HomeMy WebLinkAbout2018-11-28 e-packet@6:31Wednesday, November 28, 2018
6:31 PM
City of South San Francisco
P.O. Box 711 (City Hall, 400 Grand Avenue)
South San Francisco, CA
Municipal Services Building, Council Chambers
33 Arroyo Drive, South San Francisco, CA
Special Successor Agency to the Redevelopment Agency
Special Meeting Agenda
November 28, 2018Special Successor Agency to the
Redevelopment Agency
Special Meeting Agenda
NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of
California, the Successor Agency to the Redevelopment Agency will hold a Special Meeting on Wednesday,
November 28, 2018, at 6:31 p.m., in the City Council Chambers, Municipal Services Building, 33 Arroyo
Drive, South San Francisco, California.
Call To Order.
Roll Call.
Agenda Review.
Public Comments - comments are limited to items on the Special Meeting Agenda.
MATTERS FOR CONSIDERATION
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 $2,000,000 (Alex Greenwood,
Economic and Community Development Director).
1.
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 $2,000,000.
1a.
Adjournment.
Page 2 City of South San Francisco Printed on 1/17/2019
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:18-1023 Agenda Date:11/28/2018
Version:1 Item #:1.
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 $2,000,000 (Alex Greenwood,
Economic and Community Development Director).
RECOMMENDATION
It is recommended that the South San Francisco Successor Agency 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
(APN 012-314-220) to a fixed amount of $2,000,000.
BACKGROUND/DISCUSSION
In December 2016,Sares Regis Group of Northern California purchased six sites from the Successor Agency
(“Agency”)for $4,000,000.For Phase 1 of the project,two of the sites,Parcels A and D,were entitled for 260
market rate rental apartments, Parcel B was used as a parking lot, and Parcel C was entitled for 12 townhomes.
Under the original Purchase and Sale Agreement (PSA),it was contemplated that Parcel C (216 Miller Avenue)
could be part of a second phase of development,either as a 12-townhome project or as part of a larger land
assemblage.As a result,Parcel C was not included in the $4 million sale price in 2016.Currently,Sares Regis
has decided to proceed with the property assemblage, instead of the 12-townhome project.
Under the approved and executed PSA,an appraisal was required to determine the supplemental purchase price
of Parcel C. The relevant section of the PSA appears below.
2.3 Supplemental Purchase Price for Parcel C.If the Buyer constructs Parcel C (whether as (i)
a 12 unit town home development consistent with the Project Approvals (“12 Unit Project’)or (ii)as part
of a revised development under the potential Land Assembly Option defined in Section 5.6),the
additional land value payable to the Seller for Parcel C will be determined either by (X)a residual land
value appraisal for Parcel C or,at Seller’s discretion,(Y)on a comparison sales based appraisal both of
which will be prepared by a certified appraiser mutually selected by the Seller and Buyer within sixty
(60)days of the date Buyer provides written notice of either its intent to pursue the Revised Parcel C
Entitlements its intent to abandon the Revised Parcel C Entitlements and proceed with construction of
the 12 Unit Project (“Supplemental Purchase Price”).In the event that the parties do not agree on an
appraiser,the Seller shall identify three certified appraisers with experience appraising properties in San
Mateo County and each Party shall strike one appraiser and the remaining appraiser shall be retained to
conduct the appraisal.The costs of the appraisal shall be shared equally between the Seller and Buyer.
Buyer shall pay Seller the Supplemental Purchase Price prior to the earlier of ninety (90)days after
completion of the appraisal or issuance of the first building permit by the City for Parcel C.This
provision shall not apply if Buyer re-conveys Parcel C to Seller pursuant to Section 5.6(e)(v).
Appraisal and Price Offer
Pursuant to Section 2.3 of the PSA,the Agency and Sares Regis mutually selected Vathana Duong of ColliersCity of South San Francisco Printed on 11/26/2018Page 1 of 3
powered by Legistar™
File #:18-1023 Agenda Date:11/28/2018
Version:1 Item #:1.
