HomeMy WebLinkAbout00 - Closed Session - Wells Fargo Bank, BalboaCLOSED SESSION ITEM
CITY OF NEWPORT REACH
OFFICE OF THE CITY MANAGER
JULY 11, 1994
TO: MAYOR AND CITY COUNCIL
FROM: ASSISTANT CITY MANAGER
SUBJECT: WELLS F'A,RCO BANK, RALROA
ACTION: Confirm or deny the purchase of the subject building at a cost
of $800,000.
BACKGROUND: Previously, the City Council approved purchase of this property for
$800,000 plus a long term, no rent lease for an ATM. However, the Council placed a
contingency on the offer that the property be appraised at the value being offered.
Richard Fuller, MAI, has completed a range of value appraisal for the land only at
$725,000 to $825,000. As of the writing of this report, the appraisal is not in hand but
will be transmitted to the Council Friday evening. Accordingly, comparables and other
information used by the appraiser are not available for discussion. However, the
range of value and land only conditions were imposed to lower the cost of the
appraisal and to reflect the City's plan to demolish the building.
DISCUSSION: The appraisal provides an opportunity for the City Council to
cancel this escrow if it so desires. As indicated previously, the property currently has
21 parking spaces and the demolition of the building will provide another 13 for a total
of 34 spaces. At fifty cents per hour and 65% occupancy, these meters will produce
$48,400 per year. This income represents a return of approximately 5% when
$100,000 for construction and demolition and continuing maintenance and operation
costs are added.
Some discussion among local business leaders in the area indicate that they may
wish to preserve the building for some tourist office or public purpose. If that is the
case, the number of spaces would remain at 21 and the annual return would be
$30,000 or approximately 4% on the $800,000 investment.
The combination of these relatively low returns and a lower than expected appraisal
may provide the Council with an opportunity to reconsider this purchase.
RECOMMENDATION: The Council has three available options.
Complete the sale at $800,000.
Cancel the sale.
Cancel this sale but offer a lower price.
4 ' .-
Kenneth J. Deli o
KJD:mb