HomeMy WebLinkAboutRDA AG PKT 2004-11-08 #6 ,0
JOINT PUBLIC HEARING OF THE SEAL BEACH REDEVELOPMENT
AGENCY AND CITY OF SEAL BEACH AGENDA REPORT
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DATE: November 8, 2004
V it- 0
TO: Honorable Chairman and Agency Members and Honorable Mayor and City cciffi
Council Members 11
THROUGH: John B. Bahorski, Executive Director
FROM: June Yotsuya, Assistant City Manager
SUBJECT: TRANSFER OF ZOETER PLACE (1190 -1198 PACIFIC COAST.
HIGHWAY, SEAL BEACH, CALIFORNIA)
SUMMARY OF REQUEST:
Staff recommends that the: n'
1. City Council adopt Resolution No. "J (Attachment A) making certain findings
regarding the exercise of an option to purchase Zoeter Place; and
2. Redevelopment Agency adopt Resolution No. tC' °'(Attachment B) accepting the
exercise of an option to purchase Zoeter Place submitted by the long -term master
lessor, Rodi Properties, LLC ("Buyer") and providing authorization to Executive
Director and staff to proceed with preparation and execution of all necessary
documents, etc. to complete the transfer of Zoeter Place (1190 -1198 Pacific Coast
Highway, Seal Beach, California) to Rodi Properties, LLC for the purchase sum of
$3,180,000.
BACKGROUND:
At the Joint Public Hearing of September 27, 2004, the Redevelopment Agency and City Council
continued the hearing to October 11, 2004 and directed staff to retain a real estate attorney to
provide legal opinion interpreting the contractual purchase option between the City and Rodi
Properties for Zoeter Place commercial property at 1190 -1198 Pacific Coast Highway, Seal
Beach. The City retained Bryan C. Leroy, Real Estate and Land Use Partner for
Manatt, Phelps, & Philips, LLP. At its October 11, 2004, the Agency and City Council again
continued the hearing to November 8, 2004.
FISCAL IMPACT:
As part of the transfer of property, proceeds would be used to pay the underlying lease agreement
between the City and the Agency as well as cover reimbursement of all necessary expenses
associated with the transfer of property process. Remaining proceeds from said transfer will then
become available for Agency use. Counsel to the Agency and City Council will review the
CC/e49 Agenda Item 6
.c
November 8, 2004
Agenda Report — Transfer of Zoeter Place to Rodi Properties
Page 2
potential negative impacts associated with not moving forward with the recommended action.
RECOMMENDATION:
That the City Council adopt Resolution (Attachment A) approving the sale; and
that the Redevelopment Agency adopt Resolution (Attachment B) authorizing the Agency
Executive Director and staff to take all necessary steps to accomplish the transfer.
ne Yots a, As istant City Manager
NOTED _ NO? • ROVE
A o
Jo Bahorski, Agency Executive Director and Seal Beach City Manager
/31/2004 22:27 FAX Pacific Mtg 1 003
L. Raymond Freer, MAI
99 South Lake Avenue, Suite 50
Pasadena, California 91101
(626) 568-1800
Mr. James M. Galbraith October 29, 2004
Rodi Properties, LLC
2600 Mission Street, Suite 200
San Marino, California 91108
Re: Appraisal of Zoeter Mace, Seal Beach, California
Fee Interest Subject to Long Term Ground Lease
by John Ellis, MAI, of Integra Realty Resources
Dear Mr. Galbraith:
You have asked me to provide a letter analyzing the appraisal of John Ellis, MAI, of Integra
Realty Resources ( "Ellis ") of the Zoeter Place land, subject to a long term ground lease. For the
benefit of anyone to whom you provide this letter, I have been involved with the
cornrnercialrimdustrial real estate field. for 39 years and an active real estate appraiser with the MAI
designation.
On August 9, 2004 Ellis completed an appraisal ofthe Zoeter Place fee effective July 1, 2004,
the date you exercised your option to purchase. The appraisal was arm's length and completely
. independent of me_ Prior to beginning the appraisal process I provided some real estate data to Ellis
and after the appraisal was completed, I reviewed the appraisal. During the course of the appraisal
process I provided no input whatsoever.
After reviewing the Ellis appraisal I independently estimated the value ofthe site, subject to
the long term ground lease. It was slightly less than the value indicated in the Ellis report. This was
an evaluation, not a full appraisal. This evaluation is not a criticism of the Ellis report. Our
respective conclusions of estimated value were less than 2% apart from each other. The analyses 1
performed were based on data in the report performed by Ellis. These analyses were generally
supportive of the conclusion of value in the report by Ellis.