Pursuant to Section 2.3 of the PSA,the Agency and Sares Regis mutually selected Vathana Duong of Colliers
International Valuation and Advisory Services to conduct the appraisal.The appraisal valued Parcel C at
$3,700,000.The appraisal methodology looked at comparable sales,as well as the residual land value of an
assumed 195-unit development (Sares Regis is currently pursuing entitlements for a 195-unit development on
the land assemblage that includes Parcel C)to determine an unentitled land value for the property.Finally,costs
associated with soil remediation and liquefiable soil abatement were deducted to arrive at a reconciled “as-is”
value.
Sares Regis contested the appraised value of Parcel C.Sares Regis initially offered $1,118,538 for Parcel C,
stating the cost of assembling the larger development site affects their ability to offer more for the property and
justifying their offer by estimating a price for the property if sold as a stand-alone site.
The appraisal,in testing the value of Parcel C to determine its highest and best use,determined that if
developed alone,rather than as part of the larger land assemblage,Parcel C could accommodate just 49 units -
which is 23 fewer units than the 72 units that can be accommodated on site as part of the land assemblage
scenario.Using the appraised,reconciled,“as-is”value of Parcel C,$66,000,the loss in value of the stand-
alone,rather than assembled site,is roughly $1.5 million (loss in value =reduction of 23 units x $66,000 per
unit).Sares Regis further argues that there is a construction cost premium for developing smaller sites,as
efficiencies are lost. They estimate this cost, and associated loss in value, at $1.3 million.
In a separate analysis of the stand-alone development option for Parcel C,staff determined the realistic price
offer the Agency could expect to receive would be approximately $1.5 million.This was determined by taking
the appraised residual land value of each unit,$57,928,multiplying it by the number of units that can feasibly
be built on the property,49,reducing the total amount by the cost of remediation,roughly $1.06 million,and
calculating the present value of the expected sale price (5% discount rate over three years).
Finally,staff evaluated the property tax implications over the next ten years of selling Parcel C to Sares Regis
versus selling the property three years from now as a stand-alone site.If Sares Regis’offer is accepted,the
taxing entities could expect to begin receiving new,higher property taxes on the 195-unit development three
years from now.Whereas,going back out to bid,selecting a new developer,and proceeding through the
Exclusive Negotiating Right Agreement process to arrive at a Purchase and Sale Agreement,followed by
construction of the project,would delay new,property tax payments on the 49-unit development until five years
from now.Staff conservatively estimates that the property taxes the taxing entities could expect to receive over
the next ten years to be $7,805,274 if Parcel C is sold to Sares Regis and just $2,260,036 if it is sold as a stand-
alone site.
Although,Sares Regis made an initial offer of $1,118,538 for Parcel C,the County of San Mateo Countywide
Oversight Board (“Oversight Board”)approval is required before the sale is finalized.Staff presented the price
offer to the Oversight Board at the September 18,2018 and October 16,2018 meetings as an informational
item.Staff returned to the Oversight Board on November 26,2018 with a recommendation that the Oversight
Board approve the sale price.The Oversight Board rejected the $1,118,538 price offer and continued to
negotiate with Sares Regis.A final sale price of $2,000,000 was negotiated and approved by both parties,
subject to Successor Agency approval.
CONCLUSION
Sares Regis has provided a best and final price offer of $2,000,000.Because Sares Regis’offer allows for a
larger development to move forward,which will produce more property tax revenue in the short and long term
than selling Parcel C as a stand-alone development site,it is recommended that the Successor Agency adopt a
City of South San Francisco Printed on 11/26/2018Page 2 of 3
powered by Legistar™
File #:18-1023 Agenda Date:11/28/2018
Version:1 Item #:1.
than selling Parcel C as a stand-alone development site,it is recommended that the Successor Agency adopt a
resolution approving the first amendment to the Purchase and Sale Agreement with Miller/Cypress SSF,LLC
amending the sale price of 216 Miller Avenue to $2,000,000.
City of South San Francisco Printed on 11/26/2018Page 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 #:18-1022 Agenda Date:11/28/2018
Version:1 Item #:1a.
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 $2,000,000.
