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HomeMy WebLinkAbout1993-07-13 - AGENDA REPORTS - ADDITIONAL PARKING CITY HALL (2)-f j NEW BUSINESS DATE: SUBJECT: DEPARTMENT: BACKGROUND AGENDA REPORT July 13, 1993 City Manager Approval��// Item to be presented by: ly MV / /Lr A ACQUISITION OF ADDITIONAL PARKING FOR CITY HALL Community Development The City Hall property does not provide adequate parking forthe City's and building tenants' needs. We have a temporary arrangement which provides 50 additional spaces to the west of the Home Savings property and so have addressed the problem in the short term. The construction of a parking structure on City Hall property which would accommodate a net gain of 80 spaces has been previously discussed. The cost would be approximately $1.4 million. A larger structure which would accommodate a net gain of 150 spaces at a cost of $3.3 million has also been considered. It was determined that 80 spaces would be adequate. Staff has been mindful of the fact that the term of construction would impose a major inconvenience to the citizens who visit City Hall, and also to employees and building tenants. Staff has also considered that upon an eventual sale of the property, the City would most likely recoup only a fraction of the cost of the parking structure, considering that the main factor In determining a building's value Is the net leasable floor area. Also, a future buyer of the building would most likely not need the additional parking provided by the structure as this need for additional parking Is generated by the unique use of government facilities. For these reasons, staff continues to believe that alternatives to construction are worthy of evaluation. It came to staff's attention that the property located to the east of the City Hall parking lot Is presently under construction. We decided to explore this construction project to determine if a win-win situation was possible. That property is owned by a group of doctors (VPIP) and it has an approval to construct a three story building. The approved plans Include a parking level below ground and the proposed number of parking spaces is substantially above that required by City code. The parking level below ground does contain tandem parking spaces. Contact was made with the owners and It was learned that they presently have no prospective tenant for the top floor, and therefore, will have a large number of unneeded parking spaces for several years. We then initiated discussions around a preliminary concept to purchase their excess parking capacity. Additional opportunities may exist with other area property owners although to date staff has only seriously opened negotiations with VPIP. RESULTS OF NEGOTIATIONS Staff has been meeting with the spokesperson for VPIP over the past five months. It appears that an agreement may be attainable which would require an Initial outlay of $1.25 million to obtain an Ac ;ode Item: ell- /s easement agreement and exclusive right to park vehicles. This compares favorably to the $1.4 million cost to construct our own parking structure. At the end of four years we could recoup our entire outlay or we could continue the arrangement In which case our $1.25 million outlay would cease to be fully refundable. Our return would diminish by $100,000 per year if we continued to use the space. For example, if we choose to use the space for 10 years, then we would recoup $650,000. Our outlay would have diminished by $100,000 for each of six years. During the first four years we would be expending only the loss of Interest on $1.25 million In exchange for the use of the parking spaces. At 5%, this computes to $62,500 per year, which Is less than $800 per year per space, or $3.00 per space for each business day. This compares to construction of a facility at a cost of $1.4 million and recouping only a fraction of that cost at the time of sale and relocation of City Hall, resulting In a cost per space per day of 10.15 dollars over four years. The City Attorney has brought several points to our attention regarding risk to the City inherent In the agreement for a parking easement. They include transmittal of funds prior to completion of the parking, concerns about the City's secured position in the event of non -completion of the project because of the potential for mechanics liens and subordination of our first trust deed position to construction and take out financing as opposed to subordination to construction financing only. The City Attorney's comments are attached. After reviewing these concerns; staff believes that If this agreement is pursued any further It should be modified