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HomeMy WebLinkAbout14 - Agreement for Purchase and Sale and Escrow Instructions for the Purchase of Real Property at 301 East Balboa Boulevard - CorrespondenceReceived after Agenda Printed August 27, 2024 Item No. 14 From: Biddle, Jennifer Sent: August 26, 2024 8:57 AM To: City Clerk's Office Subject: FW: Agenda Item No. 14 - Parking at 301 East Balboa Blvd Attachments: Staff Report-38.pdf -----Original Message ----- From: Laura Curran <lauracurran6Dme.com> Sent: August 25, 2024 6:33 PM To: Dept - City Council<CityCouncil@newportbeachca.gov> Cc: Jurjis, Seimone <siuriis@newportbeachca.gov> Subject: Agenda Item No. 14 - Parking at 301 East Balboa Blvd [ EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the sender and know the content is safe. Report phish using the Phish Alert Button above. Council: The City The City proposes to spend $2.3 M on parking by purchasing an existing property adjacent to the ATT Building on Balboa Blvd. Parking on the Balboa Peninsula and in beach areas is generally constrained. Visitors make adjustments to driving/parking and use rideshare, bikes, and trolley services to adapt. The Staff Report notes that Parking is limited in the area. However, the Staff Report does not address Parking Requirements 1) how many parking spaces and other amenities will be created 2) the overall parking deficit in the area most likely served by the new Parking Lot, i.e. how'underparked is the Peninsula today? 3) Downsides of not adding parking at this location Fiscal impact of purchase /construction/operation 4) Development costs to construct the Parking Lot/other amenities 5) Potential revenue generation from the Parking Lot, If any 6) Operational plan The Council would improve circulation and access to the Peninsula by expanding safe options to bike and walk on the Boardwalk to /from/on the Peninsula. The growth of electric bikes as a micro -mobility option makes this a more urgent and enhancing project than more parking spots. Please pull this item from the Agenda until these issues are addressed. Best regards, Laura Curran Q �EwPpRT CITY OF s NEWPORT BEACH `q44:09 City Council Staff Report August 27, 2024 Agenda Item No. 14 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Seimone Jurjis, Assistant City Manager/Community Development Director - 949-644-3232, sjurjis@newportbeachca.gov PREPARED BY: Lauren Wooding Whitlinger, Real Property Administrator - 949-644- 3236, Iwooding@newportbeachca.gov TITLE: Agreement for Purchase and Sale and Escrow Instructions with Bobby Hanada and Linda Hanada, husband and wife as joint tenants for the Purchase of Real Property at 301 East Balboa Boulevard ABSTRACT - The City of Newport Beach owns various properties on the Balboa Peninsula which provide opportunities for public parking and access to oceanfront beaches. Most of the properties, however, are concentrated toward the west end of the Peninsula. Public parking at the east end of the Peninsula is primarily provided at the Balboa Pier parking lot and through limited on -street parking, often not meeting the parking needs of the area. The property located at 301 Balboa Boulevard East was listed for sale and is ideally located to expand public parking along Balboa Boulevard at the eastern end of the Peninsula. For the City Council's consideration is an Agreement for Purchase and Sale of Real Property and Escrow Instructions (Agreement) (Attachment A) for the purchase of property located at 301 Balboa Boulevard East for a price of $2.6 million, utilizing FY 2023-24 year-end General Fund surplus funds. RECOMMENDATIONS: a) Determine this action exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and Section 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because this action will not result in a physical change to the environment, directly or indirectly; b) Authorize the City Manager and City Clerk to execute the Agreement for Purchase and Sale of Real Property and Escrow Instructions, and all associated documents necessary to complete the purchase transaction, with Bobby Hanada and Linda Hanada, to purchase the property at 301 East Balboa Boulevard, for a price of $2,600,000 in a form substantially similar to the agreement attached to the staff report; and 14-1 Agreement for Purchase and Sale and Escrow Instructions with Bobby Hanada and Linda Hanada, husband and wife as joint tenants for the Purchase of Real Property at 301 East Balboa Boulevard August 27, 2024 Page 2 c) Approve Budget Amendment No. 25-013 (Attachment B) to record a budget transfer of $2,832,000 from the General Fund to the General Fund CIP Fund where it will be expensed from 01201925-911047-25F11. DISCUSSION: As is common in many beach communities in Southern California, public