THE REDEVELOPMENT AGENCY OF THE CITY OF SAN JOSE

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1 BOARD AGENDA: 4/27/10 ITEM: 8.1 THE REDEVELOPMENT AGENCY OF THE CITY OF SAN JOSE MEMORANDUM TO: HONORABLE MAYOR, CITY COUNCIL, AND AGENCY BOARD SUBJECT: SEE BELOW FROM: HARRY S. MAVROGENES EXECUTIVE DIRECTOR DATE: APRIL 13,2010 SUBJECT: REAL ESTATE PURCHASE AGREEMENT FOR ACQUISITION OF REAL PROPERTY LOCATED ON HOWARD STREET AND OLD W. JULIAN STREET RECOMMENDATIONS It is recommended that the Redevelopment Agency Board: (a) (b) Approve a Purchase and Sale Agreement with Michael G. Akatiff & Christy D. Akatiff, as Trustees under the Michael G. Akatiff and Christy D. Akatiff Revocable Living Trust Agreement dated July 8, 1993, and Pacific Coast Cycle Corporation (An Akatiff-owned entity) in the amount of $4,610,000 plus related closing costs, for the acquisition of all or portions of Howard Street, 442 Howard Street, 428 Old W. Julian Street, 440 Old W. Julian Street, and APN (vicinity of Howard Street), and authorize the Executive Director to execute ancillary documents or take those actions necessary to close escrow; and, Approve a Purchase and Sale Agreement with Michael G. Akatiff & Christy D. Akatiff, as Trustees under the Michael G. Akatiff and Christy D. Akatiff Revocable Living Trust Agreement dated July 8, 1993, for the sale of a portion of 445 Old W. Julian Street (APN ); and authorize the Executive Director to execute ancillary documents or take those actions necessary to close escrow. OUTCOME Approval of the proposed acquisition will allow for development of the planned Autumn Street Extension Project.

2 Page 2 BACKGROUND The Agency has been tasked with completing the acquisitions and relocations required to secure the right-of-way necessary to enable construction of the Autumn Street extension. The extension is a portion of the larger Coleman/ Autumn transportation corridor project. With completion of the Coleman improvements, current efforts are focused on "Segment 1" of the Autumn Street extension, which runs between the Union Pacific railroad tracks and New Julian Street. The Agency will negotiate acquisitions, coordinate relocations and manage the construction process. The properties will ultimately be conveyed to the City as the City will own and maintain the new road. Goals of the Coleman/Autumn transportation corridor project are to provide a safe, efficient and attractive route to Downtown San Jose from and to facilitate economic development of the DiridodArena area. The adopted development plan for Downtown San Jose (Downtown Strategy Plan 2000) includes expansion of the Downtown core area westerly in the San Jose Diridon transit station area, near the HP Pavilion at San Jose. The plan identifies the ColemadAutumn transportation corridor project as a high priority for facilitating development of the area. The specific features of the project include: Extending Autumn Street as a twolfour-lane parkway, from Coleman Avenue to St. John Street, with an attractive frontage to the Guadalupe River Park. Upgrading Coleman Avenue to a six-lane boulevard with bike lanes, sidewalks and a landscaped median. The ColemadAutumn transportation corridor project is included in the regional transportation master plan, known as the Valley Transportation Plan ANALYSIS Below is a summary of the properties to be acquired as part of this transaction. (See attached site map) Old Julian Street Parcels Owner: Michael G. Akatiff & Christy D. Akatiff & Pacific Coast Cycle Corporation, a California Corporation

3 Page 3 Subject Property Address:, Old W. Julian Street Assessor Parcel Numbers: & Full Take APN Portion of APN TCE Portion of APN Improvements Described: Land Area - 10,500 sq. ft. Building Area - 6,977 sq. ft. Land Area - 4, sq. ft. 1, sq. ft. Multiple industrial buildings totaling approximately 15,155 sq. ft. with concrete yard and fenced site Light Industrial warehouse and office building 1 I Zoning: LI - Light Industrial I Howard Street Parcels Owner(s): Michael G. Akatiff & Christy D. Akatiff i Subject Property Address: Howard St. Assessor Parcel Numbers: ,050, & Howard St. (APN ) Fee Take - 8, sq. ft. Fee Take sq. ft. TCE - approx. 2,965 sq. ft. No Street Address (APN ) Fee Take - 19,191 sq. ft. Fee Take sq. ft. TCE - approx. 2,337 sq. ft. I I 410 Howard St. (APN ) Full Take approx. 9,024 sq. ft. Improvements Described: N/A

