EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: February 7, 2023
TO: Honorable Mayor and Members of the City Council
VIA: Melvin Gaines, City Manager
BY: Patrick Heisinger, Assistant City Manager
SUBJECT: Proposed Updated Terms for Library Acquisition Recommendation
Adopt a Resolution:
1. Authorizing the City Manager to execute an amendment to the Purchase and Sale Agreement (“PSA”), in a form approved by the City Attorney, between the City of East Palo Alto and the East Palo Alto Youth Arts & Music Center, LLC for the potential acquisition of the property located near the corner of Bay Road and Pulgas Avenue (APN: 063-240-490) (“Site”) to extend the term of the agreement;
2. Appropriating additional funds to compensate the seller for agreeing to extend the term of the PSA as further described in the staff report; and
3. Authorizing the City Manager, in consultation with the City Attorney, to extend the term of the PSA for up to 90-days in the event of unforeseen issues prior to the close of the transaction.
Background
On December 7, 2021, the City Council adopted a Resolution:
1. Authorizing the City Manager to execute a PSA between the City of East Palo Alto (“City”) and the East Palo Alto Youth Arts & Music Center, LLC, an affiliate of the John and Marcia Goldman Foundation (“Foundation”), for the potential acquisition of the Site for future development of a new public library; and
2. Appropriate $110,000 from the General Fund Reserve to provide funding for the acquisition deposit and any unforeseen costs incurred during the contract term, as further described in this staff report.
The terms of the agreement are shown in Table-1 below:
Table-1 Key Deal Terms
Item Term
Parties
The City of East Palo Alto and East Palo Alto Youth Arts & Music Center, LLC (an affiliate of the Foundation)
Site 1950 Bay Road, APN: 063-240-490
Term 9-months of the PSA Effective Date – January 31, 2023 Price $3,260,000
Deposit/Earnest Money $97,800
Due Diligence Period 90-days of the PSA Effective Date
Covenants, Conditions,
and Restrictions (CC&R’s)
As a condition of closing, City and Foundation will negotiate final CC&R language acceptable to all parties.
On September 6, 2022, the City Council agreed to extend the term of the PSA to January 31, 2023, to provide additional time for staff to complete the processes required by the California Environmental Quality Act (CEQA) prior to purchasing the Site.
The purpose of this staff report is to seek City Council approval to: 1) further extend the term of the PSA through March 31, 2023, 2) appropriate additional funds to compensate the seller for agreeing to extend the term of the PSA, and 3) delegate authority to the City Manager to further extend the term of the PSA under certain circumstances as described in the staff report.
Analysis
Extending the term of the PSA to March 31, 2023, should provide ample time for the City to complete the required CEQA process that must be finalized prior to the City’s acquisition of the Site.
The Goldman Foundation has agreed to extend the term of the PSA to March 31, 2023, but requested that a payment of $50,000 be released prior to the close of escrow. The $50,000 would be treated as a credit towards the eventual purchase price of the Site. Staff recommends that the City appropriate $10,000 which, when combined with the funds that are currently available in escrow, will be sufficient for the recommended $50,000 payment.
Staff also seeks delegated authority to the City Manager, in consultation with the City Attorney, to extend the term of the PSA for up to 90-days in the event of unforeseen issues prior to the close of the transaction.
Next Steps
Staff intends to return to the City Council on March 21, 2023, with recommended actions that, if approved, would result in closing the transaction. Barring unforeseen interruptions, the transaction should close by March 31, 2023.
Fiscal Impact
There is adequate funding in the Cit’s General Fund Reserve to cover the $10,000 being requested as in this staff report.
Public Notice
The City was provided notice of this agenda item by posting the City Council agenda on the City’s official bulletin board outside City Hall and making the agenda and report available at the City’s website and at the San Mateo County Library located at 2415 University Avenue, East Palo Alto.
Environmental
The proposed action is exempt from CEQA pursuant to CEQA Guidelines section 15061(b)(3) because it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.
Attachments
1. Resolution