HomeMy WebLinkAboutRES NO 73-96RESOLUTION
RESOLUTION AUTHORIZING CONVEYANCE
OF PROPERTY AT 2t20 "L" STREET
WHEREAS, the City of Bakersfield and the Central District Development Agency
(CDDA) desire to effectuate the purposes of the redevelopment plan within the
redevelopment project area; and
WHEREAS, the CDDA wishes to assist KGET-TV ("Developer") in the acquisition
and rehabilitation of that real property located at 2120 "L" Street in the City of Bakersfield;
and
WHEREAS, said real property is within the redevelopment project area and is
unoccupied; and
WHEREAS, the Implementation Plan adopted by the CDDA in 1994 seeks to
promote the preservation and enhancement of commercial areas within the project area,
as well as promote the economic revitalization of the project area; and
WHEREAS, currently, said real property contains a 27,000 square-foot, cinder block
building and is zoned Commercial Center; and
WHEREAS, to bring said real property to a standard where it can be occupied,
Developer must remediate any hazardous or toxic materials, install a new heating and air
conditioning system, install new insulation and bring the building into compliance with the
Americans with Disabilities Act; and
WHEREAS, the estimate of such rehabilitation exceeds One Million Dollars
($1,000,000.00); and
WHEREAS, without such rehabilitation, said real property would not be
competitively marketable in the downtown Bakersfield area; and
WHEREAS, Developer intends to relocate its production studio to this location and
could not do so without assistance from the CDDA; and
WHEREAS, Developer will employ sixty-five people at this new location; and
WHEREAS, Developer's planned use is consistent with the Redevelopment Plan
and the Implementation Plan currently adopted; and
WHEREAS, under Health and Safety Code Section 33433, as enacted by the State
of California, the legislative body must make specific findings regarding property which will
be conveyed by a redevelopment agency.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Bakersfield
that, based on the findings of this Council, it is found and determined that:
1. The above-recitals are true and correct.
2. The conveyance of real property located at 2120 "L" Street, in the City
of Bakersfield by the CDDA to the developer will assist in the elimination of blight by
rehabilitating the building as well as bringing a business with sixty-five employees into the
redevelopment project area.
3, The conveyance of said real property is consistent with the
Implementation Plan adopted by the Central District Development Agency.
4. In light of the cost of rehabilitating said property and the covenants
placed upon it as the result of the Central District Development Agency's involvement, the
consideration paid for the interest conveyed is not less than the fair reuse value of said
property.
000 .......
I HEREBY CERTIFY that the foregoing Resolution was passed and adopted by the
Council of the City of Bakersfield at a regular meeting thereof held on
JUN /. $ 18~ , by the following vote:
AYES: COUNCILMEMBER DeMOND, CAR~O~,,S?nffH, McDERMOTT, It~, SUM.IVAN, SALVAGGIO
NOES: COUNCILMEMBER
ABSTAIN: COUNCILMEMBER
ABSENT; COUNCILMEMBER
c~ing CiTY CLERK and Ex Officio ~l.e~Zk of the
Council of the City of Bakersfield
JUN 2 $ 1~
APPROVED
MAYOR
- 2 -
APPROVED as to form:
JUDY K. SKOUSEN
CITY ATTORNEY
~D~" ~y Cit~ Attornoy
SUMMARY REPORT PURSUANT TO SECTION 33433
of the
CALIFORNIA HEALTH AND SAFETY CODE
DISPOSITION AND DEVELOPMENT AGREEMENT
by and between the
CENTRAL DISTRICT DEVELOPMENT AGENCY
of the
CITY OF BAKERSFIELD
and
KGET-TV a division of
ACKERLEY COMMUNICATIONS GROUP, INC.
THE SUMMARY AS REQUIRED BY SECTION 33433 OF THE HEALTH AND
SAFETY CODE REQUIRES A DESCRIPTION OF THE COST INCURRED BY
THE CENTRAL DISTRICT DEVELOPMENT AGENCY IN IMPLEMENTING
A DISPOSITION AND DEVELOPMENT AGREEMENT. THUS THIS
SUMMARY IS LIMITED TO DESCRIBING ONLY THE COST TO BE
INCURRED BY THE CENTRAL DISTRICT DEVELOPMENT AGENCY.
(See Addendum 1 for changes to this report.)
