HomeMy WebLinkAbout06/01/2010, C4 - AUTHORIZATION TO EXERCISE THE OPTION AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY, AS AMENDED, i
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CITY OF SAN LUIS OBISPO
From: Shelly Stanwyck, Assistant City Manager
Prepared By: Neil Havlik, Natural Resources Manager
SUBJECT: AUTHORIZATION TO EXERCISE THE OPTION AGREEMENT FOR
PURCHASE AND SALE OF REAL PROPERTY, AS AMENDED,WITH
IRISH HILLS PLAZA WEST, LLC,FOR PURCHASE OF 310 ACRES
OF LAND IN THE IRISH HILLS NEAR LOS OSOS VALLEY ROAD,
AND PROVIDE OTHER STAFF DIRECTION
RECOMMENDATION:
Approve a Resolution:
1. Authorizing the Mayor to exercise the option to purchase 310 acres of land at the
Froom Ranch from Irish Hills West, LLC, at an agreed purchase price of $635,500,
and accept the title to the property on behalf of the City of San Luis Obispo;
2. Authorizing the conveyance of a Deed of Conservation Easement to the Land
Conservancy of San Luis Obispo County covering the 310 acres;
3. Providing certain assurances regarding historical and archeological resources on the
property to the Federal Land and Water Conservation Fund;
4. Providing a deed restriction covering the property as required by the Nature
Conservancy of California;
5. Direct staff to advance funds into the escrow to accommodate the Federal Land and
Water Conservation Fund program, which provides reimbursements; and
6. Authorizing the City Attorney to approve any non-substantive changes required to the
documents to facilitate the transaction.
DISCUSSION
Background
The serpentine land in the Irish Hills, west of the City of San Luis Obispo, has been one of the
City's prime open space acquisition areas. This is due to the rich habitat provided by the area, its
scenic character, and the large number of plant and animal species of concern that are found there
(eight). In recent years the City has acquired approximately 944 acres of land in the Irish Hills
area, including what are now known as the Irish Hills Natural Reserve (702 acres) and the
Johnson Ranch Open Space (242 acres). Both of these properties have become popular hiking
and biking destinations for our citizens, and there continues to be strong interest in the continued
growth of recreational opportunities in the area.
1\Chstore4\admin\Stafl\HAVI.WCouncilagenda\froom ranch option exercise.doc —[
Froom Ranch Option Exercise Page 2
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") (Attachments 1 -Vicinity Map, and 2—Project Map). During that time(the "Option
Period") the City planned to raise the funds necessary to complete the purchase. The Option
Agreement identified the purchase price as $700,000.
At its regular meeting of May 12, 2010, the Planning Commission determined, as required by
law, that the acquisition of the Froom Ranch was consistent with the City's General Plan.
Successful Grant Fund Raising Results in New Appraisal and Reduced Purchase Price
Since July 2008, the has City successfully contracted 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 land
prices had declined and determined a new fair market value for the property of$635,500 or
$2,050 per acre. This constituted an 11% drop in the purchase price. However, the sellers
recognized that the real estate market had been negatively affected since 2008 and.agreed to the
new price. This was memorialized at the City Council meeting of April 20, 2010, when the
Council approved an amendment to the option agreement.
Granting Agencies Require Other Assurances
The two granting agencies have asked for certain assurances pursuant to their own policies or
directives. LWCF is strongly concerned with historical preservation, and has required that the
City undertake a historical/archeologicalreconnaissance, and, if necessary, a detailed survey of
any areas proposed for physical changes. City staff have completed the first item and, through
the Council resolution, propose formal agreement to the second. This is not expected to be a
costly item as three short trail connections that will make loop trails out of several existing routes
are the only physical alterations contemplated for the property at this time.
TNC has requested that certain language be inserted in the deed to the property that will ensure
that the property remains forever as open space and in its essentially natural condition. 'This is
also a common requirement of many granting agencies, and is in fact consistent with the City's
own goals. Therefore the Council resolution includes a statement that the City agrees to such
restrictive language.
Placing a Conservation Easement on the Property is Desirable for Several Reasons
To carry the deed restrictions further, staff is proposing to grant a conservation easement over the
property to the Land Conservancy of San Luis Obispo County. While it may appear redundant,
experience has shown that such easements always strengthen the commitment to land
conservation and generally carry with them property tax advantages as well. The.City of San
Luis Obispo is working with the County to reduce the City's property tax burden on open space
lands, and placement of a conservation easement has proven to be an attractive and effective
C1f- a
Froom Ranch Option Exercise Page 3
means of achieving that goal. (Our rationale for this is that the City open space lands are open to
all and should be treated the same as if they were owned by the County.) Finally, the easement is
also in recognition of the support received by the City from the Land Conservancy in the local
fundraising that was necessary to complete our funding needs, and to further strengthen the
beneficial relationship represented by this partnering.
