Title
Recommendation to Authorize the City Manager to Execute a Purchase and Sale Agreement with Branagh Land, Inc., a California Corporation, for a Net Sales Price of $1,000,000 for the 0.82 Acre Vacant Parcel at 2350 Fifth Street. (Community Development 207)
Body
To: Honorable Chair and Members of the Successor Agency to the Community Improvement Commission
EXECUTIVE SUMMARY
Pursuant to the Long Range Property Management Plan (LRPMP), the parcel at 2350 Fifth Street is the only property owned by the former Community Improvement Commission (CIC) that is to be sold on the open market. Because the property is listed on the LRPMP and designated for sale, it is subject to the Surplus Lands Act, as recently amended; compliance with the Surplus Lands Act is discussed in more detail below. The Purchase and Sale Agreement with Branagh Land, Inc. for this 35,719 square foot (0.82 acres) undeveloped parcel with no utilities, has an “as-is” purchase price of $1,000,000. Staff recommends that the Successor Agency authorize the City Manager to execute the Purchase and Sale Agreement.
BACKGROUND
In February 2012, redevelopment agencies throughout the State were dissolved via State legislative action and successor agencies were established and charged with unwinding of the affairs of their respective redevelopment agencies. The City of Alameda’s (City) 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 negotiated a purchase and sale agreement with Branagh Lands, Inc. and recommends that the Successor Agency authorize the City Manager to execute the Purchase and Sale Agreement (Exhibit 2).
DISCUSSION
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 the parcel to have a developable parcel. The appraised value of the property, $540,000, provided an estimate of fair market value and a guideline for verifying that the negotiated purchase price of $1,000,000 is reasonable. The appraisal and addendum update is attached as Exhibit 3. Pursuant to state laws, the 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 a taxing entity, will receive approximately 30% of the net sales proceeds, which is about $300,000.
In addition to the purchase price, the transaction provides for:
• A $50,000 initial deposit upon opening escrow (refundable during the due diligence period);
• A 90-day due diligence period;
• A 15-month escrow period following expiration of the due diligence period; and
• An option to extend closing for up to ninety (90) days beyond the fifteen (15) months after the due diligence period expires in consideration of a $50,000 extension deposit, which is applied to the purchase price at closing if closing occurs.
The purchaser is Branagh Land, Inc., which was established in 2017 to procure land for development opportunities for Branagh Development. Branagh Development has been a construction and development firm serving the Bay Area since 1986, specializing in residential, commercial, and mixed-used projects.
During the 15-month escrow period, Branagh Land, Inc. will work to secure entitlements to build a residential townhome development on the property.
ALTERNATIVES
Staff recommends that the Successor Agency authorize the City Manager to execute a Purchase and Sale Agreement consistent with the Oversight Board’s recommendation attached as Exhibit 2.
Alternatives include:
-Direct staff to renegotiate terms of the purchase and sale agreement. Under this alternative, staff would continue to negotiate purchase and sales agreement terms with Branagh Land, Inc. based on City Council direction.
-Direct staff to seek other prospective buyers. If Branagh Land, Inc. is not the preferred purchaser, staff would market the property to other prospective buyers.
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 $300,000 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.
SURPLUS LANDS ACT
The property is subject to the Surplus Lands Act, as recently amended, because it is listed in the LRPMP and designated therein for sale. However, because the property will be subject to a legally binding agreement, the PSA, prior to December 31, 2020 and the closing of the sale will be completed before December 31, 2022, the disposition process applicable to this property is the process that was in place prior to the recent amendments to the Surplus Lands Act, which were those in the California Redevelopment Law. The disposition complies with those provisions as well as the requirements of the Redevelopment Dissolution Law.
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.
CLIMATE IMPACTS
This action has no anticipated climate impacts.
RECOMMENDATION
Authorize the City Manager to execute a purchase and sale agreement with Branagh Lands, Inc., a California corporation, for a net sales price of $1,000,000 for the vacant parcel at 2350 Fifth Street.
CITY MANAGER RECOMMENDATION
The City Manager recommends authorization of the City Manager to execute a purchase and sale agreement.
Respectfully submitted,
Debbie Potter, Community Development Director
By,
Lorie Curtis, Real Estate Technician
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Property Map
2. Purchase and Sale Agreement
3. Appraisal and Addendum Update
cc: Eric Levitt, City Manager