ARLINGTON COUNTY, VIRGINIA. County Board Agenda Item Meeting of July 14, 2018

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1 ARLINGTON COUNTY, VIRGINIA County Board Agenda Item Meeting of July 14, 2018 DATE: July 6, 2018 SUBJECT: Agreement of Sale between NOBE I, LLC, a Virginia limited liability company, and SHCII LLC, a Virginia limited liability company, and the County Board of Arlington County for the acquisition of the properties known as 2629 Shirlington Road (RPC No ), 2633 Shirlington Road (RPC No ) and the outlot parcel designated as RPC No , in Arlington, Virginia. C. M. RECOMMENDATION: 1. Approve the attached Agreement of Sale between NOBE I, LLC, a Virginia limited liability company, and SHCII LLC, a Virginia limited liability company, and the County Board of Arlington County for the acquisition of the properties known as 2629 Shirlington Road (RPC No ), 2633 Shirlington Road (RPC No ) and the outlot parcel designated as RPC No , in Arlington, Virginia. 2. Authorize the Real Estate Bureau Chief, Department of Environmental Services, or his designee, to execute the Agreement of Sale and any related documents, on behalf of the County Board, subject to approval as to form of the Agreement of Sale and related documents, by the County Attorney. ISSUES: There are no outstanding issues identified regarding approval and execution of the attached Agreement of Sale. SUMMARY: Upon approval and execution of the attached Agreement of Sale, the County Board will have agreed to purchase the properties known as 2629 Shirlington Road (RPC No ), 2633 Shirlington Road (RPC No ) and the outlot parcel designated as RPC No (the Property ) from NOBE I, LLC, a Virginia limited liability company, and SHCII LLC, a Virginia limited liability company (the Property Owners ), for a purchase price of twenty-three million eight hundred and sixty thousand dollars ($23,860,000), consistent with the terms and conditions set forth in the Agreement of Sale. BACKGROUND: Arlington County has a need for industrially-zoned land located within or immediately proximate to the County to permanently accommodate current and anticipated County Manager: ##### County Attorney: ***** 44. Staff: Tim O Hora, DES Real Estate Bureau

2 future County public ART facility needs and uses. After an extensive analysis of industriallyzoned properties located within and immediately proximate to the County, County staff identified the Property as the most suitable property to meet the County s immediate and longer term transit facility needs and uses. During initial discussions with the Property Owners, the Property Owners offered to exchange the Property for other similarly zoned property owned by the County Board, but were unwilling to consider a voluntary outright sale of the Property to the County Board. Subsequently, at a meeting of the County Board on October 24, 2017, at which the County Board held a public hearing, the Board adopted a Resolution authorizing a Bona Fide Offer to be made to the Property Owners by the County to purchase the Property and further authorizing, if such effort to purchase the Property is ineffectual or unsuccessful, the acquisition of the Property for public purposes by eminent domain. After conducting additional due diligence and further engaging the Property Owner, County staff sent a Bona Fide Offer to the Property Owners to purchase the Property for the amount of $20.5 million, based on the fair market value of the Property, as determined by an appraisal dated September 8, 2017 prepared by W. Scott Gudely, MAI, The Robert Paul Jones Company, LLC. The Property Owners rejected the County s Bona Fide Offer and made a counteroffer to the County. After further negotiations with County staff, the Property Owners are offering to sell the Property to the County for a purchase price of $23,860,000, consistent with the terms and conditions of the attached Agreement of Sale. DISCUSSION: The Property is located at 2629 and 2633 Shirlington Road and an outlot, in the Shirlington area of Arlington County, and is shown on Vicinity Maps attached to this Report. The County currently leases a 2.52-acre parcel portion of the Property, known as 2629 Shirlington Road, for storage and operation of a portion of the County s Arlington Transit (ART) bus fleet. The rent paid by the County to the Property Owner s under the terms of the lease is approximately $60,000 per month. A 0.05-acre parcel portion of the Property is located in the area of a storm water drainage culvert. The remaining.94-acre parcel portion of the Property, known 2633 Shirlington Road, is leased, on a month-to-month basis, to Redman Fleet Services, Inc., and is currently being used to store towed vehicles, as part of Redman s operations. A permanent operations location is needed for ART to provide the operations facility with the certainty necessary to support the system's growing needs. The growth that is underway and planned was approved in the County Board-adopted 10-year Transit Development Plan. The existing leased ART bus storage at Shirlington is ideally located within the ART service area and presents the best location to develop as a base for ART operations. Conceptual plans indicate that the currently leased 2.52 acres, plus the additional area (approximately 1 acre) is sufficient for up to 90 ART buses, bus operator parking, and an operations facility. The full Shirlington Property, together with the recently opened Eads Street ART Light Maintenance Facility and acquisition of the Electronic Drive Heavy Maintenance Facility site approved by the County Board on December 13, 2016, would establish the facilities base required for Arlington County's public transit system for the next quarter century. The significant terms of the proposed Agreement of Sale include the following: - 2 -

