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12-01-2020 - AGENDA ITEM 08 CONSIDERATION OF DISPOSITION OF AGENCY ASSETS #28 AND #29 (LONG RANGE PROPERTY MANAGEMENT PLAN) (APNs; 8735-001-933, 8735-001-934) TO M&A GABAEEAGENDA ITEM NO. 8 AGENDA STAFF REPORT City of West Covina I Office of the City Manager DATE: December 1, 2020 TO: Mayor and City Council FROM: David Carmany City Manager SUBJECT: CONSIDERATION OF DISPOSITION OF AGENCY ASSETS #28 AND #29 (LONG RANGE PROPERTY MANAGEMENT PLAN) (APNs; 8735-001-933, 8735-001-934) TO M&A GABAEE RECOMMENDATION: It is recommended that the City Council, acting as the Successor Agency, authorize the Executive Director, or his designee, to negotiate and execute an Exclusive Negotiation Agreement (ENA) with M&A Gabaee (Gabaee) for the Sale of Agency Parcels (APNS: 8735-001-933 and 8735-001-934). BACKGROUND: The Successor Agency (Agency) to the former West Covina Redevelopment Agency received a Finding of Completion (FOC) from the Department of Finance (DOF) on December 16, 2015. Shortly thereafter, on December 18, 2015, the Agency also obtained DOF approval of the Long Range Property Management Plan (LRPMP). As a result, the Agency is proceeding with implementing the LRPMP including the disposition of assets listed for sale. The LRPMP included thirty-two (32) properties, twenty-six (26) which are Government Use Transfers to the City, and six (6) listed for sale. In July 2006, the Community Development Commission of the City of West Covina (CDC) sold a portion of then parcel 12 and all of parcel 13 (now referenced as pads 700 and 750) to Gabaee for the development of a commercial/retail/office project. As part of the 2006 Purchase and Sale Agreement (2006 PSA) dated July 13, 2006, Gabaee is responsible for the cost, installation and completion of all public infrastructure (road, curb, gutter, sidewalk, sewer, and utilities for proposed commercial development of the 700 and 750 pads), including upsizing the improvements as necessary to support the proposed golf course and clubhouse from the "stub -out point'. In addition, pursuant to the 2006 PSA, Gabaee is responsible for paying the cost of the water system as well as coordinating installation of such improvements with the water purveyor Suburban Water Systems (Suburban), including the water tanks to support any future development on the 700 & 750 pads, and the proposed golf course and clubhouse. To help facilitate the installation of the water system, the CDC granted use of the retained parcel 12 (now assets #28 and #29) to Gabaee to construct the water tanks and water pipes. In of June of 2016, Gabaee submitted an offer letter, to purchase the two Public Water Tank Assets #28 and #29 at a purchase price of $85,500. The appraised value for the two assets together came in at $85,000. The appraisal, conducted in April of 2016, takes into consideration the restraints on the property including the agreement with Gabaee for use of the site for the water tanks as well as the environmental restriction for open space. LRPMP Asset Parcel No. Description Lot Size 8 8735-001-933 Public Water Tank Site .53-Acres 29 8735-001-934 Public Water Tank Site .87-Acres 1.40-Acres Gabaee and the Agency entered an Exclusive Negotiating Agreement (ENA) on June 20, 2017 with the ENA expiring in December of 2017. Since the expiration of the ENA, the City Council, acting as the Successor Agency, directed staff to pursue the sale of the Water Tank assets to Gabaee. Gabaee remains interested in purchasing the Water Tank assets and wishes to proceed with its proposed development in conjunction with the purchase of the properties. As such, Gabaee wishes to enter a new ENA. DISCUSSION: In May of 2020, Gabaee submitted plans for proposed research and development (R&D) center on the 700 and 750 pads. In order to move forward with the development of the R&D center Gabee will need to concurrently work with Suburban to provide water for the project. In order to move forward with the proposed R&D project, Gabaee will need to purchase the Water Tank assets. As such a new ENA for the sale of the Water Tank Assets (730 pad) is required to finalize the terms of a Purchase and Sale Agreement including the purchase price. The proposed ENA for the Sale of the Water Tank assets will include the following terms: • Purchase by Gabaee of 1.4-acres of Agency property • Term of ENA: 180-days • Deposit: $5,000 • Disposition Costs (including staff time, attorney fees and any consultants if needed) • Developer Submissions (concept development site plan, Proforma, among others) • Draft PSA within 180-days • Exclusive Right to Negotiate. Agency shall not negotiate with any other party; Agency and developer shall negotiate in good faith. The sale will meet the LRPMP requirement to dispose of the property. If authorized, the Executive Director would negotiate and execute an ENA with Gabaee and any other documents necessary to execute the ENA. Subsequent approval of a Purchase and Sale Agreement by the Successor Agency is also required before the property can be disposed. Sale of the Successor Agency assets require approval by the Oversight Board, as such the sale of any Agency asset is contingent upon Oversight Board approval. This contingency will be included as a tern of the any future agreements for the sale of the Agency assets. LEGAL REVIEW: The City Attorney's Office will review all agreements and approve them as to form prior to execution by Executive Director. OPTIONS: The Successor Agency has the following options: 1. Adopt staff's Recommendation; or 2. Not pursue the sale with M&A Gabaee and provide direction on alternative disposition process. ENVIRONMENTAL REVIEW: The ENA is categorically exempt from the California Environmental Quality Act (CEQA) and CEQA Guidelines. CEQA review will be required when an application for a "project" is submitted. Fiscal Impact FISCAL IMPACT: The DOF is not reimbursing cities for the costs associated with the sale of Agency assets. As such, the Successor Agency, will seek reimbursement of the costs incurred by each of them associated with the sale of the property including but not limited to attorney fees, and appraisal costs separately from the purchase price of the property. As the property will be sold under the LRPMP, pursuant to Redevelopment dissolution law, revenues from the sale will be shared among the various taxing entities. The City's share of sales proceeds is estimated at 16 cents to the dollar.