10.c Staff Report Date: April 25, 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 John.montagh@cityofconcord.org (925) 671-3082 Considering adoption of Resolution No. 17-39 approving a Purchase and Sale Agreement with DG Concord LLC for Cityowned property located at 1701/1711 Concord Avenue (APN 112-101-022) and authorizing the Mayor to execute all documents needed to complete the transaction, and further authorizing the Mayor to execute all deeds and similar instruments in a form acceptable to the City Attorney. Approving the Purchase and Sale Agrement is not a "Project" under the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21065 and CEQA Guidelines Sections 15060 (c) or 15378 Report in Brief Before its dissolution in 2012, the Redevelopment Agency of the City of Concord ( RDA ) owned 14 properties in the City of Concord ( City ). Upon its dissolution, all of the RDA s assets and liabilities passed by operation of law to the Successor Agency to the Redevelopment Agency of the City of Concord ( Successor Agency ). The disposition and use of former-rda properties is described in the Successor Agency s Long Range Property Management Plan ( LRPMP ). Among other things, the LRPMP provides for the retention and future development of 1701/1711 Concord Avenue (APN 112-101-022), an approximately 41,469 square foot unimproved parcel (the Property ). Pursuant to the LRPMP, the Successor Agency conveyed the Property to the City on October 4, 2016. Page 1 of 41
City Council Agenda Report Considering adoption of Resolution No. 17-39 approving a Purchase and Sale Agreement with DG Concord LLC for City-owned property located at 1701/1711 Concord Avenue April 25, 2017 The Del Grande Auto Group ( DGDG ) owns and operates the Concord Mazda dealership, and desires to purchase the Property. DGDG also owns and operates the Mazda Parts and Service Center on the adjacent parcel (1651 Concord Avenue). DGDG, intends to merge the Property with the 1651 Concord Avenue property, and to eventually construct a Mazda new car dealership on the merged parcel. A map of the Property is included as Attachment 1 to this report. Recommended Action Adopt Resolution No. 17-39 (Attachment 2) approving the Purchase and Sale Agreement in substantially the same form as Attachment 3 and authorizing the Mayor to execute all documents needed to complete the transaction, and further authorizing the Mayor to executed all deeds and similar instruments in a form acceptable to the City Attorney. Background California s Redevelopment agencies were dissolved by the State Legislature on February 1, 2012. The Successor Agency is responsible for winding down the affairs of the former RDA. Pursuant to Assembly Bill x1 26 (Chapter 5, Statutes of 2011-12 First Ex. Session), as amended (the Dissolution Law ), the Successor Agency prepared a LRPMP to govern the disposition and use of the former RDA s real property. The Successor Agency prepared, and the Successor Agency s Oversight Board and the California Department of Finance approved, a LRPMP providing for four properties (collectively, the Development Properties ), including the Property, to be transferred from the Successor Agency to the City for retention and future development. Per the Dissolution Law, the net proceeds from the sale of the Development Properties must be remitted to the County Auditor Controller for distribution to the taxing entities in proportion to their respective shares of the property tax base. The City Council approved the transfer of the Development Properties from the Successor Agency to the City on June 7, 2016. During meetings of the City Council s Housing and Economic Development Committee and the City Council on April 25 and June 7, 2016, the City Council approved a disposition process for the four former RDA properties. This disposition process contemplates the sale of the Property to DGDG though approval of a Purchase and Sale Agreement. Staff commissioned a fair market appraisal for the Property from Smyers & Krauss Appraisal Consultants. DGDG has offered to purchase the Property for its appraised fair market value of $1,080,000 on the terms and conditions set forth in the proposed Purchase and Sale Agreement ( Agreement ) (Attachment 3). The net proceeds from Page 2 of 41
City Council Agenda Report Considering adoption of Resolution No. 17-39 approving a Purchase and Sale Agreement with DG Concord LLC for City-owned property located at 1701/1711 Concord Avenue April 25, 2017 the sale of the Property will be remitted to the Contra Costa County Auditor Controller for distribution to the affected taxing entities as required by Dissolution Law. At this point, DGDG has not yet designed the proposed new dealership or otherwise decided precisely what it will build on the Property. Accordingly, within the proposed Agreement, the City has retained unfettered discretion to conduct a review of all discretionary permit applications (including the environmental review required by the California Environmental Quality Act ( CEQA )) at such time as DGDG submits such applications and a project description sufficient for the City to conduct the review required by CEQA. On March 15, 2017, the Planning Commission adopted Resolution No. 17-11PC, determining, among other things, that the proposed disposition