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HomeMy WebLinkAboutRDA ACQUIS PROPERTY 03-15-93RDA NO. 6 FIre l G E N D LOW 3-15-93 DATE: MARCH 15, 1993 Inter -COM TO: WILLIAM A. HUSTON, EXECUTIVE DIRECTOR FROM: CHRISTINE A. SHINGLETON, ASSISTANT CITY MANAGER SUBJECT: REQUEST FOR ASSISTANCE IN ACQUISITION OF REAL PROPERTY AT THE SOUTHWEST CORNER OF NEWPORT AVENUE AND IRVINE BOULEVARD RECOMMENDATION Pleasure of the Agency. FISCAL IMPACT Acquisition costs for approximately 1685 square feet of the subject site from future Measure M or Santa Ana/Tustin Transportation System Improvement Funds. BACKGROUND The Tustin Redevelopment Agency at a regular meeting on June 15, 1992 instructed the City Attorney to prepare an Agreement for the City and Tustin Redevelopment Agency to provide assistance for acquisition of certain property located at the southwest corner of Newport Avenue and Irvine Boulevard to accommodate Home Savings' intent of replacing the existing two-story commercial building on the site with landscaping and additional parking (see attached June 15th report). The original intent of the transaction as defined in the June 15th report was for Mr. Larson to purchase the property from Sumitomo Bank and negotiate a lease agreement with Home Savings. While an signature, he was not able agreement was prepared for Mr. Larson's to finalize his acquisition of the property. Home Savings, however, now wishes to proceed with their own acquisition of the property under the same terms as proposed with Mr. Larson. The City Attorney has revised the original agreement to show Home Savings as the anticipated owner of the subject site instead of Mr. Larson. A copy of the revised agreement is also attached for the Agency's consideration. Christine A. Shi Teton Assistant City Manager CAS:Abc\npcivprp.cas 3EINDA DATE: JUNE 15, 1992 I n t e r- C O iT) ("M TO: WILLIAM HUSTON, EXECUTIVE DIRECTOR FROM: CHRISTINE SHINGLETON, ASSISTANT CITY MANAGER SUBJECT: REQUEST FOR ASSISTANCE IN ACQUISITION OF REAL PROPERTY AT THE SOUTHWEST CORNER OF NEWPORT AVENUE AND IRVINE BLVD. RECOMMENDATION Pleasure of the Agency. 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 �^'2 Sumitomo Bank and, if successful in such negotiations, G'7 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. A��", 'e:=� Christine A. Sh' gleton Assistant City Manager CS:\kd\nwprtirv.ccr EXHIBIT A Larson property leased by Home Savings "Adjacent Parcel" Subject Property fd ° ✓ - w' ., a 1-1:; ° �,� 1 .5 '. EXHIBIT B 19 Z �PezfS aaS a''71 Y�,t !3AV IH0AM=1N t 3• � / ' a ` ]'Y I I t EXHIBIT B 19 Z �PezfS aaS a''71 Y�,t !3AV IH0AM=1N 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 goodwill. 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, inability 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. 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 time to consider the offer and to obtain professional advice or assistance. Careful ,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 appraisal may be: new evidence presented by the owner; material change in the character 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. Negotiated agreements will be put into escrow and the escrow closed as soon as possible. The full amount of the 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 a property interest by the Agency will only be done after all reasonable efforts to obtain the required property by negotiations have been exhausted and sufficient time has elapsed for the affected party to make a decision. The threat of condemnation will not be used to reach a settlement, but can be exercised 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. I I i 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 possession 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. ct 3.1C O r c 'o aN=O�zO i :-moo<� zz Tu i yr.cu Ow l Tr L = Y O � O < s r v► u JW J p Y r J2 W r <r <fp W r� = 1 <_ r =r LU 2 t Go fW lO .W< ,2 . 