HomeMy WebLinkAboutAGENDA REPORT 2008 0319 CC REG ITEM 08AMOORPARK CITY COUNCIL
AGENDA REPORT
TO: Honorable City Council
From: David C. Moe II, Redevelopment Manager �G
Date: March 10, 2008 (CC Meeting of 3/19/08)
Il�ul
9. A.
CITY OF MOORPARK, CALIFORNIA
City Council Meeting
of 3 -l9 -.2006'
ACTION:
ov
Subject: Consider Resolution Revising Approval of Sale of Property Owned
by the Redevelopment Agency of the City of Moorpark, located at 192
High Street, to Aszkenazy Development, Inc.
BACKGROUND AND DISCUSSION
The Redevelopment Agency of the City of Moorpark ( "Agency ") acquired a 2.34 acre
site, located at 192 High Street ( "Property "), from the Ventura County Transportation
Commission on August 8, 1993, at a cost of $393,451.34. An aerial of the Property is
attached as EXHIBIT A. This Property was part of a 4.77 acre purchase for
$800,000.00. Since the acquisition, the Property has been leased to a variety of
commercial tenants.
The Agency has negotiated a Disposition and Development Agreement with Aszkenazy
Development, Inc. ( "Developer ") to construct two, two story, commercial buildings
totaling 67,103 square feet. The proposed project would be built in two phases under
separate Disposition and Development Agreements.
The first phase of the project would be sold under this Disposition and Development
Agreement and include the land from east of the site leased to the Chamber of
Commerce location to about Bard Street. The Developer would construct a 39,916
square foot building to include office and retail uses.
The second phase would include the land from Bard Street to the north Metrolink
parking lot. The Developer proposes to construct the 27,187 square foot building in the
second phase, which would also include office and retail uses.
The Agency will subdivide the Property into three parcels. Parcel one would be the
property leased by the Chamber of Commerce, which is not included in this project.
Parcel two is the first phase of this project. Parcel three is phase II, which will be held
by the Agency for future development. Developer will have a three year option (from
execution of Disposition and Development Agreement for phase 1) to purchase parcel
000001
Honorable City Council
March 19, 2008
Page 2
three at fair market price; however, the Developer must have the building in phase one
90% leased to exercise the option.
The sale price of parcel two (phase 1) was reduced from $1,123,414.00 to $920,854.00
to reflect the current fair market value of the property. The Agency decided to
reappraise the Property as the appraisal used for the sale was over six months old.
California Community Redevelopment Law ( "CCRU) Section 33433 requires that the
legislative body approve, by resolution and after a public hearing, any agency sale or
lease of property which was acquired with tax increment funds. Said resolution must
also include the following three findings:
1. The sale of property will assist in the elimination of blight
in the Moorpark Redevelopment Project Area.
2. The sale of property is consistent with the goals and
objectives in the 2005 -2009 Implementation Plan for the
Moorpark Redevelopment Project pursuant to Section
33490 of the CCRL.
3. The property is being sold to the Developer at the fair
market price at the highest and best use in accordance
with the Moorpark Redevelopment Plan.
Therefore, since the Agency did acquire the Property with tax increment funds, the City
Council will need to approve the proposed sale and make the three required findings.
The Section 33433 Summary Report (EXHIBIT B) summarizes all Agency's cost
associated with the acquisition, holding and sale of the Property; states that the
Property is being sold for the fair market value; and describes how the sale of the
Property will assist with the elimination of blight and is consistent with the 2005 -2009
Five Year Implementation Plan.
STAFF RECOMMENDATION
1) Open public hearing, take public testimony, and close the public hearing; and
2) Approve Resolution No.
Agency and Developer
approval by the Agency.
