Staff Report. Victoria Walker, Director of Community and Economic Development

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1 7.a Staff Report Date: July 11, 2017 To: From: Reviewed by: Prepared by: Subject: City Council Valerie J. Barone, City Manager Victoria Walker, Director of Community and Economic Development John Montagh, Economic Development Manager (925) Considering adoption of Resolution No approving a Purchase and Sale Agreement with Carlton Senior Living LLC for City owned property located at Harrison and Sutter Street (APN ) and authorizing the Mayor to execute all documents, deeds, and similar instruments needed to complete the transaction in a form acceptable to the City Attorney. Approving the Purchase and Sale Agreement is not a "Project as defined by the California Environmental Quality Act (CEQA) pursuant to Public Resources Code sections and and CEQA Guidelines sections 15060, 15352, or Report in Brief The City of Concord ( City ) owns a 9,600 square foot (0.22 acre) vacant parcel at the corner of Sutter and Harrison Streets ( City Property ). Carlton Senior Living LLC (Carlton) owns and operates the Carlton Concord Senior housing facility ( Senior Facility ) located at 1700 Broadway ( Carlton Property ). The Carlton Property is adjacent to the City Property. Carlton desires to (i) purchase the City Property for its appraised full fair market value, (ii) purchase an adjacent privately-owned parcel (2051 Harrison Street, Concord CA) ( Harrison Property ) from an unrelated third party, (iii) merge the City Property, the Harrison Property, and the Carlton Property into a single parcel, and (iv) expand the Senior Facility by developing on the merged parcel a new memory care unit for seniors. A map of these parcels is included as Attachment 1 to this report. Page 1 of 40

2 City Council Agenda Report Agenda Item No. 7.a July 11, 2017 Recommended Action Adopt Resolution No (Attachment 2) approving the proposed Agreement and authorizing the Mayor to execute all documents needed to complete the transaction, and further authorizing the Mayor to execute all documents, deeds, and similar instruments needed to complete the transaction in a form acceptable to the City Attorney. Background On April 27, 1981, the Concord Redevelopment Agency approved expenditure of funds for the acquisition of the City Property. It is currently zoned High Density Residential which allows for compact, high density multifamily residential development, including apartments, townhomes and condominiums at densities ranging from 33 to 100 dwelling units per acre. The City Property and the Harrison Property are identified as a Housing Opportunity Site in the City s Housing Element. Carlton has not submitted an application for any project to the City. However, the Carlton ownership have stated that they intend to expand the Senior Facility to include approximately 30 new memory care units. The contemplated expansion will not negatively impact the City s ability to meet its Regional Housing Needs Assessment goals. Moreover, the development of approximately 30 senior memory care units would achieve Housing Element Goals and policies, including to: Promote a balanced supply of housing types, densities, and prices to meet the needs of all income groups residing or who wish to reside in the City. Promote the expansion of housing opportunities for all special needs groups, including seniors, female-headed households, people with disabilities, first-time homebuyers, large families, and homeless individuals and families. Strive for equal housing opportunity and access for all people regardless of race, religion, gender, marital status, age, ancestry, national origin, color, sexual orientation, familial status, source of income, or disability. Promote parcel consolidation to facilitate the assembly of new housing sites. Encourage senior housing developments to be located in areas that are convenient to shopping and other services, including public transit services, and/or to provide transit services (e.g., van shuttles) for their residents. Carlton is a Concord-based business that owns and operates 11 senior living communities throughout Northern California. It has owned and operated the Senior Facility since The Senior Facility has 153 senior dwelling units. Thirty-one of its units are offered at below market rents per a deed restriction imposed by the former Concord Redevelopment Agency. Staff commissioned a fair market appraisal for the City Property from Smyers & Krauss Appraisal Consultants which was funded by Carlton. Carlton has offered to purchase Page 2 of 40

