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Home My WebLink About11/17/1992, 8 - CONSIDERATION OF DISPOSITION OF CITY PROPERTY: STENNER CANYON APN 073-281-004 iIII�INII�llllln�l IIuI�I MEETING DATE: citysan LUis osispo November 17, 199 COUNCIL AGENDA.REPORT ITEM NUMBER: From: John Moss Prepared by: Sue Baasch Acting Utili s Director Administrative Analyst SUBJECT: Consideration of Disposition of City Property: Stenner Canyon APN 073-281-004 CAO RECOMMENDATION Receive a report from staff concerning the disposition of City-owned real property in Stenner Canyon and direct staff to proceed with the desired alternative. The staff's suggested alternatives are voiding the sale, followed by leasing (alternative 5 and alternative 1). DISCUSSION Background This parcel in Stenner Canyon was used historically to provide housing for the Water Treatment Plant Supervisor, but has not been used for that purpose since 1990. The housing, a double-wide mobile home, was auctioned in late 1990 to the highest bidder, who elected not to move it and sold it to the second bidder, Ken Glick. Due to existing site conditions, the relocation of the mobile home was discovered to be extremely difficult and costly. The mobile home remains on the property. The owner, Mr. Glick, originally asked if the City was interested in leasing the property. Mr. Glick also stated he would be interested in purchasing or possibly exchanging other property for this site, if these options would be more advantageous for future City plans. At the regular scheduled meeting of the City Council on June 1 , 1992, staff recommended the City not lease the property to Mr. Glick but proceed with assisting Mr. Glick in the relocation of the mobile home as required in the original mobile home purchase agreement. Council denied staff's recommendation and directed staff to evaluate the advantages and disadvantages of selling, trading, or leasing the property the mobile home occupies to Mr. Glick. At Council's direction, staff has analyzed the possible advantages and disadvantages of selling, exchanging or leasing the property. A brief summary of that analysis is as follows. Sale of the orooertv Mr. Glick would be interested in purchasing the property because he is concerned about security for his other properties located farther up Stenner.Canyon and the current location of the mobile home is a good location for monitoring access further in the canyon. The parcel is currently zoned agriculture, and is included in both the City and County General Plan areas. It lies within the City's "green belt" as it currently defined in the City's draft Open Space Element. If the property is sold, the City could require Mr. Glick to merge the Il��i�►NI�IIIIIIIIIh�°►► city of San IDIS OBISpo Nii%IIII► COUNCIL AGENDA REPORT Stenner Canyon Property Page 2 parcel with his other property, if possible, thus supporting the draft City Open Space Element policy of establishing a green belt around the City and the County goal of consolidating parcels to promote larger standard divisions of property in the area. The City Council must declare the property surplus prior to a sale. This could be done, as the Utilities Department currently has not identified any plan for this parcel. However, the Department would have to ensure that any disposition of the property assured continued access to its water facilities across the road and did not create access issues for adjoining property owners. The potential advantage of selling the property would be to produce additional revenue for the Water Fund and to resolve the issue of the mobile home remaining on City property. However, as the purchase price would be set by an appraisal of the property during the current soft real estate market, the projected revenues may not be as high as in a stronger economy. Exchange of the orooerty Mr. Glick has said that he would be willing to consider an exchange of some of his property that is contiguous to the City's Parcels 6 and 7 for Parcel 4, if the City were to favor an exchange over a sale. The terrain of the property adjoining parcels 6 and 7 is rolling grassland. It is difficult to assess the value of acquiring this additional property. The amount of property the City would receive through the exchange would be based on the appraised value of Parcel 4, not on the total acreage. As in a sale of the property, access to City property and facilities would have to be addressed, as would the protection of any access rights for adjacent property owners. Leasing the property Leasing the property to Mr. Glick would solve the current difficulty of the mobile home on City property. It would allow Mr. Glick to house a ranch foreman on the property to provide the security in the canyon he desires. The City, by maintaining ownership, would be in a better position to evaluate the sale of the property in a better real .estate market in the future, if the sale of the property continues to be contemplated. Mr. Glick has indicated he would be willing to be responsible for all utilities, including the supply of water, in a lease arrangement. Process required to sell, trade, or lease the property The following section outlines the process required to sell, trade, or lease City owned real property. The purpose of outlining these steps in some detail for the Council ja-=to create a perception that there are insurmountable barriers to a sale, trade, or lease. This is not the ii��il►�u►��Illllilli�' ��Illll city of San WIS OBISp0 COUNCIL AGENDA REPORT Stenner Canyon Property Page 3 case. Instead, staff wishes to point out that there is a process that must be followed to dispose of City property, and that this process will require a fairly sizeable investment of staff time and some costs. This investment of staff time and resources must be weighed against the possible advantages of pursuing such a transaction. The City