2008 - approving sale of Property between the
subject to Disposition and Development Agreement
i000Ct0
Honorable City Council
March 19, 2008
Page 3
Exhibit "A" Aerial
Exhibit "B" Section 33433 Summary Report
Exhibit "C" Resolution
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EXHIBIT B
URBAN
FUTURES
INCORPORATED Finance • Redevelopment • Implementation • Planning • Bond Administration • Continuing Disclosure
INFORMATION SUMMARY
FOR PROPOSED
DISPOSITION AND DEVELOPMENT AGREEMENT WITH
ASZKENAZY DEVELOPMENT, INC., A CALIFORNIA CORPORATION
°33433 REPORT"
This summary was prepared for the Moorpark Redevelopment Agency (the "Agency's pursuant
to Section 33433 of the California Community Redevelopment Law (Part 1 of Division 24 of the
Health and Safety Code, the "CCRL') with respect to the Disposition and Development
Agreement ( "DDA') between the Agency and Aszkenazy Development Inc., a California
Corporation (the "Developer'. The DDA pertains to the development of a multi- tenant
commercial building of 39,916 square feet of gross building area (the "Project') on an
approximately 65,776 square foot parcel (i.e., approximately 1.51 acres of land) located near
the southeast corner of Moorpark Avenue and High Street (the "Site'} within the Moorpark
Redevelopment Project Area. In addition, this report supersedes the 33433 Report prepared by
Urban Futures, Inc. for the Project dated November 21, 2007.
1. Cost of Project to Agency:
The overall Project is not anticipated to produce a net cost to the Agency. On the
contrary, Urban Futures, Inc. projects that the Agency's overall revenues, interest
earnings and land sale proceeds resulting from its property management, purchase
money financing and Site disposition, as contemplated in the DDA, are anticipated to be
approximately $1,017,871. This conclusion is based upon the following data:
a. Land Acquisition Cost: On August 17, 1993, the Agency acquired
approximately 4.7 acres of land (approximately 204,732 square feet)(the
"Acquisition Property') from the Ventura County Transportation Commission
( "VCTC'� for $800,000. Agency records reflect that the Agency incurred
$39,140.93 of acquisition - related costs. Further, during 2007, the Agency
incurred $50,000 of additional costs to rectify certain property boundary
discrepancies with the VCTC with respect to adding approximately 14,000 square
feet of additional area to the Acquisition Property and incurred $11,600 of
additional costs for the preparation of a current environmental assessment of the
Site. As a result, the Acquisition Property currently consists of an area of
approximately 218,732 square feet or approximately 5.02 acres. Therefore, in
total, the Agency has incurred $900,740.93 of costs related to purchasing the
Acquisition Property. The Site consists of approximately 30% of the Acquisition
Property. Therefore, on a prorated basis the Agency has incurred approximately
$270,222.28 (rounded to $270,223) of costs reasonably related to acquiring the
Site.
Crestview Corporate Center - 3111 N. Tustin Street, Suite 230, Orange, CA 92865 -1753
Tel: (714) 283 -9334 www.urbanfuturesine.com Fax: (714) 283 -9319
J� 0005
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b. Clearance Costs: The proposed DDA obligates the Agency to demolish and
clear the structures currently located on the Site. Agency staff and its
construction experts have inspected the improvements on the Site and have
determined that the Agency requires approximate $313,000 to carryout this
work.
C. Relocation Costs: All of the current tenants on the Site have post acquisition
month -to -month rental agreements. As such, the tenants are not eligible for
relocation benefits. Notwithstanding this, one particular sub - tenant (i.e., Carlos
and Mayra Perez, DBA Maria's Family Restaurant [the " Maria's Restaurant"]) has
requested assistance from the Agency to remain as a tenant within the Project.
In addition, the Developer has indicated a desire to include Maria's Restaurant
within the Project. As a result, the Agency has committed to assist Maria's
Restaurant as may be required consistent with the Agency's Owner Participation
Rules. In addition, the level of such assistance is unknown as of the date of this
33433 Report. Therefore, for the purposes of this 33433 Report it is assumed
that any of the Agency's expenses with respect to assisting Maria's Restaurant
remain as a tenant within the Project will be characterized as economic
development expenses rather than relocation expenses. Notwithstanding the
manner in which the assistance to Maria's Restaurant is classified, it would be
received in a seamless fashion by the participant. Therefore and only for the
purposes of this analysis, it is assumed that the Agency will not incur any
relocation costs.
d. Improvement Costs: The Agency has not incurred any improvement
costs.
e. Finance Costs: None
Other Costs: None
g. Offsetting Revenue: The sum of the above costs (i.e., items "a" through
"F is $583,223, which represents the Agency's current total investment in the
Site. These costs are offset by the $920,854 sales price of the Site, the prorated
rental income received by Agency during the term of its ownership of the
Acquisition Property and the interest income anticipated to be earned from the
Agency's purchase money loan to the Developer over the next ten years.
