Background:
As part of this action, the Board will review and consider whether to approve the Option to Purchase Real Property (“Option”) between the District and Mountain View Owner, LLC (“MVO”), who owns the real property commonly referred to as 699 N. Shoreline Blvd, Mountain View, California 94043, described as one parcel of land totaling approximately 1.8 acres with assessor parcel number ("APN") 153-24-027, as identified in Exhibit A-1 attached to the Ground Lease (“Lot B”), which the Board is being asked to approve during this same Board meeting (“Ground Lease”). Lot B is the parcel upon which the District constructed its employee housing building with 144 residential units (“EH Building”).
The District and MVO expect the City of Mountain View (“City”) to issue a Temporary Certificate of Occupancy on or about February 6, 2025, after which time the District can begin leasing units to its employees. MVO and the District now need to enter into a Ground Lease for Lot B upon which the EH Building is located.
The District is motivated to keep the rental rates for its employee tenants of the EH Building as low as possible. The largest operating expense going forward is the Ground Lease payment to MVO. To reduce its operating expense, the District approached MVO about purchasing the land with the initial goal of reducing that Ground Lease expense. As part of the District’s efforts, District staff has negotiated a purchase option agreement with MVO (“Option Agreement” or “Option”). This not only has the benefit of eliminating the payment obligation of the Ground Lease in return for an anticipated lower financial obligations (in the form of debt service payments that are lower than the Ground Lease payments), but also has the benefit of the District owning the real property on which the EH Building is located.
The District finds it in the District’s best interest to now enter into the Option until June 30, 2025 (“Option Period”) during which time the District and MVO will work towards agreeing on a purchase price for Lot B and the District can perform its due diligence and determine if it would be financially prudent to exercise its option to purchase Lot B versus continuing to lease Lot B under the Ground Lease.
Attached as Exhibit C to the Option is the Form of the Purchase and Sale Agreement for Real Property with Joint Escrow Instructions (“PSA”) that the District and MVO would enter into if the District exercises its Option during the Option Period after MVO and the District come to an agreement on the purchase price for Lot B and all other terms and conditions in the Option are satisfied by the District and MVO.
Fiscal Implication:
Fifty Thousand Dollars ($50,000) as the nonrefundable amount of the option consideration that MVO requires the District to pay.
Recommended Action:
It is recommended that the Board approve the attached Option Agreement subject to minor revisions approved by staff and legal counsel that do not alter or reduce the intent of the Option. By approving the Option, the Board would also be approving the PSA. The PSA will be brought to the Board for approval at the time the Board considers whether to exercise the Option.