I also concur withthernethodology employed intheEllisreport. Thevalu� ofthe alt; subject
to the lease, is determined by the cash flow being generated from the lease of the site. If the property
were unencumbered by a lease, the value of the site would be different both by my estimate of value
and the Ellis estimate of value. But, the property is encumbered by a lease for slightly less than 40
more years. Therefore the value is determined by the terms and conditions of the lease and both the
consequent receipt ofincome over its remaining life and the property reversion at the end oflhe lease
term. This suggests a discounted cash flow analysis as was presented in the Ellis report. Again, I
J2127 FAX Pacific Mtg 4009
t
Mr. Galbraith
Page 2
October 29, 2004
concur with the Ellis report
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I have known John Ellis professionally for about 25 years. As an MAI, he is required to act
in a manner befitting a disinterested third party. He is generally regarded to be a fine appraiser and
analyst as well as completely fair and objective in his approach to real estate. In a word he is
competent
t hope this letter is of assistance to anyone interested in the option process you are pursuing
with the City of Seal Beach and its redevelopment agency.
Sincerely,
1
L. Raymond Freer, MAI
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(y*o AT 10
RESOLUTION NUMBER 11.-- I
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF SEAL BEACH APPROVING THE EXERCISE OF AN
OPTION BY RODI PROPERTIES, LLC OF PROPERTY
OWNED BY THE REDEVELOPMENT AGENCY OF THE
CITY OF SEAL BEACH
THE CITY COUNCIL OF THE CITY OF SEAL BEACH DOES HEREBY RESOLVE,
FIND AND DETERMINE:
Section 1. Rodi Properties, Inc., ( "Optionee ") and its predecessor -in- interest
the Karl and Tina Rodi Family Trust have operated Zoeter Place ( "Property ") since 1996,
pursuant to a Master Lease executed by the Agency in 1987. In 1996, pursuant to the Third
Amendment to Master Lease, the Agency Board for the Redevelopment Agency of the City of
Seal Beach ( "Agency ") granted the Rodi Family Trust an option to purchase the Agency's
interest at the fair market value of the Property. The six -month option period began on July 1,
2004. The Buyer has exercised that option, and will pay the Agency the fair market value price
established by an independent appraiser hired by the Agency.
Section 2. The Agency will not incur any costs in connection with the
proposed sale, apart from normal transaction fees. There are no additional land acquisition costs,
clearance costs, relocation costs, improvement costs or financing/interest costs. The estimated
value of the interest to be sold, determined at the highest and best uses permitted under
applicable zoning, as determined by an independent appraiser, is $3,180,000. The estimated
value of the interest to be sold, determined at the use and with the conditions, covenants, and
development costs required by the sale is equal to the estimated value of the interest to be sold:
$3,180,000.
Section 3. The sale will assist in the elimination of blight and is consistent
with the implementation plan for the Project Area adopted pursuant to Health and Safety Code
Section 33490. The former tenant's change in status from lessee to owner of the property will
enhance the condition of the improvements located on -site. The sale proceeds will be used to
retire debt, any may be used to purchase an adjacent property currently leased by the City for
child care services, and to construct public improvements and projects, all of which will assist in
the elimination of blight and improve public services. The Project Area is characterized by the
existence of inadequate open spaces, public improvements and public facilities. The availability
of funds for future improvements, including in and to the Project Area, will benefit the health,
safety and welfare of the residents and taxpayers of the Project Area and the immediate
neighborhood. The sale will assist in the elimination of conditions of blight within the Project
Area caused by inadequate public improvements. This in turn will assist in eliminating a factor
that negatively impacts the value of property within the Project Area.
Section 4. A summary report of this proposed transaction has been made
available for public inspection (and copying at a cost not exceeding the cost of duplication).
Section 5. Notice of a joint public meeting to be held by the City Council and
the Agency regarding this matter has been duly given in the manner required by law.
Section 6. Based upon the foregoing and the evidence presented at the
hearing, including the staff report, the consideration for the sale is not less than the fair market
value at its highest and best use in accordance with applicable zoning.
Section 7. The City hereby approves the sale.
Section 8. The City Clerk shall certify to the passage and adoption of this
Resolution.
