City Council Report 915 I Street, 1 st Floor Sacramento, CA

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1 City Council Report 915 I Street, 1 st Floor Sacramento, CA File ID: May 23, 2017 Consent Item 06 Title: (City Council/Redevelopment Agency Successor Agency) Purchase and Sale Agreement: Sale of Front Street to California Vehicle Foundation Location: District 4 Recommendation: Pass 1) a City Resolution a) approving the sale of 2200 Front Street (APN ), in the best interest of the City, to California Vehicle Foundation, and grant of a surface easement to California Vehicle Foundation for the adjacent parking lot which is a portion of 2014 Front Street (also known as a portion of Assessor Parcel Number ), for $100, and b) authorizing the City Manager or the City Manager s designee to execute the attached Purchase and Sale Agreement and related documents and take any additional necessary actions to implement the agreement; and 2) a Redevelopment Agency Successor Agency Resolution a) approving the sale of 2224 Front Street (Assessor Parcel Number ) to the California Vehicle Foundation for $70,000 and b) authorizing the City Manager or the City Manager s designee to execute the attached Purchase and Sale Agreement and related documents and take any additional necessary actions to implement the agreement. Contact: Bill Sinclair, Real Property Agent, (916) , Department of Public Works: Leslie Fritzsche, Principal Planner, (916) , Economic Development Department Presenter: None Attachments: 1-Description/Analysis 2-Location Map 3-Background 4-City Council Resolution 5-Purchase and Sale Agreement 6-RASA Resolution James Sanchez, City Attorney Shirley Concolino, City Clerk John Colville, City Treasurer Howard Chan, City Manager Page 1 of 76

2 File ID: Consent Item 06 Description/Analysis Issue Detail: The City and the Redevelopment Agency Successor Agency (RASA) own properties located at 2200 and 2224 Front Street, respectively, and the City owns a 1.73-acre adjoining parking lot which is a portion of 2014 Front Street. The parking lot and 2200 Front Street have been leased to the California Vehicle Foundation ( CVF ), operator of the California Automobile Museum ( Museum ) (formerly the Towe Auto Museum) since The approximately 70,000-square foot Museum building at 2200 Front Street was constructed in the 1950s and has significant roof and structural issues. CVF is interested in long-term operation of the Museum at this location and securing ownership of the building. Ownership of the building will significantly enhance CVF s ability to raise the funds necessary for critical improvements. The Museum is a civic amenity that is widely supported by the community and an attraction along the waterfront. Disposition of the properties to CVF for $70,100, as further described in this report, is recommended to secure the Museum as a long-term cultural amenity. Policy Considerations: The recommendations in this report are in accordance with the provisions of City Code section (A)(2). Staff recommends that the City Council provide for the sale of the property without first calling for bids by finding that such action is in the best interest of the City. The sale of the property to CVF will support the City s policy of investing in civic amenities and quality of life. It is consistent with the policy direction to enliven the Sacramento waterfront with amenities and encourage use and visitation of this important City asset. In addition, the building has structural deficiencies that need to be addressed in the near term. Sale of the property will provide the means for CVF to secure the necessary funds to complete critical repairs. The Museum is an existing use in the Docks area, but the use is inconsistent with the 2035 General Plan, the 2009 Docks Area Specific Plan, and the goals of the Waterfront Master Plan. The Museum can be viewed as an interim use and at such time as the economics of development in the Docks area change, a more intensive use and one more in line with the General Plan is envisioned. Economic Impacts: The actions recommended in this report will result in cost savings to the City for the future capital repair and maintenance of the facility. In addition, maintaining attractions along the Sacramento River waterfront will bring in additional visitors which will benefit Old Sacramento businesses, other nearby attractions, and further supports the City s range of civic amenities. City of Sacramento May 23, 2017 powered by Legistar Page 2 of 76

