Item 11.A – public hearing Property Purchase
&
Item 13.a – Consideration of a loan agreement
real property located at 9903 FLOWER STREET (APN 7109-013-033) 1 Thank you, Mr. Smoot. Staff has requested that the City Council combine these separate but related items for discussion purposes. This is an effort to cover the bases and provide the City options for the acquisition and/or development control of 9903 Flower Street, the former White’s Funeral Home site. I’ll first go over the subject property, followed by a discussion regarding the Loan Agreement scenario, which will then be followed by the Purchase and Sale Agreement scenario. 1 DISCUSSION – subject property
Located at 9903 FLOWER STREET, JUST weST OF civic center drive approximately 48,495 SF (1.11 acre) in area
Approx. 24,100 sf of structures on the site;
Property recently listed for sale for $3.9M
2 The subject property is located at 9903 Flower St., just west of Civic Center Drive on the north side of Flower St. The property is 1.11 acre in area and contains about 24,000 square feet of structures. It was recently listed for sale for $3.9M. The funeral home operations ceased on the site around June of this year.
Now on to Plan A and Plan B.
2 DISCUSSION – loan agreement
Plan “A”
City loans $3,660,000 to city ventures for its acquisition of the 9903 Flower street
2-Year Term to obtain entitlements for a project
If city ventures backs-out of the project or is unable to obtain project entitlements within the term, the property AUTOMATICALLY reverts to the city plus accrued interest Interest will be at the California Local Agency Investment fund (LAIF) rate
Loan repayment will be deferred to when city ventures receives final certificate of occupancy for a potential project.
3 Plan A proposes the City loan City Ventures $3,660,000 to City Ventures to acquire the subject property. The term of the loan will be two years, during which City Ventures will obtain project entitlements for the site. Should City Ventures back-out of the project or is unable to obtain project entitlements within the 2-year term, the Property will revert to the City plus the accrued interest. The interest rate will be the equivalent to that paid by the State of California Local Agency Investment Fund.
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.
3 DISCUSSION – loan agreement
Plan “A”
Meets 3 major objectives for the parties involved.
CITY – wants to see a high-quality development on the site
Seller – wants a quick close of escrow to reduce holding time
City Ventures – gets time to design and entitle a quality project with reduced entitlement risk/cost
4 Plan A regarding 9903 Flower St. meets 3 major objectives for the parties involved.
First, the City wants to see a high-quality development on the site.
Second, the Seller wants a quick close of escrow on the sale of the property to reduce its holding time.
Third, City Ventures gets time to design and entitle a quality project with reduced entitlement risk and cost.
A true Win-Win-Win for all involved.
4 DISCUSSION – Purchase & Sale AGMT
Plan “B”
City offered $3,600,000 WITH A 30-DAY CLOSE OF ESCROW
agreed ON A PRICE OF $3,650,000 60-DAY CLOSE OF ESCROW
45-Day due diligence period plus 15 days to close
Recent comparable sales in downtown bellflower support the negotiated price
SUMMARY REPORT INCLUDED PURSUANT TO GOVERNMENT CODE SECTION 52201 DESCRIBES THE KEY dEAL-POINTS OF THE PURCHASE AND SALE AGREEMENT Explanation of why the acquisition will assist in the creation of economic opportunity
IT’S THE CITY’S INTENT TO SELL THE PROPERTY FOR ECONOMIC OPPORTUNITY FOR A USE THAT WILL CONTRIBUTE TO THE ECONOMIC DEVELOPMENT OF DOWNTOWN BELLFLOWER
ALL PROCEEDS FROM THE SALE OF THE PROPERTY WILL BE DEPOSITED INTO THE CITY’S GENERAL FUND 5 Should Plan A fall through for whatever reason, staff is also recommending Plan B which is the direct purchase of the property.
After an initial City offer of $3.6M with a 30-day escrow, the parties negotiated a price of $3.65M with a 60-day close of escrow. Staff reviewed recent comparable sales in Downtown Bellflower, which support the negotiated price.
Included in the Agenda Packet is a Summary Report, prepared pursuant to Government Code Section 52201, which describes the key deal points of the agreement and provides an explanation of why the acquisition of the property will assist in the creation of Economic Opportunity.
It is the City’s intent to secure the property and sell it to a developer for a project that will contribute to the economic development of the Downtown area.
Finally, all proceeds from the future sale of the property will be deposited into the City’s General Fund. 5 RECOMMENDATION
Agenda Items
Authorizing the City Manager to enter into either or both of the Agreements as approved by the City Attorney. This provides the City with maximum flexibility to pivot from Plan “A” to Plan “B” without having to return to City Council for consideration.
