AGENDA ITEM NO. 8.18 CITY OF ELK GROVE CITY COUNCIL STAFF REPORT AGENDA TITLE: Adopt resolution authorizing the City Manager to execute a Purchase and Sale Agreement for property located at 9676 Railroad Street [APNs: 134-0050-043 and 134-0050-052] (CEQA Exempt) MEETING DATE: June 14, 2017 PREPARED BY: DEPARTMENT HEAD: Julie D. Cline, Real Estate Manager Darrell Doan, Economic Development Director Darrell Doan, Economic Development Director RECOMMENDED ACTION: Staff recommends the City Council adopt a resolution authorizing the City Manager to execute a Purchase and Sale Agreement with Frank P. Leal ( Owner ), for the property located at 9676 Railroad Street [Assessor Parcel Numbers 134-0050-043 and 134-0050-052] (the Property ). BACKGROUND INFORMATION: The Property is located in the City s historic Old Town district at 9676 Railroad Street, and is adjacent to and south of the City s Old Town Plaza property. The Old Town Plaza is currently under construction in Phase I of a three phase, $8 million improvement project. The Old Town district consists of a mix of residential, commercial, and civic land uses. Economic Development staff believes that Old Town s highest potential is that of a vibrant mixed-use dining, arts, entertainment, and 1
Elk Grove City Council June 14, 2017 Page 2 of 5 shopping district that would serve as a lifestyle amenity for residents, and act as a regional visitor destination. While there has been recent reinvestment in Old Town by both the City (e.g. streetscape improvements and the Old Town Plaza project) and the private sector (e.g. Lola s Lounge, Pinot s Palette, and the soon to open School of Rock project), staff believes that the above vision for the district would be significantly furthered by development of a destination dining and entertainment venue that would be an immediate resident amenity, as well as serve as a catalyst for future similar investment in the district. Although the ultimate plan for the use or development of the Property is uncertain and undefined at this time, staff hopes that the proposed acquisition could result in the development of the Property for commercial use in coordination with the City that will further the above vision. If acquired, staff s intent would be to seek a well-capitalized developer/operator team, who would deliver the type of project envisioned. Staff would then negotiate, and seek City Council approval of, an agreement for the development. Staff has had preliminary discussions with a number of regional dining and entertainment operators who are currently evaluating projects in Elk Grove. Additionally, staff has had discussions with developers who specialize in historic renovation and reuse projects. Both groups have expressed interest in partnering with the City to develop the Property. ANALYSIS: The Property under consideration is vacant and includes a 5,000+/- square foot brick building, approximately 1.75 acres of land, and is located south of and adjacent to the City-owned Old Town Plaza property south of Elk Grove Boulevard, as shown in Figure 1. 2
Elk Grove City Council June 14, 2017 Page 3 of 5 Figure 1 The Owner has actively marketed the Property for sale for the past two years, with a current listing price of $595,000. Pursuant to direction from City Council, staff has negotiated a proposed purchase price of $500,000, which has been accepted by the Owner, subject to City Council approval (Attachment 2). Following is a summary of the negotiated terms: $500,000 to purchase 1.75± acres including a 5,000± square foot brick building; $5,000 Purchase Deposit; 105-day Due Diligence Period following fully-executed Purchase and Sale Agreement; Ability to terminate Agreement within Due Diligence Period at no cost to City based on Property inspection findings; Escrow to Close by September 30, 2017; City responsible for one-half of the escrow closing fees; 3
Elk Grove City Council June 14, 2017 Page 4 of 5 Seller will pay for a standard title insurance policy, which insures against loss regarding matters of record. City may request, at City s own cost, an extended title insurance policy, which provides additional coverage related to encroachments and any unrecorded matters; Seller will provide disclosure to City of property or structural defects of which he has actual knowledge only. The City will essentially be taking the Property as-is, and with any and all faults, but will be provided an opportunity during the Due Diligence Period to inspect the Property and to conduct any necessary testing in order to decide whether to proceed with the purchase. Due Diligence Staff will complete the following activities during the Due Diligence Period and report back to the City Council prior to completing the purchase: Appraisal; Phase I and II Environmental Site Assessments; Property Survey; Structural/roof Inspection. The estimated