HomeMy WebLinkAbout07/01/2008, C8 - RESOLUTION AND AGREEMENT TO APPROVE A LOT LINE ADJUSTMENT TRANSFERRING A PORTION OF CITY OWNED PROP C
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FROM: Jonathan P. Lowell, City Attorney
Prepared By: Christine Dietrick, Asst. City Attorney
SUBJECT: RESOLUTION AND AGREEMENT TO APPROVE A LOT LINE
ADJUSTMENT TRANSFERRING A PORTION OF CITY OWNED
PROPERTY TO DEPOT SQUARE, LP
CAO RECOMMENDATIONS
1. Adopt a resolution authorizing the transfer of approximately 8,184 square feet of City owned
property to Depot Square, LP.
2. Authorize the Mayor to execute the Real Property Exchange Agreement setting forth the
terms of the property transfer and a separate hold harmless and indemnification agreement, to be
drafted at the direction of and subject to the approval of the City Attorney, relating to possible
site contamination.
DISCUSSION
Proiect Proposal:
On May 21, 2007, the Architectural Review Commission (ARC) approved project design plans
the preservation and rehabilitation of the historic Railroad Square building along with the
demolition and rebuilding of the annex portions of the building (City Application No. ARC 44-
07). Along with Depot Square, LP's application for architectural review, a lot line adjustment
map was submitted for review and approved by the City. The map shows the existing eastern
property line being moved 30-35 feet further to the east to the edge of the City owned parking lot
for a distance of about 240 feet. This 8,184 square-foot area of City property was previously
Southern Pacific Railroad right-of-way and was, for decades, developed with portions of
privately owned buildings, walkways and landscaping. The modified lot line would not impact
the extent or functionality of the adjacent public parking(Attachment 1 —Vicinity Map).
Historically, a portion of the City property requested for acquisition has been partially occupied
by portions of the historic Railroad Square building. It is not clear that the encroachment was
even known to the City or the adjacent property owners over the years. The adjusted property line
allows for the restoration and structural reinforcement of the Railroad Square building to
proceed. Since the fire in November of 2002, the future of the Master List building has been in
question. With the support of staff, the Cultural Heritage Committee and the ARC, the new
plans to retain and restore the building were enthusiastically approved. The redevelopment is
consistent with policies and programs of the Railroad District Plan, including the preservation of
the main historic resource, maintenance of the District's mixed-use character, use of shared
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Depot Square Real Property Exchange Page 2
parking facilities, and the provision of new pedestrian linkages to both the street and railroad
sides of the property. Since the City has no redevelopment agency, conveying these portions of
City-owned land would facilitate private redevelopment in a way that achieves the objectives of
the Railroad District Plan.
The proposed project design and its ability to fulfill City objectives for the District relies on
Depot Square's acquisition of the 8,184 square-feet of City owned property along the southeast
side of the building, adjacent to the City-owned parking lot, in order to comply with Building
Code and other City development standards. Building permits cannot be issued and development
of the project cannot proceed as approved without the project owner's acquisition of the subject
portion of the adjacent City property. Section 906 of the City's Charter provides, in relevant part,
that "[nlo sale or lease of real property ... shall be authorized by the Council except by resolution
passed by the affirmative vote of three-fifths (3/5) of all the members of the Council." Because
the requested lot line adjustment necessary would effect a transfer of City property, 3/5 Council
authorization by resolution is required prior to the Community Development Director taking an
action on the proposed lot line adjustment.
Property Value:
The precise value of the City property proposed for acquisition is difficult to determine, primarily
due to two factors. First, the location of the historic building that encroaches upon the property
in relationship to the adjacent City Parking lot makes it highly unlikely that this portion of a
larger C-S-S zoned parcel would be used for other improvements. Second, while no testing has
been done, there is a risk that the City property being transferred herein may be impacted by
underground soil contamination resulting from past railroad operations. As a result of the
valuation difficulty, Council directed staff to pursue negotiations for transfer of the property in
exchange for Depot Square's agreement to construct enhanced improvements to Railroad District
area that would enhance the area as a whole and provide a higher level of project amenities than
the City could reasonably require as conditions of project approval.