Property Owner/Seller is very motivated. This dual-plan strategy maintains the quick close of escrow, a priority of the Property Owner/Seller
No cost difference between the Plan Options, with Plan “A” providing the opportunity to earn interest during the term of the loan. 6 Before I go into the specific recommendations for these two Agenda Items, I’m going to review the purpose for bringing both items to City Council for consideration and approval.
Staff is requesting the City Council authorize the City Manager to enter into either the Loan Agreement with City Ventures or the Purchase and Sale Agreement to purchase the property OR authorize the City Manager to enter into both the Loan Agreement and the Purchase and Sale Agreement. Entering into both agreements would provide the City with flexibility to pivot from Plan A to Plan B without having to return to City Council for consideration. This leads us to the next bullet point. The Seller is extremely motivated to sell and sell quickly.
This dual-plan strategy maintains the quick close of escrow for both plans meeting the Seller’s needs. Finally, there is not cost difference between the Plan options, with Plan “A” providing the opportunity to earn interest during the term of the loan. 6 RECOMMENDATION
Agenda Item 11-A
OPEN THE PUBLIC HEARING, TAKE TESTIMONIAL AND DOCUMENTARY EVIDENCE, INCLUDING RECEIVING AND FILIING A REPORT REQUIRED BY GOVERNMENT CODE SECTION 52201; AND AFTER CONSIDERING THE EVIDENCE, ADOPT RESOLUTION NO. 24-58 AMENDING THE FISCAL YEAR 2024-25 OPERATING BUDGET TO ALLOCATE FUNDS FOR THE PROPERTY PURCHASE AND AUTHORIZING THE CITY MANAGER TO EXECUTE A PURCHASE AND SALE AGREEMENT IN A FORM APPROVED BY THE CITY ATTORNEY; OR
ALTERNATIVELY, DISCUSS AND TAKE ANOTHER ACTION RELATED TO THIS ITEM 7 With that, staff’s recommendation for Agenda Item 11.A is to OPEN THE PUBLIC HEARING, TAKE TESTIMONIAL AND DOCUMENTARY EVIDENCE, INCLUDING RECEIVING AND FILIING A REPORT REQUIRED BY GOVERNMENT CODE SECTION 52201; AND AFTER CONSIDERING THE EVIDENCE, ADOPT RESOLUTION NO. 24-58 AMENDING THE FISCAL YEAR 2024-25 OPERATING BUDGET TO ALLOCATE FUNDS FOR THE PROPERTY PURCHASE AND AUTHORIZING THE CITY MANAGER TO EXECUTE A PURCHASE AND SALE AGREEMENT IN A FORM APPROVED BY THE CITY ATTORNEY; OR
ALTERNATIVELY, DISCUSS AND TAKE ANOTHER ACTION RELATED TO THIS ITEM 7 RECOMMENDATION
Agenda Item 13.A
AUTHORIZE THE CITY MANAGER TO AMEND THE FISCAL YEAR 2024-25 OPERATING BUDGET TO ALLOCATE FUNDS FOR THE LOAN AGREEMENT
AUTHORIZE THE CITY MANAGER TO EXECUTE A LOAN AGREEMENT AND ANY ASSOICATED DOCUMENTS WITH CALIFORNIA LAND INVESTMENTS, LLC (CITY VENTURES HOLDINGS, LLC) IN FORMS APPROVED BY THE CITY ATTORNEY; OR
ALTERNATIVELY, DISCUSS AND TAKE ANOTHER ACTION RELATED TO THIS ITEM 8 For Agenda Item 13.A, staff recommends the City Council AUTHORIZE THE CITY MANAGER TO AMEND THE FISCAL YEAR 2024-25 OPERATING BUDGET TO ALLOCATE FUNDS FOR THE LOAN AGREEMENT;
AUTHORIZE THE CITY MANAGER TO EXECUTE A LOAN AGREEMENT AND ANY ASSOICATED DOCUMENTS WITH CALIFORNIA LAND INVESTMENTS, LLC (CITY VENTURES HOLDINGS, LLC) IN FORMS APPROVED BY THE CITY ATTORNEY; OR
ALTERNATIVELY, DISCUSS AND TAKE ANOTHER ACTION RELATED TO THIS ITEM.
This completes my presentation and staff is available to answer questions. 8 Subject property
FLOWER ST.
CIVIC CENTER DR.
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