EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: July 18, 2023
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: Salifu Yakubu, Senior Planner
Elena Lee, Planning Manager
Amy Chen, Community & Economic Development Director
SUBJECT: University Avenue/Beech Street Property Exchange Recommendation
Adopt a resolution (Attachment 1):
1. Finding the City-owned 0.36-acre property at 2277 University Avenue in East Palo Alto is “exempt surplus” land, which may be disposed in accordance with Government Code section 54221(f)(1);
2. Authorizing City Manager to transmit the adopted resolution to the State Department of Housing and Community Development to seek concurrence of the subject property’s qualification as “exempt surplus” land pursuant to Government Code section 54230.5 (b)(1); and
3. Authorizing the City Manager to take all action in preparation for the disposal of the subject property pursuant to the Memorandum of Understanding (MOU) between the City of East Palo Alto and County of San Mateo and respectively signed on March 25, 2022, and April 19, 2022, including without limitation, conducting all due diligence activities such as the preparation of title reports, Phase I and II soil reports, geotechnical reports, appraisal reports, etc.
Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:
Priority No. 2: Enhance Economic Vitality
Priority No. 4: Improve Public Facilities and Infrastructure Priority No. 6: Create a Healthy and Safe Community
Background
Introduction
The City of East Palo Alto (City) owns 2277 University Avenue (Assessor’s Parcel Number 063-302-460) (“City Property”) and County of San Mateo (County) owns a piece of real property in the City, 1266 Beech Street (Assessor’s Parcel Number 063- 600-060) (“County Property”), that the two public entities are interested in exchanging so that properties can be used for legitimate government purposes. The City is desirous of expanding the Martin Luther King (MLK) Park onto the adjoining Beech Street property while the County would facilitate the development of affordable housing on the University Street property.
To advance these interests, the City adopted a resolution (Attachment 2) on March 15, 2022, authorizing the City Manager to enter into an MOU with the County to explore the real property exchange. This paved the way for City and County staff to engage in several consultation meetings, culminating in the signing of an MOU (Attachment 3) on March 25, 2022, and April 19, 2022, by the City and County respectively to undertake certain due diligence measures to assess the feasibility and potential exchange of the subject real properties. Apart from the Phase I and II soil reports prepared for a separate but related MLK Park master planning process, the applicable due diligence measures would be undertaken after the State Department of Housing and Community Development concurs that the two properties are “exempt surplus” land.
The purpose of this staff report is to facilitate the property exchange by recommending that the Council adopt a resolution finding and declaring the City-owned 0.36-acre property at 2277 University Avenue as “exempt surplus” land pursuant to the Surplus Land Act (SLA) as amended by Assembly Bill 1486 and other subsequent bills and transmit that resolution to obtain a concurrence from the State Department of Housing and Community Development (HCD). The County staff are scheduled to make similar recommendations for the County-owned Beech Street property to the Board of Supervisors on July 25, 2023.
2277 University Avenue Real Property
The subject real property at 2277 University Avenue is owned “in fee simple” by the City. The
0.36-acre property is located on the west side of University Avenue, mid-block between Bell and Runnymede Streets, and mostly surrounded by a single-family residential neighborhood, except for a multi-family building just to the south (2263 University Avenue), the Menlo Park Fire District building at the southeast corner of University Avenue and Runnymede Street, and the 1.42-acre Community Church of East Palo Alto site at 2201 University Avenue. The subject property is improved with a 1930’s era single-story residential structure which was converted into a non-residential use by the David E. Lewis Community Re-entry Center. The David E.
Lewis Center, which has been in operation since 2007, is a collaborative program sponsored by the City of East Palo Alto and the County of San Mateo.
The 2277 University Avenue property was previously owned by the East Palo Alto County Waterworks District (EPACWD). The EPACWD was dissolved by Resolution 925 of the Local Agency Formation Commission (LAFCO) of San Mateo County on July 3, 2001, and its services transferred to the cities of East Palo Alto and Menlo Park. As the successor in interest to the EPACWD, the City (Grantor) granted the subject property to itself (Grantee) by way of a Grant Deed on February 26, 2014, and a Certificate of Acceptance, pursuant to Government Code 27281, signed on March 4, 2014.
The subject property is zoned MUC-1 Mixed Use Corridor -1, which allows mixed use developments at 22-65 dwelling units per acre at a floor area ratio not to exceed 1.75, with residential uses only allowed above the ground floor. Its General Plan land use designation is also Mixed-Use Corridor, which also allows the same kinds of uses including multi-family residential, attached single family residential, retail, services, office, hotel/ lodging, public, assembly and other similar uses.
County’s Interest in 2277 University Avenue Property
The County has expressed interest in utilizing the City-owned property for affordable housing and the City has therefore added the site as a potential development site in its 2023-2031 Housing Element. To be consistent with the City’s General Plan and Development Code, new development would have to be mixed-use with at least twothirds being residential and include 20% affordable housing units, which would make it eligible for density bonuses of 35% (with reduced parking) or 80% (without parking) with various concessions and waivers pursuant to the State Density Bonus Law and the City’s Affordable Housing Ordinance. These bonuses could yield a maximum of 33 to 44 dwelling units respectively.
