City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2023-00735 6/13/2023 Consent Item 30.
Declaration of Exempt Surplus Land and Purchase and Sale Agreements: Southern Portion of APNs 006-0012-020 and 006-0012-034 Adjacent to 914 2nd Street and Commonwealth Alley File ID: 2023-00735
Location: Adjacent to 914 2nd Street, District 4, Represented by Councilmember Valenzuela Recommendation: Adopt a Resolution: 1) declaring the southern portion of APNs 006-0012-020 and 006-0012-034 of approximately 788 square feet to be “exempt surplus land” not necessary for the City’s use, in accordance with the California Surplus Land Act; and Adopt aResolution: 1) authorizing the City Manager or the City Manager’s designee to execute the Purchase and Sale Agreement with D&S Development, Inc. for the City’s purchase of D&S Development, Inc.’s 17.9% interest in the 788 square foot property at no cost to the City; 2) authorizing the City Manager or the City Manager’s designee to executethe Purchase and Sale Agreement with 914 Associates, LLC for the sale of the City’s 92.7% interest in the 788 square foot property at no cost (inclusive of the interest obtained from D&S Development, Inc.) in exchange for 914 Associates, LLC leasing the basement of 914 2nd Street for at least 10 years for the Old Sacramento historic underground tours and making substantial tenant improvements in the basement to benefit the tour patrons; 3) authorizing the City Manager or the City Manager’s designee to execute any related documents to consummate the real property transactions; and (4) declaring the sale of the City’s 92.7% interest in the 788 square foot property without first calling for bids to be in the best interest of the City under City Code section 3.88.090(A)(2).
Contact: Bill Sinclair, Real Property Agent III, (916) 808-1905, [email protected], Department of Public Works; Ellen Sullivan, Senior Development Project Manager, (916) 808-5758, [email protected], Office of Innovation and Economic Development; Leslie Fritzsche, Community Investment Manager, (916) 808-5450, [email protected], Office of Innovation and Economic Development; Megan Van Voorhis, Director of Convention and Cultural Services, (916) 808-5979, [email protected], Convention and Cultural Services Presenter: None
Attachments:
1-Description/Analysis
2- Site Map
3-Resolution Declaring the Property Exempt Surplus
File ID: 2023-00735 6/13/2023 Consent Item 30.
4-Resolution Authorizing Execution of Purchase and Sale Agreements 4- Exhibit A -Purchase and Sale Agreement - D&S Development, Inc. 5-Exhibit B - Purchase and Sale Agreement - 914 Associates, LLC Description/Analysis
Issue Detail:
Old Sacramento Service Courts
The service courts in Old Sacramento were established in the 1960s during Old Sacramento’s redevelopment as a common location for refuse, recycling, and utilities for the tenants within the half- city block where they are situated. These parcels were owned by the Redevelopment Agency (Agency) with the intent that they would function in perpetuity as service courts. With the dissolution of redevelopment agencies in 2011, a separate legal entity known as the City of Sacramento Redevelopment Agency Successor Agency (RASA) became the owner. RASA subsequently deeded its interests in the service courts to the City.
The service court comprising APNs 006-0012-020 and 006-0012-034 is adjacent to Commonwealth Alley, near “I” Street between Front and 2nd Streets. The service court is 2,269 square feet in size and is undeveloped except for a City light pole and the location of the paved and fenced area for trash and recycling containers. The southern 788 square foot portion is not being utilized and is not necessary for trash or recycling operations.
The southern portion of the service court is unusual as the City only has a partial ownership interest.
The ownership interests in the southern portion are as follows:
· Six Bar C, LLC, a California limited liability company, owns 90% of a divided 7.3% interest; · Robert C. Cook Jr, as Trustee under the will of Robert C. Cook Sr., deceased for the benefit of Kristen A. Cook, owns 5% of an divided 7.3% interest;
· Robert C. Cook Jr, as Trustee under the will of Robert C. Cook Sr., deceased for the benefit of Mark A. Chrisler, owns 5% of an divided 7.3% interest;
· D&S Development, Inc., a California corporation, owns an undivided 17.9% interest; and · City of Sacramento owns the remaining 74.8% interest.