3 File ID: Consent Item 06 Environmental Considerations: California Environmental Quality Act (CEQA)/National Environmental Policy Act (NEPA): Under Section of the California Environmental Quality Act (CEQA) guidelines, a title transfer of City property where there is no change in its current use is categorically exempt from CEQA. Sustainability: The actions outlined in this report will result in the continued occupancy and use of the 2200 Front Street building, an outcome that comports with the City s goal of utilizing, where possible, existing structures. Commission/Committee Action: Not applicable. Rationale for Recommendation: The City-owned property located at 2200 Front Street contains an approximately 70,000 square foot building constructed in the 1950s. CVF has been leasing and operating the California Automobile Museum (formerly the Towe Automobile Museum) in the building since July The Museum attracts over 55,000 visitors annually. It serves as a showcase for an extensive collection of automobiles and displays of automobile history, is a venue for local and regional events and has been a long-standing community asset. On January 25, 2016, the City entered into a new 20-year lease for the facility. According to the lease, CVF was to raise funds for the repair/replacement of the building s failing roof structure by February 2017, estimated to be at least $750,000. CVF has raised approximately $300,000 towards that goal but have experienced difficulty in securing the remaining cash required to completely fund the roof repair. CVF has attempted to obtain a private loan for the balance of the funds and to act as a bridge to span the timing of pledge payments but CVF has faced challenges because it does not own the property and its long-term future in the location remains uncertain. Since the passage of the Docks Area Specific Plan in 2009 which called for the development of the Front Street area as a mixed-use neighborhood, the future of the Museum in the Docks Area has been unsettled. As a result, even though CVF would like the Museum to remain in place, representatives from the Museum have looked at options to relocate the facility, even considering locations outside the City limits. The CVF would ideally like to acquire fee title to the current building, use of the adjacent parking lot and fee title to the adjacent RASA parcel. The sale of the property to CVF will solidify the Museum s future and strengthen the resolve to have Front Street as its permanent home. In addition, the acquisition of the City of Sacramento May 23, 2017 powered by Legistar Page 3 of 76

4 File ID: Consent Item 06 property will provide CVF a strong base to begin an aggressive fundraising campaign to increase the capital to stabilize the building, add necessary repairs to the roof structure, remodel the exterior, and to enhance the Museum s offerings. Maintaining this Museum in its current location on Front Street is part of the City s desire to retain and further develop the Sacramento River waterfront as an active cultural and recreational corridor. The future Powerhouse Science Center, Old Sacramento Historic District, Railroad Museum, Crocker Art Museum, and the Automobile Museum form a string of attractions for visitors and locals alike. The warehouse-type Museum structure is characterized by a structural wood beam roof that is currently showing significant signs of decay and loss of structural integrity. Some short-term improvements have been made to the roof, but the repairs have been remedial and have not provided a long-term fix. In November 2015, the City contracted with Shuhaibar to do an assessment of the roof. The cost for the roof work has been estimated by City staff and roofing contractors to be between $750,000 to $1.2 million depending on the approach taken to address the structural issues and the longevity of the improvements. These estimates do not include additional work that will be needed to bring the building into compliance with new American Disabilities Act, Title 24 energy standards, or any improvements to improve the condition or functionality of the interior. Staff has estimated these costs along with the roof would exceed staff s approximate $2 million estimate of value for the property after renovation. Because of the building s condition and the interest to maintain the Museum, the recommendation is to provide the City-owned Museum parcel plus the parking lot easement to CVF for $100. The proposed Purchase and Sale Agreement includes the Museum Building at 2200 Front Street, an easement for parking across the gravel surface parking lot to the north of the building currently leased by the Museum for parking and a vacant 23,015 square foot property to the building s south owned by RASA. The RASA parcel is recommended for inclusion in the transaction because it is a residual parcel that has limited development potential as an independent parcel. The grant of an easement for parking on the adjacent parking lot will satisfy CVF s near term needs to have parking for its Museum. A sale of the parking lot to CVF now is complicated by an existing lease encumbrance on the property. This lease was provided to Sacramento Basketball Holdings for construction of a billboard on the western portion City of Sacramento May 23, 2017 powered by Legistar Page 4 of 76

