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HomeMy WebLinkAbout2018-06-19 e-packet@2:00Tuesday, June 19, 2018 2:00 PM City of South San Francisco P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA City Hall, City Manager's Conference Room 400 Grand Avenue, South San Francisco, CA Oversight Board to the Successor Agency to the former Redevelopment Agency Regular Meeting Agenda June 19, 2018Oversight Board to the Successor Agency to the former Redevelopment Agency Regular Meeting Agenda NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of California, the Oversight Board for the Successor Agency to the City of South San Francisco Redevelopment Agency will hold a Regular Meeting on Tuesday, June 19, 2018, at 2:00 p.m., in the Large Conference Room, Top Floor at City Hall, 400 Grand Avenue, South San Francisco, California. In accordance with California Government Code Section 54957.5, any writing or document that is a public record, relates to an open session agenda item, and is distributed less than 72 hours prior to a regular meeting will be made available for public inspection in the City Clerk ’s Office located at City Hall. If, however, the document or writing is not distributed until the regular meeting to which it relates, then the document or writing will be made available to the public at the location of the meeting, as listed on this agenda. The address of City Hall is 400 Grand Avenue, South San Francisco, California 94080. In compliance with Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the South San Francisco City Clerk’s Office at (650) 877-8518. Notification 48 hours in advance of the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. Page 2 City of South San Francisco Printed on 6/15/2018 June 19, 2018Oversight Board to the Successor Agency to the former Redevelopment Agency Regular Meeting Agenda Chairperson: Selected by: Neil Cullen Largest Special District of the type in H&R Code Section 34188 Vice Chair: Selected by: Michael Krause San Mateo County Superintendent of Schools Assistant Superintendent, Business Services South San Francisco Unified School District Alternate: Dr. Shawnterra Moore Superintendent, South San Francisco Unified School District Board Members: Selected by: Mark Addiego Mayor of the City of South San Francisco Councilmember, City of South San Francisco Barbara Christensen Chancellor of California Community College Director of Community/Government Relations, San Mateo County Community College District Alternate: Mitchell Bailey, Chief of Staff to the Chancellor San Mateo County Community College District Iliana Rodriguez San Mateo County Board of Supervisors Deputy County Manager, San Mateo County Paul Scannell San Mateo County Board of Supervisors (Public Member) Adena Friedman Mayor of the City of South San Francisco Senior Planner, City of South San Francisco Counsel Craig Labadie Advisory: Mike Futrell – City Manager, City of South San Francisco Richard Lee – Finance Director, City of South San Francisco Alex Greenwood – Director of Economic and Community Development, City of South San Francisco Jason Rosenberg – City Attorney, City of South San Francisco Krista Martinelli – City Clerk, City of South San Francisco Page 3 City of South San Francisco Printed on 6/15/2018 June 19, 2018Oversight Board to the Successor Agency to the former Redevelopment Agency Regular Meeting Agenda Call To Order. Roll Call. Pledge of Allegiance. Agenda Review. Public Comments. Comments from members of the public on items not on this meeting agenda. The Chair may set time limit for speakers. Since these topics are non-agenda items, the Board may briefly respond to statements made or questions posed as allowed by the Brown Act (Government Code Section 54954.2). However, the Board may refer items to staff for attention, or have a matter placed on a future agenda for a more comprehensive action report. MATTERS FOR CONSIDERATION Motion to approve the Minutes from the meetings of January 16, 2018 and February 27, 2018. 1. Informational presentation on the approved Recognized Obligation Payments Schedule for the development of Oyster Point. (Alex Greenwood, Economic & Community Development Director) 2. Update on transfer of property from the Successor Agency to the City of South San Francisco for the Community Civic Campus. (Nell Selander, Economic & Community Development Deputy Director) 3. Update on the sale of 938 Linden Avenue, a Successor Agency property. (Nell Selander, Economic & Community Development Deputy Director) 4. Report regarding a resolution approving a final sale price of $3,050,000 for the disposition of the properties at 200 Linden Avenue and 212-216 Baden Avenue, pursuant to the approved Long Range Property Management Plan and Health and Safety Code Section 34191.5, with the proceeds to be distributed to the local taxing entities. (Julie Barnard, Economic Development Coordinator) 5. Resolution approving a final sale price of $3,050,000 for the disposition of the properties located at 200 Linden Avenue and 212 - 216 Baden Avenue pursuant to the approved Long Range Property Management Plan and Health and Safety Code Section 34191.5, with the proceeds to be distributed to the local taxing entities. 5a. Page 4 City of South San Francisco Printed on 6/15/2018 June 19, 2018Oversight Board to the Successor Agency to the former Redevelopment Agency Regular Meeting Agenda Report on the terms of a revenue sharing agreement for commercial space at 636 El Camino Real. (Mike Lappen, Economic Development Coordinator) 6. CLOSED SESSION Closed Session Conference with Real Property Negotiators (Pursuant to Government Code Section 54956.8) Property: 200 Linden Avenue, 212 and 216 Baden Avenue Agency Negotiators: Alex Greenwood and Nell Selander Negotiating Parties: South San Francisco Successor Agency, City of South San Francisco, and Hisense REUS, LLC Under Negotiation: Price and Terms 7. Adjournment. Page 5 City of South San Francisco Printed on 6/15/2018 City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:18-527 Agenda Date:6/19/2018 Version:1 Item #:1. Motion to approve the Minutes from the meetings of January 16, 2018 and February 27, 2018. City of South San Francisco Printed on 6/15/2018Page 1 of 1 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:18-502 Agenda Date:6/19/2018 Version:1 Item #:2. Informational presentation on the approved Recognized Obligation Payments Schedule for the development of Oyster Point. (Alex Greenwood, Economic & Community Development Director ) RECOMMENDATION It is recommended that the Oversight Board for the Successor Agency to the City of South San Francisco Redevelopment Agency receive an informational presentation on the final approved Recognized Obligation Payments Schedule (ROPS) related to the development of Oyster Point. BACKGROUND At its December 17,2017 meeting,the Oversight Board for the Successor Agency to the City of South San Francisco Redevelopment Agency (Oversight Board)adopted a resolution approving the ROPS for Fiscal Year (FY)2018-19 (July 2018 to June 2019),pursuant to Health and Safety Code Section 341779(l).This ROPS forms the basis for the County’s distribution of Redevelopment Property Tax Trust Fund dollars (RPTTF,or former RDA property taxes)to the Successor Agency to pay enforceable obligations for FY 2018-19.Prior to the December Oversight Board meeting,the Successor Agency also reviewed the ROPS and approved its submittal to the Oversight Board on December 13, 2017. The ROPS FY 2018-19 included,in line 12,a request for an additional $18,890,000 for public improvements in Phase IC and the landfill clay cap repair in Phase IIC of the Oyster Point Development Project.The Disposition and Development Agreement (DDA)for the Oyster Point Development Project,which has been previously recognized as an enforceable obligation by the Oversight Board and DOF,obligates the Successor Agency to fund specified public improvements in Phase IC and the landfill clay cap repair in Phase IIC of the proposed development.The additional funding request included cost increases associated with project cost escalation of thirty eight point thirty seven percent (38.37%)since 2011 and completed construction drawings which reflect regulatory requirements/standards and best practices related to grading,underground utility,geofoam technology minimizing settlement,bio retention for storm water draining,clay cap repair and intersection improvements. Following Oversight Board approval of the FY 2018-19 ROPS,it was submitted to the State Department of Finance (DOF)for approval.The Successor Agency received notice