HomeMy WebLinkAboutCC 01 SALE OF PROP 10-18-04
AGENDA REPORT
Agenda Item 1
Reviewed: ~
City Manager
Finance Director ~
MEETING DATE:
OCTOBER 18. 2004
FROM:
WILLIAM A. HUSTON, CITY MANAGER
REDEVELOPMENT AGENCY STAFF
TO:
SUBJECT:
APPROVAL OF THE SALE BY AGENCY OF PROPERTY FOR A PROPOSED
RETAIL PROJECT LOCATED IN THE TOWN CENTER REDEVELOPMENT
AREA PROJECT
SUMMARY
The Tustin City Council is being asked to adopt the resolution approving the sale of
Agency-owned property to Makena Great American Newport Company, LLC, for the
development of a 7,400 square feet retail building at the southwest corner of EI Camino
Real and Newport Avenue.
RECOMMEDATION
Staff recommends that the City Council adopt Resolution No. 04-85 approving the sale
by the Agency property located at 14011 Newport Avenue pursuant to Health and
Safety Code Section 33433.
FISCAL IMPACT
A fiscal analysis of the proposed DDA is provided in the report prepared pursuant to
Health and Safety Code Section 33433 and attached as Exhibit A to Resolution No. 04-
85. There will be no fiscal impact to the Agency for the construction of private
improvements pursuant to the DDA (Attachment B - Disposition and Development
Agreement 04-02).
BACKGROUND
In April, 2004, the Agency approved an Exclusive Agreement to Negotiate a Disposition
and Development Agreement with Makena Great American Newport Company, LLC (the
"Developer') in response to the Developer's request for assistance in purchasing a
Caltrans surplus site located along the 1-5 freeway for the purpose of assembling larger
site for development of a retail center located at 14001 Newport Avenue. The Caltrans
surplus site is contiguous to the southerly boundary of the Newport Avenue property
owned by the Developer, which is formerly the site of Tustin Transmission and is currently
vacant and in need of redevelopment.
Makena Great American Newport Company DDA
October 4, 2004
Page 2
The Exclusive Agreement to Negotiate was to allow the Developer to proceed in
completing preliminary design drawings, detailed economic and cost evaluations, and to
allow him to begin serious discussions on the necessary financing for the project. During
the Exclusive Right to Negotiate period, the Agency was to use its reasonable and best
efforts to acquire the Caltrans surplus site to be subsequently sold to the Developer. On
July 29, 2004 the Agency adopted Resolution RDA 04-06 approving the acquisition of real
property and entered a Purchase and Sale Agreement with the California State
Department of Transportation for the Caltrans surplus site.
DISCUSSION
Redevelopment Agency Staff have prepared the proposed Disposition and
Development Agreement 04-02 between the Redevelopment Agency and Makena
Great American Newport Company. The DDA provides for the payment by the
Developer to Agency of a purchase price of $189,000 plus acquisition costs for the
Caltrans surplus site. The purchase price to be paid is greater than the appraised fair
market value and the reuse value of the land and is equal to the Agency's cost of
acquiring the property, thus not requiring any public subsidy for the construction of the
private improvements on the Site.
The DDA requires the Developer to secure all required land use entitlements from the
Tustin Planning Commission and City Council, and to obtain private funds necessary for
all project costs, including but not limited to, the acquisition of the site, construction of all
on-site improvements and all related private improvements as identified in the DDA related
to developing the site. The site improvements will be constructed in compliance with all
provisions of the DDA and with all "Conditions of Approval" stipulated by the Tustin
Planning Commission, the City Council, and other applicable governmental agencies
having jurisdiction. The DDA also requires the developer to provide an irrevocable offer
to dedicate in fee to the City of Tustin at no cost the easterly ten feet along Newport
Avenue for future roadway improvements.
Following the public hearing on September 27, 2004, the Planning Commission adopted
Resolution No. 3931 finding the disposition of property by the Tustin Community
Redevelopment Agency for the proposed Project is in conformance with the Tustin
General Plan. Since the site is being purchased by Tustin Community Redevelopment
Agency, Health and Safety Code Section 33433 requires the legislative body (the Tustin
City Council), after a public hearing, to approve an Agency sale of property that was
acquired in whole or in part with tax increment moneys.
