CITY COUNCIL STAFF REPORT
Meeting: June 18, 2024
Subject
Sale of city-owned property at 10301 Byrne Avenue
Recommended Action
Adopt Resolution No. 24-XXX authorizing the sale of surplus real property located at 10301 Byrne Avenue, Cupertino, California. (Attachment A) Approve a deed restriction substantially similar to Attachment B in compliance with the State Surplus Land Act for the property, to be completed prior to the close of escrow.
Authorize the City Manager to execute sales agreements (Attachment C) and related documents for the property at 10301 Byrne Avenue with Zhao Han.
Reasons for Recommendation
On December 19, 2017 the City Council approved the purchase of the Property at 10301 Byrne Avenue. The purpose of the purchase was to facilitate right-of-way modification to create space for an enhanced pedestrian entrance to Blackberry Farm. A dedication of right-of-way has been completed and recorded with the County.
The Surplus Land Act (Act) (California Government Code Section 54222 et seq.), defines the process for disposition of real property owned by government entities. In summary, prior to offering the property for sale, the City must offer this property for sale or lease to the following types of organizations as defined in the Act:
Public entities and Housing Sponsors for the development of low- or moderate-income housing.
Entities involved in parks, recreation, and open space.
School districts.
On July 6, 2023, the City Council declared the subject property surplus. Following this decision, on July 25, 2023, the City sent a 60-day Notice of Availability (NOA) of Surplus Land to all required entities as pursuant in the Act.
Upon conducting this process, two entities expressed interest in the property and staff entered into negotiations with both. The Surplus Land Act requires negotiation for a 90 day period. The two entities are listed below:
Bay Area Housing Corporation
Community Veteran’s Partners
Initially both entities provided proposals for the property that included a donation of the property at no cost to the interested entity. Consistent with Council direction, staff countered with an offer for sale at market rate. Bay Area Housing Corporation provided notice that they would not be interested at that value. Community Veterans Partners continued to pursue the property but were unable to provide information on the legal status of the entity, fiscal capacity, and other information within a timely manner. Following 167 days of negotiation, staff had the property listed for sale publicly by Keller Williams.
The Surplus Land Act process is monitored by State Housing and Community Development (HCD) department. HCD has reviewed the documents associated with the process the City followed and provided a letter of approval.
The City contracted with Keller Williams Realty to represent the property interests. Real estate agents began the marketing effort immediately, sharing the upcoming availability of the property within the industry. The property was listed promptly on the Multiple Listing Service (MLS) with upcoming availability and Keller Williams marketed the property through other agents and known interested parties. The goal with the advance work was to build anticipation and interest early such that, when the property is listed publicly, there is immediate activity. This bore during the three-day weekend (May 25-27) where the property was open. It was also listed as active on internet-based property sites such as Redfin as well as traditional noticing by way of a for-sale sign placed in advance in front of the property. Interest was high during this timeframe with 15 parties expressing online interest and over 50 visitors walking in during open house.
The City received a strong as-is offer of $3,110,000, above the asking price, with no contingencies from a Cupertino family who currently rents down the street and wants to make Cupertino their permanent home.
This property was purchased for the purpose of obtaining additional right-of-way. In that process, the property itself was made smaller. In spite of the reduction in size, the City is positioned to generate revenue above the expenses from the acquisition.
Sustainability Impact:
None
Fiscal Impact:
The sale of the property will net the City approximately $2,912,395.05 in cash after commission and fees associated with closing escrow. These funds will be deposited in the City’s General Fund for later appropriation by the City Council.
California Environmental Quality Act (CEQA)
The proposed project is exempt from CEQA under CEQA Guidelines section 15312 (surplus government property sales). Under CEQA Guidelines section 15132(b)(3), the use of the property and adjacent property has not changed since the time of its purchase by the City. _____________________________________
Prepared by: Tina Kapoor, Deputy City Manager
Reviewed by: Christopher Jensen, City Attorney
Approved for Submission by: Pamela Wu, City Manager
Attachments:
A – Draft Resolution
B – Draft Deed Restriction
C - Sales Agreement