Loading...
RA2005/12/06ANAHEIM, CALIFORNIA ANAHEIM REDEVELOPMENT AGENCY D ece m be r 6, 2005 The Anaheim Redevelopment Agency met in regular session in the Chambers of Anaheim City Hall located at 200 South Anaheim Boulevard. Chairman Pringle called the meeting to order at 6:50 P.M. Present: Chairman Curt Pringle, Agency Members: Richard Chavez, Lord Galloway, Bob Hernandez, and Harry Sidhu Staff Present: City Manager Dave Morgan, City Attorney Jack White, and Secretary Sheryll Schroeder A copy of the agenda for the meeting of the Anaheim Redevelopment Agency was posted on December 2, 2005 at the City Hall exterior bulletin board. ADDITIONS /DELETIONS TO THE AGENDA: None PUBLIC COMMENTS: No remarks offered during the joint Agency /Council /Housing Authority public comment session related to the Anaheim Redevelopment Agency. At 6:50 P.M, Council session was adjourned to consider the Redevelopment Consent Calendar. CONSENT CALENDAR ITEMS 1 - 2 Agency Member Sidhu removed Item 1 from the consent calendar for further discussion. Agency Member Hernandez moved to approve the balance of the consent calendar; seconded by Agency Member Galloway. Roll call vote: Ayes - 5; Chairman Pringle, Agency Members: Chavez, Galloway, Hernandez and Sidhu. Noes - 0. Motion carried. 2. Approve minutes of the Agency meeting of November 15, 2005. END OF CONSENT CALENDAR: 1. Approve and authorize the Executive Director to execute a Disposition and Development 3734 Agreement by and among the Anaheim Redevelopment Agency, and the City of Anaheim, and DWWH, Inc. for the purpose of improving the property located at 8323 and 8375 East La Palma (related to Agency Item # 26). ELisa Stipkovich, Community Development Director, indicated Item No. 1 was related to Item No. 26 on the Council agenda and was a recommendation by staff to sell property to the Agency for the Agency to dispose of by selling to DWWH, Inc. She stated the property had been owned by the ANAHEIM REDEVELOPMENT AGENCY MINUTES December 6, 2005 Page 2 City for a very long time and leased to two auto dealerships, and the 25 -year lease had two five year renewal options and 15 years remaining and that staff had been negotiating with the tenant for 18 months. The property would be sold for $5.65 million, with Ms. Stipkovich explaining if the site had been unencumbered by the lease, the value of the property was $8 million. She reported an appraisal had been completed in 2004 which valued the site significantly below the purchase price due to the lease encumbrance. She noted there were two automobile dealers on the site, Acura and Honda, who wanted to acquire the property and to put in at least $2.2 million in improvements. She reported the amount of sales tax the auto dealers generated to the City was $600,000 annually and they were projected to generate about $800,000 for the next year. Based on the terms of the land price and the projected sales tax for this property, Ms. Stipkovich indicated staff recommended entering into the agreement and approving the sale of the property. Agency Member Sidhu asked Ms. Stipkovich to explain what had happened since the item had been on the November 15 agenda. Ms. Stipkovich indicated a question had been raised as to the value of the property and staff had been requested to renegotiate a higher price for the land. She advised the tenant agreed to pay $5.65 million or more than they considered fair for the property in order to try and get the transaction completed. Agency Member Sidhu asked if they offered the 5.3 million or the City accepted that offer. She replied that the staff had agreed to accept the $5.3 million purchase price and Ms. Stipkovich indicated staff agreed to recommend that figure because it was well above the appraised value and also higher than an analysis performed by an independent real estate economist. Agency Member Sidhu clarified that it was 5.3 and just because the City questioned it, they increased the price $350,000 within a week's time. She responded that they did in order to get the transaction completed. Agency Member Sidhu asked when the appraisal was done and Ms. Stipkovich noted the appraisal was done over a year and a half ago when they first started negotiating. He asked why the City was considering selling this property and Ms. Stipkovich stated it was surplus, had been purchased some time ago by Public Utilities as a potential water well site and later determined not feasible for that use and no other department was interested in the property. The second reason, she pointed out, was to accommodate one of the City's highest revenue generators with the added benefit of increasing future sales tax generation. She emphasized the purchase price was about 40 percent higher than the lowest appraised value reflected in the 2004 appraisal. Agency Member Sidhu said when the lease was done in 1984, it was done at a very low rate just to attract them and based on that the appraisal has come up with value based on the existing lease that is on the property now and she responded that was correct. He asked if staff had determined the price based on the appraisal. She explained they used the appraisal and a real estate economist's analysis as well. He asked if she believed that an appraisal that was done by MIA was the actual truth. She responded that she thought they were reputable appraisers. He asked if she was aware that in the appraisal it said it was only good for six months, to which she replied she knew that, staff was not accepting the value that was in the appraisal, with this price and even with the 5.3, it was a 35% increase. She thought that was a significant amount of appreciation for a year and a half. He