This service court is adjacent to a privately owned building, 914 2nd Street, commonly referred to as the Hall Luhrs Building. The Sacramento History Museum currently utilizes the basement of the building for its Old Sacramento historic underground tours (Tours), which are currently run by the Sacramento History Alliance pursuant to an operating agreement with the City. The Tours are specialized guided tours that allow the public to explore Old Sacramento’s underground and hollow sidewalks. The Tours access the basement of the Hall Luhrs Building through Commonwealth Alley.
The building owners, 914 Associates, LLC. (914 Associates), are in the process of obtaining Building Permits for substantial improvements to the building. As a requirement of the improvements, there must be a secondary emergency egress installed. If the emergency egress were installed inside the building, it would significantly impact the basement area and operations of the Tours. An alternate external egress staircase was proposed on the exterior of the north side
File ID: 2023-00735 6/13/2023 Consent Item 30.
of the building. However, the proposal would require 914 Associates to acquire a portion of the service court to accommodate construction of a new two-story external staircase for emergency egress. The proposal is consistent with other second story renovations within the historic district that have exterior emergency egress staircases.
Construction of the external staircase would require the owners of the service court to agree to sell that portion of the service court needed for the staircase to 914 Associates, LLC. D&S Development, Inc. (D&S) has agreed to grant its interest to the City and in a subsequent transaction, the City will grant its newly combined ownership interest (92.7%) to 914 Associates. The City will deed its interest to 914 Associates in exchange for 914 Associates allowing the basement of the building to be made available for the underground tours for a period of at least 10 years, to install an estimated $800,000 in core-shell improvements in the basement, including a secondary egress, to work in good faith to execute a new lease for the Tours, and because 914 Associates is a technology company that has heavily invested in Old Sacramento to improve the local economy, bring high wage jobs, and bring 80 employees to the Old Sacramento historic district. 914 Associates has worked out a private transaction with Six Bar C, LLC and Robert C. Cook Jr. for the remaining 7.3% interest in the portion of the service court that is needed.
A Lot Line Adjustment is underway to establish the new property lines needed for the external staircase to be built. The City would retain an easement in the 788 square foot property for public utility uses.
California Surplus Lands Act
Pursuant to the California Surplus Land Act (California Government Code § 54220 et seq.), the City Council must declare property as either “surplus land” or “exempt surplus land” before the City can dispose of it. “Exempt surplus land” is real property owned in fee simple that is not necessary for the City’s use and that falls within one of the exemptions specified in the Surplus Land Act. If the City Council declares property as “exempt surplus land” the City may sell the property without conducting the Notice of Availability process.
One of the exemptions specified in Government Code section 54221(f)(1)(B) of the Surplus Land Act is for property that is not suitable for housing. City staff has identified that the 788 square foot service court property is not necessary for the City’s use and falls within this exemption because it is less than 5,000 square feet in area and is not contiguous to land owned by a state or local agency that is used for open-space or low- and moderate-income housing purposes. Further, City staff is proposing to offer this portion of the parcel for sale to the owner of the contiguous property.
The above-mentioned 788 square foot property is not suitable for independent development, including housing, because of the small size of the property.
Policy Considerations: The recommendations in this report are in accordance with the provisions of the Surplus Land Act and consistent with the provisions of City Code Section 3.04.020 and Chapter
File ID: 2023-00735 6/13/2023 Consent Item 30.
3.88 regarding the disposition of real property owned by the City.
Economic Impacts: None
Environmental Considerations:
California Environmental Quality Act (CEQA): The City Council declaration that a parcel is exempt surplus land is in compliance with a statutory requirement and the purchase and sale of the 788 square foot service court property is not part of a project that will be designed or funded under the purchase and sale agreements. The subject external staircase project (PB19 -010) referenced above was reviewed and approved on July 14, 2020 and was found to be exempt from CEQA pursuant to CEQA Guidelines Section 15301. The subject activity that would facilitate the described development and would be consistent with the approved project and the CEQA exemption determination.