Makena Great American Newport Company DDA
October 4, 2004
Page 3
The proposed property sale and infill redevelopment may be categorically exempt from
the regulations of the Environmental Quality Act pursuant to Section 15332 (Class 32)
of the California Code of Regulations, Title 14, Chapter 3 (Guidelines for the California
Environmental Quality Act). The Community Redevelopment Agency has made such a
determination for this project. Such determination is on file with the Redevelopment
Agency.
CONCLUSION
The proposed project is consistent with the Implementation Plan's five year plan for
redevelopment activities in the Town Center Redevelopment Project Area. The proposed
project will remove a blighting influence and contribute to economic revitalization in the
Project Area by removing vacant deteriorating buildings and developing a retail project
consisting of a 7,400 square foot commercial building.
Attached are the proposed Resolution 04-85 with the Section 33433 Summary Report,
as Exhibit A thereto.
CZ2;t~
Redevelopment Program Manager
S:IRDAICC reportlOc! 4 04 Makena Grea! American DDA Section 33433 Report.doc
Attachments
RESOLUTION NO. 04-85
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF TUSTIN, CALIFORNIA, APPROVING THE
SALE OF A 0.23-ACRES PARCEL BY THE TUSTIN
COMMUNITY REDEVELOPMENT AGENCY LOCATED
AT 14011 NEWPORT AVENUE PURSUANT TO
HEALTH AND SAFETY CODE SECTION 33433
The City Council of the City of Tustin does hereby resolve as follows:
I.
G.
The City Council finds and determines as follows:
A.
The Tustin Community Redevelopment Agency (the "Agency") is engaged
in implementation of the "Redevelopment Plan" for the Town Center Area
Redevelopment Project (the "Redevelopment Project"); and
B.
Section 33430 of the California Community Redevelopment Law (Health &
Safety Code 33000, et seq.: "CRL") authorizes the Agency to sell or lease
real property for redevelopment purposes; and
C.
In order to implement the Redevelopment Plan, the Agency proposes to
enter into a certain Disposition and Development Agreement (the "DDA"),
with Makena Great American Newport Company, LLC, a California Limited
Liability Company (the "Developer") pursuant to which (a) the Agency
would sell to Developer that certain Agency-owned real property located at
14011 Newport Avenue (the "Caltrans Parcel"); and (b) Developer would
merge the Caltrans Parcel with the Developer-owned parcel located at the
southwest corner of Newport Avenue and EI Camino Real and construct a
retail project on the site (collectively the "Property" and "Project"); and
D.
In its current condition, the Property is a blighting influence on the
Redevelopment Project area; and
E.
The Project will remove the blighting influence described above and
provide a mixed-use retail, office and live-work market rate housing
project; and
F.
The public improvements contemplated for the Project are of benefit to the
Redevelopment Project Area or the immediate neighborhood in which the
Redevelopment Project is located; and
Pursuant to Section 33433 of the CRL, the City Council of the City of
Tustin after a public hearing, is required to approve an Agency sale of
property acquired in whole or in part from tax increment moneys; and
Resolution No. 04-85
Page 2
H.
Agency staff has prepared, and the City Council has reviewed and
considered, a report pursuant to Section 33433(a)(2) of the CRL attached
hereto as Exhibit "A" and incorporated herein by this reference, setting
forth:
(a) A copy of the proposed Sale documents, i.e. the DDA; and
(b) A summary which describes and specifies all of the following:
The DDA contains all of the terms, covenants, conditions, restrictions,
obligations and provisions required by state and local law; and
The City Council has duly considered all of the terms and conditions of the
DDA and believes that the sale under the DDA is in the best interests of
the City of Tustin and the health, safety, morals and welfare of its
residents, and is in accord with the public purposes and provisions of
applicable state and local law and requirements; and
Pursuant to Section 33433(a)(1) of the CRL the City Council has held a
duly noticed public hearing on the proposed DDA, at which public hearing
all persons were given an opportunity to be heard.
(i)
(ii)
(iii)
(iv)
I.
J.
K.
