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HomeMy WebLinkAbout10 ACCEPT AN OFFER TO PURCHASE AT FAIR MARKET VALUE AND EXECUTE ALL NECESSARY DOCUMENTATION REQUIRED TO COMPLETE ESCROW FOR THE FINAL DISPOSITION OF EACH REAL PROPERTY AT 2061 VALHALLA DRIVE AND 11781DocuSign Envelope ID: CBB14C60-FC6C-4B94-AF63-29C1D5BC1FEA 10 • Agenda Item AGENDA REPORT Reviewed. os City Manager _s�v Finance Director N/A MEETING DATE: JULY 19, 2022 TO: MATTHEW S. WEST, CITY MANAGER FROM: DOUGLAS S. STACK, DIRECTOR OF PUBLIC WORKS/CITY ENGINEER SUBJECT: AUTHORIZE THE CITY MANAGER TO ACCEPT AN OFFER TO PURCHASE AT FAIR MARKET VALUE AND EXECUTE ALL NECESSARY DOCUMENTATION REQUIRED TO COMPLETE ESCROW FOR THE FINAL DISPOSITION OF EACH REAL PROPERTY AT 2061 VALHALLA DRIVE AND 11781 OUTLOOK LANE ACQUIRED FOR THE SIMON RANCH RESERVOIR, BOOSTER PUMP STATION, AND PIPELINE REPLACEMENT PROJECT (CIP NO. 60114) SUMMARY At the direction of the City Council, staff successfully negotiated acquisition agreements for the residential properties located at 2061 Valhalla Drive and 11781 Outlook Lane (the "Properties"), adjacent to the Simon Ranch Reservoir. The acquisition of the properties facilitated construction of the Simon Ranch Reservoir and Booster Pump Station Replacement Project (CIP No. 60114) which is now substantially complete and in service. Staff seeks City Council approval to authorize the City Manager to accept one or more purchase offers and to complete disposition of the Properties from the City, or either of them, at no less than fair market value, and to execute all necessary documentation to finalize and close escrow(s) in a timely manner for each real property, respectively. RECOMMENDATION It is recommended that the City Council: 1. Authorize the City Manager to accept one or more offers to purchase at no less than fair market value the real properties located at 2061 Valhalla Drive (APN 104-611-30) and 11781 Outlook Lane (APN 104-611-33), respectively; and 2. Authorize the City Manager to execute all necessary documentation on behalf of the City to submit the appropriate documentation to the California Department of Housing and Community Development pursuant to the Surplus Land Act and Final Surplus Land Act Guidelines; and 3. Authorize the City Manager to execute all necessary documentation on behalf of the City to complete the sale of each property. DocuSign Envelope ID: CBB14C60-FC6C-4B94-AF63-29ClD5BClFEA Final Property Disposition, C{PGO114 July 18.2O22 Page 2 FISCAL IMPACT All land S2|e proceeds will be booked SS revenue to the appropriate Water Enterprise Fund pursuant to the adopted budget for Fiscal Year 2022/2023. CORRELATION TO THE STRATEGIC PLAN The proposed project furthers GOG| C of the City of Tustin Strategic Plan pertaining to Financial Strength, inthat the action will provide financial resources for 8well-maintained and reliable water BACKGROUND AND DISCUSSION On October 2, 2018' the City Council approved the Agreements for the Acquisition of R8@| Property Gt2081Valhalla Drive (APN1D4-011-3O)and 11781 Outlook Lane A\PN1O4-611-33\' respectively. It was determined that ownership Of the properties by the {}ih/ vVOU|d facilitate construction of the 8iOOoD Ranch Reservoir, Booster Pump Station and Pipeline Replacement Project, resulting in approximately $1.12M in project COSt G8ViOgg. The project is substantially CoDlp|8t8 and in operation. Pending final punch list items and conclusion Of the plant establishment period for the landscaping and i[rig@tiOO, staff anticipates presenting the Final Acceptance and Notice of Completion to the City Council at their regularly scheduled meeting of August 16, 2022. On September 21, 2021' the City Council adopted Resolution 21-72, regarding 2601 Valhalla Drive (APN1O4-011-3O)and Resolution 21-73'regarding 11781Outlook Lane (APN1O4-61i'33) declaring each property as surplus property pursuant to California Government Code Section 54221. The Surplus Land Act (SLA) defines the process for |oC8| agencies to follow when disposing of surplus parcels of |GOd oxvO8d in fee that are AO longer needed for government use. The SLA established timelines for circulating notification of an available surplus p[Operty, defined the process for negotiating with any