of the Property is consistent with the General Plan. (See Gov. Code 65402.) Analysis The Property is zoned for West Concord Mixed Use (WMX) and has a West Concord Mixed Use General Plan land use designation. The WMX zoning district allows new automotive dealerships as a permitted use. The key deal points of the proposed Agreement include: o Purchase price of $1,080,000; o Deposit of $25,000; o DGDG shall apply to merge 1651 Concord Avenue and the Property into a single parcel prior to closing. A Certificate of Compliance for Lot Merge shall be recorded at closing; o o Prior to closing, DGDG shall apply for, and the City shall have approved via a tree removal permit, an application to remove trees from the Property; Prior to closing, DGDG shall have received from Mazda any approvals necessary for it to acquire the Property and to expand its existing dealership thereon; o The outside date for the transaction to close is December 31, 2017. However, the outside date may be extended by the mutual agreement of the parties; o o DGDG is purchasing the Property in as-is condition; and City will reserve an easement on the Property to operate and maintain storm drains and other public infrastructure. Page 3 of 41
City Council Agenda Report Considering adoption of Resolution No. 17-39 approving a Purchase and Sale Agreement with DG Concord LLC for City-owned property located at 1701/1711 Concord Avenue April 25, 2017 Financial Impact The Dissolution Law requires the City to remit the net proceeds from the sale of the Property to the County Auditor Controller for distribution to the various affected taxing entities. In its capacity as a taxing entity, the City is entitled to approximately 10% of the net proceeds from the sale of the Property. Funds received from this sale are considered one-time and the use is subject to the City Council adopted 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 held in February of each year. Government Code section 52201 requires the City of Concord to prepare a report disclosing certain information regarding property sold to create an economic opportunity. Staff has prepared the report (Attachment 4) and has been made available at the City Clerk s office as required by Government Code section 52201. 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 DGDG 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 21065 and 21080 or CEQA Guidelines Sections 15352 and 15378. Public Contact The City Council Agenda was posted and public notice was provided as required. Attachments 1. Map of the Property 2. Resolution No. 17-39 3. Proposed Purchase and Sales Agreement 4. Government Code section 52201 Report Page 4 of 41
Attachment 1 1701 Concord Ave APN 112-101-022 Concord Mazda Service Center 1651 Concord Ave Page 5 of 41
Attachment 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 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 DG Concord, LLC, as Buyer, For 1701 and 1711 Concord Avenue, City of Concord, CA (APN 112-101-022) Resolution No. 17-39 / WHEREAS, Assembly Bill X1 26, as subsequently amended by AB 1484 and SB 107 (collectively, the Dissolution Law ) dissolved redevelopment agencies formed under the Community Redevelopment Law (Health and Safety Code Section 33000, et seq.); and WHEREAS, under the Dissolution Law, all real property owned by the Concord Redevelopment Agency ( RDA ) at dissolution passed by operation of law to the Successor Agency to the Concord Redevelopment Agency ( Successor Agency );; and WHEREAS, Section 34191.5(b) of the Dissolution Law required the Successor Agency to prepare and submit for review and approval by the Oversight Board for the Successor Agency ( Oversight Board ) and the California Department of Finance ( DOF ) a long-range property management plan ( LRPMP ) addressing the disposition and use of real property owned by the Successor Agency; and 19, 2015; and 2015; and WHEREAS, the Oversight Board approved the Successor Agency s LRPMP on November WHEREAS, DOF approved the Successor Agency s LRPMP by letter dated December 1, WHEREAS, the approved LRPMP authorized the Successor Agency to transfer four properties, including that certain approximately 41,469 square foot unimproved property located at 1701 and 1711 Concord Avenue, and designated as Assessor s Parcel No. 112-101-022 (the Property ) to the City for retention and future development pursuant to an approved redevelopment plan under Section 34191.5(c)(2) of the Dissolution Law; and WHEREAS, on June 7, 2016, the City Council adopted Resolution No. 2016-34, authorizing the City to accept the four properties, including the Property, for retention for future development. 28 Res. No. 17-39 1 Page 6 of 41
