HomeMy WebLinkAbout1999-11-01 City Council Summary Minutes Special Meeting November 1, 1999 ORAL COMMUNICATIONS........................................89-151
1. Consideration of Possible Bid at Trustee=s Sale to Purchase Real Property Located at 1525 Arastradero Road........89-151 2. Conference with Real Property Negotiator..............89-158 ADJOURNMENT: The meeting adjourned at 7:15 p.m............89-158
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The City Council of the City of Palo Alto met on this date in the Council Chambers at 6:15 p.m. PRESENT: Fazzino, Huber, Kniss, Mossar, Rosenbaum, Ojakian, Wheeler ABSENT: Eakins, Schneider ORAL COMMUNICATIONS Kathleen Coakley, P.O. Box 598, spoke regarding the ballot. SPECIAL MEETING
1. Consideration of Possible Bid at Trustee=s Sale to Purchase Real Property Located at 1525 Arastradero Road Vice Mayor Wheeler was informed on Friday, October 29, 1999, that the property in question was advertised as being for sale at a public auction on Thursday, November 4, 1999. The Council discussed the item in 1994 when there was a similar notice and similar occurrence. In the meantime, there were several new members of the Council, and she felt the new Council Members and community should have an opportunity to again discuss the issue. City Manager June Fleming said there were a number of directions the Council could take. Options included directing staff to attend the auction and bid on the property; express interest in the property and in addition to directing staff to participate in the bidding, direct staff to pursue the purchase beyond the bid if the property is not sold at the auction; decide not to purchase the property and do nothing; or discuss the item and decide to take no action. City Attorney Ariel Calonne said the second item on the agenda was a closed session to authorize negotiators as to the price and terms. If the Council chose not to pursue purchase of the property, the closed session would not be required. The Council needed to come to a preliminary conclusion that it wanted to purchase the property prior to lawfully adjourning to the closed session. Karen Cotter, Bay Area Action, 120 Alma Street, #4, appreciated the fact the Council came together quickly to consider bidding on the Bressler property. Having the City purchase the land before a private individual did was important as it would be a shame to have a large stucco home built on the land. There were important biological components of the property. The Arastradero Preserve
had little native grass, and there was a species called Αwet meadow
wild rye≅ found on the Bressler property that could be propagated
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on the rest of the preserve. The property also had the rare Αbrown
walnut≅ which would be an important species to continue to propagate at the preserve. A stream ran through the property which should be preserved. David Houston, 1099 Fife Avenue, said in the mid-1970's, the Council had the foresight to preserve the 610-acre Arastradero Preserve. He requested the present Council have the same foresight to see the value of the open space. David Smernoff, Bay Area Action, 112 Foxwood, Portola Valley, worked on the biological resources at the preserve. The stream was underground on the Bressler property, and there was a possibility the stream could be resurfaced again. There were many important biological and restorative processes that occur on the property. The existing trail was on part of the Bressler property which would require realignment or negotiation with the potential purchaser. The main access into the preserve might be affected if the property was purchased by someone other than the City. He urged the Council to consider bidding on the property. Herb Borock, P.O. Box 632, said the City Attorney correctly stated that the Council had to make a decision relative to purchase of the property prior to going into closed session. The Council also had to make a decision whether to have a transaction with either of the parties listed on the current agenda. If the Council decided to wait until after the foreclosure sale to purchase the property, the Council would not be able to discuss it because the potential negotiator or private party interested in purchasing the property were not present. The Council could only go into closed session if it wanted to buy the property from the Bresslers or the Trustee of the foreclosure sale. An appraisal was necessary in order to make a wise public decision. The Council needed budget authority in order to participate in the foreclosure sale which would require a budget amendment ordinance. He expressed concern about anyone who might have a potential conflict of interest with Stanford University, considering the close proximity of the Stanford-owned parcel across the street. The site development regulations and open space zone would take care of concerns expressed by the previous speakers. He reviewed maps from the Public Works Department which indicated the existing trail cut across the Bressler property in a small way on the southeast corner of the property. He noted testing of revegetation on the property near the creek. The MidPeninsula Open Space District regulations Chapter 18.94 on Nonconforming/Noncomplying Uses gave the Council complete control over what could be built. He understood the parcel was created without benefit of going through the Palo Alto subdivision process, that the City filed timely notice, and there was no legal parcel at the current time. The City had latitude in determining what the boundaries of the parcel would be. At the meeting of February 22, 1994, former Vice Mayor Simitian indicated that one of the reasons for purchasing the property was to create a 10-acre parcel that
