HomeMy WebLinkAboutCC RESO 2010-08RESOLUTION NO. 2010 — 8
RESOLUTION OF THE COMMUNITY DEVELOPMENT
COMMISSION OF THE CITY OF NATIONAL CITY
APPROVING THE SUMMARY REPORT PERTAINING
TO THE PROPOSED SALE OF PROPERTY OWNED
BY THE COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF NATIONAL CITY
AT 1640 EAST PLAZA BOULEVARD
WHEREAS, the Community Development Commission of the City of National
City ("CDC") owns 1.066 acres of land at 1640 East Plaza Boulevard within the National City
Redevelopment Project area; and
WHEREAS, Palm Plaza Associates, LLC, owns 1.144 acres of land at 1300
Palm Avenue contiguous with the CDC land; and
WHEREAS, Palm Plaza Associates, LLC, desires to acquire the CDC land to
develop a multi -family housing project consisting of 72 market rate condominiums; and
WHEREAS, the proposed sale of the CDC land has been analyzed as required
under Section 33433 of the California Redevelopment Law; and
WHEREAS, this analysis is attached as an exhibit to this Resolution as Exhibit
NOW, THEREFORE, BE IT RESOLVED that the Community Development
Commission of the City of National City hereby approves the Summary Report, attached hereto
as Exhibit "A", pertaining to the proposed sale of property owned by the Community
Development Commission at 1640 East Plaza Boulevard (California Redevelopment Law
Section 33433).
PASSED and ADOPTED this 5th day of January, 2010.
on Morrison, Chairman
ATTEST:
cretary
APPROVED AS TO FORM:
George H. Eiser, Ill
City Attorney
EXHIBIT "A"
NATIONAL CITY REDEVELOPMENT PROJECT
NATIONAL CITY, CALIFORNIA
SUMMARY REPORT PERTAINING TO THE PROPOSED SALE
OF CERTAIN PROPERTY WITHIN THE
NATIONAL CITY REDEVELOPMENT
PROJECT AREA
California Community Redevelopment Law
Section 33433
PURSUANT TO PROPOSED PURCHASE AND
SALE AGREEMENT
BETWEEN
THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF NATIONAL CITY
AND
PALM PLAZA ASSOCIATES, LLC
Community Development Commission of
the City of National City
National City, California
October 2009
TABLE OF CONTENTS
Page
I. Introduction 1
II. Costs of the Agreement to the Commission 4
III. Estimated Value of the Interest to be Conveyed at the Highest and Best Use Permitted
Under the Redevelopment Plan 5
IV. Estimated Value of the Interest to be Conveyed at the Use and with the Conditions,
Covenants, and Development Costs Required by the Sale of the Seller Property 6
V. Compensation which Purchaser will be Required to Pay 7
VI. Explanation of the Difference, if any, between the Compensation to be Paid to the
Commission by the Proposed Transaction and the Fair Market Value of the Interest to
be Conveyed at the Highest and Best Use Consistent with the Redevelopment Plan 8
VII. Explanation of why the Sale of the Property will Assist with the Elimination of Blight 9
I. INTRODUCTION
A. Purpose of Report
This Summary Report was prepared in accordance with Section 33433 of the California
Community Redevelopment Law in order to inform the Community Development
Commission of the City of National City (Commission) and the public about the proposed
transaction between the Commission and Palm Plaza Associates, LLC (Purchaser). The
Report describes and specifies:
1. The costs to be incurred by the Commission under the Purchase and Sale
Agreement (Agreement);
2. Estimated value of the interest to be conveyed at the highest and best use permitted
under the Redevelopment Plan;
3. The estimated value of the interest to be conveyed at the proposed use and with the
conditions, covenants, and development costs required by the sale of the Seller
Property;
4. The compensation to be paid to the Commission pursuant to the proposed
transaction;
5. An explanation of the difference, if any, between the compensation to be paid to the
Commission under the proposed transaction, and the fair market value at the highest
and best use consistent with the Redevelopment Plan; and
6. An explanation of why the sale of the Seller Property will assist with the elimination of
blight.
B. Description of Area and Proposed Project
The Site is located within the National City Redevelopment Project Area (Project Area).
The Project Area encompasses approximately 2,000 acres. Goals of the
Redevelopment Plan (Plan) are to keep businesses and jobs in the area, creating and
improving public facilities in the area, and improving the community's supply of
affordable, quality housing. Since the adoption of the Plan, numerous redevelopment
ventures have been, and continue to be, carried out by public agencies, non-profit
institutions, and private developers in National City. The Commission continues its
efforts to revitalize the Project Area with projects such as: the National City Fire Station
and Police Center, the City Library, Education Village, Harbor View Condos, and Centro
Condos.
