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HomeMy WebLinkAbout04/20/2010, C13 - ACCEPTANCE OF FIRST AMENDMENT TO OPTION AGREEMENT FOR PURCHASE OF PROPERTY FROM IRISH HILLS PLAZA W council j acenaa nepojzt NUUA�> 3 C I TY OF SAN LU IS O B I S P O FROM: Shelly Stanwyck, Assistant City Manager Prepared By: Neil Havlik,Natural Resources Manager SUBJECT: ACCEPTANCE OF FIRST AMENDMENT TO OPTION AGREEMENT FOR PURCHASE OF PROPERTY FROM IRISH HILLS PLAZA WEST, LLC RECOMMENDATION Authorize the Mayor to execute the First Amendment to the Option Agreement for the sale and purchase of approximately 310 acres from Irish Hills Plaza West, LLC, at a reduced purchase price of$635,500, using funds from the City's Open Space Acquisition Fund plus outside fundraising, and with all other conditions of the option agreement remaining in full force and effect. DISCUSSION Background In June 2008 the City Council approved an Option Agreement with Irish Hills Plaza East, LLC, to purchase approximately 310 acres of land from the company by June 30, 2010 ("Froom Ranch") (Attachment 1 -Vicinity Map). During that time (the "Option Period") the City planned to raise the funds necessary to complete the purchase. The Option Agreement further identified the purchase price as $700,000. Successful Grant Fund Raising Results in Need for New Appraisal Since July 2008, the City has successfully contracted for two grants, one from the Federal Land and Water Conservation Fund(LWCF) for$200,000, and one from the Nature Conservancy of California (TNC) for$100,000. Both of the grantors,however, required that, due to the length of time since the appraisal on which the purchase price was based (January 2008), a new appraisal be prepared. This has been done, and the new appraisal, dated February 2010, found that prices had declined and found a new fair market value for the property of$635,500 or$2,050 per acre. This constituted an 11% drop on the purchase price. However, the sellers recognized that the real estate market had been negatively affected since 2008 and have agreed to the new price (Attachment 1). The requested action will formalize the First Amendment to the Option Agremeent and will permit the successful conclusion of the acquisition project. At the present time the City is within $20,000 of its fundraising goal, with an active fundraising effort underway(Attachment 4). At this time, staff is confident of the ability to successfully complete the project. G' l3 - 1 G/Havlik(Councilagendd/Froom Ranch Option Amendment Froom Ranch Option Amendment Page 2 FISCAL IMPACT At the present time City funds in the amount of$310,000 (including the $40,000 option payment made in 2008) are available for the project. In addition there is $300,000 in grant fund support from outside agencies. The City and Land Conservancy are cooperating on a fundraising effort to raise the remaining funds for both the purchase price and ancillary costs such as appraisals, Phase I reports, survey work, and other costs of the project. Staff is presently seeking a total of $660,000 to cover all of these costs, and as of the present time (April 8, 2010), staff has secured approximately$625,000, with approximately$35,000 to go. ATTACHMENTS 1. Vicinity Map 2. Letter from Irish Hills Plaza West, LLC, successor in interest to Irish Hills Plaza East, LLC, 3. First Amendment to the Option Agreement 4. Fundraising Materials C1l3 -� ATT CHMENT 1 I ; ,i11i�J �.` . AN Akor _7 YZ 'i O's fteaft IL rte•--.:.,; jo '�t \4 +\, - :?�.1'f��'_ �r !if/1r •' I 1+ �✓, i '" '��JlJ',f rr- �_r"`.. 1 O .f -' 111 +� 1 ' ` ✓`'+ .- ,{ +t � /-•- •-~`� • 'F /J F~t 1;� "f���,'f''�-^' \��''i''I ,;'O�t/' 1 �t� _ trj� f�,/�� jJJr 7. 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'' f �•_7,' 'r ff' ..