3 City Council Agenda Report Agenda Item No. 7.a July 11, 2017 the City Property for its appraised fair market value of $380,000 subject to the terms and conditions set forth in the proposed Agreement. On May 17, 2017, the City s Planning Commission adopted Resolution No 17-12PC determining, among other things, that the proposed disposition of the City Property is consistent with the Concord 2030 General Plan (See Gov. Code 65402). Analysis Carlton desires to expand the Senior Facility by acquiring the City Property and the Harrison Property. Carlton intends to demolish the improvements on the Harrison Property and to merge the Carlton Property, the City Property, and the Harrison Property into a single parcel. The proposed expansion would include an approximately 30-unit memory care community and ancillary improvements. The proposed expansion will require Carlton to obtain City approval of an amendment to its existing use permits and design review. Staff commissioned a fair market appraisal for the City Property from Smyers & Krauss Appraisal Consultants. Carlton has offered to purchase the City Property for its appraised fair market value. Government Code sections and 37351, authorizes the City to dispose of real property for the common benefit and for the benefit of the City. In addition, Government Code section authorizes the City to sell property to create an economic opportunity. A Government Code Section report is attached as Attachment 4. The City Property is not surplus land according to City records or within the meaning of Government Code Section Staff supports the sale of the City Property to Carlton for expansion of its existing senior housing community for the following reasons: It will provide additional needed senior and memory care housing in Concord; It supports the City s Economic Vitality Strategy by assisting an existing business and its desired expansion; The proposed use is consistent with the City Property s General Plan land use designation and zoning for High Density Residential development; The City Property and the Harrison Property are designated as a Housing Opportunity Site in the Housing Element. Development of the City s Property as anticipated will support the Housing Element Goals and Policies including: H-1; H-3; H4 H1.2.1 H1.5.3 and H.3.2; Carlton has agreed to purchase the City Property for its appraised full fair market value; and Page 3 of 40

4 City Council Agenda Report Agenda Item No. 7.a July 11, 2017 Carlton intends to hire more staff associated with the expansion of services, creating jobs within Concord. The key deal points of the proposed Agreement (Attachment 3) include: Purchase price $380,000; Deposit $19,000; Carlton shall apply to merge the Carlton Property, the City Property and the Harrison Property into a single parcel prior to closing. A Certificate of Compliance for Lot Merger shall be recorded at closing; The transaction shall close by December 31, However, this date may be extended by the mutual agreement of both parties; and Carlton is purchasing the City Property as-is. Financial Impact Funds the City receives from the sale of the City Property will be considered one-time funds, subject to the Fiscal Sustainability Ordinance (Chapter 3.20 of the Concord Municipal Code). The City Council typically does not allocate one-time funds until they are received and the allocation is done as part of the Mid-Year Budget Update process conducted in February of each year. Government Code section requires the City to prepare and make publicly available a report disclosing certain information regarding property sold to create an economic opportunity. Staff has prepared the report (Attachment 4) and it is available at the City Clerk s office. Environmental Determination The approval of the Agreement is exempt from the requirements of CEQA because this action does not constitute approval of a Project as defined by CEQA. Approval of the Agreement does not commit the City to approving a project nor constitute an entitlement for use of a project. Per the Agreement, the City will conduct a review of all discretionary permit applications, including CEQA-compliance, at such time that Carlton submits such applications and a project description sufficient for the City to conduct the analysis required by CEQA. Therefore, this action is not approval of a Project, as defined by Public Resources Code sections and or CEQA Guidelines sections 15060, 15352, and Public Contact The City Council Agenda was posted and public notice was provided as required by law. Page 4 of 40

5 City Council Agenda Report Agenda Item No. 7.a July 11, 2017 Attachments 1. Map of the Parcels 2. Resolution No Proposed Purchase and Sale Agreement 4. Government Code section Report Page 5 of 40

6 ATTACHMENT 1 Carlton Senior Living Facility 2051 Harrison St. property under contract by Carlton City Property Harrison/Sutter Page 6 of 40