5 File ID: Consent Item 06 of the parcel. Staff will endeavor to clear the encumbrance and transfer fee title to the parking lot to CVF at some point within the near future. The Purchase and Sale Agreement includes an Option Agreement allowing the City to purchase back the property at fair market value, or CVF s original purchase price for the property (i.e. $70,100 for APNs and ) plus the cost of Major Capital Improvements paid for by donations from the effective date of the Option Agreement until the date City exercises its option, whichever is greater. Financial Considerations: On February 10, 2015, the Council approved the deposit of proceeds from all City-owned assets and the City s share of proceeds from RASA-owned assets to be placed into the Innovation and Growth Fund. Therefore, the $100 in sales proceeds for the City property will be deposited into the Innovation and Growth Fund (Fund 2031). As part of the redevelopment dissolution process, RASA-owned properties are to be disposed of at fair market value. The appraisal established a value for the RASA parcel at $70,000, which is the price included in the proposed Purchase and Sale Agreement. In accordance with the redevelopment dissolution law, the proceeds from the sale of the RASA-owned parcel will be provided to the County Auditor-Controller for distribution to the taxing entities. The City s portion will be approximately 23%, $16,100, and these funds will be deposited into the Innovation and Growth Fund. Local Business Enterprise (LBE): Not applicable. City of Sacramento May 23, 2017 powered by Legistar Page 5 of 76

6 Attachment 1 City of Sacramento, GIS City of West Sacramento Sacramento River City-Owned V ST FRONT ST U ST I N T E R S T A T E 5 Pioneer Reservoir City-Owned H I G H W A Y 5 0 RASA-Owned }þ 99 5!"#$ 80!"#$ 5!"#$ }þ )* ,- )*+,- 80 5!"#$ 80!"#$ 80!"#$ 80!"#$ Aerial and Land Use Map California Automobile Museum- Proposed Site Acquisition (/ 50 }þ 99 Page 6 of 76 Feet }þ 99 Aerial Photo: 2014

7 Background Information In July, 2003, the City Council accepted the Sacramento Riverfront Master Plan, which identified the Sacramento Docks Project Area as an opportunity development site. The planning process resulted in a detailed concept plan, including a higher density residential and mixed-use neighborhood with a riverfront parkway/promenade. The City Council adopted the 2030 General Plan in March 2009 and amended the docks area from Heavy Industrial to Urban Center High. The Urban Center High designation provides areas with concentrations of uses similar to downtown. The final EIR was released on October 23, On December 15, 2009, the City Council adopted the Sacramento Docks Specific Plan (P08-058). The Specific Plan was designed to prepare the area for urban development. However, existing within the Specific Plan area is the Pioneer Reservoir, a combined storm water/sewage enclosed holding facility. This reservoir is part of the combined storm water/sewage system that conveys up to 60 million gallons per day to the Sacramento Regional Wastewater Treatment Plant. The cost to remove and replace this facility is currently estimated at $18,000,000 to $20,000,000. This cost represents a significant drag on development prospects in the Docks area. Further, the Pioneer reservoir sits on a site adjacent to 2200 Front Street. It has flooded the subject site once and outgases periodically. The fact that the Pioneer reservoir will likely remain here indefinitely makes 2200 Front Street undesirable for most commercial and residential development. Therefore, the current and proposed use of 2200 Front Street as a special use/automobile museum is the currently the site s highest and best use. However, the continued use of the site as a museum is inconsistent with Sacramento Riverfront Master Plan, the 2030 General Plan and the 2009 Docks Specific Plan. Page 7 of 76

