Title
Purchase Agreement - Trachtenberg Enterprise Group, Inc. (B)
Explanation
In late October, the Economic Development Department was contacted by Mr. Stephen Trachtenberg, President of Quartz Solutions. This firm is a manufacturer of granite and quartz countertops and is currently located in Bradford County. Mr. Trachtenberg expressed interest in purchasing Lot 3, a prominent corner lot located within the City of Gainesville Airport Industrial Park, to construct his new manufacturing facility in Gainesville. The Company is experiencing fast growth, necessitating a new facility. Mr. Trachtenberg resides in Gainesville.
Staff has negotiated a purchase agreement on Lot 3 with Mr. Trachtenberg. The agreement contains the following salient points:
* Purchase price for five acres is $100,000, the assessed value of the land;
* The purchaser's offer is contingent upon the ability to construct a manufacturing facility and showroom on the premises. This seems to be permissible based upon a First Step meeting held on October 25th;
* The purchaser indicated an interest in obtaining an Industrial Revenue Bond to prospectively finance the purchase of the land and construction of the building. Staff attempted to facilitate this by putting the purchaser and his attorney in touch with City bond counsel. This option proved not to be in the best financial interest of the purchaser;
* The purchaser indicated that he sought the waiver of any applicable impact fees. Staff is not aware of any impact fees administered by the City of Gainesville at this time;
* The purchaser indicated that he sought all required utilities within the right of way of the public roads immediately adjacent to the premises, between property line and back of curb, on the premise side of road. This fact was subsequently confirmed by the purchaser's prospective contractor following a meeting with GRU staff on November 18th;
* No other incentives are offered other than those that are adherent to the Enterprise Zone and the services of the Economic Development Director in facilitating the project through the normal Development Review process.
Quartz Solutions has been in business for 3 years and was formerly located within the City of Gainesville. The firm currently employs 14 full time employees and it is anticipated that a staffing level of 35 full time employees will occur by the end of calendar year 2005. Line employees currently are compensated at approximately the average wage per job level for Alachua County that is roughly between $25,000 - $30,000 dollars. Management and professional employees are compensated at a level above the average wage per job for Alachua County.
The project will involve construction of a 34,000 square foot facility comprised of 30,000 square feet of manufacturing space with 25 foot ceilings, overhead cranes with the ability to expand to 80,000 square feet. The remaining 4,000 square feet of office and showroom space will be expandable to 10,000 square feet if the need arises. The reported preliminary cost associated with building construction is $1.5 million dollars. In addition, the purchaser indicates that machinery and equipment existing and planned for purchase should exceed $1.0 million dollars by calendar year 2006.
It is anticipated that this prospective purchase will result in further development of the Airport Industrial Park; provision of job opportunities for residents of East Gainesville; and, is consistent with the City Commission's stated Strategic/Action Plan for Economic Development goals including: 1) providing for consistent job growth; 2) diversifying the economic base; 3) expanding the taxable property base; and, 4) raising standards of living through economic development activities.
Fiscal Note
Per FAA regulations incorporated into a prior agreement executed between the City of Gainesville and the Gainesville Regional Airport, the proceeds of the sale are transferred to the Airport. Typically land purchased through FAA funds is required to be sold at fair market value with the proceeds returned back to the Airport. At an offered purchase price of $100,000 for five acres or $20,000 per acre, the purchaser is seeking a discount in the land price. The assessed price of the subject lot is $100,000 according to Alachua County Property Appraiser records. However, the market value of the property is probably within the $30,000 - $35,000 per acre range. A brief analysis indicates that based upon an improvement value of $1.5 million dollars, the City can expect to receive approximately $6,300 in property tax annually in the initial years of operation. In addition, based upon a calculation of tangible tax associated with reported machinery and equipment, the City can expect to receive an additional $5,000 in tangible tax annually in the initial years of operation. This results in approximately $11,000 - $13,000 in annual return over a ten-year period.
This totals approximately $123,500 over ten years and is conservative due to the fact that it does not take into consideration future anticipated expansion. Because 50% of the ad valorem taxes related to the market differentials are paid to the Gainesville Regional Airport by the agreement referenced above to reimburse the market differential, the City can expect an approximate payback of the discount over ten years in the amount of approximately $61,750 or 50% of the ten year total.
Recommendation
The City Commission approve the attached contract for the purchase of Lot 3 in the Airport Industrial Park and authorize the Mayor and Clerk of the Commission to execute the closing documents, subject to the approval of the City Attorney as to form and legality.