Attachment 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 The Grant Deed conveying the Property from the Successor Agency to the City was recorded on October 6, 2016 as Document No. 2016-0207904-00 in the Official Records of Contra Costa County; and WHEREAS, DG Concord, LLC, desires to purchase the Property from the City for its appraised full fair market value; and WHEREAS, a fair market appraisal prepared by Smyers & Krauss Appraisal Consultants determined that the Property s fair market value is $1,080,000.00; and WHEREAS, City staff have negotiated with DG Concord, LLC 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 the Property. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CONCORD DOES RESOLVE AS FOLLOWS: Section 1. The City hereby finds and determines that the foregoing recitals are true and correct, and are incorporated herein by reference as findings. Section 2. The approval of the Agreement is exempt from the requirements of CEQA because this action does not constitute approval of a project. Approval of the Agreement does not commit the City of Concord to approving a project nor constitutes an entitlement for use of a project. Therefore, this action is not approval of a project, as defined by Public Resources Code Sections 21065 and 21080 or CEQA Guidelines Sections 15352 and 15378. There are no unusual circumstances. This determination reflects the independent judgment and analysis of the City. Section 3. The City hereby determines based on the evidence in the record, that the proposed sales price of $1,080,000 is not less than the fair market value of the Property at its highest and best use. Section 4. The Planning Commission of the City of Concord has previously found that the disposition of the Property as described in the Agreement is consistent with the objectives, policies, general land uses, and programs specified in the City of Concord s General Plan and the Central Concord Redevelopment Plan. 28 Res. No. 17-39 2 Page 7 of 41
Attachment 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Section 5. The City Council hereby approves and authorizes the Mayor to execute and enter into the Agreement in the form attached to the staff report, and further authorizes the Mayor to executed all deeds and similar instruments, 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 and the City Clerk are further authorized and directed to take 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 Mayor is further authorized and directed to disburse the net proceeds generated from the sale of the Property, less the City s proportionate share of the property tax revenues in the tax rate area where the Property is located, to the Contra Costa County Auditor Controller for distribution to all affected taxing entities except for the City. Section 6. This resolution shall become effective immediately upon its passage and adoption. PASSED AND ADOPTED by the City Council of the City of Concord on April 25, 2017, by the following vote: AYES: Councilmembers - NOES: Councilmembers - ABSTAIN: Councilmembers - ABSENT: Councilmembers - I HEREBY CERTIFY that the foregoing Resolution No. 17-39 was duly and regularly adopted at a regular meeting of the City Council of the City of Concord on April 25, 2017. 22 23 24 25 26 27 APPROVED AS TO FORM: Susanne Meyer Brown City Attorney Joelle Fockler, MMC City Clerk 28 Res. No. 17-39 3 Page 8 of 41
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Attachment 3 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the dates set forth below. BUYER: DG CONCORD, LLC, a California limited SELLER: CITY OF CONCORD, a municipal corporation Nam ::: S fwij "'t;:ffl 4,@.,NJYG' By: Name: Laura M. Hoffmeister Title: Mayor Date: ----------- ATTEST: By: Joelle Fockler, Clerk APPROVED AS TO FORM: By: Susanne Brown City Attorney OAK #48\9-3318-3794 vl2 20 Page 28 of 41
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Attachment 4 Government Code Section 52201 Report for Sale of Real Property Located at 1701/1711 Concord Avenue (APN 112-101-022) Government Code section 52201 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 41,469 square feet, and located at 1701/1711 Concord Avenue, 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 DG Concord, LLC ( DG ): Land acquisition costs (Gov. Code 52201(a)(2)(B)(i)): The City acquired the Property from the Successor Agency to the former Concord Redevelopment Agency ( RDA ) on October 4, 2016 at no cost. However, Assembly Bill x1 26 (Chapter 5, Statutes of 2011-12 First Ex. Session), as amended, requires the City to remit the net proceeds from the sale of former RDA properties, including the Property, to the County Auditor Controller for distribution to the taxing entities. Clearance costs (Gov. Code 52201(a)(2)(B)(i)): No cost as the Property was unimproved upon transfer to 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)): DG 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 $1,080,000. 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 $1,080,000. The transaction does not include a lease. OAK #4811-4404-9990 v1 05685-0007 Page 40 of 41
Attachment 4 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 52201(a)(2)(B)(iv)). The proposed transaction is anticipated to facilitate the expansion of Concord Mazda, one of the City s major businesses. The current Mazda dealership (which is owned by DG) is operating on a small location and in order to meet Mazda s dealership requirements, DG needs to either find a larger location in Concord or relocate out of the City. By selling the Property to DG, the City will facilitate the retention and expansion of a major Concord business, retain critical sales tax revenue, and increase the number of jobs available in the City. In addition, the City desires to strengthen its auto row to support the City s long term economic development strategy and goals. OAK #4811-4404-9990 v1 05685-0007 Page 41 of 41