City OKs loan to assist development
Funds to help developer close escrow on land parcel
PALMDALE — To help a developer who has planned an industrial development on the southeast corner of Columbia Way (Avenue M) and 10th Street West get through escrow by the end of the year, the City Council, on Wednesday, agreed to a $2.75 million loan.
It is required to enable the developer, Tripod Investments, LLC, and Hafrisco, LLC, to finalize efforts in order to close escrow on the property by the end of the year, Economic Development Director Luis Garibay said.
The project is awaiting permits to finalize escrow.
Those permits have been delayed by state agency bureaucracies, he said.
The approximately 118 acres of land belongs to the Successor Agency, the entity that took control of properties owned by the city’s Redevelopment Agency, when such agencies were dissolved statewide, in 2012.
The agency entered into an agreement to sell the property to a developer, in 2017, to develop industrial space to bring in a Fortune 500 company, according to the staff report.
The original tenant for the
development pulled out of the project, but a second one, was described by Garibay as a Fortune 500 company with a good reputation that could bring approximately 100 jobs to the area.
According to the terms of a settlement agreement with the Successor Agency and the developer, escrow on the property must close by Dec. 31.
“If the escrow doesn’t close, the purchase and sale agreement would evaporate,” consulting attorney Murray Kane said.
Should that deadline pass without escrow closing, the property will be subject to the Surplus Lands Act. Sale of the property would then require the approval a Los Angeles County Oversight Board, as well as the state Department of Finance, and would be subject to low-income housing development requirements, Kane said.
“The economic development opportunity is in jeopardy if escrow doesn’t close by Dec. 31,” he said.
The city will receive a $140,800 loan fee and 14% interest on the $2.75 million loan. It is expected to be a 90day loan, Garibay said.
Resident Jason Zink argued against the loan, mistaking it for the sale price of the land. As such, he felt it was far too low for what he called “the most prime piece of property in the Antelope Valley.”
“The lack of transparency when it comes to this property in particular … really makes people scratch their heads,” Zink said, prior to the Council discussion.