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HomeMy WebLinkAbout04/06/2004, BUS. 6 - PURCHASE OF 633 PALM STREET council 84_ oA--o j ac,Enaa nEpoizt C ITY O F SAN LUIS O B I S P O FROM: Michael D. McCluskey, Director of Public Works�� SUBJECT: PURCHASE OF 633 PALM STREET CAO RECOMMENDATION 1. Authorize the purchase of property located at 633 Palm Street for$650,000. 2. Authorize preparation of a letter of friendly condemnation. 3. Transfer $670,000 from the Parking Fund appropriation for land acquisition in 2004-05 to 2003-04 to fund this property purchase and related costs. 4. Authorize the CAO to sign purchase documents and the deed. DISCUSSION Recently staff became aware of a property listed for sale at 633 Palm Street (Attachment 1). As the City Council has an informal policy of acquiring properties that serve its long-term interest and do not involve the use of eminent domain, staff was directed to investigate the site and obtain an appraisal prior to any negotiations for purchase. The.site has long term City interest, as it is one of the few shown for eventual City use in the Conceptual Physical Plan for the City's Center (Downtown Plan). The current version of the Downtown Plan designates this location for eventual use as part of a cultural/parking/office or retail complex that would benefit the City. The ultimate use of the site will be determined by some City Council in the future. After purchase of this property, only one property will remain identified for future purchase. The property recommended for purchase is currently in residential use as a 3-unit apartment complex. Staff recommends that, if purchased, this property be left in its current use. Preliminarily, staff feels that the best management strategy for the property would be to contract with a professional residential property management company (rather than the Housing Authority). Since all of the units are already rented, for continuity and to minimize disruption on current renters, a professional residential property management company would have little work needed and the Parking Fund would receive the bulk of the rents rather than the typical $1/year paid by the Housing Authority. This strategy would be used until such time as a more refined master plan for the site is developed and a plan for implementation begun by the City Council. After purchase, a General Plan amendment to "Public" from "Medium High Density Residential" would eventually be necessary in order to accommodate the multiple uses anticipated by the Downtown Plan. One of the current Council's goals is to consider future development scenarios of the site — especially the proposed parking garage. Pursuing that goal, the City's consultant on the Palm- Purchase of 633 Palm Street Page 2 Nipomo Parking Garage conceptual planning has recently been hired and is enthusiastic over the prospects of purchasing this property. We have told them the issue is not yet decided, so at this point they will be preparing ideas of how the site can be developed with and without this property. However, they do feel that adding this property to the site would definitely increase the possibilities and make for a more efficient parking garage layout. We recommend that the City Council purchase this property because it makes sense from a long range planning perspective. The City already owns four of the six properties shown for acquisition and this purchase would leave only one remaining to acquire. Eventually, the City will own a nicely sized piece of property that will offer many possibilities for future use. These could include the currently expected combination of office, cultural and parking uses called for by the Downtown Concept Plan to other uses that current or future Councils deem of benefit for the City. Staff will schedule a study session with the City Council in the coming months to review concept plans prepared by the consultant and solicit input from the Council for further direction. The seller has requested that the City offer its use of eminent domain. This does not mean that there are adverse relations between the seller and the City. By threatening the use of eminent domain the seller is given (by law) a longer period in which to find and purchase a suitable replacement property. This is one advantage that municipalities can offer when negotiating a property purchase and the City has done this on numerous occasions in the past. Staff recommends that this also be part of this purchase. CONCURRENCES The Planning Commission reviewed the proposed property acquisition for General Plan conformity on March 24, 2004. The Commission found the proposed acquisition to be in conformance with the General Plan. A copy of the Planning Commission staff report is attached (Attachment No. 2) FISCAL IMPACT The City retained an appraisal from the Rincon Corporation, Santa Maria, California. The appraiser used similar property sales and gross multipliers to arrive at its conclusion. It found the property to be valued between $582,750 and $658,350. The asking price of$650,000 is within this range. The 2003-05 Financial Plan (page E-9) recognized that parking land acquisition opportunities might arise and budgeted $1,400,000 in 2004-05 for this purpose. We recommend transferring $670,000 of this appropriation to 2003-04 in order to fund this purchase. Along with $650,000 for the property purchase, $20,000 is being requested to cover related costs, including the original appraisal, title report, purchase consultants and closing escrow (which should occur within 30 days of Council approval). ALTERNATIVES 1. Do not purchase the property.. Given the unique opportunity to purchase a key site identified Purchase of 633 Palm Street Page 3 in the Downtown Plan with a willing seller at a reasonable cost, we do not recommend this option. 