HomeMy WebLinkAbout07/17/2001, B 6 - APPROVAL OF PURCHASE OF REAL PROPERTY OF APPROXIMATELY 154 ACRES OF LAND IN THE IRISH HILLS FROM JA council °;
j acEnaa REpoRt th.N.� Q
CITY OF SAN LUIS 0 B I S P 0
U
-FROM: Wendy George, Assistant City Administrative Officer Uly
Prepared By: Neil Havlik,Natural Resources Manager c
SUBJECT: APPROVAL OF PURCHASE OF REAL PROPERTY OF APPROXIMATELY 154
ACRES OF LAND IN THE IRISH HILLS FROM JACK AND PAT FOSTER.
CAO RECOMMENDATION
Approve exercising the Agreement of Option for Purchase and Sale of Real Property with Jack and Pat
Foster, for the purchase of 154 acres in three existing lots at a purchase price of$1,150,000, subject to
non-substantive changes approved by the City Attorney, and authorize the Mayor to execute the
necessary documents associated with the transaction.
DISCUSSION
The Foster property is scenic property in the Irish Hills, west of the City of San Luis Obispo. There
have been two major open space acquisitions on either side of the Foster property in the past three
years that highlight the importance of the site. The Prefumo Homes dedication of 360 acres is adjacent
to the Foster property on the northwest and the 184-acre DeVaul property dedication lies to the
southeast (Attachment 1). Both of these have the same westerly boundary as the Foster property, that
being a rancho line of many'decades standing. Acquisition of the Foster property would consolidate
this open space area into a single large holding of some 700 acres. The area consists of serpentine
chaparral and woodland with numerous rare plant species, excellent quality of wildlife habitat and a
perennial stream (Froom Creek), known to contain spawning habitat for southern steelhead. It would
provide the opportunity for continuous trail access from planned entry points on the DeVaul and
Prefiuno Homes project sites. It would enable the establishment of a comprehensive trail system, offer
fine views of the Los Osos Valley, the Morros, the San Lucia Mountains, and much of the City of San
Luis Obispo as well as a remote hiking or mountain biking experience in quality habitat with only
localized alteration by human activity.
Because of its desirability as open space, and due to the interest of the Fosters in a transaction that
would conserve the property, the City Council in February 2000 entered into a one-year, exclusive
option agreement with the Fosters to purchase the 154.acre property. In December 2000 the option
was extended for an additional six months when it became apparent that additional time was needed to
assemble the funding package. Since then, staff has secured $915,000 in grant support for the
$1,150,000 project, and is now working with the Fosters to finalize the transaction.
6 - /
1
Council Agenda Report:Approval of Purchase of Real Property
Page 2
FISCAL IMPACT
This project has been an extremely challenging one: a wide variety of grant programs have been
pursued in the effort to obtain funding, and the biological richness of the site has been a strong
attraction for granting agencies. In addition to City funds, five outside funding, sources have been
successfully applied for. The funding package for the property is outlined below:
• Wildlife Conservation Board $300,000
• The Nature Conservancy(David and Lucile Packard Foundation) $3001000
• City of San Luis Obispo funds (previously appropriated) $235,000
• State Coastal Resources Grant Program $150,000
• Land and Water Conservation Fund $100,000
• California Coastal Salmon Recovery Program $65,000
• Total $1,150,000
At the time of the original option agreement, the Fosters were looking for an income stream, rather
than a large amount of cash. Therefore, the request from the Fosters at that time was for a purchase
price of$1.15 million dollars for the three parcels, structured in a fashion that would generate a tax-
free interest to the Fosters with the principal due at the end of a term or paid out over that term.
However, the Foster's financial goals have changed since that time, and we are still working with them
on a different structure that will accomplish the new goals. Therefore, staff anticipates having
modified language in Paragraph 3 of the Option Agreement to present at the Council meeting.
This property, together with the DeVaul Open Space and Prefumo Homes Open Space, will eventually
impose additional responsibilities on the ranger program. These are anticipated to "phase in" over the
next year or so as the three properties are opened to public use and become better known in the
community. Current ranger staffing should be sufficient to handle this additional open space, although
staff has recognized that by the 2003-05 Financial Plan it may be necessary to add an additional open
space ranger.