The cost of the DDA to the Agency, including land
acquisition costs, clearance costs, relocation costs, the cost
of improvements to be made by the Agency, plus the
expected interest on any loans or bonds to finance the
agreements;
The estimated value of the interests to be sold to Developer,
determined at the highest and best uses permitted under the
plan;
The estimated value of the interests to be sold, determined
at the uses and with the conditions, covenants and
development costs required by the sale; and
An explanation of why the sale of the property will assist in
the elimination of blight, with reference to all supporting facts
and materials needed upon making this explanation.
Resolution No. 04-85
Page 3
II. The City Council hereby finds and determines, based upon substantial evidence
provided in the record before it:
A.
B.
That the foregoing recitals are true and correct.
That the City Council has received and heard all oral and written testimony
regarding the proposed sale to Developer and Developer's proposed
development of the Property in connection therewith and to any other
matters pertaining to this transaction.
C.
That the sale of the Property will assist in the elimination of blight in the
Redevelopment Project area and is consistent with the implementation
plan adopted by the Agency for the Town Center Area Redevelopment
Plan pursuant to Section 33490 of the CRL.
That the consideration for the Agency's sale of the Property pursuant to
the DDA is not less than the fair reuse value at the use and with the
conditions, covenants and development costs authorized by the DDA.
D.
E.
The foregoing findings are based upon the record of the public hearing on
the sale and approval of the DDA, and the report prepared in accordance
with CRL Section 33433 (a)(2).
The proposed property sale and infill redevelopment may be categorically
exempt from the regulations of the Environmental Quality Act pursuant to
Section 15332 (Class 32) of the California Code of Regulations, Title 14,
Chapter 3 (Guidelines for the California Environmental Quality Act). The
Community Redevelopment Agency has made such a determination for
this project. Such determination is on file with Redevelopment Agency.
F.
PASSED, APPROVED AND ADOPTED at a regular meeting of the Tustin City Council
held on the 4th day of October, 2004.
TONY KAWASHIMA
MAYOR, CITY OF TUSTIN
PAMELA STOKER
City Clerk
S:IRDAICC resosl04-85 Makena Great American Newport Company DDA 33433 Report Adopting Resoiution.DOC
Attachment: Exhibit "A" - Fair Reuse Analysis and Summary Report
Resolution No. 04-85
Page 4
STATE OF CALIFORNIA)
ORANGE COUNTY )
CITY OF TUSTIN )
I, Pamela Stoker, City Clerk and ex-officio Clerk of the City Council of the City of Tustin,
California, do hereby certify that the whole number of the members of the City Council
of the City of Tustin is five; that the above and forgoing Resolution No. 04-85 was duly
passed and adopted at a regular meeting of the Tustin City Council, held on October 4,
2004, by the following vote:
COUNCILMEMBER AYES:
COUNCILMEMBER NOES:
COUNCILMEMBER ABSTAINED:
COUNCILMEMBER ABSENT:
PAMELA STOKER
CITY CLERK
EXHIBIT A
TO RESOLUTION 04-85
SUMMARY REPORT PURSUANT TO
SECTION 33433
OF THE HEALTH AND SAFETY CODE
ON A
OWNER PARTICIPATION AND DISPOSITION AGREEMENT
BY AND BETWEEN
TUSTIN COMMUNITY REDEVELOPMENT AGENCY
AND
MAKENA GREAT AMERICAN NEWPORT COMPANY, LLC
SUMMARY REPORT PURSUANT TO
SECTION 33433
OF THE
CALIFORNIA HEALTH AND SAFETY CODE
ON A
OWNER PARTICIPATION AND DISPOSITION AGREEMENT
BY AND BETWEEN THE
TUSTIN COMMUNITY REDEVELOPMENT AGENCY
AND
MAKENA GREAT AMERICAN NEWPORT COMPANY, LLC
The following Summary Report has been prepared pursuant to Section 33433 of the California
Health and Safety Code. The report sets forth certain details of the proposed Disposition and
Development Agreement (Agreement) between the Tustin Community Redevelopment Agency
(Agency) and Makena Great American Newport Company, LLC (Developer). The purpose of
the Agreement is to effectuate the Redevelopment Plan for the Town Center Redevelopment
Project Area (Redevelopment Plan).
