Title
Staff Report for Resolution Approving the Successor Agency's Long Range Property Management Plan Pursuant to Health and Safety Code Section 34191.5
Staffreport
SUMMARY AND RECOMMENDATIONS
Staff recommends that the Board of Directors of the Successor Agency to the Redevelopment Agency of the City of San Leandro (Successor Agency) approve the resolution that approves the Long Range Property Management Plan (LRPMP). The Plan outlines plans and procedures for disposing of the twenty-two properties owned by the Successor Agency.
BACKGROUND
The Redevelopment Agency of the City of San Leandro (RDA) was dissolved on February 1, 2012, pursuant to ABx1 26 (as amended by AB 1484 and SB 107). These statutes govern the dissolution of the former redevelopment agency, which includes the disposition of its former real property assets. At the time of its dissolution, the former redevelopment agency owned twenty-two parcels of real property, which are the subject of the LRPMP. Pursuant to the redevelopment dissolution statutes, ownership of the properties transferred on February 1, 2012 to the Successor Agency.
The Successor Agency is now responsible for disposition of the properties in accordance with the procedures and requirements of Redevelopment Dissolution Statutes. A key component of AB 1484 was the requirement that all successor agencies prepare a Long Range Property Management Plan governing the use and disposition of former RDA properties.
The LRPMP must be approved by the Successor Agency Oversight Board and the California Department of Finance (DOF). Oversight Board review will take place in November 2015 and the report will be submitted to the DOF immediately thereafter. Health and Safety Code (HSC) section 34191.3 (a) requires the DOF to approve LRPMPs by January 1, 2016. After the Plan is approved by the DOF, the Successor Agency’s properties will be placed in a Community Redevelopment Property Trust Fund, consistent with State law.
Section 34191.5 of the HSC dictates that the LRPMP must include an inventory of the Successor Agency properties to include the information below.
1. Date the property was acquired and value at the time of acquisition.
2. Purpose for the acquisition.
3. Parcel data, including address, lot size, and current zoning in the former agency redevelopment plan or specific, community, or general plan.
4. Estimate of the current value of the parcel including, if available, any appraisal information.
5. Estimate of any lease, rental, or any other revenues generated by the property, and a description of the contractual requirements for the disposition of those funds.
6. History of environmental contamination, including designation as a brownfield site, any related environmental studies, and history of any remediation efforts.
7. Description of the property’s potential for transit-oriented development and the advancement of the planning objectives of the successor agency.
8. A brief history of previous development proposals and activity, including the rental or lease of the property.
9. The intended use or disposition of the property, which could include
a. Retention of the property for governmental use,
b. Retention of the property for future development,
c. Sale of the property, or
d. Use of the property to fulfill an enforceable obligation.
A prerequisite for submittal of the LRPMP is DOF issuance of a Finding of Completion. Pursuant to HSC Section 34179.7, the DOF will issue a finding of completion to the Successor Agency, within five business days, once the following conditions have been met and verified:
1. The successor agency has paid the full amount as determined during the due diligence reviews and the county auditor-controller has reported those payments to the Department of Finance. And
2. The successor agency has paid the full amount as determined during the July True-Up process. Or
3. The successor agency has paid the full amount upon a final judicial determination of the amounts due and confirmation that those amounts have been paid by the county auditor-controller.
The San Leandro Successor Agency disputed the DOF’s payment demands related to the due diligence review process (#1 above) and the matter was subsequently the subject of litigation. This resulted in a multi-year delay in the Agency’s ability to submit the LRPMP and therefore a delay in the Agency’s ability to dispose of its real estate assets. The matter was resolved earlier this year and the DOF issued a revised payment demand on June 23, 2015. An appropriation to make that payment was approved by the City Council on October 19, 2015. Staff submitted a request for a Finding of Completion on October 20, 2015 and the Finding of Completion is expected to be received in advance of the Successor Agency and Oversight Board meetings to consider approval of the LRPMP.