from the DOF denying line 12,the additional request for enforceable obligations associated with the Oyster Point Development Project of the ROPS.Following this denial,Successor Agency staff met with the DOF in April 2018 in a “meet and confer meeting”to discuss the additional $18,890,000 million request.Following the meet and confer and information presented in that meeting,in May 2018,the DOF informed the Successor Agency of its approval of line 12 for FY 2018-19 ROPS, the increased Oyster Point project construction costs. City of South San Francisco Printed on 6/15/2018Page 1 of 2 powered by Legistar™ File #:18-502 Agenda Date:6/19/2018 Version:1 Item #:2. DISCUSSION Consistent with the DDA,the funds provided through prior ROPS disbursements have been placed in an escrow account with the Bank of New York Mellon.Also consistent with the DDA,is the cost sharing allocation between the Successor Agency and the project’s developer.This obligation by the developer is separate from the buildings and additional improvements they will be constructing on the property.The request for additional funds to the Successor Agency conformed to the obligations of the Redevelopment Agency identified in the DDA.All cost information was prepared by the developer’s construction management team, informed by preliminary bids from potential contractors, and peer reviewed by City staff and consultants. FISCAL IMPACT This informational presentation confirms that the DOF has approved line item 12 of the ROPS for FY 2018-19 to provide funding in the amount of $18,890,000 for obligations set forth in the DDA as described. CONCLUSION This staff report is provided as an informational report to the Successor Agency and represents updates to the approval of the ROPS for FY 2018-19. Attachments: 1.PowerPoint Presentation City of South San Francisco Printed on 6/15/2018Page 2 of 2 powered by Legistar™ Oversight Board June 19, 2018 1 Economic & Community Development Department 2011 – City and RDA enter into DA and DDA with Oyster Point Ventures 2016 – OPV requests assignment of DA and DDA to Oyster Point Development 3 Sept 2017 – Property is transferred to OPD Oct 2017 – Work begins on Phase IC Dec 2017 – Successor Agency staff prepare ROPS for Oversight Board approval 4 Jan 2017 – Staff first update Oversight Board on potential increase in enforceable obligations Dec 2017 – Staff present ROPS for Oversight Board approval 5 $18,890,000 request (line item 12) for OPD cost overruns, due to: ◦Delay in construction ◦Regulatory requirements ◦Sensitive habitat ◦Repositioning/disposal of landfill 6 Dec 2017 – Successor Agency and Oversight Board approve FY18-19 ROPS April 2018 – DOF denies ROPS line item 12 for OPD enforceable obligations 7 April 2018 – Staff meet with DOF in Meet and Confer May 2018 – DOF approves Successor Agency and Oversight Board’s approval of OPD enforceable obligations 8 City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:18-408 Agenda Date:6/19/2018 Version:1 Item #:3. Update on transfer of property from the Successor Agency to the City of South San Francisco for the Community Civic Campus. (Nell Selander, Economic & Community Development Deputy Director) RECOMMENDATION Staff recommends that the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of South San Francisco (“Oversight Board”)receive an update regarding the retention of certain former Redevelopment Agency real property to the City of South San Francisco for the Community Civic Campus.No action is required for this item. BACKGROUND/DISCUSSION On January 8,2008,the former Redevelopment Agency of the City of South San Francisco (“former RDA”) acquired a 1.65-acre property from Ron Price Motors at 1 Chestnut Avenue,and on January 31,2008 the former RDA acquired 13.2 acres of real property from the San Francisco Public Utilities Commission encompassing the properties identified as the PUC properties sites A1,A2,A3,B &C,as outlined in Attachment 1 (collectively,the “Properties”).The purpose of the acquisition of these properties was to facilitate redevelopment at the geographic center of South San Francisco,just a half mile from the South San Francisco Bay Area Rapid Transit (BART) station. In 2011,the Legislature of the State of California (“State”)adopted Assembly Bill x1 26 (“AB 26”)amending provisions of the State’s Community Redevelopment Law (Health and Safety Code sections 33000 et seq.). Pursuant to AB 26 and the California Supreme Court decision in California Redevelopment Association,et al. v.Ana Matosantos,et al.,which upheld AB 26 (together with AB 1484,the “Dissolution Law”),the former Redevelopment Agency of the City of South San Francisco was dissolved on February 1, 2012. Pursuant to Dissolution Law,the Successor Agency to the Redevelopment Agency of the City of South San Francisco (“Successor Agency”)prepared a Long Range Property Management Plan (LRPMP)to govern the disposition of all former Redevelopment Agency properties in South San Francisco,including the subject Properties outlined in Attachment 1.The LRPMP was approved by the Oversight Board on May 21,2015 and the California Department of Finance (“DOF”) on October 1, 2015. In November 2015,South San Francisco residents passed Measure W allowing the City to create a revenue source to plan for a new Community Civic Campus on a portion of the Properties,specifically,A1(APN 011- 322-030),A2 (APN 011-326-030),and A3 (APN 093-312-050)in Attachment 1 (the “Campus Site”).On August 16,2016,the Oversight Board adopted a resolution approving the transfer of the properties identified for governmental use in the LRPMP.In that same resolution,the Oversight Board approved the transfer of Site A2b to the City,at no cost.Site A2b,although not technically eligible to be classified as a governmental use City of South San Francisco Printed on 6/15/2018Page 1 of 2 powered by Legistar™ File #:18-408 Agenda Date:6/19/2018 Version:1 Item #:3. A2b to the City,at no cost.Site A2b,although not technically eligible to be classified as a governmental use property under dissolution law,was identified as the City’s future library site in the LRPMP.To further the necessary land assemblage for the Civic Campus,in 2016,City staff prepared new appraisals to identify the market value of the Campus Site properties identified for redevelopment.On July 18,2017,the Oversight Board considered the market value appraisals prepared for Sites A1,A2a &A3 and adopted resolution 03-2017 (Attachment 2)approving the retention of the Properties by the City necessary for the Community Civic Campus project.The Oversight Board also approved the sale price of $7,180,000,subject to the City’s completion of CEQA and due diligence.Both of those conditions have occurred and the City has sent the taxing entities its proportionate share of the net proceeds.The Successor Agency has sent letters to the various taxing entities, distributing the net proceeds from the $7,180,000 sale (SSFUSD letter attached as Attachment 3). Pursuant to Dissolution Law and the LRPMP,redevelopment properties were to be transferred to the City for development consistent with the LRPMP.This included Sites A1,A2,and A3 (as identified in Attachment 1) and were transferred to the City via Grant Deed and recorded in the County of San Mateo’s Official Records as document numbers 2017-042157 and 2017-042158. During the drafting of Resolution 03-2017,sites B and C (APN 093-312-060)of the Properties outlined in Attachment 1 were inadvertently included among the parcels authorized to be retained to the City as part of the sale for the Community Civic Campus.However,the approved sale price of $7,180,000 was based on the fair market value appraisals for Sites A1,A2a and A3.The intent of the City and the Oversight Board was only to include sites A1,A2a,and A3 in the sale to the City.Sites B and C are to be sold to a developer in a separate transaction for high-density,mixed-use housing,as outlined in the LRPMP.After completing a thorough developer selection process,the City selected the development team of AGI Avant and KASA Partners to enter into an Exclusive Negotiating Rights Agreement (ENRA)for the eventual disposition and development of the sites.As such,sites B and C are being held by the City in trust,pursuant to the requirements of the LRPMP,and will be transferred to the AGI/KASA at the time of disposition. Attachments: 1.LRPMP Map 2.Oversight Board Resolution 03-2017 3.Letter to the Taxing Entities City of South San Francisco Printed on 6/15/2018Page 2 of 2 powered by Legistar™ ATTACHMENT 1 SUBJECT PROPERTIES LONG RANGE PROPERTY MANAGEMENT PLAN SITE MAP City of South San Franciscoo -o P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco,CA Oversight Board Lo.g.