CITY OF COMMERCEAGENDA REPORTCITY OF COMMERCEAGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
Item No. Item No.
Item No.
Item No.
TO: Honorable City Council
FROM: City Manager
SUBJECT: Resolution Approving the Exercise of the Repurchase Option for Property located at 2143 South Atlantic Boulevard and Authorizing $335,000 from the General Fund Reserves for the Acquisition of Said Property Meeting Date: June 14, 2022
RECOMMENDED ACTION:
Approve the Resolution authorizing the exercise of the “Repurchase Option” outlined in Section 10.15 of the Contingent Agreement of Purchase of Sale (“Agreement”) that was entered into between the Successor Agency to the Commerce Community Development Commission and Ramez Karkafi and Catherine George Bitar for property located at 2143 South Atlantic Boulevard in the City of Commerce. The “Repurchase Option” will allow the City of Commerce to repurchase the property due to the Buyer’s inability to comply with the terms of the Agreement. The Resolution authorizes $335,000 for the contemplated transaction, which is the same amount that the Buyer (now Seller) paid for the property.
BACKROUND:
Pursuant to ABx1 26 (“AB 26”) enacted in June 2011, the Commerce Community Development Commission (the “Commission”), and all other redevelopment agencies throughout the state, were dissolved as of February 1, 2012. AB 1484 was enacted in June of 2012 and substantially amended AB 26, and was codified in the Health and Safety Code.
Pursuant to Health & Safety Code § 34175(b), on February 1, 2012, the real property and other assets of each dissolved RDA were transferred to the ownership and control of their “successor agency.” Health and Safety Code § 34173(g) requires each successor agency to dispose of such properties and to unwind the affairs of the dissolved redevelopment agencies. The City of Commerce has elected to take on the duties of the successor agency to the Commission (the “Successor Agency”), and by operation of law, the Successor Agency currently owns the land formerly owned by the Commission.
Pursuant to Health and Safety Code § 34191.5, within six (6) months after receiving a Finding of Completion from the Department of Finance (“DOF”), each successor agency was required to submit for approval to its oversight board and the DOF, a Long Range Property Management Plan (“LRPMP) that addresses the disposition and use of the real properties of the respective former RDA. The Dissolution Law mandates that a LRPMP identify that former RDA properties must be used or dispersed in one of the following ways: (1) to fulfill an enforceable obligation; (2) retention for future development, including possible sale of the property; (3) retention of property for governmental use; (4) of liquidation / sale.
On May 24, 2013, the Successor Agency received a Finding of Completion from the DOF.
On May 19, 2014, the DOF approved the Successor Agency’s LRPMP, thereby approving the Successor Agency’s proposed use or disposition of all the properties listed on the LRPMP.
One property identified in the LRPMP is located at 2143 South Atlantic Boulevard in the City of Commerce. The subject property consists of a 0.17 acre (7,477 square feet) commercial/manufacturing zoned parcel that is currently unimproved. The property is located on the northeast corner of S. Atlantic Boulevard and Everington Street, just west of Interstate 5.
ANALYSIS:
On July 2, 2019, the Successor Agency entered into the Agreement with Ramez Karkafi and Catherine George Bitar for property located at 2143 South Atlantic Boulevard in the City of Commerce. Based on an appraisal obtained by the Successor Agency at the time, the Land had a market value of $335,000. The Buyers (Ramez Karkafi and Catherine George Bitar) offered to pay the $335,000 with the intent to add their adjacent parcels and develop the combined properties into a mixed use development. The proposed project would have provided eighteen (18) units of housing, three (3) live-work units, a restaurant and a café with sufficient parking on-site for all (“Anticipated Use”).
Pursuant to Section 10.15 of the Agreement, the Seller has the option to repurchase the Property if the Buyers do not (a) obtain building permits to construct Buyer’s Anticipated Use within one (1) year from the Closing Date, or (b) commence (and thereafter, diligently prosecute to completion) the Buyer’s Anticipated Use within two (2) years after the occurrence of the events contemplated by subsection 10.15(a), then Seller shall have an option to repurchase the Property (the “Repurchase Option”) for the amount of the Purchase Price. The Agreement provides that the Seller must give Buyer written notice of its election to exercise the Repurchase Option within one hundred eighty (180) days after the right matures. Finally, upon exercise of the Repurchase Option by Seller, the Agreement provides that the Buyer and Seller shall open an escrow within thirty (30) days for the purchase and sale of the Property from Buyer to Seller. Each party shall pay the customary fees and charges of escrow.
Unfortunately, the Buyer was not able to comply with the abovementioned terms of the Agreement. Therefore the Seller exercised its right to repurchase the property and opened escrow in September 2021. In this instance, by operation of law and consistent with the terms of the Grant Deed related to this transaction, the City of Commerce has the right to exercise the repurchase option. Therefore, it is recommended that the City authorize City staff to exercise its right to repurchase the property located at 2143 South Atlantic Boulevard for the amount of the purchase price ($335,000). Once the repurchase has been finalized, the City intends to sell and/or develop the property. Doing such will provide for the recovery of the funds used for the purchase of the property and to seek a new development that is consistent with the City’s long term vision and that will set the tone for future residential and commercial development in the area.
ALTERNATIVES:
Approve Staff recommendation; or
Decline Staff recommendation and provide further direction.
FISCAL IMPACT:
The repurchase of the subject property is $335,000 which will be paid from the General Fund reserve. Once the repurchase has been finalized, the City intends to sell the property to recover the funds used for the purchase of the property or develop it in a manner that best serves the community’s interests.
Recommended by: Edgar P. Cisneros, City Manager
Respectfully submitted by: Edgar P. Cisneros, City Manager Approved as to form: Noel Tapia, City Attorney
ATTACHMENTS:
Resolution