Sustainability: Not Applicable
Commission/Committee Action: None
Rationale for Recommendation: The Surplus Land Act requires the City Council to declare property which meets certain requirements as “exempt surplus land” supported by written findings before the City can dispose of the property. Adoption of the Resolution by the City Council and approval of the PSAs will allow the sale of the subject property to the owner of contiguous property in accordance with the requirements of the Surplus Land Act.
Further, the owners of the Hall Luhrs building considered an interior stairwell/egress but its size and location in the building was determined to be too intrusive to the reasonable function of the second- floor plate. The proposed exterior staircase is a better solution and in line with other multiple story renovations in Old Sacramento and in keeping with the historic fabric of the historic district. The use of a portion of the service court for the external emergency egress staircase will allow the Tours to continue in the Hall Luhrs building. The City’s southern 788 square foot portion of the service court is not necessary for the City’s use and allows for the construction of the exterior staircase.
Financial Considerations: D&S, the City and 914 Associates have agreed to the following transactions: 1) D&S will grant its 17.9% interest in the 788 square foot portion of the service court to the City at no cost, and 2) the City will deed its new 92.7% interest in the 788 square foot portion of the service court to 914 Associates in exchange for at least 10 years of operation for the Tours under a new lease agreement and an estimated $800,000 in basement core-shell improvements including demolition, sitework, concrete, electrical, and a new secondary egress which will benefit the Tours Local Business Enterprise (LBE): Not applicable
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Declaration of Exempt Surplus Land
and Purchase and Sale Agreement:
Southern Portion of City Owned Parcel
006-0012-034-0000006-0012-020-0000
5/23/2023
DISCLAIMER: All maps & data provided are subject to T erms of Use identified in the City of Sacramento Open Data Policy at http:// portal.cityofsacramento.org/opendata
RESOLUTION NO. 2023-xxx3
Adopted by the Sacramento City Council
June 13, 2023
Declaration of Exempt Surplus Property
BACKGROUND
A. Pursuant to the California Surplus Land Act (California Government Code § 54220 et seq.), the City Council must declare property as either “surplus land” or “exempt surplus land” before the City can dispose of it. “Exempt surplus land” is real property owned in fee simple that is not necessary for the City’s use and that falls within one of the exemptions specified in the Surplus Land Act. If the City Council declares property as “exempt surplus land,” the City may sell the property without conducting the Notice of Availability process.
B. One of the exemptions specified in Government Code section 54221(f)(1)(B) of the Surplus Land Act is for property that is not suitable for housing. City staff has identified that a portion of a parcel that the City has a percentage interest in that is not necessary for the City’s use and falls within this exemption because it is less than 5,000 square feet in area and is not contiguous to land owned by a state or local agency that is used for open-space or low- and moderate-income housing purposes.
City staff is proposing to offer this portion of the parcel for sale to the owner of the contiguous property.
C. Pursuant to Government Code section 54221(b)(1) of the Surplus Land Act, the City Council must take formal action in a regular public meeting declaring that the land is “exempt surplus land” and not necessary for the City’s use prior to sale of the land.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
SECTION 1.
The City Council hereby declares that a southern portion of the legal parcel known as APNs 006- 0012-020 and 006-0012-034 of approximately 788 sq. ft. owned by the City is not necessary for the City’s use and is “exempt surplus land” in accordance with Government Code section 54221(f)(1)(B) of the California Surplus Land Act because the property is less than 5,000 square feet in area, the property is not contiguous to land owned by a state or local agency that is used for open-space or low- and moderate-income housing purposes, and the City intends to offer the property for sale to the owner of the contiguous property.