Summary Report
Palm Plaza
09156ndh
16104.006.022
Page 1
The Seller Property is a 1.07-acre site located on the south side of Plaza Boulevard,
east of Palm Avenue, and west of Interstate 805 in the city of National City. The Seller
Property is an approximate 25-SF sloped portion of land on the southwest corner of the
parcel.
The Purchaser intends to build 72 market -rate dwelling units (Project) on two parcels of
land totaling 2.21 acres, as follows:
Ownership Location Site Size
Seller Property Commission 1640 East Plaza Blvd. 1.07 Acres
Purchaser Property Purchaser 1300 Palm Avenue 1.14 Acres
Total 2.21 Acres
C. Proposed Transaction Terms
This section summarizes the salient aspects contained in the Purchase and Sale
Agreement (Agreement) between the Commission and Purchaser.
• The Commission will convey the Seller Property parcel to the Purchaser for
$1,823,000 (Purchase Price).
• The Purchase Price will accrue fair market interest during the period between the
Effective Date and the close of escrow. The Effective Date will be the date that the
last of the following occurs:
o The Agreement has been executed by the Purchaser and delivered to the
Seller;
o The Agreement has been formally approved by resolution of the Seller's Board;
and
o The Agreement has been executed by the Seller and delivered to the
Purchaser.
• In addition to the Purchase Price, the Purchaser will pay interest at a rate of 1.3%
beginning on the Effective Date through the close of escrow.
• The Purchaser will deposit into an escrow account a good faith deposit equal to
$54,690. The deposit will be applied to the Purchaser purchase price at the close
of escrow.
Summary Report
Palm Plaza
09156ndh
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Page 2
• The Purchaser will accept the Seller Property in an "as is" condition.
• The Purchaser will construct 72 market -rate dwelling units on the 2.21-acre site
comprised of the Seller Property and the Purchaser Property.
Summary Report
Palm Plaza
09156ndh
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Page 3
II. COSTS OF THE AGREEMENT TO THE COMMISSION
The estimated costs of the Agreement to the Commission total $4,296,000, and include
the following items:
Acquisition -Related Costs
Amount
Site Acquisition
Commission Third Party and Other Costs (2)
Subtotal Commission Costs
(Less) Purchaser ENA Deposit
Total Commission Costs
$3,775,000
$546,000
$4,321,000
($25,000)
$4,296,000
(1) Includes maintenance/holding costs, appraisal, escrow costs, fees paid to the previous property owner, franchise
fees, inspection reports, legal and economic consultants, and other third -part soft costs.
Sources: Commission, Keagy Real Estate appraisal dated February 2006.
Summary Report
Palm Plaza
09156ndh
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Page 4
III. ESTIMATED VALUE OF THE INTEREST TO BE CONVEYED AT THE HIGHEST
AND BEST USE PERMITTED UNDER THE REDEVELOPMENT PLAN
This section presents an analysis of the fair market value of the Seller Property at its
highest and best use.
In appraisal terminology, the highest and best use is that use of the Seller Property that
generates the highest property value and is physically possible, financially feasible, and
legally permitted. Therefore, value at highest and best use is based solely on the value
created and not on whether or not that use carries out the redevelopment goals and
policies for the City of National City. By definition, the highest and best use is that use
which is physically possible, financially feasible, and legally permitted. The Seller
Property is zoned General Commercial - Planned Development (CG-PD). CG-PD allows
for high intensity commercial and complementary development along major roadways
and in community shopping complexes. Compatible residential development of no more
than one unit per 1,250 square feet (SF) of lot area is also permitted.
KMA undertook a review of available appraisals and comparable land sales in order to
determine the fair market value of the Seller Property. KMA first reviewed the appraisal
done for the Commission and conducted by Keagy Real Estate with a date of value of
February 24, 2006. The appraisal states the Seller Property's optimal "utility is for a
residential condominium development, which would be subject to issuance of a
conditional use permit. Keagy Real Estate relied on the comparable sales approach to
value, with a conclusion of value for the Seller Property of $2,135,000, or $45 per SF of
land.
In addition, KMA undertook its own review of selected land sales in the City of National
City and surrounding communities. Table 1 summarizes the KMA review of land sales.
The KMA survey focused on sales of sites for the time period from January 2008 to the
present. As shown in the table, sales prices ranged from $14 to $131 per SF of land.
The median and average sales price were $43 and $55 per SF of land, respectively.
