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AUTHORIZE AMENDMENT OF PURCHASE AND SALE AGREEMENT FOR A PORTION OF CITY PROPERTY - 2501 NAVY DRIVE
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RECOMMENDATION
It is recommended that the City Council approve a resolution authorizing the City Manager to execute the First Amendment to Agreement for the Purchase and Sale of the Real Property located at 2501 Navy Drive.
It is further recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of the resolution.
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Summary
The City-owned property currently used for the Municipal Utilities Department (MUD) Stores at 2501 Navy Drive is adjacent to an industrial property owned by Charles and Rebecca Toledo and operated as C&R International Sales (C&R). C&R has an interest in a portion of the City-owned property for truck access due to the widening of Navy Drive.
C&R originally offered to purchase approximately 1.19 acres for $490,000 as part of a purchase and sale agreement previously approved on September 1, 2015. A survey of the site prior to entering escrow revealed the actual size of the site to be approximately 1.74 acres. The additional acreage increased the value of the property resulting in C&R not moving forward with the purchase of the entire property because of the increased cost.
Instead, C&R proposed to amend the original purchase agreement. The proposed amendment would allow for the processing of a lot line adjustment, and C&R would purchase only the easterly portion of the site, approximately 0.54 acres, for $219,000, which is based on a Caltrans appraisal. This is a reduction in acreage and purchase amount from the previously approved purchase and sale agreement.
Upon review, staff determined that a lot line adjustment could be done and the remaining 1.20 acre portion would be a viable parcel to sell separately. Consequently, it is recommended that Council approve the proposed resolution.
DISCUSSION
Background
Highway 4 (Crosstown Freeway) is currently being extended west from Fresno Avenue to Navy Drive just east of the Regional Wastewater Control Facility (RWCF). The California Department of Transportation (CalTrans) designed this extension to route Port of Stockton Interstate traffic away from Fresno Avenue for ease of access to the Interstate Highway System. A 2011 traffic signal study for the RWCF Main Plant entrance indicated post-project completion traffic on Navy Drive to increase by a factor of 3.5 peak-hour morning and 3.8 peak-hour afternoon, and is expected to increase nearly 6 times by 2035.
This projected increase in traffic on Navy Drive to and from the Port of Stockton could potentially cause delays and unsafe turn and crossing movements into and from the RWCF Main Plant Site, as well as the existing MUD Stores site at 2501 Navy Drive, by the MUD personnel.
C&R is currently located at 2403 Navy Drive, just east of the MUD Stores property and the company is interested in purchasing a portion of the MUD Stores site. The MUD Stores is the location where many of the utilities spare parts and supplies are stored in a large warehouse for use by field and maintenance crews. At a minimum, C&R desired approximately 0.54 acres on the easterly portion of the property in order to expand their property to accommodate truck turning movements impinged by Caltrans’ Highway 4 Extension and Navy Drive Widening Projects.
On April 27, 2015, City granted permission to C&R via a Right of Entry agreement to enter and install a truck turning area within the easterly 120 feet of the MUD Stores site. C&R agreed to relocate all of the MUD’s stored material and provide security fencing bordering the MUD Stores area and the portion to be temporarily occupied by C&R. It was understood and agreed that C&R would return the occupied property to its original or better condition immediately after completion of the Highway 4 Extension and Navy Drive Widening Projects (Attachment A).
C&R had expressed interest in purchasing a larger portion of the MUD Stores site for potential facility expansion. On September 1, 2015, City Council adopted Resolution No. 2015-09-01-1201-01 approving the filing of Notice of Exemption No. CE009-15, approving the sale of real property from the City of Stockton to the owners of C&R, Charles Toledo and Rebecca Toledo for $490,000, and amending the Fiscal Year 2015-16 Annual Capital Fund Budget (Attachment B).
Present Situation
The Agreement for the Purchase and Sale of Real Property (Agreement) with the owners of C&R, Charles and Rebecca Toledo, was executed on September 17, 2015, (Attachment C). C&R offered to purchase 1.19 acres of the City of Stockton property at 2501 Navy Drive for $490,000 to expand their property to accommodate truck turning movements from the widened Navy Drive and allow for future business expansion opportunities.
A survey of the site prior to entering escrow revealed the actual size of the property to be approximately 1.74 acres. The additional acreage increased the value of the property. The City was notified of C&R’s decision not to move forward with the purchase of the property due to the increased costs. Upon receiving this information, the City then required that C&R fulfill the terms and conditions of the aforementioned Right of Entry agreement and restore the property to its original condition.
In response, C&R requested the City consider selling the eastern 0.54 acres (120 feet of the property) as currently occupied by them, and made an offer of $219,000 based on a July 22, 2014, Caltrans appraisal (Attachment D). C&R will agree to pay for all the necessary engineering work and other fees, including title costs, associated with the preparation and processing of a lot line adjustment, and recording of new grant deeds. The MUD and the Economic Development Department staff reviewed the proposal and agreed that the offer is fair and reasonable.
If approved, this resolution would authorize the City Manager to execute an Amendment to the Agreement for the Purchase and Sale of Real Property located at 2501 Navy Drive to only include the easterly 0.54 acres (120 feet of the property) for $219,000, and execute any related documents with this transaction.
According to Caltrans, the Highway 4 Extension and Navy Drive Widening Projects will be completed by the fall of 2016. The MUD continues to look for a temporary location for the MUD Stores until a permanent Stores facility location is identified in conjunction with the RWCF Capital Improvement and Energy Management Plan’s Progressive Design-Build Project overall site development. The remainder of the MUD Stores site parcel will still be available for sale as part of the normal surplus property procedures upon relocation of the Stores facility.
FINANCIAL SUMMARY
Upon close of escrow of the 2501 Navy Drive portion, the gross sales amount of $219,000, less approximately $8,000 for escrow closing costs, will be deposited into the Capital fund account 301-0000-461.
Attachment A - Right of Entry - 2015-04-27 - 2501 Navy Drive
Attachment B - Resolution 2015-09-01-1201-01 PSA 2501 Navy Drive
Attachment C - Purchase and Sale Agreement - 2015-09-17 - 2501 Navy Drive
Attachment D - Caltrans Appraisal MUD Stores PSA East 120 - 07-22-2014