Successor Agency to the Redevelopment Agency of the City of Riverside TO: HONORABLE MAYOR AND CITY COUNCIL DATE: DECEMBER 19, 2023 FROM: COMMUNITY & ECONOMIC DEVELOPMENT WARD: 2
DEPARTMENT
SUBJECT: ADOPT A RESOLUTION APPROVING THE LEASE TERMINATION AND SIGN PURCHASE AGREEMENT WITH UR VILLAGE LLC FOR THE DISPOSITION OF THE SUCCESSOR AGENCY-OWNED ELECTRONIC PYLON SIGN AT THE UNIVERSITY VILLAGE SHOPPING CENTER ISSUE:
Adopt a resolution authorizing the City of Riverside, as the Successor Agency to the Redevelopment Agency of the City of Riverside, to enter into a Lease Termination and Sign Purchase Agreement with UR Village LLC (University Village) for the disposition of the Successor Agency-owned electronic pylon sign (Sign), located at the University Village shopping center, as-is and at no cost, in accordance with the Successor Agency’s Long-Range Property Management Plan that was approved by the State Department of Finance in 2014.
RECOMMENDATIONS:
That the Successor Agency:
Adopt the attached Resolution (Attachment 1) authorizing the execution of the attached Lease Termination and Sign Purchase Agreement with University Village for the disposition of the Sign as-is and at no cost (Attachment 2); Recommend the Countywide Oversight Board adopt a Board resolution authorizing the execution of the attached Lease Termination and Sign Purchase Agreement (Attachment 2) with University Village for the disposition of the Sign as-is and at no cost, in accordance with the State Department of Finance approved Long-Range Property Management Plan, to be presented to the Countywide Oversight Board for final consideration and approval; and Authorize the Executive Director, or designee, to take all actions, including making minor and non-substantive modifications, and execute the Lease Termination and Sign Purchase Agreement with University Village.
LEGISLATIVE HISTORY:
State Legislation
In 2011, the State of California passed Assembly Bill X1 26 (State Dissolution Act), which eliminated redevelopment agencies throughout the state and required a successor in interest to manage the dissolution of each redevelopment agency. In 2012, pursuant to the State Dissolution Act, the City Council adopted a resolution for the City of Riverside (City) to become the Successor Agency (Successor Agency) to the former Redevelopment Agency of the City of Riverside (RDA). As the Successor Agency, the City is responsible for winding down the affairs of the RDA and overseeing the disposition of its assets and properties.
In 2013, the State of California passed Assembly Bill 1484 (AB 1484), which directed all successor agencies to prepare a long-range property management plan to address the use and disposition of the RDA’s assets and properties. In accordance with AB 1484, the Successor Agency submitted a plan to the State Department of Finance (DOF). In 2014, the DOF approved the Successor Agency’s Long-Range Property Management Plan with a total of 33 properties for disposition and development (State Approved LRPMP). Since the State Approved LRPMP, the Successor Agency has sold a total of 19 properties. The Successor Agency currently has 12 surplus land sites, an occupied building (known as Cal Tower), and an electronic pylon sign (located on privately-owned property) remaining for disposition.
Enacted in 1968, the Surplus Land Act requires all local agencies to prioritize affordable housing, as well as parks and open space, when disposing of surplus land. As California continues to face an affordable housing crisis, all publicly owned surplus land, according to the State, has the potential to promote affordable housing developments. As such, in 2019, Governor Newsome signed into law Assembly Bill 1486 to promote the use of publicly owned surplus land for affordable housing projects (State Surplus Land Act). Effective in 2020, the Successor Agency is required by the State Surplus Land Act to notify its surplus land to local public agencies and all affordable housing developers who registered with the State’s Housing and Community Development (HCD). With the initial notice of availability, the State Surplus Land Act requires that no less than 25% of a proposed housing development be restricted to low-income qualified renters. Additionally, the State Surplus Land Act requires an affordability covenant be recorded on surplus land for 55 years.
Since the Sign is not surplus land, its disposition is not subject to the Surplus Land Act.
BACKGROUND:
California Redevelopment Law
Prior to the State Dissolution Act, the California Redevelopment Law allowed cities and counties to form redevelopment agencies with special powers to eradicate blighting conditions in urban areas since its inception in 1952. These special powers included the ability for redevelopment agencies to assemble and sell property for both public and private development. To effectuate the RDA’s goals, property was often acquired to eliminate social and economic blight and facilitate re-use in a manner that was beneficial to the community.
With that in mind, the RDA acquired many neglected and developed properties with undesirable uses along University Avenue to provide opportunities for street-focused development featuring pedestrian scale commercial and mixed-use projects. These redevelopment projects were intended not to only eliminate blight but create jobs and stimulate the economy. Additionally, since University Avenue serves as an important link between UCR and Downtown, the RDA explored a cost effective way for businesses to advertise their activities and events while helping the City to “brand” Riverside.
On November 20, 2007, to improve economic conditions of the University Corridor, the City Council and RDA approved the installation of a freeway-adjacent electronic message pylon sign on privately-owned property. The Sign is approximately 65 feet high, double faced and internally illuminated. The intent of the Sign was to promote business activities and City sponsored events, attractions, activities, and programs, including arts and cultural events.