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,were 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,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
WHEREAS,the Successor Agency was the owner of certain real property located in the City of South San
Francisco ("City"),California,known as County Assessor's Parcel Number 012-317-110 ("401 AirportCity of South San Francisco Printed on 1/17/2019Page 1 of 3
powered by Legistar™
File #:18-1022 Agenda Date:11/28/2018
Version:1 Item #:1a.
Francisco ("City"),California,known as County Assessor's Parcel Number 012-317-110 ("401 Airport
Boulevard")and 012-317-100 ("411 Airport Boulevard")(collectively “Parcel A”),012-317-090 ("421 Airport
Boulevard"),012-314-100 ("405 Cypress Avenue")(collectively “Parcel B”),012-314-220 ("216 Miller
Avenue"or “Parcel C”),012-318-080 ("315 Airport Boulevard"or “Parcel D”)and collectively referred to as
the "Properties"; and,
WHEREAS,on February 10,2016,the Agency adopted Resolution number 03-2016 approving the Purchase
and Sale Agreement (“PSA”)with Miller Cypress SSF,LLC (“Developer”)for the acquisition and development
of the Properties; and
WHEREAS, the PSA was executed and became effective on February 23, 2016; and
WHEREAS, the Properties were conveyed to the Developer; and
WHEREAS,on February 10,2016,entitlements were approved by the City Council for 260 market rate rental
apartments on two assembled sites,Parcel A and D,a parking lot on Parcel B,and 12 townhomes on Parcel C;
and
WHEREAS,the Developer purchased six sites,comprising Parcel A,B,C and D,from the Successor
Agency/City of South San Francisco (“City”) for $4,000,000; and
WHEREAS,pursuant to the terms of the PSA,Parcel C was transferred to Developer,but was not included in
the $4,000,000 sale price; and
WHEREAS,Developer has indicated it is pursuing the Land Assembly Option,as contemplated in the PSA;
and
WHEREAS,the appraisal,dated July 3,2018,valued Parcel C at $3,700,000 as part of a larger development;
and
WHEREAS,due to increases in construction costs,the cost to assemble neighboring properties for the
development,and slow growth in rental revenues Developer has informed the Successor Agency that it is
unable to pay the appraised value; and
WHEREAS,upon issuance of a building permit for Phase 2 of the Cadence project,the taxing entities will
receive sale proceeds consistent with the Compensation Agreement; and
WHEREAS,pursuant to the terms of the Compensation Agreement,the Oversight Board must approve the final
sale price; and
WHEREAS,at the November 26,2018 the Oversight Board amended and approved the sale price of
$2,000,000, subject to Successor Agency approval.
NOW,THEREFORE,BE IT RESOLVED that the South San Francisco Successor Agency does hereby resolve
as follows:
1.The foregoing recitals are true and correct and made a part of this Resolution.
City of South San Francisco Printed on 1/17/2019Page 2 of 3
powered by Legistar™
File #:18-1022 Agenda Date:11/28/2018
Version:1 Item #:1a.
2.The proposed actions in this Resolution are consistent with the Long Range Property Management Plan.
3.The First Amendment to the Purchase and Sale Agreement,amending the supplemental purchase price
for 216 Miller Avenue (APN 012-314-220)to a fixed amount of $2,000,000,a draft of which is attached
hereto as Exhibit A and incorporated herein, is hereby approved.
4.The Executive Director,or his designee,is authorized to execute the First Amendment to the Purchase
and Sale Agreement,a draft of which is attached hereto as Exhibit A and incorporated herein,subject to
minor amendments that do not materially increase the Successor Agency’s obligations.
5.The Executive Director,or his designee,is authorized to execute any necessary documents related to the
First Amendment to the Purchase and Sale Agreement.
6.The Executive Director,or his designee,is authorized take any and all other actions necessary to
implement this intent of this Resolution, subject to approval as to form by Agency Counsel.
