6-B
TO: Honorable Mayor and Members of the City Council
ATTENTION: Ryan Smoot, City Manager
FROM: Jim DellaLonga, Director of Economic Development
SUBJECT: Consideration and possible action to conduct a public hearing to consider adopting Resolution No. 24-20 – A Resolution authorizing the City Manager to amend the FY 2023-24 Operating Budget and execute a Purchase and Sale Agreement, in a form approved by the City Attorney, with Arioto Cali Properties Inc. for the purchase of real property located at 9835 Flower Street (APN 7109-013-036 and 037).
DATE: April 25, 2024
EXECUTIVE SUMMARY
Executing a Purchase and Sale Agreement (PSA) with Arioto Cali Properties Inc. (“Arioto Cali”) would cause the City to purchase real property located at 9835 Flower Street for $5,100,000.
The property includes the United States Post Office and associated parking spaces and is adjacent to a City owned public parking lot. Acquiring the property would give the City control over its future use in a manner that contributes to Downtown Bellflower’s economic growth and image. There is a pending escrow for this property, however, with the adoption of this resolution, the city is in position to acquire the property if the escrow falls through.
RECOMMENDATION TO CITY COUNCIL
1) Open the public hearing; take documentary and testimonial evidence including receiving and filing a report required by Government Code § 52201; and after considering the evidence, adopt Resolution No. 24-20 amending the fiscal year 2023-24 Operating Budget to allocate funds for the property purchase and authorizing the City Manager to execute the Purchase and Sale Agreement, in a form approved by the City Attorney; or
2) Alternatively, discuss and take other action related to this item.
FISCAL IMPACT
The City would pay $5,100,000 to Arioto Cali Properties to acquire the Property plus $10,000 to pay for estimated escrow fees and title insurance costs.
A budget amendment to the 2023-24 fiscal year operating budget is needed to allocate $5,110,000 for the Public Projects Fund Account No. 012-47212-9000 for the purchase of the Property. The following sources of funds are available: $1.8 million in cash reserve set-aside for property acquisition, $3.2 million from the sale and liquidation of the Municipal Water System, and $110,000 in unencumbered fund balance.
PUBLIC NOTICE
On April 12, 2024, a Public Hearing Notice was posted at City Hall, Brakensiek Library, Bellflower Substation, Thompson Park, and Simms Park; also, on April 12 and April 19, a Public Hearing Notice was published in the Los Cerritos Community News newspaper.
Staff Report – Purchase and Sale Agreement File No. 1039 with Arioto Cali Properties April 25, 2024
DISCUSSION
In the spring of 2023, the property at 9835 Flower Street (the “Property”) was put on the market for sale for $8,000,000. In early 2024, Arioto Cali reduced the listing price to $5,100,000. The Property consists of two parcels containing the 18,924 square foot post office building on 60,891 square feet of land. The building is currently under lease to and occupied by the United States Postal Service (“Tenant”). The lease to the Tenant expires in May 2027 and there are no options to renew remaining on the lease. The tenant pays $251,163 in annual rent.
Staff believes the purchase of this property, with the right business or developer, represents an important asset and opportunity that will contribute to this area’s economic growth. As part of this process, the City reviewed recent comparable sales in Downtown Bellflower which support the negotiated purchase price of $5,100,000, agreed to by Arioto Cali. The purchase and sale agreement represents the terms and conditions of this pending acquisition. There is a pending escrow for this property, however, with the adoption of this resolution, the city is in position to acquire the property if the escrow falls through.
In the short-term, the City would continue to honor the lease with Tenant and begin discussions regarding the future of the site. In the long-term it is the City’s intent to lease or sell the property to a developer that will contribute to the economic development of the Downtown Bellflower area. Proceeds from the current and any future leases of the property will be returned to the City’s general fund.
Attached is a Summary Report required by Government Code § 52201 that describes the following:
a) the cost of the agreement to the City;
b) the estimated value of the interest to be conveyed or leased determined at the highest and best uses permitted under the general plan or zoning;
c) if applicable, the estimated value of the interest to be conveyed or leased determined at the use with the conditions, covenants, and development costs required by the sale or lease;
d) the purchase price or present value of the lease payments which the lessee will be required to make during the term of the lease;
e) if the sale price or total rental amount is less than the fair market value of the interest to be conveyed or leased, determined at the highest and best use, then the city shall provide, as part of the summary, an explanation of the reasons for the difference; and
f) an explanation of why the sale or lease of the property will assist in the creation of economic opportunity (as defined by Government Code § 52200.2), with reference to all supporting facts and material relied upon in making this decision.