7 ATTACHMENT BEFORE THE CITY COUNCIL OF THE CITY OF CONCORD COUNTY OF CONTRA COSTA, STATE OF CALIFORNIA A Resolution Approving An Agreement of Purchase and Sale And Initial Escrow Instructions Between The City of Concord, As Seller, And Carlton Senior Living LLC, As Buyer, For Assessor s Parcel No (Northwest Corner of Sutter Street and Harrison Street), City of Concord, CA Resolution No / WHEREAS, the City of Concord, a municipal corporation and general law city duly organized and existing under and pursuant to the Constitution and laws of the State of California ( City ) is authorized to dispose of real property for the common benefit (Gov. Code 37350); and WHEREAS, the City is also authorized to control, dispose of, and convey public property for the benefit of the city (Gov. Code 37351); and WHEREAS, the City is also authorized to sell property to create an economic opportunity (Gov. Code 52201); and WHEREAS, the City is the owner of that certain unimproved real property consisting of approximately 9,600 square feet, in the City of Concord, County of Contra Costa, State of California, located at the northwest corner of Sutter Street and Harrison Street, and designated as Assessor s Parcel No ( Property ); and WHEREAS, Carlton Senior Living LLC ( Carlton ), owns and operates 11 senior living communities in Northern California, including an existing Concord facility located directly adjacent to the Property at 1700 Broadway Street, Concord, California; and WHEREAS, Carlton s existing Concord facility contains 152 apartments, 31 of which are restricted to low income seniors; and WHEREAS, Carlton desires (i) to purchase the Property from the City for its appraised full fair market value, (ii) to purchase an adjacent privately-owned parcel (2051 Harrison Street, Concord CA) from an unrelated third party, (iii) to subsequently merge those two parcels and Carlton s existing parcel into a single parcel, and (iv) to expand Carlton s existing facility by developing on the expanded merged lot a new memory care unit for seniors ( Proposed Project ); and 28 Res. No Page 7 of 40

8 ATTACHMENT WHEREAS, a fair market appraisal prepared by Smyers & Krauss Appraisal Consultants and determined that the Property s fair market value is $380,000; and WHEREAS, pursuant to Government Code section 65402, on May 17, 2017, the City Planning Commission adopted PC Resolution No PC and found the sale of the Property to Carlton to be consistent with the City s General Plan; and WHEREAS, the Property is not surplus land according to City Records, or within the meaning of Government Code Section because the sale is necessary to create an economic opportunity, will provide a common benefit, and will provide a benefit to the City, as further described in the staff report and attachments; and WHEREAS, City staff have negotiated with Carlton a proposed Agreement of Purchase and Sale and Initial Escrow Instructions ( Agreement ), which is attached to the staff report and incorporated by reference herein, for City s sale of the Property to Carlton; and WHEREAS, at its duly noticed public meeting on July 11, 2017, the City Council considered the oral and written staff reports; pertinent information, materials and testimony; and the foregoing recitals; and thereafter expressed its desire to make the findings, take the actions, and grant the approvals and authorizations identified below. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CONCORD DOES RESOLVE AS FOLLOWS: Section 1. The forgoing recitals, staff report dated July 1127, 2017, and all attachments thereto are hereby incorporated by reference. The City Council hereby finds and determines that the foregoing recitals are true and correct and constitute finding in this matter. Section 2. The approval of the Agreement is exempt from the requirements of CEQA. Approval of the Agreement does not commit the City to approving a project nor does it constitute an entitlement for use of a project. Therefore, this action is not approval of a project, as defined by Public Resources Code Sections and or CEQA Guidelines Sections 15060, 15352, and Res. No Page 8 of 40

9 ATTACHMENT Section 3. Consistent with the findings memorialized in PC Resolution No PC, the City Council hereby finds that the disposition of the Property to Carlton as contemplated by the Agreement will promote the following Housing Element Goals and Policies: Promote a balanced supply of housing types, densities, and prices to meet the needs of all income groups residing or who wish to reside in Concord; Promote the expansion of housing opportunities for special needs groups, including seniors and people with disabilities; Promote equal housing opportunity and access for all people regardless of race, religion, gender, marital status, age, ancestry, national origin, color, sexual orientation, familial status, source of income, or disability; Promote parcel consolidation to facilitate the assembly of new housing sites; and Encourage senior housing developments to be located in areas that are convenient to shopping and other services, including public transit services. Section 4. The disposition of the Property as described in the Agreement will provide numerous benefits for the City and the community by enabling the potential expansion of Carlton s facility to one capable of providing a full continuum of quality care for seniors, and offering Concord seniors in need of memory care the opportunity to receive such care within the City. Accordingly, the City Council hereby finds and determines that the disposition of the Property as described in the Agreement is for the common benefit and the benefit of the City. Section 5. The City Council hereby determines based on the evidence in the record that the proposed sales price of $380, is not less than the fair market value of the Property at its highest and best use. Section 6. The City Council hereby approves and authorizes the Mayor or her designee, to execute and enter into the Agreement in substantially the form attached to the staff report, with such further minor conforming, technical or clarifying changes or revisions as may be agreed to and approved by the City Attorney, which do not materially increase the obligations of the City thereunder. The Mayor or her designee and the City Clerk are further authorized and directed to take 28 Res. No Page 9 of 40

