The URL can be used to link to this page

Home My WebLink About2009-10-27 - AGENDA REPORTS - ACQUISITION APN 2831-007-014 (2)Agenda Item: w 4&m a CITY OF SANTA CLARITA JOINT CITY COUNCIL / REDEVELOPMENT AGENCY AGENDA REPORT City Manager Approval: CONSENT CALENDAR Item to be presented by: Armine Chaparyan DATE: October 27, 2009 SUBJECT: ACQUISITION OF APN'S: 2831-007-014,2831-007-015, 2831-007-016, 2831-007-017, 2831-007-018, 2831-007-019 AND 2831-007-032 DEPARTMENT: Community Development RECOMMENDED ACTION City Council: Appropriate $703,345 from the Developer Fee Fund Balance (Fund 306) to account 13002-5201.004. Redevelopment Agency: 1. Appropriate $5,512,655 from the Redevelopment Agency Housing fund balance (Fund 391) to Account 13401-5201.004. 2. Authorize Executive Director or designee to approve payments up to a maximum amount of $6,216,000 for the acquisition and for all required costs related thereto and execute all required documentation to complete the acquisition, subject to review by the Agency Attorney. BACKGROUND The City Council adopted the Downtown Newhall Specific Plan (Plan) in December, 2005, in an effort to provide the strategic planning necessary for the revitalizaiton of Old Town Newhall. The Plan is designed to help transform downtown Newhall into a thriving, mixed-use, pedestrian-onented village with a series of economic engines, ultimately creating an Arts & Entertainment District. APPROVED The Redevelopment Agency of the City of Santa Clarita (Agency) is currently in the process of implementing the Plan. The recently completed steetscape improvements on two blocks of Main Street from 6th to 8th Street were a part of this effort and included sidewalk pavers, hardscape and tree planting, as well as the installation of landscaping and street furniture. Future improvements for the Old Town Newhall area include plans for a roundabout at Newhall Avenue and Main Street to facilitate smoother traffic flow, as well as a new Newhall Public Library. The Agency was approached several months ago by Larry Kosmont (Kosmont), the representative for Gary Avery and Akki Frimerman (Sellers), who currently control a total of 1.70 acres of property in Old Town Newhall (1.26 owned by them and .46 acres of the Wiese parcels controlled through a Purchase and Sale/Escrow Agreement), bounded by Lyons Avenue, Main Street, Railroad Avenue, and 9th Street, collectively referred to as "AF Main Block," soliciting interest from the Agency to acquire the AF Main Block in Old Town Newhall (See attached map). The Redevelopment Agency has an opportunity at this time to acquire a critical block in Old Town Newhall. For redevelopment, one of the biggest challenges is assembling property consisting of an entire block. It will be highly beneficial for the Agency to acquire an entire block and realize a full block redevelopment versus smaller parcel development. Originally, the Sellers requested $4.525 million (this includes $4.26 million in debt on the property, along with $265,000 accrued in outstanding loan interest/property taxes, and consultant fees) for the 1.23 acres that they own ($84.69 per sq. ft.), and $2.0 million for the .46 acre Wiese parcels ($99.70 per sq. ft.), for a total sale price of $6.525 million. Current Leases on the property include: • Insurance Auto Collision is currently on a month-to-month lease; • Wanjon Auto has a 5 -year lease, expiring on 8/2010, with no extensions. • Wiese Property- • Includes Automotive Technology which has a 5 -year lease expiring on 6/2010, with one 5 -year extension option; • Insurance Auto Collision has a 5 -year lease, expiring on 5/2010, with one 5 -year extension option. An appraisal was completed on July 15, 2009 which valued the Avery/Frimerman property at $3.32 million and the Wiese property at $2.39 million, with a total appraised value of $5.62 million for the AF Main Block. This information was shared with the City Council/Agency Board. Since this meeting, staff has finalized negotiations with the Sellers and reached an agreement to acquire the entire AF Main Block for $6,196,000 ($4.196 million for the Avery/Frimerman property, and $2.0 million for the Wiese property). J The Agency staff is recommending the acquisition of this block at $6,196,000, greater than the appraised value by $576,000, due to the following reasons: • The note holders on the property are not motivated sellers and have every intention of maximizing their investment, even if it means letting the property go into foreclosure. If this block was to go into foreclosure, there is no guarantee on how long it will take before it was acquired and possibly developed; • Kosmont contends the appraisers valuation doesn't take into account the calculation for keeping these parcels vacant (without tenancies in the last several months) knowing that the Agency might have some interest in acquisition. According to Kosmont, AF Main was conscious of the Agency's potential acquisition of the block and did not want to lease space to new tenants; and • Given the block's proximity to the future Newhall Public Library site and its location in relation to the overall revitalization of Old Town Newhall, staff is of the opinion that the acquisition of this block can provide the Agency with a variety of opportunities to potentially seek quality development of this area. An additional $20,000 is estimated to be expended for escrow and title fees as part of the escrow process bringing the total acquisition cost to $6,216,000. The Agency will not need to complete environmental documents as part of this transaction since the current property owners spent approximately $50,000 on soils and environmental reports (Phase I and Phase II on the entire block) which show that a majority of the block is relatively uncontaminated. Minor remediation costs are estimated at $10,000. As part of the due -diligence process for this property acquisition, City staff from various departments including Public Works (Engineering/Development Services) and Redevelopment have conducted an extensive walk through of the AF Main Block and identified/documented all existing conditions. All parties have executed a Purchase and Sale Agreement and Escrow Instructions (Agreement) subject to approval by the City Council/Agency Board. Upon approval of this Agreement, staff will work with the Sellers to finalize and close escrow. Lastly, this acquisition has been found in compliance with Government Code Section 65402 regarding general plan consistency. TERNATIVE ACTIONS Other actions as determined by the Agency or City Council. FISCAL IMPACT Various funding sources will be used for this property acquisition. These sources include City in -lieu developer fees for affordable housing (Centex funds), Redevelopment Agency Housing Funds, and the City's award of Neighborhood Stabilization Program funding. 3 The City Council will appropriate $703,345 from the Developer Fee Fund Balance (Fund 306) to account 13002-5201.004. The Redevelopment Agency will appropriate $5,512,655 from the Redevelopment Agency Housing fund balance (Fund 391) to Account 13401-5201.004. The City has also received a formula allocation of Neighborhood Stabilization Program Funds totaling $1,187,003 through the American Recovery and Reinvestment Act. As those funds become available, they will be applied towards the property acquisition. u a NG O 4S P �y0 �O '7O 9� IPA s` _ AF Main Property Acquisition ap�ERIT �N d o Q AF Main Block = 73,493 SF (1.70 Ac) Si � PV AF Main Parcels = 53,433 SF (1.23 Ac) Wiese Parcels in escrow = 20,060 SF (0.46 Ac) C4 9yMgh <� Parcel Boundaries Building Footprints 5 � sr n a n Parolaebs. rrgm.bm moe, caumyd�osAngelea. W E Talon¢ hseneb. �F me ee�a vera AnWhe prapnebry pmveMofme s0 Ctbe rerLaemJ el rosuppled UMar bares anemry 5 pro geeatim aetymeoounry c Me(Wee f the Wr®lidomeli 2prmiCetl by 110 55 0 10 Faet MAPLE Sf 0Office. bty Ang4ea CeumyAaeeew. Lps Argelea Ccunry av no liag14 for any enda doMb.. ne.0 bream q:\projects\cd\091026el\mxd\af_prop.mxd