Background
GVN, a local exchange telecommunications provider that serves customers in parts of Stanislaus, Merced, Alameda, Santa Clara, and Yolo Counties, requests Commission authorization pursuant to Section 851 to sell an office building and related land located at 4918 Taylor Court, Turlock, California (the Turlock property) because GVN is relocating its headquarters to Patterson. The Turlock office building is presently used as GVN's headquarters, and approximately two-thirds of GVN's employees work out of this building. The land measures approximately 249,163 square feet, and the building occupies approximately 15,210 square feet on the land. The land is also used for parking and the storage of warehousing equipment. GVN has occupied the Turlock property since approximately 1986.
GVN plans to use the proceeds generated from the sale of the Turlock property to obtain a new office building in Patterson. GVN states that it wishes to relocate its headquarters to Patterson because the largest and fastest growing number of exchanges operated by GVN are located in Patterson. Based on customer research, GVN believes that relocation of its corporate offices into the area in which GVN offers services, instead of remaining 30 minutes outside of that area, would be a prudent business decision. The new Patterson office will benefit GVN customers by providing a conveniently located customer service center, including a drive-up payment window, and increased access to GVN's management and technical personnel.
GVN further states that the proposed transaction is consistent with Decision (D.) 01-06-084 (the Country Road Communications acquisition decision), Appendix A, Condition No. 1, because GVN will use the proceeds of the sale to acquire new facilities in its Patterson service area and not to satisfy debt obligations related to the previous acquisition of GVN (formerly named Evans Telephone Company) by Country Road Communications, Inc. (Country Road).
Purchasers wish to use the Turlock property as the site for retail sales.
The sales agreement provides that GVN's sale of the Turlock property to purchasers is contingent upon Commission approval of this transaction and GVN's ability to secure land and construct a suitable office facility in Patterson. Under the agreement, GVN has 30 days after purchasers' acceptance of the offer to secure replacement land and to determine the timeline for completion of the new office building and the move-in date. The agreement also requires purchasers to lease the property back to GVN for up to one month after the close of escrow. In addition, the agreement is contingent upon purchaser's obtaining approval from Stanislaus County for the rezoning of the property to permit retail sales at the site.
GVN has agreed to sell the property to purchasers for $2.8 million. The anticipated net loss on the sale of the land and office building is approximately $32,334.2 Before GVN and purchasers entered into this transaction, the Turlock property had been on the market for approximately one year, and GVN had received only one other offer in the amount of $2.05 million.
2 In the application, GVN estimates the net basis of the property as $2,680,746.23 and the net proceeds from the sale as $2,648,412.50. The difference between the net basis of the property and the net proceeds is $32,334.00.
