HomeMy WebLinkAbout2007-11-13 Ordinance 4973ORDINANCE NO.4973
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
AMENDING THE BUDGET FOR FISCAL YEAR 2007-08 TO ESTABLISH
CAPITAL IMPROVEMENT PROGRAM. PROJECT NUMBER AS-08000,
ACQUISITION OF LOS ALTOS TREATMENT PLANT SITE AND TO
PROVIDE AN INITIAL APPROPRIATION IN THE AMOUNT OF
$2,670,918
The Council of the City of Palo Alto does ORDAIN as
follows:
SECTION 1. The City Council of the City of Palo Al to
finds and determines as follows:
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the Charter of the City of Palo Alto, the Council on June II, 2007
----=d~ia adopt a budget for fiscal year 2007-08; and
B. In 1984 the City of Palo Alto (Palo Alto) entered into a
Lease/Purchase Agreement (1984 Agreement) with the City of Los Altos
(Los Altos) for the lease and ultimate purchase of the Los Altos
Treatment Plant (LATP) site. Palo Alto paid Los Altos $2,005,637
from the Refuse Fund, over eight years, ending December 1991; and
C. Under the 1984 Agreement, at the end of the 8-year term,
Palo Alto was entitled to a one-half undivided interest (as tenants
in common) in the property. Under the 1984 Agreement, Los Altos had
the right to convey its 50% interest in the property to Palo Alto.
The Agreement provided a valuation method for appraising the
property in the event of buyouti and
D. Since the start of the 1984 Agreement, Palo Alto has managed
the property and rented it to various tenants. Rental revenue had
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considered several options for use and development LATP site,
Palo Al to has attempted to purchase the remaining share of the
property. Staff has conducted several appraisals of the property,
none of which has been accepted by Los Altos; and
E. On December II, 2006, the Council directed the City Manager
and City Attorney to initiate negotiations with Los Altos to acquire
the site. In August 2007, the cities entered into an agreement
whereby Palo Alto obtained the deed from Los Altos for one-half
undivided interest. On November 16, 2007, Council authorized terms
of an offer including a $6,500,000 price for the purchase of the
LATP site and the City of Palo Alto plans to enter into an agreement
to acquire Los Altos' remaining ~ interest in the property (2007
Agreement)i and
F. The terms of the 2007 Agreement include a purchase price of
$6,500,000 to be paid in three payments, on January 4, 2008, January
5, 2009, and January 5, 2010 respectively. Each payment will be in
amount of $2,166,667, plus interest on the 2009 and 2010 payments.
Interest will be at the City portfolio rate, which is currently
4.46%. The Agreement provides for Los Altos to give the deed for
the site to Palo Alto on January 4, 2008. Included in the 2007
Agreement is for Palo Alto and Los Altos to provide $400,000 each
for deposit to a USet-Aside Account," to cover for unforeseen or
increased costs of remediation and infrastructure work which are not
included in the site preparation costs estimates. The Set-Aside
funds will be administered by Palo Alto and will accrue interest at
the City's portfolio rate and will be released in 5 years if not
used. The summary of total costs for the acquisition of LATP site,
including the Set-Aside account under the 1987 Agreement are shown
in the following table; and
Description Total 2007-08 2008-09 2009-10
Amount (Year 1) (Year 2) (Year 3)
Due by Due by Due by
January 4, January 5, January 5,
2008 2009 2010
Purchase Price $6,500,000 $2,166,667 $2,166,667 $2,166,666
Interest on $ 290,430 $ 94,251* $ 146,406 $ 49,773
Installment
Payments (estimated
at 4.46%)
Set-Aside Account $ 400,000 $ 400,000 0 0
Other Legal $ 10,000 $ 10,000 0 0
Expenses
Total $7,200,430 $2,670,918 $2,313,073 $2,216,439
*lnterest wlll be lncluded In the 2008-09 payment
G. The General Fund Budget Stabilization Reserve will provide
the funds needed for fiscal year 2007-08. Future payments and other
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adoption process for fiscal year 2008-89 and 2009-10. Sources of
future long-term funding will be dependent on the ultimate use of
the property and include general fund reserves with potential lease
payments from Enterprise Funds if the site is used for Refuse or
Utility related purposes, and revenue generated from a possible
future private tenant; and
H. The appropriation of funds for the acquisition of LATP site
is a one-time event, and in future years maintenance costs will be
included in the City of Palo Alto's operating budget; and
I. City Council authorization is needed to amend the 2007-08
budget as hereinafter set forth.
SECTION 2. Capital Improvement Program (CIP) Project Number
AS-08000/ Acquisition of Los Altos Treatment Plant S is hereby
created.
SECTION 3. The sum of Two Million Six Hundred Seventy Thousand
Nine Hundred Eighteen Dollars ($2/670/918) is hereby appropriated to
CIP Project Number AS 08000 / Acquisition of Los Altos Treatment
Plant Site.
SECTION 4. Revenue in CIP Project Number AS-08000/ Acquisition
of Los Altos Treatment Plant Site is hereby increased by a transfer
from the General Fund Budget Stabilization Reserve in the amount of
Two Million Six Hundred Seventy Thousand Nine Hundred Eighteen
Dollars ($2/670/918).
SECTION 5. The General Fund Budget Stabilization Reserve is
hereby reduced by Two Million Six Hundred Seventy Thousand Nine
Hundred~ightee~:n~oo.1lars ($~~~r9L8e}--t--G----'I'w~~e~011mmS~lH' J~{ ----~
Hundred Thirty Four Thousand Eighty Two Dollars ($23/634/082) as
SECTION 6. As specified in Section 2.28.080(a) of the Palo Alto
Municipal Code/ a two-thirds vote of the City Council is required to
adopt this ordinance.
SECTION 7. The Council of the City of Palo Alto hereby finds
that this appropriation is exempt under the California Environmental
Quality Act and/ therefore/ no environmental impact assessment is
necessary.
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SECTION 8. As provided in Section 2.04.330 of the Palo Alto
Municipal Code, this ordinance shall become effective upon adoption.
INTRODUCED AND PASSED: November 13, 2007
AYES:
NOES:
BARTON, BEECHAM, CORDELL, DREKMEIER, KISHIMOTO, KLEIN,
KLEINBERG, MORTON
ABSTENTIONS:
ABSENT: MOSSAR
APPROVED:
Director
Services