Title
Recommendation to Authorize the Interim City Manager to Execute a Purchase and Sale Agreement for a Net Sales Price of $261,000 with an Additional $409,525 Infrastructure Investment for the Vacant Parcel at 2350 Fifth Street; and [SACIC]
Introduction of Ordinance Amending the Alameda Municipal Code by Amending Section 30 to Rezone Property at 2350 Fifth Street to Administrative Professional Zoning District. [City Council] (Community Development 209) [Not heard on January 2, 2019]
Body
To: Honorable Chair and Member of the Successor Agency to the Community Improvement Commission
Honorable Mayor and Members of the City Council
From: David L. Rudat, Interim City Manager
EXECUTIVE SUMMARY
The $670,525 Purchase and Sale Agreement for 2350 Fifth Street includes a negotiated sales price of $261,000 plus the required $409,525 infrastructure investment. Because the parcel has no utilities, the Buyer must install the utilities in order to have a developable parcel. In addition, the property must be rezoned from Mixed Use (MX) to Administrative Professional (AP) to allow the proposed 7,000 square foot office building to go forward without a requirement to prepare a Master Plan for a 35,719 square foot parcel (0.82 acres).
BACKGROUND
In February 2012, redevelopment agencies throughout the State were dissolved and successor agencies were established and charged with unwinding the affairs of their respective redevelopment agencies. The City’s Community Improvement Commission (CIC) was dissolved and succeeded by the Successor Agency to the CIC (Successor Agency).
Oversight Boards were created to oversee the activities of successor agencies. Effective July 1, 2018, all city oversight boards were disbanded and one oversight board per county was established to serve the oversight board function for local jurisdictions.
The Successor Agency prepared and submitted, with Oversight Board approval, a Long Range Property Management Plan (LRPMP) to the State Department of Finance (DOF). DOF approved the LRPMP which now governs the disposition of real property assets of the former CIC.
The LRPMP requires that the property located at 2350 Fifth Street (Exhibit 1) be marketed for sale with proceeds distributed among the taxing agencies. Staff has an executed letter of intent (LOI) from Loisos & Ubbelohde to purchase the property for a net purchase price of $261,000. Loisos & Ubbelohde, is an architectural firm currently located at Alameda Marina. George Loisos, the owner of Loisos & Ubbelohde, proposes to build an approximately 7,000 square foot office building on the site for his firm.
Consistent with the executed LOI, staff negotiated a purchase and sale agreement (Exhibit 2) and is recommending that the Successor Agency authorize the Interim City Manager to execute the Purchase and Sale Agreement.
In addition to the Successor Agency approving the Purchase and Sale Agreement, staff is recommending that the City Council adopt an ordinance rezoning the property to Administrative Professional to allow the office project to move forward.
DISCUSSION
Purchase and Sale Agreement
Pursuant to the LRPMP, the property at 2350 Fifth Street is the only property owned by the former CIC that is to be sold on the open market. To facilitate that process, staff had the property appraised and worked with its broker, Cushman & Wakefield, to market the property for sale. The property is an irregularly shaped, 35,719 square feet (0.82 acres) remnant parcel across from the Bayport residential development and adjacent to the College of Alameda on Fifth Street. It is sometimes referred to as the “bottle parcel” because of its shape.
Because the property is a remnant parcel there are no on-site utilities. Therefore, the buyer must pay the cost of providing those utilities to have a developable parcel. The appraised value of the property was $690,000. The appraisal is an estimate of fair market value and provides a guideline for verifying that the negotiated price is reasonable. The $670,525 purchase price of the parcel includes a $409,525 credit to cover the cost of providing the required utilities. This results in a net purchase price of $261,000. The cost of providing utilities has been verified based on construction bids received (Exhibit 3). Pursuant to state laws, these land sale proceeds will be split among the taxing entities based on their pro rata share of the property sales tax dollar. The City, as taxing entity, will receive approximately 30% of the net sales proceeds, about $78,300.
In addition to the purchase price and utilities credit, the transaction provides for:
• A $10,000 deposit upon opening escrow (refundable during the due diligence period);
• An additional $10,000 deposit upon removal of all contingencies (total of $20,000 non-refundable); and
• 180 days from approval of the Purchase and Sale Agreement to remove all contingencies, including securing design review and development plan approvals.
On June 4, 2018, the Oversight Board recommended that the Successor Agency authorize the Interim City Manager to negotiate and execute a Purchase and Sale Agreement consistent with the LOI. The disposition of this property fulfills the Successor Agency’s obligations under the LRPMP. As mentioned above, the purchaser is Loisos & Ubbelohde, an architectural firm currently located at Alameda Marina. In addition to redeveloping a remnant parcel, this transaction retains a local business and allows for its expansion. Therefore, staff recommends that the Successor Agency authorize the Interim City Manager to execute the Purchase and Sale Agreement consistent with the Oversight Board’s recommendation.
Proposed Zoning Amendment
The property is currently zoned Mixed Use - Planned Development (MX-PD). On June 25, 2018, the Planning Board voted unanimously to recommend that the City Council rezone the property as Administrative Professional (A-P), as the MX-PD zoning is not appropriate for this small parcel.
The property was originally zoned Mixed Use (MX) as part of the Bayport - Alameda Landing Development zoning amendments in 2000. Although the MX zoning allows for office uses, the MX zoning also requires a Master Plan. In 2000, a Master Plan was approved for the Bayport-Alameda Landing project, but the Alameda Landing-Bayport Master Plan does not cover the subject parcel.
According to Section 30-4.7 of the Alameda Municipal Code, the Administrative Professional zoning district is intended for areas where administrative and professional offices are appropriate and architectural office space is a permitted use. Under the Administrative Professional zoning designation, any future development of the site would be subject to Design Review approval by the Planning Board, but a Master Plan would not be required.
Given that the parcel is less than an acre in size, staff does not believe that it is appropriate to require a future owner of the property to develop a Master Plan for a mix of uses on this small site. For this reason, it is recommend that the City Council adopt an ordinance to rezone the site from MX - Mixed Use to AP - Administrative Professional as recommended by the Planning Board.
FINANCIAL IMPACT
Sale of the property at 2350 Fifth Street has a positive financial impact on the General Fund as it is anticipated that approximately $78,300 of the sales proceeds will flow to the General Fund.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
Sale of the property is consistent with State law and the approved LRPMP. The proposed rezoning is consistent with the requirements of the Alameda Municipal Code.
ENVIRONMENTAL REVIEW
Authorization to negotiate and execute a purchase and sale agreement is not considered a project pursuant to Public Resources Code section 21065 and California Environmental Quality Act (CEQA) Guidelines section 15378. Therefore, no environmental review is required.
In addition, rezoning the property to allow for a small office building is categorically exempt from the California Environmental Quality Act, pursuant to CEQA Guidelines Section 15303 New Construction of Small Structures.
RECOMMENDATION
It is recommended that the Successor Agency:
Authorize the Interim City Manager to execute a Purchase and Sale Agreement for a net sales price of $261,000 with an additional $409,525 Infrastructure Investment for the vacant parcel at 2350 Fifth Street.
It is recommended that the City Council:
Introduce an Ordinance Amending Section 30 of the Alameda Municipal Code to Rezone Property at 2350 Fifth Street to Administrative Professional Zoning District.
Respectfully submitted,
Debbie Potter, Base Reuse and Community Development Director
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Property Map
2. Purchase and Sale Agreement
3. Infrastructure Investment Bid