January 22, 2014 - Judging by Oxford Village Councilman Elgin Nichols' first impression of Raven Engineering's offer to purchase the municipal-owned property at 98 S. Glaspie St., some spirited negotiations could be ahead.
Raven Engineering, Inc. will be negotiating with Oxford Village to purchase the 3.58-acre site it owns at 98 S. Glaspie St. A badly-deteriorated 21,720-square-foot building would be renovated to serve as Raven's new headquarters. Photos by C.J. Carnacchio. (click for larger version)
"My initial thoughts are I'd roll it up into a ball and throw it away," he said. "They're trying to get something for nothing here."
Last week, Raven Engineering, Inc., located at 3270 Adventure Lane in Oxford Township, submitted its letter of intent to purchase the 3.58-acre former industrial site and the 21,720-square-foot building that sits on it.
In the Jan. 9 letter, Raven offered the village $250,000 for the property. It also requested certain provisions be included in the purchase agreement such as the village agreeing to grant the company a 10-year property tax abatement; rezone the property from residential to industrial; replace the water and sewer service lines, if necessary; and pay for the removal of the historic Smith Silo, if the municipality wishes to preserve it.
"We're really trying to be reasonable on this thing," said Raven President Robert Corbin. "We're not trying to low-ball it and hope to get away with it. That's not our intention at all. Our intention is to make a reasonable offer, to have some good discussions and to find a way to conclude the sale eventually."
Raven, a light manufacturer of balancing/gauging equipment and driveline-related components, is looking to move its headquarters and operations to the village-owned site.
"Right here and right now, this is the opportunity we would like to pursue," Corbin said.
In response to the letter, council authorized a team consisting of Nichols, Manager Joe Young and village attorney Bob Davis to negotiate with Raven representatives.
Nichols has multiple issues with Raven's letter, ranging from the proposed purchase price to all the "demands," as he put it, being made of the village.
"I'm not impressed with the letter," he said. "It's all one-sided. I would have hoped that if they're interested in the property they would have given a more legitimate bid (for) it and a more reasonable outlook as to what they want and what we can provide for that price."
"I don't see that in the letter. If they want to negotiate in good faith, then they need to come up with something that's got reality to it," Nichols continued. "I think it's a worthless letter. I would have liked to have seen something much more responsible coming to us than that . . . I would liked to have never seen that letter because it just makes me wonder what the heck are they thinking?"
Corbin explained that Raven's offer is basically "a starting point."
"When you make an offer, you make an offer from your perspective," he said. "A buyer's going to make an offer from the buyer's perspective. He's not going to make it from the seller's perspective. But the seller's going to come back and say, 'Hey, we find this part of it acceptable. This part is not. Is there a way we can compromise on it?' . . . My suspicion is that there will be some cooperation all the way around and this can get done."
"I'm very much looking forward not to a contentious discussion, but to a very cooperative discussion," Corbin noted. "I'm very optimistic that this is a starting point that will eventually lead to a purchase agreement that everybody is satisfied with . . . I'm not trying to waste their time, that's for sure."
Nichols' biggest issue is with Raven's $250,000 offer
"I need to know the value of the property. I don't know if that's been established," he said. "I'm certain that it's much more than the $250,000 that they're offering."
Nichols believes it's the village's responsibility, as the seller, to set a price. "Then the potential buyer has some idea what you're looking for and why you're looking for it," he said.
In March 2006, the village purchased the property for $700,000. It bought the site to protect the nearby municipal water supply from potential contamination and possibly expand Scripter Park.
Since then, the village has done very little with the property except use it for storage purposes and event parking. In November 2012, village residents voted 1,069 to 521 to grant the municipality the authority to sell it.
"We're offering property and if (Raven wants) tax abatements and all these other things, I say fine, pay $700,000 for it and we'll be glad to do it. That's my opinion," Nichols said. "If, on the other hand, they want to negotiate a price, it is 'as is' property."
Corbin believes the $250,000 price is a "fair offer" based on comparable properties and the amount of work that needs to be done to bring the badly-deteriorated building up to code and make it suitable for Raven's needs.
He noted Raven issued a letter of intent for another piece of property in Oxford Township that's "similar in size" to 98 S. Glaspie St. and "needed a lot of renovations as well." The company's offer for that property was $25,000 less than the one made to the village.
"We eventually withdrew that because there were some discrepancies with the property lines," Corbin said. "This property (98 S. Glaspie St.) that we're looking at now . . . would be a little bit more attractive, so we bumped the offer up to $250,000."
Improving the building isn't going to be cheap or easy. "It's a money pit," Corbin said. "It's going to be a challenge."
In the letter of intent, Raven indicated it's planning to spend at least $200,000 on renovations, which include demolishing portions of the existing structure and adding office space and a truck dock.
"We have a ballpark budget that we're working with . . . in the $250,000 range," Corbin said. "Hopefully, this is not like a government estimate where once you get into it, it gets a lot worse."
It's been difficult get an accurate assessment of the building's condition and what exactly needs to be done, according to Corbin, but there are some things Raven knows need to happen.
"The whole back end of the building has to be demolished for sure," Corbin said.
For Corbin, the price of the property is one of two "primary deal-breakers."
"Let's just say if the village came back and said, 'Listen, we paid $700,000 for this in 2006 and we think that real estate has appreciated over time, so we will only consider selling this property for $1 million.' That would be a deal-breaker," he said.
The other deal-breaker would be if the property is not rezoned from residential to industrial, so as to allow Raven to do business.
Other than these two items, Corbin said he assumes "everything else" can be resolved "in good faith discussions."
Nichols isn't thrilled with the prospect of giving Raven a tax abatement.
"I don't believe in tax abatements to begin with, but if it's a necessity, if it will (keep) the business in this area, then that's fine," he said.
Nichols noted he's willing to consider a tax abatement, but he's "not inclined to go in that direction" for a $250,000 offer.
When asked if Raven considers the tax abatement a make-or-break part of the deal, Corbin replied, "As we have discussions with this committee, I'm sure that this is going to come up and there may be a little give and take on that. But I can't pre-negotiate with myself."
As for the idea of the village installing new water and sewer service lines for 98 S. Glaspie St., Nichols is opposed to that. "Once you get the building and the property, that's up to you to make improvements," he said.
Despite his criticisms of Raven's initial offer, Nichols made it clear he doesn't have a "final opinion" and he's "willing to negotiate."
"I believe in negotiation," he said. "But they need to start at a very logical position . . . Don't drive me crazy here. Start out with a good price."
Nichols's intention is not to have a "fire sale" with this property and "give it away."
"It's good property and it makes sense to get as much value out of it as you can," he said.
CJ Carnacchio is editor for The Oxford Leader. He lives in the Village of Oxford with his wife Connie and daughter Larissa. When he's not busy working on the newspaper, he enjoys cigars/pipes, Martinis/Scotch, hunting and fishing.