Agenda Package - 10-1-12 Reg. Meeting

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MEMORANDUM TO: Lee County Board of Commissioners FROM: John Crumpton, County Manager RE: Purchase of Property — Dr. Paul Howard — CCCC — Revised from May 12, 2012 Memo DATE: September 20, 2012 As was previously discussed with the Board back in May, Dr. Paul Howard approached Dr. Bud Marchant months ago about using property he owns as a mechanism to give the College a gift and to also set up a revenue stream from those properties for the next 10 years. The properties that Dr. Howard originally approached Dr. Marchant about were 1020 Carthage Street (his residence), 128 -134 Steele Street, and 408 Summit Drive. The appraisal for the 1020 Carthage Street property came in way above what we could justify and has been removed from the proposal. A piece of property at 915 Wicker Street was substituted for the Carthage Street property. This property has now been removed from consideration, so the transaction now involves two (2) properties — one that Dr. Howard will gift to the County for Community College use and one that the County will purchase for the College /County. The two properties remaining in the transaction are 128 -134 Steele Street and 408 Summit Drive. The appraised value for the Summit Drive Property is $675,000, and the County is agreeing to purchase the property for this amount. The property on Steele Street appraised for $200,000; therefore, the gift to the College is in the amount of $200,000. During this due diligence period, the County has been inspecting both properties. Attached you will find reports on the roofs of both properties and a mold report on the Steele Street building. These were the only issues that were uncovered that the County felt needed to be investigated prior to the close of this transaction. The legal structure of the deal is now being finalized. By limiting the transaction to the two properties, the deal is much easier to complete. The Steele Street property will be a simple gift from Dr. Howard to the County for the use of the Community College. This is a straight forward transaction. The County will be purchasing the Summit Drive property through a 59 month loan from Dr. Howard (reduced from 10 years to reduce interest costs). This will be a straight forward real estate transaction with a Deed of Trust. At the end of the loan period, both properties will become the Community College's, with the County having the right to continue to lease the Summit Street property from the College for a mutually agreed upon period. The County and College will need to sign a lease agreement on the building. The Community College will use the Steele Street location as their Small Business Development Center. The building will also have enough space for use as a small business incubator. The third floor can be used as an artist loft or something similar. Use of the third floor will be restricted until a mechanical means of getting to this floor can be developed. The building is in good shape for its age. Dr. Howard has replaced most of the HVAC and electrical systems and brought them up to code. Emergency exits meet today's code. The third floor has some water and ceiling damage. This damage was caused by two