PREPARED BY: Charles Ching DATE OF MEETING: 06/01/20
SUBJECT:
TITLE
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN PABLO APPROVING AND AUTHORIZING EXECUTION OF A DISPOSITION AND DEVELOPMENT AGREEMENT WITH AMERICAN RECESS, LLC AND MULHOLLAND DRIVE COMPANY, LLC FOR THE SALE AND DEVELOPMENT OF THE SOUTHERN PORTION OF PROPERTY LOCATED AT 2600 MORAGA ROAD
Label
CITY MANAGER RECOMMENDATION
Recommendation
Adopt Resolution
Body
Compliance statements
Economic Development and Diversification is a major policy goal under the FY 2019-21 Council Priority Workplan, effective March 1, 2019.
CEQA Compliance Statement
Following the execution of the Disposition and Development Agreement but prior to the acquisition of the Property, the Developer will need to undertake any required environmental review in compliance with the California Environmental Quality Act.
BACKGROUND
On December 9, 2019, City Council adopted resolution 2019-167 declaring the 4.08-acre southern portion of City-owned property located at 2600 Moraga Road (the “Property”) as surplus under the requirements of Government Code section 54220.
Upon the City’s determination that the Property is surplus land, the City offered the Property for sale or lease to certain public entities for a period of 60 days under the procedures set forth in Government Code Section 54220 et seq. and did not receive any interest.
On December 16, 2019, City Council under Closed Session authorized staff to begin negotiations with American Recess, LLC and Mulholland Drive Company, LLC (together the “Developer”) for the disposition and development of the Property as a self-storage facility (the “Project”).
The City and the Developer have negotiated the substantive business terms of a Disposition and Development Agreement (the “DDA”) providing for the sale and development of the Property. The purchase price for the Property is $5,125,000; the proposed DDA is attached to this staff report as Attachment No. 1.
The proposed DDA provides the Developer up to 360 days to obtain all the necessary entitlements to develop the Project and calls for the Developer to construct the Project on the Property within a certain time frame and according to a specific scope of development.
The sale of the Property is subject to obtaining all required Project entitlements, including a General Plan amendment and review under the California Environmental Quality Act. General Plan project consistency will be obtained when all Project entitlements are obtained.
The schedule currently estimates that close of escrow for the Property would occur as soon as possible but no later than July 31, 2021 and that construction would commence no later than August 31, 2021.
Pursuant to the proposed DDA, the Developer must obtain all necessary approvals to develop the Project prior to close of escrow for the Property.
The DDA contains provisions for the termination of the DDA by the City prior to the conveyance of title to the Property if the Developer is in default under the DDA or has not performed certain actions required by the DDA. After conveyance of the Property to the Developer, if development of the Project stalls due to the Developer’s default, the DDA provides the City with an option to repurchase the Property.
FISCAL IMPACT
The DDA provides for the sale of the Property for $5,125,000 with the City paying for its proportionate share of transaction costs including escrow, notary and other required fees.