The Foster property will be also subject to property tax as it is outside of the City limits. It is not
certain how much this will be, but due to the numerous restrictions required by the granting agencies,it
is assumed that the property will be deed restricted to open space uses and therefore assessed at
agricultural value. Initial funding for taxes should be available within the Natural Resources budget.
However, it may prove desirable to annex the property to enable City ordinances to be applied and
avoid future property tax. City staff will explore this possibility and report back to Council in the near
future.
ATTACBAMNTS
1. Project Location Map
2. Agreement of Option for Purchase and Sale of Real Property and Agreement for Extension
� -a
ATTACHMENT 1
:.
'�:-,c ` •- f /�.--.\_ ." .:� 1' r `-- �� 'i �. 'lam, N.'.. �._i
Field 1 �
�•;• •• .= �=-`�,4-,-♦ `--J .�; ,� {.FirsAN
.�
r
Prefumo Creek `Homes property .,- _
`i��� ``�-; I �• .-/_ ,'. �\ -t.J.r+ —�jj .e. -v QC:fOW 1?L:'•.LtJt. •�
Foster
r 1 I •J�� ' ._ �/ 1 L r� 'r
'ULS
J- �•-��`'~`� \y} h•) p C , , - _ _ SCA.P ,-, �L�•' ••\•.' ♦ '
�,1CS116) \`'1 6:i,'•"_ ;r„``.o-� — -_-9i' •r •� / aQ� .\''�'-. _�-`ti �' '�`_- �,Gr.. 1
"♦`•c: '1'00�?Lf}
�'..� �b� r---�..^ /• y� I
�---' !�=•_ �•-... `-J- Vii' -�_� c. `” ''1'_ --�.•— `, ;i�.
T ♦p is
I ��r! l .[,\J\• �1�� �`q
CITY OF SAN LUIS OBISPO GREENBELT PROGRAM
Jack and Pat Foster Property
1" = 1600'
San Luis Obispo Quadrangle, California
Pismo Beach Quadrangle, California
ATTACHMENT 2
AGREEMENT OF OPTION FOR PURCHASE AND SALE
OF REAL PROPERTY
This 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 JACK SLOAN FOSTER AND CHARLOTTE PATRICIA
FOSTER ("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
and ecological value to the City of San Luis Obispo; and
WHEREAS, Seller wishes to preserve, protect and restore the scenic and ecological
values which exist or may 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 municipal 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.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. OPTION AND OPTION TERM.
Seller, for valuable consideration, hereby grants to Buyer an .exclusive Option to
purchase the Property identified as San Luis Obispo County APNs 067-221-034, 067-221-
035, and 067-221-036 and.commonly referred to as Parcels 2, 3, and 4 of Tract 1626 in the
County of San Luis Obispo, (shown on Exhibit A attached hereto) totaling approximately 154
acres ("the Property"). Buyer and Seller agree that the term of this Option shall commence
on February 1, 2000, and continue for ONE YEAR, to January 31, 2001. Buyer may exercise
the Option at any time within that period by sending written notice to Seller.
6-�
I 1
ATTACHMENT 2
2. OPTION PAYMENT; RETURN OF OPTION PAYMENT.
(a) In consideration of the Option and Option Term described above, Buyer shall
pay Seller the sum of twenty thousand dollars ($20,000) as an Option Payment.
This payment shall not be refundable. If the Option is exercised on or before
August 1, 2000, the full Option Payment shall apply to the purchase price. If
the option is exercised at any time between August 2, 2000 and January 31,
2001, one-half of the Option Payment shall apply to the purchase price.
(b) In the event that Seller is unable to deliver clear title to the Property to Buyer, or
in the event that hazardous materials are found to exist on the site such that
completion of the Purchase and close of escrow or extension thereof as
described herein cannot take place, then Seller shall refund the full Option
payment to Buyer.
3. PURCHASE PRICE
(a) If and when the Option is exercised, the total purchase price for the property
shall be $1,150,000.00, payable as described in Section (b) below.
(b) Seller desires to receive a secure cash flow from the sale of the property,
generating a tax-exempt income equal to six percent.(6%) of the purchase price
less the Option Payment. The parties agree to use their best efforts to
establish a legal mechanism for such income as a part of this transaction. If the
parties are unable to do so, Seller shall have no obligation to complete the
transaction.
