Title
Staff Report for Resolutions Authorizing the City Manager to Execute a Purchase and Sale Agreement with BEAM Development, LLC, for Sale of Successor Agency-owned Property at 290 Davis Street, 250 Davis Street, 222 Davis Street, 212 Davis Street and 1199 E 14th Street; and for Sale of City-owned Property at 262 Davis Street, San Leandro, California.
Staffreport
SUMMARY AND RECOMMENDATIONS
Staff recommends that the City Council, serving in its capacity as the Board of Directors of the Successor Agency to the Redevelopment Agency of the City of San Leandro (Successor Agency), approve a Resolution authorizing the City Manager, acting as the Executive Director of the Successor Agency, to execute a Purchase and Sale Agreement with BEAM Development, LLC (BEAM) for sale of the following Successor Agency-owned properties in keeping with the Successor Agency’s Long Range Property Management Plan:
• 290 Davis Street (APN: 075-0001-010-02)
• 250 Davis Street (APN: 075-0001-008-02)
• 222 Davis Street (APN: 075-0001-006-00)
• 212 Davis Street (APN: 075-0001-005-00)
• 1199 East 14th Street (APN: 075-0001-004-00)
Staff also recommends that the City Council approve a Resolution authorizing the City Manager to execute a Purchase and Sale Agreement with BEAM Development, LLC, for the sale of the following City-owned property, which is adjacent to the Successor Agency-owned properties:
• 262 Davis Street (APN: 075-0001-009-02)
BACKGROUND
The properties offered for sale are a part of what is known as Town Hall Square in Downtown San Leandro. The City’s Redevelopment Agency (RDA) acquired the properties as a 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). The six Successor Agency- and City-owned properties comprise just over half an acre (0.68 acre). The entire Town Hall Square site is approximately 1.5 acres. See attached map.
The property at 290 Davis Street was acquired in 2004 for $500,000 and the building was subsequently demolished. The three other RDA owned parcels were also acquired in 2004 as part of one transaction for $735,000. The building at 1199 East 14th Street has been vacant for more than ten years and is in poor condition and assumed to have no value at this time. 262 Davis Street, the City owned parcel, was acquired from the San Leandro Chamber of Commerce as part of an exchange for title to an office condominium in the Estudillo parking garage in Downtown San Leandro. The transaction was finalized in 2012 with the opening of the garage.
Over the years, the RDA established Exclusive Negotiating Agreements with several developers for the development of Town Hall Square. These agreements expired due to the difficulty of purchasing neighboring properties and the economic downturn. The three additional properties located in the Town Hall Square area, include:
• 1145 East 14th Street (APN: 075-0001-003-00)
o White building where Union Bank is located, owned by PSK Development
• 234 Davis Street (APN: 075-0001-007-02)
o Parking lot to the rear of Union Bank building, owned by Union Bank
• 1117 East 14th Street (APN: 075-001-002-02)
o Chevron Gas Station, owned by Chevron USA Inc.
In the City’s 2007 Transit-Oriented Development (TOD) Strategy the properties were identified as a strategic development opportunity site. Additionally, the Redevelopment Agency’s 2010-2014 Implementation Plan includes a goal to redevelop the properties to “continue assisting with land assembly and design to redevelop Town Hall Square, the underutilized block bounded by Hays, Davis, and East 14th Streets in the downtown core.” Such a project has the potential to build upon additional new development in Downtown San Leandro and to positively impact the greater area.
The properties at the Town Hall Square site are among 22 properties that were owned by the Redevelopment Agency of the City of San Leandro at the time of its dissolution in February 2012 (as required by ABx1 26, amended by AB 1484 and SB 107). Pursuant to the redevelopment dissolution statutes, ownership of these properties transferred to the Successor Agency to the Redevelopment Agency of the City of San Leandro (“Successor Agency”). The City of San Leandro serves as the Successor Agency, with the City Council acting as the Board of Directors.
