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Home My WebLink About6/16/2004 - STAFF REPORTS (2) DATE: JUNE 16, 2004 TO: COMMUNITY REDEVELOPMENT AGENCY FROM: DIRECTOR OF COMMUNITY & ECONOMIC DEVELOPMENT APPROVAL OF AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY AND ESCROW INSTRUCTIONS WITH H&H INVESTMENTS, LLC OF LAS VEGAS, NEVADA FOR THE PURCHASE OF A 4.96 ACRE PARCEL AT THE NORTHWEST CORNER OF SUNRISE WAY AND TAHQUITZ CANYON WAY FOR THE PURPOSES OF FACILITATING A LAND SWAP, MERGED AREA#2, IN THE AMOUNT OF $2,575,000 RECOMMENDATION: It is recommended that the Agency approve an Agreement for Purchase and Sale of Real Property and Escrow Instructions with H & H Investments, LLC of Las Vegas, Nevada, in the amount of $2,575,000, for a 4.96 acre parcel for the purpose of facilitating a land swap for a parcel on East Palm Canyon Drive. SUMMARY: This Agreement facilitates the purchase by the Agency of a 4.96(gross)acre parcel at the northwest corner of Sunrise Way and Tahquitz Canyon Way in the amount of $2,575,000 for the purpose of facilitating a land swap for a parcel on East Palm Canyon Drive. The Agency will apply to the Bureau of Indian Affairs (BIA)for a Fee to Trust Transfer; simultaneously, the owner's representative of an 8 + acre parcel on East Palm Canyon Drive will apply to the BIA for a Trust to Fee Transfer to effectuate a swap of the two parcels. BACKGROUND: The Agency has a strong desire to assist VIP Motors (Palm Springs Mercedes, Infiniti and BMW) to improve its business. BMW corporate anticipates that within five years VIP's BMW sales will increase significantly. The dealership anticipates a more conservative growth, but still assumes an increase within that period of time. They need to identify by the end of 2004 the location where they'll build a new facility and be in by 2007. They need adequate land for a building of approximately 20,000-25,000 square feet, plus 20 service bays. Over the past few years, we've looked at a number of options for helping VIP expand. After considering several other locations in the vicinity, the parcel that works the best is the adjacent Indian-owned parcel to the west of BMW. In May, 2003 the Agency expressed its intent to Ernest Noia to facilitate a trade of his client's parcel for a fee simple piece elsewhere in the City. This is the best possible site for the BMW expansion, but in order to qualify for BMW's below-market financing the dealer would need to own the parcel fee simple, and not be in an Indian lease. The Agency has therefore proceeded for about the past 12 months on the land swap. In September, 2003, the Agency appraised a gross 4.96 (net 3.74) acre parcel in Section 14, at the northwest corner of Sunrise and Tahquitz, and started negotiating with the owner (Hank Gordon of H & H Investments, LLC)to purchase the property (the H & H Parcel). Our intent was to acquire the H & H parcel and swap parcels with the Indian owner of the parcel adjacent to BMW. Hank Gordon (iM `Own-00 of Laurich Properties acquired the parcel to develop a Vons-anchored shopping center. Our September appraisal, conducted by Lidgard &Associates of Orange, estimated a value of$2,575,000 for the parcel. Additionally, the H & H Parcel is encumbered by a covenant by Albertson's, the previous owner of the property,which prohibits the development of either a grocery or drug store on the corner. There are a number of options to dealing with the restriction: Gordon proceeds with the development of the center (either on his own, or under Agency- or Indian ownership)with the deed restriction on the corner parcel. His plan includes combining his parcel with the adjacent 5 acre parcel. The Agency could acquire the restriction from Albertson's either amicably or through a condemnation action. Under Health & Safety Code Section 33397 the Agency has a right to eliminate the restriction through proper notice to the holder, but it doesn't prevent the beneficiary of the restriction from seeking monetary damages from the Agency. The third issue is whether the restriction could remain on the title during the fee-to-trust transfer (it going back into Indian trust). Congress this year addressed a problem the BIA had last year on the issue of Agency-related covenants in the Grant Deed for a parcel that we sold to the Tribe. The BIA indicated that they could be flexible on the issue. It's helped by two things: (a) Congress amended the Federal Non-Deficiency