8 RESOLUTION NO XXXX Adopted by the Sacramento City Council May 23, 2017 APPROVING AND AUTHORIZING THE SALE OF 2200 FRONT STREET AND PROVISION OF AN EASEMENT ON A 1.73 ACRE PORTION OF ASSESSOR PARCEL TO THE CALIFORNIA VEHICLE FOUNDATION BACKGROUND A. The City of Sacramento owns a 66-year old, approximately 70,000 square foot building on 2.15 acres located at 2200 Front Street (APN ), and the California Vehicle Foundation ( Foundation ) currently leases 2200 Front Street from the City for operation of the California Automobile Museum. In addition, the City owns the adjoining 1.73 acre parking lot (portion of APN ), which is also leased to the Foundation. The two properties are collectively referred to herein as the Site. B. The City desires to activate the Sacramento River Waterfront by developing and maintaining existing attractions including museums. Retention of the California Automobile Museum is part of that strategy. C. The museum building has significant structural issues, primarily with the roof, and the Foundation s ownership of the building will facilitate its ability to raise funds for these necessary repairs. Sale of the property to the Foundation without first calling for bids is in the best interest of the City due to the need to repair the building and the City s policy of investing in civic amenities and encouraging visitation to such amenities. C. The Foundation desires to acquire the City s building at 2200 Front Street and an easement for the adjoining parking lot parcel to maintain its presence on Front Street. The Foundation is undergoing a capital campaign to raise the funds necessary to improve and maintain the existing museum facility. D. The Redevelopment Agency Successor Agency owns a property to the south of the California Automobile Museum (APN ) that is surplus and that the Foundation wants to purchase. Page 8 of 76

9 BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS: Section 1. Section 2. Section 3. Section 4. The facts set forth in the Background section are correct. The City Manager or his designee is hereby authorized to execute the Purchase and Sale Agreement with California Vehicle Foundation for sale of APNs and APN , and granting of an easement on a portion of APN , in substantially in the form attached to this resolution as Exhibit A. The City Manager or the City Manager s designee is hereby authorized to execute such additional actions to implement the Purchase and Sale Agreement. The City Council hereby finds that selling the property referenced in the Purchase and Sale Agreement without calling for competitive bids is in the best interest of the City. (City Code section (A)(2)) Table of Contents Exhibit A Purchase and Sale Agreement with California Vehicle Foundation. Page 9 of 76

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75 RESOLUTION NO XXXX Adopted by the Redevelopment Agency Successor Agency May 23, 2017 APPROVING AND AUTHORIZING THE SALE OF 2224 FRONT STREET TO THE CALIFORNIA VEHICLE FOUNDATION. BACKGROUND A. The City of Sacramento owns a 66-year old, approximately 70,000 square foot building on 2.15 acres located at 2200 Front Street (APN ), and the California Vehicle Foundation ( Foundation ) currently leases 2200 Front Street from the City for operation of the California Automobile Museum. In addition, the City owns the adjoining 1.73 acre parking lot (portion of APN ), which is also leased to the Foundation. B. The City desires to activate the Sacramento River Waterfront by developing and maintaining existing attractions including museums. Retention of the California Automobile Museum is part of that strategy. C. The Foundation desires to acquire the City s building at 2200 Front Street and an easement for the adjoining parking lot parcel for $100 to maintain its presence on Front Street. The Foundation is undergoing a capitol campaign to raise the funds necessary to improve and maintain the existing museum facility. D. The Redevelopment Agency Successor Agency owns a property located at 2224 Front Street to the south of the California Automobile Museum (APN ) that is surplus and that the Foundation wants to purchase for $70,000. E. Under California Health and Safety Code Section 34181(a), the Redevelopment Agency Successor Agency is to dispose of all of its property interests. F. On December 15, 2014, the Oversight Board for the Redevelopment Agency Successor Agency approved the Long Range Property Management Plan for disposition of the properties; 2224 Front Street was designated as a property to be sold in conjunction with the adjacent City-owned parcel, 2200 Front Street. BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS: Section 1. The facts set forth in the Background section are correct. Page 75 of 76

76 Section 2. Section 3. The City Manager or his designee is hereby authorized to execute the Purchase and Sale Agreement with California Vehicle Foundation for sale of APNs and APN , and granting of an easement on a portion of APN , in substantially the form attached as Exhibit A to the accompanying City Council resolution. The City Manager or the City Manager s designee is hereby authorized to execute such additional actions to implement the Purchase and Sale Agreement. Page 76 of 76