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APPROVE AMENDMENT OF OPTION AGREEMENT WITH STOCKTONIANS TAKING ACTION TO NEUTRALIZE DRUGS (STAND)
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RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Authorizing an amendment to extend the Option Agreement with Stocktonians Taking Action to Neutralize Drugs for City-owned property at 2222 and 2244 South Airport Way; and
2. Authorize the City Manager, or designee, to take necessary and appropriate actions to carry out the purpose and intent of the resolution.
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Summary
City Council approved a two-year Purchase Option Agreement with Stocktonians Taking Action to Neutralize Drugs (STAND) on April 17, 2018 (Attachment A - Resolution 2018-04-17-1104), and the City Manager executed the agreement on May 10, 2018, for the sale of the City-owned real estate at 2222 and 2244 South Airport Way (Attachment B - Vicinity Map). The developer, STAND, intends to construct a health clinic, as well as office space, public gathering space, affordable housing and/or retail services.
The Option Agreement will expire on May 10, 2020, and the developer desires to extend it for an additional three (3) years through May 10, 2023. Pursuant to Section 17 of the Agreement, the Agreement may be amended only by written approval of both parties. The extension will allow the developer additional time to conduct its due diligence.
DISCUSSION
Background
Through the dissolution of Redevelopment in 2012, the former Redevelopment Agency was required to implement a Long-Range Property Management Plan, with a detailed description of each property that is owned, and the plan to develop the existing properties for disposition or how they would be held for future development. The plan was approved by the State of California in December 2015.
In addition, the 2015 Council adopted City of Stockton Economic Development Strategic Plan outlining a Neighborhood Revitalization Program as part of the implementation plan. It focuses on utilizing existing City resources (e.g., publicly-owned development sites) as one way to bring much-needed revitalization to the South Stockton neighborhood.
In May 2016, a Request for Interest seeking proposals from parties interested in developing City-owned properties located at 2222 South Airport Way (APN 169-163-01) and 2244 South Airport Way (APN 169-151-01) was issued by the City. After review by a selection committee and recommendation of City staff, the City Council approved an ENRA between the City and STAND on October 18, 2016, to allow staff to negotiate specific terms associated with a Purchase Option Agreement for the above-mentioned parcels.
City Council approved a Purchase Option Agreement on April 17, 2018, and the City Manager executed the agreement on May 10, 2018 (Attachment C - Option Agreement.). The terms of the Option Agreement for the purchase of City-owned property located at 2222 South Airport Way and 2244 South Airport Way will continue with the proposed extension. Below are the major deal points:
• Purchase Price $1.00 for both parcels
• Lot Size (both parcels) 1.6 acres
• Closing costs Paid 100% by STAND
• Environmental Reimbursement Up to $47,000 paid to City at the close of escrow
Since STAND intends to develop the subject properties for the economic and social benefit of the surrounding neighborhood, Council approved that the property be sold for $1.00. The project, particularly the health clinic and community space, would not come to fruition due to funding shortfalls should the City sell the property at market value.
The existing Agreement also stipulates that should STAND fail to obtain building permits for construction of the project as described within five years of the City conveying the property, the City shall have the right to repurchase the property for the original $1.00 purchase price. The City also has the right to repurchase the property for $1.00 should STAND fail to commence construction of said project within six months of building permit issuance. The City’s right to repurchase the subject parcels at the original purchase price shall not be subject to or limited by any mortgage or debt recorded against said parcels unless agreed upon by the City to allow STAND to encumber costs associated with any potential environmental remediation against the subject parcels.
Present Situation
The developer, STAND, desires to extend the Option Agreement for an additional three years through May 10, 2023. Pursuant to Section 17 of the Agreement, the Agreement may be amended only by written approval of both parties. As such, it is recommended that Council approve a three-year extension to the Option Agreement commencing on May 10, 2020, and expiring on May 10, 2023. The terms of the original Option Agreement will remain the same with this extension.
The developer is proposing to develop the site for the economic and social benefit of the surrounding neighborhood, which will include a health clinic, as well as a combination of non-profit and/or social services office space, community meeting and public gathering space, affordable housing and/or retail services that serve the nearby community. The extension will allow the developer additional time to conduct its due diligence.
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 March 12, 2020.
FINANCIAL SUMMARY
Net proceeds from the sale of the subject City-owned parcels must be remitted to the San Joaquin County Auditor-Controller for disbursement to the taxing entities in accordance with the Long-Range Property Management Plan. The proceeds will be deposited into the Liability Fund Account No 633-0000-461 and remitted to the San Joaquin County Auditor-Controller. Reimbursement for the Phase II environmental study will be deposited into the General Fund Reimbursements Account No. 010-1760-371.
Attachment A - Resolution 2018-04-17-1104
Attachment B - Vicinity Map
Attachment C - Option Agreement