-Resolution: RES 03-2017 File Number: 17-626 Enactment Number: RES 03-2017 RESOLUTION APPROVING THE RETENTION BY THE CITY OF SOUTH SAN FRANCISCO OF CERTAIN FORMER REDEVELOPMENT AGENCY REAL PROPERTY ASSETS PURSUANT TO THE APPROVED LONG RANGE PROPERTY MANAGEMENT PLAN AND HEALTH AND SAFETY CODE SECTION 34191.5, UPON THE PAYMENT OF SEVEN MILLION ONE HUNDRED EIGHTY THOUSAND DOLLARS ($7,180,000), WITH THE PROCEEDS TO BE DISTRIBUTED TO THE LOCAL TAXING ENTITIES. WHEREAS, on June 29, 2011, the Legislature of the State of California (the"State") adopted Assembly Bill xl 26 ("AB 26"), which amended provisions of the State's Community Redevelopment Law (Health and Safety Code sections 33000 et seq.); and WHEREAS, pursuant to AB 26 and the California Supreme Court decision in California Redevelopment Association, et al. v. Ana Matosantos, et al., which upheld AB 26, the former Redevelopment Agency of the City of South San Francisco was dissolved on February 1, 2012; and WHEREAS, the City of South San Francisco ("City") became the Successor Agency to the Redevelopment Agency of the City of South San Francisco ("Successor Agency"); and WHEREAS, the California Legislature subsequently amended AB 26 by the passage of AB 1484 and AB 107, and these statutes are collectively referred to as the"Dissolution Law"; and WHEREAS, pursuant to Health and Safety Code Section 34191.5(c)(2)(C), property shall not be transferred to a successor agency, city, county or city and county, unless a Long Range Property Management Plan(LRPMP)has been approved by the Oversight Board and the California Department of Finance("DOF"); and WHEREAS, pursuant to the Dissolution Law, the Successor Agency prepared an LRPMP, which was approved by a resolution of the Oversight Board for the Successor Agency to the Redevelopment Agency of the City of South San Francisco("Oversight Board")on May 21, 2015, and was approved by the DOF on October 1, 2015; and WHEREAS,pursuant to the Dissolution Law and the LRPMP,certain real properties located in the City of South San Francisco,that were previously owned by the former Redevelopment Agency, were transferred to the Successor Agency("Agency Properties"); and WHEREAS, the LRPMP establishes a plan for transferring nineteen (19) Agency Properties from the Successor Agency to the City for development consistent with an approved redevelopment plan City of South San Francisco Page 1 File Number: 17-626 Enactment Number: RES 03-2017 the "Redevelopment Properties") pursuant to Health and Safety Code section 34191.5(c)(2) and in accordance with the requirements set forth in the LRPMP; and WHEREAS,on October 18, 2016,the City of South San Francisco entered into an Amended and Restated Master Agreement for Taxing Entity Compensation("Compensation Agreement") with the various local agencies who receive shares of property tax revenues from the former redevelopment project area Taxing Entities"); and WHEREAS,the Compensation Agreement provides that upon approval by the Oversight Board of the sale price, and consistent with the LRPMP, the proceeds from the sale of any of the Agency Properties will be distributed to the Taxing Entities in accordance with their proportionate contributions to the Real Property Tax Trust Fund for the former Redevelopment Agency; and WHEREAS, on February 8, 2017, the City adopted Resolution 16-2017 approving the transfer of the Redevelopment Properties from the Successor Agency to the City and in accordance with the requirements set forth in the LRPMP; and WHEREAS,on February 21,2017,the Oversight Board adopted a resolution approving the transfer of the Redevelopment Properties from the Successor Agency to the City; and WHEREAS, consistent with the LRPMP and the Oversight Board resolution, the Successor Agency and City executed and recorded grant deeds transferring the Redevelopment Properties to the City; and WHEREAS, four(4) of the nineteen (19) Redevelopment Properties, which are commonly known as the former PUC properties, are identified in the LRPMP for redevelopment activities consistent with the Redevelopment Plan and the LRPMP, and more specifically identified in Exhibit A ("PUC Properties"); and WHEREAS,the City, in partnership with the Grand Boulevard Initiative, conducted a market analysis for the site and prepared a development program that would be consistent with the Redevelopment Plan and the El Camino Real Chestnut Area Specific Plan; and WHEREAS, at the time of LRPMP preparation, the City and the consultants determined that a master-developer approach would yield the highest and best uses of the PUC Properties; and WHEREAS,the City is interested in retaining the PUC Properties in order to construct the City's proposed Community Civic Campus Project; and WHEREAS, the City's goal of developing a Community Civic Campus Project on the PUC Properties would achieve the same goals as the master developer approach identified in the LRPMP, which is to, adopt a strategy most likely to maximize the long-term revenue to the taxing agencies while also maintaining the vision expressed in the former Redevelopment Agency's El Camino Corridor Project Plan,the El Camino Real/Chestnut Avenue Area Plan and the City's General Plan; (LRPMP p. 68)"; and WHEREAS,the LRPMP also contains the following additional statements regarding the objectives City of South San Francisco Page 2 File Number: 17-626 Enactment Number: RES 03-2017 for the PUC Properties: The City of South San Francisco has identified the intersection of El Camino Real and Chestnut Avenue as a key opportunity site for new development and economic revitalization.The El Camino Real/Chestnut Avenue Area Plan, adopted in 2011, establishes a compelling long-term vision for the area as a new mixed-use neighborhood with residential, retail, and civic uses at a range of densities, along with public plazas and open space that benefit the broader community." (LRPMP, p. 68) Strategic Economics worked with Successor Agency staff to devise a development program that is both market driven and consistent with the community's goals for the study area as expressed in the El Camino Real/Chestnut Avenue Area Plan and the goals of the El Camino Real Project Plan. The development program assumes redevelopment of all Successor Agency-owned parcels in a manner consistent with a master developer approach. In this approach,the property is redeveloped with the goal of maximizing the combined potential of all of the parcels"...1) economies of scale; 2) more efficient site design; 3) development of all properties. (LRPMP, pp. 71-72) In the event the Successor Agency elected to sell individual properties, Site C is the only site that would be developed consistent with the Agency's El Camino Corridor Project Plan, the El Camino Real/Chestnut Avenue Area Plan and the City's General Plan. Site Al would most likely be purchased by a business that would retain the existing use. Site A2 would not be developed or sold given the site's development constraints and environmental condition. The size and accessibility constraints of Site A3 and Site B would most likely preclude the development and sale of these properties as well. Such outcomes waste a tremendous opportunity to develop hundreds of housing units in a transit oriented area." (LRPMP, pp. 71-72) WHEREAS, the development of the Community Civic Campus Project,which would include a new joint library and recreation center,police station, and other civic uses,would be consistent with the stated goals of the LRPMP and maximize the development of all properties; and WHEREAS, appraisals completed in December 2016 by a qualified commercial real estate appraiser determined that the total fair market value of the PUC Properties based on the highest and best uses contemplated in the LRPMP, after reasonable deductions for environmental cleanup and infrastructure costs, is seven million one hundred eighty thousand dollars ($7,180,000); and WHEREAS, the deduction for an allocable share of infrastructure costs for the planned extension of Oak Avenue is based on projected trip generation from the subject parcels,which is an accepted and reasonable allocation methodology; and WHEREAS, the deduction for environmental cleanup is based on estimates of soil remediation costs for the PUC Properties; and WHEREAS, the City has offered to pay seven million one hundred eighty thousand dollars ($7,180,000) in order to retain the PUC Properties for use as the City's Community Civic Campus Project; and City of South San Francisco Page 3 File Number: 17-626 Enactment Number: RES 03-2017 WHEREAS, the retention of the properties and the implementation of the amended LRPMP through this Resolution itself does not commit the Oversight Board to any action that may have a significant effect on the environment and thus does not constitute a "project" subject to the requirements of the California Environmental Quality Act("CEQA"),pursuant to CEQA Guidelines section 15061(b)(3). NOW, THEREFORE, BE IT RESOLVED that the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of South San Francisco does hereby take the following actions: 1) Finds and determines that the above recitals are true and correct and the proposed actions are consistent with the Long Range Property Management Plan. 2) Subject to the completion of environmental review pursuant to the California Environmental Quality Act (CEQA) and approval of the appropriate environmental document, the Oversight Board approves a purchase price of seven million one hundred eighty thousand dollars ($7,180,000) for the Agency Properties identified in the LRPMP as properties#2,#3,#6,and#7,and as also described in Exhibit A(the PUC Properties"). 