10 ATTACHMENT such further actions and execute such documents on behalf of the City as are necessary to carry out the transaction contemplated by the Agreement on behalf of the City, including without limitation, all actions and documents necessary for the sale of the Property pursuant to the Agreement. The City Manager is hereby authorized to extend deadlines and other time periods in the Agreement as she may deem necessary or appropriate. Section 7. This resolution shall become effective immediately upon its passage and adoption PASSED AND ADOPTED by the City Council of the City of Concord on July11, 2017, by the following vote: AYES: Councilmembers - NOES: Councilmembers - ABSTAIN: Councilmembers - ABSENT: Councilmembers I HEREBY CERTIFY that the foregoing Resolution No was duly and regularly adopted at a regular meeting of the City Council of the City of Concord on July 11, APPROVED AS TO FORM: Susanne Meyer Brown City Attorney Joelle Fockler, MMC City Clerk 28 Res. No Page 10 of 40

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39 Attachment 4 Government Code Section Report for Sale of Real Property Located at Harrison and Sutter Streets (APN ) Government Code section requires the City of Concord ( City ) to prepare a report disclosing certain information regarding property sold to create an economic opportunity. (See Gov. Code 52201(a)(2).) A copy of the proposed Purchase and Sale Agreement for that certain unimproved real property consisting of approximately 9,600 square feet, and located at the corner of Harrison and Sutter Streets (APN: ) City of Concord, County of Contra Costa, State of California (the Property ) is attached hereto as Exhibit A. Accordingly, the City hereby discloses the following information regarding the proposed sale of the Property to Carlton Senior Living LCC ( Carlton ): Land acquisition costs (Gov. Code 52201(a)(2)(B)(i)): Staff believes the purchase price for land was $102,800. Clearance costs (Gov. Code 52201(a)(2)(B)(i)): Unknown. Staff could not find cost associated with clearance costs. Staff believes the Property did not have any improvements when it was acquired by the City. Relocation costs (Gov. Code 52201(a)(2)(B)(i)): No cost as the Property is unimproved and has no tenants. The costs of any improvements to be provided by the City (Gov. Code 52201(a)(2)(B)(i)): No cost as the City is not providing any improvements. Expected interest on any loans or bonds to finance the agreements (Gov. Code 52201(a)(2)(B)(i)): Carlton intends to purchase the Property with cash. The City is not providing any loans or bonds to finance the sale. The estimated value of the interest to be conveyed, determined at the highest and best use permitted under the General Plan or zoning (Gov. Code 52201(a)(2)(B)(ii)). A fair market value appraisal determined that the Property s fair market value is $380,000. The estimated value of the interest to be conveyed, determined at the use and with the conditions, covenants, and development costs required by the sale or lease (Gov. Code 52201(a)(2)(B)(iii)). The City is selling the Property for its appraised fair market value of $380,000. The transaction does not include a lease. An explanation of why the sale or lease of the property will assist in the creation of economic opportunity, with reference to all supporting facts and materials relied upon in making this explanation (Gov. Code Page 39 of 40

40 Attachment (a)(2)(B)(iv)). The proposed transaction is anticipated to facilitate the expansion of Carlton Senior Living s senior community by providing approximately 30 new units of housing for seniors with Alzheimer s/memory disabilities. The expansion of Carlton s existing facility will result in temporary constructions jobs in the short term, and a permanent increase in staffing for the long term. Thus, the proposed sales transaction creates an economic opportunity Page 40 of 40