Analysis
As noted above, the Redevelopment Agency owned 22 properties at the time of its dissolution. Those properties, along with their intended disposition, are summarized in the following table:
|
Properties to Be Sold for Development |
|
# |
APN |
ADDRESS |
|
1 |
075 0001 010 02 |
290 Davis Street |
|
2 |
075 0001 004 00 |
1199 East 14th Street |
|
3 |
075 0001 005 00 |
212 Davis Street |
|
4 |
075 0001 006 00 |
222 Davis Street |
|
5 |
075 0001 008 02 |
250 Davis Street |
|
6 |
075 0005 011 01 |
1595 Washington Avenue |
|
7 |
075 0005 012 00 |
268 Parrott Street |
|
8 |
079A 0568 005 00 |
2101 Marina Boulevard |
|
Properties Transferred to the City for Governmental Use |
|
# |
APN |
ADDRESS |
|
9 |
077 0545 026 02 |
Washington Ave & West Juana Ave |
|
10 |
077 0545 015 00 |
135 West Joaquin Ave |
|
11 |
077 0545 009 00 |
Washington Ave & Joaquin Ave |
|
12 |
077 0545 010 00 |
Washington Ave & Joaquin Ave |
|
13 |
077 0545 024 01 |
1490 Washington Avenue |
|
14 |
077 0545 025 00 |
1446 Washington Avenue |
|
15 |
077 0545 018 00 |
1433 East 14th Street |
|
16 |
075 0226 006 00 |
West Juana Ave & Hays Street |
|
17 |
079A 0295 002 17 |
Burrell Field - Aladdin Avenue |
|
18 |
077A 0655 001 00 |
1193 Warden Avenue |
|
19 |
075 0036 058 00 |
Carpentier Street |
|
20 |
077D 1499 001 00 |
14901 East 14th Street |
|
21 |
077A-0649-008-25 |
2512 Davis Street |
|
State Controller Allowed Housing Assets Transfer |
|
# |
APN |
ADDRESS |
|
22 |
077E-1525-003-09 |
13664 East 14th Street |
Properties to Be Sold for Development
As described more fully in the LRPMP, eight properties will be sold for future development, and are therefore the most significant assets of the former RDA. These properties were acquired by the former Redevelopment Agency with specific plans for development consistent with City and Agency planning objectives; however the Agency was dissolved by the State before those plans could be realized. These eight properties fall into three groups:
1. Town Hall Square (properties #1-5): The RDA acquired these parcels as part of an effort to assemble the entirety of the block bounded by East 14th Street, Davis Street and Hays Street (now known as Dan Niemi Way). Collectively, the block is known as Town Hall Square and constitutes an opportunity site for mixed use development in Downtown San Leandro. The five Successor Agency parcels comprise just over half an acre. The entire Town Hall Square site is approximately 1.5 acres.
2. Washington Avenue and Parrott Street Properties (properties #6 and #7): The properties at 268 Parrott Street and 1595 Washington jointly comprise a 0.42 acre development site. The RDA purchased 1595 Washington from the East Bay Municipal Utility District in 2004. After being purchased by the City of San Leandro in 1998, 268 Parrott was subsequently transferred to the RDA so that the properties could be developed together. The conveyance agreement for the transfer of 268 Parrott stipulates that “when Agency thereafter disposes of the Property to another party, any and all funds Agency derives from such disposition of the Property shall be paid to City.”
3. Former Fire Station #11 (property #8): In 2003, Fire Station #11 was relocated from 2101 Marina Boulevard to another location. The building was used as a fire house from the 1950s until the late 1990s-2000s. The parcel at 2101 Marina Boulevard is 0.35 acres and located in a district that includes commercial, industrial, and residential uses. The parcel was conveyed from the City to the RDA in 2003 so that the RDA could sell the parcel for development. The conveyance agreement stipulates that “when the Agency disposes of the Property to another party, any and all funds the Agency derives from such disposition of the Property shall be paid to the City.”
For each of these three project areas, the Successor Agency proposes to sell the properties for development through an RFP process. An RFP process will enable the Successor Agency to market the sites widely to potential developers. The Successor Agency Board of Directors and Oversight Board will then be able to select a buyer that is best positioned to maximize value for the community. Through this process, the Agency will ensure that it receives fair market value, consistent with State law, and also achieves development projects that advance broader community goals. In the case of Town Hall Square, it is expected that priority will be given to developers that demonstrate the ability to acquire adjacent properties and deliver a cohesive project that is consistent with the goals of the City’s Transit Oriented Development Strategy.
Once the properties are sold, the sale proceeds will be remitted to the Alameda County Auditor-Controller for distribution to the local taxing entities. The funds will be allocated to the taxing entities in proportion to the share of property tax that each agency receives. As one of the taxing entities, the City of San Leandro will receive approximately 12% of the sale proceeds. The two exceptions to this arrangement are 268 Parrott Street and 2101 Marina Boulevard. For those properties, prior agreements between the City and the RDA committed 100% of the proceeds to the City.