3 The proposed purchase price for the Property is $23,860,000; Settlement would occur with 30 days after the satisfaction of the conditions precedent to County s obligations under the Agreement of Sale, but in no event would be later than August 31, 2018, unless extended pursuant to the terms of the Agreement of Sale; The County is entitled to terminate the Agreement of Sale for any reason during the Feasibility Period between the Effective Date of the Agreement of Sale Agreement and earlier to occur of: i) the date which is sixty (60) days thereafter or fifteen (15) days after the date of the Phase II Environmental Report; and The Property Owners are required to deliver possession of the Property to the County free of any leases, tenants, or occupancies. PUBLIC ENGAGEMENT: While the public is not generally engaged during negotiations for the acquisition of real property by the County, the public and relevant stakeholders were provided with notice of the Board s intention to acquire the Property, and an opportunity to provide input, at the October 24, 2017 public hearing during which the County Board adopted the Resolution authorizing a Bona Fide Offer and acquisition of the Property by eminent domain, if the County s effort to purchase the Property was ineffectual or unsuccessful. FISCAL IMPACT: The purchase price of $23,860,000 million and estimated closing costs of approximately $20,000, totaling $23,880,000 will be funded as follows: State Grant Funds (34%) & Local Match (66%) Amount Account Number $6,970, MA65.D (DRPT Grant Funds) $2,740, MA65.NV (NVTA Local) $10,790, MA65.CT (TCF-C&I) $20,500,000 Subtotal State Grant Funding & Local Match Funds Other Local Funding Amount Account Number $3,360, MA65.CT (TCF-C&I) $20, MA65.NV (NVTA Local) $3,380,000 Subtotal Other Local Funding $23,880,000 Total Funding - 3 -

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37 Vicinity Map Acquisition of 2629 and 2633 Shirlington Road RPC#'s , , & TH ST S S KENMORE ST 24TH RD S S GLEBE RD S LINCOLN ST S KENWOOD ST 25TH ST S S LOWELL ST 25TH ST S 25TH CT S S KENMORE CT KEMPER RD SHIRLINGTON RD Acres Acres Acres INTERSTATE 395 INTERSTATE 395 INTERSTATE 395 HOV LANES 27TH RD S 27TH ST S S CLEVELAND ST S FOUR MILE RUN DR SHIRLINGTON RD SHIRLINGTON RD SHIRLINGTON CIR Feet / Pursuant to Section of the Code of Virginia, any determination of topography or contours, or any depiction of physical improvements, property lines or boundaries is for general information only and shall not be used for the design, modification, or construction of improvements to real property or for flood plain determination. Aerial Photography 2015 Commonwealth of Virginia Easement Locations are Approximate. Map prepared by Arlington County GIS Mapping Center Produced and September 2016

38 RD Vicinity Map Acquisition of 2629 and 2633 Shirlington Road RPC#'s , , & SHIRLINGTON Acres Acres Acres INTERSTATE Feet INTERSTATE 395 HOV LANES INTERSTATE 395 / Pursuant to Section of the Code of Virginia, any determination of topography or contours, or any depiction of physical improvements, property lines or boundaries is for general information only and shall not be used for the design, modification, or construction of improvements to real property or for flood plain determination. Aerial Photography 2015 Commonwealth of Virginia Easement Locations are Approximate. Map prepared by Arlington County GIS Mapping Center Produced and September 2016

39 RD Vicinity Map Acquisition of 2629 and 2633 Shirlington Road RPC#'s , , & SHIRLINGTON Acres Acres Acres INTERSTATE 395 INTERSTATE 395 HOV LANES Feet INTERSTATE 395 / Pursuant to Section of the Code of Virginia, any determination of topography or contours, or any depiction of physical improvements, property lines or boundaries is for general information only and shall not be used for the design, modification, or construction of improvements to real property or for flood plain determination. Aerial Photography 2015 Commonwealth of Virginia Easement Locations are Approximate. Map prepared by Arlington County GIS Mapping Center Produced and September 2016