2. Renegotiate the selling price or other terms of the sale. Based on our appraisal and standard terms of the sale,we believe that the selling price and other terms are fair and reasonable. 3. Fund the purchase from another source. While the ultimate use of this site, if purchased by the City, has not been yet finalized, it is likely that it will be incorporated in some fashion into the plans for the Palm-Nipomo parking structure, which are currently being developed. As such, funding from the Parking Fund is appropriate at this time. In the event that the site is not used for parking at some in the future, then the Parking Fund will be reimbursed from the appropriate funding source at that time. In the interim,the Parking Fund will receive the rental income. ATTACHMENTS 1. Vicinity map 2. Planning Commission staff report AVAILABLE IN COUNCIL OFFICES Purchase Agreement 1AAdmin DivisionTroperty Acquisition\Palm-633\633 Palm 4-6-04 cc agenda reporLDOC �-3 Attachment No. 1 Vicinity Map Subject Property fa r. , ♦ 0. .A c 3P •a j.A nN• n.w .. W 'G/ 1 Attachment No. 2 CITY OF SAN LUIS OBISPO PLANNING COMMISSION STAFF REPORT ITEM# FROM: Michael Draze, Deputy Director MEETING DATE: March 24, 2004 FILE NUMBER: GPC 42-04 PROJECT ADDRESS: 633 Palm Street SUBJECT: General Plan conformity determination for property acquisition at 633 Palm Street, for potential future development of a public facility or a cultural facility. RECOMMENDATION Determine, and report to the City Council,that the proposed property acquisition is in conformity with the General Plan. DISCUSSION Data Summary Property Owner: Bradley Bilsten, J. Tre. Etal Owner's Representative: Steven Ferrario-The Real Estate Group General Plan Land Use Designation: Medium High Density Residential Current Zoning: R-3 Surrounding Uses: dwellings(n),public parking (e& s), sports field(w) Environmental Status: Categorically exempt as an existing facility (CEQA Guidelines Section 15301; future development of a public or cultural facility will be subject to environmental review. Site Description The proposed acquisition is a piece of property containing three residential rental units. The lot size is 4,500 square feet. One house was built in 1927 is located in front and the other two, an upper and lower unit, are located in the rear of the property. None of the units are listed in any of the historical categories. Why is the City thinking of buying this property? The Downtown Concept Plan shows eventual public ownership of a rectangle of property located between Monterey and Palm bordering on Nipomo Street. This property is one of two pieces that have not yet been acquired. The Plan calls for a number of uses on the entire site: cultural or historical uses along the Monterey Street frontage; retail or office along the Nipomo Street frontage; a parking garage behind the uses on Monterey and Nipomo and pedestrian access paths along the boundary with nearby residential properties. The pedestrian amenity and portions of the parking garage are shown on the subject property of this report. The City Council has also recently leased a significant portion of the property, currently in use as �'S ATTACHMEW 2 Planning Commission Staff Report—633 Palm Street Page 2 surface parking, to the San Luis Obispo Little Theatre as the future site of their performance hall. The site is immediately southeast of the property under consideration. The City has no immediate plans to build in this area. The City Council has designated planning for the eventual parking garage as one of its goals for the 03-05 financial period. Since 1994 the City has purchased three properties along Nipomo Street so the land would be in City ownership when a project is proposed, studied and finally approved. The City has tried to obtain sites intended for public facilities from willing sellers as opportunities arise, rather than by condemnation. The subject site is one of those opportunities. What will'the City do with the property? For the immediate future, the existing housing units will remain rented as housing. The ultimate use of the property will be determined by this or future City Councils. What is the Planning Commission's role? California law requires that before the City acquires real property, it must first refer the item to the Planning Commission for a determination of conformity with the General Plan (Government Code Section 65402). The Commission must then hold a public hearing and report its findings to the City Council. A finding that a proposed acquisition conforms to the General Plan does not necessarily mean the Commission endorses a particular project for the site. There are no specific sanctions in State law if an acquisition is found not to conform to the General Plan. A finding of nonconformance could make a project vulnerable to legal challenge through Government Code provisions.requiring General Plan conformity for new development. What does the General Plan say? The Land Use Map shows the site as Medium-High Density Residential. (Typically, the Land Use Map designates property as Public only if it is owned by a government agency, to avoid potential "takings" issues.) Land Use Element Figure 4 shows the site as being within the downtown planning area and just outside the downtown core. Land Use Element policy 4.2.1 says, "Downtown residential uses contribute to the character of the area, allow a 24-hour presence which enhances security, and help the balance between jobs and housing in the community. Existing residential uses within and around the commercial core should be protected, and new ones should be developed." As this purchase does not propose to eliminate housing, this policy will need to be addressed in more detail when a proposal to change the residential use is presented. Land Use Element policy 4.3 says, "Cultural