4. CONVEYANCE
Title to the Property shall be conveyed by Grant Deed and shall be insured by a CLTA
(or at Buyer's election, an ALTA) owners' policy of title insurance in the amount of the
purchase price, showing title vested in Buyer, subject only to those exceptions listed in the
Preliminary Title Report and/or Supplemental Report approved or deemed approved by
Buyer.
5. CONDITIONS PRECEDENT FOR BENEFIT OF BUYER
After exercise of the Option, Buyer's obligation to purchase the Property is expressly
conditioned upon the satisfaction, deemed approval, or Buyer's waiver of each of the
following conditions, each of which is deemed exclusively for the benefit of Buyer.
(a) Title Report. Buyer's approval of the exceptions to title set forth in a preliminary
title report for the Property (the "Preliminary Title Report"). Buyer shall have thirty (30) days
after the receipt of the Preliminary Title Report and copies of all documents referenced
therein, to provide to Seller and Escrow Holder written notice of Buyer's disapproval of any
specific title exception. Any title exception not so disapproved shall be deemed approved,
- 5
ATTACHMENT 2
provided that if a Supplemental Title Report is issued showing any exception not shown in
the Preliminary Title Report, Buyer shall have an additional ten (10) calendar days after
receipt of such Supplemental Report to similarly disapprove any new title exception. If Buyer
disapproves any title exception, Seller shall have no obligation to cure such disapproval
(except that Seller shall be obligated to remove any liens) but Seller may elect, by written
notice to Buyer within ten (10) calendar days after receipt by Seller of such notice of
disapproval, to attempt to remove such disapproved items. If Seller is unable within a
reasonable time to accomplish such cure or removal, or if Seller elects not to. attempt to so
cure or remove (which election shall be communicated to Buyer within ten (10) calendar days
after receipt by Seller of such notice of disapproval), then Buyer may elect to (i) terminate its
obligations under this Agreement, (ii) waive its objections to such exception, or (iii) elect to
correct any such disapproved exception itself, in which case Seller will provide reasonable
assistance to Buyer to cure the same.
(b) Inspection and Approval of Property and of Any Testing Thereon. Buyer's
inspection and approval of the Property and all improvements thereon, including (at Buyers
option and expense), any surveys or studies deemed necessary in Buyer's sole judgement.
Access to the property shall be given to Buyer, its agents and authorized representatives
during normal business hours upon at least one (1) business day's notice to Seller, at
Buyer's own cost and risk, for any purposes relating to Buyers conditions. Buyer shall
indemnify and defend Seller against and hold Seller harmless from all losses, costs,
damages, liabilities, and expenses, including, without limitation, reasonable attorney fees
arising out of Buyer's entry onto the Property or any activity thereon by Buyer or its agents,
or authorized representatives prior to the Close of Escrow, except to the extent any such
losses, costs, damages, liabilities, and expenses arise out of the gross negligence or willful
acts of Seller. If Buyer discovers through its investigations any defects on the Property or
improvements thereon which it disapproves of, Seller shall have no obligation to cure such
disapproval (except that Seller shall be obligated to remove any liens) but Seller may elect,
by written notice to Buyer within ten (10) calendar days after receipt by Seller of such notice
of disapproval, to attempt to remove such disapproved items. If Seller is unable within a
reasonable time to accomplish such cure or removal, or if Seller elects not to attempt to so
cure or remove (which election shall be communicated to Buyer within ten (10) calendar days
after receipt by Seller of such notice of disapproval), then Buyer.may elect to (i) terminate its
obligations under this Agreement, (ii) waive its objections to such exception, (iii) elect to
correct any such disapproved exception itself, in which case Seller will provide reasonable
assistance to Buyer to cure the same. The parties may also enter into additional
negotiations, as may be mutually acceptable, concerning adjustment of the purchase price,
allocation of risk, or contribution to the costs to cure or other matters, and the Escrow shall
be extended for a reasonable time of effect such negotiations.