The Successor Agency is now responsible for disposition of properties owned by the RDA. On December 30, 2015, the California Department of Finance approved the Successor Agency’s Long Range Property Management Plan, which is the guiding document for transferring or selling the real property assets that were owned by the RDA.
Analysis
Request for Proposals
In accordance with the Long Range Property Management Plan, on November 28, 2016, the Successor Agency released a Request for Proposals (RFP) for purchase and development of the properties. The RFP included information about the City’s vision for development, zoning and other regulations, submittal requirements, and selection criteria. Respondents were requested to submit detailed proposals for development of the site, as well as information about their development team and project timeline.
The RFP was widely marketed to architects and developers, the City’s website, the San Leandro Next blog, and online commercial realty sites including OppSites, CoStar, Loopnet and ICSC (the International Council of Shopping Centers). Staff worked with Larry Bell, a Vice President at Transwestern, as the listing agent and broker for the properties. Mr. Bell assisted in marketing to potential developers and conducted outreach to over 250 developers. City staff outreached directly to approximately 50 others. The goal of the process was to ensure that a large number of qualified developers were aware of the opportunity.
Responses to the RFP were due on February 28, 2017, and two complete offers were received for this site. City staff and the listing agent held interviews with the two respondents who submitted complete applications to gain more information about their proposals for the site and development expertise. The responses proposed various mixed-use commercial and residential uses for the site. Proposals were evaluated based upon the following selection criteria:
• Proposed vision and design that works towards the goals and policies of the City
• Achievable plan to include as many of the adjacent properties as possible in the development
• Quality of development team and its experience working on high profile TODs
• Proposed price
• Financial ability to fund development
• Incorporation of sustainable design
Developer Selection
After a careful review of the offers and interviews, BEAM Development, LLC, was found to provide a proposal that best meets the selection criteria and goals for the site. The BEAM Development team has a wide array of experience, from mixed-use and TODs, to detached single-family homes, and apartment complexes. The team includes Managing Members Anita and Mukesh Bajaj, Branagh Inc Construction, Hunt Hale Jones Architects, and Ankor Design, Development & Construction, Inc.
BEAM’s goal for the project is to create “a dynamic, welcoming, high quality urban public space that will be the heart of Downtown San Leandro.” The mixed-use development proposal envisions approximately 120 residential units within four floors. Each floor would have one, two and three bedroom units ranging from 750 to 1,150 square feet. At the ground level, a vibrant two-level commercial area of up to 30,000 square feet is proposed with an open entryway plaza at the front and rear.
BEAM is recommended for the following reasons:
• BEAM has performed outreach and research and has developed a feasible plan to obtain the adjacent properties in order to create a high-impact project that redevelops the majority of the block (excluding the gas station).
• The proposal follows the City’s Transit Oriented Development (TOD) strategy goals for Downtown, which strives to ‘provide mixed-use retail and multi-family residential.’
• The proposal’s primary goal is to provide high quality residential units and provide flexible commercial space opportunities for specialty business, shopping and food service, which are identified needs in Downtown San Leandro.
• The team’s experience working in San Leandro and the surrounding area producing other high quality projects, including Garden Acres Condominiums, Ashland Place affordable housing, and the 159th Street townhome community.
• A high quality design is proposed, which builds upon the strengths of the site’s location and creates an attractive frontage in the central downtown location. An open entryway is planned for the corner of East 14th and Davis Streets, and a public plaza is proposed along Dan Niemi Way across from San Leandro Creek.
• The proposed residential units include a good share of two- and three-bedroom units, which provides a variety of housing options for the community.
• BEAM offers a price that is competitive.
Terms of Purchase and Sale Agreement
Staff prepared a Purchase and Sale Agreement based upon the following key terms:
Purchase Price: $2,100,000
Deposit: $200,000; $100,000 of which is applicable toward the sale price if the sale closes, or refundable if it does not
Due Diligence: 12 months
Extensions: Five (5) twelve (12) month extension periods, each with a $25,000 non-refundable deposit applicable towards the purchase price
Close of Escrow: Within 90 days of the last day of the extension periods or buyer’s acquisition of entitlements, whichever comes first.