7< TY O <,2 « y s< T 1 C; <o <n Cyr • • W Y � a{� Y< .1.1 .1 UYN a zOr_ WJ:< z moSW z mm i Z�w ;o 0 u <=.pip< W Y1 Oz z_r-ip 7 --A =zOwOZO oc ;:)E:;W uYuouT cl • • • W �u (z t 7:t 02 cis =z J ; =W wx2m r W r O=OU T OI 00 u< z wa �a W T z < r i a.Y • ll � • • c oo� AGREEMENT This Agreement is made thio day of , 1992, by and between the CITY OF TUSTIN, a municipal corporation (hereinafter referred to as "City,,), the TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a California community redevelopment agency (hereinafter referred to as "Agency"), and HOME SAVINGS OF AMERICA FSB, a federal savings bank (hereinafter referred to as "Home") - R= I Home"). $FOCI TALE WHEREAS, Home leases certain real property which is located near the intersection of Irvine Boulevard and Newport Avenue in the City of Tustin, and that property is contiguous to the real property described in the following paragraph; and WHEREAS, Home desires to acquire a certain piece of real Property (hereinafter referred to as the "Subject Property"), described in Exhibit A attached hereto and shown on Exhibit B attached hereto, and remove all of the improvements presently thereon and landscape it for the aesthetic benefit and incroased visibility of the property it presently leases; and WHEREAS, the improvement and redevelopment of the Subject Property would ordinarily trigger land dedication requirements to the City for right-of-way purposes; and WHEREAS, City and Agency find that the proposed redevelopment of the Subject Property would be in the public interest and would be consistent with Community Redevelopment Public Law purposes in conjunction with Agency's redevelopment activities within the City of Tustin; and WHEREAS, City and Agency agree to the concept of expenditure Of Potentially available public funds from Measure M to facilitate and assist the said improvement and redevelopment purposes proposed by Home. NOW, THEREFORE, it is mutually resolved and agreed among City, Agency and Home as follows: Section 1. Statement of Intent Regarding Preparation of Development and Disposition Agreement ("DDA111. Agency, City and Home agree to in good faith within the next one hundred twenty (120) days negotiate a Disposition and Development Agreement (11DDA11) with Home and any other affected 1GR JAb:R11.WM3(A2UU jnb) —1— parties for the purpose of City/Agency acquisition of certain right-of-way identified on Exhibit A under threat of condemnation. The purpose of the DDA will be to set forth, in detail, the exact terms of an acquisition process, including such matters as price, time frame and site plan development of the Subject Property. section 2. Home NeODtiations. Home agrees to begin forthwith negotiations to acquire the subject Property. Section 3. City and Agency will agree that upon. execution of a DDA by City and Agency and as an obligation to be prescribed therein that City will agree to waive normal land use dedication requirements with respect to the right-of-way identified in Exhibit A, and will agree to acquire the right-of-way for fair market value compensation and under threat of condemnation. City and Agency will agree to process the acquisition reasonably and as expeditiously as possible when Measure M funding and/or TusLin- Santa Ana Transportation System Improvement Agency funding is available, considering all relevant constraints. Section 4. Acquisition Price. City and Agency agree that the DDA will contain provisions for the acquisition of right-of-way as described generally in paragraph 5 of the June 15, 1992 staff report from Christine Shingleton, Assistant City Manager, to William Huston, Executive Director of the Redevelopment Agency, and supplemented by the March 15, 1993 memorandum to the Tustin Community Redevelopment Agency which reports are incorporated herein by this reference. Section 5. Waiver and Conditions Precedent. City, Agency and Home each -reserve the right not to enter into a DDA. City and Agency reserve the right to rescind any and all commitments to pay for the subject right-of-way in the event that City and/or Agency are unable to acquire the contemplated Measure M funding and/or Tustin -Santa Ana