Agenda Item
3.04 Reconsideration of Purchase and Sale Agreement for 8111 Gatehouse Road – 1. Approve the acquisition of, and financing for, the Facility (the property located at 8111 Gatehouse Road, Falls Church, Virginia) for use as the second centralized administration facility for a purchase price not to exceed that stated in the Original PSA and consistent with the parameters discussed in closed session. The School Board hereby adopts the resolution attached hereto relating to the New Financing of the Facility.
2. That the School Board authorize the Division Superintendent or the Chief Operating Officer, on behalf of the School Board, and with the advice and counsel of the School Board attorney to (i) negotiate, execute and deliver the New PSA in substantial conformity with the foregoing; (ii) negotiate, execute and deliver all documents and amendments related to, in connection with, or in furtherance of the transaction described herein; and (iii) upon approval by the Board of Supervisors of the New Financing, proceed with the transaction and complete the purchase and financing of the Facility.
3. If the Board of Supervisors declines to approve the New Financing during the New Due Diligence Period, if the transaction cannot be completed consistent with the parameters discussed by the School Board in closed session, or it is otherwise determined during the New Due Diligence Period that termination of the New PSA is in the best interest of the School Board, then the School Board hereby authorizes the Division Superintendent or the Chief Operating Officer, with the advice and counsel of the School Board attorney, (i) to terminate the New PSA, (ii) to recover the deposit and any other sums that may be due the School Board, and (iii) to notify the County of the foregoing and to cancel the New Financing (FTS)
Meeting:10/02/2008 Regular Meeting No. 5
Category:3. Action Items - 9:30 p.m.
Agenda Type:Action
Agenda Item Content

3.04 Reconsideration of Purchase.mp3
Staff Contact: Dean A. Tistadt, Chief Operating Officer, Facilities and Transportation Services

Meeting Type: October 2, 2008 - Regular Meeting No. 5

SUBJECT: Reconsideration of Purchase and Sale Agreement for 8111 Gatehouse Road

TYPE: Action

BACKGROUND:

On July 24, 2008, the School Board approved, in open meeting, the execution and delivery of a Purchase and Sale Agreement (Original PSA) for the acquisition of a 275,000 square foot office building (the Facility) that is located, along with Gatehouse Administration Center I, in the Jefferson Park commercial complex. On July 30, 2008, in accordance with the School Board’s directive, the Chief Operating Officer executed and delivered the Original PSA on behalf of the School Board.

At its September 18, 2008 meeting, the School Board voted to confirm its desire and intent to proceed with the purchase of the Facility and approved resolutions relating to the financing thereof which was to be provided by the Board of Supervisors (the Original Financing). The Original Financing would have consisted of (i) a draw on Fairfax County’s line of credit with Bank of America, N.A. that would have provided interim funding for the initial purchase of the Facility, certain renovation costs and related transaction expenses; and (ii) a request that the Fairfax County Economic Development Authority (EDA) provide long term permanent financing, through the issuance of EDA Bonds, for the Facility and all renovations thereto.

On September 22, 2008, the Board of Supervisors declined to approve the Original Financing. As a result of this decision, and to avoid losing the $500,000 deposit the School Board had made under the Original PSA, the School Board terminated the Original PSA effective as of September 26, 2008. The original deposit, with interest, has been returned to the School Board.

School Board Staff has been in contact with the owner of the Facility (Seller) who has indicated a willingness to enter into a new Purchase and Sale Agreement on substantially the same terms and conditions as those contained in the Original PSA (New PSA). The New PSA will contain the same price terms as the Original PSA, including a negotiated purchase price of $52 million, plus an amount up to $5 million to reimburse the Seller for certain documented renovations made by the Seller to the Facility. In addition to these acquisition costs, the School Board is expected to finance approximately $53.1 million to renovate and furnish the Facility. It is anticipated that the financing plan (the New Financing) supporting the New PSA will be substantially the same as the Original Financing.

Upon execution of the New PSA, the School Board will be required to post a new refundable deposit of $500,000. The New PSA will provide for a new due diligence period which will terminate on December 1, 2008 (the New Due Diligence Period). During this New Due Diligence Period, School Board Staff will pursue updated data and analysis of the Northern Virginia real estate market generally, and the Merrifield area submarket specifically, in order to determine what, if any, changes have occurred since early June when the previous appraisal of the Facility was completed.