During the course of project planning and negotiations, Depot Square proposed to construct a
variety of enhancements to components of its project, including: constructing boardwalk on
Santa Barbara Street in excess project requirements; installing seven pedestrian oriented lighting
fixtures that will accent the historical context of the District; making a donation to the Railroad
Museum in excess of the project's public art requirement; constructing parking lot improvements
in excess of project requirements; and assuming the cost of landscape maintenance that has
historically been borne by the City. Additionally,Depot Square has agreed to assume and
indemnify the City against any liabilities that may arise relating to the existence of contaminated
soils or other materials on the City property. Viewed collectively, the improvements and
assumption of liability by Depot Square equal or exceed any reasonable estimate of the monetary
value of the property.
Actions to Accomplish Transfer:
TAAttomey\Railroad Square\CAR.Real Property disposition.Depot Square.2008.7.l.doc
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Depot Square Real Property Exchange Page 3
If Council determines that the transfer of the City property is appropriate, Council must adopt the
attached Resolution authorizing the property transfer and authorize the Mayor to execute two
separate agreements that memorialize the terms and conditions of the transfer. The first
agreement is the Real Property Exchange Agreement,which will be executed substantially in the
form attached to the authorizing Resolution. The Real Property Exchange Agreement also
obligates Depot Square to execute a separate hold harmless and indemnification agreement
relating to any possible contamination that may be discovered on the City property being
transferred. The City Attorney has retained outside counsel to draft that separate agreement in
order to ensure that the agreement adequately addresses the variety of complex state and federal
regulations governing waiver of liability arising from such contamination and fully protects the
City's interests in being relieved from any future liability. Staff is requesting that the Council
also authorize the Mayor to execute that agreement on behalf of the City,subject to approval by
the City Attorney.
CONCURRENCES
The Community Development Director concurs with the recommendation to transfer the subject
property to Depot Square.
FISCAL EWACT
The City will likely receive increased tax revenues resulting from the addition of commercial and
retail space in the proposed project.
ALTERNATIVES
Decline to authorize the lot line adjustment and transfer of City owned property to Depot
Square, LP and maintain City ownership of the subject property. This alternative is not
recommended because it would interfere with or preclude the successful renovation of an
important historical resource integral to the achievement of the objectives in the Railroad District
Plan.
ATTACHMENTS
1. Vicinity Map
2. Resolution(including Real Property Exchange Agreement and Exhibits(aerial photo depiction
and cost estimate))
TAAttamey%ailroad Square\CARReW Property disposition.Depot Sq=e.2008.7.1.doc
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® ATTACHMENT
RESOLUTION NO. (2008 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
AUTHORIZING THE TRANSFER OF CITY OWNED PROPERTY
WHEREAS, the City of San Luis Obispo is a charter city as defined in the California
Constitution article XI, section 5 and may transfer real property as provided by City Charter
Section 906; and
WHEREAS, the City owns, or has rights in, certain property located at 1820 Osos Street
in the City of San Luis Obispo (Assessor's Parcel No. 003-655-009), which is currently utilized
as a surface parking lot; and
WHEREAS, Depot Square.owns, or has rights in, certain property located and 1880
Santa Barbara Avenue in the City of San Luis Obispo (Assessor's Parcel No. 003-655-006), and
adjacent to the above City property, which is currently occupied by the historic Railroad Square
building; and
WHEREAS, on May 21, 2007, the City's Architectural Review Commission (ARC)
approved project design plans for the preservation and rehabilitation of the Railroad Square
building and the demolition and reconstruction of the annex portions of the building (City
Application No. ARC 44-07); and
WHEREAS, during planning review of the ARC application, it was discovered that
portions of the existing Railroad Square building encroach upon a portion of the City property
described herein; and
WHEREAS,in order to complete the proposed project as approved by the ARC, it is
necessary for Depot Square to obtain approximately 8,184 square feet of the City property by
means of a lot line adjustment; and
WHEREAS, Depot Square has submitted an application and map for the proposed lot
line adjustment to the City and has requested that the City approve the lot line adjustment, and
thereby transfer the necessary property to Depot Square, on the terms and conditions set forth in
the Real Property Exchange Agreement to be executed by the Parties; and
WHEREAS the Parties recognize that there is a risk that the City property being
transferred herein is impacted by underground soil contamination resulting from past railroad
operations; and
WHEREAS, the Parties agree that Depot Square will assume all risks, liabilities and
financial obligations arising from or relating to contamination, if any; and
WHEREAS, the City Council finds that the subject property is not necessary to any City
purpose and disposition of the City's property as set forth herein is in the best interest of the City
and results in public benefits, including, but not limited to, the provision of enhanced public
amenities to the historic Railroad District; maintenance of a compact urban form; facilitation of
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Resolution No. (2008 Series)
Page 2
economic development, provision of a variety of housing types; and enhancement of the
historical context and character of the Railroad District,
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo authorizes that:
SECTION 1. The Community Development Director shall approve, subject to Depot
Square's compliance with otherwise applicable City requirements, Depot Square's application
for a lot line adjustment, which will effect the transfer of a portion of City owned property,
Assessor's Parcel No. 003-655-009 (as more specifically depicted in Exhibit 1 to the Real
Property Exchange Agreement), to Depot Square,LP.