The proposed terms of the Purchase and Sale Agreement take into account the fact that redevelopment of the Town Hall Square sites will be a difficult and complicated project. The purchase of the adjacent properties at 1145 East 14th Street and 234 Davis Street (with purchase of the gas station at 1117 East 14th Street not found to be feasible at this time) is necessary in order to achieve a cohesive and complete development. The Purchase and Sale Agreement requires that the developer purchase at least one of these properties prior to the sale of the Successor Agency and City properties.
The long due diligence period is proposed in order to allow BEAM sufficient time to negotiate with Union Bank, whose lease of the building at 1145 East 14th Street is understood to be through early 2022. Staff recommends that a long due diligence period be provided in order to give the developer sufficient time to ‘wait out’ the Union Bank lease, acquire both of the adjacent parcels, and develop the best project possible. A $25,000 cost to each one year extension is proposed to ensure BEAM’s continued commitment to the project.
Next Steps
The attached Resolution authorizes the City Manager, acting as the Executive Director of the Successor Agency, to execute a Purchase and Sale Agreement between the Successor Agency and BEAM Development, LLC, for sale of Successor Agency-owned properties at 290 Davis Street, 250 Davis Street, 222 Davis Street, 212 Davis Street and 1199 E 14th Street, in keeping with the Successor Agency’s Long Range Property Management Plan. Later this month, the Purchase and Sale Agreement will be brought before the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of San Leandro for approval.
A second Resolution authorizes the City Manager to execute a Purchase and Sale Agreement with BEAM Development, LLC, for sale of City-owned property at 262 Davis Street, which is adjacent to the Successor Agency-owned properties.
Following execution of the agreement, BEAM Development, LLC, will begin its due diligence period, during which it will perform additional investigations of the properties and further planning for redevelopment, including purchase of the neighboring properties. City project review will likely involve major site plan review, which will evaluate elevations, floor plans, exterior materials, landscaping details, and engineering plans. Mixed-use residential, with ground floor retail, is permitted in the DA-1-Downtown Mixed-Use Zoning District, so no additional planning entitlements are anticipated unless exceptions are requested.
Previous Actions
• On November 2, 2015, the Successor Agency approved the Long Range Property Management Plan, establishing a plan for transferring or selling the real property assets that were owned by the Redevelopment Agency.
Environmental Review
The requirement for environmental review will be determined as part of the entitlement process as plans for the site are further developed.
Legal Analysis
The Purchase and Sale Agreement with BEAM Development, LLC, was reviewed by the City Attorney and approved as to form.
Fiscal Impacts
The sale of these Successor Agency- and City-owned properties will result in new, unrestricted revenue to the City’s General Fund once the transaction is completed. Proceeds from the sale of the six parcels will be allocated on a per-square-foot basis. Proceeds from the sale of the Successor Agency-owned properties at 290 Davis Street, 250 Davis Street, 222 Davis Street, 212 Davis Street, and 1199 East 14th Street will be remitted to the Alameda County Auditor-Controller for distribution to the local taxing entities, with the City of San Leandro receiving approximately 12%. Proceeds from the sale of the City-owned property at 262 Davis Street will be paid to the City. Based upon this, the estimated revenue to the City of San Leandro is expected to be approximately $850,000, less a broker’s commission and applicable closing costs.
ATTACHMENTS
Attachment to Staff Report
• Final Proposal by BEAM Development, LLC, for purchase and development of 290 Davis Street, 250 Davis Street, 222 Davis Street, 212 Davis Street, 1199 E 14th Street, and 262 Davis Street
Attachment to Resolutions
• Purchase and Sale Agreement with BEAM Development, LLC.
PREPARED BY: Katie Bowman, Economic Development Manager, Community Development Department