By Mathew Morgan
As I handed the keys to the new owner, I was filled with both the excitement of a job completed and apprehension at going through a similar sale process several times again.
Escrow on the first of about 280 buildings the church has listed for sale in Pasadena and Big Sandy had finally closed.
The sale process started in November 1995 when church management interviewed commercial real estate brokers and began negotiations with Grubb and Ellis to market the headquarters property. A contract was signed early in 1996.
As part of their assignment, Grubb and Ellis was directed to sell the Office Facilities and Photography buildings and adjacent garage and parking lots (together the OFB complex).
The OFB complex previously housed the church's mail processing center and the Photography Department. Since these are not a contiguous part of the main campus, church management believed they could be sold first without negatively affecting the value of the larger parcel.
Not long after Grubb and Ellis prepared marketing material and began marketing the property, a company from Alhambra, California, expressed interest.
Even though the interested party wanted to buy the OFB complex and the church wanted to sell it, escrow did not close until February of this year. This delay was caused by several complications not typical of real estate transactions.
A utility corridor containing chilled water for air conditioning, heating, electricity, telephone and computer cabling runs under the OFB complex and provides service to it and other church-owned buildings on the east campus.
This utility system saved the church thousands of dollars every year, but became a major complication when trying to separate and sell the property.
An easement had to be negotiated with the purchase and sales agreement that would allow church employees to access and maintain the utility corridor after the property was sold. In addition, church employees had to excavate and sever all utility connections to the building and resurface the parking lot that was damaged before the close of escrow.
An Environmental Site Assessment was required by the purchaser's bank. This showed that a plating company had been located near the OFB complex and that the property contained hydraulic hoists that can be an environmental concern if leaking.
Because plating facilities use metals and solvents that can be hazardous, and because hydraulic hoists were present, further subsurface testing had to be done by the purchaser and the church to ensure that toxic substances were not present in the soil.
Testing revealed no cause for concern. However, this step took months and five amendments to the purchase and sales agreement before it was completed.
The OFB complex also contained asbestos, now considered a toxic substance. The church either had to remove the asbestos before the sale or negotiate language in the Purchase and Sales Agreement to shield the church from future liability.
Asbestos removal is expensive and complicated for other reasons, so church management decided to leave the asbestos and negotiate indemnities to minimize future risk to the church.
The city of Pasadena requires all buildings being sold to have ample parking. The OFB complex did not meet requirements because, as part of a campus, parking was shared with other church-owned facilities.
To meet city requirements, the church had to obtain a written agreement that the new owner would demolish a building on the site and construct a parking lot.
In addition, city zoning required the church to obtain approval to allow construction of this lot, because it would be on a street corner. City approval also had to be obtained allowing an adjacent church-owned lot to be split and a portion sold with the OFB complex to satisfy remaining city requirements.
During escrow, the church had to show that title to the property was clear and free of back taxes. This was complicated by an error in county records, which indicated the church owed taxes that had been paid.
Finally, on Feb. 27, 1998, after hundreds of hours invested by many people, the sale was concluded.
May WN page 27
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