6. ESCROW
(a) Escrow Holder. Buyer and Seller will establish an escrow ("Escrow") with
Escrow Holder within ten (10) business days of execution of this Agreement, subject to the
provisions of the standard conditions for acceptance of escrow and the terms and conditions
in this Agreement, with a signed counterpart of this document to be delivered as escrow
instructions to Escrow Holder. In the event of any conflict between the terms of this
6 ��
ATTACHMENT 2
Agreement and the standard conditions for acceptance of escrow, the terms of this
Agreement shall control. The Escrow Holder shall be First American Title Insurance
Company, 899 Pacific Street, San Luis Obispo, CA. 93449.
(b) Prorations and Fees.
(i) Real property taxes and rental income shall be prorated to the.close of
escrow.
(ii) Seller shall pay (1) the documentary transfer tax, (2) the premium for a
CLTA policy of title insurance, and (3) recording fees. If Buyer elects an ALTA
policy of title insurance, Buyer shall pay the portion of the premium that
exceeds the premium for a CLTA policy of title insurance.
(iii) All Escrow fees and costs shall be allocated according to custom in San
Luis Obispo County.
(c) Closing Date. Escrow shall close within thirty (30) days of exercise of the
Option by Buyer.
7. REPRESENTATIONS, WARRANTIES, AND AGREEMENTS
(a) Authorized Representative. Buyer and Seller hereby represent and warrant to
each other that the persons who sign this agreement and any other documents required to
be executed by such party to perforin its obligations hereunder, shall have all requisite power
and authority to have entered into this Agreement, and that all authorizations required to be
obtained by or on the part of such party to execute and perform this Agreement have been
obtained.
(b) Proof of Citizenship. Seller is not a foreign person as such term is used in
Section 1445 of the Internal Revenue Code. Prior to the Close of Escrow, Seller shall
deposit in Escrow a non-foreign affidavit as provided under said Section 1445. Failure to do
so shall entitle Buyer to withhold from the purchase price such sums as are required by said
Section 1445.
(c) Delivery of Property. Possession of the Property shall be delivered by Seller to
Buyer upon the close of Escrow. Seller may remove, at Seller's expense, prior to the Close
of Escrow, all personal property and trade fixtures on the property, provided that the property
is left in a safe, sound and usable condition.
(d) Legal Actions. Seller represents and warrants to Buyer that there are no
actions, suits, or legal proceedings related to the ownership, use, operation or sale of the
Property to which Seller is a party nor has Seller received any notice that any such actions
are pending or threatened.
6 -7
ATTACHMENT 2
(e) Seller's Knowledge of Environmental Conditions of the Property. To the best of
Sellers knowledge, there are not now nor have there been any hazardous or toxic wastes
(as said terms are defined in applicable Federal, State, or County laws or regulations)
located on or within any portion of the property; nor have there been any enforcement;
cleanup, removal or other governmental or regulatory actions instituted, contemplated, or
threatened pursuant to any applicable Federal, State, or local laws or regulations relating to
any hazardous materials and affecting the property; nor have there been any claims made or
threatened by any third party against Seller or the property, relating to damage, contribution,
cost recovery, compensation, loss or injury resulting from any hazardous materials.
(f) Extinguishment of Access Easement. The parties recognize that an easement
for access to Parcels 3 and 4 crosses portions of another property owned by Seller,
commonly called Lot 13 of Tract No. 1438 in the City of San Luis Obispo. Said easement is
referred to as Easement "C" in the Tract Map for Tract 1438. The parties further recognize
that an alternative access on the edge of said Lot 13 (referred to as Easement "B" in the
Tract Map for Tract 1438) and on Parcel 2 is available to serve as the access to Parcels 2, 3,
and 4. Therefore, the parties agree that, in the event of completion of the purchase of the
property by Buyer, the parties shall cooperate to extinguish the access easement (Easement
"C") on said Lot 13, and Buyer will exclusively utilize the alternative access on Easement "B"
on said Lot 13 and on Parcel 2 for access to Parcels 2, 3, and 4.
