CITY OF ELK GROVE CITY COUNCIL STAFF REPORT AGENDA ITEM NO. 8.17 AGENDA TITLE: Adopt resolution authorizing the City Manager to execute all documents necessary to purchase the Tax Defaulted Property identified as 8921 El Oro Plaza Drive [Sacramento Assessor Parcel Number 125-0292-001] from Sacramento County and finding the purchase of the Property exempt from the California Environmental Quality Act MEETING DATE: October 12, 2016 PREPARED BY: DEPARTMENT HEAD: Sarah Bontrager, Housing and Public Services Manager Darren Wilson, PE, Development Services Director RECOMMENDED ACTION: Staff recommends the City Council adopt a resolution finding the purchase of 8921 El Oro Plaza [Assessor Parcel Number 125-0292-001] ( Property ) exempt from the California Environmental Quality Act and authorizing the City Manager to execute all documents necessary to purchase the taxdefaulted Property from Sacramento County ( County ), in conjunction with an affordable housing project. Analysis: Pursuant to State Revenue and Taxation Code, properties that are determined to be in default for unpaid property taxes for five years or more are periodically put up for public auction by the County for a minimum bid amount equivalent to the delinquent taxes, plus fees incurred by the County. 1
Elk Grove City Council October 12, 2016 Page 2 of 4 Staff reviewed the list of tax-defaulted properties that were scheduled for tax sale on February 29, 2016, and determined that the City may desire to purchase the Property for a low-income housing project. The Location Map attached, marked as Attachment 2, depicts the location of the Property. Staff proposes to use the 0.2-acre vacant Property, which is surrounded by duplex/fourplex housing and commercial development, for an affordable housing project. The minimum bid for the Property is $10,800, and the anticipated purchase price of the Property will not exceed $15,800. While the anticipated purchase cost is within the City Manager s purchasing authority, the County recently requested a resolution confirming the Council s approval to proceed with the purchase. Pursuant to Revenue and Taxation Code Section 3695.4, an objection letter, and application, has been filed with the Tax Collector. Submitting an application to Purchase Tax-Defaulted Property does not commit the City to purchasing the Property, nor does it guarantee purchase approval. By objecting to the sale, the Property was withheld from the public auction on February 29, 2016. If it is determined at any time during the purchase process that the Property is not in the City s best interest to purchase, Staff would submit a letter to the Tax Collector requesting to withdraw the application to purchase. The City would be required to reimburse the Tax Collector for providing notice, publication and actual costs incurred for preparing and conducting the Chapter 8 Agreement Sale for the Property, per Revenue and Taxation Code 4112(a)(b)(3). The property owner may also redeem the Property by paying the delinquent taxes prior to the effective date of the Chapter 8 Tax-Default Sale. The Tax Collector establishes a tentative effective date for the tax sale to the City and determines the minimum purchase price of the Property, for an amount sufficient to redeem the delinquent property taxes, as defined in Revenue and Taxation code 3793.1. Staff will conduct a thorough investigation of the Property during the Chapter 8 Agreement Sale process. Due diligence will include a complete review of the preliminary title report and an environmental site assessment 2
Elk Grove City Council October 12, 2016 Page 3 of 4 for the Property. All parcels purchased through a Chapter 8 Agreement Sale, are purchased as is. After City receives the Tax Collector s deed, the former owner or lien holder may attempt to overturn the sale, pursuant to Revenue and Taxation code Section 3725, alleging the sale invalid due to any irregularity of any proceeding instituted during the Chapter 8 process. Due to this risk, it may be prudent to delay improvements on the property for one year. If the sale is overturned, the purchase price would be returned to the City. Due to the one-year challenge, it may be hard to acquire title insurance on the property during the first year of ownership. Staff recommends the City pursue the purchase of the tax default Property up to the not-to-exceed purchase price of $15,800. The not-to-exceed purchase price includes estimated current 2015-2016 taxes due, interest, penalties, sale costs, and notification cost. ENVIRONMENTAL REVIEW: The California Environmental Quality Act (Section 21000, et. seq. of the California Public Resources Code, hereinafter referred to as CEQA) requires analysis of agency approvals of discretionary projects. A project, under CEQA, is defined as 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. State CEQA Guidelines Section 15378(a) states that an action cannot be found to be 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, as a use for the Property has not been fully identified. Depending on the scope and scale of any future proposed project, CEQA would be assessed as part of any necessary permit review. Therefore, the proposed acquisition is not considered the approval of a project under CEQA and is exempt from CEQA review. 3
