HomeMy WebLinkAboutRDA 05 ACQUIS PROP 06-15-92RDA N0. 5
6-15-92
UA
-1992 Inter-Com
JUNE 15,
WILLIAM HUSTON, EXECUTIVE DIRECTOR
CHRISTINE SHINGLETON, ASSISTANT CITY MANAGER
Iia JF:CT_ REQUEST FOR ASSISTANCE IN ACQUISITION OF REAL PROPERTY AT THE
SOUTHWEST CORNER OF NEWPORT AVENUE AND IRVINE BLVD.
RECOMMENDATION
Pleasure of the Agency.
BACKGROUND
At the City Council meeting on June 7, 1992, Mr. Rich Condon
representing Remax Goldenwest Realty appeared before the City
Council and requested Redevelopment Agency financial assistance for
his clients in the acquisition of certain property located at the
southwest corner of Newport Avenue and Irvine Boulevard.
According to the Orange County Assessor's office, the subject
property is approximately 9,290 square feet in size and contains an
approximate 4,610 square foot office building (identified as
"Subject Property" on Exhibit A). The City has determined that
approximately 1685 square feet of the subject site would be
required dedication for future master planned right-of-way
intersection enhancements at the corner of Newport Avenue and
Irvine Boulevard (Exhibit B) . The future right-of-way needed by
the City would not require acquisition of the existing office
building on the subject property.
The subject property was owned by Mr. Jim Vecchio and Mr. Condon
has represented that Sumitomo Bank has foreclosed on the property.
Home Savings is currently engaged in business on a property to the
south which they lease from Mr. Ray Larson ("Adjacent Parcel" as
shown in Exhibit A). Mr. Larson is apparently interested in
purchasing the Subject Property and leasing the property to Home
Savings who would demolish the existing office building, construct
additional parking and enhance their current landscaping setback to
improve the aesthetic appearance of their project at the corner of
Newport and Irvine Boulevard.
Improvements proposed by Home Savings would require dedication of
master planned right-of-way on the subject site to the City of
Tustin as a condition of any building permits issued pursuant to
Tustin City Code. Mr. Larson is not desirous of dedicating this
City Council Report
Page 2
required right-of-way without compensation and is seeking a
commitment from the Agency at this time to acquire the necessary
right-of-way at a value of approximately $65 a square foot.
Staff explained to the City Council at their meeting of June 1st,
that acquisition of property by the Agency or City of Tustin would
require a number of specific legal procedures that must be followed
prior to any acquisition which can take approximately 90-180 days.
A general description of the acquisition process is attached as
Exhibit C. As shown in the Exhibit, title work in the form of a
litigation guarantee as well as an independent appraisal work would
be necessary.
As requested by staff, Mr. Condon has provided letters of interest
from Sumitomo, Mr. Ray Larson and Home Savings (attached).
However, Sumitomo is apparently unwilling to share their own
appraisal of the site which justifies the $65 a square foot
valuation of the property.
Staff identified on June 1st that the subject project was not
originally planned or included in the Town Center Redevelopment
Project Financing Plan. approved by the Agency in 1991. With the
Agency's prioritization of the Columbus Tustin Gymnasium project
and the current Civic Center Expansion Project under construction,
commitment of additional Town Center Agency tax increment to
projects not listed and prioritized by the Town Center Financing
Plan, will ultimately impact available cash flow for previously
prioritized projects. The Irvine Boulevard/Newport Avenue
intersection enhancement, however, is included in. the City's
Congestion Management Plan (CMP) 7 -Year Capital Improvement
Program. In addition, with the County of Orange's designation of
Irvine Boulevard as a "Super Street" candidate, staff believe that
there may be available both Measure M and County participation
funds sometime in the future for the acquisition of planned right-
of-way and construction of improvements.
Given the above background information, there are significant legal
and timing constraints that would affect the Agency's ability to
acquire the property in a timely manner. However, the Agency could
enter into a letter of understanding agreeing to certain terms or
principles that could be utilized in preparing a future Disposition
and Development Agreement (DDA) for the acquisition of the required
right-of-way in the future. There would be a number of advantages
to the use of this process. The owner of the Home Savings site
could proceed with acquisition of the subject property with the
understanding that a DDA would be prepared that would establish a
process for the Agency's future acquisition of the necessary right-
of-way. The letter of understanding would also provide a basis for
negotiating a comprehensive DDA.
