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HomeMy WebLinkAbout06 SURPLUS PROPERTY DECLARATION FOR ASSESSORS PARCEL NUMBERSDocuSign Envelope ID: C4132333-6D58-4518-A322-B70AAF2BOE8F AGENDA REPORT :00AN, P4 MEETING DATE Ito] FROM JUNE 20, 2023 MATTHEW S. WEST, CITY MANAGER ECONOMIC DEVELOPMENT DEPARTMENT Agenda Item 6 Reviewed: DS -M'5 City Manager Finance Director N/A SUBJECT: SURPLUS PROPERTY DECLARATION FOR ASSESSORS PARCEL NUMBERS 430-272-11, 12, 13, 14, 15, 22, 24, 26, 27 AND 28; AND PORTIONS OF 430-272-04, 07, 08, 20, 21 AND 23 SUMMARY Resolution 23-27 will declare APNs 430-272-11, 12, 13, 14, 15, 22, 24, 26, 27 and 28; and portions of 430-272-04, 07, 08, 20, 21 and 23 as surplus property pursuant to California Government Code Section 54221. RECOMMENDATION It is recommended that the City Council take the following actions: 1. Adopt Resolution 23-27: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, DECLARING CERTAIN REAL PROPERTY COMPRISED OF ASSESSORS PARCEL NUMBERS 430-272-11, 12, 13, 14, 15, 22, 24, 26, 27 AND 28; AND PORTIONS OF 430-272-04, 07, 08, 20, 21 AND 23 AS SURPLUS PROPERTY PURSUANT TO CALIFORNIA GOVERNMENT CODE SECTION 54221. 2. Authorize the City Manager to direct staff to submit the appropriate documentation to the California Department of Housing and Community Development in connection with the Resolution. FISCAL IMPACT Adoption of Resolution 23-27 itself does not have a financial impact to the City, however noticing and negotiating disposition of property as required under the revised Surplus Land Act (SLA) may have financial impacts to the City. BACKGROUND The SLA defines the process for local agencies to follow when disposing of surplus parcels of land owned in fee that are no longer needed for a government purpose. The DocuSign Envelope ID: C4132333-6D58-4518-A322-B70AAF2BOE8F Agenda Report — Surplus Property Declaration June 20, 2023 Page 2 SLA set general timelines for posting notification of an available surplus property, defined the process for negotiating with an affordable housing developer that expressed interest, and the process of disposition absent any notification of interest or in the event negotiations do not result in a sale to a qualifying affordable housing developer. While the parcel identified in the declaration is identified in the Tustin Legacy Specific Plan as "Commercial/Business," per the revised SLA both residential and non-residential property are subject to the same process. Assembly Bill 1486 (Ting, 2019) revised the SLA and significantly changed the terms of the SLA, as well as added substantial penalties for noncompliance. The revised SLA became effective January 1, 2020. The Final Housing and Community Development Department (HCD) Guidelines (Final HCD Guidelines) for compliance with the SLA were published in April 2021. Prior to January 1, 2020, the City did not consider any property at Tustin Legacy as "surplus property" for a variety of reasons, including: - Method of Acquisition: The City and the United States of America executed a Memorandum of Agreement in May 2002 that conveyed a vast majority of former MCAS Tustin to the City. The conveyance method was an Economic Development Conveyance (EDC) that requires the City to focus on job creation to replace those lost due to the base closure and housing for the surrounding community in accordance with a federally approved Reuse Plan for former MCAS Tustin. The City believes that this "contract" between the City and United States of America should supersede any state law requirements for disposition of property owned by the City. - Infrastructure Requirements: Tustin Legacy requires the installation of the modern major and local infrastructure needed as part of the redevelopment of a former military base at significant cost to the City. When the City began receiving property at former MCAS Tustin in 2002, none of the former military utilities were suitable for new development. Major drainage, streets, parks and utilities must be installed prior to advancing new development of residential neighborhoods and commercial employment centers. Remnant parcels of "surplus property" that a public agency no longer has an intended use for typically involve smaller parcels already connected to existing infrastructure, and does not take into account property, such as Tustin Legacy, that the City has an established intended use for per a federal Reuse Plan and an adopted Specific Plan and requires significant remaining infrastructure investment. - Revenue Needed to Continue with Development: The City, acting as Executive Developer for Tustin Legacy, must have the ability to generate revenue from land sales or lease proceeds for reinvestment purposes to continue to advance residential and non-residential development progress at Tustin Legacy. A significant portion of revenues generated from land sales at Tustin Legacy are DocuSign Envelope ID: C4132333-6D58-4518-A322-B70AAF2BOE8F Agenda Report — Surplus Property Declaration June 20, 2023 