SECTION 2. The Mayor is authorized to execute on behalf of the City the Real Property
Exchange Agreement setting forth the terms and conditions of the property transfer, substantially
in the form attached hereto as Exhibit A, and subject to the approval of the City Attorney.
SECTION 3. The Mayor is authorized to execute on behalf of the City a contaminated
materials hold harmless and indemnification agreement to be drafted at the direction and subject
to the approval of the City Attorney.
Upon motion of seconded by
and on the following vote:
AYES-
NOES:
ABSENT:
The foregoing resolution was adopted this 1st day of July 2008.
Mayor David F. Romero
ATTEST:.
Audrey Hooper
City Clerk
APPROVED AS TO FORM:
nathan . Lowell
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REAL PROPERTY EXCHANGE AGREEMENT
THIS REAL PROPERTY EXCHANGE AGREEMENT ("Agreement") by and
between, Depot Square, LP a California limited partnership ("Depot Square") and the
City of San Luis Obispo, a municipal corporation and charter city (the "City"), is made as
of July 1, 2008 (the "Agreement Date"), with reference to the following facts:
A. The City is a charter city as defined in the California Constitution article XI,
section 5. The parties agree and acknowledge that the City has availed itself of the power
to make and enforce all laws and regulations with respect to municipal affairs as required
by the California Constitution and as indicated the City's Charter section 203.
B. The City owns, or has rights in, certain property located at 1820 Osos Street in the
City of San Luis Obispo (Assessor's Parcel No. 003-655-009), which is currently utilized
as a surface parking lot.
C. Depot Square owns, or has rights in, certain property located and 1880 Santa
Barbara Avenue in the City of San Luis Obispo (Assessor's Parcel No. 003-655-006),
and adjacent to the above City property, which is currently occupied by the historic
Railroad Square building.
D. On May 21, 2007, the City's Architectural Review Commission (ARC) approved
project design plans for the preservation and rehabilitation of the Railroad Square
building and the demolition and reconstruction of the annex portions of the building
(City Application No. ARC 44-07).
E. During planning review of the ARC application, it was discovered that portions of
the existing Railroad Square building encroach upon a portion of the City property
described herein.
F. In order to complete the proposed project as approved by the ARC, it is necessary
for Depot Square to obtain approximately 8,184 square feet of the City property by
means of a lot line adjustment. Depot Square has submitted an application and map for
the proposed lot line adjustment to the City (Application No. LLA 44-07) and has
requested that the City approve the lot line adjustment, and thereby transfer the necessary
property to Depot Square, in exchange for the consideration set forth herein.
G. The Parties recognize that there is a risk that the City property being transferred
herein is impacted by underground soil contamination resulting from past railroad
operations. It is the intention of the Parties that, through this agreement and a subsequent
contaminated materials agreement to be drafted at the direction and to the satisfaction of
the City Attorney, Depot Square will assume all risks, liabilities and financial obligations
arising from or relating to contamination, if any.
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H. The City Council finds that disposition of the City's property as set forth herein is
in the best interest of the City and results in public benefits, including, but not limited to,
the provision of enhanced public amenities to the historic Railroad District; maintenance
of a compact urban form; facilitation of economic development, provision of a variety of
housing types; and enhancement of the historical context and character of the Railroad
District.
NOW,THEREFORE, the parties hereto agree as follows:
1. Agreement to Exchange Properties.
(a.)Exchange. Subject to the terms, covenants and conditions of this Agreement
and compliance with otherwise applicable City application requirements, on or as soon as
practicable after July 2, 2008, City will approve Depot Square's application for a lot line
adjustment, as reflected with greater specificity in City Application No. LLA 44-07 and
depicted in Exhibit A hereto. The approval will result in the transfer of the City's
ownership interest in approximately 8,184 square feet of Assessor's Parcel No. 003-655-
009 being transferred to Depot Square. As soon as practicable after the execution of this
Agreement, Depot Square will record a grant deed transferring to the City ownership of
the triangular portion of Depot Square's property located at the northwesterly boundary
of its property, Assessor's Parcel No. 003-655-006, and adjacent to the City property (as
depicted with greater specificity in Exhibit 1 hereto).
