DATE: June 4, 2024
TO: Mayor and City Council
FROM: Director of Finance
SUBJECT: Resolution Authorizing the City Manager to Execute The Eighth Amendment to the Purchase and Sale Agreement with Caltrans for Transfer and Development of State Highway 238 Bypass Properties That Extends the Deadline for the City to Dispose of the Properties by Five Years from 2027 to 2032
RECOMMENDATION
That Council adopt the following resolution:
A resolution authorizing the City Manager to execute the Eighth Amendment to the Purchase and Sale Agreement with Caltrans for the transfer and development of State Highway 238 Bypass Project properties and finding the project is consistent with prior California Environmental Quality Act (CEQA) determinations.
SUMMARY
After abandoning the State Route 238 Bypass Project in the 1970’s, Caltrans began selling parcels that had previously been acquired for the planned freeway. In order to ensure that future development of the State Route 238 parcels located in Hayward align with the City’s land use policies and overall vision, the City negotiated a Purchase and Sale Agreement (PSA) with Caltrans in 2016 to manage the disposition and development of former right of way for the now defunct 238 Bypass. The City-controlled State Route 238 properties are divided into ten “parcel groups.” The PSA, as amended, currently requires that the City dispose of the properties by January 20, 2027. In light of the current real estate market challenges (e.g. higher interest rates and construction costs) City staff and Caltrans staff have acknowledged that the deadline for the City to dispose of all of the parcel groups should be extended. An amendment extending that deadline has been prepared for the City Council’s consideration.
BACKGROUND
The City of Hayward entered into a PSA with Caltrans in January 2016 to acquire 10 parcel groups comprised of properties acquired by Caltrans for the State Route 238 expansion project. Caltrans has transferred those properties to the City subject to the City managing the disposition and development of these parcel groups with the goals of removing blight, enhancing community involvement in the development process, and creating economic and public benefits, such as job generating uses and trails and parks. As the City sells or transfers particular parcels, the City is obligated to repay Caltrans the negotiated purchase prices for the various parcel groups under the PSA. Table 1 provides the current status of the disposition of the parcel groups.
Table 1: Status of 238 Parcel Groups
Parcel Group
Status
Entity
Est. Disposition Timeline
Estimated Unit Counts
Affordable Unit Count
1 & 10
Sold / Under Construction
William Lyon Homes (SOHAY)
2018 - transferred
472 (approved)
48 (approved)
2 Sold / Under Construction
The True Life Companies (Mirza)
2021 - transferred
189 (approved)
20 (approved)
3 Sold / Under Construction
Eden Housing and The Pacific Companies
2022 - transferred
176 (approved)
176 (approved)
4 Master Development Planning
City of Hayward
2029
3 0
5 Entitlements and DDA Approved
Trumark Properties, LLC
2027
92 (under review by Developer)
18 (under review by Developer)
6 Developer solicitation in future
City of Hayward
2029
300
30 7
Lower lot – Sold and operating
One Subaru of Hayward
2020 - transferred
0 0
7 Upper lot
City of Hayward
2029
0 0
8 Affordable Housing: Execution of DDA approved
Open Space: Under negotiations
Market Rate: Developer solicitation in future
AH: Resources for Community Development
OS: HARD
MR: City of Hayward
2026
2024
2029
89 (approved)
100
89 (approved)
9 Developer solicitation in future
City of Hayward
2029
TBD
TBD
TOTAL
1,403
381
DISCUSSION
Since the execution of the PSA, City staff and Caltrans have communicated regularly regarding the disposition of the parcel groups. Due to increase in interest rates, construction costs, and competitiveness for construction financing for residential projects, City staff and Caltrans staff have acknowledged that the deadline for the City to dispose of all of the parcel groups should be extended. The City have executed seven prior amendments to the PSA addressing technical and timing issues related to the sale of the property.
A. Proposed Eighth Amendment to the PSA
The proposed amendment simply extends by five years the deadline by which the City is required to dispose of the properties.
Environmental Review
Pursuant to the California Environmental Quality Act (Public Resources Code Sections 21000 et seq.) ("CEQA") and its implementing guidelines, the approval of the PSA is eligible for streamlined, ministerial approval pursuant to Government Code Section 65913.4, and is therefore exempt from review pursuant to Public Resources Code Section 21080(b)(1), which states the general rule that CEQA does not apply to ministerial projects.
ECONOMIC IMPACT
The proposed disposition of the parcel groups would have a positive economic benefit in that it would result in development of a currently vacant sites with new residential units and rehabilitate existing units that require infrastructure investment, and this would beautify the sites and increase surrounding property values. Developers will leverage the City’s investment in their project to secure funding from the County, the State, and private sources.
FISCAL IMPACT
The proposed amendment would have no additional fiscal impact on the City. The City currently is responsible for the maintenance of the properties transferred by Caltrans.
STRATEGIC ROADMAP
The proposed project supports the Strategic Priorities of Preserve, Protect, and Preserve Housing for All, as well as of Grow the Economy, and specifically, relates to the implementation of the following project:
Project E13: Continue to work on Route 238 Corridor lands disposition and development.
NEXT STEPS
Following Council approval, staff will take the necessary steps to execute Amendment 8 to the PSA.
Prepared by: Nicole Gonzales, Finance Director
Recommended by: Nicole Gonzales, Finance Director
Approved by:
____________________________________________
Dustin Claussen, Interim City Manager
163\40\2901539.1
163\40\2901539.1
https://portal.laserfiche.com/Portal/DocView.aspx?id=380620&repo=r-b6d2994c&searchid=9b4cafe3-f0b8-4acd-9a47-783e7a0f305c Staff estimates 27% of total Route 238 Corridor Lands Development residential units will be affordable.