3) Approves the retention by the City of South San Francisco of the Agency Properties identified in the LRPMP as properties #2, #3, #6, and #7, and as also described in Exhibit A. The retention of the PUC Properties by the City is conditioned on the following terms: Pending compliance with CEQA, the City will pay a total purchase price of seven million one hundred eighty thousand dollars ($7,180,000) for the PUC Properties. The sale proceeds will be distributed to the taxing entities according to Section 5 of the Amended and Restated Master Agreement for Taxing Entity Compensation.Nothing in this Resolution shall be deemed to pre-commit the City Council to retaining the PUC Properties until the City Council formally approves the issuance of a Notice of Decision or any other appropriate environmental review required under the CEQA. Pending compliance with CEQA, the City will commit to including the Oak Avenue extension project in the City's Capital Improvement Plan,making reasonable efforts to prepare a full funding plan(including a five million, three hundred and seventy thousand dollars ($5,370,000) set aside) for the total cost of the extension which is estimated at fifteen million five hundred thousand dollars ($15,500,000) in 2017 dollars, and building the project subject to necessary processes and approvals, including environmental review and public discussions. If the final costs for any environmental remediation undertaken by the City on the PUC Properties is less than seven hundred and ninety thousand dollars($790,000),the cost estimate for soil remediation,the City will distribute the difference between the seven hundred and ninety thousand dollar ($790,000) soil remediation estimate and the final remediation costs to the taxing entities according to Section 5 of the Amended and Restated Master Agreement for Taxing Entity Compensation. Prior to the retention of the PUC Properties and the distribution of the net unrestricted City of South San Francisco Page 4 File Number: 17-626 Enactment Number: RES 03-2017 s from the sale price to the taxing entities, the City shall be given the opportunity to obtain a title free and clear of all liens,encumbrances,conditions,covenants, and restrictions that would affect the marketability or value of the Property. This condition may only be waived if the City expressly agrees to acquire title to the property subject to certain exceptions which may appear on the title report. In the event that the City retains the PUC Properties and pays a total purchase price of seven million one hundred eighty thousand dollars($7,180,000),upon distribution of the sale price to the taxing entities,the PUC Properties will no longer be subject to the provisions of the Amended and Restated Master Agreement for Taxing Entity Compensation, and the City will be entitled to retain any future revenue received from any of the PUC Properties.The City will accept the properties subject to any existing leases as of the date of this resolution. 4) Authorizes and directs the City Manager and any designees to execute and record any and all documents, and take all actions necessary to implement this intent of this Resolution, including without limitation the execution of Grant Deeds, Quitclaim Deeds, Certificates of Acceptance, and all other necessary instruments, as applicable, subject to approval as to form by the City Attorney and Oversight Board Counsel. 5) Finds that the adoption of this Resolution itself does not commit the City of South San Francisco or Oversight Board to any action that may have a significant effect on the environment and thus does not constitute a"project" subject to the requirements of the California Environmental Quality Act("CEQA"), pursuant to CEQA Guidelines section 15061(b)(3). At a meeting of the Oversight Board to the Successor Agency to the former Redevelopment Agency on 7/18/2017, a motion was made by Mark Addiego, seconded by Barbara Christensen, that this Resolution be approved.The motion passed. Yes: 4 Krause,Addiego, Christensen, and Friedman No: 2 Cullen, and Scannell Absent: 1 Farrales Attest Krist. afelli ' City of South San Francisco Page 5 Exhibit A PUC Properties LRPMP Property# Address APN 2 093-312-050 3 Former PUC Properties 093-312-060 6 011-326-030 7 1 Chestnut Avenue 011-322-030 City of South San Francisco Property Disposition Costs APN #093-312-050 011-326-030 011-322-030 LRPMP Property #2 6 7 Project #701206 701210 & 701601 701201 & 701301 TOTAL Fiscal Year 2016-17 41,279.95$ 5,277.26$ 7,716.90$ 54,274.11$ 2017-18 5,359.44 2,993.91 3,025.43 11,378.78 Total Property Disposition Costs 46,639.39$ 8,271.17$ 10,742.33$ 65,652.89$ Staff time allocation corrections (3,028.40)$ Less bridge demolition costs (701206)(37,250.00) Total Adjustments (40,278.40)$ Adjusted Total Property Disposition Costs 25,374.49$ Adjustments Successor Agency to the Former Redevelopment Agency of the City of South San Francisco Sale Price 7,180,000.00$ Property Disposition Costs 25,374.49$ Net Proceeds 7,154,625.51$ Tax Account OFAS Account Tax Account Description % Total Allocated Share of Net Proceeds 100 80110 GENERAL COUNTY TAX 0.2578886749 1,845,096.90$ 19401 59401 CITY OF SOUTH SAN FRANCISCO 0.1673150885 1,197,076.80 50940 0WA01 SO SAN FRAN UNIFIED GENL PUR 0.4393144458 3,143,130.34 60870 0ZA01 SM JR COLLEGE GEN PUR 0.0737921212 527,954.99 75180 48475 COLMA CR FLOOD CONTROL ZONE 0.0024088779 17,234.62 75181 48478 COLMA CR FLOOD CONT SUB ZN 3 0.0011070295 7,920.38 75182 48477 COLMA CR FLOOD CONT SUB ZN 2 0.0113953464 81,529.44 75183 48476 COLMA CR FLOOD CONT SUB ZN 1 0.0009441058 6,754.72 78703 02647 WILLOW GARDENS PKS-PKWYS MNT 0.0012794558 9,154.03 79020 02665 BAY AREA AIR QUALITY MANAGEMENT 0.0022739600 16,269.33 79450 02700 COUNTY HARBOR DISTRICT 0.0038360455 27,445.47 79920 02656 RESOURCE CONSERVATION DISTRICT 0.0000423453 302.96 79994 0ZZ01 COUNTY EDUCATION TAX 0.0384025034 274,755.53 1.0000000000 7,154,625.51$ Distribution of Net Proceeds APNs 093-312-050; 011-326-030; 011-322-030 Total City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:18-503 Agenda Date:6/19/2018 Version:1 Item #:4. Update on the sale of 938 Linden Avenue,a Successor Agency property.