The School Board will have the right to terminate the New PSA for any reason during the New Due Diligence Period and to receive a refund of the new initial $500,000 deposit. If the School Board does not terminate the New PSA during the New Due Diligence Period, on December 1, 2008, (i) the new initial $500,000 deposit will become non-refundable, and (ii) the School Board will be required to post an additional deposit in the amount of $500,000, for a total non-refundable deposit of $1,000,000.

The School Board’s obligations under the New PSA will be expressly contingent upon, among other things, Board of Supervisors approval of the New Financing. Based on the updated market information and such other information Staff may obtain during this New Due Diligence Period, the Board of Supervisors would be able to reconsider the New Financing at their scheduled meeting in November.

OPTIONS: None recommended.

RECOMMENDATION:

1. That the School Board approve the acquisition of, and financing for, the Facility (the property located at 8111 Gatehouse Road, Falls Church, Virginia) for use as the second centralized administration facility for a purchase price not to exceed that stated in the Original PSA and consistent with the parameters discussed in closed session. The School Board hereby adopts the resolution attached hereto relating to the New Financing of the Facility.

2. That the School Board authorize the Division Superintendent or the Chief Operating Officer, on behalf of the School Board, and with the advice and counsel of the School Board attorney to (i) negotiate, execute and deliver the New PSA in substantial conformity with the foregoing; (ii) negotiate, execute and deliver all documents and amendments related to, in connection with, or in furtherance of the transaction described herein; and (iii) upon approval by the Board of Supervisors of the New Financing, proceed with the transaction and complete the purchase and financing of the Facility.

3. If the Board of Supervisors declines to approve the New Financing during the New Due Diligence Period, if the transaction cannot be completed consistent with the parameters discussed by the School Board in closed session, or it is otherwise determined during the New Due Diligence Period that termination of the New PSA is in the best interest of the School Board, then the School Board hereby authorizes the Division Superintendent or the Chief Operating Officer, with the advice and counsel of the School Board attorney, (i) to terminate the New PSA, (ii) to recover the deposit and any other sums that may be due the School Board, and (iii) to notify the County of the foregoing and to cancel the New Financing.


Attachment: Financing ResolutionResolutionFinancingGatehouse.pdf
Action Agenda Details
Motion:
1. Approve the acquisition of, and financing for, the Facility (the property located at 8111 Gatehouse Road, Falls Church, Virginia) for use as the second centralized administration facility for a purchase price not to exceed that stated in the Original PSA and consistent with the parameters discussed in closed session. The School Board hereby adopts the resolution attached hereto relating to the New Financing of the Facility.
2. That the School Board authorize the Division Superintendent or the Chief Operating Officer, on behalf of the School Board, and with the advice and counsel of the School Board attorney to (i) negotiate, execute and deliver the New PSA in substantial conformity with the foregoing; (ii) negotiate, execute and deliver all documents and amendments related to, in connection with, or in furtherance of the transaction described herein; and (iii) upon approval by the Board of Supervisors of the New Financing, proceed with the transaction and complete the purchase and financing of the Facility.
3. If the Board of Supervisors declines to approve the New Financing during the New Due Diligence Period, if the transaction cannot be completed consistent with the parameters discussed by the School Board in closed session, or it is otherwise determined during the New Due Diligence Period that termination of the New PSA is in the best interest of the School Board, then the School Board hereby authorizes the Division Superintendent or the Chief Operating Officer, with the advice and counsel of the School Board attorney, (i) to terminate the New PSA, (ii) to recover the deposit and any other sums that may be due the School Board, and (iii) to notify the County of the foregoing and to cancel the New Financing
Motion By:
Judith (Tessie) Wilson		Second:
Phillip A Niedzielski-Eichner
Action:Unanimous
Voting Record
Daniel G Storck - ChairmanYea
Kathy L Smith - Vice ChairmanYea
Elizabeth T BradsherYea
Brad CenterYea
Martina A HoneYea
Ilryong MoonYea
James L RaneyYea
Jane K StraussYea
Kaye KoryYea
Phillip A Niedzielski-EichnerYea
Stuart D GibsonYea
Judith (Tessie) WilsonYea
Arvin Ahmadi - Student RepresentativeNot Present