Properties to Be Transferred/Sold to the City for Governmental Use
Since its creation in 1960, the RDA either acquired or created several parcels that were held for governmental purposes. The properties tend to be public plazas, parking lots, and pieces of right-of-way that serve the public interest but do not have potential for private development. Although the Successor Agency now has an obligation to dispose of all its real property assets, the dissolution laws contain a provision for transfer or sale of properties to the City if they are used for a legitimate governmental use. Thirteen properties fall into this category for the San Leandro Successor Agencies. Of those, all but one have been determined to have no market value and are therefore proposed to be transferred at no cost.
As described more fully in the LRPMP, the governmental use properties have been classified as follows:
1. Plaza Pedestrian Walkways (properties #9 and #10): These properties were acquired by the RDA to implement the Plaza Redevelopment Plan. The Plan called for improvement to the downtown pedestrian experience with plazas, landscaping, fountains, lighting, benches and decorative paving. All of these improvements exist within these two parcels which are integral to pedestrian circulation. They provide a path from Joaquin Plaza toward Washington Avenue without having to walk in parking lots. These properties have no development potential and are proposed to be transferred to the City at no cost.
2. Plaza Public Parking Lots (properties #11-15): These parcels were acquired by the RDA to improve downtown parking and traffic circulation. All together they provide 92 parking spaces. Maintenance and operation of these parcels and the adjacent shopping center are governed by an agreement executed in 1981 that precludes construction of any buildings “except as shall have been approved by the Parties and Safeway Stores.” Therefore, these properties have no development potential. The Successor Agency proposes that these parcels be transferred to the City of San Leandro at no cost for continued use as public parking lots. Pursuant to HSC Section 34181(a), these parcels qualify as governmental use because they do not generate income and therefore have maintenance cost in excess of revenue.
3. Corner Parcel at West Juana Ave. & Hays St. (property #16): This corner parcel consists of 256 square feet of landscaping located at the back corner of the Safeway building. It has no development potential and is proposed to be transferred to the City at no cost.
4. Burrell Field Sign - Public Park (property #17): In 1996, the City created a 456 square foot parcel contained wholly within the San Leandro Ball Park adjacent to Burrell Field. The parcel was then conveyed to the Redevelopment Agency at no cost for development of a sign promoting the nearby Auto Mall. In 1997, the RDA executed a lease with the Batarse Family Trust that permitted construction of the sign. The lease does not require any rent payments through 2017. Beginning in 2017, the lessee is required to make annual payments “equal to 10% of the land value of the Premises, which shall reflect the unique value of the Premises as the site of a reader board sign for retail purposes.” Because the lease will ultimately generate some revenue, it is not feasible to transfer this property at no cost. Therefore, the LRPMP proposes that the City purchase the property for fair market value. Staff has included a very preliminary estimate of $200,000 in the LRPMP, however an appraisal will be conducted prior to any transaction. The appraisal will take into account he condition of the sign.
5. 1193 Warden Ave. - Public Park (Property #18): The RDA purchased the property in 1995, removed the existing dilapidated single-family home and constructed a neighborhood entry sign for the Davis-West neighborhood. The RDA also improved the remaining portions of the property with landscaping and wider sidewalks along Warden Avenue and Davis Street. The pocket park with the neighborhood entry sign serves to buffer the residential area from the busy Davis Street commercial corridor and I-880 intersection. The Successor Agency proposes that this property be transferred to the City of San Leandro as a governmental use at no cost.
6. San Leandro Creek Walk (Property #19): This property was part of the City’s former corporation yard. In 2000, the RDA sold the property to the Creekside Partners to develop an office project. The Development Agreement required the developer to construct, operate, and maintain a public walking trail along the bank of the San Leandro Creek. The Creek Walk was subsequently established as a separate parcel and re-conveyed back to the RDA in 2001. The Successor Agency proposes that this parcel be transferred to the City at no cost as a governmental use as the property is used for a public park.
7. 2512 Davis Street - Eden Road (property #20): This property is the final link for the future Eden Road improvement project. By paving the road and constructing an “L” connection back to Davis Street, the City will create safe, efficient access to properties that have been landlocked and therefore blighted. The Successor Agency proposes that this property be transferred to the City as a governmental use in order to complete the project. The property does not hold any market value because it will serve as future road right-of-way.