�"',r ��f'h r` �Jt �: �.C:—�•'} rJ r,;,�l . • i ATTACHMENT Z IRISH BILLS PLAZA WEST' March 24, 2010 Mayor David F. Romero and City Councilmembers City of San Luis Obispo 990 Palm Street San Luis Obispo, CA- 93401 RE: First Amendment to Agreement of Option for Purchase and Sale of Real Property Dear Mayor Romero and Councilmembers represent Irish'Hills Plaza West, LLC, ("Plaza West"), which is the successor in interest to Irish Hills Plaza East, LLC. We have an agreement with the City of San Luis Obispo by which the City has an option to purchase approximately 310 acres from Plaza West for public purposes, namely, open space, passive recreation and environmental purposes. This letter will confirm our willingness to modify the purchase price for this acreage to . $635,500. We understand that the City has received two grant contracts; one from the Cal'ifomia Department of Parks and Recreation, and one from the Nature Conservancy of California, totaling $300,000, which grants could be used toward the purchase price of this property: As a condition of these grants, the agencies required that a new. appraisal of the property be conducted, since the first appraisal was conducted in January 2008 and is considered out of date. The new appraisal, completed in February 2010, found the fair market value of the property in question to be $635,500, or approximately$2,050 per acre. Given the local real estate market in the past two years, Plata West concurs that this new appraisal represents the fair market value of the property and hereby agrees to sell the property to the City at that price. Specifically,we agree that Paragraph 3.of the Agreement may be amended to read as follows:- "3. PURCHASE PRICE If and when the Option is exercised, the total purchase price for the Property. shall be SIX HUNDRED THIRTY-FIVE THOUSAND, FIVE HUNDRED DOLLARS ($635,500.00)payable in cash at the close of escrow. The Option Payment of FORTY THOUSAND DOLLARS ($40,000.00), receipt of which Seller acknowledges, shall be included as part of the total purchase price for the Property.° 284 Higuera Street San Luis Obispo CA 93401 Phone: 805-543-0300 Fax: 805-541-3067 C l3 -rf ATTACHMENT 2- IR[SII BILLS PLAZA IMST Ail other conditions of;the Agreement of option for Purchase and.Sale of.Real Property,- dated July 9, 2008, including that the property shall be conveyed to the City free and clear of all encumbrances other than those acceptable.to the City, shall remain in full force and effect, except as modified by the change in ownership from Irish Hills Plaza East LLC to Irish.Hills Plaza West LLC. Plaza West is pleased to participate in this project,which vAll.enhance the recreational opportunities for our citizens and preserve in perpetuity a substantial portion of the scenic and environmentally rich Froom Ranch. Sinoerety; W Clint Pearce, Irish Hills Plaza West LLC 284 Higuera Street San Luis Obispo, CA. 93401 284-Higuera Street San Luis Obispo CA 93401 Phone: 805-543-0300' Fax: 805-541-3067. ATTAPHM T 3 FIRST AMENDMENT TO AGREEMENT OF OPTION FOR PURCHASE AND SALE OF REAL PROPERTY This FIRST AMENDMENT TO AGREEMENT OF OPTION FOR PURCHASE AND SALE OF REAL PROPERTY is entered into by and between the CITY OF SAN LUIS OBISPO ("Buyer"), a California Charter Municipal Corporation, and Irish Hills Plaza West, LLC ("Seller"), pursuant to the following: RECITALS WHEREAS, Buyer is a California Charter Municipal Corporation; and WHEREAS, Buyer, acting through its City Council and through adopted public procedures, has determined that certain lands surrounding the city of San Luis Obispo are important to the scenic character, healthy natural environment, and economic and social well being of the community and its citizens; and WHEREAS, Buyer seeks to preserve and conserve characteristics such as visual quality, wildlife habitat, and other community attributes where appropriate surrounding