City Council Agenda Report
December 17, 2024
TO: Honorable City Council
FROM: Jesus M. Gomez, City Manager
BY: Alex Hamilton, Interim Director of Community Development SUBJECT: RESOLUTION NO. 24-62- DECLARING REAL PROPERTY EXEMPT SURPLUS LAND PURSUANT TO GOVERNMENT CODE SECTIONS 54221(F)(1) AND 37364 AND APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT
FOR THE DISPOSITION AND DEVELOPMENT OF REAL PROPERTY
LOCATED AT 13200 BLOOMFIELD AVENUE
Background:
Concurrent with this proposed Disposition and Development Agreement (“DDA”), the City has entered into a purchase and sale agreement (“PSA”) with the State of California, acting by and through its Department of General Services, (“State”) to acquire the former Southern California Youth Correctional Reception Center and Clinic (CYA) which is comprised of certain property consisting of approximately ±32 acres including, without limitation, approximately 35-40 structures and ancillary improvements, located at 13200 Bloomfield Avenue in the City of Norwalk, Los Angeles County, State of California, Assessor’s Parcel No. 8045-008-902.
Prior to the DDA, the City and Lewis Land Developers, LLC (“Developer”) (by assignment from its affiliate Lewis Acquisition Company, LLC) were parties to an Exclusive Negotiation Agreement dated July 11, 2019.
“Exclusive Negotiation Agreements” (ENA) are very common tools used by public agencies to memorialize areas of common understanding with outside parties on matters relating to acquisition of disposition of real property. Within the ENA, there were subsequent non substantive amendments (mainly to extend the negotiation period with current term expiring January 10, 2025. ENA extensions are very common on larger, more complex projects, nonetheless, during the ENA negotiation periods the following due diligence items occurred:
•Conducted extensive site investigations of the Property to determine its feasibility for development and the extent of all environmental remediation work required for development;
City Council December 17, 2024
Resolution No. 24-62 Declaring the Disposition of Real Property Exempt from the Surplus Land Act and Approving a DDA by and between the City of Norwalk and Lewis Land Developers, LLC.
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•Undertook comprehensive stakeholder and community outreach and visionary programs to solicit ideas for the future development of the Property; •Designed a Transit Oriented Development project consistent with the results of the outreach efforts that met mobility and greenhouse gas reduction goals and affordable housing goals of the City; and
•Negotiated the terms of a disposition and development agreement (“DDA”) for Developer’s purchase of the Property from the City and Developer’s development of (a) a for-sale and/or for-rent market-rate residential project on approximately 10-12+/- acres of the Property consisting of a maximum of 462 market-rate residential units (the “Developer Residential Project”) and (b) a neighborhood commercial/retail project on approximately 3.2+/- acres of the Property consisting of a maximum of 66,647 Sq.Ft. of building area (0.5 floor area ratio) together with a possible hotel (the “Hotel”) containing a maximum of 150 rooms (the “Developer Retail Project”) (collectively, the “Developer Project”), and (v) provide for the development an affordable for-rent housing project consisting of rental units affordable to lower income and very low income households on the Property and consisting of a minimum number of affordable residential units which equals 40% of the total number of all residential units constructed in the Project (the “Affordable Housing Project”) (Developer Project and Affordable Housing Project are collectively referred to herein as the “Project”).
On July 10, 2024, the Planning Commission held a public hearing for review and consideration of the Norwalk Transit Village project and recommended approval with a 5-0 vote.
On November 19, 2024, City Council completed the public hearing for review of the project and as a First Reading, adopted the Norwalk Transit Village Specific Plan and certified the project Final Environmental Impact Report (FEIR) with a 5-0 vote.
On November 25, 2024, the Planning Commission adopted PC Resolution No. 24-12 finding that the disposition of the Property to be in conformance with the City’s General Plan pursuant to Government Code Section 65402.
On December 3, 2024, City Council adopted Resolution No. 24-61 approving the PSA by and between the State of California and the City for the CYA site.
Analysis:
Typically used for large-scale projects, DDAs outline the terms of sale/lease and the development of public lands to private developers. The City is authorized and empowered pursuant to the laws of the State of California to enter into agreements for the acquisition, disposition and development of real property, and to make and execute contracts and other instruments necessary or convenient to exercise its powers.
City Council December 17, 2024
Resolution No. 24-62 Declaring the Disposition of Real Property Exempt from the Surplus Land Act and Approving a DDA by and between the City of Norwalk and Lewis Land Developers, LLC.
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Summary of Key Terms of the Disposition and Development Agreement Below is a summary of the key points of the DDA:
•Purchase Price: Equal to the amount set forth in the Purchase and Sale Agreement with the State DGS (PSA): Twenty Million Three Hundred Thousand Dollars ($20,300,000.00). •Holdback amount (City Reimbursement): In addition, to sales price, Lewis to reimburse City project costs relating to preparation of the entitlement costs including preparation of the Specific Plan and other documents.
•Additionally, Lewis shall be responsible and pay for the City for third party costs relating to the demolition and remediation of the site performed by a third party. This is currently estimated at $4.7 million.
•Opening of Escrow: Open but initiated upon Effective Date of Escrow company receiving fully executed DDA and Escrow Instructions.
•Developer Deposit: Two Hundred Thousand Dollars ($200,000) as security to complete transaction. This will be applied to the purchase price provided all other DDA terms and conditions are met.
•Close of Escrow: 30 days after the City’s completion of site demolition and remediation. •Developer Completion of Infrastructure Improvements: Within 18 months after close of escrow, the developer shall commence infrastructure improvements i.e. grading, roads, utilities with appropriate bonding and security provided to the City to warranty and guarantee the work completion.