8. NOTICES
All notices, communications, consents, approvals and disapprovals required or
permitted hereunder must be in writing and shall be delivered by personal delivery, facsimile,
or deposited in the United States mail, postage prepaid and addressed as follows:
TO BUYER: City of San Luis Obispo
.Dr. Neil Havlik, Natural Resources Manager
990 Palm Street
San Luis Obispo, CA 93401
Telephone (805) 781-7211
TO SELLER: Jack Sloan Foster and Charlotte Patricia Foster
P. O. Box 1161
San Luis Obispo, CA. 93406
Telephone (805) 238-5033
The foregoing addresses may be changed by written notice. If served personally, or
by facsimile, service shall be conclusively deemed made at the time of service. If served by
mail, service shall be conclusively deemed made seventy-two (72) hours after deposit thereof
in the United States mail.
9. BROKERS
Buyer and Seller each represent to the other that it knows of no claim for brokers or finders
fees or other commissions in connection with this transaction other than as provided in this
ATTACHMENT 2
paragraph. In the event any other broker or finder asserts a claim for a commission or
finder's fee, the party through whom the broker or finder makes this claim shall indemnify the
other party for any and all costs and expenses (including attorney's fees) incurred by the
other party in defending the same.
10. SURVIVAL
The warranties, representations, and agreements made in this Agreement shall survive the
close of escrow.
11. MISCELLANEOUS
(a) Entire Agreement. This Agreement, and the exhibits hereto, contains the
entire agreement between the parties hereto. No modification or addition to any term or
provision hereof shall be effective unless made in writing and signed by both parties hereto.
The captions and headings in this Agreement are for reference only and shall not be deemed
to define or limit the scope or intent of any of the terms,,covenants, conditions or agreements
contained herein.
(b) Attorneys' Fees. If litigation is commenced between the parties, the prevailing
party in that litigation shall be entitled to recover from the non-prevailing party all reasonable
attorney fees and costs.
(c) Successors. This Agreement shall inure to the benefit of and shall be binding
upon the parties to this Agreement and their respective heirs, successors, and assigns.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with California law.
(e) Time of Essence. Time is of the essence in this Agreement.
(f) Offer and Acceptance. This Agreement shall be of no force or effect
whatsoever until signed by authorized representatives of both Buyer and Seller.
(g) Exhibits. Exhibit A. Map
"Seller"
✓ACK SLOAN FOSTER CHARLOTTE PATRICIA FOS R
Date:
6 - �
i
ATTACHMENT 2
"Buyer,
CITY OF SAN LUIS OBI PO
i
y; � �� ' Date:
ALLEN SETtl-EtIWYOR
ATTEST* APPROVED AS TO FORM:
Lee Price, CMCJo ens
City Clerk City Atto ey
�"lr�
ATTACHMENT 2
EXHIBIT A
S 4=I° I5 E 924.36 _
d'
4 \�
5-187
a53
23
1807 N
181! co
`
SO N oL AIM 1.5
r o a�p3a� YB°' ,�bbn�°
4
3a/ •6 �GGf� � 2.
o S 1 a� 4A'52AC.
� ti0 a
4265 ACya,4.
let j0l�f 1
IN � 1 0 �
3.
24
o �
a 5679AC. a 57.13 AC.
Z
7R. 1053 TR.1626
TR- 1053, R.M. 8K 14,PG� 15.
TR. 1626, R.M. BK.15,PG.89.
6�/
JHLK tUJItK/f'1-M1LLHN k, 1U0 ;5U»40UJ1L JUN 11 U1 1J • 00 INU .uU1 r .U4
-- ATTACHMENT 2
AGREEMENT FOR EXTENSION OF OPTION FOR PURCHASE AND SALE
OF REAL PROPERTY
This AGREEMENT FOR EXTENSION 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 JACK SLOAN FOSTER AND
CHARLOTTE PATRICIA FOSTER ("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 attributes where appropriate surrounding the City; and
WHEREAS, Seller is owner of certain lands within the City which are of scenic and
ecological value to the City of San Luis Obispo; and
WHEREAS, Seller wishes to preserve, protect and restore the scenic and ecological
values which exist or may 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 municipal purpose; and
WHEREAS, Buyer and Seller did enter into an Agreement of Option for Purchase and
Sale of Real Property on February 1, 2000, which Option was for ONE YEAR, to January 31,
2001; and
WHEREAS, both Buyer and Seller recognize that additional time is needed to secure
the funds necessary for the transaction, and for other matters related thereto.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. EXTENSION OF OPTION TERM.