With respect to the rental income, Agency staff has estimated that the Agency
has received roughly $223,000 of rental income attributable the Acquisition
Property over the last nine years (i.e., since 1999). Unfortunately, the Agency no
longer has records that will confirm the amount of rental income it received from
the Acquisition Property during the Agency's first five years of ownership.
However, upon obtaining title to the Acquisition Property the rent role shows that
the annualized rental income from the then existing tenants was $52,320.
Therefore, in light of the lack of records and the knowledge that tenants actually
occupied the Acquisition Property, Urban Futures, Inc. believes it is appropriate
to provide a conservative estimate of the rental income the Agency received
during its initial five year period of ownership of the Acquisition Property. With
Aszkenazy DDA 33433 Report v3 -07 -08 Final (3) ; j
Page 3
the foregoing in mind and in order to be extraordinarily conservative, Urban
Futures, Inc. believes that an estimate of annual rental income received prior to
1999 should be based on not more than 50% of the Acquisition Property's initial
annualized rental role. This conservative estimate should fairly allow for vagaries
that may have occurred with respect to tenant changes and /or short-term
vacancies. Using this formula, Urban Futures, Inc. believes that it is reasonable
to project that the Agency received at least $26,000 per year in rental income
during the first five years of the Agency's ownership of the Acquisition Property
for a total of approximately $130,000 (i.e., $52,320 x .50 = $26,160, rounded to
$26,000 x 5 = $130,000). Therefore, it is reasonable to project that throughout
the term of the Agency's ownership of the Acquisition Property, the Agency
received at least $353,000 (i.e., $223,000 + $130,000 = $353,000) of rental
income from this property. On a prorated basis (i.e., 30 %), $105,900 may be
reasonably attributed to the Site.
It is also important to note that the DDA calls for approximately 76% of the
purchase price (i.e., $696,171) to be funded with an Agency purchase money 10-
year interest only subordinate loan (the "Agency Loan'. The $224,683 balance
will be paid in cash at escrow closing. Agency staff and the Developer have
determined that a fair interest rate for the Agency Loan is 8.25 %. By way of
comparison and as of the date of this report, the interest rate proposed for the
Agency Loan is 2.25% above the Prime Rate and 1.92% above the SBA 504
Program rate. Given these parameters, Urban Futures, Inc. concurs that the
interest rate proposed for the Agency Loan is fair and reasonable. Based on the
proposed rate, the Agency Loan, will generate $57,434 of interest income per
year for each year that it remains outstanding or $574,340 over its full ten year
term, if it remains outstanding for a full ten -year period.
The sum of the above noted sources (i.e., $920,854 + $105,900 + $574,340) is
$1,601,094. Therefore, Urban Futures, Inc. projects that the Agency's overall
revenues, interest earnings and land sale proceeds resulting from its property
management, purchase money financing and Site disposition, as contemplated in
the DDA, are anticipated to be approximately $1,017,871 (i.e., $1,601,094 -
$583,223 = $1,017,871).
2. Estimated value of interest to be conveyed or leased, determined at highest
and best use permitted by the Redevelopment Plan:
In order to determine the estimated value of the interest to be conveyed, staff engaged
the services of Dale Donerkiel, SRPA, SRA and California Certified General Real Estate
Appraiser ("Appraiser') as an expert, third party real estate appraiser. On February 4,
2008, the Appraiser completed a real estate appraisal on an approximately 2.36 -acre
(approximately 108,142 square feet) portion of the Acquisition Property, from which the
Site will be created (the "Appraised Property'. The appraisal is on file with the Agency.
Based upon their value analysis, it is the Appraiser's opinion that the estimated value of
the Appraised Property at its highest and best use permitted by the Redevelopment Plan
equals a total of $1,514,000 or $14.00 on a square foot basis. It is important to state
that in determining this value, the Appraiser assumed that the Agency would cause the
improvements on the Site to be demolished; in other words, that the Site was vacant.
Aszkenazy DDA 33433 Report v3 -07 -08 Final (3)
4 1000 7
Page 4
The Appraiser also assumed that the Site is free from environmental contamination.
