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HomeMy WebLinkAboutE-09 Purchase and Sale Agreement with State of California - Azusa Orange ArmoryCONSENT ITEM E-9 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: TROY L. BUTZLAFF, ICMA-CM, CITY MANAGER FROM: MARCO MARTINEZ, CITY ATTORNEY DATE: NOVEMBER 7, 2016 SUBJECT: PURCHASE OF AZUSA-ORANGE ARMORY PROPERTY FROM STATE OF CALIFORNIA SUMMARY: Since 1948, the State of California has owned an approximately 1.5 acre property adjacent to Memorial Park at 340 N. Orange Avenue. Officially, the property is classified as a State National Guard armory (the “Azusa-Orange Armory”). The California National Guard occupied the Azusa-Orange Armory until 2006 when a new state-of-the-art armory located north of the existing facility off of Sierra Madre Avenue was finally constructed. Once the California National Guard relocated to their new facility, the State leased the former armory to the City of Azusa for recreational and community programs. Under State law, the State may sell an armory for fair market value, provided the Legislature has first authorized its sale. As of January 1, 2016, the Legislature has authorized the sale of the Azusa-Orange Armory. Over the last few months, Staff has been negotiating a purchase and sale agreement with the State (Attachment 1). This action approves a purchase and sale agreement with the State of California for the purchase of the Azusa-Orange Armory property and authorizes the City Manager to execute all documents on behalf of the City. RECOMMENDATION: Staff recommends the City Council take the following actions: 1) Approve a purchase and sale agreement with the State of California for the purchase of the Azusa-Orange Armory property, on the terms and conditions specified therein. 2) Authorize the City Manager to execute, in a form acceptable to the City Attorney, all document s necessary to effectuate the purchase of the Azusa-Orange Armory property. DISCUSSION: Since 1948, the State of California has owned an approximately 1.5 acre property adjacent to Memorial Park at 340 N. Orange Avenue. Officially, the property is classified a State National Guard armory (the “Azusa-Orange Armory”). ”). The California National Guard occupied the Azusa-Orange Armory until APPROVED COUNCIL MEETING 11/7/2016 Purchase and Sale Agreement – Azusa-Orange Armory November 7, 2016 Page 2 of 3 2006 when a new state-of-the-art armory located north of the existing facility off of Sierra Madre Avenue was finally constructed. Once the California National Guard relocated to their new facility, the State leased the former armory to the City of Azusa for recreational and community programs. Under Section 435 of the California Military and Veterans Code, the State may sell an armory for fair market value, provided the Legislature has first authorized its sale. As of January 1, 2016, Senate Bill 536 has specifically authorized the State to sell the Azusa-Orange Armory. Further, because the property is located within Azusa City limits, Section 435 requires the State to first offer the property for sale to the City. Over the last several months, Staff has been negotiating a purchase and sale agreement with the State (Attachment 1). The principal deal points of the Agreement are as follows: ▪ Sale price of $1,736,065.28, payable in three installments of $578,688.42, $578,688.43 and $578,688.43, respectively. The first installment is due at close of escrow. The second is due on the first anniversary of close of escrow, and the third is due on the second anniversary of the close of escrow. ▪ The second and third installment payments will be secured by a standard promissory note and deed of trust recorded against the property. Once the third installment payment is made, the State will release the Note and Trust Deed. ▪ No advance deposit of the purchase price is required from the City prior to close of escrow. ▪ During escrow, the State will abate rent due from the City under its existing lease for the Armory. However, if escrow does not close for any reason, the City must reimburse the State for any abated rent payments required. ▪ The City will have 10 calendar days after the Agreement’s effective date to review the title report and either approve or disapprove title. If the City disapproves of title, it may either go forward with the transaction or terminate the Agreement/escrow. Staff has already reviewed the preliminary title report and have identified no significant title issues with the property. ▪ The City will also have 30 calendar days after the Agreement’s effective date to inspect and evaluate the property for environmental issues, General Plan and zoning consistency, development potential, seismic/soils issues, etc. (the “Contingency Period”). If the City disapproves of the property’s condition, it may terminate the Agreement/escrow. Given the short time frame provided in the Agreement, Staff has already ordered a Phase I environmental assessment of the property to ensure that results come in before the Contingency Period expires. Staff has noted no major problems with the property since it began leasing it in 2008. Further, Staff intends to bring this item before the Planning Commission at its November 16, 2016 meeting to request a finding that the purchase of this property is consistent with the City’s General Plan, pursuant Government Code Section 65402. ▪ Close of escrow to occur no later than 30 calendar days after expiration of the Contingency Period. Under Military and Veterans Code Section 435, all armory sales are “as is”. All title insurance premiums, recording and escrow costs are to be paid by the City. Purchase and Sale Agreement – Azusa-Orange Armory November 7, 2016 Page 3 of 3 Staff recommends that the City Council authorize the City’s entry into the purchase and sale agreement with the State of California for the purchase of the Azusa-Orange Armory Property, on the terms and conditions specified therein. FISCAL IMPACT: The City has sufficient Rosedale Parks Contribution Funds to make the property purchase in three annual installments outlined in the discussion section above for a not to exceed price of $1,736,065.28. Upon Council approval, Staff will administer the required mid-year budget amendment for the FY 2016/17 installment and will budget accordingly in subsequent years. Prepared by: Fiscal Impact Reviewed by: Marco Martinez Talika M. Johnson City Attorney Director of Finance Reviewed and Approved: Reviewed and Approved: Louie F. Lacasella Troy L. Butzlaff, ICMA-CM Management Analyst City Manager Attachment: 1) Agreement or Purchase and Sale and Initial Escrow Instructions – Azusa-Orange Armory.