On January 23, 2008, the City and the property owner of the University Village shopping center (Property Owner) at the time entered into a ten-year agreement to lease approximately 462 square feet of land at the shopping center adjacent to the 60 Freeway for placement of the Sign, with the City having the option to extend the lease an additional ten years (Lease). Concurrently, the RDA and Property Owner entered into an agreement for the installation, maintenance, and operations of the Sign for the same term as the Lease with the City. The RDA agreed to own and pay for the fabrication, construction, repair, and maintenance of the Sign. The Property Owner agreed to pay the RDA $1,900 per month for the first 60 months and $2,000 per month thereafter to advertise on the Sign. The RDA and the Property Owner also agreed to split 50/50 the cost of electricity, repair, insurance, programming, and telecommunications of the Sign (Maintenance Expenses). The Property Owner is responsible for paying the Maintenance Expenses and requesting reimbursement from the Successor Agency.
In 2012, the Sign needed extensive, recurring, and on-going repairs.
On February 28, 2013, the Oversight Board approved a budget of over $350,000 on the Recognizable Obligation Payment Schedule 13-14A to pay for the removal of the existing displays and the purchase and installation of new displays for the Sign. Following the DOF approval, the Successor Agency solicited proposals for replacement and successfully installed the new displays in 2013. The estimated lifespan of the replacement displays was anticipated to be seven to ten years.
In 2016, UR Village LLC purchased the property and is the current owner of the shopping center, commonly refers to as University Village.
The Sign is listed as Site 8 in the State Approved LRPMP and is not surplus land. Therefore, the Sign is not subject to the Surplus Land Act.
DISCUSSION:
State law restricts off-premises displays along the highways and makes them subject to the Outdoor Advertising Act. However, there was an exception for advertising goods, services, and businesses located within redevelopment zones, subject to the approval of the California Department of Transportation (Caltrans). Given the elimination of redevelopment agencies, displays along the highways are now prohibited by Caltrans.
On September 29, 2022, the Successor Agency received a notice of violation of the Outdoor Advertising Act from Caltrans directing all advertising on the Sign be removed (Violation Notice). With the dissolution of the RDA and after more than a decade of allowing the Successor Agency extensions, off-premise advertising is no longer allowed by Caltrans. On-premise advertising on the other hand is permissible. For that reason, Caltrans would allow University Village, the property owner of the shopping center, where the Sign structure is located, the option of on-premise advertising to its tenants.
After receiving the Violation Notice and consultations with Caltrans regarding the on-premises advertising option, the Property Owner approached the Successor Agency about a potential purchase of the Sign. As the Property Owner of the land where the Sign is located, University Village is allowed by Caltrans to operate the Sign and provide advertising for its tenants within the shopping center.
The attached Lease Termination and Sign Purchase Agreement (Agreement) is to terminate the existing Lease with the City and transfer the Sign to University Village as-is and at no cost. The Sign has no monetary value to another buyer, and only the University Village can operate the Sign in compliance with Caltrans’s Outdoor Adversting Act. Additionally, the Property Owner has paid approximately $160,000 for Maintenance Expenses over the years, without requesting reimbursement from the Successor Agency, and has agreed to waive the Successor Agency’s portion of the unpaid expenses.
Consistent with the State Dissolution Act and State Approved LRPMP, staff recommends that the Successor Agency approve the Agreement to transfer the Sign to University Village for continued promotion of economic activity, targeted marketing of businesses, and City events and programs for the benefit of the community.
STRATEGIC PLAN ALIGNMENT:
This item contributes to Strategic Priority 3 – Economic Opportunity, and Goal 3.3 – Cultivate a business climate that welcomes innovation, entrepreneurship, and investment.
This item aligns with each of the five Cross-Cutting Threads as follows:
Community Trust – The process of considering University Village’s purchase proposal was accomplished in accordance with the State Approved LRPMP by transferring the RDA’s asset to another entity while keeping the original intent of the Sign.
Equity – Approving disposition of the Sign to University Village will produce the following benefits for local small businesses and the community:
Providing a cost-effective way for local small businesses within the shopping center to advertise their goods and services.
Promoting economic activity and targeted marketing for businesses.
Reaping the high visibility location and making it possible for the traveling public, pedestrians, and rush hour commuters to see messages.
Enhancing and promoting business activities, which in turn helps improve economic conditions.
Increasing public presence, activities, and shopping.
Supporting City sponsored events, attractions, and activities.
Fiscal Responsibility – Transferring ownership of the Sign from the Successor Agency to University Village will save the Successor Agency and Taxing Entities money on operations, repairs, maintenance, and utilities while still maintaining the same benefits for small local businesses and the community.
Innovation – The strategic placement of the Sign, located adjacent to the 60 Freeway, west of University Avenue (within the University Village shopping center) and its high visibility, makes it possible for the travelling public, pedestrians, rush hour commutes to see messages advertised. It also maximizes reach by its use of repetitive advertising.
Sustainability & Resiliency – Developing solutions for continuity of business marketing visibility demonstrates that Riverside is committed to sustainability and resilience.
FISCAL IMPACT:
There is no direct fiscal impact related to this action. While the disposition of the Sign has no net sales proceeds, the transfer of the Sign to University Village will save the Successor Agency and Taxing Entities money on replacement of the aging displays and Maintenance Expenses. Additionally, the Property Owner has agreed to waive the Successor Agency’s unpaid portion of the Maintenance Expenses, which is estimated to be $80,000.
Prepared by: Kaitlyn Nguyen, Senior Project Manager
Approved by: Jennifer A. Lilley, Community & Economic Development Director Certified as to the
availability of funds: Kristie Thomas, Finance Director / Assistant Chief Financial Officer Approved by: Rafael Guzman, Assistant City Manager
Approved as to form: Phaedra A. Norton, City Attorney
Attachments:
Resolution
Lease Termination and Sign Purchase Agreement
University Village Pylon Sign DispositionhPage 4