City Council Report
Page 3
A brief synopsis of possible general terms that might be considered
at this time could include the following.
1. The Agency would agree to prepare within 120 days a
Disposition and Development Agreement (DDA) with all
parties (Mr. Ray Larson, Home Savings).
2. Mr. Ray Larson would agree to initiate negotiations with
Sumitomo Bank and, if successful in such negotiations,
will purchase the subject property.
3. Home Savings will negotiate a lease agreement with Mr.
Ray Larson, contingent upon his purchase of the subject
property from Sumitomo. If successful in such
negotiations, Home Savings will agree to develop the site
with additional parking and landscaping enhancements
subject to Agency approval of the development plan.
4. Pursuant to terms of a future DDA and Mr. Larson's
purchase of the subject lease and his entering into a
lease with Home Savings, the City of Tustin and Tustin
Redevelopment Agency will agree to enter into an
agreement with Mr. Larson to waive dedication of right-
of-way on the subject property as a condition of any
future building permits necessary on the subject site and
to purchase, under threat of condemnation (due to
potential tax advantages), master planned right-of-way on
the subject property subject to a schedule to be
established in the proposed DDA and consistent with
available Measure M and County of Orange super street
funds earmarked for the intersection enhancement at
Newport Avenue and Irvine Boulevard. The purchase price
would be determined as provided in the following
paragraph.
5. The purchase price for that portion of the subject
property needed for right-of-way would be determined in
the following manner. The Agency would select an
appraiser and have an appraisal performed at its sole
cost. The appraiser would determine fair market value
based upon generally accepted methods of appraisal and in
accordance with the California Code of Civil Procedure.
The Agency would make an offer to acquire the needed
right-of-way based upon this appraisal. If Mr. Larson
disagrees with the Agency appraiser's estimate of fair
market value, Mr. Larson may retain at his own cost an
appraiser who shall also appraise the needed right-of-way
property in the same manner.
City Council Report
Page 4
Upon completion of the second appraisal, the two
appraisers would attempt to reconcile any differences in
their appraisals. If such differences could not be
reconciled, the Agency would pay the higher amount
provided that the higher appraisal is not more than two -
and -one-half percent (2-1/2%) higher than the lower
appraisal. If the difference is greater than such
amount, the two appraisers would select a third
appraiser. The third appraiser would either review the
two prior appraisals or perform his own appraisal as he
deems appropriate. The cost of such review and/or third
appraisal would be borne equally by the parties. The
three appraisers would attempt to reconcile their
appraisals and reach agreement, in which case the Agency
would offer to acquire the needed right-of-way for the
price agreed to by the appraisers. If the three
appraisers could not agree on a price, the purchase price
would be determined based upon averaging the appraised
values.
The Agency would make a formal offer to acquire the
needed right-of-way and when requested to do so by Mr.
Larson, the Agency shall provide Mr. Larson with a letter
indicating that the acquisition of the.needed right-of-
way by the Agency was under a threat of condemnation.
6. In the event. that for any reason the Agency fails to
acquire the Master Planned right-of-way on the adjacent
property, no claim or lawsuit will be filed or pursued
against the City or Agency by the parties alleging that
the Agency is guilty of unreasonable precondemnation
activities or any other theory that would give rise to
liability for inverse condemnation, and the parties would
agree to release and hold the Agency and City harmless
from any and all claims that might be brought by or on
behalf of the parties arising under or relating in any
way to our agreement to general terms described herein.
7. The Agency or City would not be liable for any real
estate commission or brokerage fees which may arise in
this matter. The Agency has not engaged any broker,
agent or finder in connection with this transaction, and
the parties would agree to hold the Agency harmless from
any claim by any broker, agent or finder retained by any
of the parties involved.
City Council Report
- Page 5
If the above approach is desired by the Agency, staff will work
with the City Attorney to prepare a letter laying out these
understandings and would request that the Agency authorize the
Agency Chairman to sign said letter to expedite property
negotiations between Mr. Larson and Sumitomo. If the approach is
acceptable, staff would also initiate preparation of a DDA for
future Agency and City approval.