INTRODUCTION
The California Health and Safety Code, Section 33433, requires that if a redevelopment
agency wishes to sell or lease property to which it holds title and if that property was
acquired in whole or in part, directly or indirectly, with property tax increment funds,
the agency must first secure approval of a proposed sale or lease agreement from its
local legislative body after a public hearing. A summary report that describes and
contains specific elements of the proposed transaction shall be available for public
inspection prior to the public hearing. As contained in the Code, the following
information shall be included in the summary report:
-~ The cost of an agreement to the redevelopment agency, including land
acquisition costs, relocation costs, if any, the costs of any improvements to be
provided by the agency, if any, plus the expected interest on any loans or bonds
to f'mance an agreement;
-* The estimated value of the interest to be conveyed or leased, determined at
the highest and best use permitted under the redevelopment plan; and
-~ The purchase price or sum of the lease payments which the lessor will be
required to make during the term of the lease. If the sale price or total rental
amount is less than the fair market value of the interest to be conveyed or
leased, determined at the highest and best use consistent with the redevelopment
plan, then the agency shall provide as part of the summary an explanation of the
reasons for the difference.
~ An explanation of why the sale or lease of the property will assist in the
elimination of blight, with reference to all supporting facts and materials
relied upon in making this explanation.
This report outlines the salient parts of a proposed Disposition and Development
Agreement (Agreement) by and between the Central District Development Agency
(Agency) and KGET-TV (Developer) under which the Developer will rehabilitate an
existing building and operate an office development. The purpose of this analysis is to
determine the cost of an Agreement to the Agency.
This report is based upon information in the proposed Agreement and is organized into
the following four sections:
Summary of the Proposed Agreement - This section includes a description of
the proposed office project and the major responsibilities of the Agency and the
Developer.
Cost of An Agreement to the Agency - This section outlines the total and net
cost of an Agreement to the Agency.
Estimated Value of the Interest to be Conveyed and Consideration Received
and Reasons Therefore - This section summarizes the value of the site to be
conveyed to the Developer. It also describes the consideration to be received by
the Agency and reasons therefore. It also contains a comparison of the purchase
price and the fair market value at the highest and best use consistera with the
redevelopment plan for the interests conveyed.
Elimination of Blight - This section explains why the sale or lease of the
property will assist in the elimination of blight.
1. SUMMARY OF THE PROPOSED AGREEMENT
a. Description of the Site and the Proposed Development
The site is a .7 acre area of the Downtown Bakersfield Redevelopment Project
Area, shown on the site map attached herewith as EXHIBIT A. The site has on
it a 27,000 sq.f~. building. An agreement obligates the Developer to purchase,
rehabilitate, complete and maintain an office development in the two-story, fi'ee-
standing concrete block building with on-site parking for approximately 30
automobiles.
The building and parking lot curremly occupy the northern one-half block between "L"
and "M" streets with 22nd Street to the north. The two-story reinforced masonry
building comains approximately 27,000 sq. ft. with additional expansion engineered for
the second floor. The building was constructed in the mid-1960's and is now more
than thirty years old.
The entire Heating Ventilation and Air Conditioning (HVAC) system along with ducts
and registers will be totally removed and replaced. All lights and related power
circuits will be removed and replaced, the roof will be removed and replaced and the
exterior walls will have insulation added on the interior side along with a new interior
look. The building will be reconstructed in certain areas to achieve compliance with
Americans with Disabilities Act (ADA).
b. Agency Responsibilities
The Agency will discount the sale price of the property to the Developer via tax
increment rebates and pay to the Developer 75% of the tax increment generated
by the property over a five year period. The actual dollar amount is dependent
upon the Kern County Assessor's valuation of the property after rehabilitation.
Following the completion of the project, commencing in 1998, the Agency will
pay the Developer two (2) semi-annual payments. The amount to be paid will
be based on the formula described above.
c. Developer Responsibilities
The Developer must complete the office project in accordance with approved
design plans and specifications.
ii.
The Agency has the right to invoke all or any combination of the following
penalties if the project does not generate tax increment:
No further rebates of property tax increment will be granted by the
Agency.
If the site is removed from the real property tax rolls between 1/1/1998
and 12/31/2002, no further rebates of property tax increment will be
granted to the Developer until the site is returned to the tax rolls. The
Developer will owe the Agency a refund of all tax increment monies
rebated up to the time the property is removed from the real property tax
rolls.