Transportation System Improvement Agency funding sufficient to acquire the subject right-of-way. In the event that the City, Agency or both fail, for any reason, to enter into a DDA with Home to acquire the right-of-way as described qenerally herein, Home waives any claim, rights,.knnwn or unknown, or rights to institute any litigation of any kind whatsoever, against City, Agency or both for its or their failure to acquire the subject right-of-way. Home further agrccs to hold City and Agency and its elective and appointed officials harmless from any -2- and all claims that may be brought by any party for any acts, omissions, or failure to perform under the terms of this Agreement. Section 6. No Liability for Brokeraae Fees. Agency and City shall not be liable for any finder's fees, real estate commission or brokerage fees, which may be alleged to be owed arising out of any activity in connection with thio Agreement. The Agency and City have not engaged any broker, agent or finder in connection with this transaction and the Home agrees to hold Agency and City harmless from any claim by any broker, agent or finder retained by any of the parties involved herein. Section 7. Relocation Benefits. Home represents to City and to Agency that to the best information, belief and knowledge of Home, no one has any right or rights of occupancy in the Subject Property which would entitle them or any of them to relocation banefitc undor tho law and Home agrees to save, defend and hold City and Agency harmless from any and all claims for relocation benefits. Section S. Entire Agreement. This Agreement constitutes the entire understanding and agreement between the parties and supersedes all previous negotiations and agreements between them pertaining to the subject matter hereof. Each party to this Agreement has been advised by counsel of its choice, and in entering into this Agreement is relying upon its own investigation and evaluation and not upon any representations by any other party. IN WITNESS WHEREOF, the parties hereto have executes this Agreement in the day and year first hereinabove written. HOME SAVINGS OF AMERICA FSB, a federal savings bank By:_ Its: By:_ Its: [Signatures continued on next page] -3- CITY OF TUSTIN, a municipal corporation By: Mayor ATTEST: City Clerk TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a California community redevelopment agency By: Agency Chairperson APPROVED AS TO FORM: JAMES G. ROURKE, City Attorney and General Counsel of the Tustin Community Redevelopment Agency XHIBIT A ALTA PLAIN LANGUAGE COMMITMENT OR -9250215 ALL THAT CERTAIN LAND SITUAT=D IN THE STATE OF CALIFORNIA, COUINTY OF ORANGE, CITY OF TUSTIN, DESCRIBED AS FOLLOWS: THAT PORTION OF LOT 9 OF THE V.!LNDERLIP AND ROWAN TRACT, AS SHOWN ON A MAP RECORDED IN BOOK 5, PAGE 160 OF MISCELT_,ANEOUS RECORDS OF LOS ANGELES COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHEAST CORNER OF THE PARCEL OF LAND DESCRIBED IN DEED TO TUSTIN LEMON ASSOCIATION, RECORDED JANUARY 5, 1910 IN BOOK 169, PAGE 227 OF DEEDS, SAID POINT BEING IN THE EAST LINE OF SAID LOT 9, DISTANT 579.96 FEET SOUTH FRCM THE NORTHEAST CORNER OF SAID LOT 9; THENCE SOUTH ALONG SAID EASTERLY LINE, TO THE NORTH CORNER OF THE PARCEL OF LAND DESCRIBED IN DEED TO PACIFIC IMPROVEMENT CONDANY, RECORDED JULY 9, 1888 IN BOOK 451, PAGE 294 OF DEEDS, RECORDS OF LOS ANGELES COUNTY, CALIFORNIA; THENCE SOUTH 350 21' 30" WEST ALONG THE NORTHWESTERLY BOUNDARY LINE OF THE LAND DESCRIBED IN SAID LAST MENTIONED DEED, 308.8 FEET, MORE OR LESS, TO A POINT IN THE SOUTHERLY LINE OF LAND DESCRIBED IN DEED TO H.P. CHRISTENSEN, RECORDED NOVEMBER 29, 1907 IN BOOK 144, PAGE 220 OF DEEDS; THENCE WESTERLY ALONG SAID SOUTHERLY LINE OF CHRISTENSEN'S LAND, 9.23 FEET; THENCE NORTH 268.99 FEET, MORE OR LESS TO THE SOUTHERLY LINE OF THE LAND OF TUSTIN LEMON ASSOCIATION BY THE ABOVE MENTIONED DEED RECORDED IN BOOK 169, PAGE 227 OF DEEDS; THENCE EASTERLY, ALONG SAID LAST MENTIONED SO=ERLY LINE, 160.9 FEET TO THE POINT OF BEGINNING. EXCEPTING THEREFROM, THE NORTHERLY 80.00 FEET. EXHIBIT A