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AUTHORIZE THE ACQUISITION OF REAL PROPERTY LOCATED AT 303 NORTH EL DORADO STREET AND ESTABLISH A REDEVELOPMENT FUND
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Authorizing the acquisition of real property located at 303 North El Dorado Street, Stockton California, APN 139-080-03 (Property) from Wells Fargo Bank (Seller) in the amount of up to $425,000;
2. Authorizing, upon acquisition of the Property, a lease-back of a portion of the Property to Seller pursuant to terms substantially similar to the Branch and Office Lease Agreement included as Exhibit 1 to the resolution.
3. Establishing a Redevelopment Unrestricted Sub-Fund within the General Fund; as a mechanism for use in the City’s redevelopment efforts including acquisition, blight abatement, demolition, and other actions to support the City’s development; authorizing a budget amendment and transfer in the amount of $1.94 million from the Economic Development Department’s General Fund to the Redevelopment Fund.
4. Authorizing the appropriation of Downtown Infill Infrastructure Reimbursement Program funds from Economic Development Budget to the Redevelopment fund to be used for property acquisition, demolition, and environmental clearance to include the acquisition and related costs of 303 North El Dorado Street;
5. Authorizing the filing Notice of Exemption under Section 15061(B)(3) under the California Environmental Quality Act (CEQA) for the acquisition of real property located at 303 North El Dorado Street, Stockton California, APN 139-080-03
6. Authorizing the City Manager to execute a purchase and sale agreement substantially similar in form to the exhibits attached to the resolution, any needed lease agreements associated with this transaction, as well as any due diligence costs associated with the purchase of the Property, and take actions necessary and appropriate to carry out the purpose and intent of this resolution.
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Summary
City Council adopted the Economic Development Strategic Action Plan on January 25, 2022. A key strategy identified as part of the plan was investment and revitalization of downtown Stockton, recognizing the need for infrastructure. The City’s Envision Stockton 2040 General Plan, adopted in December 2018, relies on strategic infill development. As such, the Economic Development Department has been positioning, and successful, in capturing grant funds for environmental clean-up, setting a precedent for future success in regard to redevelopment projects. Through Motion 2023-02-07-1210, the City was also able to de-obligate $1.94 million from the Open Windows project, which will now be used for a critical step in the development of downtown land assembly.
Strategically, acquiring the Property would allow the City to have site control of two full city blocks comprised of the Wells Fargo Bank, the Permit Center, the buildings attached to the Permit Center, and City Hall. The reuse and redevelopment of these two City blocks is a critical building block for downtown revitalization.
DISCUSSION
Background
A City Department may initiate the acquisition of real property according to Administrative Directive HRD-01, Acquisition of Real Property, by submitting a written request to the City Manager.
Economic Development Department (EDD) staff requested approval to start the acquisition process for the Property (Attachment A - Vicinity Map and Attachment B - Aerial Map). The proximity of this parcel to City Hall, the Permit Center, Al Lee’s Garage, and the Annex is a critical acquisition in redeveloping the entire block. Currently, Wells Fargo is looking to sell the parcel.
An appraisal was completed by City staff as part of Administrative Directive HRD-01. A Certificate of Just Compensation must be approved by the City Manager based on the written appraisal review prepared by staff so that negotiations for the acquisition of the Property may be authorized, and staff may make a written offer in the amount stated in the Certificate. Comps for similar properties were $12-30/sq. ft. for land value only. Staff started negotiations at $918,090 which is $15/sq. ft. Purchase price offer was to be contingent on Wells Fargo completing demolition of the building.
The following is a sample of similar properties that were reviewed by staff:
|
Address |
APN |
Sale Price |
Lot Sq. Ft |
Price/sq ft |
|
190 N American |
139-270-14 |
$736,000 |
34,983 |
$21/sq ft. |
|
542 N American |
139-222-01 |
$60,000 |
3,864 |
$15.53/ sq ft. |
|
Washington Street |
137-360-58 |
$120,000 |
9,788 |
$12.26/sq ft. |
Present Situation
With City Manager approval, EDD staff presented an offer to the Property owner and negotiated a Purchase and Sale Agreement (Exhibit 2 to the Resolution). After discussion, the purchase price was reduced to $425,000 and the City would be responsible for demolition. In addition, Wells Fargo has the option of a limited lease to accommodate moving to their new location. Because the City would own the Property during the lease-back, a notice for the lease of City-owned real property was published on May 4, 2024 pursuant to City Charter section 510.
Staff has negotiated a 180 day Inspection Period and barring any issues would close on the Property not less than 60 days after the Inspection Period. During the Inspection Period staff will conduct thorough due diligence. Staff will also prepare to demolish the building along with reviewing and assessing the remaining buildings on the block for environmental abatement and demolition. The Seller plans to open a new location nearby and is currently under construction. To ensure continuity of service and a smooth transition between sites the City has negotiated a short-term lease option.
Funding for the purchase is provided by reprogramming the Downtown Infill Infrastructure Reimbursement Program Funds that were de-obligated from the Open Windows Project. The de-obligated amount of $1.94 million will seed a revolving Redevelopment fund that will allow the Economic Development Department to further the goals of the Economic Development Strategic Action Plan including acquisition, blight abatement, demolition, and necessary actions that support downtown development. The initial primary focus of the fund will be on strategic acquisition, as land assembly is a key factor in the City’s economic development strategy.
FINANCIAL SUMMARY
The proposed resolution would establish a new unrestricted sub-fund within the General Fund. The purpose of this sub-fund would be to establish a tracking mechanism to enable fund balance to rollover, and be added to augmented when appropriate, for the purposes of facilitating property acquisition and economic development activities, with a focus on the downtown area as funds become available.
When established, approximately $1.94 million will be transferred from EDD’s General Fund to the redevelopment fund for the acquisition. There is sufficient available budget in EDD’s General Fund to support this effort. Earnest funds of approximately $60K will be wired to meet the conditions of the purchase and sale agreement.
Attachment A- Vicinity Map
Attachment B- Aerial Map