ATTACHMENTS
Summary Report ......................................................................................................................... 3 Resolution No. 24-20 .................................................................................................................. 5
Summary Report Government Code Section 52200 – Purchase and Sale Agreement – 9835 Flower Street 1
SUMMARY REPORT PURSUANT TO
GOVERNMENT CODE § 52201
REGARDING A
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN THE
CITY OF BELLFLOWER AND
ARIOTO-CALI PROPERTIES INC.
The following Summary Report was prepared pursuant to Government Code § 52201. This report sets forth certain details of the proposed Purchase and Sale Agreement (“Agreement”) between the City of Bellflower (“City”) and Arioto-Cali Properties Inc. (“Seller”).
Seller owns a total of 60,891 square feet (1.39 acres) of land located at 9835 Flower Street on two parcels (APNs 7109-013-036 and 7109-013-037) (“Property”). The Agreement requires Seller to sell the Property to the City.
The following Summary Report is based upon information required by the Government Code. It is organized into the following three sections:
I. Salient Points of the Agreement: This section summarizes the major responsibilities agreed to by Seller and the City by the Agreement.
II. Cost of the Agreement to the City: This section details the total cost to the City associated with implementing the Agreement.
III. Creation of Economic Opportunity: This section describes the existing condition of the subject property and explains how the Agreement will assist in the creation of economic opportunity.
This report and the Agreement are to be made available for public inspection prior to the approval of the Agreement and no later than the time of publication of the first required notice of the public hearing pursuant to Government Code § 52201.
I. SALIENT POINTS OF THE AGREEMENT
A. Project Description
The Project is the City’s purchase of all that certain real property located at 9835 Flower Street, Bellflower, CA 90706 on APNs 7109-013-036 and 7109-013-037.
B. Seller Responsibilities Under the Agreement
The Agreement requires Seller to accept the following responsibilities:
1. Seller agrees to sell the Property, following the satisfactory inspection(s) of the Property by the City and approval of documents produced during a maximum 10-day Due Diligence Period.
Summary Report Government Code Section 52200 – Purchase and Sale Agreement – 9835 Flower Street 2
2. Seller agrees to pay the costs associated with a CLTA Standard Coverage Police of Title Insurance showing title to the Property vested in Buyer.
C. City Responsibilities Under the Agreement
1. The City will purchase the Property for Five Million One Hundred Thousand Dollars ($5,100,000) following satisfactory inspection(s) of the Property during escrow and the Due Diligence Period.
II. COST OF THE AGREEMENT TO THE CITY
The cost incurred by the City to implement the Agreement is $5,100,000 for the purchase of the Property plus half of the typical escrow fees and de minimus costs for inspections and staff time to effectuate the acquisition.
III. ECONOMIC OPPORTUNITY
The Property, located on the major east/west arterial street in Downtown Bellflower, is currently occupied by an operating United States Post Office branch and owned by Seller. As a long-term ownership, legacy property, it is currently generating a minimum of state or local taxes. The City intends to market the Property to produce a private development project that will create economic opportunity, as defined by Government Code Section 52200.2, by increasing property tax revenues to all property tax collecting entities by at least 15% at full implementation of a project when compared to the year before the property being acquired by the City.
Significant new development is occurring within the vicinity of the Property. This includes Edgeway Downtown Bellflower, The Mayne Events Center and Los Angeles County Fire Museum, The Bellflower Regional Transit Center and Parking Structure, SteelCraft outdoor food hall, the Downtown Collection townhomes by City Ventures, The Nest Eatery, and The Stand Up Comedy Club. The Site, located in the heart of Downtown Bellflower just east of Bellflower Blvd., is adjacent to a City-owned public parking lot and is within walking distance from several other public parking lots. Additionally, a street improvement project has been awarded by the City to complete improvements on Bellflower Boulevard from Flower Street south to the 91 Freeway.
The Property is served by all major utilities and is currently occupied by the United States Post Office with 3 years remaining on its lease. A new sales tax generating use utilizing the square footage of the Property could generate between $3,000 and $100,000 in revenue to the City annually. Furthermore, as part of Downtown Bellflower, the property is included in the Downtown Bellflower Revitalization Vision Strategy, the Downtown Bellflower Strategic Development Plan, the Downtown Bellflower Transit Oriented Development Specific Plan Area, and would be eligible for the Bellflower Business Assistance Plan.
