City CouncilMay 10, 2016

17422 Murphy AvenuePurchase Agreement

Overview• Unique opportunity to

acquire an asset that solves pressing Civic Center space planning needs

• Nearby industrial office/warehouse building is available for purchase

• Additional space will allow for 10 years of growth• Will allow time for staff to identify resources to build

a new police station

Granite Court

Kelvin Apts

360 FusionResidences on Jamboree

17422 Murphy

Life Storage

Storage WestSan Diego Creek

Property Profile• Building is 27,187 square feet

– 11,498 sf office

– 2,363 sf mezzanine

– 13,326 sf warehouse

• Built in 1975; renovated in 2014

• Outstanding condition• 10-minute walk from City Hall

CDBG Capital ProjectsCommission

RecommendationCity of Irvine

Community Facilities ADA $ 73,700

City of IrvineLakeview Senior Center $ 767,850

City of Irvine Residential Rehabilitation Program $ 67,699

CDBG Capital Total $ 909,249Driveway

Driveway

Warehouse

Offices

Loading Dock

Entrance

Mur

phy

Ave

Conference Room

SecurityGate

San

Die

go C

reek

Storage West

Life Storage

Proposal• Public Safety Divisions to

relocate (28 people)– Animal Services

– Regulatory Affairs

– Emergency Management

– Office of Professional Development

– Office of Professional Standards

• Primarily internal support staff will work normal business hours

• Vehicles to relocate (48 total vehicles)– Five large footprint vehicles

– 43 fleet and employee vehicles

• Vehicles will not activate lights and sirens from Murphy location

Terms• Negotiated sales price is

$7,585,000

• $50,000 deposit due from City at signing

• City has 45-day due diligence period

– Environmental review

– Building, structural and termite inspections

– Evaluate anticipated operating costs

• After due diligence period, deposit increases to $100,000

• Deposit will be credited toward purchase price

• Seller has up to two 30-day escrow extension options

• Seller has up to 14-month leaseback option

Anticipated ImprovementsTotal anticipated cost is $1.6 million• At Murphy

– Earthquake retrofitting

– Building security

– Office reconfiguration

– Warehouse reconfiguration

– IT infrastructure

– New small locker facilities

– Cubicles and office furniture

• At City Hall– Expand men’s locker room

– Office reconfiguration

Financing• Purchase price to be

financed from the Asset Management Plan (AMP) fund balance

– Balance is $50.5 million

• Will be repaid with a fully amortized 10-year internal note

– Repaid from the General Fund and leaseback rental revenue

• Anticipated loan payment is $807,000 per year

• Anticipated rental revenue is $304,494 for 14 months

• Proposed financing will not compromise funding of previously identified City Council priorities

AMP Balance

$50.5

$33.6

$56.8

$0

$10

$20

$30

$40

$50

$60

Millions

Pension Pay Down PlanPension Pay Down PlanLoanLoan

Loan RepaidLoan

Repaid

Benefits• Eases overcrowding at Civic Center• Opens parking in back and public lots at Civic Center• Provides secured parking for high value vehicles• Provides potential new community room in the IBC• Extends capacity at Civic Center for 10 years

Recommended Action• Authorize the Mayor to execute a

Purchase Agreement for 17422 Murphy Avenue

• Authorize the City Manager to execute all necessary budget approvals to implement the Purchase Agreement