PURPOSE

The purpose of this report is twofold: 1) to present information necessary for the Redevelopment Agency Board to consider approval of an Acquisition and Settlement Agreement to purchase 206 East Cedar Avenue owned by Greg Owens and Linda Owens; and 2) to present information necessary for the City Council to consider approval of a Purchase and Sale Agreement to sell City-owned property at 461 North Varney Street to Greg and Linda Owens.

BACKGROUND

On June 29, 2004, the Agency Board and City Council approved a Disposition and Development Agreement and development entitlements for development of a 33-unit residential project by the Olson Company.  The project is located on the former Lance site in the South San Fernando Redevelopment Project Area.  The project site encompasses 700-722 South San Fernando Boulevard and 206 E. Cedar Avenue (Exhibit A).  According to the Schedule of Performance, escrow is projected to close by March 31, 2005.

To date, the Agency has acquired two of the three properties necessary for the site.  The third remaining property is a 2,033 square foot parcel located at 206 East Cedar Avenue, which is owned by Greg and Linda Owens.  The parcel is vacant of buildings but is used as a storage lot.   On April 27, 2004, the Agency directed staff to make a written offer to the Owens to purchase their property for $100,000 based on an appraisal of fair market value dated April 23, 2004.  On August 27, 2004, staff received a letter from Greg and Linda Owens offering to sell their property to the Agency for an all-inclusive settlement of $160,000, including land ($100,000), and costs for relocation and potential loss of goodwill ($60,000).  Under the terms of their offer, the Owens propose to vacate and sell their property on Cedar Avenue to the Agency and to purchase the City-owned property located at 461 North Varney Street for $310,000.   The Owens are also responsible for the completion of all proposed property improvements and the payment of all costs associated with converting the house to an office use (including using the site to store construction equipment and vehicles). 

The property located at 461 North Varney Street consists of a 5,497 square foot parcel which is improved with a 992 square foot single family residence constructed in 1940.  It was acquired by the Burbank Water and Power Department for $352,000 in May 2003 as a requirement of the Southern California Public Power Authority in order to remove a residential use within close proximity of the new Magnolia Power Plant.  This property is zoned M-2 General Manufacturing (Exhibit B).

Since the property at 461 North Varney Street can no longer be used as a residential use, the City has obtained a restricted use appraisal which appraises the property as an industrial use only.  Because the property is being appraised as an industrial rather than a residential use, in a manner consistent with existing zoning (M-2), the appraiser�s opinion of fair market value is less than the City�s acquisition price of $352,000 when the property was valued as a single family residential property. The proposed resale price of $310,000 is not less than the appraised value when considering the property as an industrial use.

As a result of ongoing discussions with staff at the Burbank Water and Power Department, they have agreed to sell the Varney property for $310,000.  The sale of this property was recently approved by the Southern California Public Power Authority on September 16, 2004. 

To summarize, Agency funds that are received by the Owens from the purchase of 206 East Cedar Avenue ($160,000) would be applied towards the purchase of 461 North Varney Street along with the Owens personal cash payment of $150,000. Additional costs for escrow, title and permit fees, overhead utility relocation and lead paint and asbestos abatement are estimated at $28,000 and are proposed to be paid by the Agency.  Therefore, total Agency costs for acquiring and relocating the Owens will be about $188,000.  Staff is requesting Agency Board approval of an Acquisition and Settlement Agreement for the Cedar Property and City Council approval of a Purchase and Sale Agreement for the Varney property. These Agreements are attached as Exhibits C and D respectively.  Acquisition of the Cedar property will complete the assemblage of property needed for the development of the former Lance site.

FISCAL IMPACT

The costs to acquire the Owens property located at 206 East Cedar Avenue total $160,000 including land, relocation and potential loss of goodwill. Additional costs including escrow, title and permits are estimated at $28,000 for a total estimated Agency cost of $188,000.  Funds for this project have been previously budgeted and appropriated in 20% Housing Set Aside Capital Improvement Program budget.         

RECOMMENDATION

Staff recommends the following actions: 1) Redevelopment Agency Board adoption of the attached resolutions to acquire 206 East Cedar Avenue from Greg and Linda Owens; and 2) City Council adoption of the attached resolutions to sell 461 North Varney Street to Greg and Linda Owens. 

EXHIBITS

A         Lance Site Map

B          461 North Varney Street Site Map

C         Acquisition and Settlement Agreement for 206 East Cedar Avenue

D         Purchase and Sale Agreement for 461 North Varney Street

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