(Nell Selander,Economic & Community Development Deputy Director) RECOMMENDATION Staff recommends that the Oversight Board to the Successor Agency of the City of South San Francisco (Oversight Board) receive an update on the sale of 938 Linden Avenue. BACKGROUND/DISCUSSION The property at 938 Linden Avenue (Property)is a former Redevelopment Agency property.It is located in the uptown historic area on Linden Avenue,a mixed-use area of South San Francisco in the low-lying Paradise Valley, south of San Bruno State Park. The former Redevelopment Agency purchased the Property in 2009 to serve as a facility for St.Vincent de Paul.However,St.Vincent de Paul was unable to secure sufficient funding to redevelop the building and relocate the services to the site prior to the dissolution of the Redevelopment Agency on February 1, 2012. Pursuant to dissolution law,the Successor Agency to the Redevelopment Agency of the City of South San Francisco (Successor Agency)is responsible for the disposition of the former redevelopment agency properties in accordance with the procedures and requirements of Dissolution Law and the approved Long Range Property Management Plan (LRPMP).The LRPMP was prepared by the Successor Agency and approved by the Oversight Board and the State Department of Finance (DOF).Under the LRPMP,the Property is designated for sale, with the proceeds of the sale distributed to the taxing entities. In October 2017,the City of South San Francisco issued a Call for Offers to purchase 938 Linden Avenue.The Call for Offers stipulated that the Property would be conveyed in an “as-is”condition,without representation or warranty by the City or Successor Agency as to physical or environmental conditions of the land or any existing structures. The Call for Offers closed on November 9, 2017. At their January 24,2018 Closed Session meeting,the Successor Agency directed staff to enter into a Purchase and Sale Agreement with the highest bidder,Sares Regis.The Oversight Board met in Closed Session on February 27,2018 and concurred with the Successor Agency’s selection of Sares Regis and provided staff with direction with regard to terms of the sale. CONCLUSION Staff drafted a Purchase and Sale Agreement (PSA)to transfer the property to Sares Regis.The developer is City of South San Francisco Printed on 6/15/2018Page 1 of 2 powered by Legistar™ File #:18-503 Agenda Date:6/19/2018 Version:1 Item #:4. Staff drafted a Purchase and Sale Agreement (PSA)to transfer the property to Sares Regis.The developer is currently reviewing the PSA. We expect comments on the form of the agreement in the coming week. City of South San Francisco Printed on 6/15/2018Page 2 of 2 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:18-504 Agenda Date:6/19/2018 Version:1 Item #:5. Report regarding a resolution approving a final sale price of $3,050,000 for the disposition of the properties at 200 Linden Avenue and 212-216 Baden Avenue,pursuant to the approved Long Range Property Management Plan and Health and Safety Code Section 34191.5,with the proceeds to be distributed to the local taxing entities. (Julie Barnard, Economic Development Coordinator) RECOMMENDATION Staff recommends that the Oversight Board adopt a resolution approving the final sale price of $3,050,000 for disposition of the properties at 200 Linden and 212-216 Baden Avenue. BACKGROUND Through an extensive developer selection process,Hisense REUS,LLC (“Hisense”)was selected as the developer for the development of 200 Linden and 212-216 Baden Avenue (“200 Linden”)in November 2016. The developer was selected primarily because its proposal offered for-sale housing,below market rate (“BMR”)units,and the intent to provide a grocery or drug store on the ground floor.Since their selection, Hisense has consistently stressed its aspirations to complete this development expeditiously,that this is their first residential development in the United States,and that their priority is to develop an attractive building rather than to generate a substantial profit. To accomplish these identified goals,the City has been working extensively with the developer to ensure that Hisense closes escrow on the properties and reaches the construction milestone as quickly as possible.At this time,even given the even lower than initially expected profit margin,the developer is struggling to make the project financially feasible.Hisense cites escalating construction costs,payment of prevailing wage,inclusion of BMR units,as well as the provision of a payment and performance bond,as items that have heavily impacted their Total Development Cost (“TDC”) and ability to reach a marginal profit. DISCUSSION Since October 2017,Hisense has made multiple requests to the City for financial assistance,including fee waivers and other concessions.Since then,the City has worked to identify feasible City solutions that will provide financial relief to the developer.The City Council will consider an amendment to the DDA and a package of financial offsets for the project at its regular meeting on June 27, 2018. Requested Reduction in Purchase Price In addition to the financial offsets being considered by the City,Hisense has requested a purchase price reduction in the amount of $450,000.This would change the initial offered purchase price of $3,500,000 to $3,050,000. Surrounding Property Land Price Offers The City is currently in escrow for the LRPMP property located at 201 Grand Avenue and the City-owned property at 418 Linden Avenue.The total price offer for the two sites,totaling 0.78 acres (compared to 200 Linden,which totals 0.72 acres),is $1,700,000.This is significantly less than the $3,050,000 offer for 200 City of South San Francisco Printed on 6/15/2018Page 1 of 2 powered by Legistar™ File #:18-504 Agenda Date:6/19/2018 Version:1 Item #:5. Linden. Property Tax Revenue Staff has estimated the property tax revenue the completed 200 Linden project will generate.It is assumed that the appraised cost per square foot could be between $350 and $500.Per the most recent building plan submittal, the total development is 190,532 square feet. The below calculations reflect the 1% of the assessed value. Utilizing a conservative estimate of the assessed value ($350 per square foot)and a high-end estimate ($500 per square foot), the annual property tax revenue projections for the taxing entities are as follows: Conservative High-End SSFUSD (43.9%)$292,819 $418,313 SMC (25.7%)$171,850 $245,500 SSF (16.7%)$111,566 $159,380 SMC CCD (7.3%)$49,214 $70,306 Other $41,412 $59,160 TOTAL $666,862 $952,660 Using the same assumptions as above, the ten-year property tax revenue projections are as follows: Conservative High-End SSFUSD (43.9%)$2,928,190 $4,183,130 SMC (25.7%)$1,718,500 $2,455,000 SSF (16.7%)$1,115,660 $1,593,800 SMC CCD (7.3%)$492,140 $703,060 Other $414,120 $591,600 TOTAL $6,668,620 $9,526,600 CONCLUSION While the developer’s request to reduce the purchase price by $450,000 would result in less initial net proceeds distributed to the taxing entities,the long-term ongoing revenue stream generated by the successful completion of the development project outweighs this immediate loss.Furthermore,given that this property is a Successor Agency property that is subject to disposition consistent with the LRPMP,any fee waivers/credits granted by the City would mean the City is disproportionately losing revenue to ensure this Successor Agency project succeeds.The taxing entities are requested to consider sharing in some of the concessions to make this project feasible. City of South San Francisco Printed on 6/15/2018Page 2 of 2 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:18-505 Agenda Date:6/19/2018 Version:1 Item #:5a. Resolution approving a final sale price of $3,050,000 for the disposition of the properties located at 200 Linden Avenue and 212 -216 Baden Avenue pursuant to the approved Long Range Property Management Plan and Health and Safety Code Section 34191.5, with the proceeds to be distributed to the local taxing entities. WHEREAS,on June 29,2011,the Legislature of the State of California (“State”)adopted Assembly Bill x1 26 (“AB 26”),which amended provisions of the State’s Community Redevelopment Law (Health and Safety Code sections 33000 et seq.)(“Dissolution Law”),pursuant to which the former Redevelopment Agency of the City of South San Francisco (“City”) was dissolved on February 1, 2012; and WHEREAS,the City elected to become the Successor Agency to the Redevelopment Agency of the City of South San Francisco (“Successor Agency”); and WHEREAS,pursuant to Health and Safety Code Section 34191.5(c)(2)(C),property shall not be transferred to a successor agency,city,county or city and county,unless a Long Range Property Management Plan (“LRPMP”)has been approved by the Oversight Board and the California Department of Finance (“DOF”); and WHEREAS,in accordance with the Dissolution Law,the Successor Agency prepared a LRPMP,which was approved by a resolution of the Oversight Board for the Successor Agency to the Redevelopment Agency of the City of South San Francisco (“Oversight Board”)on May 21,2015,and was approved by the DOF on October 1, 2015; and WHEREAS,consistent with the Dissolution Law and the LRPMP,certain real properties located in the City of South San Francisco,that were previously owned by the former Redevelopment Agency was transferred to the Successor Agency (“Agency Properties”); and WHEREAS,on October 18,2016,the City entered into an Amended and Restated Master Agreement for Taxing Entity Compensation (“Compensation Agreement”)with the various local agencies who receive shares of property tax revenues from the former redevelopment project area (“Taxing Entities”),which provides that upon approval by the Oversight Board of the sale price,and consistent with the LRPMP,the proceeds from the sale of any of the Agency