Act in February of this year to allow deed restrictions placed by redevelopment agencies to stay on title (whether or not the change would apply to a restriction passed through by the Agency is something we need to look at); and, (b) the land would be placed in Trust already subject to a lease so that the Indian is not harmed by the restriction. Mr. Gordon, as the owner of the property, has been willing to accommodate the Agency's desire to acquire the parcel in order to swap, provided: (1) he still be able to develop a shopping center there, (2) he receives the appraised value, and (3) we can acquire it under threat of condemnation. Some of the timing on the business terms have changed somewhat since the Agency approved using part of the bond refinancing proceeds to facilitate this swap. We're now using bond proceeds plus some fund balance to acquire this parcel and process the fee-to-trust transfer through the BIA as the fee owner. Having the City/Agency as the applicant/proponent will speed things up since a big factor in the fee-to-trust transfer is getting other governmental approvals (city, county, state). Nola has requested through the BIA a swap of the Millie Browne parcel and the Laurich parcel. As a public agency, we hope to receive expedited processing through the BIA,which needs to approve the transaction (taking the Browne parcel out of Trust); the Tribe needs to waive its right of option to acquire the Browne parcel out of trust. The BIA will complete the appraisal on the Browne parcel (hopefully by the end of this week); we requested the swap prior to their hiring the appraiser. 0 ra The Agency also hired John Sanborn to complete the "Indian survey" of the Browne parcel, which is a necessary prerequisite of the swap. We need to still put together a DDA with VIP for the purchase of the Browne parcel upon the completion of the exchange at fair market value. We had perviously proposed that VIP advance to the Agency the estimated "purchase price" of the Browne parcel, estimated to be $2.1 million (to be confirmed by appraisal). This was to be secured by a Promissory Note made by the Agency and a Deed of Trust on the trade property, when acquired. However, the bond proceeds eliminate the need to do that and should make that part of the transaction much simpler. URAYMUNof Com & Economic Development APPROVED Executive Director ATTACHMENTS: 1. Resolution 2. Amendment No. 1 to the Owner Participation Agreement cra _a -3 RESOLUTION NO. OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS,CALIFORNIA,APPROVING AN AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY AND ESCROW INSTRUCTIONS WITH H & H INVESTMENTS, LLC OF LAS VEGAS, NEVADA FOR THE PURCHASE OF A 4.96 ACRE PARCEL AT THE NORTHWEST CORNER OF SUNRISE WAY AND TAHQUITZ CANYON WAY FOR THE PURPOSES OF FACILITATING A LAND SWAP, MERGED AREA#2 WHEREAS,the Community Redevelopment Agency of the City of Palm Springs, California ("Agency") is constituted under the Community Redevelopment Law(California Health and Safety Code Section 33000 et. seq.)to carry out the purpose as the redevelopment in the City of Palm Springs ("the City"); and WHEREAS, Section 33430 of the Community Redevelopment Law allows that an agency may, "for purposes of redevelopment, sell, lease, for a period not to exceed 99 years, exchange, subdivide, transfer, assign, pledge, encumber by mortgage, deed of trust, or otherwise, or otherwise dispose of any real or personal property or any interest in property;" and WHEREAS, Section 33432 of the Community Redevelopment Law requires that any such lease shall be conditioned on the redevelopment and use of the property in conformity with . the redevelopment plan; and NOW, THEREFORE, BE IT RESOLVED by the Community Redevelopment Agency of the City of Palm Springs as follows: SECTION 1. The Agreement for Purchase and Sale of Real Property and Escrow Instructions with H & H Investments, LLC of Las Vegas, Nevada, in the amount of$2,575,000, for a 4.96 acre parcel for the purpose of facilitating a land swap for a parcel on East Palm Canyon is hereby approved and incorporated herein by this reference. SECTION 2. The Chairman of the Agency, and/or his designee, is authorized to execute all necessary documents, in a form approved by the Agency Counsel. ADOPTED this day of , 2004. AYES: NOES: ABSENT: ATTEST: COMMUNITY REDEVELOPMENT AGENCY CITY OF PALM SPRINGS, CALIFORNIA By Assistant Secretary Chairman REVIEWED & APPROVED