Page 3 essential as they are reinvested back into the base to install the major infrastructure needed to open up more parcels for development, and to provide amenities like parks, schools and public services for the Tustin Legacy community. A portion of revenue at Tustin Legacy is also used for projects in other areas of the City, to pay down unfunded liabilities, or to help offset revenue losses that occur during an economic downturn or a crisis such as the COVID-19 pandemic. Given the City's role as Executive Developer for Tustin Legacy, revenue generation is a necessary government function to advance development, and meet its financial and federal Reuse Plan obligations to create a mix of residential, institutional, employment opportunities and parks and open space. Absent a specific exemption for former military bases, or case law over conflicts with other laws and/or federal base closure law preemption, the revised SLA appears to place all City owned portions of Tustin Legacy within the newly defined meaning of "surplus land" and therefore the City is approaching all dispositions as subject to the SLA. While the City maintains the assertion that due to the direct conveyance of land from the federal government, Tustin Legacy should not be subject the SLA, the City has not challenged the SLA on this basis. Therefore, the City has chosen to comply with the law as prescribed in order to avoid tying property up in lawsuits, and continue to expedite development of Tustin Legacy until such time as further clarification or judgment is rendered related to Federal Reuse Plans and former military bases, given the threat of substantial penalties for noncompliance (30%-50% of final land sale or lease price). DISCUSSION Should the City Council adopt Resolution 23-27, staff will then release the required Notice of Availability (NOA) per the revised SLA and Final HCD Guidelines to the required entities. F OCUSigned by: DocuSigned by: Christopher Koster Kenneth Piguee Director of Economic Development Senior Management Analyst ATTACHMENTS - Resolution 23-27 DocuSign Envelope ID: C4132333-6D58-4518-A322-B70AAF2BOE8F RESOLUTION NO. 23-27 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, DECLARING CERTAIN REAL PROPERTY COMPRISED OF ASSESSORS PARCEL NUMBER 430-272-11, 12, 13, 14, 15, 22, 24, 26, 27 AND 28; AND PORTIONS OF 430-272-04, 07, 08, 20, 21 AND 23 AS SURPLUS PROPERTY PURSUANT TO CALIFORNIA GOVERNMENT CODE SECTION 54221. WHEREAS, the City of Tustin (City) owns certain real property consisting of approximately 52 acres (Site) at Tustin Legacy (former Marine Corps Air Station Tustin) comprised of APNs 430-272-11, 12, 13, 14, 15, 22, 24, 26, 27 and 28 and portions of 430-272-04, 07, 08, 20, 21 and 23; and WHEREAS, in 1992, the City was designated by The United States Department of the Defense as the Lead Agency or Local Reuse Authority for preparation of a reuse plan for MCAS Tustin in order to facilitate the closure of MCAS Tustin and its reuse in furtherance of the economic development (including the creation of jobs and housing) of the City and surrounding region; and WHEREAS, in May 2002, The United States of America approved an Economic Development Conveyance (EDC) and agreed to convey approximately 1,153 acres of former MCAS Tustin to the City; and WHEREAS, on May 13, 2002, a total of approximately 977 acres were conveyed by The United States of America to the City by quitclaim deed, in accordance with the provisions of a Memorandum of Agreement by and between The United States of America and the City dated May 13, 2002, and WHEREAS, the additional approximately 177 acres were made subject to a ground lease by the City from The United States of America and portions thereof have subsequently been conveyed to the City pursuant to subsequent quitclaim deeds; and WHEREAS, the City believes the Site (and all portions of Tustin Legacy owned or to be owned by the City) to be assets to be held, used, and portions sold or leased to enable the City to meet its responsibilities to fund ongoing and future infrastructure, development and maintenance costs at Tustin Legacy that are borne by the City as Executive Developer in order to provide housing, employment, public services and recreation to City residents; and WHEREAS, the City, acting as Executive Developer for Tustin Legacy, carefully plans neighborhoods within the 1,600-acre footprint to account for infrastructure costs, market conditions, and community benefits prior to initiating a disposition process for certain parcels; and DocuSign Envelope ID: C4132333-6D58-4518-A322-B70AAF2BOE8F WHEREAS, the City, acting as Executive Developer for Tustin Legacy, has acted in its role to provide market rate and affordable housing at Tustin Legacy, with 3,856 residential units (ownership and rental) constructed or under construction to date, 688 of which are deed restricted for various levels of affordability; and WHEREAS, the Site is located within portions of Planning Areas 9-12 of the Tustin Legacy Specific