SELLER, for additional valuable consideration, hereby extends to BUYER the
exclusive Option to purchase the Property identified as San Luis Obispo County APNs 067-
221-034, 067-221-035, and 067-221-036, totaling approximately 154 acres ("the property")
for an additional SIX MONTHS. BUYER and SELLER agree that the term of this option,
which commenced on February 1, 2000, will therefore continue for ONE YEAR AND SIX
MONTHS, to July 31, 2001. Buyer may exercise the Option at any time within that period by
sending written notice to Seller.
JHLK rUJItK/I`'IUMiLLHIN l 1V ;6UJJ40U:)12 JUN 11 U1 13 .Jb rqu .UU1 r .UJ
- - ATTACHMENT 2
2. OPTION EXTENSION PAYMENT; PREVIOUS OPTION PAYMENT FORFEITED
In consideration of the Extension of the Option Term described above, Buyer shall pay
the sum of ten thousand dollars ($10,000) to Seller as an Option Payment. This payment
shall not be refundable nor shall it apply to the purchase price. Furthermore, Buyer
acknowledges that the Option Payment of twenty thousand dollars ($20,000) made in
February, 2000, is forfeited and will not apply to the Purchase Price as Buyer will not
exercise the Option within the original Option Period.
3. ALL OTHER TERMS AND CONDITIONS REMAIN IN FULL FORCE AND EFFECT
All terms and conditions of the Option Agreement dated February 1, 2000, between
Buyer and Seller shall remain in full force and effect except as modified by this Extension,
and are incorporated into this Agreement by reference.
"Seller"
f
JACK SLOAN FOSTER CHARLOTTE PATRICIA FOSTER
Date:
"Buyer,
CITY OF SAN LUIS OBISP
Y
ALLEN SETT , MAYOR
Date: 1a
ATTES
Lee Price, CMC
City Clerk
APPROVED AS TO FORM:
*Att�jKnc;r46460��
CO
Nro AGENDA
- L E —17-01 ITEM#.
counat memoizanoum
[city of san luis osis o, aomimstuation ae autment
DATE: July 17, 2001
UNCIL ❑ CDD DIR
TO: City Council � p FIN DIR
0 ❑ FIRE CHIEF
FROM: Neil Havlik,Natural Resources Manager RNEY ❑ PW DIR
4EMLERKICRIG ® POLICE CNF
❑ D PT HEADS Z REG DIR
VIA: Ken Hampian, City Administrative Office 1-1 8 UTIL DIR
SUBJECT: Foster Property
REVISED RECOMMENDATION
J
0 o Z 1. Approve exercising the revised Agreement of Option for Purchase and Sale of Real.
W o :3 Property with Jack and Pat Foster for purchase of 154 acres in three existing lots at a
> N OV purchase price of$1,245,000, subject to non-substantive changes approved by the City
Attorney, and authorize the Mayor to execute the necessary documents associated with
W _r U the transaction.
Q �
N2. Approve using an additional $95,000 from the Open Space Fund to complete the
transaction.
DISCUSSION
As reported in the staff report for tonight's agenda item on the Foster property acquisition,
negotiations with the Fosters for a final form to the transaction have continued beyond the
submittal deadline for the agenda. The reason for this was that staff had found it considerably
more problematic to structure an installment purchase arrangement for the property using State
grant funds than was originally expected. The Fosters had essentially offered the City a discount
on the purchase price if we were able to set up such a structure. This was because that structure
would (1) postpone exposure to capital gains tax for the Fosters, and (2) would provide a tax-
exempt income stream for them.
What City staff found as we began to create the structure was that the State agencies, with a few
exceptions, are not set up to grant monies for structured purchases. We found that, although it
was possible to do it, success was not assured as any one of five grantors could veto the structure
and cause the transaction to collapse. After protracted negotiations over the past two weeks, City
staff and the Fosters have agreed on a substitute: an all-cash purchase with no financing
structure. In exchange for this approach, the Fosters have asked that the City pay the appraised
value of the property, $1,245,000 or $95,000 more than had been earlier agreed upon. This
would offset the loss of interest income the Fosters had anticipated, as well as the earlier
exposure to capital gains tax. Given the unexpected difficulty and uncertainty of successfully
setting up a structured transaction, staff recommends that the Council approve the amended
agreement presented tonight,which will bring the project to closure.