2. Exchange Values of Properties.
(a.) Monetary.The parties agree that establishing a precise monetary value
of the City property subject to exchange via the lot line adjustment is not practical due to
the longstanding and previously undiscovered encroachment of the historic Railroad
Square building onto the subject City property, the remote likelihood that the City would
seek to make any economical use of that portion of its property, and the possibility of
contamination on the property relating to historical railroad operations.
3. Consideration.
(a.) Real Property. As partial consideration for transfer of the City owned
property to Depot Square, Depot Square shall record a grant deed transferring to the City
ownership of the triangular portion of Depot Square's property located at the
northwesterly boundary of its property, Assessor's Parcel No. 003-655-006, and adjacent
to the City property (as depicted with greater specificity in Exhibit 1 hereto).
(b.) District Improvements. Depot Square agrees to construct its Project(City
Application No. ARC 44-07) substantially as approved by the ARC. In consideration of
the remainder of the value of the City property to be transferred to Depot Square for
purposes of constructing the Project, which is not offset by the real property to be
transferred to City by Depot Square as set forth above, Depot Square will provide
amenities and construct improvements in conjunction with its Project with approximate
values as set forth in Exhibit 2 to this Agreement and also as set forth below:
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1) Construct wooden boardwalk on Santa Barbara Street
2) Install seven (7) pedestrian oriented light fixtures consistent with
District character at locations to be agreed upon by applicant and City
3) Re-construct Rear parking lot
4) Public Art, a donation to the RR Museum in exchange for a period piece
of RR art to be incorporated into the project
(estimated cost of$80,000)
5) Landscape maintenance
(estimated cost of$4,800 annually)
(c.) Adequacy. The Parties agree that the dollar value of the proposed
improvements to be constructed by Depot Square that is in excess of the value
associated with improvements that the City could otherwise have required as
conditions of project approval is equal to or greater than any reasonably estimable
value of the City's property. Together the improvements will constitute a
significant public benefit to the District and the City as a whole and constitute
adequate consideration for the property transferred.
4. Hold Harmless and Indemnification. As additional consideration for the transfer
of City property, Depot Square shall indemnify, defend and hold the City harmless from
and against any and all liabilities; claims, demands and expenses of any kind or nature
made on or after the effective date of the lot line adjustment, including but not limited to,
any claim arising from or related to any title defect; labor, materials or supplies in
connection with work performed on the City Property; hazardous materials and
contamination (as set forth here and in the separate contaminated materials agreement
between the Parties, as drafted to the satisfaction of the City Attorney and which Depot
Square hereby agrees to execute); and all expenses related thereto including, without
limitation, court costs and attorneys' fees.
5. Taxes. All property taxes relating to the transfer of City property to Depot Square
shall be the sole responsibility of Depot Square..
6. Miscellaneous.
(a.) Notices. All notices, demands or other communications of any type
(collectively "Notices") given by the City to Depot Square or by Depot Square to
the City, whether required by this Agreement or in any way related to this
transaction, shall be sufficient if in writing and delivered by hand or Federal
Express or similar courier service to the person to whom the Notice is directed or
mailed by United States Mail, as a Registered or Certified item, Return Receipt
Requested, at or to the addresses specified in this section, as follows:
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If to City: If to Depot Square:
City of San Luis Obispo
990 Palm Street
San Luis Obispo, California 93401-3249
Attention: City Administrative Officer
Facsimile: (805) 781-7109
With a copy to:
City Attorney
City of San Luis Obispo
990 Palm Street
San Luis Obispo, California 93401-3249
Facsimile: (805) 781-7409
(b.) Governing Law; Plurality; and Gender. This Agreement shall be construed
and interpreted in accordance with the laws of the State of California. Where
required for proper interpretation, words in the singular shall include the plural;
the masculine gender shall include the neuter and the feminine, and vice versa.
(c.) Amendment. This Agreement may not be modified or amended, except
by an agreement in writing signed by the parties to this Agreement. The parties
may waive any of the conditions contained in this Agreement or any of the
obligations or the other party under this Agreement, but any such waiver shall be
effective only if in writing and signed by the party waiving such conditions or.
obligations.
