The most recent purchase agreement for the former South Adams Elementary School property has fallen through.
Superintendent Scott Litwiller announced at a special meeting on Tuesday that he recently received a letter from CDI Development Services notifying the school corporation that it is "terminating the purchase agreement for the property." Litwiller said that CDI was unable to secure a lease agreement from its major tenant. As a result, Litwiller recommended that the board accept the termination notice and direct the escrow agent to return the earnest money to CDI per the agreement.
A $747,300 bid for the property from CDI was accepted by the schools' board back in March. In September, Litwiller received a letter from CDI stating that it had not received adequate assurances from potential clients, and without such assurance, CDI could not complete its due diligence activity to close on the purchase of the property.
At that time, the due diligence period was extended another 60 days through a contract amendment, without cost to CDI.
The original purchase agreement stated that CDI has the option to extend the due diligence period, for up to two periods of 60 days, by paying an additional $7,500 into the escrow account for each extension.
When CDI bid on the property, it said there was "confirmed interest" from a grocery operation that intended to build a grocery store and an Amish country store that specializes in bulk foods, Amish specialty goods and gifts. CDI also said it was negotiating with owners of a quality Amish-style restaurant and that there could be three to five different retail establishments on the property.
The other purchase agreement that didn’t pan out was in June of 2011 when the school corporation accepted a $650,000 bid from GKB Enterprises for the property. The bid was contingent upon CVS Corporation signing a lease agreement. That agreement also fell through when CVS indicated that its relocation was no longer a priority.
Litwiller said he recently spoke with school board Attorney Tim Baker who said that if the school corporation wants to hire a real estate broker, it would have to go through the bid process first. If the school corporation either receives no bids or rejects all bids, it can begin the process of finding a broker.
It was noted that the current appraisal on the property is 10 months old. Although it is not necessary to have a new appraisal completed at this time, Baker recommended that the appraisal at least be updated.
The two previous appraisers said they could update the appraisal for a few hundred dollars. Litwiller said he expects the updated appraisal to cost less than $800, as opposed to a new appraisal which would cost several thousand dollars.
"The risk is if we do get a bid and we're tempted to accept it," Litwiller said. "Because if we accept it and it falls through, then we have to go through the process all over again." However unlikely that might be, Litwiller said if that happens, the purchase agreement would be more firm and include that the purchaser would not get its escrow money back if the deal doesn't work out.
Board members directed Litwiller to obtain an updated appraisal in order to start the process of putting the property up for bid yet again (Tony Mellencamp was absent).
Litwiller said, "We will shop around for a broker after the bid process has been completed." He added, "The third time is going to be a charm."