The fiscal effect of the recommendation is to potentially constrain the City's open space
protection program at a near-future time. Currently, some $863,220 of City funds is available for
open space acquisitions. Expenditure of$330,000 for the Foster transaction and $315,000 for
the Johnson Ranch transaction will leave $218,220 available for the next transaction or
transactions. This is $95,000 less than anticipated but it should be pointed out that the next
transaction, be it the Ahearn property or the Morganti property, is speculative at this time, with
no formal discussions taking place for either project. In addition, the Finance Department has
estimated a cost of $10,000415,000 to retain bond counsel and actually create the financing
structure, so the actual additional cost is $80,000 to $85,000. Finally, even despite this change,
City funds for the Foster transaction will be leveraged by almost 3:1 ($915,000:$330,000), and
staff believes that this fact should be given strong weight in the Council's deliberations.
AGREEMENT FOR AMENDMENT OF CERTAIN TERMS
FOR PURCHASE AND SALE
OF REAL PROPERTY
This AGREEMENT FOR EXTENSION OF OPTION AND AMENDMENT OF CERTAIN
TERMS 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
JACK SLOAN FOSTER AND CHARLOTTE PATRICIA FOSTER ("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 attributes where appropriate surrounding the City; and
WHEREAS, Seller is owner of certain lands within the City which are of scenic and
ecological value to the City of San Luis Obispo; and
WHEREAS, Seller wishes to preserve, protect and restore the scenic and ecological
values which exist or may 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 municipal purpose; and
WHEREAS, Buyer and Seller did enter into an Agreement of Option for Purchase and
Sale of Real Property on February 1, 2000, which Option was for ONE YEAR, to January 31,
2001 (the "Original Option") and did by subsequent Agreement extend said Option for an
additional SIX MONTHS, to July 31, 2001 (the "Extension Agreement"); and
WHEREAS, both Buyer and Seller recognize that additional time is needed to finalize
certain details of the transaction, and for other matters related thereto.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. AMENDMENT OF PURCHASE PRICE AND TERMS
The parties agree that the full Purchase Price of ONE MILLION, TWO HUNDRED
FORTY-FIVE THOUSAND DOLLARS ($1,245,000) shall be payable in full, in cash at the
close of escrow.
2. ALL OTHER TERMS AND CONDITIONS REMAIN IN FULL FORCE AND EFFECT
All other terms and conditions of the "Original Agreement' dated February 1, 2000,
and the "Extension Agreement' dated December 14, 2000, between Buyer and Seller remain
in full force and effect except as modified by this Agreement, and are hereby incorporated
into this Agreement by reference.
"SELLER"
CK SL AN FOSTER CHARLOTTE PATkim FOSTER
Date: /�- Date: Z j
"BUYER"
CITY OF SAN LUIS OBISPO
by:
ALLEN K. SETTLE, MAYOR
Date:
ATTEST:
Lee Price, CMC
City Clerk
APPROVED AS O FORM:
Jo e n
City Atto ney
MFRiNG AGENDA
- 1
From: Don & Ellen Dollar<ddollar®pacbell.net>
To: John Ewan <jewan@slocity.org>,Jan Howell Marx<jmarx@slocity.org>,Allen Settle
<asettle@slocity.org>, Ken Schwartz<kschwartz@slocity.org>, Christine Mulholland
<cmulholland @ slocity.org>
Date: 7/16/01 4:13PM
Subject: Foster Property
City Council, C@UNCIL ❑ CDD DIR
�O ❑ FIN DIR
We strongly urge you to purchase the Foster property in the Irish Hills. 0 ❑ FIRE CHIEF
The future of the city depends on actions such as this. It will make a RNEY O PW DIR
long term difference in the quality of life for all of us. Future FLEORIQORIG ❑ POLICE CHF
generations will look back on this as a very forward looking and wise ❑ 4EPTH 11 AEC DIR
decision. p' M UTIL DIR
Q HR DIR
Thank you,
Don and Ellen Dollar
2357 Banderola Court
SLO
CC: Ken Hampian <khampian@slocity.org>, Neil Havlik<nhavlik@slocity.org>
1--WE-CEIVED
�UL i. 7 2001
SIA CITY COUNCIL
� _J