SR-12-17-2013-3ECity of ' Council Report
Santa Monica
City Council Meeting: December 17, 2013
Agenda Item: -
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Disposition of City -Owned Property at 1731 -1733 20" Street
Recommended Action
Staff recommends that the City Council authorize:
1) the final sale and terms of purchase for the remnant parcel located at 1731 -1733
20th Street;
2) the City Manager to enter into a 20 -year option agreement with Crossroads School
of Arts and Science ( "Crossroads ") to acquire an easement for a bicycle and
pedestrian path along the northerly edge of 1748 21St Street ( "21th Street Bike Path
Easement "); and
3) granting an easement that would allow Crossroads to build an 8 foot perimeter fence
across 20th Court ( "Fence Easement ") in the event that the City exercises the option
to acquire the 21St Street Bike Path Easement.
4) appropriate budget changes outlined in the financial impacts section of this report.
Executive Summary
The City -owned remnant parcel at 1731 -1733 20th Street is not needed for any public
purpose and is therefore surplus property. This report summarizes the negotiated terms
related to the purchase and sale agreement with Crossroads School of Arts and
Science ( "Crossroads ") and recommends Council authorize final sale of the remnant
parcel to Crossroads in order to assemble the land necessary to facilitate the
construction of its new science building. Concurrently with the sale of the remnant
parcel to Crossroads, staff recommends that Council authorize the acquisition of an
easement from Crossroads for the purpose of extending the 20th Street Bike Path
Easement to 21St Street, as envisioned in the City's Bike Action Plan (Final Draft 2011).
Background
On June 25, 2013, Council held first reading of an ordinance approving the
Development Agreement (Contract No. 9768 (CCS)] for Crossroad's construction of a
new science building on their property, including the subject remnant parcel at
1731 -1733 20th Street. Crossroads' proposed project relies on the City's sale of the
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remnant parcel pursuant to the conditions of the Development Agreement, which also
requires Crossroads to grant the City a bicycle and pedestrian easement along the
northern edge of 1731 -1733 20th Street ( "20th Street Bike Path Easement ").
Municipal Code Section 2.24.110 authorizes Council, by resolution, to allow the sale of
City -owned real property if the property is no longer needed for the purpose acquired or
if the title to the land is no longer needed for any public purpose. Additionally, with at
least five affirmative votes, Council may adopt a resolution authorizing the sale of
property without advertising for bids in cases where public bids would be to no avail and
would cause unnecessary expense and delay, or would not be in the best interest of the
City.
On July 23, 2013, the City Council adopted a resolution declaring the City -owned
remnant parcel at 1731 -1733 20th Street as surplus property and authorized the City
Manager to negotiate and execute a purchase and sale agreement with Crossroads for
the sale of the remnant parcel. As described in the July 23, 2013 staff report, the
$154,400 proceeds from the remnant parcel sale were contemplated to be deposited in
the General Fund, however, subsequently, as part of the negotiation process, due to the
City's desire to acquire an easement from Crossroads to construct a future bike path, an
appropriation of $16,700, to serve as a deposit, is necessary. Further description of the
proposed transaction is summarized in the following discussion section.
Discussion
Staff commissioned an independent appraisal to determine market value and highest
and best use for the remnant parcel (APN 4275 - 029 -028). Based on the parcel in its
"as -is" condition, the highest and best use is as an assemblage to the surrounding
property owned by Crossroads to create a unified holding for new construction. The
City's independent appraisal determined the value of the remnant parcel to be
approximately $200 per square foot utilizing the market data approach for fee simple
valuation. Crossroads concurs with the appraised value and agrees to purchase the
772 square foot remnant parcel for $154,400.
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Concurrently with the sale of the remnant parcel to Crossroads, the City desires to
acquire an easement from Crossroads for the purpose of extending the 20th Street Bike
Path Easement to 21St Street, as envisioned in the City's Bike Action Plan (Final Draft
2011). The proposed 21St Street Bike Path Easement is approximately 1,670 square
feet in area, with a length of approximately 167 feet in length and 10 feet in width over
the southern portion Crossroads' property at 1748 21St Street (APN 4275 - 029 -027).
Crossroads commissioned an independent appraisal which finds the present value of
the 21St Street Bike Path Easement is $167,000. City staff reviewed the appraisal and is
in agreement with its approach and analysis. Given that financing for the bike path
construction is years in the future, staff recommends the City enter into a 20 year option
agreement with Crossroads with the following terms:
• Agreed upon value of $167,000 with a 10 percent deposit of $16,700 to
Crossroads. Crossroads would credit the $16,700 deposit toward the value of
easement; therefore the City's payment upon exercise of the option would be
$150,300. Crossroads agrees to maintain the easement area until such time City
exercises the option.
• Crossroads would obtain a survey to delineate areas for purposes of recordation
and exhibit agreement.
• Option agreement would be in recordable form and recorded concurrently with
the conveyance of the remnant parcel to Crossroads.
• Provisions for construction, use and maintenance of the bike path would remain
the same as the provisions in the Development Agreement relating to the 20th
Street Bike Path Easement.
• Option agreement would include an expiration date of December 31, 2033.
As part of this transaction, staff also recommends that the City agree to' the following
provisions to allay Crossroads' security concerns regarding the construction, use and
maintenance of the bicycle and pedestrian path adjacent to Crossroads' property:
• Approve an easement on the City's right of way at 20th Court ( "Fence
Easement "), which would allow the school to build a future perimeter fence /wall
across 20th Court concurrently with the City's acquisition of the 21St Street Bike
Path Easement; and allow the height of the future perimeter fence to be up to
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8 feet, while the City's Public Works Department retains its review authority over
the location of the Fence Easement and the design and location of the
fence /wall. The Fence Easement would be recorded concurrently with the
recording of the 21St Street Easement, if the City exercises its option.
® Allow the school to maintain an existing gate at 1748 21st Street until such
time as the City acquires the 21St Street Bike Path Easement.
® Require Crossroads to pay all closing costs in consideration of the City's grant of
future rights to obtain the Fence Easement.
Title and Escrow services would be provided by a mutually agreed company and
escrow would close within 30 days following execution of a mutually acceptable
purchase and sale agreement. Escrow fees and costs would be shared equally
between the parties, with a $3,200 offset to the City. Title insurance and any other
associated fees and costs would be paid by Crossroads.
Environmental Analysis
Sale of the subject property is categorically exempt from environmental review pursuant
to California Environmental Quality Act (CEQA) Guideline 15312, as it involves the sale
of surplus governmental property for which the use of the property has not changed
since it was deeded to the City in 1968.
Financial Impacts & Budget Actions
Staff projects proceeds from the sale of the remnant parcel to be $154,400. Funds will
be deposited into the City's General Fund at account 01274.404170.
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The deposit due to Crossroads for entering into a 20 -year option agreement to acquire
the bike easement is $16,700. This payment requires an additional appropriation of
$16,700 to account 012681.544390; the payment will be charged to account
012681.544390.
Prepared by: Nia Tang, Senior Development Analyst
Approved:
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Attachments:
Forwarded to Council:
Rod Gould
City Manager
Attachment A: Remnant Parcel (APN 4275 - 029 -028)
Attachment B: Easement (APN 4275 - 029 -027)
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Reference:
Contract No. 9847
(CCS)