indicated that when the property went from 5.35 to 5.65 in a week, that indicated that the value of the property was much more than what it was being sold for. She responded that they had to look at independent objective analysis of what the fair market value is. She added that there were representatives in attendance from the auto franchise owner, they have told Ms. Stipkovich that in order to get the transaction done, they were willing to go to what they felt was beyond a fair value. She said they were trying, in good faith, to present an offer that they thought was the highest they were willing to go. Agency Member Sidhu said the Acura dealership had already been remodeled, spending 2.2 million. She stated the Acura dealer had already spent $2.2 million in remodeling and the additional improvements would be for the Honda dealership and the agreement would require them to complete at least $2.2 million worth of improvements and would also require that the site remain auto sales for 15 years or the City would get the differential in the value between $8 million and ANAHEIM REDEVELOPMENT AGENCY MINUTES December 6, 2005 Page 3 $5.65 million if the land use changed within that 15 year period. Agency Member Sidhu remarked the appraiser stated it might be best to hold onto the property as a long -term lease investment. Ms. Stipkovich responded the appraiser did not look at any revenue stream coming to the City from the property but solely viewed this as a real estate transaction and had indicated, by holding onto the property and letting the lease burn off, it might be a better investment. Staff, she explained, looked at the sale in terms of increasing future sales tax for more than 15 years by disposing of surplus land and encouraging successful business operators to continue to invest in Anaheim. Agency Member Sidhu asked if the appraiser or real estate expert provided a comparison of commercial property being sold in the neighborhood and Ms. Stipkovich indicated staff had looked at what unencumbered real estate was selling for in terms of commercial properties which came to $20 per square foot while the purchase price of $5.65 million reflected $17 per square foot. Chairman Pringle remarked the property was straddled by a power line and had limited use and limited access and that years ago; the City decided to get revenue from it and allowed two auto dealers to lease the property. Two years ago, he stated, an automobile company had purchased the two dealerships and immediately put $2 million in upgrades into that investment which now generated $600,000 annually in sales tax to Anaheim and was projected to generate $800,000 a year. He commented the auto dealer had come to the City more than a year ago indicating an interest in buying the property as they wanted to invest another $2.2 million in upgrading the Honda dealership and did not feel investing multimillions given the remaining options on the lease was economically feasible. Chairman Pringle added that most cities push for car dealers to create a revenue stream for general funds and Anaheim had two car dealerships wanting to lock in auto sales for the next 15 years. Chairman Pringle complimented Ms. Stipkovich on her tenacity in getting this deal and for ensuring the City retain a significant revenue stream. Agency Member Hernandez thanked staff for their diligence on this agreement remarking the auto dealership would not be improving their property if they did not think they would improve sales and with improved sales came an additional benefit back to the City in increased sales tax revenue. Agency Member Hernandez was supportive of the agreement and confirmed the requirement for the differential between $8 million and the purchase price, should the land use be changed during the term of the agreement would be a deed restriction. Agency Member Galloway also thanked staff for their hard work at retaining this business in the City and generating good will towards the business community. Agency Member Chavez would support the project and suggested going back to the original purchase price of $5.3 million. Agency Member Sidhu stated he believed the City had a fiduciary duty to spend dollars wisely and without an up -to -date appraisal or bidding comparisons, the property could be undervalued and recommended postponing this action for another 30 to 90 days to allow bidding for the property to get the best value for the site which could potentially provide for affordable housing or other uses. Chairman Pringle noted there were four Agency members supportive of the property sale who did not discount the fact that nearly a million dollars of revenue stream was received by the City each year as a result of this business operation. The City would still lose money by selling the property for residential use, he pointed out, versus the overall sales tax generated by the auto dealerships, even if the site was possible for residential use. Chairman Pringle recommended and Agency Member Chavez concurred, to support the proposal as written. Agency Member Hernandez moved to approve the Disposition and Development Agreement with the City of Anaheim, and DWWH, Inc. for the purpose of improving the property located at 8323 and 8375 East La Palma; ANAHEIM REDEVELOPMENT AGENCY MINUTES December 6, 2005 Page 4 seconded by Agency Member Chavez. Roll call vote: Ayes - 4; Chairman Pringle, Agency Members: Chavez, Galloway, and Hernandez. Noes — 1, Agency Member Sidhu. Motion carried. ADJOURNMENT: There being no further business, Chairman Pringle adjourned the Anaheim Redevelopment Agenc meeting at 7:15 P.M. Sheryll Schroeder, MMC Secretary, Anaheim Redevelopment Agency