Without dissension, the Mesquite City Council approved a measure at its Oct. 13 meeting to sell 104 acres of city-owned land using a direct sale process rather than sending it to auction. The land is located at the new I-15 Exit 118 interchange scheduled for completion in June 2016.
All four councilors voting on the issue cited the benefits of selling the land directly to a developer. Saying the city could possibly get more money for the land through an auction, Councilman Rich Green echoed the others saying “I’m all about the jobs. It’s about the payrolls and the dollars that will multiply.”
Councilman Kraig Hafen recused himself from the agenda item saying he had interest in another property that was in competition with potential development at I-15 Exit 118.
Aaron Baker, City Economic Development officer, explained to the Council that an auction process came with very little city control over use of the land. The winning bidder could also sit on the land for an extended time or flip it to a new buyer realizing an immediate profit.
With a direct sale to an interested party, the city can place controls on how the land is used and dictate a timeline for developing the property.
Councilwoman Cindi Delaney remarked that she was pleased with the Economic Development Incentives Committee who provided recommendations on how to structure incentives for developers to build on the land in a timely fashion. “We’re looking at the long-term benefits to Mesquite,” she said.
“I’m in favor of a direct sale,” Councilman Geno Withelder said by telephone. “Let’s get moving. Let’s quit talking.”
Prior to the Council’s discussion, they heard plans for a Travel Center (TC) from 333 Eagles Landing, LLC, who wants to purchase the city’s land. A competing group, Mesquite Exit 118 Group, LLC, also expressed interest in the property although their plans are much less developed.
After voting 4-0 to approve a direct sale process for the Exit 118 land, the Council moved on to deciding which of the two development groups they would sell to.
The land is divided into two parcels: 5.71 acres lays on one side of the road with the remaining 98.24 acres on the other side. An appraisal commissioned by the City pegs the value of the combined parcels at $1.535 million. A second appraisal, paid for by Eagles Landing comes in at $1.610 million.
“We intend to build a facility that soccer moms and kids won’t be afraid to use,” Andy Geller, managing partner of 333 Eagles Landing, told the Council about his group’s plans to build a Travel Center with a convenience store, restaurants, and truck traffic facilities in the back. “We have a clean and polished look that’s architecturally beautiful,” he said as he flipped through a slide presentation showing the plans.
Eagles Landing has offered $1,572,500 for the land. They will pay $630,200 cash up front. They also promise to invest at least two million dollars in capital improvements and provide a minimum of 40 jobs within three years. According to the city’s economic development matrix, each of those incentives will garner separate 30 percent reductions in the land’s purchase price.
The Exit 118 group will pay $1.8 million for the acreage with one million dollars in cash up front. They are requesting the same incentive reductions for improvements and the number of jobs but as a form of rebate on the up-front cash.
Both offers give the city a first deed of trust on part of the land should the buyer default on the purchase. The city would get 73 acres back from Eagles Landing and 98 acres back from the Exit 118 group.
“Both offers are very similar,” Councilman George Rapson said, concluding the end difference in the two offers was $136,000 after incentives. “The economics are not incredibly different. The differences are principally in the security of the property and how the refunding works. But one of these groups has a history of building and operating truck stops and hotels,” referring to Eagles Landing.
“The Exit 118 group is relying on selling off parcels to others. The likelihood of quickly getting something going vertical and employing people is more inclined to happen with 333 Eagles Landing,” he added.
Rapson said he was ready to make a decision that night.
“This is a wonderful position to be in,” Delaney remarked about the two competing offers. “However, I would like to see both proposals listed side-by-side so we can compare them better.” She proposed that Baker create a presentation for the next Council meeting rather than decide on the issue immediately.
Withelder and Green voted with Delaney to bring the issue back in two weeks. Rapson voted against the measure.
Once the Council decides to whom they will sell the land, a contract and purchase agreement will be hammered out and brought back for a vote.