PURPOSE

The purpose of this report is to provide the information necessary for the:  1) City Council to consider the proposed acquisition of real property located at 2721 W. Burbank Blvd. (and related documents); and 2) for the Redevelopment Agency Board to consider a budget amendment to the FY 05-06 annual budget (and related documents).

BACKGROUND

The City Council has historically shown its ongoing commitment to and support of the non-profit service providers in Burbank.  More specifically, in Fiscal Years 04-05 and 05-06, Community Development Block Grant funding totaling $1,034,900, was awarded to assist in the expansion and rehabilitation of the Burbank Temporary Aid Center facilities; and since 1994, the City has leased the former Fire Station 13 to the Boys and Girls Club to further its mission in serving Burbank�s youth.  Similarly, the City Council has established a goal of helping the Family Services Agency find a suitable new location from which they can continue and expand operations. 

The Family Services Agency was established in 1953 to strengthen the Burbank community�s families by providing low and no-cost professional, clinical and psycho-educational services.  The Family Services Agency provides a myriad of community services including:  individual, couples, and family counseling; daily school-based outreach services to a variety of local middle and high schools; teen substance abuse and anger management programs; family violence intervention programs; child abuser�s treatment programs; parenting and senior peer support programs; and community outreach services.  In addition to all of these programs, the Family Services Agency is Burbank�s largest provider of Los Angeles County Probation Department-approved domestic violence intervention services.  While the Family Services Agency offers impressive programming, which meets the community need, their current 2,000 square foot facility is a limiting factor for providing expanded services to Burbank families, youth and adults in distress.  The property, at 2721 W. Burbank Blvd. meets the needs of the Family Services Agency and will allow them to grow and increase its community support. 

The subject property includes a 7,906 square foot parcel improved with a two-story building of 6,892 gross square feet, built in 1987.  There are 15 to 16 on-site parking spaces, with additional on-street parking on Burbank Blvd.  The property has a listing price of $1,950,000 ($283 per gross square foot).  The property is owned by Bill Burnett, trustee of the Burnett Trust.

The City�s appraiser, Otis Hackett and Associates, found the property to be listed within the fair market value range of $1.895 to $1.965 million ($275 to $285 per gross square foot).  Staff also reported that based on a preliminary walk-through of the building, City building inspectors found the building to be structurally sound. 

The proposed real property acquisition was discussed in Closed Session on April 25^th and May 2, 2006.  As directed by the City Council, on April 25, 2006, staff, on April 26, 2006 made an offer to purchase the subject property for $1.95 million, conditioned on:  1) acceptable environmental conditions and title; and 2) final approval of a purchase and sale agreement by the City Council.  On April 26, 2006, staff received a letter from the broker accepting the City�s offer to purchase the property.  As directed by the City Council on May 2, 2006, staff negotiated the proposed purchase and sale agreement.

ANALYSIS  

The following are the recommended basic terms of the proposed purchase and sales agreement:

• Purchase price is $1,950,000;

• Seller will deliver a vacant property, with no tenant(s) and/or no relocation costs or responsibilities will be borne by the City;

• Both parties will take every measure reasonably possible to close escrow within 30 to 40 days (or sooner) of Council approval of the purchase and sales agreement;

• City will cooperate with seller�s 1031 exchange at no cost to the City;

• Title insurance will be provided to City at the seller�s expense and Alliance Title company shall be used;

• Escrow services shall be provided by Escrows, Inc. and escrow fees will be shared equally; and

• All other standard representations, warranties and indemnities have been included.

PROPOSED FUTURE USE

Should the City Council approve the proposed purchase and sale agreement for the subject property, the next step will be to determine the specifics of how the property will be used.  Staff recommends the City retain ownership of the property and negotiate a lease agreement with the Family Services Agency. 

Based on the preliminary property reconnaissance, the building appears to be useable �as is�.  The building has a mix of small rooms and private offices, which would be conducive for one-on-one and small-group counseling.  In addition, there are several larger, open areas that could accommodate larger-group sessions.  There are rest room facilities on both floors and the building has two separate entrances, one in the front of the building, off of Burbank Blvd. and one in the rear off of the parking lot area.  While a certain level of �cosmetic� improvements are anticipated, staff recommends that these improvements along with any other desired tenant improvement (such as adding or modifying interior walls, reconfiguring spaces and other customization activities) be the responsibility of the Family Services Agency.

Staff also proposes that the Family Services Agency, as the tenant, maintain all property maintenance and operations responsibilities, including day-to-day maintenance and upkeep (including but not limited to cleaning, cosmetic upkeep such as painting and replacement of interior finishes) as well as other basic property repairs (including minor to moderate plumbing, electrical, other repair and/or replacement activities).   Likewise, staff proposes the City assume responsibility for all major systems repair and replacement (such as HVAC, structural, etc.).

While the merits and community value associated with the Family Service Agency are not in question whatsoever, because the proposed acquisition is specifically geared toward the Family Services Agency, staff prudently recommends that the proposed lease include a minimum standard and/or level of Burbank community service programming and outreach.  Defining such a standard and/or level will require discussion with the organization with the goal of reaching some type of measurable performance gauge.  Staff realizes that such performance indicators would include a qualitative component as well as quantitative.     

In exchange for maintaining and expanding community outreach and service levels, staff recommends a discounted lease rate be provided to the Family Services Agency. 

Due to the aggressive timeframe in closing the proposed escrow, staff proposes to return to the Council at a later date with a lease agreement between the City of Burbank and the Family Services Agency.  Additionally, staff recommends that a �project  oversight committee� be formed (including two members of the City Council, City Manager, Community Development Director and other key staff members) to negotiate the proposed lease with Family Services Agency. 

FUNDING SOURCE

As mentioned, the acquisition price is $1,950,000.  In addition, there are escrow fees totaling $1,500 which will be shared equally between the City and seller, resulting in a total expenditure of $1,950,750.  Staff recommends that the City utilize debt reimbursement funds from the Redevelopment Agency to acquire the subject property.  More specifically, staff proposes the Agency repay a portion of its City Centre Project Area Loan for the sole purpose of funding the proposed acquisition.

FISCAL IMPACTS

If approved, $1,950,750 will be transferred from Fund 306.ND000.30004.0000 (Merged Project Area Fund, Unappropriated Fund Balance) to the City�s General Fund, Account 001.ND000.70005 (General Fund Capital Projects).  

RECOMMENDATION

Staff recommends the City Council adopt the proposed resolutions approving the purchase and sales agreement, appropriation of funds and related cooperation agreement with the Redevelopment Agency.  Staff also recommends the Redevelopment Agency adopt the proposed resolution amending the FY 05-06 budget and approving the proposed cooperation agreement with the City.  And finally, staff recommends that the City Council select two Members to serve on a �Project Oversight Committee� to negotiate the proposed lease with the Family Services Agency.

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