SR-012709-8bCity Council Meeting: January 27, 2009
Agenda Item: ~L ~j
To: Mayor and City Council/Chairperson and Redevelopment Agency
From: Andy Agle, Director of Housing and Economic Development
Subject: Acquisition of Property at 1334 Stn Street in accordance with the
Downtown Parking Strategy
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 Sunnyside Group; located at
1334 5th Street, and to negotiate and execute a Purchase and Sale Agreement
and other related documents with the Sunnyside Group;
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 1334 5th Street to
be of benefit to the Earthquake Recovery Redevelopment Project Area; and
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 the property at 1.334 5th Street;
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 1334 5th Street to be of benefit to the
Earthquake Recovery Redevelopment Project Area; and
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
1334 Stn Street.
Executive Summary
The Letter of Intent between the City and the Sunnyside Group provides for the City to
purchase the property located at 1334 5th Street for $5,000,000, plus the City's share of
closing costs. The property is 7,500 sq. ft. and improved with a building of 9,943 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 would authorize the Redevelopment Agency to grant funds to
the City to acquire the property located at 1334 5'h Street. Acquisition of the property
was considered as part of the CEQA analysis for the Downtown Parking Strategy EIR
and no additional environmental analysis is required.
Discussion
Background
The property at 1334 5ih Street is 7,500 sq. ft. and is improved with a 9,943 sq. ft.
building occupied by .Hershey Associates, a firm whose (ease expires December 31,
2012, and Ezai Florists, a shop which is on a month-to-month lease. The property is
located within the area identified in the Downtown Parking Strategy and Environmental
Impact Report, certified by the Council on 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 an Offer
Letter from the Sunnyside Group to sell its property to the City. The offer to sell states
that the transaction is made in lieu of the City's exercise of the power of eminent domain
and will contain a right in favor of one or more of the Sellers under Section 1033 of the
Internal Revenue Code. Following execution of the Letter of Intent, the City and the
Sunnyside Group will negotiate a Purchase and Sale Agreement. The City would
purchase the property subject to the existing leases.
As part of its due diligence, staff will complete a Phase I environmental assessment of
the property, now in progress. 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 analysis. If the tests reveal
conditions that are unacceptable to the City, the City may cancel its escrow and its good
faith deposit in the amount of $100,000 will be returned.
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Previous Council Actions
Council approved the Downtown Parking Strategy on May 9, 2006, following a series of
community workshops and review by the Bayside District Board and Planning
Commission. The strategy identifies the need to acquire properties on Fifth Street to
serve as interim parking while the downtown parking structures are reconstructed. The
strategy also anticipates that the properties could serve as long-term parking resources.
Environmental Analysis
The property is located within an area studied in the Downtown Parking Strategy 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, 4th Court on the west and 6th 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 irrthe elimination of one or more
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.
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Financial Impacts & Budget Actions
The Cooperation Agreement will provide a grant to the City from the Redevelopment
Agency in the amount of $5,000,000 and the City's share of closing costs. Funds for
the grant to pay for acquisition and closing costs are available at Account No.
C 170776.589009.
Prepared by:
Miriam Mack, Economic Development Manager
Approved: Forwarded to Council:
Andy Agle, Director a nt Ewell
Housing and Economic Development Ci anager
Attachments:
Attachment A: Resolution of the City of Santa Monica Consenting to the Use of Agency
Funds for the Acquisition of Property Located at 1334 5th Street and Making Certain
Findings Pursuant to Health and Safety Code Section 33445
Attachment B: Resolution of the Redevelopment Agency of the City of Santa Monica
Consenting to the Use of Agency Funds for the Acquisition of Property Located at 1334
5"' Street and Making Certain Findings Pursuant to Health and Safety Code Section
33445
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Reference Contract Nos.
9030 (CCS) and 9031
(CCS/RAS); reference
Resolution Nos. 10378
(CCS) and 514 (RAS)