parking proximate to public beaches in Newport Beach is limited. The City owns several public parking lots along the Balboa Peninsula, with most located on the west end of the Peninsula. Public parking at the east end of the Peninsula is primarily provided at the Balboa Pier parking lot and in the Palm Street parking lot, along with limited on -street parking. This parking, especially during peak summertime demand, often does not meet the parking needs of the area, which can have a negative effect on local businesses and residents. While the City has generally sought options to provide more public parking in the east Balboa Peninsula area, opportunities to expand public parking arise infrequently and property acquisition costs in the area can be prohibitively expensive. City staff has had several discussions with AT&T, the property owner of the site at 311 Balboa Boulevard East (AT&T Site), one of the largest properties in the area, about acquiring all or a portion of the site for a public parking lot. The AT&T Site is ideally located to expand public parking along Balboa Boulevard near Balboa Village at the eastern end of the Peninsula. AT&T has been open to the discussions, however, the timeline for the company to downsize or relocate its operations from the property are unknown at this time. The adjacent site at 301 Balboa Boulevard East provides hard corner access to the nearest cross street — Coronado Street - and was listed for sale in November 2023. 301 East Balboa Boulevard — Property 301 East Balboa Boulevard (Property), located at the entrance to Balboa Village at the east end of the Balboa Peninsula (Attachment C), is a 2,399-square-foot (0.06-acre) site currently developed with an original 1,638-square-foot legal nonconforming residential triplex, zoned Two -Unit Residential (R2). The triplex consists of one studio unit and two, one -bedroom units. The triplex was constructed in 1921 and has been maintained in its original condition with minor system upgrades and tenant improvements completed since then. Two tenants currently occupy units at the site, including the studio unit and one of the one-bedroom/one-bathroom units. The Property is owned by Bobby and Linda Hanada, husband and wife as joint tenants (Seller), who acquired the site in 1989. Given the limited number of parcels suitable for public parking in the area, the proximity to the AT&T Site and the Balboa Village area, and the upward trend of real estate values in Newport Beach, staff proposes to purchase the Property for future redevelopment as public parking. 14-2 Agreement for Purchase and Sale and Escrow Instructions with Bobby Hanada and Linda Hanada, husband and wife as joint tenants for the Purchase of Real Property at 301 East Balboa Boulevard August 27, 2024 Page 3 Interim Uses Staff reviewed the characteristics and location of the Property and determined it to be a viable option to temporarily locate Fire Station No. 1 staff and operations while the Balboa Fire Station and Library project is being redeveloped at the nearby 100 Balboa Boulevard East site. Although alternative temporary fire station locations exist at other City -owned sites in the area, these other sites are inferior to the Property as they do not provide direct access to Balboa Boulevard, do not provide direct access to utilities, and would increase the Fire Department's response times. Opening - Closing Escrow and Due Diligence Upon execution of the Agreement and opening of escrow, staff will proceed with a 60-day due diligence period to investigate the condition of the Property. Staff anticipates due diligence to cost approximately $45,000 and will likely include, but not be limited to, an appraisal, a survey of the property and improvements, a hazardous materials survey of the building, and preparation of a relocation plan. Under the terms of the Agreement, the seller will provide a Phase I environmental report to the City. Due diligence will be handled by professional consultants that specialize in property inspections. After due diligence is completed and staff is satisfied with the condition of the Property, the close of escrow will be scheduled for within 15 days after due diligence approval. The close of escrow is anticipated to occur before the end of calendar year 2024. Purchase Price and Closina Costs The City and the Seller have negotiated the terms of a Purchase and Sale Agreement. The negotiated purchase price is $2.6 million. Staff proposes to use the FY 2023-24 year-end General Fund surplus to fund the purchase price, and associated closing and relocation costs. In addition to the purchase price of the Property and due diligence costs, staff anticipates closing costs, the premium for an owner's policy of title insurance, and prorated property taxes of $10,000 or less. The prorated property taxes will be refunded to the City after closing by the County of Orange. Relocation Costs Under California Relocation Assistance law (Government Code §7260 et seq.), the City is required to provide relocation assistance when acquisition of property for a public project will displace existing residential occupants. Staff proposes to hire a relocation planning consultant to develop the required relocation plan, prepare the required formal notices, document and administer the relocation assistance payments, and facilitate vacation of the Property. The consultant fees are included in the due diligence costs outlined above. 