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SALE OF CITY-OWNED PROPERTY LOCATED AT 1000 NORTH HUNTER STREET, STOCKTON
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RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Authorizing the sale of 1000 North Hunter Street (APN 139-040-19, 20,21, & 22) to the Philomathean Foundation; and
2. Authorizing the City Manager to execute the purchase agreement and any related documents and take any and all actions necessary and appropriate to carry out the purpose and intent of this resolution.
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SUMMARY
In 2000, the City acquired 1000 North Hunter Street from the Philomathean Club ("Club") for $25,000. In 2002, the City completed the purchase for the remaining three parcels located on the same site for an additional $3,500 (Attachment A - Vicinity Map, Attachment B - Aerial Map, and Attachment C - Property Photo). The City was to perform maintenance and improvements on the property as part of the original purchase agreement (Attachment D - Original Agreement). Due to the high cost and the lack of available funds, most of the improvements have not been completed.
On May 21, 2013, the City Council asked staff to negotiate a sale of the property to the Club. An offer was recently received from the Philomathean Foundation ("Foundation") for the City's original purchase price of $28,500. The Foundation is a newly formed organization, independent of the Club, with its main purpose to preserve the historic Philomathean Building and to allow the Club to continue to function at this location. The Foundation is willing to assume all duties, liabilities, and obligations entered into by the City of Stockton and the Club as it relates to the buildings and existence of the Club. The Club has also agreed to waive its right to any proceeds due it under the terms of the original agreement.
DISCUSSION
Background
The Club has owned and occupied the Philomathean building in the Magnolia District since December 30, 1911. The Club was interested in the City acquiring the property, since it was no longer financially able to maintain the building. In 2000, the City acquired 1000 North Hunter Street, which consisted of the building and adjacent parking lot, from the Club for $25,000. In 2002, the City completed the purchase by acquiring three additional vacant lots on the Club property for an additional $3,500. Some of the terms and conditions of the sale to the City included the Club's right to use the premises rent free as long as the Club exists, receive a one-third portion of any sale of the property, and City to complete all repairs as outlined in the agreement.
The building is a classic example of early Stockton architecture within the Magnolia District and the City intended to preserve it as part of its overall strategy of redeveloping the Midtown-Magnolia District neighborhood. The Club continues to occupy the building for its meetings and other activities, as stipulated within the original purchase agreement with the City.
Present Situation
In May 2013, the City Council was presented a surplus property list for the purpose of selling the properties. City Council requested that staff remove 1000 North Hunter Street, along with a few other properties, from the surplus list and negotiate a sale directly with the Club to allow for its continued use of the property. After many months of negotiations, the Foundation made an offer to purchase the property in its present condition as well as the adjacent parcels, at a sales price of $28,500. Included in the agreement, the Foundation has agreed to do certain repairs immediately at a cost of $62,870 (Attachment E- Immediate Rehabilitation Repairs).
The proposed sale includes the three adjacent vacant lots that were originally purchased by the City from the Club in 2002 as part of the original purchase price of $28,500. The offer is from the Foundation which is willing to assume all duties, obligations, and complete all required improvements entered into by the City of Stockton and the Club as it relates to the use and maintenance of the building. That agreement allows the Club to continue to use the building for all of its functions as long as there are at least ten members. The original agreement also allowed the Club to receive one-third of any sale proceeds, as long as it has at least ten members.
Staff previously reviewed the property with an independent broker and received an opinion of value of $396,000 for all the property, including the three additional vacant lots. The building is in need of major repairs and the Community Services Department compiled an estimate of repair costs. A detailed spreadsheet is attached itemizing the repairs and estimated costs (Attachment F - Itemized Repair Costs). In addition, the roof needs replacing, which is estimated to cost $425,000. The total cost of repairs to the building is estimated to be $541,220. Further, the annual maintenance cost of the building, in its present state, is approximately $16,480 per year. Based on the information regarding the buildings present condition, the cost to repair the building is greater than the current value.
Staff recommends that the City Council authorize the proposed sale of 1000 North Hunter Street and the adjoining three parcels to the Foundation in the amount of $28,500, based on estimated value less the cost of improvements. Staff also recommends that the sale include a waiver by the Club of any proceeds from the sale of the subject properties.
Notification
As required, a "Notice of Intent to Grant or Sell Real Property Interest" in accordance with the provisions of Article V, Section 510, of the Charter of the City of Stockton was advertised in the legal notice section of The Record on June 10, 2015.
ENVIRONMENTAL CLEARANCE
It has been determined by the Community Development Department that this action/project is exempt from the requirements of the California Environmental Quality Act (CEQA) and has been granted a "Categorical Exemption" under Article 19 and, specifically by Section 15312, Class 12 of the State CEQA Guidelines. In accordance with Section 65402 of the Government Code, the Community Development Department further determined that this project/action conforms to the City's General Plan designation for the site and with the General Plan Policy Document, as amended.
FINANCIAL SUMMARY
Upon close of escrow, the gross amount of $28,500, less approximately $3,300 for escrow closing costs, will be deposited into the Disposition/Sale of Fixed Assets Account No. 010-0000-461, and approximately $500 will be allocated from 010-0000-461 for advertising and filing fees for the Notice of Exemption.
Attachment A - Vicinity Map
Attachment B - Aerial Map
Attachment C - Property Photo
Attachment D - Original Agreement
Attachment E - Immediate Rehabilitation Repairs
Attachment F - Itemized Repair Costs