The Village owns a vacant piece of property at 580 University Drive, which it purchased in 2001. It was purchased for the express purpose of leasing it to Arlington Heights Ford (“AH Ford”) for vehicle storage, as an incentive to ensure that AH Ford remained in the Village. As part of the original agreement for purchase of the property, it was anticipated that the Village might declare the property surplus and sell it to AH Ford. At the time the Village purchased the property, it entered into a Lease/Purchase Agreement with AH Ford covering the property. The Village paid $376,390 for the property.

In 2011, the Village and AH Ford entered into two agreements replacing the original Lease/Purchase Agreement – one was a Lease and the other was a Purchase Agreement, which provided AH Ford an option to purchase the property under established terms.

On March 14, 2016, AH Ford notified the Village of it's desire to exercise the option to purchase the property. Pursuant to the Purchase Agreement, an appraisal is to be used to determine the purchase price of the property. The appraisal was received in mid-April and the appraised value was determined to be $575,000. Through May 2016, AH Ford has paid $657,000 in rent to the Village. The Village pays approximately $50,000 per year in real estate taxes. Once ownership is transferred to AH Ford, the Village will be relieved of paying taxes. The Village receives a significant amount of sales tax revenue from AH Ford.

The terms of the Purchase Agreement provide that if the appraised value is less than the rent paid to date by AH Ford, AH Ford must pay the difference. If the price is more than the rent paid, no money is owed to the Village. The appraised value is less than the rent paid, so no money is owed to the Village.

RECOMMENDATION

It is recommended that the Village Board approve the attached Resolution Authorizing the Sale of Surplus Property Owned by the Village of Arlington Heights for the property located at 580 W. University Drive.