4 Page 4 Zoning: Vacant land used as public parking lot HI - Heavy Industrial On June 1,2009, the Agency sent the owner a "Notice of Decision to Appraise" letter. Hulberg & Associates, Inc., was retained by the Agency to perform an appraisal of the property. Hulberg & Associates valued the property at $3,735,000 in an appraisal report dated September 15,2009. An Offer to Purchase letter was presented to the property owners for the appraised amount on September 15,2009. That offer was rejected by the owners. As required by law, the Agency reimbursed the owner $10,000 to allow the property owner to retain their own firm to perform an appraisal on their behalf. After approximately five months of negotiations with the owner, the parties were able to mutually agree upon a purchase price of $4,100,000. In addition, the owner is being compensated $510,000 for severance damages, - relocation, loss of business - goodwill, and temporary construction easements (TCE). Due diligence, including environmental investigations, was completed in August 2009 pursuant to a right-of-entry agreement with the property owners. The recommended acquisitions would secure more than 72% of the privately owned land required for completion of Segment 1 of the Autumn Street extension. As part of the agreement, the owner has agreed to purchase two properties (a portion of 445 Old W. Julian St. and 406 N. Autumn St.) owned by the Agency. On April 20,2010, the City Council and Agency Board are being requested to approve conveyance of the property located at 406 N. Autumn Street from the City to the Agency through approval of a proposed CityIAgency Cooperation Agreement. The subsequent sale of that property from the Agency to Akatiff will enable the Agency to reduce the cash requirements needed to accomplish the rightof-way acquisitions on behalf of the city. The owner will pay the Agency the full appraised value of $1,080,000 for these properties. This amount will offset a portion of the purchase price by an equal amount. Below is a summary of the Agency parcels to be sold: Owner: San Jose Redevelopment Agency Address: 406 N. Autumn Street Assessor's parcel Number: Land Area: 12,632 sq. ft. Vacant Land Zoning: LI - Light Industrial Purchase Price; $630,000

5 Page 5 Owner: San Jose Redevelopment Agency Address: 445 Old W. Julian Street Assessor's parcel Number: Land Area: 9,988 sq. ft. Industrial warehouse building Zoning: HI - Heavy Industrial Purchase Price: $450,000 Additionally, the owner has agreed to provide the Agency with a 20,000 sq. ft. staging area and a temporary construction easement during the twelve-month road construction period. The Agency will pay all closing and transfer costs for the transactions. The owner will be assigning to the Agency a portion of a temporary construction easement that will pay the Agency $7, per month or $85, per year. EVALUATION AND FOLLOW-UP There will be further property acquisitions and construction contracts for this street project in both the current Segment 1 efforts and subsequent segments. PUBLIC OUTREiACH/INTEREST The proposed action meets Criterion 1 for added outreach efforts. This staff report was distributed and posted on the Agency's website and made available for public review in the Agency's public lobby area 14 days prior to the Agency's Board meeting. J Criterion 1: Requires Board action on the use of public funds equal to $1 million or greater. - a Criterion 2: Adoption of a new or revised policy that may have implications for public health, safety, quality of life, or financial/economic vitality of the City. 0 Criterion 3: Consideration of proposed changes to service delivery, programs, or staffing that may have impacts to community services and have been identified by staff, the Board or Council, or a community group that requires special outreach.

6 Page 6 COORDINATION This item has been coordinated with the Department of Transportation, General Services, Environmental Services, Public Works and the Agency's General Counsel. FISCAL IMPACT The $4,610,000 purchase price, plus incidental transaction fees, is provided in the Agency's Adopted FY Capital Budget, Autumn Street Infrastructure Plan project line. Resolution No Attachment HARRY S. MAVROGENES Executive Director

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