HomeMy WebLinkAboutAGENDA REPORT 2007 1205 CC REG ITEM 08B UFM g . Ti
CITY OF MOORPARK,CALIFORNIA
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MOORPARK CITY COUNCIL gv. �,
AGENDA REPORT
TO: Honorable City Council
From: David C. Moe II, Redevelopment Manager
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Date: November 19, 2007 (City Council Meeting of 12/5/07)
Subject: Consider Resolution Approving 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 about 10,000 square feet (ground level) for restaurant
uses.
The second phase would include the land from Bard Street to the north Metrolink
parking lot. The Agency will sell the land for the second phase under a second
Disposition and Development Agreement after phase I has been 90% leased. The
building in this phase would consist of about 27,187 square feet.
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
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Honorable City Council
12/5/2007
Page 2
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
three at fair market price.
The Developer offered to purchase parcel two (phase 1) for $1,123,414.00. The Agency
hired Ventura Appraisal Consulting Corporation ("VACC") to verify that the purchase
price reflected the fair market price of the land in phase I. VACC's letter dated
September 5, 2007, stated that the negotiated price is within the range of fair market
price.
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.
The Agency will consider the proposed Disposition and Development Agreement for
phase I at its meeting of January 16, 2008.
STAFF RECOMMENDATION
1) Open public hearing, take public testimony, and close the public hearing; and
Honorable City Council
12/5/2007
Page 3
2) Approve Resolution No. 2007 - approving sale of Property between the
Agency and Developer subject to Disposition and Development Agreement
approval by the Agency.
Exhibit "A" Aerial
Exhibit "B" Section 33433 Summary Report
Exhibit T" Resolution
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EXHIBIT B
UNDER SEPARATE COVER
Exhibit C
RESOLUTION NO. 2007-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
MOORPARK, CALIFORNIA, APPROVING 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, notice was published in the Ventura Star once a week for two weeks
prior to the public hearing; and
WHEREAS, on December 5, 2007, the City Council conducted a public hearing
to take public comment on the proposed sale of Agency owned property; and
S 101 0 V If.`�
Resolution No. 2007 -
December 5, 2007
Page 2
WHEREAS, the proposed sale will assist with the elimination of blight in the
Moorpark Redevelopment Project Area; and
WHEREAS, the proposed 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 appraised and the fair market price, at its
highest and best use in accordance with the Moorpark Redevelopment Plan, has been
established; and
WHEREAS, on December 5, 2007, 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 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 proposed 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.
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.
u�� + ,Z`7
Resolution No. 2007 -
December 5, 2007
Page 3
PASSED AND ADOPTED this 5th day of December, 2007.
Patrick Hunter, Mayor
ATTEST:
Deborah S. Traffenstedt, City Clerk
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° 92 CITY OF MOORPARK
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o ASSISTANT CITYMANAGER'S OFFICE
INTEROFFICE MEMORANDUM
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OAq rFO d J`1�
DATE: December 3, 2007
TO: Honorable City Council
Steven Kueny, City Manager
Hugh R. Riley, Assistant City Manager
FROM: David C. Moe II, Redevelopment Manager Pc
SUBJECT: City Council Agenda Item 8.13.
Attached to this memorandum.is Exhibit "B" to City Council Agenda item 8.13. Please
contact Steven Kueny if there are any questions.
ITEM 8.13.
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")
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 approximately 40,000 square feet of gross building area (the
"Project") on an approximately 66,239 square foot parcel (i.e., approximately 1.52 acres of
land) located near the southeast corner of Moorpark Avenue and High Street (the "Site")
within the Moorpark Redevelopment Project Area.
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 $1,117,026. 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
Page 2
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 in which the tenants have
waived all claims for relocation benefits. Therefore, the Agency will not incur
any relocation costs.
d. Improvement Costs: The Agency has not incurred any improvement
costs.
e. Finance Costs: None
f. 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 $1,123,414 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 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 easily 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
Page 3
$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 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 80% of the purchase price
(i.e., $898,731) to be funded with an Agency purchase money 10-year
interest only subordinate loan. Agency staff has determined that the fair
market rate for this loan is 5.24%. To ensure that the Agency's investment
in the purchase money loan will match other Agency investments, Agency
staff set the loan's interest rate at the Agency's investment rate currently
offered by the State's Local Agency Investment Fund (i.e., 5.24%). The
loan, therefore, will generate $47,093.50 of interest income per year for each
year that it remains outstanding or $470,935 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., $1,123,414 + $105,900 +
$470,935) is $1,700,249. 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
$1,117,026 (i.e., $1,700,249 - $583,223 = $1,117,026).
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 Ventura Appraisal Consulting Corporation ("Appraiser") as
an expert, third party real estate appraiser. On July 26, 2007, the Appraiser
completed a real estate appraisal on an approximately 2.54-acre (approximately
110,642 square feet) portion of the Acquisition Property, from which the Site will be
created (the "Appraised Property"). Subsequently, on September 5, 2007 the
Appraiser amended the appraisal. The appraisal and its amendment are 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 $1,834,000 or $16.96 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. 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
Page 4
Geotechnical, Inc. indicated that they did not detect and 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 $1,123,413.40 (rounded to $1,123,414). Pursuant to the DDA,
the Developer will purchase the Site for $1,123,414 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 $1,123,414 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 $1,123,414 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 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.
Page 5
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.
Respectfully Submitted,
*URBANRES, C.
Principal
Dated: November 21, 2007