(d..) Authorization. The person executing this Agreement on behalf of Depot
Square hereby warrants and represents to the City that all necessary legal
prerequisites to that party's execution of this Agreement have been satisfied and
that he or she is fully authorized to do so and to bind the party of whose behalf he
or she signs. The person executing this Agreement on behalf of the City claims to
do so to the extent the authority to do so has been duly delegated to that person by
the City Council of the City in accordance with applicable law.
(e.) Time of Essence. Time is of the essence in this Agreement.
(f.) Attorneys'Fees. If it becomes necessary for either party to file a suit to
enforce this Agreement or any provisions contained in this Agreement, or to seek
damages for a breach, the prevailing party shall be entitled to recover, in addition
to all other remedies or damages, reasonable attorneys' fees incurred in such suit.
(g.) Captions. The description headings of the several Articles, Sections and
Paragraphs contained in this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions of
this Agreement.
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(h.) Entire Agreement. Except for those certain obligations of Depot Square or
successors as set forth in the separate hazardous materials agreement to be
executed by the Parties, the Agreement constitutes the entire agreement among
the parties pertaining to the subject matter of this Agreement and supersedes all
prior and contemporaneous agreements and understandings of the
parties in connection therewith. No representation, warranty,covenant, agreement
or condition not expressed in this Agreement shall be binding upon the parties to
this Agreement or shall affect or be effective to interpret, change or restrict the
provisions of this Agreement.
(i.) Counterparts. A counterpart of this Agreement with separate but fully
executed signature pages attached thereto shall have the full force and effect of an
original executed instrument.
0.) Successors. This Agreement shall be run with the City Property transferred to
Depot Square and shall be binding upon and inure to the benefit of the Parties,
their heirs, assigns, and successors in interest.
Dated:
CITY OF SAN LUIS OBISPO DEPOT SQUARE, LP
A California Limited Partnership
By: By:
Mayor Dave Romero Hamish S. Marshall
Authorized Agent
APPROVED AS TO FORM:
Jo atha . Lowell, Michael Pfau,
City ttorney Attorney for Depot Square
5
EXHIBIT
RAILROAiu SQUARE REDEVELOPMENT
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003-655-009 -
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Railroad Square Parcel CMV oFsanluisoaispo
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27038-001
June 20,2008
Depot Square, LP
895 Aerovista Place, Suite 100
San Luis Obispo, CA 93401
Mr. Hamish Marshall
Reference: Railroad Square, 1880 Santa Barbara St., SLO
Subject Improvements in Public ROW
Mr. Hamish Marshall:
In accordance with the Assistant City Attorney's request,.SCI has reviewed the conditions of approval for
the project and evaluated which improvements being constructed where originally conditioned, and which
were not
i
Depot Square LP is constructing the following improvements in the public right of way that were not
originally conditioned as part of the project:
Removal and salvage of railroad tracks, remove AC walk, remove j$7200
curbs
Demo parkingstalls, curbs, etc in upper parkin lot Pave new stallnew curbs etc in u erin lot New curbs for walkwa , new flatwork for ublic sidewalk
Grading for prep of all new work in public walks and drives, base $12000
for flatwork
Trimming of trees for clearance and access in public right of way $2500
Additional 7 bollard lights along Santa Barbara St. in public right of $28000
wa .
TOTAL OF IMPROVEMENTS $71,200
Thank you in advance for your attention to these matters.
Sincerely,
Specialty Construction
Tom Ehlers
Project Manager
File: 01 Estimate
Cc: JM,RB,RC,Garcia Architecture,Oasis
License A, B 619361
645 Clarion Court'San Luis Obispo, CA 93401
Telephone: 805/543-1706"Administrative Fax: 805/543-1712' Estimating Fax:805/543-1722
C
RED FILE
IIIIIIIII IIIIII I Illill I - MEETING AGENDA
IMTEZ ITEM #�'
MEMORANDUM
From the Office of the City Attorney
June 30, 2008
TO: Mayor and City Council
FROM: Jonathan P. Lowell, City Attorney JIL-
SUBJECT: Item C8, Resolution and Agreement to Approve a Lot Line Adjustment
Revised Page
Attached is a revised Exhibit 1 to the Real.Property Exchange Agreement,page C8-12. Please
remove and recycle the existing page and replace it with the attached.
JPL/cp
cc: Ken Hampian
Shelly Stanwyck
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