Plan which does not currently allow for residential as a permitted or conditionally permitted use and is categorized as "Commercial/Business" and the existing infrastructure on the Site has been designed, sized and installed to accommodate commercial office use; and WHEREAS, the City desires to implement the existing Tustin Legacy Specific Plan on the Site, thereby creating employment opportunities such as office and retail uses close to residential and public transit, and providing publicly accessible park space that complements existing and future residential sites throughout Tustin Legacy; and WHEREAS, existing law established the Surplus Land Act (SLA) for local agencies to follow when disposing of surplus properties no longer needed for government use or for revenue generation; and WHEREAS, prior to January 1, 2020, the City did not consider the Site (and all of Tustin Legacy) to be "surplus land" as defined in the SLA because it considered the development of the Site (and all of Tustin Legacy) consistent with the Federal Reuse Plan to be a continuing City use of the property, as well as due to the deed conveyance mechanism whereby the City received the property with restrictions from The United States of America as part of the Defense Base Realignment and Closure Act of 1990 as amended; and WHEREAS, on October 9, 2019, California Governor Gavin Newsom signed Assembly Bill 1486 (Ting) into law, making substantive amendments to the SLA effective January 1, 2020; and WHEREAS, the amended SLA requires local agencies to declare land as "surplus land" or "exempt surplus land" prior to disposing of property owned by the local agency; and WHEREAS, the Site (and all of Tustin Legacy) is not "surplus land" in any traditional sense because the funds received from sales and leases of portions of the Tustin Legacy, and the uses to which the property are put after such sale or lease, are essential to accomplish the Federally- and City -approved military base Reuse Plan, including but not limited to, providing the funding for the significant cost of infrastructure needed to accomplish the planned redevelopment of a former military base; and WHEREAS, although the City contends that it is not required to do so for the reasons referenced herein, the City will send a written notice of availability for the Site by electronic mail to all of the entities identified in Government Code section 54222; and DocuSign Envelope ID: C4132333-6D58-4518-A322-B70AAF2BOE8F WHEREAS, as contemplated by Government Code section 54222 and 54227, if one of the entities/agencies desires to purchase or lease the Site after having received the notice of availability, it must indicate its interest to do so in writing within 60 days of receiving the City's notice, and the City and the entity/agency so responding to the notice will negotiate in good faith to determine whether price and terms for the disposition of the Site can be agreed upon; and WHEREAS, as contemplated by Government Code 54223 and 54227, in the event no agreement is reached between the City and any interested entity/agency after a good faith negotiation period of 90 days, the Site may be disposed of without further regard to the SLA, except that the City will record a covenant indicating that if ten or more residential units are ever constructed on the Site, 15 percent of the total number of units shall be provided as affordable to lower income households. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF TUSTIN, THAT: 1. The foregoing recitals are hereby incorporated and adopted as the findings of the City Council; and 2. This action results in no binding commitment by the City to authorize or advance the disposition of the Site, will not result in a direct or indirect physical change in the environment, and does not constitute an "approval" of a "project" pursuant to CEQA Guidelines Sections 15004 and 15352; and 3. Subject to the findings above, and without waiving any claim or argument that the SLA is inapplicable to property dispositions made consistent with the City's Federally -approved Reuse Plan, and for purposes of forestalling delays or disputes that might arise if no finding is made under the amended SLA, the Site comprised of APNs 430-272-11, 12, 13, 14, 15, 22, 24, 26, 27 and 28 and portions of 430-272-04, 07, 08, 20, 21 and 23 is hereby declared "surplus land". PASSED and ADOPTED by the City Council of the City of Tustin at a regular meeting on 20t" day of June, 2023. AUSTIN LUMBARD, Mayor /_VAaIQM9 ERICA N. YASUDA, City Clerk DocuSign Envelope ID: C4132333-6D58-4518-A322-B70AAF2BOE8F STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF TUSTIN I, Erica N. Yasuda, 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 foregoing Resolution No. 23-27 was duly passed and adopted at a regular meeting of the Tustin City Council, held on the 20'" day of June, 2023 by the following vote: COUNCILMEMBER AYES: COUNCILMEMBER NOES: COUNCILMEMBER ABSTAINED: COUNCILMEMBER ABSENT: ERICA N. YASUDA, City Clerk