CITY OF BELLFLOWER
RESOLUTION NO. 24-20
A RESOLUTION AUTHORIZING THE CITY MANAGER TO AMEND THE
FY 2023-24 OPERATING BUDGET AND EXECUTE A PURCHASE AND
SALE AGREEMENT BETWEEN THE CITY OF BELLFLOWER AND
ARIOTO CALI PROPERTIES INC. FOR THE PURCHASE OF REAL
PROPERTY LOCATED AT 9835 FLOWER STREET (APN 7109-013-036 AND 7109-013-037)
THE CITY COUNCIL DOES RESOLVE AS FOLLOWS:
SECTION 1. The City Council finds and declares as follows:
A. In March 2024, in response to a reduction in sales price, the City of Bellflower made an offer to purchase the property located at 9835 Flower Street (APN 7109-013-036 and 7109-013-037) from Arioto Cali Properties Inc. for a purchase price of $5,100,000;
B. Based on a review of recent comparable sales in Downtown Bellflower in March 2024, the City verified the negotiated price for 9835 Flower Street (“Property”) as a fair market purchase price;
C. Arioto Cali Properties Inc. desires to convey the Property to the City of Bellflower for a purchase price of $5,100,000, which represents a fair market value for the Property per the City’s review of recent comparable sales in Downtown Bellflower;
D. As set forth in the accompanying report (as required by Government Code § 52201) the City believes that the Property is an important asset that contributes to the economic activity in Downtown Bellflower. Accordingly, the City Council desires to purchase the Property; and
E. Toward that end, the City and Arioto Cali Properties Inc. desire to enter into a Purchase and Sale Agreement for the Real Property.
SECTION 2. Environmental Assessment. Adopting this Resolution is exempt from further environmental review pursuant to the California Environmental Quality Act (Public Resources Code §§ 21000, et seq., “CEQA”) and the regulations promulgated thereunder (14 Cal. Code of Regulations §§15000, et seq., the “CEQA Guidelines”).
Acquisition of the Property (by itself) does not have the potential to cause significant effects on the environment. Consequently, it is categorically exempt in accordance with CEQA Guidelines § 15061(b)(3) as CEQA only applies to projects that have the potential to cause a significant effect on the environment. Additionally, acquiring the property would result in minor (if any) alterations to existing facilities involving no significant expansion of the existing use. Acquiring the Property – by itself – would not have any significant impacts with regard to traffic, noise, air quality, or water quality. There are adequate utilities and public services to serve the Property. Any future redevelopment of the Property would require separate environmental review and either discretionary or ministerial approvals by the City. A simple conveyance of title does not necessitate
City of Bellflower
Resolution No. 24-20 – 9835 Flower Street Acquisition
preparation of an environmental document. The City Manager, or designee, is directed to file a Notice of Determination in accordance with Public Resources Code §§ 21152, 21167(f); CEQA Guidelines § 15075; and any other applicable law.
SECTION 3. Authorizations. The City Council authorizes the purchase of the Property from Arioto Cali Properties Inc. to the City upon payment of $5,100,000 by City.
In order to effectuate that conveyance, the Mayor and City Manager are authorized to execute all documents, in a form approved by the City Attorney, needed to implement the conveyance of the Property as contemplated by this Resolution including, without limitation, escrow instructions, the grant deed, closing statement, and the certificate of acceptance. The City Manager is further authorized to accept the grant deed and cause them to be recorded in the Office of the County Recorder of the County of Los Angeles after they are executed by Arioto Cali Properties Inc.
SECTION 4. The City Manager, or designee, is directed to amend the FY 2023-2024 Operating Budget to allocate $5,110,000 in the General Fund Account No. 012-47212-9000 to account for the acquisition of property.
SECTION 5. Electronic Signatures. This Resolution may be executed with electronic signatures in accordance with Government Code §16.5. Such electronic signatures will be treated in all respects as having the same effect as an original signature.
SECTION 6. The Mayor, or presiding officer, is hereby authorized to affix his signature to this Resolution signifying its adoption by the City Council of the City of Bellflower, and the City Clerk, or her duly appointed deputy, is directed to attest thereto.
SECTION 7. This Resolution will become effective immediately upon adoption and will remain effective unless repealed or superseded.
PASSED, APPROVED, AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF BELLFLOWER THIS 25th DAY OF APRIL 2024.
________________________________
Dan Koops, Mayor
ATTEST:
________________________________
Mayra Ochiqui, City Clerk
APPROVED AS TO FORM:
________________________________
Karl H. Berger, City Attorney