13-A
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 authorizing the City Manager to amend the FY 2024-25 Operating Budget and to enter into Loan Agreement No. 1064, in a form approved by the City Attorney, with California Land Investments, LLC (City Ventures Holdings, LLC) for the purchase of real property located at 9903 Flower Street (APN 7109-013- 033).
DATE: October 14, 2024
EXECUTIVE SUMMARY
Executing a Loan Agreement with California Land Investments, LLC (City Ventures) would cause the City to lend $3,660,000 at an interest rate equal to that paid by the State of California Local Agency Investment Fund to City Ventures for the acquisition of the former White’s Funeral Home property at 9903 Flower Street (Property) for future development. City Ventures will have two years to secure entitlements for a development project at the site or the ownership of the Property will revert to the City for economic opportunity, plus the accrued interest. Repayment of the principal and accrued interest will be deferred to when City Ventures receives the Final Certificate of Occupancy for a potential project.
RECOMMENDATION TO CITY COUNCIL
1) Authorize the City Manager to amend the fiscal year 2024-25 Operating Budget to allocate funds for the loan agreement; and
2) Authorize the City Manager to execute a Loan Agreement and any associated documents with California Land Investments, LLC (City Ventures Holdings, LLC), in forms approved by the City Attorney; or
3) Alternatively, discuss and take other action related to this item.
FISCAL IMPACT
The City would loan $3,660,000 at the interest rate equal to that paid by the State of California Local Agency Investment Fund during the term to City Ventures to acquire the Property. The loan amount includes $10,000 to pay for estimated escrow fees and title insurance costs.
A budget amendment to the 2024-25 fiscal year operating budget is needed to allocate $3,660,000 in the General Fund to loan City Ventures the funds necessary for its purchase of the Property ($1,174,000 from the Cash Reserve for Property Acquisitions and $2,486,000 from the other available General Fund reserve).
Staff Report – Purchase and Sale Agreement File No. 1064 with Alderwoods Group
October 14, 2024
DISCUSSION
In September 2024, the Property was put on the market for a listing price of $3,900,000. The Property consists of one parcel containing approximately 9,000 square feet of buildings on 48,534 square feet of land. The Property was previously used as White’s Funeral Home and is no longer in operation.
In an effort to facilitate a high-quality development on the Property, staff is recommending entering into a loan agreement with City Ventures for it to purchase the property. The entitlements for a development may require a zone change and general plan amendment for residential development and a development agreement. By providing this loan, the City is able to accommodate the Seller’s main requirement/objective of a quick close of escrow on the sale of the Property while allowing City Ventures the time to design and entitle a project on the Property, thereby reducing the developer’s entitlement risk associated with a project of this type.
The loan is proposed to have a term of two years at an interest rate equivalent to that paid by the State of California Local Agency Investment Fund over the term of the loan. Initial discussions with City Ventures indicate that repayment of the principal and accrued interest will be deferred to when City Ventures receives the Final Certificate of Occupancy for a potential project. The loan will be secured by the Property through a deed of trust. If, during the process, City Ventures decides not to move forward with or is unable to secure the entitlements for a potential project within the term of the loan, the ownership of the Property will revert to the City plus any accrued interest.
The City reviewed recent comparable sales in Downtown Bellflower which support the negotiated purchase price of $3,650,000, agreed to by the Seller (Alderwoods Group (California)).
Staff believes the facilitation of the development of the Property for economic opportunity, combined with the right developer, is an excellent opportunity to contribute to this area’s economic growth.