RESOLUTION NO. 2023-xxx3
Adopted by the Sacramento City Council
June 13, 2023
Approving Purchase and Sale Agreements with D&S Development, Inc. and 914 Associates, LLC for Southern Portion of Old Sacramento Service Court Known as APNs 006-0012-020 and 006- 0012-034, Adjacent to 914 2nd Street and Commonwealth Alley
BACKGROUND
A. The service courts in Old Sacramento were established in the 1960s during redevelopment as a common location for refuse, recycling and utilities for the tenants within the half-city block where they are situated. These parcels were owned by the Redevelopment Agency (Agency) with the intent that they would function in perpetuity as service courts. With the dissolution of redevelopment agencies in 2011, a separate legal entity known as the City of Sacramento Redevelopment Agency Successor Agency (RASA) became the owner. RASA subsequently deeded its interests in the service courts to the City.
B. The service court known as APNs 006-0012-020 and 006-0012-034 is adjacent to 914 2nd Street and Commonwealth Alley, near “I” Street between Front and 2nd Streets. The service court currently has several owners, with each owning a percentage interest in the property.
The service court is 2,269 square feet in size and the southern 788 square foot portion is not being utilized by any of its owners and is not necessary for refuse or recycling operations. The 788 square foot southern portion is referred to herein as the “Southern Portion.”
C. The Southern Portion is unusual as the City only has a partial ownership interest. The ownership interests in the Southern Portion are as follows:
• Six Bar C, LLC, a California limited liability company, owns 90% of a divided 7.3% interest.
• Robert C. Cook Jr., as Trustee for the Estate of Robert C. Cook Sr., deceased, for the benefit of Kristen A. Cook, owns 5% of a divided 7.3% interest. • Robert C. Cook Jr., as Trustee for the Estate of Robert C. Cook Sr., deceased, for the benefit of Mark A. Chrisler, owns 5% of a divided 7.3% interest. • D&S Development, Inc., a California corporation, owns an undivided 17.9% interest.
• City owns the remaining 74.8% interest.
D. 914 Associates, LLC, the owners of the adjacent property at 914 2nd Street would like to purchase the Southern Portion to construct an exterior wooden staircase for emergency egress
which will allow them to fully occupy the second floor of the building for office use. City would retain an easement for public utility uses. Private utility easements would be established by conditions associated with a future lot line adjustment of the Southern Portion.
E. D&S Development, Inc. will be transferring its 17.9% ownership interest in the Southern Portion to the City for $0. In a subsequent transaction, the City will transfer such 17.9% interest plus the City’s remaining 74.8% interest in the Southern Portion (for a total of 92.7% interest) to 914 Associates, LLC for $0. Robert C. Cook Jr. and Six Bar C, LLC will separately transfer their combined 7.3% interest in the Southern Portion to 914 Associates, LLC.
F. Consideration for the property transfer from the City to 914 Associates, LLC will be in the continued use of the basement of 914 2nd Street for a period of at least 10 years for the Old Sacramento historic underground tours in addition to an estimated $800,000 in improvements that 914 Associates, LLC will be making to the basement of 914 2nd Street which will benefit the tour operators and visitors.
G. The City’s transfer of its 92.7% interest in the Southern Portion without first calling for bids is in the best interest of the City under City Code section 3.88.090(A)(2) because: the Old Sacramento historic underground tours operate out of the basement at 914 2nd Street; 914 Associates, LLC will be making significant improvements to the basement; and 914 Associates, LLC is a technology company that has heavily invested in Old Sacramento to improve the local economy, bring high wage jobs, and bring 80 employees to the Old Sacramento historic district.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The City Manager or the City Manager’s designee is authorized to execute the attached Purchase and Sale Agreement in the amount of $0 with D&S Development, Inc. for the City’s acquisition of a 17.9% interest in the Southern Portion.
Section 2. The City Manager or the City Manager’s designee is authorized to execute the attached Purchase and Sale Agreement in the amount of $0 with 914 Associates, LLC for the City’s sale of a 92.7% interest in the Southern Portion.
Section 3. The City Manager or the City Manager’s designee is authorized to execute any related documents to consummate the real property transactions specified in Sections 1 and 2 above.
Section 4. The sale of the City’s 92.7% interest in the Southern Portion without first calling for bids is in the best interest of the City under City Code section 3.88.090(A)(2).