Charter, Section 906, states that the sale or lease of City property must be by a resolution of the City Council. An appraisal will assure that fair market value is received if the property is sold. State law places some requirements on the disposition of city-owned property. Government Code Section 65402 requires that all sales be reviewed by the Planning Commission to determine compliance with the General Plan. In this case, both the City and County planning commissions will need to issue conformity reports. Government Code 54220 requires that the City offer property before a sale or lease is awarded to (1) Housing Authorities, (2) Parks, recreation and open space areas, (3) Enterprise zones, (4) Schools. An offer from these entities need only be accepted if the terms are acceptable to the City. SUMMARY Of the three options described above, selling, exchanging or leasing, a lease seems to have the most advantages. A lease addresses current issues and maintains options for the future. The amount of potential earnings from a sale or acquisition of additional land adjacent to parcel 6 and 7 from a property exchange do not seem like compelling reasons to proceed to dispose of the property at this time. Staff's recommendation based on the above discussed options, would be to lease the property to Mr. Glick, as outlined in alternative number one. However, Council may wish to consider all of the alternatives and provide staff direction to proceed as appropriate. Alternatives 4 and 5 of this report were not included in the Council's direction on June 1, 1992, however, staff feels they do deserve consideration by Council. Alternative #1 - Lease of the Property Direct staff to negotiate a lease for Council's review and approval. Staff recommends that in determining the appropriate lease amount, careful consideration be given to the actual market value of the mobile home versus what was actually paid by Mr. Glick. As part of the original agreement for sale of the mobile home, the buyer was required to move the mobile home from the property. This requirement was likely reflected in the price the City received for the mobile home, $21,000. Additionally, the lease amount should also consider the fair market price of comparable double wide mobile home rent, less utilities. The lease would be for five years with an optional five year renewal, the rent to escalate annually with the CPI index. 99 -3 i��fi1►��,iWllllllll Ii ��U�ll city of San Luis osIspo COUNCIL AGENDA REPORT Stenner Canyon Property Page 4 Alternative #2 - Sale of the Property If Council wishes to proceed with either the sale or property exchange, staff should be directed to obtain a formal appraisal of the property and to seek general plan conformity reports from both the City and County planning commissions. The appraisal has been estimated at $800 and the County's conformity report filing fee will be $500. The City's property management manual states that the sale of city property can be conducted through a Request for Proposal (RFP) process. Staff recommends this over an auction or formal bid (the other options), as it offers a means of negotiating various types of conditions and addressing departmental concerns about continued access to city facilities. If Council favors this option, staff will prepare a draft RFP for Council's review and approval. After a review of the proposals and staff's recommendation, Council would approve surplus and sale of the property. Alternative #3 - Exchange of the Property Following an appraisal of the property, staff would meet with Glick and negotiate a proposed property exchange. The City would seek to enlarge parcels 6 and 7 with a lot line adjustment. The exact terms of the exchange and a Resolution to sell would be brought to Council for final approval. Alternative #4 - Retain control and ownership of the Property Direct staff to work with Glick for the removal of the mobile home per the original mobile home purchase agreement. The terms and requirements of the mobile home purchase agreement clearly identified the requirement to move the mobile home from the City owned parcel. Staff still feels that the original recommendation would best serve all the interests of the City, but recognizes that it may cause some hardship to Mr. Glick. Alternative #5 - Void the original mobile home purchase agreement Since the original purchase agreement for the mobile home required removal of the mobile home from the property, and Mr. Glick to date has been unable to comply with this requirement, upon mutual consent with Mr. Glick, Council may wish to void the original mobile home purchase agreement and refund Mr. Glick's purchase cost plus interest. Council may then direct staff to sell, lease, or trade the mobile home and property as a unit. This alternative would better insure that a fair market price for the mobile home would be received. Additionally, this alternative would relieve concerns over the fairness of the transaction since staff is aware of other property owners in Stenner Canyon, adjacent to the site, who would have bid on the purchase of the mobile home had it not been required to be moved. Attachments: Exhibit A - Area Map =' �:_�:��: ; 1 II;I Imo- � ��..__;-i<' C:`••'�. y�- ' �•�.-•— -�_:: EXHIBIT A .z Ilk Ir ir —/� - p 0 T--\.R E. R =_0 (\' Serrano bN. - 797 ! t\xc( i - ^/• s - /,� `.� S,'\ i2C- G='xz��a/x'r/ %c RESERVOIR 2 Sprinea., �s n �. Water \\ ,�� _/� -- —�"�c . _ -�___• ,,, .'eo Tanks � ��! _, - __ ..-_:�. E — . — _ BM 599k :/4 ./ \� Chorro ETu• -.��_IEast c:, J PARCEL 4 �, -- 0 I- S .rP 0 _ W_ M 515 i 1 « le Fil{ratio C - � •.` ��! � � — ��. Plant \` ter:. \.4t'Mine 7. WATER — WATER TREATMENT PLANT 76 p C O _ - I_�: _ i 66/6•� /� -'��. ate. '• -, ._- - ��'• �Y -� 1 �� •" /" -. BM 360 `_ - aa. I Camornia State \ I BM Polytechnic C°Ilese . \ •^l! 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