cost to complete Due Diligence activities is not expected to exceed $85,000. California Government Code Section 65402 requires the acquisition of publicly owned real property be submitted to and reported upon by the planning agency as to conformity with the adopted General Plan. The proposed purchase of the Property was presented to the Planning Commission on June 1, 2017. The Planning Commission found that the purchase of the Property is in conformance with the adopted General Plan. Staff recommends that the City Council authorize the City Manager to enter into a Purchase and Sale Agreement consistent with the terms outlined in this staff report, and subject to a finding by the City Council that the proposed purchase is in conformance with the General Plan. 4
Elk Grove City Council June 14, 2017 Page 5 of 5 ENVIRONMENTAL REVIEW: The proposed purchase is exempt from California Environmental Quality Act (CEQA) review. CEQA Guidelines, sections 15060(c),(2)(3) and 15378(a) state that where an action is not a project (meaning the whole of an action which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment), that action is not subject to CEQA. The proposed acquisition does not result in a direct or indirect change in the environment because the ultimate use and/or development of the Property has not been identified. The development of the site, if any, remains unspecified, uncertain, and undefined at this time. If and when future development is proposed for the site, by either the City or another entity, the City would review such development consistent with CEQA. Therefore, at this time, the proposed acquisition is not considered the approval of a project under CEQA and is, therefore, exempt from CEQA review. (Pub. Res. Code 21065, CEQA Guidelines 15060(c),(2)(3); 15378(a).) FISCAL IMPACT: The purchase of the Property would be funded by the General Fund and is included in the fiscal year 2017-18 proposed budget. ATTACHMENTS: 1. Resolution 2. Purchase and Sale Agreement 5
ATTACHMENT 1 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ELK GROVE AUTHORIZING THE CITY MANAGER TO EXECUTE A PURCHASE AND SALE AGREEMENT WITH FRANK P. LEAL FOR THE ACQUISITION OF REAL PROPERTY LOCATED AT 9676 RAILROAD STREET [ASSESSOR PARCEL NUMBERS 134-0050-043 AND 134-0050-052] (CEQA EXEMPT) WHEREAS, 9676 Railroad Street, identified as Assessor Parcel Numbers 134-0050-043 and 134-0050-052 (the Property ) is located in the City s historic Old Town district and is adjacent to and south of the City s Old Town Plaza properties; and WHEREAS, the proposed purchase of the Property is for commercial development that is intended to seed the revitalization of Old Town as a dining, arts, entertainment, and shopping district; and WHEREAS, staff has negotiated a purchase price of $500,000, which has been agreed to by Frank P. Leal by execution of the Purchase and Sale Agreement, subject to City Council approval; and WHEREAS, there is a 105-day Due Diligence Period where the City may terminate the Purchase and Sale Agreement at no cost to the City based on the findings of its inspections; and WHEREAS, staff will complete due diligence activities, which associated costs are anticipated to be less than $85,000, and report back to the City Council within the 105-day Due Diligence Period; and WHEREAS, the proposed purchase of the Property has been found to be in conformity with the adopted General Plan by the Planning Commission at its June 1, 2017 meeting, pursuant to California Government Code Section 65402; and and WHEREAS, funding for the purchase of the Property is from the General Fund; WHEREAS, staff recommends entering into a Purchase and Sale Agreement with Frank P. Leal for the purchase of the Property; and WHEREAS, the proposed acquisition is exempt from review under the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2), (3) and 15378(a) of the CEQA Guidelines because the proposed acquisition does not constitute the approval of a project under CEQA and, therefore, environmental review under CEQA is not required at this time. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Elk Grove finds that the purchase of the Property as proposed is for the common public benefit and is consistent with the General Plan, and hereby authorizes the City Manager to execute a Purchase and Sale Agreement in substantially the form presented with Frank P. Leal for the City s purchase of the property located at 9676 Railroad Street and 6
identified as Assessor Parcel Numbers 134-0050-043 and 134-0050-052, all subject to approval as to form by the City Attorney. PASSED AND ADOPTED by the City Council of the City of Elk Grove this 14 th day of June 2017. STEVE LY, MAYOR of the CITY OF ELK GROVE ATTEST: APPROVED AS TO FORM: JASON LINDGREN, CITY CLERK JONATHAN P. HOBBS, CITY ATTORNEY 7
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