Fremont City Council Meeting: 08/15/23 07:00 PM
3300 Capitol Avenue Div/Dept: Economic Development Department Fremont, CA 94538 Category: Property Acquisitions & Dispositions
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 4981) DOC ID: 4981
Updated: 8/11/2023 7:50 PM by Alberto Quintanilla Page 1 PROPERTY ACQUISITION – Approval of the Agreement to Purchase the Property Located at 39180 Liberty Street in the Amount of $6,540,000; Related Appropriation Actions
Contact Persons:
Name: Donovan Lazaro Christina Briggs
Title: Economic Development Manager Assistant City Manager Div/Dept: Economic Development Department City Manager's Office Phone: 510-284-4024 510-284-4022
E-Mail: [email protected] [email protected]
EXECUTIVE SUMMARY: The purpose of this report is to request City Council approval to enter into a purchase agreement (“Agreement”) for the property located at 39180 Liberty Street (“Property”), which is privately owned by trustees of the Bishop 2001 Living Trust, Gordon Declaration of Trusts, and Abreu Living Trust (“Seller”). The purchase of the Property will support future phases of development and implementation of the Civic Center Master Plan, provide strategic flexibility in locating various City operations, and enhance the future land values and redevelopment potential of existing City properties.
Staff are also requesting that the City Council reallocate $6,750,000 from the Strategic Investment Opportunities Reserve in the Capital Improvements Fund (PWC8811-501) to the 39180 Liberty Street Acquisition Project (PWC9107-501) to pay the purchase price of the Property, $6,540,000, and any additional related costs.
BACKGROUND:
On July 11, 2023, the City Council authorized the City Manager or designee to engage in negotiation with the Seller’s representatives to purchase the Property. The City retained a real estate broker, DCG Strategies, to represent it in connection with the proposed purchase. DCG Strategies provided a broker opinion of value based on numerous comparable sales of properties purchased for their higher and better residential or mixed- use redevelopment potential. The comparable sales range in value. The opinion of value was provided to the City Council in the form of an attorney-client privileged memorandum concluding that the proposed purchase price falls within the range of the sales prices of the relevant comparable sales. The City and the Seller have come to agreement on the purchase price of $6,540,000 for the Property.
Within 5 business days of full execution of the proposed agreement, City must deposit $195,000 with the escrow holder, which will be refundable if City elects not to proceed with closing by the end of the due diligence period. During the due diligence period, City has the right to retain third party consultants to inspect the condition of the Building and the Property and perform a Phase 1 environmental analysis. The proposed agreement provides the City a 30-day due diligence period that may be extended by 15 days if there is a recognized environmental condition requiring further investigation or a major defect in the building or building component. If the City closes escrow, the Seller will credit the City for Council Staff Report (ID # 4981) Meeting of August 15, 2023 Updated: 8/11/2023 7:50 PM by Alberto Quintanilla Page 2 the costs of inspections performed during the due diligence period and the $195,000 deposit will be applied to the purchase price.
A draft “Standard Offer, Agreement, and Escrow Instructions for Purchase of Real Estate” and accompanying “Addendum” is attached to the staff report. The Addendum published on August 11, 2023 is close to final form, but City staff anticipates publishing a revised Addendum, via Green Sheet, on Monday, August 14, 2023 to incorporate additional legal edits to the terms of the Addendum.
DISCUSSION/ANALYSIS:
On October 12, 2012, the City Council adopted the Downtown Community Plan, a comprehensive long-term planning document for the City’s Downtown District that envisions a walkable, vibrant, mixed-use destination to serve as a central gathering point for the community for an array of activities including dining, shopping, and civic events. Following the Downtown Community Plan’s adoption, on July 15, 2014, the City Council approved the Civic Center Master Plan, which outlines a multi-phased development of the City’s Downtown property holdings to include a new home for the Family Resource Center (FRC), new City Hall and Council Chambers, public parking garage, and Downtown Event Center, the latter of which was opened in October 2021.
The Civic Center Master Plan is considered a critical component of the long-term vision for downtown Fremont (“Downtown”) due to the opportunities created from consolidating the multiple City departments within a new City Hall and capitalizing on the City’s surplus land for redevelopment. In addition to serving as a catalyst for Downtown, the implementation of the Civic Center Master Plan would serve to modernize Fremont’s civic facilities comparable to other regional cities and is in-line with the City’s recent Capital Improvement Plan efforts to reinvest in community facilities and assets.
The purchase of the subject Property would allow the City to expand its real property holdings immediately adjacent to the current City Hall. The Property consists of 53,578 square feet (roughly 1.23 acres) and is improved with a 23,000 square, foot two-story office building (the “Building”). The Building is occupied by several tenants. Staff will review the leases and obtain additional information about the existing tenants during the due diligence process. Staff anticipates allowing these tenants to continue occupancy of the Property pursuant to the terms of their existing leases. During due diligence, the City will also evaluate whether it is appropriate and desirable to assume any of the Seller’s existing contracts whereby vendors provide maintenance and other services to the Property.
The acquisition of the Property would be strategic in nature, providing an opportunity to further consolidate City administrative operations within the current City Hall area in the future while adding a key parcel that would enhance the overall redevelopment viability of the City’s existing properties with the possibility of increasing their underlying land values.