Christine A. Sh6igleton
Assistant City Manager
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EXHIBIT A
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Larson property leased by Home Savings
"Adjacent Parcel"
Subject Property
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EXHIBIT B
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EXHIBIT C
ACQUISITION PROCESS
THE ACQUISITION PROCESS
In the process of redevelopment, it is sometimes necessary for the Agency to
acquire real property, equipment and/or fixtures. When this becomes
necessary, the Agency follows certain procedures which are outlined below. It
fs hoped that the following information will answer any questions you may have
regarding the purchase of property by the Tustin Community Redevelopment
Agency.
A. Decision to Appraise
The Agency decides on those parcels it wishes to acquire. As soon as
possible after a decision to appraise is made, the Agency will provide
�. affected property owners and tenants with a written notice that an
appraisal will be made along with information on the owner's or tenant's
opportunity to accompany the appraiser during -their inspection of the
property.
B. Title Report
A title report will be ordered to verify ownership and encumbrances
against the property.
C. Appraisal
Professional independent appraisers (not affiliated with the Agency) will
be retained to determine the fair market value of each property interest
required. The appraisers will submit a written appraisal report which
contains their opinion of the property's current market value.
The owner
of
a business may be entitled to
compensation for loss of
goodwi 11.
The business owner must meet specific qualifications before
this type'
of compensation is recognized.
These qualifications are
described
in
the portion of Eminent Domain Law
pertaining to compensation
for loss
of
goodwill, a copy of which is
attached (Code of Civil
Procedure,
§
1263.510 - 1263.530). Anyone who
believes that they may be
entitled
to
compensation for loss of goodwill should talk to the
appraiser
at
the time the appraiser visits the
property.
D. Appraisal'Review and Approval
The appraisal reports will be reviewed, and the amount of just
compensation established.
E. Decision to Acquire
The Agency's offer to purchase property will be made as soon as
practicable following the decision to acquire. In all cases', except
emergencies, i nabi 1-i ty to locate the owner, or those cases ,referred to in
Government Code Section 7267.2, the Agency will issue a written offer to
purchase on the property or property interest for the approved amount of
just compensation. A written statement will be included which gives the
basis for the offered price.
i
F. Negotiations
The Agency will make every reasonable effort to acquire real property by
negotiated purchase. No action will be taken, however, which is coercive
in nature in order to compel agreement on a price. After the real
property has been appraised and the- amount.. of just compensation is
established, the Agency will proceed to negotiate with the property owner
in the following manner:
The property owner will be given a reasonable period of assistance.imeto consider
the offer and to obtain professional advice or
consideration will be given to material presented by the owner that may
have a bearing on value.
If during the course of negotiations, certain factors or conditions
concerning the property value arise, a re -appraisal or update of the
appraisal will be conducted. Factors indicating a new atheaisal may be:
new evidence presented by the owner; material change
in or
condition of the property; and/or significant delay since determination
of just compensation. If the latest appraisal evidence indicates that
an increase in the property value warrants a change, the Agency will
promptly reestablish just compensation and adjust the price accordingly.
Once agreement is reached for the purchase of the property, appropriate
legal steps will be completed to transfer ownership.ase soon ted
ad
agreements will be put into escrow a
he neescrow
possible. The full amount agreed price will -be paid to the
property owner at closing. The Agency will pay all closing costs such as
recording fee, transfer taxes, and escrow fees. However, the property
owner must pay taxes, assessments, and encumbrances such as mortgages,
which are liens against the property.
G. Condemnation
If a satisfactory agreement on the value of the property cannot be
reached through negotiations, condemnation action may be initiated.
Condemnation is the process by which a public entity exercises its right
to take private property for public use ( the right of eminent domain) .
The action allows the court to determine the amount of just compensation
that should be paid -for property. Condemnation of aproperty
r r interest
by
the
the Agency will only be done after all reasonable efforts t
required property by negotiations have been exhausted and sufficient time
has elapsed for the affected party to make a decision. The threat
of
sed
condemnation will not be used to reach a settlement, but can
be in order to avoid costly delays in an Agency project.
Condemnation may also be required when the following conditions exist:
title defects which preclude acquisition by voluntary conveyance; and/or
multiple ownership and lack of agreement among multiple owners.
