PURPOSE:

The purpose of this report is for the Agency Board to consider the adoption of a Resolution of Necessity to acquire the leasehold interest in property located at 700 South San Fernando Boulevard.  The acquisition of the leasehold interest is necessary for the development of the San Fernando Walk Project located on the former Lance site.

BACKGROUND:

On June 29, 2004, the Agency Board and City Council approved a Disposition and Development Agreement and development entitlements for the development of a 33-unit residential project by the Olson Company.  The project is located on the former Lance site which includes 700-722 South San Fernando Boulevard and 206 E. Cedar Avenue (Exhibit A).

Pursuant to the terms of the Disposition and Development Agreement, the Agency is responsible for assembling the site as a condition to the Developer�s performance to acquire and develop the Site.  To date, the Agency has acquired two of the three properties necessary for the site which include 700-722 South San Fernando Boulevard. As of the writing of this report, Agency staff is currently in negotiations with the remaining property owner to acquire the property located at 206 E. Cedar Avenue.

While the Agency has assembled the majority of the real properties, the Agency has not yet acquired the leasehold interest in the property located at 700 South San Fernando Boulevard.  This property is owned in fee by the Agency and occupied by a used auto sales business called John�s West Coast Auto Resale.

On September 22, 2004, the Agency sent a revised offer letter to John Dincher of John�s West Coast Auto Resale offering to pay a leasehold bonus value for the appraised value of $23,000.  The Agency�s statutory offer of leasehold bonus value was part of a larger all-inclusive offer relating to leasehold bonus value, goodwill and relocation.  The Agency received no response to its offer and the offer terminated on its own.  Mr. Dincher was provided with a 15-day notice on October 20, 2004 setting the hearing for the Resolution of Necessity on November 23, 2004. 

Staff is recommending that the Agency take the next step in the condemnation process by conducting a hearing to consider a Resolution of Necessity to acquire the leasehold interest in property located at 700 South San Fernando Boulevard. 

ANALYSIS:

According to State law, the owner of an interest in property that is the subject of a proposed Resolution of Necessity is the only party that can be heard at the hearing on the Resolution.  Pursuant to the Code of Civil Procedure Section 1245.235(b)(3), an owner of an interest in real property subject to a proposed Resolution of Necessity has fifteen days to file a written request to be heard at the Resolution hearing. 

As required by State law, the Notice that was sent to Mr. Dincher of John�s West Coast Auto Resale stated he has the right to appear and be heard on the following areas only:

1. Whether or not the public interest and necessity require the project;

2. Whether or not the project is planned or located in the manner that will be most compatible with the greatest public good and the least private injury;

3. Whether or not the property sought to be acquired is necessary for the project; and

4. Whether or not the offer required by Government Code Section 7267.2 has been made to the owners of record.

These findings can be made for the following reasons:

1. Whether or not the public interest and necessity require the project.

As the City Council and Redevelopment Agency have already previously determined, the proposed project, the San Fernando Walk project, is a project that will further the goals of the South San Fernando Redevelopment Project Area, assist in the elimination of blighting conditions in the Project Area, and provide affordable ownership housing opportunities within the City.

2. Whether or not the project is planned or located in the manner that will be most compatible with the greatest public good and the least private injury.

The project site is being assembled with one vacant property (comprising about 80% of the project site) and two occupied properties (as of the writing of this report) to create a single unified development in an area in which the Agency is undertaking improvements.  The owners and occupants of the proposed project site are being provided with full compensation for property value, leasehold bonus value, goodwill, and relocation, where applicable.

3. Whether or not the property sought to be acquired is necessary for the project.

The leasehold interest subject to the proposed hearing must be acquired to remove all interests and occupancies on the project site.  The proposed project encompasses the property subject to the proposed Resolution of Necessity.

4. Whether or not the offer required by Government Code Section 7267.2 has been made to the owners of record.

As stated above, the Agency made the statutory offer on September 22, 2004.

The Resolution of Necessity is part of the process to acquire the leasehold interest through eminent domain.  If the Agency approves the Resolution, Agency legal counsel will institute an action of eminent domain and seek an Order of Possession to take possession of the property at the earliest possible time which is 90 days after the Order of Possession is served on the business owner.  It is important to note that Mr. Dincher will also receive relocation benefits and goodwill compensation above and beyond the compensation for the leasehold interest. Agency staff will continue negotiations with Mr. Dincher throughout this process to try to reach a settlement in the event that the Agency adopts a Resolution of Necessity.

FISCAL IMPACT:

Funds associated with the costs to file the condemnation action have been previously budgeted and appropriated from 20% Housing Set-Aside funds.  If costs exceed the budgeted amount, staff will return with a budget appropriation request at the time of settlement.

RECOMMENDATION:

It is recommended that the Redevelopment Agency Board approve the Resolution of Necessity.

EXHIBITS:

A         Site Map