*****
City of South San Francisco Printed on 1/17/2019Page 3 of 3
powered by Legistar™
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
This First Amendment to the Purchase and Sale Agreement and Joint Escrow
Instructions (this “First Amendment”) is made effective as of _________________,
2018 (“Effective Date”) by and between the South San Francisco Successor Agency, a
public agency (“Seller” or “Agency”) and SSF Miller Cypress Phase 2, LLC(“Buyer”),
successor-in-interest to Miller Cypress SSF, LLC, which is the date this Agreement was
approved by the South San Francisco Oversight Board ("Oversight Board"). Seller and
Buyer are each individually referred to herein as a “Party” and, collectively, as the
“Parties.”
RECITALS
A. WHEREAS, Seller and Miller Cypress SSF, LLC entered into that certain
Purchase and Sale Agreement dated August 23, 2016 (the “Agreement”) with respect to
that certain real property located at known as County Assessor’s Parcel Numbers 012-
317-110 (401 Airport Boulevard)(“Parcel A.1”), 012-317-100 (411 Airport Boulevard)
(“Parcel A.2”), 012-317-090 (421 Airport Boulevard) (“Parcel A.3”), 012-318-030 (315
Airport Boulevard) (“Parcel D”), 012-314-100 (405 Cypress Avenue) “(Parcel B”), and
012-314-220 (216 Miller Avenue parking lot) (“Parcel C”). Parcel A.1, Parcel A.2 and
Parcel A.3 are collectively, “Parcel A.” Parcel A, Parcel B, Parcel C, and Parcel D are
collectively the “Property.”
B. WHEREAS, the Agreement was approved by the Oversight Board by
Resolution 4-2016 which also authorized the transfer of the property to the City of South
San Francisco (“City”) for subsequent conveyance to Miller Cypress SSF, LLC pursuant
to the terms of the Agreement.
C. WHEREAS, Miller Cypress SSF, LLC subsequently assigned its interest
and obligations under the Agreement and the related development agreement to Miller
Cypress PRI, LLC.
D. WHEREAS, at a joint meeting of the City Council and the Agency held on
November 30, 2016, the City Council and the Agency approved, by motion, a
Memorandum of Understanding between the City and the Agency whereby the Agency
agreed to convey the Property to the City as part of the Close of Escrow as set forth in
Section 5 of the Agreement and the City agreed that it would subsequently convey the
Property to SSF Miller Cypress PRI, LLC pursuant to the terms and at the times set forth
in the Agreement as part of the Close of Escrow.
E. WHEREAS, the Agency and City entered into a grant deed to convey the
Property to the City as part of the Close of Escrow as set forth in Section 5 of the
Agreement solely for the purpose of allowing the City to thereafter convey the applicable
Property to SSF Miller Cypress PRI, LLC pursuant to the terms and at the times set forth
in the Agreement.
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT –
401 AIRPORT BLVD, 411 AIRPORT BLVD, 421 AIRPORT BLVD, 315 AIRPORT BLVD, 405 CYPRESS AVE AND 216
MILLER AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA
Page 2 of 4
F. WHEREAS, SSF Miller Cypress PRI LLC changed its name to BIT SSF
Miller Cypress, LLC.
G. WHEREAS, BIT SSF Miller Cypress, LLC subsequently assigned its
interest and obligations under the Agreement and the related development agreement to
Buyer for the portion of the Property known as Parcel C (also known as 216 Miller
Avenue).
H. WHEREAS, pursuant to the grant deed between the Successor Agency
and the City, the Parties agree that the City conveyed the property in accordance with the
above-described Memorandum of Understanding and did not assume any obligations or
liabilities of the Agency as set forth in the Agreement and that such obligations and
liabilities remain the obligations and liabilities of the Agency.
I. WHEREAS, Buyer has notified the City and the Agency of its intent to
pursue the Land Assembly Option, as defined in Section 5.6 of the Agreement.
