PURPOSE

The purpose of this report is for the City Council and Redevelopment Agency to consider approving a purchase and sale agreement with PFP, LLC to sell Agency owned property in relation to Planned Development No. 2003-1.

BACKGROUND

The Redevelopment Agency purchased the subject property in 1988 in anticipation of future development of the site.  The property was originally operated as a motel, before converted into a parking lot.  The property consists of two parcels totaling 12,072 square feet as well as one half of an alley running parallel to Alameda Avenue when considering the proposed alley vacation  for a total of 13,442 square feet (Exhibit �A�).

In 1991, the Media District Specific Plan was created, which identified this property as part of Media Center North intended for commercial mixed-use development.  Since that time, the property has remained as a parking lot.

In 2000, the proposed buyer of the property proposed a mixed-use development project for a site bounded by Alameda Avenue, Lima Street, Olive Avenue and property adjacent to the 134 Freeway off-ramp.  The project went through many iterations after community meetings and Planning Board meetings and ultimately, was denied be the City Council in April 2003.  The buyer applied again as Planned Development No. 2003-1 with Development Review No. 2003.36

This project again went through many iterations after community meetings, Planning Board meetings and City Council meetings. Ultimately, the City Council approved the Planned Development for a mixed-use condominium, retail, church and childcare facility in January 2005.

The proposed buyer approached the Agency about the purchase of its property.  The Agency�s position on the sale of its property was that it must receive the fair market price for the property, and that it would not provide any assistance for development of the project.  Based on the Agency�s valuation of the property, the parties agreed to a sales price of $1,651,000, or $123 per square feet.

ANALYSIS & CONCLUSIONS

Per Section 33433 of the California Health and Safety Code, whenever the Agency sells property purchased with Redevelopment tax increment funds it must prepare a Summary Report, which outlines among other things the: the salient points of the Agreement; the cost of the Agreement to the Agency; and, the estimated value of the interests to be conveyed (Exhibit �B�).

The buyer proposes to purchase the property with an initial five percent deposit of $82,500 allowing for a 60 day due diligence period to investigate the conditions of the property, at which time an additional five percent deposit is required totaling $165,000.  The escrow period shall be for 180 days.  If the buyer wishes to extend the escrow, they will be required to pay an additional $50,000 per month for up to a three month period.  Should the buyer at some time after the sale of the property wish to sell the property separate from the other properties subject to Planned Development No. 2003-1, the Agency shall have the right to repurchase its property at the original sales price.

FISCAL IMPACT

Per the terms of the Agreement to the Agency, the buyer is to pay $1,651,000 less certain closing costs estimated at $17,000.  The Agency purchased the property for $255,000, thus the net revenue to the Agency is estimated at $1,379,000.  The Agency may receive additional tax increment revenue should the project be developed; however, the Agreement does not call for the development of the property; therefore, no tax increment revenue is assumed. The proposed sales price of the property represents the Agency�s fair market valuation of the property. The cost of the Agreement is summarized below:

            Agency revenue from property sale                   $1,651,000

            (Less) Agency acquisition cost                              (255,000)

            (Less) Estimated closing costs                                ( 17,000)

                        Net Agency Revenue                            $1,379,000

RECOMMENDATION

It is recommended that the City Council and Redevelopment Agency approve the proposed Purchase and Sale Agreement with PFP, LLC (Platt).

EXHIBITS

A         Map of the Site

B          Summary Report

C         Purchase and Sale Agreement

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