The Transportation Agency for Monterey County is proposing to extend passenger rail service from Santa Clara County south to Salinas. The service is scheduled to start with two round trips, expanding to up to six round trips as demand warrants. The property in question is 0.09 acres located at 30 W Market Street in the City of Salinas, California, known as Monterey County Assessor’s Parcel No. 002-172-001. The parcel will be needed for the parking lot planned for the area of the Salinas Rail Station.

The Transportation Agency Board previously approved a Purchase and Sale Agreement with Frank Favaloro to purchase 30 West Market Street, Salinas on April 27, 2016.  This approval included a lease-back agreement that would allow Mr. Favaloro to remain in the property for an additional four months after the close of escrow (originally scheduled for May 30, 2016).  However, in lieu of entering into a lease agreement, the Agency and Mr. Favaloro instead agreed to extend escrow until October 31, 2016.  Prior to the agreement to purchase the property by the Agency, Mr. Favaloro had been renting a portion of the building to Olivia's Cafe.  The extension of escrow provided Mr. Favaloro the additional time requested to wind down his business and allowed Olivia's Cafe to remain on-site while efforts to relocate the business continued.

During this time, Overland, Pacific & Cutler (the Agency's real estate acquisition consultants) had provided a number of potential relocation sites in Salinas, Monterey, Seaside, and Watsonville to Olivia's Cafe.  However, the owners had not selected one of the potential sites to move the business as the close of escrow approached on October 31, 2016.  In addition, Mr. Favaloro also requested to remain on the property past the proposed close of escrow date.  As such, the Agency again agreed to extend escrow to December 31, 2016 and continued to work with Olivia's Cafe to relocate the business. 

An additional complication that necessitated the extensions of escrow was to provide Mr. Favaloro with time to clear a lien against the property's title from a previous loan that he received.  Overland, Pacific & Cutler have been working with Mr. Favaloro to review his records for certification of the loan repayment in order to reconvey the title of the property.  Unfortunately, Mr. Favaloro has not been able to locate these records.  However, Overland, Pacific & Cutler have been in contact with the current manager of the trust that provided the loan (the original trustee is deceased), and have been in discussions regarding relinquishment of the lien.  Alternatively, if progress is not made with the trustee to clear the loan, Mr. Favaloro will need to post a "lost note" bond to clear the title.  Presently, escrow on the property is set to close in January 2017, pursuant to the clearance of the lien against the title.

As part of these discussions to clear the lien, Mr. Favaloro has indicated a desire to the Agency to remain on the property to dispose of inventory and wind down his business, up to April 30, 2017.  As such, when the Agency takes ownership of the property, the proposed short-term lease agreement will provide additional time for a smooth transition. In addition, with the Agency intending to begin demolition of the acquired buildings in the Summer of 2017, the Agency is legally-mandated to provide at least 90-days notice to vacate. The term of the proposed lease agreement, expiring on April 30, 2017, would cover that time period and be consistent with the recently-signed lease agreements with Olivia's Cafe and the County of Monterey for the Agency-owned property at 20 West Market Street.

For this agreement, the Agency is seeking to set the current market-rate monthly payments of $1,896 per month for the term of the lease agreement.  Mr. Favaloro would also be responsible for payment of the utilities and maintaining insurance on the property.  Given the short-term nature of the agreement, no modifications to the property or extensions of the agreement are contemplated.