J. Seller and Buyer now desire to amend certain provisions of the
Agreement, as set forth herein.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and incorporating all of the above as
though set forth in full herein and in consideration of all the recitals, conditions and
agreements contained herein, the parties agree to amend the Agreement as follows:
1. Section 2.3 of the Agreement is hereby deleted in its entirety and replaced
with the following:
2.3 Supplemental Purchase Price for Parcel C. If the Buyer constructs
Parcel C (whether as (i) a 12-unit town home development consistent with the
Project Approvals (“12 Unit Project”) or (ii) as part of a revised development
under the potential Land Assembly Option defined in Section 5.6 (“Cadence
Phase 2 Project”)), Buyer shall pay Seller a fixed Supplemental Purchase Price
of Two Million Dollars ($2,000,000) (the “Supplemental Purchase Price”),
which amount shall be paid in full at the issuance of the first building permit for
the Cadence Phase 2 Project. the additional land value payable to the Seller for
Parcel C shall be One Million Dollars will be determined either by (X) a residual
land value appraisal for Parcel C or, at Seller’s discretion, (Y) on a comparison
sales based appraisal both of which will be prepared by a certified appraiser
mutually selected by the Seller and Buyer within sixty (60) days of the date Buyer
provides written notice of either its intent to pursue the Revised Parcel C
Entitlements its intent to abandon the Revised Parcel C Entitlements and proceed
with construction of the 12 Unit Project (“Supplemental Purchase Price”). In
the event that the parties do not agree on an appraiser, the Seller shall identify
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT –
401 AIRPORT BLVD, 411 AIRPORT BLVD, 421 AIRPORT BLVD, 315 AIRPORT BLVD, 405 CYPRESS AVE AND 216
MILLER AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA
Page 3 of 4
three certified appraisers with experience appraising properties in San Mateo
County and each Party shall strike one appraiser and the remaining appraiser shall
be retained to conduct the appraisal. The costs of the appraisal shall be shared
equally between the Seller and Buyer. Buyer shall pay Seller the Supplemental
Purchase Price prior to the earlier of ninety (90) days after completion of the
appraisal or issuance of the first building permit by the City for Parcel C. This
provision shall not apply if Buyer re-conveys Parcel C to Seller pursuant to
Section 5.6(e)(v).
2. General Provisions. Each party hereto has received independent legal
advice from its attorneys with respect to the advisability of executing this First Amendment
and the meaning of the provisions hereof. The provisions of this First Amendment shall
be construed as to the fair meaning and not for or against any party based upon any
attribution of such party as the sole source of the language in question. Except as expressly
amended pursuant to this First Amendment, the terms and provisions of the Agreement
shall remain unmodified and shall continue in full force and effect, and Buyer and Seller
hereby ratify and affirm all their respective rights and obligations under the Agreement.
Any capitalized terms not defined herein shall have the meaning ascribed to them in the
Agreement. In the event of any conflict between this First Amendment and the Agreement,
this First Amendment shall govern. The terms and provisions of this First Amendment,
together with the Agreement, shall constitute all of the terms and provisions to which Buyer
and Seller have agreed with respect to the transaction governed hereby, and there are no
other terms and provisions, oral or written, that apply to the Agreement and/or the Property
other than as set forth in the Agreement as modified by this First Amendment. The
provisions of this First Amendment shall apply to, be binding upon, and inure to the benefit
of the parties hereto and to their respective successors and assigns. This First Amendment
may be executed in multiple counterparts, all of which shall constitute an original, and all
of which together shall constitute a single instrument. Counterparts of this First
Amendment executed and delivered by facsimile, email or other means of electronic
delivery shall constitute originals for all purposes.
IN WITNESS WHEREOF, the parties have executed this First Amendment as
of the Effective Date.
SIGNATURES ON FOLLOWING PAGES.
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT –
401 AIRPORT BLVD, 411 AIRPORT BLVD, 421 AIRPORT BLVD, 315 AIRPORT BLVD, 405 CYPRESS AVE AND 216
MILLER AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA
Page 4 of 4
SELLER
SOUTH SAN FRANCISCO SUCCESSOR AGENCY
By: _______________________________
Mike Futrell
Executive Director
ATTEST:
By: _______________________________
Agency Clerk
APPROVED AS TO FORM:
By: _______________________________
Jason Rosenberg
Agency Counsel
BUYER:
SSF MILLER CYPRESS PHASE 2, LLC
a Delaware limited liability company
By: SRGNC MF Miller Cypress Phase 2, LLC,
a Delaware limited liability company
Sole Member
By: SRGNC MF, LLC
a Delaware limited liability company
Sole Member
By:
Mark R. Kroll
President