the City; and WHEREAS, Seller is owner of certain lands adjacent to the City which are of scenic, ecological, and agricultural value to the City of San Luis Obispo; and WHEREAS, Seiler wishes to preserve, protect and restore the scenic and ecological values which exist or could in the future exist on the Property, and WHEREAS, the purchase of said land in the judgment of Buyer would act to preserve the values indicated above and serve an important public purpose; and WHEREAS, both Buyer and Seller recognize that time will be required to secure the funds necessary for the transaction, and for other matters related thereto, and WHEREAS, Buyer and Seller agreed on July 1, 2008 to enter into an AGREEMENT OF OPTION FOR PURCHASE AND SALE OF REAL PROPERTY, in which Seller gave Buyer up to two years in which to secure funding to purchase said lands, and WHEREAS, both Buyer and Seller recognize that changes in local real estate values since the original agreement are such that it is desirable to modify the purchase price of the property. NOW, THEREFORE, THE PARTIES HEREBY AGREE THAT PARAGRAPH 3 OF THE AGREEMENT OF OPTION FOR PURCHASE AND SALE OF REAL PROPERTY IS HEREBY AMENDED AS FOLLOWS: 9. PURCHASE PRICE If and when the Option is exercised, the total purchase price for the Easement shall be SIX HUNDRED THIRTY-FIVE THOUSAND, FIVE HUNDRED DOLLARS ($635,500), payable in cash ATTACHMENT 3 at the close of escrow. The Option Payment of FORTY THOUSAND DOLLARS ($40,000.00), receipt of which Seller acknowledges, shall be included as part of the total purchase price for the Property." Seller specifically waives any new Option payment as part of this Amendment. Buyer and Seller agree that all other terms and conditions of the original AGREEMENT OF OPTION FOR PURCHASE AND SALE OF REAL PROPERTY, dated, July 1, 2008, shall remain in full force and effect. "Seller" DATE CLINT PEARCE "Buyer" CITY OF SAN LUIS OBISPO by: DATE: DAVID F. ROMERO, MAYOR ATTEST: APjROAS T RM: Elaina Cano trick, Esq. City Clerk City Attorney C/3- 2 OPE f kOOM WCH SPACE We have .: great opportunity right1 1 acquire 310 OPEN SPACE for our enjoyment today and for future generations to enjoy forever. 14 -14 r .RECREATION HABITAT- • ' WATER- ;, _:�.,��`EUTURE,;:� Yui .�.. •� f 45 FROOM RANCH IRISH HILLS RESERVE 3" •w 4 ♦y'_-a ';t ! .:� a. ��^ 111 r j :, _, ._ C. .� �y- j,-�, � _ .may .��, •' ` ,l i i }t � , j� tM •:� A ni3�'.7�'YYA` ,. J •. i1 I � 4• F © 111 ATrACHM9NT San Luis Obispo residents have always valued and Please send your supported open space. Golden hills and green canyons surround donation today! our city, sheltering wildlife and producing diverse habitats, giving Whether you can donate San Luis Obispo its wonderful character, and giving us access to 51 or 510,000, every dollar you great recreational opportunities. give will be spent to purchase and preserve public open space. We have areat Every 8l Froom Ranch is a significant g ou donate to property for an amazing price, opportunity now Y and now is the time to buy it. to preserve Froom Ranch, help create Your donation is tax deductible. a significant open space area FRh Please, dig in and help preserve Froom Ranch in the Irish Hills west of town, Froom Ranch. Make your check and to double the trail system Open Space payable to "LCSLO — Froom Randy: that already exists there. The Land Conservancy will be matched by of San Luis Obispo County A willing seller and our 812 from other 547 Marsh Street San Luis Obispo, CA 93401 City Council agreed sources. www.LCSLO.org to an option that would allow Mail a check or pay online the City of San Luis Obispo We need just $50 000 Send a check by mail, or go to purchase the 310-acre online to www.LCSLO.org and Froom Ranch at fair market to buy Froom Ranch. dick the DONATE NOW button value, as determined by a Every