to reflect the elimination of the City providing an initial outlay of $1.25 million, or any portion thereof, prior to completion of the parking and our first trust deed position be subordinate to construction funding only. The VPIP representative indicated in mid-June that these modifications are not acceptable and are "deal -breakers". Staff believes this modification is necessary to ensure that the City maintains a secured position. ANALYSIS One advantage of constructing our own parking structure would be the permanent acquisition of additional parking. If the City builds a structure and utilizes it for a period of 10 years, then recoups $400,000 upon sale of the property, the cost per space per day would have diminished to about eight dollars. This Is still expensive and compares to six dollars per space per day after 10 years under the parking agreement. Under the construction scenario, the average cost would reach six dollars after 16 years, and continue to slowly fall. Building a parking structure appears to be financially attractive only if the City Hail will remain at Its present location and continue to require a high ratio of parking spaces to employees for a period exceeding 10-15 years. Incentives will most likely materialize in the future to reduce the ratio of vehicles to employees for better air quality and congestion management. Already we see the effects of the 9/80 work program on Mondays, which is one weekday when additional parking Is not needed at the City. A non -monetary disadvantage of construction on City Hall property is the disruption during the minimum six-month period of construction which would render City Hall with very few parking spaces in the meantime. Because of this, costs associated with the construction of the structure, and other reasons cited below staff believes that the construction of the structure is not practical at this time. Goals and Policies of the City's General Plan Air Quality Element strongly support the implementation of transportation demand management and parking management In an effort to reduce emissions from vehicle trips (i.e., reduce vehicle trips). The addition of permanent parking spaces seems to be in conflict with the goals and policies of the Air Quality Element, as this action may Increase the number of single occupancy vehicles due to a future availability of parking at City Hall. The AQMD and MTA may also view the addition of parking spaces in a negative light because It Is in conflict with transportation demand management measures being required by these agencies. Failure of local jurisdictions and the AQMD to reduce vehicle emissions may result In the inability of MTA, AQMD, and the City to obtain future federal transportation money. Another alternative Is to provide employee Incentives and/or programs In -lieu of providing permanent additional parking In an effort to reduce the number of employee vehicles at City Hall. These Incentives could be Implemented at a much reduced cost from constructing permanent parking and would be In compliance with AQMD and MTA programs. These Incentives could Include: increased employee subsidies for carpooling and/or use of alternative modes of transportation, the purchase of commuter vans for employees, satellite parking lots, staggered flex days, lunch money for carpooling or alternative transportation, and shower facilities at City Hall (encouraging walking and/or bike-rldingby City employees). Additional Incentives and or programs could be designed and Implemented. The City has an opportunity, with the Implementation of these Incentives and/or programs, to set an example for other cities and private corporations on how to effectively reduce vehicle emissions through the reduction of employee vehicles. Staff believes that additional temporary parking will be necessary while the Incentives and programs are being implemented by the City. This temporary parking would be necessary to allow for a 'transition period" which will allow City employees to become familiar with and utilize these programs and/or Incentives. This parking may be necessary for a time period of up to three years. A City Hall Parking Management Plan could also evaluate methods of reducing the public's need to visit City Hail during peak parking hours. For example, recreation sign-ups and buss pass sales could be offered at satellite locations. OPTIONS Below Is a list of options to construction: 1) Pursue finalization of the agreement with VPIP stipulating no funds up front, subordination to construction financing only and verification of ownership and value. 