TO: LINDA REICH, CITY MANAGER
FROM: FRED GALANTE, CITY ATTORNEY
SUBJECT
title
Purchase of Real Property at 13272 6th Street.
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RECOMMENDATION
recommendation
1) Adopt Resolution 2026-026, authorizing the Purchase and Sale of Real Property and Joint Escrow Instructions (“Purchase Agreement”) to acquire a property at 13272 6th Street (“Property”) from Terri Gillette, as Successor Trustee of the Sturzenegger Family Trust, and Kent H. Cheng, as Successor Trustee of the Langdon and Jo Ann Tannehill 1992 Trust (jointly the “Owner”) in the amount of $2,500,000, including $11,000 for fees and other costs related to the sale; 2) appropriate $2,511,000 from the General Fund balance; and 3) authorize the City Manager to execute all necessary documents.
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FISCAL IMPACT
The acquisition was not previously anticipated and therefore not included in the FY 2025-26 Adopted Budget. Approval of the Purchase Agreement will utilize the remaining $1.8 million FY 2025-26 budget surplus and a portion of the $6.8 million available unassigned General Fund balance to cover the purchase in the amount of (i) the purchase price of $2,500,000, (ii) costs to conduct due diligence estimated at approximately $6,000, plus (iii) escrow fees and costs not to exceed $5,000. The City is also exploring other alternative funding sources to reimburse the General Fund.
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above further the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Positive City Image
• Responsible Long-Range Planning
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Expenditure: 1009020-48000-MS267 |
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BACKGROUND
The Property at 13272 6th Street (APN 1020-282-12) is directly across from the Chino Civic Center. The Property consists of approximately 2.38 acres and is improved with a 70+ year old commercial building of approximately 67,000+ square feet, which is not worth renovating.
City Staff has confirmed by a Comparative Analysis issued by Doverspike & Associates, Inc. (“Doverspike”) dated November 11, 2025, comparing appraisal reports issued by Doverspike and Micheal Freudenthal & Associates that the Property is worth the Owner’s asking price of $2,500,000.
ISSUES/ANALYSIS
With City Council approval, the Property may be repurposed for public use in the future.
Purchase Agreement Terms: City and Owner have negotiated the Purchase Agreement, which contains the following terms.
Purchase Price: $2,500,000
Deposit: $60,000
Escrow: Commonwealth Land Title Insurance Company
Title Insurance:
Insurer: Commonwealth Land Title Insurance Company
Title Policy: An ALTA (non-extended) owner’s title policy to be issued to City closing with exceptions approved by City.
Due Diligence Period: 90 days from City’s receipt of all required information from Owner. If Phase I report recommends a Phase II report be obtained, the due diligence period will be extended to 10 days after receipt of the Phase II report. City is responsible for the cost of all due diligence work.
Close of Escrow: 7 business days after expiration of due diligence period. However, Owner has the right to extend the closing for up to 90 days if necessary for Owner to cause the tenant to vacate the Property.
Representations & Warranties: City is acquiring the Property in AS-IS condition except for limited representations and warranties by Owner. The representations and warranties survive for 2 years from the closing.
Costs: Owner shall pay the cost of the owner’s title insurance policy, cost of natural hazard disclosure report and ½ of all escrow charges. City shall pay ½ of escrow charges. City will also be responsible for the cost of all its due diligence work. Real estate taxes shall be prorated to closing and utilities shall be terminated by Owner prior to the closing.
Liquidated Damage Clause: City has the right to terminate the agreement with the Deposit returned if it disapproves the Property prior to the end of the Due Diligence Period. If the City elects not to purchase the Property after that period has expired, it may do so but will technically be in breach of the PSA and will forfeit the Deposit ($60,000) to the Owner pursuant to a liquidated damage clause, which means that the maximum liability for breach is $60,000.
Broker: City is represented by Paul Collins of Highland Partners Corp. (“City’s Broker”) pursuant to that certain Buyer-Broker Exclusive Representation Agreement dated May 22, 2025, as amended which provides that City’s Broker will only be paid by Owner. Accordingly, the Purchase Agreement provides for Owner to pay City’s Broker an amount equal to 2% of the Purchase Price at the closing.
City Manager Authority: The Purchase Agreement provides authority for the City Manager to execute all documents to implement the transaction including authority to make modifications or amendments including extensions of time.
Planning Commission Approval:
At its meeting held on April 15, 2026, the Planning Commission, with a vote of 6-0-1, found the acquisition as being in conformance with the general plan.
Attachment: Resolution 2026-026 including Purchase and Sale Agreement