14-3 Agreement for Purchase and Sale and Escrow Instructions with Bobby Hanada and Linda Hanada, husband and wife as joint tenants for the Purchase of Real Property at 301 East Balboa Boulevard August 27, 2024 Page 4 Relocation payments to the existing tenants at the Property are not anticipated to exceed $90,000 per unit and are included in the budget amendment in Attachment B. Relocation payments include assistance with moving costs, and an amount that enables the tenant to lease or rent a comparable replacement dwelling for a period not to exceed 42 months. A formal relocation plan must be approved by the City Council prior to its implementation and will be submitted for Council's approval at a future meeting, before any payments are made. Proposed Agreement The City and Seller have negotiated terms of an Agreement for Purchase and Sale of Real Property and Escrow Instructions, for the City to purchase the Property from the Seller. The proposed terms of the sale are summarized below: 1. City will pay the Seller a purchase price of $2,600,000; 2. City will deposit $26,000 in initial earnest money, which money will become non- refundable after the expiration of the due diligence period; 3. City will have a 60-day due diligence period from the opening of escrow and receipt of all existing agreements and reports related to the Property, to inspect the Property and perform any tests to determine its condition; 4. City will deposit an additional $26,000 in earnest money, which money will become immediately non-refundable, after expiration of the due diligence period and City approval of the condition of the Property; 5. Escrow will close 15 days from the City's approval of due diligence; 6. City and Seller will each pay half of the closing costs; and 7. The Seller will pay for a standard owner's policy of title insurance for the City, with the cost of an upgraded policy and endorsements paid for by the City. The Agreement has been prepared by the City Attorney's Office and has been approved as to form. The Seller reviewed and approved the proposed Agreement, and their signatures are included on Attachment A. California Housing Crisis Act Senate Bill 330 (Chapter 654, Statues of 2019), the Housing Crisis Act (HCA) of 2019, was signed into law in 2019, updated in 2021 with Senate Bill 8 (Chapter 161, Statutes of 2021), and updated again in 2023, with Assembly Bill 1218 (Chapter 754, Statutes of 2023). The HCA includes provisions to protect existing housing inventory by prohibiting cities from approving a housing development project that results in a reduction of 14-4 Agreement for Purchase and Sale and Escrow Instructions with Bobby Hanada and Linda Hanada, husband and wife as joint tenants for the Purchase of Real Property at 301 East Balboa Boulevard August 27, 2024 Page 5 housing units on a site. HCA does include a new provision applicable to nonresidential projects that states any existing units proposed for demolition that meet the definition of "protected" must be replaced, and displaced tenants must be provided relocation benefits. Protected units are units that are or were within the past 5 years that were either subject to an affordable housing covenant or occupied by low- or very low-income households. During the 60-day due diligence period, staff will be able to determine if the units are "protected". If it is determined the units to be "protected", staff believes that replacement units can be found prior to their demolition. Replacement units can be in a form of either accessory dwelling units or affordable housing units as part of a larger multifamily project. FISCAL IMPACT: Approval of this item will result in an increase in expenditures to the General Fund for the purchase of the Property, due diligence investigations, the City's share of closing costs and recording fees, an owner's policy of title insurance, payment of prorated property taxes, and tenant relocation costs. Upon purchase of the Property, the City will increase General Fund revenues and collect approximately $8,500 in rental income for approximately three months from existing