dollar you donate will be to pay by credit card. recent independent appraisal. matched by $12 from other Questions? The option agreement gives us sources, including Measure Y Call The Land Conservancy at a limited time to raise the funds funds (local), the Land &Water 544-9096 or City of San Luis Obispo Conservation Fund (federal) Natural Resources at 781-7211. and complete the purchase. r and The Nature Conservancy ;o Donate 5100 or more (private foundation). • : •• and well send you w t" Phasin WILDFLOWERS of �004fR urcg the SAN LUIS OBISPO, 310ACRFS` Cil 310-acre Froom Ranch a new book showing will enlarge the Irish Hills almost 300 color SOO �NCY Natural Reserve to over 1,000 photos of wildflowers Q acres and create the opportunity found in and around RF r0to connect to the Johnson Ranch San Luis Obispo. 01 Open Space, one mile south. 12'VALUE.WHILE SUPPLIES LAST Creating new trails out of the Three percent of online donations is deducted by Donate Now as a fee for their service. Froom Ranch lies in the old ranch roads and linking to existing trails will create longer Donations are 1004b tax deductible,except where hills behind Home Depot a Wildflower book has been received in which trails and open up new areas case the value of the book(112")must be and Costco, off Los Osos Valley to explore and enjoy. deducted before claiming the donation. G040 Road, adjacent to the 700-acre Please send your donation today.To purchase With your support the froom Ranch property,adequate funds Irish Hills Natural Reserve, must be deposited by June 30,2010.Any funds this opportunity for permanent raised beyond the Froom Ranch project goal a city-owned open space land conservation and outdoor will be transferred into The land Conservancy of San Luis Obispo County's Visionary Vistas Fund since 2001. recreation will be accomplished. to be restricted for future land acquisitions. ,py�g� ®� THE LAND CONSERVANCY A� eG�Cr�HME8�A y NONPROFITORGANIZATION 0 o a 0 p a OF SAN LUIS OBISPO COUNTY US POSTAGE f�g� Post Office Box 12206 PAID San Luis Obispo,California 93406 PERMIT#4 PISMO BEACH �^^ (805)544-9096 www.LCSLO.org CALIFORNIA p CREATE �' pom _ Help create Froom Ranch Open Space! U^ Froom Ranch lies in the hills behind Home Depot and Costco off Los Osos Valley Road in San Luis Obispo.This property is adjacent to the 700-acre Irish Hills Natural Reserve, a city-owned open space since 2001. Froom Ranch covers 310 acres of wildlife habitat,dense chaparral, oak woodland and open grassland.Froom Creek,a small perennial stream, supports steelhead trout. Both areas are underlain by serpentine soils which contain a number of rare wildflowers. +. f These habitats extend into Irish Hills Reserve,where six miles of popular,multiuse trails already exist. Let's create Froom Ranch Open Space! MieIx`lx d Irf .4 74 e% city of san Luis OBISPO OF SAN LUIS OBISPO COUNTY _ PHOT05:Marlin Harms,Steve Schubert,Ray Belknap,Patrick Dyas,Lindsey Collinsworth,Allyson Nakasone, The City of San Luis Obispo Geographic Information Services and Natural Resources Divisions, /3 ' The Land Conservancy of San Luis Obispo County,and Gaia Graphics&AssociatesCIf • RECYCLED PAPER Q PLEASE RECYCLE AND BUY RECYCLED ATTACHMENT `f california Eat, Drink ' calif Eat, Drink and and PRaise Money! Raise Moneys! You are invited to a very tasty FUNdraising event You are invited to a very tasty FUNdraising event at California Pizza Kitchen.5imply bring in this flyer at California Pizza Kitchen.Simply bring in this flyer and present it to your server when you order and and present it to your server when you order and 20%of your check will benefit this great organization! 20%of your check will benefit this great organization! Help Create Help Create F$QOM MNCH OPEN SPACE! FIZQOM INCH OPEN SPACE! 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