PASSED, APPROVED AND ADDOPTED by the City Council of the City of Seal Beach
this day of 2004 by the following vote:
AYES: Council Members
NOES: Council Members
ABSENT: Council Members
ABSTAIN: Council Members
Mayor
ATTEST:
City Clerk
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STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF SEAL BEACH )
I, Linda Devine, City Clerk of the City of Seal Beach, Califomia, do hereby certify that the
foregoing Resolution is the original copy of Resolution Number on file in the office of
the City Clerk, passed, approved, and adopted by the City Council of the City of Seal Beach at a
meeting thereof held on the day of , 2004.
City Clerk
50)
RESOLUTION NUMBER \)‘'‘ p+
1 1 �
A RESOLUTION OF THE REDEVELOPMENT AUtn -�
OF THE CITY OF SEAL BEACH APPROVING THE
EXERCISE OF AN OPTION BY RODI PROPERTIES, LLC
OF PROPERTY OWNED BY THE 'REDEVELOPMENT
AGENCY OF THE CITY OF SEAL BEACH
THE REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH DOES HEREBY
RESOLVE, FIND AND DETERMINE:
Section 1. Rodi Properties, Inc., ( "Optionee ") and its predecessor -in- interest
the Karl and Tina Rodi Family Trust have operated Zoeter Place ( "Property") since 1996,
pursuant to a Master Lease executed by the Agency in 1987. In 1996, pursuant to the Third
Amendment to Master Lease, the Agency Board for the Redevelopment Agency of the City of
Seal Beach ( "Agency ") granted the Rodi Family Trust an option to purchase the Agency's
interest at the fair market value of the Property. The six -month option period began on July 1,
2004. The Buyer has exercised that option, and will pay the Agency the fair market value price
established by an independent appraiser hired by the Agency.
Section 2. The Agency will not incur any costs in connection with the
proposed sale, apart from normal transaction fees. There are no additional land acquisition costs,
clearance costs, relocation costs, improvement costs or financing/interest costs. The estimated
value of the interest to be sold, determined at the highest and best uses permitted under
•
applicable zoning, as determined by an independent appraiser, is $3,180,000. The estimated
value of the interest to be sold, determined at the use and with the conditions, covenants, and
development costs required by the sale is equal to the estimated value of the interest to be sold:
$3,180,000.
Section 3. The sale will assist in the elimination of blight and is consistent
with the implementation plan for the Project Area adopted pursuant to Health and Safety Code
Section 33490. The former tenant's change in status from lessee to owner of the property will
enhance the condition of the improvements located on -site. The sale proceeds will be used to
retire debt, any may be used to purchase an adjacent property currently leased by the City for
child care services, and to construct public improvements and projects, all of which will assist in
the elimination of blight and improve public services. The Project Area is characterized by the
existence of inadequate open spaces, public improvements and public facilities. The availability
of funds for future improvements, including in and to the Project Area, will benefit the health,
safety and welfare of the residents and taxpayers of the Project Area and the immediate
neighborhood. The sale will assist in the elimination of conditions of blight within the Project
Area caused by inadequate public improvements. This in turn will assist in eliminating a factor
that negatively impacts the value of property within the Project Area.
Section 4. A summary report of this proposed transaction has been made
available for public inspection (and copying at a cost not exceeding the cost of duplication).
Section 5. Notice of a joint public meeting to be held by the Seal Beach City
Council and the Agency regarding this matter has been duly given in the manner required by
law.
Section 6. Based upon the foregoing and the evidence presented at the
hearing, including the staff report, the consideration for the sale is not less than the fair market
value at its highest and best use in accordance with applicable zoning.
Section 7. The Agency hereby accepts the exercise of an option to purchase
Zoeter Place submitted by Optionee and authorizes and directs the Executive Director and staff
to proceed with preparation and execution of all necessary documents to complete the transfer of
Zoeter Place (1190 -1198 Pacific Coast Highway, Seal Beach, California) to Rodi Properties,
LLC for the purchase price of $3,180,000.
•
Section 8. The Agency Secretary shall certify to the passage and adoption of
this resolution.
PASSED, APPROVED AND ADDOPTED by the Redevelopment Agency of the City of Seal
Beach this day of 2004 by the following vote:
AYES: Agency Members
NOES: Agency Members
ABSENT: Agency Members
ABSTAIN: Agency Members
Chairman
ATTEST:
Agency Secretary
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF SEAL BEACH )
I, Linda Devine, Agency Secretary of the Redevelopment Agency of the City of Seal Beach,
Califomia, do hereby certify that the foregoing Resolution is the original of Resolution Number
, on file in the office of the City Clerk, passed, approved, and adopted by the
Redevelopment Agency of the City of Seal Beach at a meeting thereof held on the day
of 2004.
Agency Secretary