8. 14901 East 14th St. - Triangle Property (property #21): This property was acquired in 2009 to provide right-of-way for the East 14th Street/Hesperian Boulevard/150th Avenue Intersection Improvement Project. Although the primary purpose of the acquisition was to support a traffic re-configuration project to enhance vehicular safety, the remaining area of the parcel is planned for a passive public park featuring landscaping, public art, and walkways. The Successor Agency proposes that this parcel be transferred to the City as a governmental use at no cost in order to complete the traffic project and passive park improvements.
State Controller Allowed Housing Asset Transfers
When the City elected to serve as Successor Agency to the Redevelopment Agency in 2012, it also took on the function of Housing Successor. Consistent with State law, the Agency submitted a Housing Asset Transfer Report on July 31, 2012 detailing all assets that would be transferred to the Housing Successor as part of this transition. That report was approved by the DOF on August 31, 2012 and included one real estate asset.
1. 13664 East 14th St - Casa Verde (property #22): This property, the former Islander Motel, was purchased by the Redevelopment Agency in 2005 for $4,500,000 for the purpose of converting it into an affordable housing project. The property was subsequently renovated and re-opened as Casa Verde. The project eliminated a significant source of blight and now offers 67 units of affordable rental housing. A 2007 Regulatory Agreement dictates that the property remain affordable housing for the long-term. The property will be transferred to the City, in its capacity as the Housing Successor, at no cost.
Next Steps and LRPMP Submittal
The LRPMP will be reviewed and considered for approval by the Successor Agency Oversight Board shortly after approval by the Successor Agency Board of Directors. The Plan will then be submitted to the DOF for review. HSC section 34191.3 (a) requires the DOF to approve LRPMPs by January 1, 2016. For many agencies, the DOF has required amendments and revisions to the LRPMPs, so it is possible that additional approval by the Successor Agency and Oversight Board will be required later this year.
Senate Bill 107, passed by the State Legislature in September, added HSC section 34191.5(f), which states that Oversight Board actions to implement the disposition of property pursuant to an approved LRPMP shall not require review by the DOF. Therefore, once the plan is approved, the Successor Agency will not need to seek additional State approvals to implement it.
Once the LRPMP is approved, staff will work to expeditiously implement the plan by disposing of assets. The properties to be transferred to the City at no cost will be relatively straightforward transactions that can be processed reasonably quickly. For properties that will be sold for development, staff will begin preparation of RFPs, while also taking steps to ensure that the process coincides with the ongoing General Plan update. Therefore, it may be prudent to wait a few months to ensure that properties are marketed with clear and well-defined understanding of the allowed uses and development characteristics. Lastly, because the City’s acquisition of the Burrell Field Reader Board site will require a funding appropriation, staff anticipates returning to the City Council with a funding proposal early in 2016.
Previous Actions
• On January 9, 2012, the City Council approved Resolution No. 2012-001 electing to serve as Successor Agency to the Redevelopment Agency.
Legal Analysis
The Long Range Property Management Plan and the Resolution have been reviewed by the City Attorney and approved as to form.
Fiscal Impacts
Of the 14 properties that will be transferred to the City of San Leandro or the City in its capacity as Housing Successor, the LRPMP proposes to transfer 13 at no cost. These properties generally have no value as they are for governmental use and do not have private development potential. Property #17, the site of the Burrell Field Reader Board Sign, will require purchase by the City at fair market value. The Successor Agency estimates that value to be $200,000, however this amount is subject to an appraisal and further refinement. This transaction will require a funding appropriation in the future as funds have not been identified at this time.
For the six of the eight properties that will be sold for development, the sale proceeds will be remitted to the Alameda County Auditor-Controller for distribution to the local taxing entities. The funds will be allocated to the taxing entities in proportion to the share of property tax that each agency receives. As one of the taxing entities, the City of San Leandro will receive approximately 12% of the sale proceeds. Staff estimates that the City will receive approximately $140,000 from these sales.
The two exceptions to this arrangement are 268 Parrott Street and 2101 Marina Boulevard. For those properties, prior agreements between the City and the RDA committed 100% of the proceeds to the City. Staff estimates that the City will receive $450,000 from the sales.
All estimates of sale values are extremely preliminary and will be subject to additional refinement and changing market conditions.
ATTACHMENT
Attachment to Resolution
• Long Range Property Management Plan
PREPARED BY: Jeff Kay, Business Development Manager, Community Development Department