McDermont Ventures Inc. seek to purchase McDermont X property as the end of their lease nears; city begins surplus land designation process to avoid reassuming McDermont operations
LINDSAY – The city of Lindsay and McDermont X are beginning the formal steps of hammering out a deal that will give McDermont’s owners the property they work in now, while relieving the city of the recreation behemoth.
McDermont X’s lease from the city of Lindsay expires at the end of the year. Without a new lease in place, or without selling the property to McDermont Ventures Inc. – the company that owns McDermont X – the city of Lindsay may have to reassume the rec center or designate it “surplus property.” Neither option is preferable to the city according to Lindsay City Manager Joe Tanner.
MVI’s lease took effect in 2018 and gave the company the option to purchase the property with an initial payment of $100,000. That was in addition to the agreement that MVI would give the city 50% of their annual profits to go toward buying the property for the term of the lease. Since the expiration date of the lease is approaching in December, Clint Ashcraft, owner of MVI, said they have already submitted the paperwork and their first $100,000 payment in January to exercise their right to purchase.
“We have every intention to purchase the property,” said Ashcraft. “That’s been our goal since we took over.”
Tanner said the city is currently negotiating in good faith with MVI, but there are still some formalities before they get the ball rolling. According to Tanner, MVI hasn’t submitted an offer letter to buy the property yet, but the city has already appraised the property based on 2018 property values. Whether MVI has arranged financing yet is unclear.
Good faith negotiations notwithstanding, the city is preparing for the possibility that a purchase agreement or an extended lease might fall through. In that case Tanner said the city is not in a position to reassume the massive recreation center.
“It would be extremely difficult to take that back over,” Tanner said. “I know we are in a better position financially, without the numbers in front of me, I can say it would be very expensive.”
Before the city turned the keys over to MVI, who were a collection of managers who worked for McDermont X (then titled the McDermont Field House), the city sunk hundreds of thousands of dollars into propping up the failing center. The other option would be to designate the property as “surplus land” under the Surplus Land Act. As surplus land, it will be available for affordable housing developers and government entities to purchase.
During the Tuesday, June 14 Lindsay City Council meeting, the council took the first steps in a potential surplus designation. Tanner said the city needed to begin the process this month to have the option to list it as surplus. Tanner emphasized that this is a “backup option” for the city, and not a reflection of the state of negotiations between MVI and the city.
Once purchase price and terms are agreed upon, it will go back to the city council for approval before the sale will be final.
If the sale to MVI falls through, the city will retain control of the building and MVI as a corporation will dissolve since it was only created to continue operating McDermont X as a recreation center.
Lindsay City Council has voted to designate the land where McDermont X sits as surplus land under the Surplus Land Act. The Surplus Land Act introduced new guidelines that must be followed when local agencies dispose of surplus public land. Designating a piece of land as surplus is the first step in the new guidelines.
“We just want to be prepared for whatever may happen,” Tanner said.
A surplus designation does not violate the current lease because, according to Tanner, all the declaration does is make it known to affordable housing developers and government agencies that the property could potentially be available.