HomeMy WebLinkAbout1994-12-13 - AGENDA REPORTS - SOLEDAD METROLINK STATION (2)AfiFI-11 RF.Pn
City Manager App val
Item to be presented by:
NEW BUSINESS ty Manager
DATE: December 13, 1994
SUBJECT: SOLEDAD METROLINK STATION LAND PURCHASE OPTIONS
DEPARTMENT: Public Works
BACKGROTTNt�
In April of 1991, the City entered into a lease agreement with the Whittaker Corporation.
This five year lease allowed the City to build its first Metrolink station. The initial term of the
lease is for three years terminating in January of 1995. The lease contains the option of being
extended once for two years. The rent for the initial term is one dollar per year or a total of
$3.00 dollars. The rent for the extended term is 10% of the appraised value. Based on the
City's recent appraisal this is $335,000 per year. Pursuant to the lease agreement, by
January 21, 1995 the City must notify the Whittaker Corporation whether or not it intends to
extend the lease for the optional two years. The purpose of this item before the City Council
tonight is to update the Council and recommend that the City exercise its option to extend the
lease until April 21, 1997.
In October 1994, the 10 acre site (see Attachment 1) was appraised by the firm P. Scott Voltz
& Associates hired by the City. The land was appraised at $3,350,000 or approximately $7.50
per square foot.
The lease has three incentives built into it. These are: The Bonus, Lease Credits and Two
Year Escrow.
The Bonus is available only if the City chooses to buy the land before April 1995. The
Bonus is the increased land value the rail station adds to surrounding Whittaker land
and that increase is subtracted from the purchase price. The recent appraisal has valued
the Bonus at $0. Mathematically expressed ... Purchase Price - Bonus = New
Purchase Price.
The Lease Credit is available if the City chooses the two year extension. The City
would receive 35 % of the lease payment credited from the purchase price.
Mathematically expressed ... Purchase Price- Lease Credit = New Purchase Price.
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Agenda Item:6106
The Two Year Escrow is available if the City, after extending the lease chooses a two
year escrow. At the end of the two year extension, a 10 % down payment would be
required and the owner would hold the "note" for up to two years at an interest rate of
2 % above the prime rate. This incentive is attractive only if delaying the purchase until
1999 is most beneficial to the City.
Two years ago, a "Ten Year Transit Financial Forecast" was developed and is updated bi-
annually. At that time, the land was estimated for forecasting purposes to be worth
$4.5 million. The Forecast made the assumption that the two year lease option would be
exercised and the land would be purchased in 1997. Current transit financial forecasting takes
into account a lease payment for the land. Therefore, leasing would not disrupt the Transit
Financial Plan..
Staff has applied for various transit grants to purchase the property outright, but thus far has
been unsuccessful in attaining grant funds. Staff will continue to search out funding
opportunities. Other methods of purchasing the station would require financing. For
discussion purposes, staff has investigated the cost of financing the cost of the station. The
cost of financing the station for 15 years at 6.8 % interest, including issuance costs would be
approximately $5,423,000 or $365,000 per year for 15 years.
Because of the financing activities associated with the City's Recovery Division and
Redevelopment Agency, at this time, staff recommends that the purchase of the rail station
should not be financed, but rather the lease should be extended. Staff will continue to seek
alternative funding opportunities as the land may be purchased at any time prior to the
expiration date of the two year extension.
Direct the City Manager to send the attached letter to the Whittaker Corporation to
extend the lease until April 1997.
Appropriate $335,000 from the Proposition C funds to Account 55-7000-220 for lease
payment to the Whittaker Corporation for the lease payment of the rail station.
ATTACHMENTS
1. P. Scott Voltz & Associates Appraisal
2. Site Map
3. Letter to Whittaker Corporation requesting lease extension
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City of
Santa Clarita
23920 Valencia Blvd.
Suite 300
Santa Clarita
California 91355 -2196
December 13, 1994
Phone
(805)259-2489
Fax
(805) 259-8125
Whittaker Corporation
10880 Wilshire Boulevard, Suite 800
Los Angeles, California 90024
Re: Commuter Rail Station Site Lease with Option to Purchase dated
April 21, 1992
Gentlemen:
Pursuant to Paragraph 12 of the Commuter Rail Station Site Lease with
Option to Purchase dated April 21, 1992 executed by and between
Whittaker Corporation and the City of Santa Clarita, please be advised
that the City hereby exercises its option to extend the term of the Lease for
a two year period.
As you have previously been advised, the City has retained the appraisal }
services of P. Scott Voltz and Associates, pursuant to Paragraph 12(c)(i) of
the Lease, please advise the undersigned which appraiser has been
selected by Whittaker so that we may proceed promptly to determine the
fair market value of the property.
Thank you for your cooperation.
Very truly yours,
JoAnne Darcy
Mayor
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cc: City Council
George Caravalho, City Manager
Jeff Kohn, Deputy City Manager, Public Works
Ron Kilcoyne, Transportation Manager / `l
Dennis Luppens, Administrative Assistant
PRINTED ON RECYCLED PAPER
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