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HomeMy WebLinkAboutMinutes 2018-08-08 @7:010 CALL TO ORDER ROLL CALL AGENDA REVIEW None. MINUTES SPECIAL MEETING JOINT CITY COUNCIL AND SUCCESSOR AGENCY OF THE CITY OF SOUTH SAN FRANCISCO P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 Meeting to be held at: MUNICIPAL SERVICES BUILDING COUNCIL CHAMBERS 33 ARROYO DRIVE SOUTH SAN FRANCISCO, CA WEDNESDAY, AUGUST 8, 2018 7:01 p.m. TIME: 10:03 p.m. PRESENT: Councilmembers Addiego, Garbarino and Gupta, Mayor Pro Tem Matsumoto and Mayor Normandy. ABSENT: None. *For purposes of this meeting Council titles assume reference to the Successor Agency tile unless otherwise specified. PUBLIC COMMENTS - comments are limited to items on the Joint Special Meeting. None. CONSENT CALENDAR 1. Report regarding a resolution approving the second amendments to the Development Agreement and Purchase and Sale Agreements for 201 -219 Grand Avenue and 418 Linden Avenue with ROEM Development Corporation. (Julie Barnard, Economic Development Coordinator) la. Resolution No. 134 -2018 (City Council) /1 -2018 (Successor Agency) approving the second amendments to the Development Agreement and Purchase and Sale Agreements for 201 -219 Grand Avenue and 418 Linden Avenue with ROEM Development Corporation. Economic Development Coordinator Barnard presented the staff report recommending adoption of a resolution approving the second amendments to the Development Agreement and Purchase and Sale Agreements for 201 -219 Grand Avenue and 418 Linden Avenue with ROEM Development Corporation to grant a 90 -day extension to the project completion date. Coordinator Barnard explained that the entities had approved two (2) Purchase and Sale Agreements, two (2) Affordable Housing Agreements, and a Development Agreement roughly a year ago. The agreements include the sale of two (2) properties that were previously entitled as follows: 1. A mixed -use project at the Successor Agency -owned 201 -219 Grand Avenue with ground floor commercial space, a leasing office, a resident lounge, and 46 residential rental units, including nine (9) Below Market Rate ( "BMR ") units; and 2. A residential project at City - owned 418 Linden with 38 residential rental units, including eight (8) BMR units. In January 2018, the developer requested additional time to develop a demolition strategy and demolition drawings so as not to compromise a neighboring building. Pursuant to Section 7.2 of the Development Agreement, staff acknowledged the complexity and proceeded with the first administrative amendments to the agreements. In July 2018, ROEM approached the City again with a request to extend the deadlines by an additional 90 days to accommodate the financing plan portion of the project, which is a requirement to close escrow. The developer successfully sought financing for twelve of the eligible BMR units from the Housing Authority of the County of San Mateo ( "HACSM "). The HACSM recognized these developments are a City priority. Receipt of a final determination on the HACSM vouchers requires a competitive bidding process and completion of a National Environmental Policy Act ( "NEPA ") study to secure the federal funding. The NEPA study takes approximately four (4) months. In order to finalize its financing plan, ROEM was waiting on the final determination for the HACSM vouchers. Coordinator Barnard explained staff found the requested extension to the performance schedule to be minor and qualified as an administrative amendment pursuant to Section 7.2 of the Development Agreement. Accordingly, staff brought the Second Amendments for approval by resolution. Councilman Addiego thanked Mr. Sanchez of ROEM for seeking and securing the HACSM financing. Mayor Pro Tem Matsumoto recounted the original transfer of the Linden property to the City by Myers Development Company. She noted the intent at the time was placement of only BMR units at the site. Motion — Councilman Addiego /Second — Councilman Gupta: to approve Resolution No. 134 -2018 Unanimously approved by roll call vote. Motion — Boardmember Addiego /Second — Boardmember Gupta: to approve Resolution No. 1 -2018 Unanimously approved by roll call vote. Successor Agency only: 2. Report regarding a resolution approving the first amendment to the Purchase and Sale Agreement between the South San Francisco Successor Agency and SSF Miller Cypress Phase 2, LLC amending the supplemental purchase price for 216 Miller Avenue (APN 012- 314 -220) to