With respect to this issue, the VCTC's immediate past Executive Director (i.e., Ms. Ginger
Gherardi) assured Urban Futures, Inc. that the appropriate steps were taken during
1993 to ensure the Site was free from environmental contamination. Unfortunately, this
assurance could not be confirmed by any of the VCTC's written records. Therefore and
to be both safe and conservative, Agency staff recently engaged the services of an
environmental engineer (i.e., AGI Geotechnical, Inc.) who has also confirmed that the
Site is free from environmental contamination. AGI Geotechnical, Inc. indicated that
they did not detect any substance that exceeded the detection limit threshold
established by the appropriately responsible government agency. Their findings are on
file with the Agency.
Therefore, by using the Appraiser's above noted per square foot value, the imputed
value of the Site is $920,854. Pursuant to the DDA, the Developer will purchase the Site
for $920,854 which is equal to its full fair market value.
3. Estimated value of the interest to be conveyed or leased, determined at the
use and with the conditions, covenants and development costs required by
the sale or lease:
Pursuant to the DDA, the Developer will purchase the Site for $920,854 which is equal to
its full fair market value.
4. The purchase price or sum of the lease payments which the lessor will be
required to pay during the term of the lease:
Pursuant to the DDA, the Developer will purchase the Site for $920,854 which is equal to
its full fair market value.
5. Explanation of the reason (if applicable) why the sales price or lease rate paid
to the Agency may be less than market value of the property as determined at
its highest and best use:
Not applicable. The sale price of the Agency parcels is at fair - market value.
6. Explanation of why the sale or lease of the property will assist in the
elimination of blight:
This DDA is part of a project designed in part to eliminate blight in the Moorpark
Redevelopment Project Area. The greater portion of the Site (i.e., the Acquisition
Property) has been used for non - operating railroad related purposes for many years in
the past. In recent times it has been used for multi - tenant small -scale commercial
purposes. The current improvements on the Site are both economically obsolete and
exhibit conditions of physical degradation. Pursuant to the DDA, the Agency is obligated
to remove the improvements which will eliminate the existing blighting conditions. The
proposed DDA will facilitate the development of a multi- tenant commercial building of
approximately 40,000 square feet of gross building area conservatively estimated by
Urban Futures, Inc. to provide approximately 40 employment opportunities (i.e.,
approximately one job per 1,000 square feet of gross building area). Therefore, the
Aszkenazy DDA 33433 Report v3 -07 -08 Final (3)
Page 5
Project will result in eliminating blight that exists in a portion of the Moorpark
Redevelopment Project Area, specifically on the Site, and will cause new economic
development activity, including job creation.
7. Economic benefits of the Project:
At a conservative value of $200 per square foot of finished building area, the completed
Project is anticipated to add approximately $8 million of assessed value to the
redevelopment project. Based on this additional assessed value estimate, it is
anticipated that the Project will generate approximately $80,000 of additional gross tax
increment (i.e., prior to tax sharing) revenue during its first taxable year. Utilizing a 2%
per year growth factor, over its first ten years it is anticipated that the Project will
generate approximately $876,000 of gross tax increment revenue. Inclusive of the Low -
to Moderate- Income Housing Fund, the Agency currently receives approximately 58% of
the gross tax increment revenue. With respect to the current illustration, the Project
could generate over $500,000 of net tax increment revenues to the Agency over its first
ten years of operation. These additional tax increment revenues will assist the Agency
in removing blight within the Moorpark Redevelopment Area as well as promoting
economic development, job creation and affordable housing projects and programs.
Certification: I certify that this report complies with the reporting requirements of Section
33433 of the CCRL. Further, I do not have a present or perspective interest in the Site, the
Project or the parties to the DDA. My engagement to prepare this report was not contingent
upon developing or reporting predetermined results. The statements of fact contained herein
and the substance of this report are based on public records, data provided by the Agency,
reports provided by its consultants or as otherwise noted herein. This report reflects my
personal, unbiased professional analyses, opinions and conclusions. If any of the underlying
assumptions related to the DDA change after the date provided below, then the undersigned
reserves the professional privilege to modify the contents and /or conclusions of this report. In -r
addition, this report supersedes the 33433 Report prepared by Urban Futures, Inc. for the
Project dated November 21, 2007.
Respectful) ubmitted,
URBAN,PUTUiRES, INC.
