PREPARED BY: Lynn Tracy Nerland DATE OF MEETING: 03/19/18
SUBJECT:
TITLE
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN PABLO AUTHORIZING THE CITY MANAGER TO EXECUTE A TERMINATION OF LICENSE AGREEMENT, QUITCLAIM OF THE MEMORANDUM OF RIGHT OF FIRST REFUSAL AND OTHER DOCUMENTS NECESSARY FOR THE CLOSE OF ESCROW OF THE FORMER DOCTORS MEDICAL CENTER PROPERTY AT 2000 VALE ROAD, SAN PABLO
Label
RECOMMENDATION
Recommendation
Adopt Resolution
Body
Compliance statements
Policy Area, “Economic Development,” and particularly Development Projects, is an adopted policy item under the FY 2018-21 City Council Priority Workplan Update, effective November 1, 2017.
CEQA Compliance Statement
This resolution to “clear up title” to the former Doctors Medical Center (DMC) property before it is sold is not an activity that may cause a direct or reasonably foreseeable indirect physical environmental change and is not a project as defined by CEQA (California Government Code Section 21065) or the CEQA Guidelines (California Public Resources Code Section 15738). Future development of the property may require further environmental review.
BACKGROUND
Given the financial struggles of Doctor’s Medical Center (“DMC”), the City Council approved the purchase of certain real property from the West Contra Costa Healthcare District (“District”). These properties included: 1) a parking lot associated with the hospital at 2000 Vale Road pursuant to a Purchase and Sale Agreement between the City and the District dated March 11, 2015 (“March 11, 2015 Agreement”); and 2) medical office buildings (2023 Vale Road) and condominium (2121 Vale Road #105) adjacent to DMC pursuant to a Purchase and Sale Agreement between the City and District dated March 26, 2015 (“March 26, 2015 Agreement”).
The March 11, 2015 Agreement also included a Right of First Refusal for the purchase of the former DMC hospital site that the District continued to own that was memorialized in a recorded Memorandum of Right of First Refusal dated March 13, 2015 (“Right of First Refusal” which is attached). The City and District also entered into a License Agreement dated March 13, 2015, which was recorded, to allow the District to use parts of the parking lot that the City had purchased pursuant to the March 11, 2015 Agreement (“License Agreement” which is attached).
On November 15, 2016, the District notified the City of its Purchase and Sale Agreement for the former DMC hospital site with the Lytton Rancheria of California, indicating that the City had 20 business days to exercise its right of first refusal to purchase the DMC site pursuant to the terms of the March 11, 2015 Agreement between the District and the City. The City Council considered this option in closed session and directed that the City decline the purchase of the DMC site as set forth in the attached letter dated November 21, 2016. With the close of escrow for the DMC hospital site now set for April 2, 2018, the title company has requested that the City memorialize by resolution that it declined to exercise the Right of First Refusal and is quitclaiming that option back to the District pursuant to the Quitclaim Deed attached to the Resolution, which will be effective only if the transaction between the District and Lytton Rancheria closes escrow.
In addition, the District has no need for the parking and other uses described in the License Agreement and it is recommended that a formal termination of the License Agreement be executed to clear title to both the District’s property and the City’s property. It is expected that this termination will be effectuated regardless of whether the transaction between the District and Lytton Rancheria closes escrow.
Finally, we understand that this will “clean up” all title issues regarding the DMC hospital site. However, given the District’s urgency in closing escrow, staff is requesting the authority to execute any ancillary documents to effectuate this transaction as approved by both the City Manager and City Attorney.
FISCAL IMPACT
There is no direct fiscal impact to these recommended actions. However, putting the now vacant, former DMC hospital site into productive use will be beneficial to the City generally and financially.