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Board Authorizes Option with City of GR

Board Authorizes Option with City of GR

Jan 28, 2020

GRAND RAPIDS, Mich. - At the Jan. 28 board meeting of the Kent County Road Commission (KCRC), commissioners voted to authorize the execution of the Option Agreement to Purchase Real Estate (Option) with City of Grand Rapids (City). Under the Option, the City will have the exclusive right for 12-months to purchase KCRC’s Central Complex property, located along 1500 Scribner Avenue and 1600, 1632 and 1660 Turner Avenue NW in Grand Rapids. Before execution, the Option also requires approval from the Grand Rapids City Commission.

“This is a great opportunity to work with a long-standing municipal partner to improve our ability to serve the people of Kent County while positioning us to achieve our long-term objectives,” said Mark Rambo, KCRC’s board chair.

The Option with the City comes about a year after KCRC initially published a Notice of Sale for the Central Complex property, in which the City was identified among a list of “Known Potential Buyers.” The City did not make a proposal at that time; and ultimately, KCRC received only one proposal, which KCRC’s board rejected because the net consideration to be received was less than KCRC’s opinion of the property’s value. For the next year, KCRC did not actively market the Central Complex property but remained open to discussion and potential negotiation with interested parties.

The Option includes:

  • An option term of 12 months, during which the City will commence a due diligence review and investigation of the Central Complex property to determine if the property is acceptable and suitable for the City’s intended use.
  • A requirement that by the end of the 12-month term, the City must either exercise the exclusive right to purchase or allow the Option to lapse and terminate.
  • A negotiated purchase price for the Central Complex property of $7,750,000.
  • A mutually agreed upon closing date of no later than September 2022.

Built in 1924, the Central Complex property resides on 14.2 acres along the Grand River just north of Webster Street, adjacent to US-131, and includes over 130,000 square feet of various building space. It is bordered by two city streets, the Grand Rapids Eastern Railroad and the Grand River. Because of these borders, the property is landlocked and lacks capacity for KCRC’s needed expansion of garage and storage facilities. Therefore, KCRC has known for some time that relocation would be necessary to expand operations. Due to this foresight, KCRC purchased a 29-acre parcel in the Walker View Industrial Park in 2016. The Walker View property provides a centralized location, easy access to state trunk lines and the required room to expand.

“Every decision we make is directed by our strategic plan and objectives. While our current Central Complex has served us well, the ongoing growth of the region and corresponding increase in demand for services and road improvements requires that we respond accordingly. We have a plan in place to accommodate these changing variables with a sound financial strategy to support it,” said Steve Warren, KCRC’s managing director.

In 1985, KCRC transitioned to a defined contribution plan and in the early 2000s modified retiree health insurance incentives. The foresight to make these changes, coupled with the organization’s ongoing financial prudence, positions KCRC as virtually debt-free. This stability has allowed KCRC to plan for the future while annually achieving road improvement targets articulated in the organization’s long range plan.

“We remain focused on the improvement, preservation and safety of our road and bridge network. The decision to relocate the Central Complex and expand operations is driven by this focus, both for today and tomorrow,” said Warren.