property. There are also boundary line discrepancies involving the property. While these discrepancies are minor, they ultimately lessen the value of the property. It should also be noted that BH-543 N Main, LLC is willing to enter into a cash transaction. It has paid $15,000 to the County as earnest money and will pay the remainder in cash at the closing provided the Board of Commissioners approves the sale. BH-543 N Main, LLC has also agreed that once the sale is approved by the Board, the closing will be held within five (5) days. It should also be noted that since this proposed sale was negotiated without the assistance of a broker, the County will not have to pay the standard 6% broker fee. Finally, BH-543 N Main, LLC has indicated that they plan to use the property for office space. Given these factors, the County believes that BH-543 N Main, LLC s offer of $280,000 to purchase the property is fair and should be accepted by the Board of Commissioners. If the sale is not approved, the building will continue to sit vacant and the County will need to expend more money and staff time to procure another prospective purchaser. IMPACT ON HUMAN RESOURCES: Approval of this Resolution will have no impact on the County s human resources. IMPACT ON BUDGET: Approval of the Resolution will result in the sale of the property to BH-543 N Main, LLC for $280,000. This money will be put into the Capital Reserve Fund. IMPACT ON INDIRECT COSTS: There are no indirect costs associated with approval of this Resolution.

Baker as a result of the sealed bid process, the parties continued to negotiate the sale of the property.

3 IMPACT ON OTHER COUNTY DEPARTMENTS OR OUTSIDE AGENCIES Approval of the Resolution will require Corporation Counsel and Facilities to work with outside legal counsel to prepare the necessary closing documents. CONFORMITY TO COUNTY POLICIES: The requested Board action is in conformity with all County policies. ATTACHMENTS: The Proposed Sales Agreement between Washenaw County and BH-543 N Main, LLC for the sale of 543 N. Main Street in Ann Arbor is attached to the Resolution.

CONFORMITY TO COUNTY POLICIES: The requested Board action is in conformity with all County policies.

4 A RESOLUTION APPROVING THE SALES AGREEMENT BETWEEN WASHTENAW COUNTY AND BH-543 N Main, LLC, A MICHIGAN LIMITED LIABILITY COMPANY FOR THE SALE OF COUNTY-OWNED PROPERTY AT 543 N. MAIN STREET IN ANN ARBOR, MICHIGAN AND AUTHORIZING THE COUNTY ADMINISTRATOR TO SIGN ANY LEGAL DOCUMENTS NECESSARY TO COMPLETE THE SALE August 4, 2004 WASHTENAW COUNTY BOARD OF COMMISSIONERS WHEREAS, on May 7, 1997 the Washtenaw County Board of Commissioners purchased the real property located at 543 N. Main Street in Ann Arbor, Michigan ( Property ) for $260,000 as a warming shelter for women; and WHEREAS, the County later paid $20,000 to replace the roof on the building located on the Property; and WHEREAS, following the County s Policy on the Sale of Real Property, County Administration, consulted with the Facilities Director, Corporation Counsel and Board Leadership and decided to sell the Property pursuant to a sealed bid process; and WHEREAS, the only bid received under the sealed bid process was from Geoffrey L. Baker; and WHEREAS, the County and Mr. Baker were unable to reach an agreement on the sale of the property as a result of the sealed bid process but agreed to continue negotiating the sale of the Property; and WHEREAS, Mr. Baker continued negotiations to purchase the property in his capacity as manager of BH-543 N Main, LLC, a Michigan Limited Liability Company ( BH-543 N Main, LLC ); and WHEREAS, the parties learned that the amount of square footage for the facility was not approximately 4200 square feet as stated by the appraisal on the property and the City of Ann Arbor s assessor s card, but was approximately 3700 square feet; and WHEREAS, the County and BH-543 N Main, LLC have now agreed on a sales price of $280,000, contingent upon final approval by the Board of Commissioners; and WHEREAS, County Administration, Facilities Management and Corporation Counsel, after having reviewed the proposed sales agreement and factoring in

on May 7, 1997 the Washtenaw County Board of Commissioners purchased the real property located at 543 N.

5 the reduced size of the building, agree that the sale of the Property to BH-543 N Main, LLC for $280,000 is in the County s best interest. NOW THEREFORE, BE IT RESOLVED that the Washtenaw County Board of Commissioners approves the sale of the Property located at 543 N. Main Street in Ann Arbor, Michigan to BH-543 N Main, LLC for $280,000 pursuant to the Sales Agreement attached to this Resolution. BE IT FURTHER RESOLVED that the Washtenaw County Board of Commissioners authorizes the County Administrator to sign whatever legal documents are necessary to complete the sale of 543 N. Main Street, Ann Arbor to BH-543 N Main, LLC. h: general/543sale

Main Street in Ann Arbor, Michigan to BH-543 N Main, LLC for $280,000 pursuant to the Sales Agreement attached to this Resolution.

COUNTY ADMINISTRATOR 220 NORTH MAIN STREET, P.O. BOX 8645 ANN ARBOR, MICHIGAN 48107-8645 (734)222-6850 FAX (734)222-6715

COUNTY ADMINISTRATOR 220 NORTH MAIN STREET, P.O. BOX 8645 ANN ARBOR, MICHIGAN 48107-8645 (734)222-6850 FAX (734)222-6715 MEMORANDUM To: From: Through: Wesley Prater, Chair Ways and Means Committee Marc