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Home My WebLink About10 RESOLUTION DECLARING ASSESSOR'S PARCEL NUMBER 430-021-30 AS SURPLUS LANDDocuSign Envelope ID: EFEBA85B-0515-43D5-BCC9-D47CFOD221FO MCA s OVA AGENDA REPORT MEETING DATE: JUNE 18, 2024 TO: ALDO E. SCHINDLER, CITY MANAGER FROM: ECONOMIC DEVELOPMENT DEPARTMENT Agenda Item 10 Reviewed: DS City Manager Q� Finance Director N/A SUBJECT: RESOLUTION DECLARING ASSESSOR'S PARCEL NUMBER 430-021-30 AS SURPLUS LAND SUMMARY Resolution 24-36 will declare Assessor's Parcel Numbers (APN) 434-021-30 as surplus land pursuant to California Government Code Section 54221. RECOMMENDATION It is recommended that the City Council take the following actions: 1. Adopt Resolution 24-36: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, DECLARING CERTAIN REAL PROPERTY COMPRISED OF ASSESSOR'S PARCEL NUMBER 434-021-30 AS SURPLUS LAND PURSUANT TO CALIFORNIA GOVERNMENT CODE SECTION 54221. 2. Authorize the City Manager to circulate a Notice of Availability and submit the appropriate documentation to the California Department of Housing and Community Development (HCD) in connection with the Resolution. FISCAL IMPACT Adoption of Resolution 24-36 itself does not have a financial impact to the City, however noticing and negotiating disposition of property as required under the 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 the City's use. The SLA sets general timelines for posting notification of available surplus property, defines the process for negotiating with an affordable housing developer in the event one expresses interest, and the process for disposition absent any notification of interest or in the event negotiations do not result in a sale to a qualifying affordable housing developer. DocuSign Envelope ID: EFEBA85B-0515-43D5-BCC9-D47CFOD221F0 Agenda Report — Surplus Land Declaration June 18, 2024 Page 2 Assembly Bill 1486 (Ting, 2019) significantly amended the terms of the SLA, as well as added substantial penalties for noncompliance. The Final HCD Surplus Land Act Guidelines (Final HCD Guidelines) for compliance with the SLA were published in April 2021. Assembly Bill 480 (Ting, 2023) and Senate Bill 747 (Caballero, 2023) clarified elements of the SLA and provided new or consolidated exemption options for surplus land. HCD has issued a Draft Updated Surplus Land Act Guidelines to reflect new legislation, but they have not been finalized. Prior to January 1, 2020, the City did not consider any City owned property within the Tustin Legacy Specific Plan area as "surplus property" for a variety of reasons, including: 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. 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 City owned property within the Tustin Legacy Specific Plan area, 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 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 obligations to create a mix of residential, institutional, employment opportunities and parks and open space. The SLA appears to place all City owned property within the Tustin Legacy Specific Plan area within the newly defined meaning of "surplus land," and therefore the City is approaching all dispositions as subject to the SLA. The City has chosen to comply with the law as prescribed in order to avoid tying property up in lawsuits, and continue to DocuSign Envelope ID: EFEBA85B-0515-43D5-BCC9-D47CFOD221 FO Agenda Report — Surplus Land Declaration June 18, 2024 Page 3 expedite development of City owned property at Tustin Legacy, given the threat of substantial penalties for noncompliance (30%-50% of final land sale or lease price). DISCUSSION Should the City Council adopt Resolution 24-36, staff will then release the required Notice of Availability (NOA) as required by the SLA and HCD Guidelines to the entities listed in California Government Code 54222. Once the NOA is released, a 60-day period begins for entities to respond to the NOA with a notice of interest to purchase or lease the property. If any notices of interest are received during the 60-day period, the City shall negotiate in good faith for up to 90 days with one or more responding entities to determine whether price and terms for the sale or lease of the property can be agreed upon. If no responses are received during the 60-day period, or if negotiations during the subsequent 90-day period are unsuccessful, the property may be disposed of without further SLA implications. The only remaining requirement is that the City must record a covenant prior to the sale or lease of the property indicating that if ten (10) or more residential units are ever constructed on the property, fifteen (15) percent of the total amount of units shall be provided as affordable to lower income households. Disposition documents and entitlements would be brought