Industrial park jump start
Cheney council approves lease agreement for 11 parcels in Industrial and Commerce Park
Last updated 8/22/2019 at 10:39am
Cheney’s City Council unanimously approved a resolution at their Aug.13 meeting that would lease almost half of the city’s Industrial and Commerce, Park to one organization.
The agreement with MVP Property, LLC, also transfers four other properties previously included as purchase options under a lease agreement with JC Steel Targets established in March 2018 and amended last August, to MVP Property. JC Steel Targets owner Jake Vibbert is one of the partners in MVP Property.
All told, MVP Property will be leasing 11 of16 properties owned by the city of Cheney located west of Fred Johns Way, which bisects the park, according to the Spokane County property website SCOUT. JC Steel Targets is leasing three other properties owned by the city, while an additional 13 properties east of Fred Johns Way are owned by AE Cheney Land, LLC.
City Administrator Mark Schuller told the council Vibbert and his partners in MVP Property have ideas and visions for development of the leased properties, which also come with options to purchase. The 30-parcel park was built in 2008 using federal grant funding, and other than two existing businesses, has had just one customer build in it since it opened.
“We see this as a great opportunity,” Schuller said. “It’s great for the park after years and years of zero action.”
Schuller said the two lease agreements are similar to the one signed with JC Steel, one of the major exceptions being the lease terms, which are for 200 months — roughly 16.5 years — versus the 120 months with JC Steel. Both lease agreements could be terminated earlier should MVP pay the total agreed upon ground rent amount to the city earlier than the 200 months.
MVP will pay $603.33 a month — $120,665.46 total — for seven parcels and an additional .88 of an acre included after a lot line adjustment south of Spring Street. The limited liability corporation will be charged $873.32 a month — $174,664.92 total — in ground rent for four other properties south of Willow Street.
Both leases carry an option to purchase the respective properties at the total amount charged for the 200-month lease — $174,664.92 for the south of Willow lots and $120,665.46 for the south of Spring parcels — less the amount of ground rent already paid and $1,000 in purchase option fees. The south of Spring lease includes a separate purchase price of $33,000 per acre for the included strip of land — about $29,040.
The leases carry 120-day performance clauses with options that must be exercised before the end of the agreement or they will be lost. Councilman Paul Schmidt commented that in leasing so many properties to a private business the city was relinquishing the opportunity to gain its own cash flow in favor of whatever businesses MVP managed to bring into the park and ground rent from the LLC.
“I don’t see any risk for the city other than not doing it,” he added.
Schuller said some of the business options MVP was looking into included start-ups and business-incubator type opportunities.
“Those are property taxes and cool businesses coming into Cheney,” city attorney Stanley Schwartz said. “It could be one way of jump starting the industrial park.”
John McCallum can be reached at email@example.com.