Potential short-term and medium-term uses for the Building would be based on City’s operational need and could include the relocation of one or more City departments to portions of the Building as space in the Building becomes available. However, the purchase agreement itself does not contemplate or require changes to the Building or the current office uses of the Property.
Council Staff Report (ID # 4981) Meeting of August 15, 2023 Updated: 8/11/2023 7:50 PM by Alberto Quintanilla Page 3 The City owns an adjacent property improved with City Hall Buildings A and B, as well as the Housing Navigation Center, consisting of approximately 6.51 acres. The addition of the Property would expand the City’s site area to approximately 7.74 acres and create a “super block” site fully controlled by the City. It would also remove redevelopment impediments currently created by City’s shared use of the Liberty Street driveway with a private owner of the Property. Longer term, as future phases of the Civic Center Master Plan are implemented, the current City Hall site is considered an important mixed-use housing development site, with the potential to make a significant contribution toward Fremont’s Regional Housing Needs Assessment (RHNA) obligation and a major advancement t oward achieving a critical mass of new residents and businesses in Downtown. If the Property is redeveloped with mixed-use housing, that use would undergo CEQA review at the time it is proposed.
General Plan Conformity Finding for Acquisition of Real Property, Government Code 65402
California Government Code 65402(a) requires that findings of general conformity be made by the local planning agency prior to acquisition of any real property by the City. Pursuant to FMC 2.20.310, for the purpose of such conformity findings, the functions of the planning agency of the City are performed by the Planning Manager.
The Planning Manager has reviewed the proposed acquisition and finds that that the acquisition would be in conformance with the General Plan. The Property has a General Plan land use designation of Commercial – City Center, and corresponding zoning of D-MD (Downtown – Mid Zone). The acquisition of the Property would further the goals and priorities of the General Plan and Downtown Community Plan by providing increased flexibility for consolidating City government offices, while strategically assembling land for potential future redevelopment consistent with the planned development intensity envisioned for downtown. The property, in its present condition, could be used by the City as an extension of City offices or for a commercial use, as allowed under the General Plan.
In the future, it would likely be combined and redeveloped with the current City Hall parcel for a commercial, residential, or mixed-use development at an intensity in conformance with the General Plan.
Council Staff Report (ID # 4981) Meeting of August 15, 2023 Updated: 8/11/2023 7:50 PM by Alberto Quintanilla Page 4 FISCAL IMPACT:
Staff are recommending that the City Council fund the purchase of the Property and any related costs from the Strategic Investment Opportunities Reserve in the Capital Improvements Fund (Fund 501). The Strategic Investment Opportunities Reserve was established with one-time General Fund revenues in fiscal years 2012/13, 2013/14, and 2015/16, and has a current balance of $8,818,000.
The recommended budget action would reallocate $6,750,000 from the Strategic Investment Opportunities Reserve (PWC8811-501) to the 39180 Liberty Street Acquisition project (PWC9107-501).
ENVIRONMENTAL REVIEW:
The City envisions continued use of the Building as an office building; some City operations may move into the Building as space becomes available. If and when a redevelopment of the Property or change in the Property’s use is proposed, the redevelopment or changed use will undergo California Environmental Quality Act (CEQA) review at that time. Accordingly, the proposed purchase is exempt from, and not subject to, further environmental review under CEQA pursuant to, without limitation, CEQA Guidelines 15183 (projects consistent with Community Plan, General Plan or Zoning), and/or 15162, as the project is covered by the analysis in the Supplemental Environmental Impact Report (SEIR) prepared for the Downtown Community Plan, certified by the City Council on September 18, 2012 by Resolution No. 2012-50 and the General Plan EIR, certified by the City Council on December 13, 2011 by Resolution No. 2011-68. None of the circumstances necessitating preparation of a subsequent EIR are present, as specified in CEQA Guidelines Section 15162, and none of the circumstances necessitating further evaluation are present as specified in CEQA Guidelines Section 15183. The action also is exempt pursuant to CEQA Guidelines Section 15378 (actions not a project) and 15061(b)(3) as no development proposal for the site is identified that would enable a reasonable evaluation of impacts. Each of the foregoing provides a separate and independent basis for CEQA compliance.
ATTACHMENTS:
• 2023.08.15 - Staff Report re 39180 Liberty Street Acquisition Resolution • 2023.08.15 - Staff Report re 39180 Liberty Street Acquisition Purchase and Sale Agreement
• 2023.08.15 - Staff Report re 39180 Liberty Street Acquisition Addendum to PSA
RECOMMENDATIONS:
1. Adopt a Resolution of the City Council of the City of Fremont approving, and authorizing the City Manager to execute, a certain Standard Offer, Agreement, and Escrow Instructions for Purchase of Real Estate and accompanying Addendum thereto for City’s purchase of the property commonly known as 39180 Liberty Street and designated as Assessor Parcel Number 501-1130-50, and finding that the proposed purchase is exempt from CEQA review.
2. Reallocate $6,750,000 from the Strategic Investment Opportunities Reserve in the Capital Improvements Fund (PWC8811-501) to the 39180 Liberty Street Acquisition Project (PWC9107-501).