tenants, during the relocation process. The Budget Amendment No. 25-013 (Attachment B) includes a transfer of $2,832,000 from the General Fund to the General Fund CIP Fund where it will be expensed from 01 201925-911047-25F1 1, and $8,500 in Fiscal Year 2024-25 revenue to be posted to the Rental of Property account in the Community Development Department — 01050505-551115. Funding for the purchase of this property will come from the anticipated General Fund Surplus for Fiscal Year 2023-24, which will be carried -over to fund the project. Based on the Third Quarter Budget Update, an unobligated budget surplus of approximately $5.8 million is projected for Fiscal Year 2023-24, which was presented to the City Council on May 28, 2024. ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). 14-5 Agreement for Purchase and Sale and Escrow Instructions with Bobby Hanada and Linda Hanada, husband and wife as joint tenants for the Purchase of Real Property at 301 East Balboa Boulevard August 27, 2024 Page 6 ATTACHMENTS: Attachment A — Agreement for Purchase and Sale of Real Property and Escrow Instructions Attachment B — Budget Amendment No. 25-013 Attachment C — Maps 14-6 Mulvey, Jennifer From: City Clerk's Office Sent: August 27, 2024 7:56 AM To: Mulvey, Jennifer Subject: FW: Comments for the Public Record- Agenda Item No.. 14- City Council Session Aug 27,2024 From: Denys Oberman <dho@obermanassociates.com> Sent: Monday, August 26, 2024 4:14:44 PM (UTC-08:00) Pacific Time (US & Canada) To: city <council@newportbeachca.gov>; Jurjis, Seimone <sjurjis@newportbeachca.gov> Cc: City Clerk's Office <CityClerk@newportbeachca.gov>; dho@obermanassociates.com <dho@obermanassociates.com>; sheri.morgan@gmail.com <sheri.morgan@gmail.com>; Laura Curran <lauracurran@me.com> Subject: Comments for the Public Record- Agenda Item No.. 14- City Council Session Aug 27,2024 I[ Q EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the sender and know the content is safe. Report phish using the Phish Alert Button above. Honorable Mayor and Members of the City Council: We have reviewed the City's Staff Report proposing an Agreement for Purchase and Sale of Real Property and Escrow Instuctions for property located at 301 E.Balboa Blvd. The proposed purchase price is, $2.6 mil.. The report proposed that the purchase be funded through FY 2023/24 FYE General Fund surplus funds. We appreciate that City recognizes the need for additional parking in the Balboa Penninsula zone, and also that staff acknowledges the Housing unit mandate. In order to properly consider this investment, we request that staff bring forward a meaningful business plan. 1. How can the Council and the public evaluate the merits of deploying cash at this time for this purpose and in this location? A fuller description of the proposed project is needed. • How big, in terms of the number of physical stories proposed • Capacity — how many parking units can be provided in the specific physical footprint • What is the unit price for the parking ( hourly, daily) • What is Revenue per day expected to be realized, and beginning in what period? • What is the ROI period and level anticipated What is the Operating Plan 2. If the City determines that it is appropriate to make this Investment, and for this Use: would it not make sense to consider the leverage on City capital and benefits of a Private public partnership to design/build, to operate 3. Further, if these additional parking units are added, we request that the City consider an offsetting relief to Central Penninsula Residents and provide some Residents permit parking on side streets of impacted area who are currently adversely impacted by lack of parking inventory in proximity to where they live, in areas where the City has permitted additional intensification of housing uses ---- ref. W. 11th _ W. 18tn 23 Thank you for your consideration. Denys H. Oberman Resident and Community Stakeholder Regards, Denys H. Oberman, CEO MOBERMAN SlfoloW ar4 Financial Advisers OBERMAN Strategy and Financial Advisors 19200 Von Karman Avenue, 6th Floor Irvine, CA 92612 Tel (949) 476-0790 Cell (949) 230-5868 Fax (949) 752-8935 Email: dho(a�obermanassociates.com CONFIDENTIALITY NOTICE: The documents accompanying this transmission contain confidential information belonging to the sender which is legally privileged. The information is intended only for the use of the individual or entity named above. If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution or the taking of any action in reliance on the contents of this telecopied information is strictly prohibited. If you have received this transmission in error, please notify us immediately at 9491476-0790 or the electronic address above, to arrange for the return of the document(s) to us. 24