If the site is removed from the real property tax rolls between 1/1/2003
and 12/31/2007, Developer shall owe Agency a refund of the last annual
rebated tax increment which was paid to Developer prior to the site being
removed from the real property tax rolls. This will continue annually
until the site is restored to the real property tax rolls, or the year 2008,
which ever occurs first.
iii.
The Developer must remove, install or replace the obsolete HVAC system, abate
asbestos, and achieve ADA accessibility compliance as a part of rehabilitating
the building.
3
2. COST OF AN AGREEMENT TO THE AGENCY
The Agency will discount the sale price of the property to the Developer via tax
increment rebates and pay to the Developer 75% of the tax increment generated
by the property. Such rebates will continue over a five year period. The actual
dollar amount is dependent upon the Kern County Assessor's valuation of the
property after rehabilitation. FolloWing the completion of the project,
commencing in 1998, the Agency will pay the Developer two (2) semi-annual
payments. The amount to be paid will be based on the formula described above.
Miscellaneous staff assistance at an estimated cost of $10,000, based on
experience with other projects.
Based on a projected $600,000 assessed valuation (rounded purchase price) the Agency
anticipates to contribute to the Developer a range estimated to start at $4,500 to
$25,000 per year, equivalent to an estimated range of 5;22,500 to $125,000 over a five
year period. The cost of the proposed agreement to the Agency is the combination of
staff costs and tax increment rebates equivalent to an estimated range of $32,500 to
$135,000. This cost is offset by the tax increment revenues to be generated by the
completed project. Therefore, it is anticipated that Agency revenues will exceed costs
to be incurred by the Agency. The Agency is not responsible for project
improvements, relocation and any costs associated with financing.
VALUE OF THE INTEREST TO BE CONVEYED AND
CONSIDERATION RECEIVED AND REASONS THEREFORE
As required in Section 33433 the following summary describes the estimated value of
the interest to be conveyed, determined as the use with the conditions, covenants,
development costs required by the conveyance.
The subject property will be conveyed to the Developer subject to the covenants,
controls, and restrictions contained in an Agreement. The property is zoned
commercial center, and, as such, could be developed to allow a mix of commercial and
residential uses that support businesses within the commemial core of the city. This
project is consistent with the Downtown Bakersfield Redevelopment Plan which
permits commercial development in the area where the project is located.
Section 33433 of the California Health and Safety Code requires that when disposing
of property, the Agency identify the fair market value of the property and if the
Agency is receiving less than fair market value, identify the reasons. The properry's
current assessed valuation, as is, is $246,000. Based on an assumption that the new
fair market value will be the purchase price it can be concluded that the property will
have a new valuation of $610,000 (approximately $20 per square foot) when re-
assessed. In addition to the increased valuation of $364,000, the Developer has
identified an estimated $1 million worth of rehabilitation costs for building upgrades
and improvements, accounting for a projected $1,364,000 investment. Taking into
consideration the purchase price, rehabilitation costs, covenants placed on the property
through the Agency's involvement, and the cost of an agreement to the Agency, the
consideration paid for the interest conveyed is not less than fair reuse value of the
property.
The office building was originally designed and constructed in 1966. The building has
a variety of issues that appear to financially burden the project including asbestos
products and materials, the original HVAC system, and concrete block walls without
any form of insulation. To comply with today's building standards all of these items
need to be removed and replaced. Certain locations of the building need to be
reconstructed to with comply with ADA accessibility, passed after the building was
constructed. Additionally, there are areas of deferred maintenance that need to be
addressed.
The combined impact of these building upgrades and improvements are anticipated to
exceed $1 million which makes the building incapable of competing in any economic
comparison of other properties. Since the property is in the redevelopment project
area, tax increment financing assistance to help offset rehabilitation and building code
compliance costs is being provided to make the project economically viable.
The completion of the office project will further implement the Redevelopment Plan.
Because it occupies a visible location within the redevelopment project area, its
appearance has been and remains a blighting influence in the project area. The project
in its current condition acts as an impediment to private re-investment. The blighting
influence is not merely physical but is also an economical hinderance to the project's
financial viability.
4. ELIMINATION OF BLIGHT
The Report to Council, prepared in connection with the Downtown Bakersfield
Redevelopment Plan and subsequent Amended Plans, describes the conditions of
blight within the project area that the Plan was adopted to remedy. The
blighting conditions which the proposed office project addresses include the
following:
i. The area contains blight, as the same is defined in the California
5
Community Redevelopment Law, which constitutes social and economic
liabilities requiring redevelopment in the interest of the health, safety, and
general welfare of the people of Bakersfield.
ii.