Properties will be distributed to the Taxing Entities in accordance with their proportionate contributions to the Real Property Tax Trust Fund for the former Redevelopment Agency; and WHEREAS,on February 8,2017,the City adopted Resolution 16-2017 approving the transfer of the agency properties from the Successor Agency to the City and in accordance with the requirements set forth in the LRPMP,and on February 21,2017,the Oversight Board adopted a resolution approving the transfer of the redevelopment properties from the Successor Agency to the City; and WHEREAS,consistent with the LRPMP and the Oversight Board resolution,the Successor Agency and City executed and recorded grant deeds transferring the agency properties to the City; and City of South San Francisco Printed on 6/15/2018Page 1 of 3 powered by Legistar™ File #:18-505 Agenda Date:6/19/2018 Version:1 Item #:5a. WHEREAS,the real property located at 200 Linden Avenue and 212 -216 Baden Avenue (“200 Linden”) located in the City of South San Francisco,California,known as assessor parcel Numbers (“APNs”) 012334130,012334160,012334030 and 012334040 are agency properties and are subject to the provisions of the LRPMP and the Compensation Agreement; and WHEREAS,City Council selected Hisense REUS,LLC (“Developer”)to develop the properties located at 200 Linden in a manner consistent with the LRPMP; and WHEREAS,on September 19,2017,the Oversight Board adopted Resolution RES 04-2017 approving the Disposition and Development Agreement (“DDA”) for 200 Linden and a purchase price of $3,500,000; and WHEREAS,the Developer,citing escalating construction costs,payment of prevailing wage,inclusion of the Below Market Rate (“BMR”) units, have requested a $450,000 reduction in the sale price of 200 Linden; and WHEREAS,the Developer has also requested financial assistance,fee waiver and other concessions from the City; and WHEREAS,the City will consider granting this financial assistance as well as an amendment to the DDA at the June 27, 2018 regular meeting of the City Council of the City of South San Francisco; and WHEREAS,while the purchase price reduction request made by the developer would result in less initial net proceeds being distributed to the taxing entities upon disposition,the long-term ongoing revenue stream generated by the completion of the development outweighs this immediate loss. NOW,THEREFORE,BE IT RESOLVED that the Oversight Board for the Successor Agency to the Redevelopment Agency of the City of South San Francisco does hereby resolve as follows: 1.The foregoing recitals are true and correct and made a part of this Resolution. 2.The proposed actions in this Resolution are consistent with the Long Range Property Management Plan. 3.The amended final sale price of $3,050,000 for the sale and development of the properties located at 200 Linden Avenue and 212 -216 Baden Avenue is approved.The sale proceeds from the disposition of the properties will be distributed to the taxing entities according to Section 5 of the Amended and Restated Master Agreement for Taxing Entity Compensation. 4.Subject to City Council and Successor Agency approval,the City Manager,or his designee,is authorized to execute an amendment to the Disposition and Development Agreement,and any necessary documents related to an amendment to the Disposition and Development Agreement consistent with the intent of this Resolution,and take any and all other actions necessary to implement this intent of this Resolution, subject to approval as to form by the City Attorney. ***** City of South San Francisco Printed on 6/15/2018Page 2 of 3 powered by Legistar™ File #:18-505 Agenda Date:6/19/2018 Version:1 Item #:5a. City of South San Francisco Printed on 6/15/2018Page 3 of 3 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:18-524 Agenda Date:6/19/2018 Version:1 Item #:6. Report on the terms of a revenue sharing agreement for commercial space at 636 El Camino Real. (Mike Lappen, Economic Development Coordinator) RECOMMENDATION Staff recommends that Oversight Board for the Successor Agency to the City of South San Francisco Redevelopment Agency (Oversight Board) receive an update on the status of the terms of a revenue sharing agreement for commercial space at 636 El Camino Real. BACKGROUND 636 El Camino Real is a mixed-use affordable housing development constructed by Mid-Peninsula Housing Coalition (Mid-Pen) and sponsored by the former Redevelopment Agency of the City of San Francisco (RDA). To assist with making the project affordable to lower income households, the RDA contributed land and a $9.9 million loan to Mid-Pen. These were RDA assets until redevelopment was abolished by the State of California. Pursuant to the dissolution statutes, the California Department of Finance (DOF) authorized the transfer of the land and Mid-Pen’s $9.9 million loan to the City of South San Francisco, as the housing successor. The City, as housing successor, entered into a ground lease with Mid-Pen, who as developer, owns the building improvements. Pursuant to a Master Lease Agreement between Mid-Pen and the RDA, Mid-Pen leased all the retail space to the former RDA. The Oversight Board and DOF approved the assignment of Master Lease to the City of South San Francisco (City). Following the assignment of the lease, the City entered into sub-lease agreements and completed tenant improvements in two of the property’s three commercial spaces - Suites A and B. Suites A and B are currently occupied, while Suite C remains vacant. Since the City began to receive rents for Suites A and B, the City and the Oversight Board recognized the need to reach an agreement pursuant to California Health and Safety Code section 34176 (f), requiring a shared revenue agreement. However, the DOF rejected the tenant improvements for Suite C as authorized ROPS payment. Accordingly, in December 2015, the Oversight Board received a staff report presenting a possible structure for such revenue sharing agreement. (see Attachment 1, Redevelopment Agency Oversight Board Staff Report from December 15, 2015). DISCUSSION In December 2015, the Oversight Board presented conceptual deal points for a revenue sharing agreement for commercial space at 636 El Camino Real, which included an up front, one-time payment based on the present value cash flows received from net rental payments. In anticipation of the transfer of responsibilities from the local Oversight Board to the county oversight board, City staff received a request to review the Revenue Sharing Agreement methodology and consider whether or not it is feasible for the City to pay the taxing entities the payment at this time. City staff has examined the current net rents, net present value and leasing activity for the commercial suites. Currently, 630 El Camino Real (Suite A), a 1,600 square foot unit, is leased to Cool Tea and 632 El Camino City of South San Francisco Printed on 6/15/2018Page 1 of 3 powered by Legistar™ File #:18-524 Agenda Date:6/19/2018 Version:1 Item #:6. Real (Suite B), a1,347 square foot unit, is leased to El Camino Florist. Suite C at 634 El Camino Real a 2,650 square feet unit, is currently vacant. The rental payments are collected by the City and distributed to the taxing agencies. The City pays for the property management and any related staff time expenses. Staff has asked the City’s property manager, SC Properties, to provide the following calculation to determine the current net rents, net present value and leasing activity for the suites. Staff calculated the Net Present Value on based on five years. 