Title
Staff Report for Resolution Approving the Termination of Disposition and Development Agreement between the City, Acting as Successor Agency to the Redevelopment Agency of the City of San Leandro, Batarse Family Trust U.T.A and McLellan Marina, LLC
Staffreport
SUMMARY AND RECOMMENDATIONS
Staff recommends that the City, serving as Successor Agency to the Redevelopment Agency, adopt a Resolution authorizing the City Manager to execute a Termination of Disposition and Development Agreement with the Batarse Family Trust, U.T.A. and McLellan Marina, LLC, for 575 Marina Boulevard.
BACKGROUND
In 2001, the City of San Leandro Redevelopment Agency entered into a Disposition and Development Agreement (DDA) with the Batarse Family Trust U.T.A. (Batarse) for the development of an automobile dealership at 575 Marina Boulevard (property). This is the site of the former Yokota nursery. The DDA was amended in late 2001 to remove a requirement that the Redevelopment Agency retain a portion of the property to develop a road, and then again in 2002 to adjust the lot line to facilitate creation of a shared driveway.
The property was developed consistent with the DDA and a Suzuki/Mitsubishi dealership opened in 2008. The recession impacted the economic viability of the automobile dealership and in 2011, the Redevelopment Agency executed a third amendment to the DDA to approve the lease of the developed property to Paramedics Plus, the medical ambulance service provider of Alameda County.
Analysis
The property is currently in escrow and a condition of the DDA is a requirement that the Redevelopment Agency approve the sale, lease or other transfer of the property prior to June 13, 2018. Batarse and McLellan Marina, LLC, the buyer, have requested Redevelopment Agency approval of the sale. Staff recommends approval of the sale.
This request triggered staff evaluation of the remaining terms and conditions of the DDA. The DDA includes a provision that the Redevelopment Agency provide a sales tax rebate of 50% of the net sales tax generated through June 13, 2018 or up to a total of $600,000. The remaining tax rebate is $329,597.74. Should automobile sales recur on the property prior to June 13, 2018, payment of the sales tax rebate would be considered an enforceable obligation to be paid by former Redevelopment Agency tax increment. This obligation was not included on the Recognized Enforceable Obligation Payment Schedule (ROPS) of the Successor Agency because of the lease with Paramedics Plus.
As the construction and development obligations described in the DDA have been satisfied, staff recommends the City, serving as Successor Agency to the Redevelopment Agency, terminate the DDA thereby allowing the property to be sold or leased without Successor Agency approval and ending any outstanding sales tax rebate obligations: the two conditions which would otherwise remain until June 13, 2018. Termination of the DDA will not become effective until approval by the Successor Agency Oversight Board. The matter is scheduled for the May 10, 2012 Oversight Board meeting.
Previous Actions
· A Disposition and Development Agreement by and between the Redevelopment Agency of the City of San Leandro and The Batarse Family Trust, U.T.A dated May 7, 1987 was approved by the City Council on October 1, 2001.
· First Amendment to the Disposition and Development Agreement Between the Redevelopment Agency of the City of San Leandro and Batarse Family Trust, U.T.A. was approved by the City Council on November 13, 2001.
· Second Amendment to the Disposition and Development Agreement Between the Redevelopment Agency of the City of San Leandro and Batarse Family Trust, U.T.A. was approved by the City Council on April 1, 2002.
· Third Amendment to Disposition and Development Agreement was entered into on February 16, 2011
Legal Analysis
The report and recommendation have been reviewed and approved as to form by the City Attorney's Office.
ATTACHMENTS
None.
PREPARED BY: Cynthia Battenberg, Business Development Manager, Community Development Department