Agenda Report
Fullerton City Council
MEETING DATE: JUNE 20, 2023
TO: CITY COUNCIL / SUCCESSOR AGENCY
SUBMITTED BY: Eric Levitt, city manager
PREPARED BY: DAISY PEREZ, DEPUTY CITY MANAGER
SUBJECT: PURCHASE AND SALE AGREEMENT FOR ACQUISITION OF REAL PROPERTY AT 3535 WEST COMMONWEALTH AVENUE (APN 030-040-15)
SUMMARY
The City of Fullerton participates in various programs and initiatives to provide shelter solutions for the homeless population. The State of California provided $10,000,000 to the City to purchase the property 3535 Commonwealth Avenue, which operates as the Fullerton Navigation Center including recuperative care and wrap-around services.
RECOMMENDATION
Adopt Resolution No. 2023-XXX.
RESOLUTION NO. 2023-XXX – A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FULLERTON, CALIFORNIA AUTHORIZING A REAL ESTATE PURCHASE AGREEMENT BETWEEN DYER 18 LLC AND THE CITY OF FULLERTON FOR PURCHASE OF REAL PROPERTY LOCATED AT 3535 WEST COMMONWEALTH AVENUE FOR THE PURCHASE PRICE OF NINE MILLION FIVE HUNDRED AND EIGHTY THOUSAND DOLLARS Authorize City Manager to execute Purchase and Sale Agreement and all required documents for acquisition of real property located at 3535 West Commonwealth Avenue (APN 030-040-15) in the amount of $9,580,000 plus closing costs and escrow fees, subject to non-substantive changes approved by the City Manager and City Attorney.
Authorize appropriation to purchase subject property.
CITY MANAGER REMARKS
The City Manager requests approval to purchase 3535 Commonwealth subject to it being consistent with the General Plan.
The City is currently negotiating an operating agreement with Illumination Foundation regarding the operations of the facility in order to maintain 40 overnight beds. That agreement should come forward to City Council later this Summer.
PRIORITY POLICY STATEMENT
This item matches the following Priority Policy Statement:
Infrastructure and City Assets.
FISCAL IMPACT
The City received $10,000,000 in funding from the State of California to purchase the property. The City intends to purchase the property for $9,580,000 plus closing costs and escrow fees. The tenant for the property currently has a triple net lease and is responsible for all costs associated with the property including ongoing maintenance costs. This item generates no general fund impact.
DISCUSSION
Background
The City has opportunities to improve service and ensure that homeless individuals have access to available beds when contacted in the field as the City continues to address the homeless challenge within the community. Staff has worked to link homeless individuals to shelter services including the Buena Park navigation center, Placentia navigation center, Bridges at Kramer (located in Anaheim) and other regional service providers, depending on individual needs and community connections over the past year. The City participates in a regional effort known as the North Service Planning Area (North SPA) funded through grants from California HCD’s Permanent Local Housing Allocation (PLHA) program.
Participating agencies pool resources to fund the Buena Park and Placentia shelters which have sheltered approximately 529 individuals in the past fiscal year. Both shelters assisted 80 individuals to permanently exit homelessness last year. The annual Point in Time (PIT) count of homeless individuals for Fullerton demonstrated a 34% net reduction in unsheltered individuals through the efforts of the City and various partners. While these figures demonstrate the impact of the City’s efforts, staff continues to see a pressing and emergent need for additional shelter beds to accommodate persistent homeless challenges.
The City has limited options to address homeless challenges when it has no beds available to shelter individuals. Staff frequently contacts homeless individuals in the field but can locate no available beds throughout the region and engagement with that person often comes to a standstill. The lack of shelter beds can significantly hamper or delay service and result in persistent homelessness in parts of the community. The City seeks to comply with Federal Court determinations from (Martin v. Boise) which limits enforcement of illegal camping in public property under the auspices of Federal Judge David O. Carter.
City Council authorized an operating agreement with Illumination Foundation in July 2020 to provide services at their center located at 3535 West Commonwealth. City Council authorized a $500,000 appropriation from the Housing Fund to the shelter for tenant improvements. The City approved a Conditional Use Permit (ZON-2019-0131) which allowed the shelter to operate within City limits and provide 90 shelter beds and 60 recuperative care beds. The conditional use permit specifically outlines that the facility does not allow walk-up clients and people experiencing homelessness can only enter the site by referral from a City approved provider. The City entered into an agreement with Illumination Foundation in December 2021 to provide shelter bed services for Fullerton residents. The agreement had a $40.00 per day bed rate. The agreement term expired in July 2022. Illumination Foundation now operates its facility primarily as a recuperative care site which addresses a broad range of needs for those within the homeless community. The City of Fullerton entered into a one-year agreement with the Illumination Foundation on November 1, 2022 for 20 dedicated shelter beds at a $80 daily per diem rate.
Property Details
The property located at 3535 West Commonwealth Avenue includes a two-story, 15,700 square foot +/- building built in 1968 on APN 030-040-15 containing 33,356+/- square feet or 0.766+/- acres. A public-private partnership renovated the building in 2020 to host the Fullerton Navigation Center with a state-of-the art facility offering navigation and recuperative care beds under one roof.
The Fullerton Navigation Center offers diversion assistance, crisis evaluation, trauma-informed case management, housing navigation, behavioral health and substance use therapy, transportation services, group and individual enrichment activities, accommodations for 20 pets, employment services, meals, laundry, security and storage areas for clients. The first floor consists of a maximum-capacity 60-bed recuperative care center (clients arriving directly from hospitals) and a maximum-capacity 87-bed homeless shelter (men, women and couples in the Navigation Center) with a total maximum capacity of 147 beds on the first floor as of the December 12, 2022 inspection, this is down from 150 because one dorm two-bed area turned into a doctor’s visiting room on the first floor and another dorm has a support pole that made it hard to put a bed in the space, as indicated in the appraisal report (Attachment 3).
Dyer 18, LLC owns this property and leases to the Illumination Foundation, which operates the Fullerton Navigation Center. The City of Fullerton has received $10 million dollars to purchase the subject property. The City received the first $4 million dollar allocation in April 2022 (Fund 32) as part of Senate Bill 119 (Skinner 2021). The City received the second $6 million dollar allocation in March 2023 (Fund 32) as an earmark from Assemblymember Sharon Quirk-Silva in the 2022-23 California Budget Bill to purchase the property and ensure maintenance of a minimum number of beds at the property for a period of no less than ten years.
The City appraiser, Curtis-Rosenthal, Inc., appraised the property in December 2022, in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP), upon the receipt of funding. Curtis-Rosenthal, Inc appraised the property at a value of $9,580,000 based on a full analysis of the market area, site conditions and other factors. The City intends to purchase the property from Dyer 18, LLC for the appraised value.
California Environmental Quality Act Analysis
California Environmental Quality Act (CEQA) Section 15060(c)(3) exempts this purchase and does not consider it a project under CEQA as the City does not intend to change the use of the existing property upon acquisition and it would not result in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment. Any future proposed change in the use of the site would require analysis in accordance with CEQA.
Attachments:
Attachment 1 – Draft Resolution No 2023-XXX
Attachment 2 – Purchase and Sale Agreement
Attachment 3 – Appraisal
cc: City Manager Eric J. Levitt
3535 West Commonwealth Avenue Purchase and Sale Agreement June 20, 2023 - Page 2