2) Construct an 80 space structure over the east parking lot at City Hall. 3) Direct staff to contact other property owners about the possibility of leasing temporary parking white additional transportation demand management and 'parking management measures (Incentives and/or programs) are Implemented by the City. 4) Pursue additional off-site parking, but direct staff to Immediately Implement additional transportation demand management and parking management measures (Incentives and/or programs) and monitor and re-evaluate the need for additional parking. Staff recommends that the City Council: 1) Direct staff to focus on solutions to better manage the parking we have and develop a parking management plan for City Hall. 2) Pursue a lease parking agreement with VPIP after parking Is constructed and available If the parking management plan substantiates a need for additional parking. 3) Not design or construct the parking structure on City Hall property at this time. LMH:RH:11:lkl coum1Pw4pakgrh To: Mr. Glen Adamkk From: TimothV E. MCOsker, Es;. 7-7-S3 3:20,:m p. 2 of 4 VENTURA COUNTY OFFICE 2310 PCNDEROBA DRIVE .URE i CAMANLLO, CALIFORNIA 03010 10051057-3468 ORANGE COUNTY OFFICE aZGQ V.IaTCL aTla SUITE 840 COSTA MESA, CALIFORNIA 82826 t"a111640Ytl VIA FACSIMILE . LAW OFFICES BuRKE, WiLLIAMS & SOUNSEN 811 WEST SI%TM STREET, SUITE 2500 LOS ANGELES, CALIFORNIA 90017' (213)233-0500 TELECOPIER: (213) 298.2700 June 14, 1993 Lynn Harris, Deputy City Manager City of Santa Clarita 23920 Valencia Boulevard Santa Clarita, California 91355 Re: Easement for Ingress/Egress and Exclusive Right to Park Dear Ly:ui: BURK I, WILLIAMS, SORENSEN 8 OAAR UGNTON PL 7300 COLLEGE BOULEVARD SUITE 220 0V 1A IU PARK, RA1i 66210 (813) 33 8 82 0 0 nNITM'D DIRIIGT OITL. 213238+2710 OUR FILE NO. 02012088 T>nrFinant to ynnr raYp2Fra1- t.'nia 1At,t.Ar will nutlinA t.hA mAjnr risks associated with the proposal from the doctor group regarding tho $1.25 million roqucotcd advanco from tho City in exclmnge for ao.parking spaces. 1. In its present form, the draft agreement contemplates that $'1bU,000 will be advanced to the property owner prior to completion of the parking structure. Tne City bears the risk that the parking structure will in fact be completed. Further, the draft agreement is silent as to what restrictions, if any, the property owner is subject to with respect to the disposition of the $750,000. At this point, there is no requirement that he spend the $750,000 in connection with the construction of the parking structure. 10095.1 i To: Mr. G1en Adamick From: Timothy E. McOsker, Esq. ?-7-93 3:20Fm p. 3 of 4 Me. Lynn. Harris June 14, 1993 Page- 7. I 2. Dcspitc.having a first trust decd on the property, the City's security in the property would be subject to potentiPal nlecliauic:'d liens arieltiy ouL of LYie coin3Lruc:Liou of Lhe parkiny structure. Note: Both risks identified in paragraphs 1 and 2 above can he mitigated by requiring the prcperty owner to obtain a completion bond and a labor and material bond. Unfortunately, these bonds could add significant cost to the project depending upon the financial strength and experience of the developer and/or property owner. 3. The agreement contemplates that the City will receive back $1.25 million (or a portion thereof if the City does not cancel the agreement within 48 months). The ability of the City to collect this money depends upon the financial strength of the property owner and the fair market value of the property at the time repayment is due. The City can minimize this risk by obtaining financial information regarding the property owner and by obtaining an appraisal of the property. s0?cs.t To: Hr. G1en Adamick from: Timothy E. McOsker, Esq. 7-7-93 3:20pm P. 4 of -4 Ys. Lynn Harris Jure 14, 1993 Page. 3 4. The 01.25 million note will be subordinate to a construction loan. If the construction loan is not repaid, the CiLy may lune 1Ln necuriLy or be iurced Lo rureclune tend Lake Lhe property and be required to pay the construction loan. In addition, unless the construction lender agrees in advance to recognize our right to the 80 parking spaces, the City may lose the right to the parking spaces if the construction lender forecloses on the property. 5. In the event the property owner should file bankruptcy, the City's ability to collect the $1.25 million dollars or to foreclose could be adversely affected. At a minimum, the,City's completion efforts to collect the $1.25 million would be materially delayed. Please give me a call if you have any questions regarding these items. Kindest regards, /s/ Dermis P. Burke DPB:im cc: George Caravalho, City Manager Ken Pulskamp, AsaiRtanh City T4anage.r Carl K. Newton, Esq. 5ass.t