City Council Meeting: February 27, 2007

Agenda Item: 8-B__  

To:                   Mayor and City Council

                        Chairperson and Redevelopment Agency

                        Chairperson and Parking Authority

 

From:              Andy Agle, Director of Housing and Economic Development

Subject:          Acquisition of Property Located at 430 Arizona Avenue, 1324 Fifth Street, 1320 Fifth Street and 1321 Fifth Street

 

Recommended Action

Staff recommends that the City Council:

1.      authorize the City Manager to execute a Letter of Intent for the City of Santa Monica (“City”) to acquire the property owned by Fifth/Arizona Investors, LLC and Bayside Domination, LLC, located at 430 Arizona Avenue, 1324 Fifth Street, 1320 Fifth Street and 1321 Fifth Street, and to negotiate and execute a Purchase and Sale Agreement and other related documents with the property owners;

2.      adopt a Resolution finding the use of funds from the Redevelopment Agency of the City of Santa Monica for acquisition of property located at 430 Arizona Avenue, 1324 Fifth Street, 1320 Fifth Street and 1321 Fifth Street, to be of benefit to the Earthquake Recovery Redevelopment Project Area;

3.      authorize preparation and execution by the City Manager of a Cooperation Agreement between the City, the Parking Authority and the Redevelopment Agency for the purpose of acquiring property at 430 Arizona Avenue, 1324 Fifth Street, 1320 Fifth Street and 1321 Fifth Street.

4.      amend Sections 1(a) and 2(a) of the Settlement Agreement between the City and Fifth/Arizona Investors, LLC, and Taking the Fifth, LLC to extend the date for expiration of Administrative Approval No. 05AA-017 and 05AA-018 from March 15, 2007, to May 15, 2007.

 

Staff recommends that the Redevelopment Agency of the City of Santa Monica:

1.      adopt a Resolution finding the use of funds from the Redevelopment Agency for acquisition of property located at 430 Arizona Avenue, 1324 Fifth Street, 1320 Fifth Street and 1321 Fifth Street to be of benefit to the Earthquake Recovery Redevelopment Project Area.

2.      authorize preparation and execution by the Executive Director of a Cooperation Agreement between the City of Santa Monica, the Parking Authority and the Redevelopment Agency to grant funds to the City of Santa Monica for the acquisition of property located at 430 Arizona Avenue, 1324 Fifth Street, 1320 Fifth Street and 1321 Fifth Street

 

Staff recommends that the Parking Authority of the City of Santa Monica authorize preparation and execution by the Executive Director of a Cooperation Agreement between the City of Santa Monica, the Parking Authority and the Redevelopment Agency to grant funds to the City of Santa Monica for the acquisition of property located at 430 Arizona Avenue, 1324 Fifth Street, 1320 Fifth Street and 1321 Fifth Street.

 

Executive Summary

The Letter of Intent between the City and Fifth/Arizona Investors, LLC and Bayside Domination, LLC, (“Property Owners”) provides for the City to purchase the property located at 430 Arizona Avenue, 1324 Fifth Street, 1320 Fifth Street and 1321 Fifth Street (“Property”) for $30,900,000, plus closing costs. The property totals 52,500 sq. ft. Acquisition of the property is in accordance with the approved Downtown Parking Strategy.  Funding for the property acquisition is available to the City from the Parking Authority and from the Redevelopment Agency, provided the City and Redevelopment Agency adopt Resolutions making findings that the use of Redevelopment funds for the acquisition of this Property is of benefit to the Earthquake Recovery Redevelopment Project Area. The Cooperation Agreement would authorize the Redevelopment Agency and Parking Authority to grant funds to the City to acquire the Property.

 

Discussion

Background

The Property consists of seven lots that total 52,500 sq. ft. One of the lots is improved with a 25,335 sq. ft. building, at 1320 Fifth Street, that the City had leased as the interim public library. The Property is located within the area identified in the Downtown Parking Strategy and Environmental Impact Report, certified by the Council May 9, 2006, as the target area for construction of additional parking resources.

 

Negotiations with the Property Owners began in October 2006, and resulted in the Offer Letter from the Property Owners to sell the Property to the City. The offer to sell states that the transaction will contain a right in favor of one or more of the Owners under Section  1033 of the Internal Revenue Code and under Section 68 of the Revenue and Taxation Code. Following execution of the Letter of Intent, the City and the Property Owners will negotiate a Purchase and Sale Agreement.   Escrow is to open within 30 days of signing the Letter of Intent.

 

As part of its due diligence, staff will conduct a Phase I environmental assessment of the property. If the tests reveal conditions that are unacceptable to the City, the City may cancel its escrow and its good faith deposit will be returned.

 

The Letter of Intent also amends the terms of a Settlement Agreement between the City and the Owners to provide for an extension on the time of building permits for approved projects at 430 Arizona and 1320 5th Street, from March 15, 2007, to May 15, 2007.  

 

Previous Council Actions

Council authorized staff to initiate negotiations with the property owner at its meeting of October 24, 2006, when it approved a Settlement Agreement with the Property Owners.

 

Environmental Analysis

The Property is located within an area studied in the Downtown Parking EIR, certified by the City Council on May 9, 2006, for the development of new parking resources. A copy of this EIR will be available on the dais at the City Council hearing on this matter and can be viewed online. None of the conditions described in CEQA Guidelines Section 15162 and 15163 have occurred which would necessitate additional environmental review.

 

Redevelopment Considerations

The City has been pursuing property acquisition for the purpose of adding public parking resources within the area bounded by Wilshire Boulevard on the north, Colorado Avenue on the south, 4th Court on the west and 6th Court on the east.  To authorize the use of Redevelopment funds, the City Council and Agency must make the appropriate determinations. The attached Resolutions (Attachments A and B) determine and find that the Project is of benefit to the Earthquake Recovery Redevelopment Project Area; no other reasonable means of financing the Project are available to the community; the payment of funds for the Project will assist in elimination of one or more blighting conditions inside the Project Area by assisting in the elimination of one or more of the conditions resulting from the 1994 Northridge Earthquake disaster; and the payment of funds for the Project is consistent with the Redevelopment Agency’s Five-Year Implementation Plan in that it helps achieve the Disaster Prevention and Mitigation and Commercial Revitalization goals as set forth in this Plan.

 

Budget/Financial Impact

The Cooperation Agreement will provide a grant to the City from the Redevelopment Agency in the amount of $27,900,000 and from the Parking Authority in the amount of $3,000,000.  The funds are available from the Redevelopment Agency at Account # C170621.589000 in the amount of $14,900,000 and Account No. C170776.589000 in the amount of $13,000,000.  Funds are available from the Parking Authority at Account No. C770776.589000 in the amount of $3,000,000 

 

 

 

Prepared by:

Miriam Mack, Economic Development Manager

 

Approved:

 

Forwarded to Council:

 

 

 

 

 

 

Andy Agle,

Director, Resource Management

 

P. Lamont Ewell

City Manager

 

 

 

Attachments:

 

Attachment A:  Resolution of The City Of Santa Monica Consenting to the Use of Agency Funds for the Acquisition of Property Located at 430 Arizona and 1324 Fifth Street, 1320 Fifth Street and 1321 Fifth Street and Making Certain Findings Pursuant To Health And Safety Code Section 33445

 

Attachment B:  Resolution of The Redevelopment Agency Consenting to the Use Of Agency Funds for the Acquisition of Property Located at 430 Arizona and 1324 Fifth Street, 1320 Fifth Street and 1321 Fifth Street and Making Certain Findings Pursuant to Health And Safety Code Section 33445

 

Attachment C:  Property Map