affordable housing developer(s) that express interest, and the process of disposition absent any notification Of iOtG[8Gt or in the event negotiations do not result iOasale o[lease tOaqualifying affordable housing developer. During the statutory Sixty /GO\ day notification p[oC0SS related to the Properties, interest was received by Abode LL{} of Corona d8| Mar for 2081 Valhalla Or|V8 and from AD |mprOVe[O8OtS Inc. Of OOvvOey for 11781 {}ut|OOk Lane. In CoOSU|t81ion with the City /#t0[Dey'S Office, DO May 25' 2022' acceptable terms for pUruh@G8 were transmitted, respectively; along with 8 sample covenant or restriction to be recorded per Government Code Section 54233 and/or 54233.5. These dDcunl8AtS are provided as attachments t0this report. On May 31, 2023. Abode LLC withdrew interest and further negotiations proved nonresponsive with AD Improvements Inc. At the COnC|USiOO of the statutory ninety (QO) day negotiation period, no transaction was concluded and nofurther interest was received. This concluded the required negotiations period pursuant to the SLA. Moving forward, doCUnnSnt@UoO of any proposed diSpOG81 of One Or more of the Properties will be submitted to the California [>8p8dOleOt of Housing and Community Development (H{|[)) for their statutory thirty (30} day review. Staff is seeking authorization to conclude the final disposition of these properties to expedite diSpOsol consistent with the 8LA. which is in the City's interest in light of rising interest rates and general housing market conditions. It should be noted that the SLA did not exist in 2018 when the City acquired the Properties. DocuSign Envelope ID: CBB14C60-FC6C-4894-AF63-29C1D5BC1FEA Final Property Disposition, CIP 60114 July 19, 2022 Page 3 Currently, 2601 Valhalla Drive is on the market and receiving notable interest (property marketing flyer is attached). It is anticipated that 11781 Outlook Lane will be listed by mid-August. Zu s S Stack, P. E. )gortd Public Works/City Engineer Attachment(s): 1. 2061 Valhalla Drive Term Sheet 2. 11781 Outlook Lane Term Sheets 3. 2061 Valhalla Drive Property Marketing Flyer DocuSign Envelope ID: CBB14C60-FC6C-4894-AF63-29C1D5BC1FEA ATTACHMENT 1 2061 Valhalla Drive Term Sheet DocuSign Envelope ID: CBB14C60-FC6C-4894-AF63-29C1D5BC1FEA CBRE Investment Properties Capital Markets May 25, 2022 Julian Tooma Principal Abode LLC PO Box 448 Corona del Mar, CA 92625 CBRE 3501 Jamboree Road, Suite 100 Newport Beach, CA 92660 949.725.8500 Tel 949.725.8545 Fax www.cbre.com VIA E-MAIL Re: Acceptable Terms for the purchase of 2061 Valhalla Drive, Santa Ana, CA 92705 Julian, Below are the acceptable terms by which the Seller (The City of Tustin) is prepared to begin negotiations for the sale of the 2061 Valhalla Drive home. Purchaser: Abode LLC Price: No less than Fair Market Pricing (Determined by Recent Appraisal Attached) Deposit: 3% of the Gross Purchase Price Opening of Escrow: The Opening of Escrow shall be deemed open upon the date Escrow Holder is in receipt of the Buyer's Deposit and the Purchase and Sale Contract and a complete set of escrow instructions are executed by both Buyer and Seller. Escrow Holder shall send written notice informing Buyer and Seller of same. Closing Costs and Escrow Fees to be divided equally between Buyer and Seller. Escrow Holder shall be the same as the Title Company below. Due Diligence: Due Diligence period to expire thirty (30) days from signing of Purchase and Sale Contract. Closing: Closing to be forty-five (45) days following expiration of Due Diligence period. Title Company: First American Title Insurance Company 18500 Von Karman Ave. Suite 600 Irvine, CA 92612 Attention: Kevin Chene (949)949-885-2462 kchene@firstam.com Affordability Term: Pursuant to the Surplus Land Act, Govt. Code 54220 et seq., including but limited to, if 10 or more units are ever built on site, they need to be restricted to affordable for 45 years (ownership) and 55 years (rental). (See attached covenant and restrictions). DocuSign Envelope ID: CBB14C60-FC6C-4894-AF63-29C1D5BC1FEA Easement: The Seller will reserve the right to a 15 -foot -wide access and construction permanent easement along the property line adjacent to the Simon Ranch Water Tank. Condition: "AS -IS WHERE -IS, WITH ALL FAULTS IN PLACE": Buyer specifically acknowledges, understands, and agrees that, except as otherwise may be expressly provided in this agreement, Seller is selling, and Buyer is purchasing the Property on an "AS -IS, WHERE -IS, WITH ALL FAULTS IN PLACE" basis. Brokerage Fee: Per separate agreement. It is understood and agreed that your offer to purchase and this response to it are not intended to be, and will not become, contractually binding and no legally binding obligations will exist until the parties enter into a definitive purchase agreement. If these terms are acceptable to you, please acknowledge your acceptance below. Best Regards, CBRE, Inc. Michelle Jefcoat ell � Chris Bates Acknowledged and Agreed: Julian Tooma Abode LLC Cc: Doug Stack, Director Public Works/City Engineer Mike Grisso, Water Service Manager, Public Works City of Tustin DocuSign Envelope ID: CBB14C60-FC6C-4894-AF63-29C1D5BC1FEA ATTACHMENT 2 11781 Outlook Lane Term Sheets DocuSign Envelope ID: CBB14C60-FC6C-4894-AF63-29C1D5BC1FEA CBRE Investment Properties Capital Markets May 25, 2022 Robert Acosta President AD Improvements Inc. 12252 Woodruff Ave. Downey, CA 90241 CBRE 3501 Jamboree Road, Suite 100 Newport Beach, CA 92660 949.725.8500 Tel 949.725.8545 Fax www.cbre.com VIA E-MAIL Re: Acceptable Terms for the purchase of 11781 Outlook Lane, Santa Ana, CA 92705 Robert, Below are the acceptable terms by which the Seller (The City of Tustin) is prepared to begin negotiations for the sale of the 11781 Outlook Lane home. Purchaser: AD Improvements Inc. Price: No less than Fair Market Pricing (Determined by Recent Appraisal Attached) Deposit: 3% of the Gross Purchase Price Opening of Escrow: The Opening of Escrow shall be deemed open upon the date Escrow Holder is in receipt of the Buyer's Deposit and the Purchase and Sale Contract and a complete set of escrow instructions are executed by both Buyer and Seller. Escrow Holder shall send written notice informing Buyer and Seller of same. Closing Costs and Escrow Fees to be divided equally between Buyer and Seller. Escrow Holder shall be the same as the Title Company below. Due Diligence: Due Diligence period to expire thirty (30) days from signing of Purchase and Sale Contract. Closing: Closing to be forty-five (45) days following expiration of Due Diligence period. Title Company: First American Title Insurance Company 18500 Von Karman Ave. Suite 600 Irvine, CA 92612 Attention: Kevin Chene (949)949-885-2462 kchene@firstam.com Affordability Term: Pursuant to the Surplus Land Act, Govt. Code 54220 et seq., including but limited to, if 10 or more units are ever built on site, they need to be restricted to affordable for 45 years (ownership) and 55 years (rental). (See attached covenant and restrictions). DocuSign Envelope ID: CBB14C60-FC6C-4894-AF63-29C1D5BC1FEA Easement: The Seller will reserve the right to a 15 -foot -wide access and construction permanent easement along the property line adjacent to the Simon Ranch Water Tank. Condition: "AS -IS WHERE -IS, WITH ALL FAULTS IN PLACE": Buyer specifically acknowledges, understands, and agrees that, except as otherwise may be expressly provided in this agreement, Seller is selling, and Buyer is purchasing the Property on an "AS -IS, WHERE -IS, WITH ALL FAULTS IN PLACE" basis. Brokerage Fee: Per separate agreement. It is understood and agreed that your offer to purchase and this response to it are not intended to be, and will not become, contractually binding and no legally binding obligations will exist until the parties enter into a definitive purchase agreement. If these terms are acceptable to you, please acknowledge your acceptance below. Best Regards, CBRE, Inc. Michelle Jefcoat hk_ Chris Bates Acknowledged and Agreed: Robert Acosta AD Improvements Inc. Cc: Doug Stack, Director Public Works/City Engineer Mike Grisso, Water Service Manager, Public Works City of Tustin DocuSign Envelope ID: CBB14C60-FC6C-4894-AF63-29C1D5BC1FEA CBRE Investment Properties Capital Markets June 13, 2022 Robert Acosta President AD Improvements Inc. 12252 Woodruff Ave. Downey, CA 90241 CBRE 3501 Jamboree Road, Suite 100 Newport Beach, CA 92660 949.725.8500 Tel 949.725.8545 Fax www.cbre.com RESPONSE REQUIRED by 5:00 P.M. on June 30, 