REPORT TO CITY COUNCIL
To:Honorable Chair and Members of the Successor Agency
From:Jason Simpson, City Manager
Prepared by:Barbara Leibold, City Attorney
Date:September 12, 2024
Subject: Sale of Real Property 284 Ellis Street
Recommendation
1. Find that the proposed sale of real property does not constitute a project under California Environmental Quality Act (CEQA) and Section 15004(b) of the CEQA Guidelines in that it does not vest any development rights or result in the physical change in the environment and that any proposed affordable housing project will be required to comply with CEQA and obtain all land use entitlements, and does not commit the City to any definite course of action or foreclose alternatives or mitigation measures that would ordinarily be part of CEQA; and
2. Adopt A RESOLUTION OF THE SUCCESSOR AGENCY OF THE REDEVELOPMENT
AGENCY OF THE CITY OF LAKE ELSINORE, CALIFORNIA, APPROVING THE
TRANSFER OF SPECIFIED REAL PROPERTY BY THE SUCCESSOR AGENCY OF
THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE PURSUANT TO SECTION 34181(a)(1) OF THE HEALTH & SAFETY CODE AND MAKING RELATED
FINDINGS AND DECLARATIONS AND TAKING RELATED ACTIONS IN CONNECTION THEREWITH.
Background
The former Redevelopment Agency of the City of Lake Elsinore (“Former Agency”) was formed, existed, and exercised its powers pursuant to the Community Redevelopment Law (California Health and Safety Code section 33000 et seq.). In 1994, the Former Agency acquired an approximately 9,148 square foot parcel (0.21 acre) with a common address of 284 Ellis Street, otherwise identified as APN 377-292-017 (the “Agency Property”). The Agency Property was initially acquired as part of a structure abatement proceeding to eliminate blight in the redevelopment project area.
Sales of SA Property 284 Ellis Street
Pursuant to Assembly Bill No. 1X 26, as modified by Assembly Bill No. 1484 enacted on June 27, 2012, and as further modified by Senate Bill No. 107 passed on September 22, 2015, which added or amended Parts 1.8 and 1.85 to Division 24 of the Health and Safety Code (“Dissolution Act”), the Former Agency was dissolved on February 1, 2012 and the Successor to the Redevelopment Agency of the City of Lake Elsinore (“Successor Agency”) was vested with all authority, rights, powers, duties and obligations of the Former Agency.
As part of the dissolution of the Former Agency, Health & Safety Code Section 34177(e) requires the Oversight Board to direct the Successor Agency to dispose of the real property held by the Successor Agency.
The Agency Property is the last remaining property owned by the Successor Agency that will be offered for sale. In February 2022, the Successor Agency declared the Agency Property surplus and, in May 2022, published a Notice of Availability pursuant to Government Code Section 54220 et seq. (the “Surplus Lands Act”).
A single letter of interest was submitted to the Successor Agency by the owner of the adjacent property (the “Buyer Property”). The Buyer Property is approximately 16,553 square feet (.38 acre) and identified as Assessor’s Parcel Number 377-292-034. The Successor Agency and the adjacent property owner (“Buyer”) engaged in lengthy good faith negotiations pursuant to which Buyer would acquire the Agency Property, merge the Agency Property and the Buyer Property into one legal parcel (the “Merged Property”), and develop and improve the Merged Property in accordance with City of Lake Elsinore (“City”) zoning and land use regulations.
The Agency Property and the Buyer Property are zoned High-Density Residential (R3), and the Buyer has commenced the design of a proposed multi-family residential project on the Buyer Property. By acquiring the Agency Property and creating the Merged Property, the Buyer will more easily be able to design a multi-family project that meets the development regulations, including parking and setback requirements, of the City’s R-3 zoning. The Merged Property may allow for one or two additional residential units, but the final design will be determined through the City’s entitlement process.
Pursuant to the Surplus Lands Act, the Successor Agency and the Buyer evaluated the feasibility of developing an affordable housing project on the Merged Parcel. Ultimately, the Successor Agency and the Buyer determined that an affordable housing project on the Merged Property was infeasible due to the small size and limited development capacity of the site, the lack of available funds to subsidize and underwrite the affordability restrictions, and the ongoing monitoring and reporting requirements required in the operation and management of affordable housing projects.
After concluding an affordable housing project was infeasible, the Buyer expressed continued interest in acquiring the Agency Property to create the Merged Property, expand the proposed project design, and seek land use entitlements for a market rate multi-family residential project consistent with the R-3 zoning and applicable City land use regulations.
Sales of SA Property 284 Ellis Street
Pursuant to the Surplus Lands Act, the Successor Agency and the Buyer evaluated the feasibility of developing an affordable housing project on the Merged Parcel. Ultimately, the Successor Agency and the Buyer determined that an affordable housing project on the Merged Property was infeasible due to the small size and limited development capacity of the site, the lack of available funds to subsidize and underwrite the affordability restrictions, and the ongoing monitoring and reporting requirements required in the operation and management of affordable housing projects.
After concluding an affordable housing project was infeasible, the Buyer expressed continued interest in acquiring the Agency Property to create the Merged Property, expand the proposed project design, and seek land use entitlements for a market rate multi-family residential project consistent with the R-3 zoning and applicable City land use regulations.
Discussion
The terms and conditions of the proposed sale of the Agency Property to the Buyer are set forth in the attached Agreement and Escrow Instructions For Purchase and Sale of Real Property. The proposed purchase price of $89,200 is fair market value based upon an August 28, 2024 valuation date reported in an Appraisal submitted to the Successor Agency on August 30, 2024.
The Successor Agency has satisfied its obligations under the Surplus Lands Act and is authorized to dispose of the Agency Property as proposed. A draft affordability restriction consistent with the Surplus Lands Act requirement that not less than 15% of the units in any residential project of 10 or more units be affordable is attached as Exhibit C to the Purchase and Sale Agreement and will be recorded against the Agency Property at the close of escrow.
Section 34181(f) of the Health and Safety Code requires that the actions taken under the Resolution be made at a public meeting of the Countywide Oversight Board after at least ten days’ notice to the public of the specific proposed actions. Successor Agency staff published the notice on behalf of the Riverside County Oversight Board for consideration of the proposed transfer at its September 19, 2024 meeting.
CEQA Exemption
Pursuant to the California Environmental Quality Act (CEQA), based upon a review of the evidence and information presented on the matter as it relates to the conveyance of the Agency Property, the Countywide Oversight Board has determined that such approval does not constitute a project under California Environmental Quality Act (CEQA) and Section 15004(b) of the CEQA Guidelines in that it does not vest any development rights or result in the physical change in the environment and that any proposed affordable housing project will be required to comply with CEQA and obtain all land use entitlements, and does not commit the City to any definite course of action or foreclose alternatives or mitigation measures that would ordinarily be part of CEQA.
Fiscal Impact
The Purchase Price of $89,200, less the estimated costs of sale (including publication costs, appraisal, escrow and title, and legal fees) in the amount of $15,000, will yield approximately Sales of SA Property 284 Ellis Street
$74,200 estimated net proceeds. In accordance with California Health & Safety Code Sections 34177(e) and 34181(a), all net proceeds will be used by the Successor Agency to pay enforceable obligations on an approved Recognized Obligation Payment Schedule. Any excess shall be transferred to the Riverside County Auditor-Controller for distribution as property tax proceeds.
Attachments
Attachment 1- Map
Attachment 2 – Resolution
Exhibit A- Agreement and Escrow Instructions
Attachment 3 - Notice of Oversight Board Meeting
City Clerk's Office