TRANSMITTAL LETTER FOR BOARD MEETING OF AUGUST 14, 2008
COMMITTEE ON REAL ESTATE
Mr. Richard Lanyon, General Superintendent
Title
Authorize Purchasing Agent to reject the bid of $2,154,000.00 from Big Shoulders Biofuels, LLC in conjunction with its proposal to lease approximately 25.50 acres of improved District real estate located at 10100 Archer Avenue, in Willow Springs, Illinois, commonly known as Main Channel Atlas Index Parcel 28.01. (As Revised)
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Dear Sir:
At its meeting of February 21, 2008, the Board of Commissioners authorized the Purchasing Agent to advertise for the public tender of bids a lease of approximately 25.50 acres of District real estate located at 10100 Archer Avenue, in Willow Springs, Illinois, for a term of 39 years. The minimum acceptable annual rental bid was established at $327,500.00, which represented 10% of the appraised fair market value.
Three bids were received for the subject proposal, and were opened on May 6, 2008. The three bids received were as follows: (1) Big Shoulders Biofuels, LLC, for an initial annual rent of $2,154,000.00; (2) Rowell Chemical Corporation (current tenant) for a minimum annual rent of $706,000.00; and (3) Gardner-Gibson Terminal, LLC, for a minimum annual rent of $420,000.00. Big Shoulders’, the high bidder, proposed use is chemical storage and distribution.
The District’s leasing statute provides that the lease will be awarded to the highest responsible bidder (an established commercial or industrial concern or financially responsible individual). The documents submitted by Big Shoulders indicated that the only assets of the company were funds equivalent to one year’s rental payment. However, the proposed lease not only obligates the tenant to pay rent but also to conduct the business it identified in its bid submission. The financial information submitted by Big Shoulders did not come close to evidencing the assets that reasonably would be expected as necessary to operate the type of business that Big Shoulders indicated it would operate on the leased land, i.e. a chemical and storage distribution facility. The fact that Big Shoulders had no history of previously operating any business precluded the consideration of any other factors that possibly could have led to a different conclusion.
Big Shoulders was advised of the inadequacy of its submission, and its response was to request that a related subsidiary be permitted to guarantee its obligations under the lease. We find no language in the statute that permits such a deficiency in financial capacity to be cured by a party that is not the bidder. Big Shoulders was advised of staff’s findings and it was afforded an opportunity to respond to staff’s concerns. Big Shoulders’ response was to request the return of its bid deposit.
Upon rejection of the subject bid by the Board of Commissioners, Big Shoulders’ bid deposit will be returned. Staff then will conduct a review of the second highest bidder, Rowell Chemical Corporation, and submit a recommendation with respect thereto for the Board’s consideration.
It is respectfully requested that the General Superintendent recommend to the Board of Commissioners that it reject the bid of $2,154,000.00 from Big Shoulders Biofuels, LLC, in conjunction with its proposal to lease approximately 25.50 acres of improved District real estate located at 10100 Archer Avenue, in Willow Springs, Illinois, commonly known as Main Channel Atlas Index Parcel 28.01.
Requested, Frederick M. Feldman, Attorney, FMF:CL:STM:sd
Recommended, Darlene A. LoCascio, Purchasing Agent
Recommended, Richard Lanyon, General Superintendent
Respectfully Submitted, Terrence J. O’Brien, Chairman Committee on Real Estate Development
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for August 14, 2008
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