H. I)UKE-tf,`Principal
Dated: March 7, 2008
Aszkenazy DDA 33433 Report v3 -07 -08 Final (3) ; 0 r 0 s 0 y
Exhibit C
RESOLUTION NO. 2008-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
MOORPARK, CALIFORNIA, REVISING THE PREVIOUS
APPROVAL OF THE SALE OF PROPERTY OWNED BY
THE MOORPARK REDEVELOPMENT AGENCY TO
ASZKENAZY DEVELOPMENT, INC. AND FINDING SALE
CONSISTENT WITH CALIFORNIA REDEVELOPMENT
LAW SECTION 33433
WHEREAS, the City Council of the City of Moorpark, adopted the
Redevelopment Plan for the Moorpark Redevelopment Project on July 5, 1989, by
Ordinance No. 110, in accordance with the California Community Redevelopment Law
(Health and Safety Code Section 33000 et seq.); and
WHEREAS, the Moorpark Redevelopment Agency ( "Agency ") purchased the
property at 192 High Street ( "Property ") with tax increment funds; and
WHEREAS, California Community Redevelopment Law ( "CCRL ") Section 33433
requires that the City Council approve, by resolution and after a public hearing, any
Agency sale or lease of property which was acquired with tax increment funds; and
WHEREAS, Section 33433 of CCRL requires that the City Council include the
following findings in the resolution approving the sale or lease of Agency property
purchased with tax increment:
1. The sale of property will assist in the elimination of blight
in the Moorpark Redevelopment Project Area.
2. The sale of property is consistent with the goals and
objectives in the 2005 -2009 Implementation Plan for the
Moorpark Redevelopment Project pursuant to Section
33490 of the CCRL.
3. The property is being sold to the Developer at the fair
market price at the highest and best use in accordance
with the Moorpark Redevelopment Plan; and
WHEREAS, The City Council conducted and approved the sale of Property after
a duly advertised public hearing on December 5, 2007; and
WHEREAS, The Agency and Aszkenazy Development, inc. was not able to
successfully negotiate the Disposition and Development Agreement prior to the
appraisal becoming outdated (greater than six months old); and
00€;'10
Resolution No. 2008 -
March 19, 2008
Page 2 of 3
WHEREAS, The Agency and Aszkenazy Development, inc. have successfully
negotiated the terms and conditions of the DDA; and
WHEREAS, notice was published in the Ventura Star once a week for two weeks
prior to the public hearing, and
WHEREAS, on March 19, 2008, the City Council conducted a public hearing to
take public comment on the revised sale of Agency owned property, and
WHEREAS, the revised sale will assist with the elimination of blight in the
Moorpark Redevelopment Project Area; and
WHEREAS, the revised sale is consistent with the adopted 2005 -2009
Implementation Plan for the Moorpark Redevelopment Project pursuant to Section
33490 of the CCRL; and
WHEREAS, the Property has been reappraised and the fair market price, at its
highest and best use in accordance with the Moorpark Redevelopment Plan, has been
established; and
WHEREAS, on March 19, 2008, the City Council reviewed the proposed sale and
determined that it is consistent with Section 33433 of the CCRL.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOORPARK
DOES HEREBY RESOLVE AS FOLLOWS:
SECTION 1. The City Council approves the revised sale of Agency owned
property to Aszkenazy Development, Inc. subject to approval of the Disposition and
Development Agreement by the Agency.
SECTION 2. The City Council determines the revised sale is consistent with
Section 33433 of the CCRL and the following findings are made:
1. The sale of property will assist in the elimination of blight in
the Moorpark Redevelopment Project.
2. The sale of property is consistent with the goals and
objectives in the 2005 -2009 Implementation Plan for the
Moorpark Redevelopment Project pursuant to Section 33490
of the CCRL.
.00011
Resolution No. 2008 -
March 19, 2008
Page 3 of 3
3. The property is being sold to the Aszkenazy Development,
Inc. at the fair market price at the highest and best use in
accordance with the Moorpark Redevelopment Plan.
SECTION 3. The City Clerk shall certify to the adoption of this resolution and
shall cause a certified resolution to be filed in the book of original resolutions.
PASSED AND ADOPTED this 19th day of March, 2008.
Patrick Hunter, Mayor
ATTEST:
Deborah S. Traffenstedt, City Clerk
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