facilities, such as museums, galleries, and public theaters should be downtown." The Concept Plan and the leasing of property to the Little Theatre are in compliance with this policy. The acquisition is consistent with this policy because the entire site would provide parking for the cultural facilities. Land Use Element policy 4.10 says, "There should be a diversity of parking opportunities. Any major increments in parking supply should take the forth of structures, located at the edges of the (v ATTACHMENT 2 Planning Commission Staff Report—633 Palm Street Page 3 commercial core, so people will walk rather than drive between points within the core." The acquisition is consistent with this policy as the Concept Plan placed the area for off-site parking just outside the edge of the core as defined by Figure 4 of the Land Use Element. Land Use Element policy 5.2.2 says, "An appropriate area for cultural facilities is the vicinity of Mission Plaza." Figure 5 shows a "Cultural Facilities Area" extending approximately from Monterey Street to San Luis Obispo Creek and from Nipomo Street to the Mission. The subject site is at the edge of the mapped area and is consistent with the text policy. Land Use Element program 5.6 says, "The City will attempt to acquire land for cultural facilities or Mission Plaza extension as sites become available." The acquisition is consistent with this program as the site is currently available. Housing Element program 3.3.2 says "To maintain housing in the Downtown, the City will consider adopting a no net housing loss policy, requiring that housing units either be maintained, or, in the case of office conversion of existing housing, be replaced on site or nearby." Like Land Use Policy 4.2.1, there is no proposal to eliminate housing at this time and thus this policy will need review when the City Council determines a final use for the site. ALTERNATIVES The Commission may determine that the acquisition does not conform to the General Plan. The Commission may continue the item. There is no legally mandated deadline for Commission action. Attachments: 1. Vicinity Map 2. Land Use Element Map 3. Figure 4—Downtown Planning Area 4. 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Dear Council Members: I'm going make to this as plain and simple as possible. 1. The proposed location of the parking structure is the wrong location.There is limited demand for parking in that area It is unlikely that future demands in the area would justify the need for a structure in that location.The Council should be seriously considering the Wells Fargo bank parting lot located behind the building. 2. You're paying too much money for the property regardless of the fact the money is coming from the Parking Fund. The Parking Fund will only be able to generate sufficient fiords for one(1)addition garage in the foreseeable fimre. The next rate increase will most likely bring core meter rates to the $1 per hour threshold. Remember the downtown competes with all other shopping opportunities within the County. The$1 per hour rate is a psychological barrier and will cause shoppers to go elsewhere. 3. The Planning Commission recommendation looked to be little more than an exercise in"going through the motions". There was no discussion about General Plan policies in their discussion. There was a motion and they just voted,too bad you don't have the minutes. Perhaps it was because the original staff report mislead the commission into believing that since the purchase wouldn't immediately eliminate housing the commission didn't have to address that issue or impacts to surrounding neighborhoods from a parking structure. 4. The"Downtown Concept Plan"continues to be used as a Community Plan without required public notification,public hearings and environmental review.Specific wording in the October 28, 1992 Planning Commission agenda details both the Mission Plaza Extension and Environmental Review issues. Mission Plaza Extension and Heritage Park Staff is not comfortable with the type offuture development envisioned by the concept plan for the Mission Plaza Extension and Heritage Park.Along Monterey Street between Broad and Nipomo,staff would prefer to see the existing structures retained and accommodate proposed cultural facilities through adaptive reuse (another primary goal of the concept plan). As it currently erists,stafffeels this area is abetter candidate for a Heritage Parr given existing historic structures and the proximity to the Mission and County Historical Museum. City and private parking lots in this block could be designated as receiver sites for historic structures threatened by demolition in other parts of the City. Environmental Review If the Planning Commission, the ARC, and the City Council agree with the approach recommended by staff, environmental review will focus on the new consistent concepts. Staff has begun to define the downtown design plan as a "project"for purposes of environmental review.It was mentioned at the beginning of the review process for the downtown plan, that environmental review may not be necessary. This would be the case if the City Council only acknowledged the design concept as a commendable vision without adopting any means of enforceable implementation or allocating any funds for capital improvements. Ifthe Council intends to adopt a "Downtown Plan"to be used in reviewing specific design proposals, with or without associated ordinances and capital improvement programs, that action becomes a "project"under the California Environmental Quality Act(CEQA). I believe the Council should withhold purchasing this property until such time that public review and hearings are completed along with required environmental review on the Mission Plaza Extension concept. Sincerely, Brett Cross _ � _ Allen_Settle_-633 Palm St. purchase ___: - __ _,_ ___._. _. .