Many buildings and structures in the area used for living, commercial and
industrial purposes are vacant, aged and of shifting uses.
iii.
The area is characterized by economic dislocation, deterioration, and
disuse resulting in depreciated land values, impaired investments, and
social and economic maladjustment, all contributing to the reduced
capacity of the area to generate taxes.
iv.
The growing or total lack of proper utilization of the areas has resulted in
a stagnant and unproductive condition of land potentially useful and
valuable for contributing to the public health, safety and welfare.
The sale or lease of the property will assist in the elimination of physical and
economic conditions of blight as identified in the AB 1290 Implementation Plan
for the Downtown Redevelopment Project. The proposed office project would
address the following physical blight conditions which are specific to this project
and identified in the AB 1290 Implementation Plan:
Buildings in which it is unsafe or unhealthful for persons to live and
work due to dilapidation and deterioration (California Redevelopment
Law Health and Safety Code Section 33031 (a)(1)) by providing
moderate to extensive structural and project site repairs including roofing,
heating ventilation air conditioning system, insulation, painting, and
asbestos removal.
ii.
Factors that prevent or substantially hinder the economically viable use or
capacity of buildings due to lack of parking Code Section 33031 (a)(2)
will be addressed by Developer by providing additional parking. The
office project currently contains approximately 30 stalls, an inadequate
amount for the proposed project.
iii.
Incompatible land uses which prevent the economic development of the
parcel Code Section 33031(a)(3) would be reversed with this project by
bringing occupancy to a building which as been vacant for many years.
Neighboring new construction projects include the Ying-on Association,
Porter-Robertson Engineering and the National Association for People
with Disabilities.
The proposed office project would eliminate the following economic blight
conditions which are specific to this project and identified in the AB 1290
Implementation Plan:
Depreciated or stagnant property values and impaired investments Code
Section 33031 (b)(1) are found within the project area when it is
compared to other metro Bakersfield areas. The proposed office project
is incapable of competing in any economic comparison of properties
because of the reconstruction costs associated with the rehabilitation of
the structure and the cost of other site improvements. When compared to
the alternatives of either building a new facility on less expensive
industrial property or acquiring a newer existing building in another part
of the city, the rehabilitation costs become economically critical.
ii.
Abnormally high business vacancies is the blight finding in Code Section
3303 l(b)(2). The occupancy and re-use of this building will reduce the
downtown vacancy rate, generate additional property tax and bring more
people into the central city. The completed project is estimated to house
a staff of over sixty five along with offices, studios and engineering
spaces.
In order for the project to move forward, the Agency will need to provide the
assistance described in this report issued in accordance with Section 33433 of the
Health and Safety Code.
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ADDENDUM 1
1.c. Developer Responsibilities (page 3)
ii.2.
As a result of changing the rebate period from five years to seven years, if the site is
removed from the real property tax rolls between 1/1/98 and 12/31/2004, no further
rebates of property tax increment will be granted to the Developer until the site is
returned to the tax rolls.
ii.3.
As a result of extending the rebate period from five years to seven years, if the site is
removed from the real property tax rolls between 1/1/2005 and 12/31/2007,
Developer shall owe Agency a refund of the last annual rebated tax increment which
was paid to Developer prior to the site being removed from the real property tax
rolls.
2. Cost of Agreement to the Agency (page 4)
Agency assistance to KGET-TV in the form of rebating 75 % of the tax increment generated
by the project to off-set the cost of acquisition and rehabilitation will be for a seven year
period instead of a five year period. The amount to be paid is based on the formula
described above and is estimated to range between $31,500 to a maximum of $175,000 over
the seven year period. The cost of the proposed agreement to the Agency is the combination
of staff costs and tax increment which is estimated to fall between a range of $41,500 to
$185,000.
BAKERSFIELD
EXHIBIT A
SCHOOL
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THE SITE
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Legal Description is: Lots 1 through 24, inclusive,
of Block 191 in the City of Bakersfield, County of
Kern, State of California as per map recorded
November 25, 1898 in Book 1, Pages 13 and 14
of Maps, in the Office of the County Recorder of
said County.
ASSESSORS MAP N0.....5.~....42...