630 El Camino Real, Suite A Monthly Rent: $3,914.00 Annual Rent: $46,968.00 Net Present Value: $782,800.00 632 El Camino Real, Suite B Monthly Rent: $2,185.00 Annual Rent: $26,220.00 Net Present Value: $437,000.00 Aggregate Monthly Rent: $6,099.00 Annual Rent: $73,188.00 Net Present Value: $1,219,800.00 Leasing Activity In March 2016, staff instructed SC Properties to search for new tenants for 634 El Camino Real (Suite C). At that time, SC Properties prepared marketing material and advertised the property utilizing standard real estate advertising resources. For example, SC Properties advertised the units on the “Loopnet” website, placed “for lease” signs on the building, and called retail businesses that are known to be expanding. Staff also informed other local realtors that the units were available to lease. According to SC Properties, the City could lease Suite C with or without constructing tenant improvements. The market rate rental rate for the unit with a completed tenant improvement (HVAC, restroom, and electric panel valued at approximately $110,000), would lease at $2.25 per square foot. If the City chose not to undertake the tenant improvements, the unit would lease “as is” for approximately $2.00 per square foot. If the City does not undertake the tenant improvements, it will most likely have to provide a rent credit and/or delay collecting rents for a period of time in order to attract a tenant. The purpose of the delay and/or credit would be to cover the cost of the tenant improvements. FISCAL IMPACT Staff believes that the taxing entities would benefit from continuing to receive the flow of revenue from the rents rather than accepting the one-time payment at this time. Even though the Net Present Value, identified above, appears large, it would actually increase when 634 El Camino Real is rented at the market rate. Moreover, the building conditions that the 2015 fiscal analysis identified assumed that the City would complete the tenant improvement and lease the space at 634 El Camino Real in two years. This did not take place. The taxing entities will receive the following rents over the next five and ten years. This amount assumes that 634 El Camino Real will be leased in two years and would be applied to the Net Present Value (8%) for the 10 year benchmark. City of South San Francisco Printed on 6/15/2018Page 2 of 3 powered by Legistar™ File #:18-524 Agenda Date:6/19/2018 Version:1 Item #:6. South San Francisco Unified School District (43.9%) 5 year benchmark: $535,492.20 10 year benchmark: $497,769.00 Total for 10 years: $1,033,261.20 San Mateo County (25.7%) 5 year benchmark: $313,488.60 10 year benchmark: $291,404.69 Total for 10 years: $532,893.29 San Mateo County Community College District (7.3%) 5 year benchmark: $89,045.40 10 year benchmark: $72,188.40 Total for 10 years: $161,233.80 Other (6.4%) 5 year benchmark: $78,067.20 10 year benchmark: $72,567.71 Total for 10 years: $150,634.91 CONCLUSION At this time, the City is unable to make a lump-sum payment to the taxing entities for the commercial suites at 636 El Camino Real. Attachments: 1.Redevelopment Agency Oversight Board Staff Report from December 15, 2015 City of South San Francisco Printed on 6/15/2018Page 3 of 3 powered by Legistar™ edevelopment Successor Agency Oversight Board t1po Staff Reiport DATE:December 15, 2015 TO:Members of the Oversight Board FROM:Alex Greenwood, Director of Economic and Community Development SUBJECT:OUTLINE FOR THE TERMS OF A REVENUE SHARING AGREEMENT FOR COMMERCIAL SPACE AT 636 EL CAMINO REAL RECOMMENDATION It is recommended that the Oversight Board review the staff report and approve the conceptual deal points for a Revenue Sharing Agreement for commercial space at 636 El Camino Real and direct staff to return to the Oversight Board with a draft Revenue Sharing Agreement containing those terms. BACKGROUND As described in previous reports to the Oversight Board, 636 El Camino Real is a mixed-use affordable housing development constructed by Mid-Peninsula Housing Coalition (Mid-Pen) and sponsored by the Redevelopment Agency of the City of South San Francisco (RDA). To assist with making the project affordable to lower income households, the RDA contributed land and a $9.9 million loan to Mid-Pen. These were RDA assets -until redevelopment was abolished by the State of California, Pursuant to the dissolution statutes, the California Department of Finance (DOF) authorized the transfer of the land and Mid-Pen's $9.9 million loan to the City as housing successor. Mid-Pen, as developer, owns the building improvements. However, because the housing project contains approximately 5,160 square feet of retail space, it is subject to California Health and Safety Code section 34176 (f), which requires the Oversight Board to: consider the overall value to the community as well as the benefit to taxing entities of keeping the entire development intact or dividing the title and control over the property between the Housing Successor and the Successor Agency or other public or private agencies. The dis-position of those as sets may be accomplished by a revenue-sharing arrangement as qpproved by the Oversight Board on behalf of the affected taxing entities emphasis added)" The City, as housing successor, owns the land and has entered into a long term ground lease with Mid-Pen. Pursuant to a Master Lease Agreement, Mid-Pen leased the retail space to the former RDA for a term of 75 years. This was required to allow the RDA to control the commercial space tenants and ensure the spaces would be occupied. The RDA was interested in control primarily from a land use perspective; to attempt to increase pedestrian traffic and make the site more of an urban amenity, rather than as a revenue seeking tool. The Oversight Board and DOF authorized the assignment of the lease to the City. The City Staff Report Subject: Terins for Revenue Sharing Agreement for Commercial Space at 636 El Camino Real Page 2 of 3 subsequently entered into sub-lease agreements for two of the three commercial spaces and has completed the tenant improvements in those two spaces. The City, as Housing Successor Agency, paid for the cost of the two retail spaces with funding from Mid-Pen. With the City now collecting rents, it is necessary for the City and Oversight Board to reach agreement with respect to Health and Safety Code Section 34176(f) requiring a shared revenue agreement. On August 19, 2014, the Oversight Board stated its preference that all net rental revenues (gross revenue minus operating costs and reserves) from the three retail spaces at 636 El Camino Real (the "Project") be conveyed to the taxing agencies. In exchange for receiving all net rental revenue, the Oversight Board agreed.the Successor Agency would fund the initial tenant improvements for the third vacant retail unit in the Project (estimated at $450,000). On September 23, 2014, the Oversight Board approved the submittal of the Successor Agency's Recognized Obligations Payment Schedule (ROPS) 14-15B that included 450,000 in Redevelopment Property Tax Trust Fund (RPTTF) for the cost of the initial tenant improvements. The California Department of Finance subsequently reviewed the funding request for the Project and authorized it by virtue of approving ROPS 14-15B. Because RPTTF funds cannot be carried over from one ROPS period to the next, the funding request would appear in every ROPS cycle until the City entered into a lease agreement with a tenant and completes the tenant improvement. However, upon submittal of the ROPS 15-16A, which included the $450,000 in tenants improvements, DOF reversed its decision which had allocated RPTTF funding for the tenant improvements. The reason for the denial is that a contractual obligation for this agreement did not exist at the time the RDA was dissolved. The Successor Agency appealed the decision but DOF informed the Successor Agency that its initial determination allowing the expense from RPTTF was inappropriate. As a result, DOF determined the denial was final. DISCUSSION Following the decision by DOF, the Oversight Board directed a subcommittee, consisting of Board Members Mark Addiego and Barbara Christenson, to meet to discuss an alternative to the revenue sharing arrangement invalidated by DOF's denial of the ROPS expense. The two board members agreed that it would be fair and appropriate for the taxing agencies to receive an up front, one-time payment reflecting the net present value of the cash flows they would receive over time from the net rental payments. An up- front payment would have value for all parties by eliminating the City's and the taxing agencies' need to monitor the project in perpetuity and allow for winding down the affairs of the former Redevelopment Agency. Based on this direction, a financial analysis was conducted by Economic Development and Finance Department staff to determine the income and expenses for the project, net operating income, and the net present value of annual net payments to the taxing agencies. Board Member Christenson requested a third party review the assumptions in the pro forma to verify whether they are reasonable. Board Member Christenson and staff had a conference call with James Chung, a retail expert and broker at Cassidy Turley, who was able to answer questions, verify assumption or provide market information as needed. Staff subsequently incorporated changes agreed upon during the call and information provide by Mr. Chung into the pro forrria. A summary of the analysis appears as Exhibit A, and a list of assumptions used in the analysis appears as Exhibit B. Four of the assumptions used in the analysis