After all legal requirements have been met and a condemnation suit filed,
the Agency will deposit the amount of probable just compensation into
court. This allows the Agency to file for an order for possession prior
to judgment and to obtain -posses' ion of the property after the property
owner is served with the order. The final determination of value will be
decided by a judge or jury after the presentation of evidence by the
affected party and the Agency.
H. Relocation
Each person required to relocate will be given at least a 90 -day notice
to vacate. This notice will not be issued until after the Agency has
ownership or control of the property. If the property is not needed
immediately, property occupants may be allowed to continue occupancy on a
rental basis for a short period of time.
Relocation payments and services will be offered and explained in detail
shortly after the acquisition process begins.
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11 Ll V i.]I iJ 1." r'H0t 1
320 California Street, 3rd Floor
San Francisco, CA 94104
Post Office Box 193949
San Francisco. CA 94119
415/445.0090
Sumitomo Sank of California Fax 415/445-3953
Trust Department
BY FACSIMILE TRANSMITTAL
June 9, 1992
64-2017-31 CDG/Firstline
RE/MAX Golden West
17561 East 17th Street
Tustin, CA 92680
Attention: Mr. Rich L. Condon
Re: OREO, 18410 Irvine Boulevard, Tustin, CA
Dear Mr. Condon:
Reaffirming our earlier communication dated May 27, 1992,
this bank, acting in its capacity of trustee for the
California Dentists Guild Pension Fund, continues to.
express an interest to sell and dispose the subject
property in the price range of $550,000, all cash to the
Seller, at the terms and conditions reflected in the Offer
to Purchase Real. Property form forwarded to you in an
earlier cover.
An offer submission must be accompanied with a Cashier's
or certified check made payable to Sumitomo Bank of
California, Trustee, in an amount equal to ten percent
(10%) of the gross offer.
This letter again represents our expression of interest
only and is not to be construed in any way to represent a
commitment, listing or contractual arrangement with and/or
among concerned or interested parties.
Sincerely,
H. Robert Lee
Vice President & Trust Officer
cc: Charles P. Wolff, Esq.
Robert H. Gajewski
Elaine S. Pavey
Villa Park, Calif.,
June 8, 1992
ReMax Golden West Realty,
17561 E. -17th St.,
Tustin, CA 92680
Attention: Rich Conlon
Dear Mr. Conlon:
This letter is to confirm our recent telephone conversa-
tion about the V.echio property. I am interested in the
possibility of obtaining the property, leasing it to
Home Savings with the consent of the City of Tustin. If
you can arrange this to every ones satisfaction and
reasonable costs, I will be happy to participate.
RJL/F1
19242 Carpenter Circle,
Villa Park, Calif. 92667
Phone: 714-637-2604
Sincerely,
YRoV d J. �L,8rson
FROM:ASSET MGMT/MARKETING t0= 8327 ?7714 66? 5198 JL'-: 6. 1992 5:30PM 9086 P.02
HOME Sl--,VINGS
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Asset Management • 4.400 RovmyWWI':gldor706-40•1 . Area Comic (r3'_)G0•F;s1 i
June 8, 1992
Ms. Christine Shingleton
City of Tustin, Director of Community Development
15222 Del Amo Avenue
Tustin, CA 92680
Re: Southwest Corner of Newport Avenue and
Irvine Blvd., Tustin, CA
Dear Ms. Shingleton:
Home Savings has an interest in acquiring possession of the
property located at the southwest corner of Newport Avenue and
Irvine Boulevard with the intent of replacing the existing two
story commercial building with additional parking for our ad;z ent
branch and a landscaped area directly on the corner.
Based on discussions with the owner of the property, we feel hat
the only way such a plan would make economic sense to Home SaN ngs
would be if the City of Tustin could reduce the cost of the
property by agreeing to purchase the designated right of wa} for
Newport Avenue/Irvine Boulevard street widening.
In addition to the obvious benefits to home Savings, we feel hat
demolition of the existing building would greatly improve the
appearance and traffic flow of that intersection.
The City's consideration of this matter is greatly apprecit ed.
Please call me at 818-814-7253 if you have any questions.
Sincerely,
HOME SAVINGS OF AMERICA, -FSB
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Craig A. Hendrickson
Vice President-
CH/cl
cc: G. Bosak
R. Condon, Re./Max Golden West Realty