2022. If we do not receive a response by this date, we will consider your nonresponse as an indication that you are no longer interested and withdraw all interest in this property. Re: Acceptable Terms for the purchase of 11781 Outlook Lane, Santa Ana, CA 92705 Robert, As a follow up to our letter dated May 25, 2022, below are the acceptable terms by which the Seller (The City of Tustin) is prepared to negotiate the sale of the 11781 Outlook Lane home. Purchaser: AD Improvements Inc. Price: No less than Fair Market Pricing (Determined by Recent Appraisal Attached) Deposit: 3% of the Gross Purchase Price Opening of Escrow: The Opening of Escrow shall be deemed open upon the date Escrow Holder is in receipt of the Buyer's Deposit and the Purchase and Sale Contract and a complete set of escrow instructions are executed by both Buyer and Seller. Escrow Holder shall send written notice informing Buyer and Seller of same. Closing Costs and Escrow Fees to be divided equally between Buyer and Seller. Escrow Holder shall be the same as the Title Company below. Due Diligence: Due Diligence period to expire thirty (30) days from signing of Purchase and Sale Contract. Closing: Closing to be forty-five (45) days following expiration of Due Diligence period. Title Company: First American Title Insurance Company 18500 Von Karman Ave. Suite 600 Irvine, CA 92612 Attention: Kevin Chene (949) 949-885-2462 kchene@firstam.com Affordability Term: Pursuant to the Surplus Land Act, Govt. Code 54220 et seq., including but limited to, if 10 or more units are ever built on site, they need to be restricted to affordable for 45 years (ownership) and 55 years (rental). (See attached covenant and restrictions). DocuSign Envelope ID: CBB14C60-FC6C-4894-AF63-29C1D5BC1FEA Easement: The Seller will reserve the right to a 15 -foot -wide access and construction permanent easement along the property line adjacent to the Simon Ranch Water Tank. Condition: "AS -IS WHERE -IS, WITH ALL FAULTS IN PLACE": Buyer specifically acknowledges, understands, and agrees that, except as otherwise may be expressly provided in this agreement, Seller is selling, and Buyer is purchasing the Property on an "AS -IS, WHERE -IS, WITH ALL FAULTS IN PLACE" basis. Brokerage Fee: Per separate agreement. It is understood and agreed that your offer to purchase and this response to it are not intended to be, and will not become, contractually binding and no legally binding obligations will exist until the parties enter into a definitive purchase agreement. Best Regards, CBRE, Inc. Michelle Jefcoat hk_ Chris Bates Acknowledged and Agreed: Robert Acosta AD Improvements Inc. Cc: Doug Stack, Director Public Works/City Engineer Mike Grisso, Water Service Manager, Public Works City of Tustin DocuSign Envelope ID: CBB14C60-FC6C-4894-AF63-29C1D5BC1FEA ATTACHMENT 3 2061 Valhalla Drive Property Flyer DocuSign Envelope ID: CBB14C60-FC6C-4894-AF63-29C1 D5BC1 FEA 88TTustin Hills Estate Home with with Panoramic City Lights Views! P�r 4 Bedrooms / 31/4 Bathrooms 3,567 SF of Living Space / 23,200 SF Lot �o Pool / Spa �r Multiple Outdoor Entertaining Areas Single -Story Home with Detached 3 -Car Garage OLocated Within the Highly Regarded Tustin Unified School District Built in 1973 / Renovated in 2009 DocuSign Envelope ID: CBB14C60-FC6C-4B94-AF63-29C1D5BC1FEA FASHION ISLAND NEWPORT BEACH PACIFIC OCEAN A 2022 CBRE, Inc. All rights reserved. This information has been obtained from sources believed reliable but has not been verified for accuracy or completeness. CBRE, Inc. makes no guarantee, representation or warranty and ac- cepts no responsibility or liability as to the accuracy, completeness, or reliability of the information contained herein. You should conduct a careful, independent investigation of the property and verify all information. Any reliance on this information is solely at your own risk. CBRE and the CBRE logo are service marks of CBRE, Inc. All other marks displayed on this document are the property of their respective owners, and the use of such marks does not imply any affiliation with or endorsement of CBRE. Photos herein are the property of their respective owners. Use of these CBRE images without the express written consent of the owner is prohibited.