SR-08-14-2012-8BCity Council Meeting: August 14, 2012
Agenda Item: 8"'
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Purchase and Sale Agreement for Fire Station Land Exchange
Recommended Action
Staff recommends the City Council:
1. adopt the attached resolution waiving advertising requirements related to an
exchange of property; and
2. authorize the City Manager to negotiate and execute a Purchase and Sale
Agreement ( "Agreement ") to exchange City -owned property located at 1338 -42
and 1321 5th Street, for property located at 1337 -45 7 h Street, owned by 1337
7th Street LLC, subject to the condition that closing of escrow and the undertaking
of any obligations or commitments under the Agreement shall not occur until the
City complies with the applicable requirements of the California Environmental
Quality Act ( "CEQA"), including any requirement that the City Council make
findings and approvals in accordance with CEQA.
Executive Summary
The City issued a Request for Proposals to exchange real property in Downtown Santa
Monica for a new site suitable to build a replacement facility for Fire Station No. 1.
The City received one response from NMS Properties Inc. ( "Seller "), offering to
exchange an equivalent -sized property at 1337 -47 7th Street ( "Seller's Property ") for
City -owned properties at 1338 -42 and 1321 5th Street (collectively, "City's Property ").
The approval of the Resolution and authorization of the exchange provides an
opportunity for the City to secure a site that meets the City's current and long -term
requirements for a new fire station that will serve Downtown and the northwestern
portion of Santa Monica.
The Seller has requested certain assurances as a condition to sale of the Seller's
Property, including the right to purchase monthly parking passes at the Main Library and
a good faith effort on the part of the City to process the developer's entitlements for the
subject properties to be acquired by the Seller within a specified timeframe. Presuming
certain parking easement encumbrances can be removed from the Seller's Property,
the exchange would require the Seller to pay the City the difference in value of the
exchanged properties in the amount of $175,000.
Background
On January 10 2012, Council authorized staff to issue a Request for Proposals (RFP)
to exchange real. property in Downtown Santa Monica at 1338 -42 and 1321 5th Street
( "City's Property," see Attachment B) for a new site to build a replacement facility for
Fire Station No. 1. The solicitation was posted on the City's website, and sent to local
property owners and brokers in the Downtown. The City received one response from
NMS Properties Inc.
Discussion
The Seller's Property is a 22,500- square foot paved parking lot at 1337 -45 7th Street
that is subject to a third -party parking easement agreement which will need to be
removed from the title before the City can acquire the property. The City's Property
consists of a 15,000- square foot parcel and a 7,500- square foot parcel at 1338 -42 and
1321 5th Street consisting of surface parking lots and a single -story retail building.
Removal of the parking easement will be a condition to closing. Assuming the parking
easement is removed from the title of the Seller's property, the City's independent
appraiser has determined that the market value of the Seller's property is $7,875,000
($350 per square foot) and the combined market value of the City's properties is
$8,050,000 (averaging $358 per square foot) resulting in a difference of $175,000 which
will be paid by the Seller to the City.
The Seller has requested that the following additional considerations be incorporated
into the Purchase and Sale Agreement:
® City makes a reasonable good faith effort to process entitlements for the City's
Property after acquisition by the Seller within 12 months, subject to the submittal
of completed applications for LUCE and Downtown Specific Plan- compliant
developments, and without any commitment as to outcome of entitlements or
CEQA determinations.
® City issues the developer a parking license to purchase up to 100 monthly
parking passes for the Main Library at publicly available market rates. The
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license term will be 10 years with two 5 -year renewal options. There are a total
of 525 spaces in the Main Library Parking Structure. During peak occupancy
periods, there are currently 157 -210 parking spaces available at any given time.
In preparing the Agreement, staff would ensure that all terms comply with federal, state,
and local law. The CEQA process must be completed before the City can close escrow
on the Seller's Property, should the City Council approve staff's recommendation.
Staff recommends that the Council adopt the attached resolution which waives
advertisement requirements for the sale of the City's Property and authorize the
Agreement. The City's Property is no longer needed for the purpose acquired, nor
needed for any public purpose.
Environmental Analysis
Under CEQA guideline 15004(b), the City may enter into a purchase and sale
agreement with the Seller as long as the agreement provides that CEQA compliance
shall be completed prior to the close of escrow and before the City's acquisition and
proposed use of the Seller's Property as a fire station. This is consistent with the
California Supreme Court's recent decision in Save Tara v. City of West Hollywood, in
which the Court emphasized that a lead agency must not take any action that commits
itself to a project in a manner that forecloses alternatives or mitigation measures that
would ordinarily be part of CEQA review of a public project. The CEQA documentation
and findings may need to return to Council for consideration and action before the City
enters into a purchase and sale agreement.
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Financial Impacts & Budget Actions
The recommended transaction involves an exchange of properties of comparable value
with the difference in price of $175,000 to be paid by the Seller to the City. Revenues
should be deposited into account 01224.404170.
Prepared by: Elana Buegoff, Sr. Development Analyst
Approved:
Andy Agle, D
Housing and
Attachments:
Development
Forwarded to Council:
Rod Gould
City Manager
A. Resolution of the City of Santa Monica Waiving Advertisement Requirements and
Authorizing the Negotiation of the Property Exchange
B. Site Map Identifying Subject Properties
M
Reference Resolution No.
10702 (CCS) and
Agreement No. 9632
(CCS).