Elk Grove City Council October 12, 2016 Page 4 of 4 FISCAL IMPACT: The total not-to-exceed purchase price of the Property is $15,800. The City currently has $475,800 in federal Neighborhood Stabilization Program funds, mainly from loan payoffs. The funding source is limited to use on foreclosed or abandoned properties which, given the recovery in home prices, are difficult to find. Tax-defaulted properties and their associated expenses are an eligible use of the funds. ATTACHMENTS: 1. Resolution 2. Location Map 4
ATTACHMENT 1 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ELK GROVE FINDING THE ACQUISITION OF 8921 EL ORO PLAZA [ASSESSOR PARCEL NUMBER 125-0292-001] TO BE EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT AND AUTHORIZING THE CITY MANAGER TO EXECUTE ALL DOCUMENTS NECESSARY TO PURCHASE TAX-DEFAULTED PROPERTY IDENTIFIED AS 8921 EL ORO PLAZA FROM SACRAMENTO COUNTY [ASSESSOR PARCEL NUMBER 125-0292-001] WHEREAS, pursuant to State Revenue and Taxation Code, properties that are determined to be in default for unpaid property taxes for five (5) years or more are periodically put up for public auction for a minimum bid amount of delinquent taxes due plus costs; and WHEREAS, staff reviewed the list of tax-defaulted properties which were scheduled for tax sale on February 29, 2016, and determined that the City may desire to purchase 8921 El Oro Plaza Drive [Assessor Parcel Number 125-0292-001] ( Property ) for a low-income housing project; and WHEREAS, pursuant to Revenue and Taxation Code 3695.4, an objection letter and application to purchase through a Chapter 8 Agreement Sale has been filed with the Tax Collector for the Property so that the Property would be withheld from the public auction on February 29, 2016; and WHEREAS, the City will conduct due diligence activities prior to final purchase of the Property and if the property is determined at any time during the purchase process not to be in the City s best interest to purchase, City will withdraw the application to purchase the property; and WHEREAS, the minimum bid for the Property is $10,800, which is at or below fair market value and is determined by the Tax Collectors Office to be an amount sufficient to redeem all defaulted taxes and the not to exceed purchase price of $15,800 includes estimated current year property taxes and all associated penalties and costs as defined in Revenue and Taxation Code 3793.1 to complete the Chapter 8 sales; and WHEREAS, the total not-to-exceed purchase price of the Property is $15,800 and funding will be sent aside from available funds from the federal Neighborhood Stabilization Program; and WHEREAS, the California Environmental Quality Act (Section 21000, et. seq. of the California Public Resources Code, hereinafter referred to as CEQA) requires analysis of agency approvals of discretionary projects. A project, under CEQA, is defined as 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. 5
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Elk Grove hereby finds the acquisition of the subject Property to be exempt from CEQA pursuant to the following finding: Finding: That the acquisition of APN 125-0292-001 is exempt from the California Environmental Quality Act (CEQA). Evidence: The site is exempt from CEQA as follows: No specific use has been identified for APN 125-0292-001. The Property could be used for an affordable housing project and/or other public purpose, such as a small neighborhood park/playground, parking or other use that has not been identified. State CEQA Guidelines Section 15378(a) states that an action cannot be found to be 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, as a use for the Property has not been identified. Depending on the scope and scale of any future proposed project, CEQA would be assessed as part of any necessary permit review. Therefore, the proposed acquisition is not considered the approval of a project under CEQA and is exempt from CEQA review. AND, BE IT FURTHER RESOLVED, that the City Council of the City of Elk Grove authorizes the City Manager to execute all documents necessary to purchase tax-defaulted property from Sacramento County, identified as 8921 El Oro Plaza from Sacramento County [Assessor Parcel Numbers 125-0292-001]. PASSED AND ADOPTED by the City Council of the City of Elk Grove this 12 th day of October 2016. GARY DAVIS, MAYOR of the CITY OF ELK GROVE ATTEST: APPROVED AS TO FORM: JASON LINDGREN, CITY CLERK JONATHAN P. HOBBS, CITY ATTORNEY 6
2N D AV E H POL Attachment 42-8921 El Oro Plaza Drive E EM U SD R M US DR 2ND AVE E POLH ELK GROVE FLORIN RD ELK GROVE BLVD VALLEY OAK LN ME FAL AD C O OW N DR PROPERTY DESCRIPTION Vacant 0.2 acre lot In neighborhood of duplexes and fourplexes Subject of CE Action for weed abatement 7