merit explanation: Staff Report Subject: Terns for Revenue Sharing Agreement for Commercial Space at 636 El Camino Real Page 3 of Share of'Net Revenues: The analysis assumes that the taxing entities will receive 2.9.65®/ of net revenues. This was calculated because the former Redeveloprnent Agency of the City of South San Francisco contributed $14,458,537 (29,65%) of the total project development cost of 48,769,355 (private tax credit investors and lenders contributed the bulk of the remaining funds). At one time, the City had agreed to give the taxing agencies 100% of the net income in exchange for the Oversight Board providing 100% ($450,000) of the tenant improvements costs for the 3`d retail unit. However, the Successor Agency is no longer providing these funds therefore a proportional share to the amount contributed to the project would be a more appropriate way to apportion revenues going forward. buildout of 3"d Retail Space: The City estimates it will pay $450,000 for tenant improvements plus $10,000 to partially offset staff costs to manage the construction). The pro forma assumes that the cost for the buildout will occur in year 2. Sta.fing Costs: Annual City staff costs for administration are assumed to be 5% of gross income instead of 10% as previously estimated. This reduced staffing costs from $6,000 per year to $3,000 per year. An exception is made in year 2, when $10,000 is allocated for staff costs to partially offset construction management costs for the buildout of the 3rd unit. Discount Rate: As shown in Exhibit A, the pro forma analysis calculates the net present value of the cash flows using., an 8.5% discount rate as suggested by Mr. Chung of Cassidy Turley. This discount rate represents the property's current condition. at 636 E1 Camino Real which includes a retail project with high vacancy, an unproven location, a site with physical limitations, and the added risk of having independent or "morn and pop-owned" tenants that typically have much greater risk from default. Based on the pro forma analysis contained in Exhibit A, the 30-year net present value of the retail spaces is $122,696. CONCLUSION It is recommended that the Oversight Board review the terms of a Revenue Sharing Agreement for the commercial space at 636 El Camino Deal as outlined in this staff report and attachments, and direct staff to return to the Oversight Board with a draft Revenue Sharing Agreement with those terns. By: J_By, Alex Greenwood ike Futrell Director of Economic and Executive Dire 'or Community Development Attachments: Exhibit A— 636 El Camino Real Retail Pro-Forma Exhibit B —Pro Forma Assumptions LO r, m a v M M Rt T,- mIr0) M W m r Q) CF) (o 00 N 13 CO LQ C\ tD CO r- cy') cl I*L Ln 00 m U) 0) M cq LO cl U') D o Cl) Ln r- C14 64 63 6% 0% 64 Efi Gq 64 64 b3 EfT 64 64 6-31 64 te G,-) 64 bp V) o fl- r 00 M1 O M M1 M cq Cl) co u') N 4m Lo N CN ko EST C) 00 0 CY) o co LO Lo Ir C1413icc Ct rll- co LONcoIqLOMN N LO N C\T 06 gyp' 61T 64 6f$ Q9 a 6, a EA E°7 64 SF9 H3 64 SfT 64 lzr Cl) - Lo 0 C) 0 LO LO C)co cli U-) 0 ; co LO tl•. cl ll:L V4 ( D r CN - CD a) NRLVL "N (o Lo m - lzr co 00 N LOD7 N W) C4 M N - 6 C4 C6 C4 C) Lo (0 64 V) G9 64 O'T 64 te 04 cq 64 V), Sr, blT O, 61) co N m N T M IX) N to p7 C"> I 4; 6N5 L U') co co m 0) 00 (D N m Yy 112L LO c! to D (.0 co LoCliU m M N CTNtr) 1-7 0 to 69 fA (a 64 Efi 69 69 Lq "q 69r Ell. u3 cf3 fA cq 64 bq 6q 64 co LO C N 0 CD 0 0 Lo r,- . , 0- p I cmN -q-m o I- coLOC) to r-- m C14 r- Cl) a) (D a) LO CN Lo0N C4 rI: G vi a; V) Go vl) V3T Ef,T 64 6% 69 CA)kq 614 69, U'T 64 69 Q4 64 tFi. m fil> D M r- oo a) , I m k M CD 0 CD CD LO M V) co co LO 00DItcocoC) N M (\ V)a) N LO N hl-- 4-- N I 0) T Lo co CO N CO N Eta fq 64 6q 6 bq v) 6- 0'3 69 Y> 6% 6q cq EFT 63 ca 6q CO 0 1 0 CD 0 It (D 00 CD CD ct C) 00 N m CD 00 U) Cl) - (D 00 0 (D rl- r-OD D - 00 CN (D M r- N C m r-_ 0 00 CN C) C\l N r- 00 (q CD S 3 C3 N xt 00 C14 69 Ul 63 6q Vy (A EFT 64 6,*613, 69, 69 6q 61* 61 Ul m cq 00 m CD CD 0 C) o CD C Co I C) 0 C) 0 00CD00CS00C C) (D (DxC cz C C cc_ cl (D M D N 0 cq CD a) Lq W D st CD 0 C c (6 c C6 I': C4cc) N co N Oj% (I% EH EFT 0 1.-0 - 0- 0 a --l-1 -.01 -0- 0 0-00cy) m cf) U) CD 0 CD CD LO m 0 75 M CN CO t 76 N Lo 0 m a) 6- 11 07 a)0 0 C) 0 w 0 0 C) C)D co CD 0 C) 0 CD CD 0 0) 6 w m (oCY) N V- c3i 0 z 0 0 0 0 E cq 63 CA, tf C1 L CD a m 0 C3 r- 0 0 — c: V-m D a) m 67 Lo m m M m 0 CL 0- c LL E2U) 3 0 o E co 3a.c D D 0E U)EEE 0 D 0 E r 0) r- E LO a) o c 0U) m .- CL EEcnU 29 x 0 0m00UmW0 m 0 E rrco0m CDEZ0) m N m 0 0) 0 LU -0 M th C: Q EA o OL Z3 D to , p S a Cl- a) c0 m CL —w 0 m 0 0 D CL 0 0D0) Z) :D n LL LL tea.u CLE20 - C a. 0 0 w 0 00 (D 0 w (D 0 E 00MD x ur w 0 P2 co 0 m (0 W LO m CD m Lo co co C\j3iU (q 71 C C C W 0: C D o00U') (0 cq c5 "o -,r N —CO C>0 "It co 0 C:)- 0' VD ul 64 64 Eq U 60 69 a 64 ke 64 60 V> tl- co m m w w m D 00 (D OY qr T (D rl r- — n r,-04 co D mC - fl LQ cc 0 0) 01 C) m N( j C) mcli0 r 14 w 0) M M C:504D 'T OD 9> m (T) M a) C4 N co 0 co 64 04 65 V q 64 69 w Eq Gq U), 69 Lq cxi b4 4q 64 3 Y-> 03 M M N CD N , , lzr N00C) mC> cl r- (f) 7 Tl co m CO00 o Y, LO m 0 W) CD 00 O 04 00 CD 14 69 0 64 613 6q to 603 6H U7) m co Cl) LO Cl) a1 ItT cli 0)m Ili W (D oc o)Cl r4 m 00 0) 1- (0 co N 03 'r M D (0 co 0 U') a co C6 6 0 m Eq b4 64 64 bq 0 V) 6 6s 69 CC) co (0 V M LO m (N (D I ;IcoLOIN (D r- m m m D m w m L4-j co r, CoLO CC\! cl C Iri cl lf 00 o m V 00 m CN r" ua C) r- m U') M Co 05 G C5 Cr;r r-- t-- t-- CS N 64 64 64 19 f.S 64 64 tq f3j bq bl) Q4 69> 64 to> (f3 EA 64 64 m co N 00 Ln m CY) 0 a ma (0 OD cr) I-. m m Nr co V) (0 1, m N, m n — wItr co CN to It C, 0) 00ODLoc) 06LnCl) F- 6 (6 1-: co N rl- CD (N 6F3 64 V> 64 64 64 64 64 V l 64 01) 64 64 Vl 64 b3 m m IT ko 0) r- co cr) qr CO coD0N00 (D r-- co LD co m w co co M Lo w CN It r" m " c) NCcam (D co co D 7r m Cl) Ul) to 0M-,- co c4 C 6 L6 cl r M r 05 rl L6 14 zi CO r- 0) N EPr ta oli 64 GG. . 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VL G (\1 ll: (Ii llz D (D 00 N (N N cq (,0 000inC) C14 M U31 64 6q G- 69 OD e-I 613 64 W V (A} 6f3 Gq fl3 64 64 of CSi To m V* co co It N 0 LO M r, -q-I'- N ; 0 CD CD It 0 C) m cl (7 Lq Iri q C"! , Vi cs C C Ci CN N 'V' m - r r- Nr C"J - CN NT (D co N 6fcoLO0 q m CD m coN W Lq cq kF3 Y) U, 0, 03, ca ER 4 V) U4 FR EtT 69 D r Eli m (D 0 m CD to LO N cc N zr DRtZCinLo. cli cc cl - C (C Lo 0 'T C) clicomC) m N kr L6 C6 C6C'4 0 0 m N Cr)N t-- 00 t- 0) m cl 0 C:) cr) U) N Lo (0Cl) LO tl- o m C, 0 m 0 T 0) coqrl- lr3 (C Q cQ Lr! r,! CCL Ca - r-- - 1 t- N 0 ;r N N t C\Fr, LO o) N N mN w V* V3 63 64 U) m coP-- M co m 0 0 0 It cc ND0LO (n co (0r- ai co V N G1 V C Gi C in 0 r C) It N 0 co 0r-- U') 0) C14 m C)N 69 61-3 V) V) ff). 69* (f). 64 01),6q w V) tq CF) 6% (n ui (n (A. to Iq co m m 0 C) N CF) to map 0WM - P-- 0 r- 0 0 0 CD IQif1 CN M a) m Ul) ca fR ke 64 03 cq 6q 69 cr) (0 't co t- In Iz 0 co 0 0V' a) m Lo r co LO co to LO CY) 0)CL rl O 0 I- N C C oc cl m - 1-- 1 00 0) 0 0 It N C\ d.: co i L6 N 69 w W, Gq 69 fA fa 63 ta V> V) 64 ff3 63 to 69 fA 69 Y4 EXHIBIT Assumptions: 1. NPV calculated asif the taxing agencies receive 29.65% of net revenues, /Note:This is proportionate to the former Redevelopment Agency's contribution to the project. Other funding sources made up the rest of the fundingi 2. $450,000 capital outlay by City is needed in Year 2 for tenant improvements/buildout to 3rd retail space, 3. Operating expenses based un historic performance of the asset. 4. Staff costs reduced from 1094to5Y6of gross income totaling$1,DO0 per year, This reflects costs for accounting, management of the property management consultant, and other oversight. 5. Vacancy reserve @Z%of gross income, G. Capital replacement reserve @ 1596of gross income. l Discount Rate is set atQ.5% based on information provided by James Chung, a retail expert and broker at Cassidy Turley. This discount rate represents the property's current condition which includes retail project with high vacancy, an unproven location, a site with physical limitations, and the added risk of having independent or "mom and pop-owned" tenants that typically have much greater risk. City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:18-506 Agenda Date:6/19/2018 Version:1 Item #:7. Closed Session Conference with Real Property Negotiators (Pursuant to Government Code Section 54956.8) Property: 200 Linden Avenue, 212 and 216 Baden Avenue Agency Negotiators: Alex Greenwood and Nell Selander Negotiating Parties:South San Francisco Successor Agency,City of South San Francisco,and Hisense REUS, LLC Under Negotiation: Price and Terms City of South San Francisco Printed on 6/15/2018Page 1 of 1 powered by Legistar™