The appraised value determined by Keagy Real Estate falls slightly below the average
sales price of the comparables. At the present time, new real estate development
ventures are severely hampered by depressed market demand, market oversupply,
impaired financing markets, and a gloomy outlook for the national economy. As such,
land values have declined in recent years, and a downward adjustment is therefore
appropriate. On this basis, then, KMA believes that a reduction from the appraised
value on the order of 15% is warranted.
KMA concludes that the fair market value of the Seller Property at its highest and best
use is $1,823,000, or $39 per SF of land.
Summary Report
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Page 5
IV. ESTIMATED VALUE OF THE INTEREST TO BE CONVEYED AT THE USE AND
WITH THE CONDITIONS, COVENANTS, AND DEVELOPMENT COSTS
REQUIRED BY THE SALE OF THE SELLER PROPERTY
Re -use value is defined as the highest price in terms of cash or its equivalent, which a
property or development right is expected to bring for a specified use in a competitive
open market, subject to the conditions, covenants, and development costs imposed by
the Agreement.
Since there are no extraordinary covenants, conditions, or restrictions delineated in the
Agreement, KMA concludes that the fair re -use of the Seller Property is equal to its fair
market value at highest and best use, or $1,823,000.
Summary Report
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Page 6
V. THE COMPENSATION WHICH PURCHASER WILL BE REQUIRED TO PAY
The estimated value of the compensation to be received by the Commission for the
Seller Property is $1,823,000.
Summary Report
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Page 7
VI. EXPLANATION OF THE DIFFERENCE, IF ANY, BETWEEN THE
COMPENSATION TO BE PAID TO THE COMMISSION BY THE PROPOSED
TRANSACTION AND THE FAIR MARKET VALUE OF THE INTEREST TO BE
CONVEYED AT THE HIGHEST AND BEST USE CONSISTENT WITH THE
REDEVELOPMENT PLAN
The fair market value of the interest to be conveyed at its highest and best use is
estimated by KMA to be $1,823,000.
The value of the compensation to be received by the Commission is $1,823,000.
The compensation to be paid to the Commission is equal to the fair market value of the
interest to be conveyed at its highest and best use.
Summary Report
Palm Plaza
09156ndh
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Page 8
VII. EXPLANATION OF WHY THE SALE OF THE SELLER PROPERTY WILL
ASSIST WITH THE ELIMINATION OF BLIGHT
The Redevelopment Plan for the National City Redevelopment Project Area governs the
Seller Property. In accordance with Section 33490 of the California Community
Redevelopment Law, the Plan contains the goals and objectives and the projects and
expenditures proposed to eliminate blight within the Project Area. Implementation of the
Agreement can be expected to assist in the alleviation of blighting conditions through the
following:
• Eliminate factors hindering economically viable uses.
• Eliminate unsafe and unhealthy buildings.
• Eliminate incompatible uses.
• Provide environmental remediation.
Summary Report
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Page 9
TABLE 1
SELECTED LAND SALES, SAN DIEGO COUNTY, JANUARY 2008 TO PRESENT (1)
PALM PLAZA
COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY
Sale Date Address
05/29/09
05/19/09
05/19/09
05/14/09
07/24/08
03/21/08
3302 32nd Street
Reo Drive @ Albemarle
1845 Island Avenue
2504 Highland Avenue
1133 E. Plaza Blvd.
309-311 Highland Avenue
Sale Price Acres SF $/SF Intended Use
San Diego $325,000 0.20 8,499 $38 Hold for development
San Diego $179,214 0.30 13,125 $14 Commercial
San Diego $490,000 0.23 10,193 $48 Mixed -use development
National City $332,500 0.39 16,988 $20 Multi -family development
National City $2,900,000 0.51 22,216 $131 Commercial
National City $850,000 0.24 10,454 $81 Mixed -use development
Minimum $179,214 0.20 8,499 $14
Maximum $2,900,000 0.51 22,216 $131
Median $411,250 0.27 11,790 $43
Average $846,119 0.31 13,579 $55
Source: CoStar Comps, Inc.
Prepared by: Keyser Marston Associates, Inc.
Filename: i:National City\Comps_2009;10/21/2009;rks
Passed and adopted by the Community Development Commission of the City of
National City, California, on January 5, 2010, by the following vote, to -wit:
Ayes: Commissioners Morrison, Parra, Sotelo-Solis, Van Deventer.
Nays: None.
Absent: None.
Abstain: Commissioner Zarate.
AUTHENTICATED BY: RON MORRISON
Chairman, Community Development Commission
Secretity Development Commission
By:
Deputy
I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of
RESOLUTION NO. 2010-8 of the Community Development Commission of the City of
National City, California, passed and adopted on January 5, 2010.
Secretary, Community Development Commission
By:
Deputy