a fixed amount of $1,118,538 (Nell Selander, Economic and Community Development Deputy Director). SPECIAL CITY COUNCIL AND SUCCESSOR AGENCY MEETING AUGUST 8, 2018 MINUTES PAGE 2 2a. Resolution No. 2 -2018 approving the first amendment to the Purchase and Sale Agreement between the South San Francisco Successor Agency and SSF Miller Cypress Phase 2, LLC amending the supplemental purchase price for 216 Miller Avenue (APN 012- 314 -220) to a fixed amount of $1,118,538. Deputy Director of Economic and Community Development Selander presented the staff report recommending that Council adopt a resolution approving the first amendment to the Purchase and Sale Agreement between the South San Francisco Successor Agency and SSF Miller Cypress Phase 2, LLC amending the supplemental purchase price for 216 Miller Avenue (APN012- 314 -220) to a fixed amount of $1,118,538. Deputy Selander advised that in 2016 Sares Regis purchased six (6) properties from the Successor Agency for $4 million dollars. One of the properties, known as Parcel C and located at 216 Miller was not valued in the sale although it was transferred to Sares Regis. The purchase and sale agreements stated that Parcel C would be valued once its use had been determined. Sares Regis therefore had two (2) options. The first was to pursue the 12 townhome development that was originally envisioned for that site. They decided, however, to pursue the second option - a larger property assemblage along the frontage at Miller Avenue. Deputy Selander continued and advised the Agency hired an appraiser for the larger property assemblage and also to determine the value of Parcel C. Colliers International conducted the appraisal and valued the parcel at $3.7 million dollars. Sares Regis then submitted a letter offering $1.1 million for Parcel C. Staff, in a separate analysis, determined that the Successor Agency might expect to receive about $1.5 million for that property if it went out for sale as a standalone site. The appraisal determined a much higher value for the site because it is part of a property assemblage as opposed to being sold separately. Deputy Selander advised the alternative to accepting the price offer that Sares Regis has made is to go back out to bid for the property which, after soliciting a developer, negotiating an ENRA and a Purchase and Sale Agreement might take roughly 2.5 years. The property tax implications of accepting the $1.1 million dollar offer versus going back out to bid reflected a negative $5 million dollars over the next 10 years. Accordingly, staff recommended that the Agency adopt the resolution amending the Purchase and Sale Agreement with Sares Regis and accepting the $1.1 million dollar offer on Parcel C. In response to a question from Boardmember Addiego, Deputy Selander confirmed that the $3.7 million dollar valuation was based on an assemblage of properties that is unique to Sares Regis based on their ownership of the majority of the parcels. She stated that Sares Regis had spent about 1.5 years assembling the properties along that frontage on Miller Avenue. As a standalone piece, it would likely sell for less. Boardmember Addiego observed a basic real estate tenet that two (2) lots are more valuable if assembled together. He opined that there should not be a penalty for this. He queried whether the next phase of the development would be called Cadence 2. Mr. Bush of Sares Regis confirmed it would all be part of one (1) development called Cadence. In response to a question from Vice Chair Matsumoto, Deputy Selander responded the building height issue was still undecided and would ultimately come to the City Council for approval. Boardmember Gupta liked the combined project idea based on its structure, cohesiveness and location. He also liked the long -term return on investment. Boardmember Garbarino indicated he was fine with the project. SPECIAL CITY COUNCIL AND SUCCESSOR AGENCY MEETING AUGUST 8, 2018 MINUTES PAGE 3 Motion — Boardmember Addiego /Second — Boardmember Gupta: to approve Resolution No. 2 -2018. Unanimously approved by roll call vote. ADJOURNMENT Being no further business, Mayor Normandy adjourned the meeting at 10:23 p.m. Submitted: Krista Martinelli, ity Clerk City of South San Francisco Submitted: C PKrista ' e 'Clerk Successor Agency Approved: Liza Normandy, Mayor City of South San Francisco Approved: Liza Normandy, Chair Successor Agency SPECIAL CITY COUNCIL AND SUCCESSOR AGENCY MEETING AUGUST 8, 2018 MINUTES PAGE 4