The Agreement requires the Agency to convey the 0.23-acre Caltrans Parcel (Caltrans Parcel)
located at 14011 Newport Avenue in the City ofTustin (City) to the Developer. The 0.68-acre
project site consists of the 0.23-acre Caltrans Parcel and approximately 0.45 acres located at
14001 Newport Avenue and 770 EI Camino Real (Site). The Developer is required to construct
a one-story, 7,400 square foot retail commercial building and a parking lot for no less than 35
cars (Project).
The following Summary Report is based upon information contained within the Agreement, and
is organized into the following seven sections:
II.
III.
IV.
I.
Salient Points of the Agreement: This section summarizes the major responsibilities
imposed on the Developer and the Agency by the Agreement.
Cost of the Agreement to the Agency: This section details the total cost to the
Agency associated with implementing the Agreement.
Estimated Value of the Interests to be Conveyed Determined at the Highest Use
Permitted under the Redevelopment Plan: This section estimates the value of the
interests to be conveyed determined at the highest use permitted under the Site's
existing zoning and the requirements imposed by the Redevelopment Plan.
Estimated Reuse Value ofthe Interests to be Conveyed: This section summarizes
the valuation estimate for the Site based on the required scope of development, and the
other conditions and covenants required by the Agreement.
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V.
Consideration Received and Comparison with the Established Value: This section
describes the compensation to be received by the Agency, and explains any difference
between the compensation to be received and the established highest and best use
value of the Site.
VI.
Blight Elimination: This section describes the existing blighting conditions on the Site,
and explains how the Agreement will assist in alleviating the blighting influence.
VII.
Conformance with the AB1290 Implementation Plan: This section describes how the
Agreement achieves goals identified in the Agency's adopted AB1290 Implementation
Plan.
This report and the Agreement are to be made available for public inspection prior to the
approval of the Agreement.
I.
SALIENT POINTS OF THE AGREEMENT
A.
Project Description
The Scope of Development defined in the Agreement includes a one-story, 7,400 square foot
retail commercial building with outdoor patio space and a parking lot for no less than 35 cars.
The Project also includes an irrevocable requirement to dedicate 2,143 square feet along
Newport Avenue for future street widening.
B.
Developer Responsibilities
The Agreement requires the Developer to accept the following responsibilities:
2.
3.
4.
1.
The Developer must accept conveyance of the Caltrans Parcel from the Agency under
the terms of the Agreement for a price of $189,000, plus Agency Transaction Expenses,
less any advance paid to Caltrans from the EAN Deposit.
The Developer must demolish and remove the existing improvements on the Site.
The Developer must develop a one-story, 7,400 square foot retail building with an
outdoor patio and a parking lot for no less than 35 cars. Building improvements and
landscaping must be consistent with the terms of the Agreement.
The Developer must irrevocably dedicate the 2,143 square feet along Newport Avenue.
0409046.TUS:JAR'emm
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2
5.
The Developer shall provide escrow instructions consistent with the Agreement and pay
in escrow the following:
a.
All escrow fees;
b.
Recording fees;
c.
Any state, county, city or other documentary stamps and transfer taxes; and
d.
The premium for the title insurance policy.
6.
The Developer shall submit to the Agency evidence of financing necessary to undertake
the Project in accordance with the Agreement.
a.
A commitment in writing from a permitted mortgagee for the funding of the
improvements.
b.
Evidence satisfactory to the Agency of sources of equity capital sufficient to
cover the difference between construction cost and financing by mortgage loans.
7.
The Developer shall begin and complete all construction and development within the
times specified in the Schedule of Performance per the Agreement.
8.
The Developer shall be responsible for any and all costs directly or indirectly related to
the Development, including but not limited to, acquisition of the Site and construction of
the Private Improvements.
c.
Agency Responsibilities
Under the Agreement, the Agency must complete the following responsibilities:
1.
The Agency shall acquire the Caltrans Parcel.
2.
The Agency shall convey the Caltrans Parcel to the Developer for $189,000.
a.
The Agency agrees to open an escrow for conveyance, and provide escrow
instructions consistent with the Agreement.
3.