before the City Council at a future date with either (1) an entity that responded to the NOA, or (2) a future competitive process or sole source process for a development project that can occur after the NOA process is completed. Ryan Swi6ntek Acting Deputy Director of Economic Development ATTACHMENTS - Resolution 24-36 Kenneth Piguee Senior Management An DocuSign Envelope ID: EFEBA85B-0515-43D5-BCC9-D47CFOD221F0 RESOLUTION NO.24-36 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, DECLARING CERTAIN REAL PROPERTY COMPRISED OF ASSESSOR'S PARCEL NUMBER 434-021-30 AS SURPLUS LAND PURSUANT TO CALIFORNIA GOVERNMENT CODE SECTION 54221 WHEREAS, the City of Tustin (City) owns certain real property consisting of approximately 14.5 acres (Site) comprised of Assessor's Parcel Number (APN) 434-021- 30; and WHEREAS, the Site is located within the Tustin Legacy Specific Plan boundary; and WHEREAS, on February 9, 2015, the City executed an Exchange Agreement with The United States of America to exchange property located within the acreage of former MCAS Tustin owned by the City, with the Site owned by The United States of America; and WHEREAS, the City believes the Site (and all areas within the Tustin Legacy Specific Plan area 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 property within the Tustin Legacy Specific Plan area, carefully plans neighborhoods to account for infrastructure costs, market conditions, and community benefits prior to initiating a disposition process for certain parcels; and WHEREAS, the City 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 Planning Area 18 of the Tustin Legacy Specific Plan. Planning Area 18 does not currently allow for residential uses and allowed uses are generally categorized as "Commercial". A Specific Plan amendment would be a necessary prerequisite for residential development of the parcel, along with any other applicable required entitlements and infrastructure improvements; 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; and DocuSign Envelope ID: EFEBA85B-0515-43D5-BCC9-D47CFOD221FO WHEREAS, prior to January 1, 2020, the City did not consider the Site (and all City property within the Tustin Legacy Specific Plan area) to be "surplus land" as defined in the SLA because it considered the development of the Site (and all of Tustin Legacy) to be a continuing City use of the property; 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 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 City property within the Tustin Legacy Specific Plan area) is not "surplus land" in any traditional sense because the funds received from sales and leases, and the uses to which the property are put after such sale or lease, are essential to provide funding for the significant cost of infrastructure needed to accomplish the planned redevelopment of the area; and WHEREAS, as contemplated by Government Code Sections 54222 and 54227, if one of the entities/agencies desires to purchase or lease the Site after having received the Notice of Availability (NOA), it must indicate its interest to do so in writing within sixty (60) days of receiving the City's NOA, and the City and the entities/agencies 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, notwithstanding and subject to the foregoing, the City Council is hereby declaring the Site to be "surplus land" for purposes of California Government Code section 54221(b)(1) and will participate in good faith in the process required by the Surplus Land Act, including but not limited to issuing a written NOA in accordance with Government Code Section 54222; and WHEREAS, as contemplated by Government Code Sections 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 ninety (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 (10) or more residential units are ever constructed on the Site, fifteen (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 DocuSign Envelope ID: EFEBA85B-0515-43D5-BCC9-D47CFOD221 FO 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, the Site comprised of APN 434-021-30 is hereby declared "surplus land;" and 4. The City Manager or designee is authorized to circulate an NOA and submit any required documentation to HCD in connection with this Resolution. PASSED and ADOPTED by the City Council of the City of Tustin at a regular meeting on 18h day of June, 2024. AUSTIN LUMBARD, Mayor ATTEST: ERICA N. YASUDA, City Clerk APPROVED AS TO FORM: DAVID E. KENDIG, City Attorney DocuSign Envelope ID: EFEBA85B-0515-43D5-BCC9-D47CFOD221F0 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. 24-36 was duly passed and adopted at a regular meeting of the Tustin City Council, held on the 18t" day of June, 2024 by the following vote: COUNCILMEMBER AYES: COUNCILMEMBER NOES: COUNCILMEMBER ABSTAINED: COUNCILMEMBER ABSENT: ERICA N. YASUDA, City Clerk