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SR-901-012~_ City Council and ~ ~;tY of Redevelopment Agency Report Santa Monica City Council Meeting: February 13, 2007 Agenda Item: g-~ To: Mayor and City Council Chairperson and Redevelopment Agency From: Andy Agle, Director of Resource Management Subject: Authorization to Acquire Property Located at 1338-42 5th Street, owned by Bryan Family Trust, and Authorization for the City of San~a Monica and the Redevelopment Agency to Enter into a Cooperation Agreement Recommended Action Staff recommends that the City Council: 1. authorize the City Manager to execute a Letter of Intent for the City of Santa Monica ("City") to acquire the property owned by the Bryan Family Trust, located at 1338-42 5th Street and to negotiate and execute a Purchase and Sale Agreement and other related documents with the Bryan Family Trust; 2. adopt a Resolution finding the use of funds from the Redevelopment Agency of the City of Santa Monica for acquisition of property located at 1338-42 5t" Street to be of benefit to the Earthquake Recovery Redevelopment Project Area; 3. authorize preparation and execution by the City Manager of a Cooperation Agreement between the City and the Redevelopment Agency for the purpose of acquiring property at 1338-42 5t" Street; 1 Staff recommends that the Redevelopment Agency of the City of Santa Monica: 1. adopt a Resolution finding the use of funds from the Redevelopment Agency for acquisition of property located at 1338-42 5t" Street to be of benefit to the Earthquake Recovery Redevelopment Project Area. 2. authorize preparation and execution by the Executive Director of a Cooperation Agreement between the City of Santa Monica and the Redevelopment Agency to grant funds to the City of Santa Monica for the acquisition of property located at 1338-42 5t" Street. Executive Summary The Letter of Intent between the City and the Bryan Family Trust provides for the City to purchase the property located at 1338-42 5th Street for $6,000,000 plus the City's share of closing costs. The property is 15,000 sq. ft. and improved with a building of 8,000 sq. ft. Acquisition of the property is in accordance with the approved Downtown Parking Strategy. Funding for the property acquisition is available to the City from the Redevelopment Agency, provided the City and Redevelopment Agency adopt Resolutions making findings that the use of Redevelopment funds for the acquisition of this property is of benefit to the Earthquake Recovery Redevelopment Project Area. The Cooperation Agreement wouid authorize the Redevelopment Agency to grant funds to the City to acquire the property located at 1338-42 5th Street. 2 Discussion Backqround The property is 15,000 sq. ft. and is improved with an 8,000 sq. ft. building occupied by Carlson Appliance. The property is located within the area identified in the Downtown Parking Strategy and Environmental Impact Report, certified by the Council May 9, 2006, as the target area for construction of additional parking resources. Negotiations with the property owner began in August 2006, and resulted in the Offer Letter from the Bryan Family Trust to sell its property to the City. The offer to sell states that the transaction will contain a right in favor of one or more of the Owners to close the transaction through a tax-deferred exchange under Section 1031 or Section 1033 of the Internal Revenue code and that the City will cooperate in connection with structuring the exchange, but will incur no additional expenses relating to the property exchange. Following execution of the Letter of Intent, the City and the Bryan Trust will negotiate a Purchase and Sale Agreement. The City would purchase the property subject to the existing lease. As part of its due diligence, staff will conduct a Phase I environmental assessment of the property. If the report identifies the need for further environmental or soils review through a Phase II investigation, the due diligence period will be extended by an amount of time necessary to complete the Phase II analysis. If the tests reveal conditions that are unacceptable to the City, the City may cancel its escrow and its good faith deposit will be returned. 3 Previous Council Actions Council authorized staff to initiate negotiations with the property owner at its meeting of July 27, 2004. Environmental Analvsis The property is located within an area studied in the Downtown Parking EIR, certified by the City Council on May 9, 2006, for the development of new parking resources. A copy of this EIR will be available on the dais at the City Council hearing on this matter and can be viewed at (EIR). None of the conditions described in CEQA Guidelines Section 15162 and 15163 have occurred which would necessitate additional environmental review. Redevelopment Considerations The City has been pursuing property acquisition for the purpose of adding public parking resources within the area bounded by Wilshire Boulevard on the north, Colorado Avenue on the south, 4t" Court on the west and 6t" Court on the east. To authorize the use of Redevelopment funds, the City Council and Agency must make the appropriate determinations. The attached Resolutions (Attachments A and B) determine and find that the Project is of benefit to the Earthquake Recovery Redevelopment Project Area; no other reasonable means of financing the Project are available to the community; the payment of funds for the Project will assist in elimination of one or more blighting conditions inside the Project Area by assisting in the elimination of one or more 4 of the conditions resulting from the 1994 Northridge Earthquake disaster; and the payment of funds for the Project is consistent with the Redevelopment Agency's Five- Year Implementation Plan in that it helps achieve the Disaster Prevention and Mitigation and Commercial Revitalization goals as set forth in this Plan. Budpet/Financial Impact The Cooperation Agreement will provide a grant to the City from the Redevelopment Agency in the amount of $6,000,000 and the City's share of closing costs. Funds for the grant are available at Account No. C170621.589000. Prepared by: Miriam Mack, Economic Development Manager Approved: Forwarded to Council: Andy Agle, ~" ~ Director, Resource anageme Attachments: Attachment A: Resolution of The City Of Santa Monica Consenting to the Use of Agency Funds for the Acquisition of Property Located at 1338-42 5th Street and Making Certain Findings Pursuant To Health And Safety Code Section 33445 Attachment B: Resolution of The Redevelopment Agency Consenting to the Use Of Agency Funds for the Acquisition of Property Located at 1338-42 5th Street and Making Certain Findings Pursuant to Health And Safety Code Section 33445 5 e erence eso u ~ o n os . an . e erence on rac os. an .