Change in Landowner During Option Period
Also during the option period, the Madonna family undertook certain restructuring of land
ownership for financial reasons, and a new corporation, Irish Hills Plaza West,LLC ("Plaza
West") became the successor in interest to the owner with whom the City had entered into the
option agreement, Irish Hills Plaza East, LLC ("Plaza East"). This is an item of note, but does
not have any bearing on the validity of the option agreement or the amendment thereto, as both
entities have the same officials.
FISCAL IMPACT
The Froom Ranch acquisition will fully deplete the City's Open Space CIP for 2009-2011.
However, the necessary funding to complete the transaction($635,500 purchase price, plus
ancillary expenses of$22,500 for a total of$658,000) is in place, and is as follows:
City Measure Y funds (includes option payment of$40,000) $310,000
LWCF grant $186,800
TNC grant $100,000
Donations through Land Conservancy or directly to the City $61,600
TOTAL RAISED $6589400
As noted earlier, Federal LWCF monies are paid in arrears and it is therefore necessary to
advance funds from in-house for the purchase. Other funds either have been, or will be, placed
into escrow to complete the transaction. Staff are working with all of our funding partners and
with the title company to complete the project if possible by June 30, 2010. Any donated funds
left over from the transaction will be held by the Land Conservancy for future acquisition
projects.
ALTERNATIVES
None are recommended.
ATTACHMENTS
1. Vicinity Map
2. Project Map
3. Resolution
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AnACHMEW 3
RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO
AUTHORIZING EXERCISE OF THE OPTION AGREEMENT FOR PURCHASE AND
SALE OF REAL PROPERTY, AS AMENDED, CONVEYANCE OF A CONSERVATION
EASEMENT THEREON TO THE LAND CONSERVANCY OF SAN LUIS OBISPO
COUNTY, AND PROVIDING CERTAIN OTHER ASSURANCES TO GRANT FUNDING
AGENCIES, REGARDING 310 ACRES OF LAND NEAR LOS OSOS VALLEY ROAD
IN SAN LUIS OBISPO, CALIFORNIA, COMMONLY KNOWN AS FROOM RANCH
WHEREAS, the City of San Luis Obispo is a chartered municipal corporation of
the State of California that is authorized by law to purchase real property; and
WHEREAS, on July 1, 2008, the City of San Luis Obispo entered into an Option
Agreement for Purchase and Sale. of Real Property commonly known as the Froom
Ranch, and described as portions of San Luis Obispo County Assessor's Parcel
Numbers 067-241-023 and 067-241-024, ("the "Property"), with the property owner,
Irish Hills Plaza East, LLC ("Plaza East"), at an agreed purchase price of $700,000; and
WHEREAS, Irish Hills Plaza West, LLC, ("Plaza West") is the successor in
interest to Plaza East, of said property; and
WHEREAS, on April 12, 2010, Plaza West agreed to a reduced purchase price
for the property of $635,500, based upon a qualified appraisal of the property; and
WHEREAS, the Property possesses high natural resource values including
wildlife and botanical resources, and scenic open space values (the "Conservation
Values") of great importance to the people of the City of San Luis Obispo, and the
people of the State of California; and
WHEREAS, the City of San Luis Obispo intends that the conservation values of
the Property be preserved and maintained forever by the continuation of currently
existing land use patterns;
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of San
Luis Obispo hereby:
1. Authorizes and directs the Mayor to exercise the Option Agreement
for Purchase and Sale of Real Property, as Amended, to a 310
portion of the properties described as Assessor's Parcel Numbers
067-241-023 and 067-241-024; and
2. Further authorizes and directs the Mayor to convey a Deed of
Conservation Easement to said property to the Land Conservancy of
San Luis Obispo County as soon as possible upon close of escrow;
and
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ATTACHMENT 3
3. Authorizes and directs City staff to include in the deed to said
property certain restrictive language regarding future use and
management, required as a condition of funding support by the
Nature Conservancy of California; and
4. Authorizes and directs City. staff to conduct the necessary
archeological and historical site investigations of the property prior to
any new ground disturbing activities, required as a condition of
funding support by the Federal Land and Water Conservation Fund;
and
5. Authorizes and directs the Finance Director to transfer funds from
City reserves in the escrow account to advance the funds anticipated
to be reimbursed from the LWCF; and
6. Authorizes the City Attorney to approve any non-substantive changes
in language to the various documents required to effectuate this
action by the City Council.
Approved and adopted this 1 st day of June, 2010.
On motion of , seconded by and
on the following roll call vote:
AYES:
NOES:
ABSENT:
David F. Romero, Mayor
ATTEST:
Elaina Cano, City Clerk
APPROVED AS TO FORM:
J hristine Dietrick, City Attorney
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