•Affordable Housing Covenants: DDA provides for assurances and developer obligations for the development of the requisite affordable housing (through a third party) and separate Regulatory Agreement in accordance with the agreement meeting all the requirements of Government Code Section 37364 (the affordability requirements). •Subsequent Statutory Development Agreement (“SDA”): The DDA requires that the City negotiate a separate SDA with the developer in accordance with Government Code Section 65864 that will vest the project entitlements. The Statutory Development Agreement will be presented for Planning Commission and City Council consideration and adoption in January-February 2025.
The DDA contains provisions for issuance of property Title Insurance along with the City’s/Developers’ mutual review and acceptance of any title exceptions. In addition, both parties agree that to close the transaction, there are no adverse actions that could threaten or materially delay or expose the City and the project to additional liability, delays, or cost increases. Also, upon close of escrow, the Developer will release and indemnify the City from any liability associated with environmental liabilities following competition of the environmental remediation and approval by the applicable state environmental regulatory agency.
Surplus Land Act:
Government Code Section 54221 of the California Government Code requires:
“Surplus land” means land owned in fee simple by any local agency for which the local agency's governing body takes formal action in a regular public meeting declaring that the land is surplus and is not necessary for the agency's use. Land shall be declared either “surplus land” or City Council December 17, 2024
Resolution No. 24-62 Declaring the Disposition of Real Property Exempt from the Surplus Land Act and Approving a DDA by and between the City of Norwalk and Lewis Land Developers, LLC.
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“exempt surplus land,” as supported by written findings, before a local agency may take any action to dispose of it consistent with an agency's policies or procedures. A local agency, on an annual basis, may declare multiple parcels as “surplus land” or “exempt surplus land.” Pursuant to Government Code Section 54221(f)(1)(A), “exempt surplus land” includes City- owned surplus land that is transferred pursuant to Government Code 37364. This exemption applies when a project provides for the development of an affordable for-rent housing project consisting of rental units affordable to lower income and very low-income households and consists of a minimum number of affordable residential units which equals 40% of the total number of all residential units constructed in the Project (the “Affordable Housing Project”). In this case, as set forth in both the DDA and related regulatory agreements, the sale of the Property under the DDA would constitute the sale of Exempt Surplus Land under the Surplus Land Act.
Additionally, as required by Government Code 65402 on November 25, 2024, the City Planning Commission made findings that the disposition of the Property by the City is consistent with the City’s General Plan pursuant to Government Code 65402.
Environmental Assessment:
The adoption of the Resolution approving the DDA by and between the City and Lewis is exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15312 – Class 12 (Surplus Government Property Sales) and CEQA Guidelines Section 15061(b)(3) (Common Sense Exemption), which states that an activity is covered by the common sense exemption that CEQA only applies to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant on the environment, the activity is not subject to CEQA review. Also, none of the exceptions to the exemptions under CEQA Guidelines Section 15300.2 apply.
Lastly, the adoption of this Resolution is consistent with those actions taken by the City Council on November 19, 2024, during which the City Council certified the Final EIR (FEIR) and approved a Mitigation and Monitoring and Reporting Program and adopted a Statement of Overriding Considerations in connection with the Norwalk Transit Specific Plan through City Council Resolution No. 24-58. The subsequent disposition of the Property by the City to a developer was evaluated and contemplated by the FEIR and is in compliance with the requirements of CEQA.
Fiscal Impact:
The costs associated with this DDA will be borne by the Developer as outlined in this report and as more fully set forth in the agreement.
City Council December 17, 2024
Resolution No. 24-62 Declaring the Disposition of Real Property Exempt from the Surplus Land Act and Approving a DDA by and between the City of Norwalk and Lewis Land Developers, LLC.
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Citizens Advised:
N/A
Strategic Plan 2023 Implementation:
The recommended actions will further the City’s Strategic Plan Goals 2 and 3 to work in partnership with our community to achieve safe and livable neighborhoods to create and sustain a resilient and economically prosperous city.
Recommended Action:
Staff recommends City Council:
a. adopt Resolution No. 24-62, A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF NORWALK DECLARING REAL PROPERTY EXEMPT SURPLUS LAND
PURSUANT TO GOVERNMENT CODE SECTIONS 54221(F)(1) AND 37364 AND
APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND
BETWEEN THE CITY OF NORWALK AND LEWIS LAND DEVELOPERS, LLC FOR THE DISPOSITION AND DEVELOPMENT OF REAL PROPERTY LOCATED AT 13200 BLOOMFIELD AVENUE; and
b. find that the declaration of exempt surplus land and approving the DDA is exempt from CEQA pursuant to Guidelines Section 15312 – Class 12 (Surplus Government Property Sales) and CEQA Guidelines Section 15061(b)(3) and consistent with certified the Final EIR (FEIR) and approved a Mitigation and Monitoring and Reporting Program and adopted a Statement of Overriding Considerations in connection with the Norwalk Transit Specific Plan pursuant to City Council Resolution No. 24-58; and c. declare the Property Exempt Surplus Land pursuant to Government Code Section 54221(f)(1) and 37364; and
d. authorize the City Manager to the execute the DDA and any ancillary documents, including but not limited to, escrow instructions, deeds, covenants, seller affidavits, other customary documents consistent with and reasonably necessary to effectuate the intent of this Resolution, record or cause to be recorded such documentation, or make such necessary amendments to the DDA and associated exhibits consistent with the intent of this Resolution, in a form as approved by the City Attorney.
Attachments:
1. Draft DDA.
2. Resolution No. 24-62, a Resolution of the City Council of the City of Norwalk approving the DDA by and between the City of Norwalk and Lewis Land Developers, LLC.