The Agency shall timely and properly execute, acknowledge and deliver the Quit Claim
Deed, conveying title to the Caltrans Parcel to the Developer.
4.
Agency's financial participation is limited to conveying fee ownership interest in the
Caltrans Parcel to the Developer, at a price of $189,000 as set forth in the Agreement.
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3
II.
COST OF THE AGREEMENT TO THE AGENCY
The Agency costs to implement the Agreement are limited to the acquisition of the Caltrans
Parcel. The Agency is scheduled to acquire the Caltrans Parcel for $189,000. As shown below,
the total cost to the Agency is $189,000.
Acquisition Cost
Total Agency Cost
$ 189.000
$ 189,000
$ 189,000
$ 416.327
$ 733.582
Land Payment at Closing
Present Value of Tax Increment
Total Agency Revenues
Net Agency Revenue
$ 544.582
The Agency costs are offset by the land payment received at closing and tax increment
revenues received by the Agency. At closing, the Agency will receive $189,000 for acquisition
of the Caltrans Parcel. The Agency receives tax increment revenues for affordable housing and
general use. Over the remaining term of the Project Area, the Agency is projected to receive
nearly $733,582 million of tax increment revenues, which has a present value, discounted at
6%, of $416,327.
The Agency revenues of $733,582 exceed the Agency costs of $189,000, so the net Agency
revenues from the Project are $544,582.
III.
ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT
THE HIGHEST USE PERMITTED UNDER THE REDEVELOPMENT PLAN
Section 33433 of the California Health and Safety Code requires the Agency to identify the
value of the interests being conveyed at the highest use allowed by the Agency Site's zoning
and the requirements imposed by the Redevelopment Plan. The valuation must be based on
the assumption that near-term development is required, but the valuation does not take into
consideration any extraordinary use, quality and/or income restrictions are being imposed on
the development by the Agency. The Agency and Caltrans have entered into a purchase and
sale agreement for the Agency to purchase the Caltrans Parcel for the fair market value of
$189,000. The Developer is acquiring the Caltrans Parcel from the Agency at fair market value
in the amount of $189,000 plus Agency Transaction Expenses.
4
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IV.
ESTIMATED REUSE VALUE OF THE INTERESTS TO BE CONVEYED
Taking into account the covenants, conditions and restrictions imposed by the Agreement, it is
concluded that the fair reuse value is the same as the fair market value, namely $189,000.
V.
CONSIDERATION RECEIVED AND COMPARISON WITH THE ESTABLISHED
VALUE
The Agreement requires the Agency to convey the Caltrans Parcel to the Developer at a price of
$189,000.
As previously mentioned, the Caltrans Parcel has a fair market and fair reuse value of
$189,000. Thus, the consideration to be received by the Agency is equal to the established fair
reuse value and the fair market value.
VI.
BLIGHT ELIMINATION
The Site currently characterized by the following blighting conditions that will be alleviated by
the Project:
Unsafe/dilapidated/deteriorated buildings
Physical conditions that limit economic viability and use of lots and buildings (age and
obsolescence)
Inadequate public infrastructure/facilities
Depreciated or stagnant property values and/or impaired private investments
The development of the mixed-use project will eliminate the current physical blighting
conditions. Thus, the proposed development fulfills the blight elimination requirement.
5
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VII.
CONFORMANCE WITH THE AB1290 IMPLEMENTATION PLAN
The Project conforms with several of the objectives defined in the Five Year Implementation
Plan adopted by the Agency in March 2000. Pertinent goals and objectives that are satisfied by
the Project are as follows:
To create a mixed-use Town Center area that combines commercial, office residential
and public uses, which will serve the needs of the community as well as encourage the
healthy growth of the area;
To encourage residential development by actively seeking private development in the
redevelopment area;
To increase the level of capital improvements such as the development of, parking
facilities, sidewalk and street landscaping, street improvements, and related public
improvement projects; and
.
To revitalize and develop amenities in the Project Area, both publicly and privately
financed, as a means of aiding the revitalization of the EI Camino Real section of the Old
Town district in particular.
6
0409046.TUS:JAR:emm
19830.001.008109128104
Refer to RDA Item 1 for
Disposition and Development Agreement
(DDA 04-02)