In May 2022, the City Council approved an interim Lease Agreement with KJ Investments Group that provided for leasing of 15,250 square feet, second floor office space located at 11277 Garden Grove Boulevard. The proposed offices would accommodate additional work space needed for the Police Department Special Resources Team and Community Liaison Unit. The lease term provided for one-year term with five (5) one-year extensions at a monthly rate of $1.25 per square foot or $19,062.50 on a monthly basis. Currently, an assessment of minor renovation work is in process to prepare the offices for occupancy.

Through an expression of interest, KJ Investments Group inquired if the City of Garden Grove would be interested in advancing the Option to Purchase for acquisition of property located at 11277 Garden Grove Boulevard (the “Property”) pursuant to the approved Lease Agreement (Attachment No. 1). The Property is improved with a two-story office building containing 30,835 gross square feet, approximately 30,500 net rentable square feet, currently configured with eight office units. The building was originally constructed in 1980 and a surface parking lot containing 146 spaces. Per the Assessor’s mapping, the Assessor Parcel Number is 090-171-35 and the lot size is 1.85 acres or 80,586 square feet.

Staff and KJ Investment Group began property acquisition negotiations. The terms of the Commercial Purchase Agreement and Joint Escrow Instructions (Attachment No. 2a and 2b) outlines a negotiated purchase price of $7,999,000 which is within the Fair Market Value appraisal range of $7,900,000 to $8,250,000 determined by R.P. Laurain & Associates, Inc. Also, a Phase 1 Environmental Assessment Report prepared by Leighton Consulting concluded no further assessment was recommended. KJ Investments Group has requested an accelerated escrow closing on or about July 22, 2022. Following Council consideration this evening, coordination with the escrow company and title officer will be underway.

In summary, acquisition of 11277 Garden Grove Blvd will offer strategic planning benefits for the future and modernization of the GGPD public safety facility. The property location within the Civic Center area is ideal to serve as interim GGPD building during future construction or potentially become an alternative site for a new GGPD public safety facility location. Work associated with project feasibility and site alternative analysis is part of the Civic Center Community Engagement effort.

Funds are budgeted in the Biennial Budget for FY 2021-2022 and FY 2022-2023 for the civic center/public safety facilities project.

It is recommended that the City Council:

• Approve the Commercial Purchase Agreement and Joint Escrow Instructions with KJ Investment Group, LLC for the acquisition of 11277 Garden Grove Boulevard by the City in the amount of $7,999,000, and an amount $50,000 for escrow and title related costs; and, 

• Authorize the City Manager to execute the Purchase Agreement and Joint Escrow Instructions on behalf of the City, and make minor modifications thereto as needed.