Arlie Purchase, Ridgeline Trail - Laserfiche WebLink

New Search

Page 2 11/16/2010 As you know, City staff expressed an interest in purchasing a large block of land south of the trail corridor and two smaller pieces of property on the north side. Arlie & Company signed the LOI prepared by the City agreeing to sell approximately 315 acres. Land on the south side is being sold at $5,000 per care (50% below appraised value) and land on the north side is being sold at $18,000 per acre (10% below the appraised value). WHAT IS THE RELATIONSHIP BETWEEN THE $600,000 DONATION AND THE PURCHASE PRICE? As stated in the Letter of Intent, the City would purchase approximately 315 acres for approximately $1.944 million. As part of the real estate transaction, Arlie & Company would donate back to the City $600,000 for park-related purposes. The donated funds would come directly from the money received from the City for the purchase of the property. The donated funds would not be limited to the ridgeline trail and could be used at the City's sole discretion for any park - related purpose, including maintenance. WHAT ASPECTS OF THE LOI ARE NEGOTIABLE? Upon receipt of the Letter of Intent from the City, all parties to the Chapter 11 bankruptcy proceedings and the public were informed of the L0l, offered the ability to tour the property and provided an opportunity to file an objection to the sale. At the conclusion of the required 30 day period, no objections were filed. On October 15, 2010 the U.S. Bankruptcy Judge filed an order granting Arlie & Company the authority to sell property to the City. The order states that the purchase and sale agreement "shall be substantially the same as the Letter of Intent and shall not be materially less favorable to the Debtor..." (A copy of the court order is enclosed.) According to the court order, any substantive or material change to the provisions in the LOI would not give Arlie & Company the authority to sell the property and would likely not be acceptable to Umpqua Bank and Arlie's other creditors. For example, if the City wants to make a minor adjustment to the total acreage of land being purchased (and thus the total sale amount) this would not require going back thru the process. Arlie & Company would be able to continue to donate $600,000 to the City. However, if the City wants to decrease the purchase price per acre, this would require going back to the U.S. Bankruptcy Judge for approval. It would also require providing new notice of the lower sale price with the opportunity for any Chapter 11 party, including the public, to file an objection to the sale. An objection to the sale is now more likely due to the recent comparable sale of the Wildish property for a county park at a fair market value equal to $18,500 per acre. Arlie & Company is also not willing to go back thru the Chapter 11 procedure since, as stated in the LOI, the transaction must close by December 31, 2010. This condition in the L0l gives Arlie & Company substantial tax benefits for the year 2009 and is one of the reasons why Umpqua Bank supported the sale. Without those tax savings, we question whether the bank would be on board with the sale at the discounted price especially given the recent comparable sale of Wildish property. PARK NAME In the prior sale agreement the City agreed to name the trail the "Suzanne Arlie Ridgeline Trail Corridor ". If the City only purchased additional park land south of the trail corridor, the discounted sale price would be equivalent to a 50% donation in land area. Arlie & Company preferred not to sell land north of the trail corridor, but at the request of City staff agreed to do so at a discounted price of 10% below appraised value. If the City purchases the land as described in the LOI, the combined discounted sale price would be equivalent to a 46% donation in land area. This is a substantial donation especially given these challenging economic times. As stated in the LOI, with