1266 Beech Street Property
Coincidentally, the County owns “in fee simple” a 1.85-acre property located at 1266 Beech Street in East Palo Alto. This vacant property is surrounded by single-family residential dwellings, with the City-owned 5.4-acre Martin Luther King (MLK) Park to the south. The County property and the Park have the same Park/ Recreation/Conservation and Parks and Recreation General Plan land use designation and Zone respectively.
City’s Interest in 1266 Beech Street Property
On October 26, 2020, the City Planning Commission held a meeting where the Commission and members of the community in attendance expressed a strong desire to expand and improve the MLK Park by acquiring the County’s Beech Street property.
Subsequently, the City Council, at open session meetings expressed interest in the acquisition as part of the larger discussion regarding the MLK Park master plan, and adopted a resolution on July 20, 2021, selecting Verde Design to complete the master plan.
In July 2021 and subsequently on February 2, 2022, City and County representatives met to discuss the potential exchange of the 2277 University Avenue and 1266 Beech Street properties for their respective uses for affordable housing and parks. As these discussions progressed the City Council adopted a resolution on March 15, 2022, authorizing the City Manager to enter into an MOU, which was ultimately signed by the City and County on March 25, 2022 and April 19, 2022 respectively, regarding a potential real property exchange.
Analysis
The Surplus Land Act (SLA)1 is a statute (Government Code Sections 54220-54234) that all local agencies (including cities and counties) must follow prior to disposal of 1 https://www.hcd.ca.gov/community-development/docs/SLA_Guidelines_final.pdf surplus real property. It requires the local agency to offer the property to affordable home developers and certain entities before the general public, unless the land qualifies as exempt surplus land. There are four (4) categories of exemptions to the SLA as follows (relevant exemptions are in bold):
1. Certain actions were taken by the local agency to dispose of the property prior to September 30, 2019 (Grandfathering Exemption).
2. Disposition can be streamlined because the surplus land is proposed for development that includes certain percentages of affordable housing (Streamlining Exemption).
3. The surplus land is dedicated for other public uses (Public Use Exemption).
4. The surplus land is not suitable for housing development (Unsuitable Parcel Exemption)
Government Code Section 54221(f)(1)(C) provides that real property that a public agency is exchanging with another public agency for agency use is exempt surplus land. Government Code Section 54221(f)(1)(D) provides that real property that a public agency is transferring to another public agency is exempt surplus property. The University Avenue property is proposed to be exchanged with the County Beech Street property qualifying the property for the exemptions pursuant to Section 54221(f)(1)(C).
Additionally, the City is proposing to dispose of the University Avenue property to the County, a public agency, qualifying the property as exempt surplus property pursuant to Government Code Section 54221(f)(1)(D).
The County has indicated that it intends to use the University Avenue property for affordable housing, an agency use.
In exchange for transferring 2277 University Avenue to the County of San Mateo, the City of East Palo Alto would receive the County’s property at 1266 Beech Street. This exchange would allow the seamless integration of 1266 Beech Street into an expanded and enhanced MLK Park and complement the City’s need for improved park uses and services. Based on these facts the property at 1266 Beech Street can be found eligible for Exemption under Category 3b pursuant to Government Code section 54221(f)(1)(C).
The County will also have to comply with the SLA with a similar process prior to the transfer of 1266 Beech Street to the City. As mentioned above, the County is planning to discuss the Beech Street property at the July 25, 2023, Board of Supervisors meeting.
Next Steps
Staff recommends that the City Council adopt the resolution (Attachment 1) finding the City-owned 0.36-acre property at 2277 University Avenue in East Palo Alto to be Exempt Surplus Land pursuant to Government Code section 54221(f)(1). Subsequent to adoption, staff will transmit a copy of the resolution to the California State Department of Housing and Community Development (HCD) no later than 30 days prior to the disposition of the subject property pursuant to Government code section 37364.
The development of the MLK master plan by Verde Design is in process and contemplating the potential integration of the Beech Street property in its conceptual design scenarios. The Mitigated Negative Declaration document that has already been prepared for it, consistent with the California Environmental Quality Act (CEQA), includes some of the due diligence measures such as Phase I and II soil reports required by the aforementioned MOU. The Phase I and II reports have been completed, and no incidence of soil or ground water contamination was found. The MLK master plan, when approved by the City Council, would be a long-range comprehensive planning and policy document for the development and expansion of the park and treatment of the park’s interface with its surroundings. The development of the Beech Street property and its seamless incorporation into the MLK park would be fast-tracked should the property exchange be successful.
The property exchange would proceed after the City and County properties are successfully declared “exempt surplus” lands. However, prior to the City acquiring the Beech Street property the City Planning Commission would be required to make a finding of property conformity with the General Plan, and the Council would approve a property exchange agreement, which staff anticipates for the December 5 Council hearing.
Fiscal Impact
The adoption of the resolution and its transmittal to HCD has no fiscal impacts on the City. Any potential costs associated with the required due diligence measures identified earlier in the report are captured under the ongoing MLK Park master planning effort.
Public Notice
The public 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 City Hall located at 2415 University Avenue, East Palo Alto.
Environmental
The proposed action does not constitute a “project” with the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines sections 15378(b)(4) and (5) in that it is a governmental fiscal, organizational or administrative activity that will not result in direct or indirect changes in the environment.
Attachments
1. Resolution
2. EPA Reso authorizing CM to enter MOU with County
3. MOU-Between EPA and SMC_Potential Property Swap