___ _.____. _.__. � • -n__ __.w..� -_. _ Page1 DA1 t= �� ITEM # 09 6 From: "Steve Delmartini"<Del@fix.net> To: <dromero@slocity.org>, <cmulholland@slocity.org>, <jewan@slocity.org>, <asettle@slocity.org>, <kschwartz@slocity.org> Date: Sat, Apr 3, 2004 12:31 PM Subject: 633 Palm St. purchase Honorable Mayor and Council members.. I'm not sure I'm stating an opposition to the potential purchase of 633 Palm St., I'm more concerned with the way the City generally goes about buying property. I will apologize for the length of this e-mail at this time. Please read it as I believe the items included are valid for your consideration. I should also let you know I spoke against this at the Planning Commission meeting recently but that was probably not the right forum as they were looking for General Plan conformity more than what I had to say. So now I'm coming to you. My concerns are as follows: How does this fit in to the no net loss housing in the downtown that you have to adopt now? I understand you are not saying this is "for sure" parking but I have read the staff reports on this purchase and it sounds like taking down a building to put up a parking lot. This needs to be explained.The most recent property purchased near the subject property, that I'm aware of, was the property at the comer of Monterey and Nipomo St. (470? Monterey St.).This property was listed in the San Luis Multiple listing Service with Dennis Allen and had been on the market for an extended time when the City decided to buy it. I believe when the selling price was put through the Multiple it had been purchased for full asking price.At that time,the sale produced one of the highest dollar per square foot sales for property in an office zone in town.The other purchase I'm familiar with was the old welding works at the corner of Nipomo and Palm as we had the listing in our office. Again it had been for sale for a long period and the only offer that had been received was from the Rizzo family to try to use it as a corner market site but due to the potential sale of alcohol and the proximity to the Mission School this did not happen. Since it was in our office I was aware that the owner was starting to feel some pressure to sell so he could move on to something else and was somewhat worried about the possible contamination on the site from the previous use. Along came the city,makes an offer to purchase and it also sold for full price. In both of these cases did anyone think to offer something other than full price? It would be my opinion both of the owners of these properties would have considered something less. Does anyone actually negotiate for you?The asking price on 633 Palm St. appears to be$650,000.00 and once again your paying full price.This is a different market today, but you are the only Buyers exposed to this being for sale, there is virtually no competition.There probably won't be multiple offers as there is no one else. If you offered less and the Seller said no its this price or nothing then at least you tried. You are an all cash Buyer and often times in the current market, Buyers get some price break due to the lack of having a loan AA"' 611 contingency. You have also agreed to use the threat of eminent domain to COUNC L CDD DIR help the Seller with their exchange time.The Seller couldn't get this from 11 CAO FIN DIR anyone else. Is that worth anything? Has anyone been inside the property? if 11 ACAO FIRE CHIEF you haven't, you should. If you get a vacancy what will be needed to rent to E I ATTORNEY I I PW DIR someone new? In the staff report it is suggested that this will be given to I I CLERK/ORIG_ ! POLICE CHF a roe manager handle and there should be no problems, sort of turn DEPT EADS„ property rtY 9 P �� REC DIR key. Hopefully it is in wonderful condition. If you are using a California UT --DIR - Association of Realtors Contract or a similar one, you should have the right i �An� - HR_�11R - - .... . Allen Settle-633 Palm St. purchase — Page 2} to complete an inspection with a professional home inspector, again I would recommend this as he/she will check almost everything out, roof, foundation, heating systems, water leaks, evidence of roof leaks, etc... If there is a problem, you can ask the Seller for repairs.The Seller may elect not to make any repairs, if you want to continue the purchase and there is something substantial to repair at least you know what you may have to deal with.Are you having a termite inspection? Sellers generally provide these with almost every transaction. I would also have the Seller provide a one ye ar property warranty plan ( home warranty).These are commonly paid for by the Seller for the Buyers protection and they will have anywhere from a $35.00 service fee to a$50.00 service fee for those items covered such as a water heater going out(if a water heater goes out you pay basically the service fee, not the water heater cost),some heating issues, electrical problems, possibly water lines etc... Since you will be owning these awhile, why pay full price for service calls plus the repair? Most purchases are"as is" in California with the right for the Buyer to inspect and the ability to ask for repairs. The items I'm suggesting above are standard in the industry.. I guess what I'm really asking you is why would you buy property and not be a prudent Buyer? If your representing me as a tax payer this is what I would expect you to do. In today's world this is basic real estate practice. None of this would indicate that you are not going to proceed to Buy the property,just Buying smarter. I haven't seen the Purchase Contract and some of this such as the property warranty could already be addressed. Thank you for your time and consideration. Steve Delmartini �J Questions? 541-2888 ext. 3108