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could be sold so the City would have control over the boundaries and location of the 10-acre parcel for development of a house. The City had the control at the current time and did not have to go through the process of first buying the property and then selling it back. Jerry Hearn, 144 El Nido Road, Portola Valley, sat on the task force that designed the gateway facility. He supported comments from others who said the purchase of the property would be a good thing. When the possibility of building a school at the site was proposed in the past, many people thought the opportunity was good
to engage the public=s input and place the facility in the most optimal location for safety and aesthetic reasons. He encouraged the Council to take advantage of purchasing the property. Vice Mayor Wheeler said Mr. Borock brought up the question of an appraisal of the property. A related question had to do with perfecting a title search so the City would know the financial obligations of the parcel. She asked whether staff had done anything on a title search or appraisal. Ms. Fleming said staff had not had time to do a title search, but she believed a quick one could be done the following day at a cost of approximately $500. The last appraisal was done in 1991 which resulted in a value of $2.5 million. Staff called for an appraisal update during the day prior to the meeting. Administrative Services Director Carl Yeats said the updated appraisal was approximately $2.5 million to $3 million as open space. Vice Mayor Wheeler clarified the appraisal was as open space rather than highest and best use. Mr. Yeats said that was correct. Vice Mayor Wheeler asked whether the City was obligated to use highest and best use when it made an offer to purchase. Mr. Yeats said no. Council Member Kniss said the property was complicated and, in the past, the owner indicated that more uses could be made of the property than the Council currently believed to be the case. A house on the property would alter the purchase price. Mr. Yeats said if the City were to acquire the property for another use, the City would have it appraised according to the use. If the City acquired the property through condemnation, the property had
to be acquired from the owner as to whatever the owner=s current use was; for instance, if there were dwellings on the property, the City would have to acquire the property as residential property.
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Council Member Kniss was unsure how the property would be acquired as open space because it was not currently zoned as open space. Mr. Calonne mentioned the fire that destroyed the building and said staff did a fair amount of analysis about what could be rebuilt. Clearly, the property had an entitlement to construct another single-family home. What went beyond that was debatable. The Council heard in public session anything from 4 to 14 houses. At one time, there was a proposal to subdivide a portion of the 77 acres across the street and exchange that property for the Bressler property. Staff did not believe the number was near 14 but agreed with one dwelling unit. An appraisal was prudent to have, and a title search was not necessary but also prudent to have. The Council needed to be clear that the City would bid on the interest that California Security Bank had, rather than clear title. He was unaware of any other outstanding liens on the property. The venture was risky. The Council might recall that the City was recently in litigation over a piece of property where a well-intended but not fully informed bidder at a foreclosure sale ended up with a below market value(BMR) unit that was significantly encumbered. The Council needed to make a fundamental determination whether it wanted to acquire the property. Once that decision was made, the techniques open to the Council would be discussed. The Council should not go into Closed Session unless there was a majority interest in acquiring the property. Mr. Borock was correct in his statement that the City would need a budget amendment. When the Council did the same exercise a few years prior, a budget amendment ordinance was agendized with the other material. Ms. Fleming believed, based on information staff had in terms of
the Council=s desire to purchase the property, the Council would have to meet the following day to approve the budget amendment ordinance. Staff contacted the bank who said they would not waive the requirement, and a certified check could not be obtained in one day. Mr. Calonne said the Council received a volume of material related to the item. His recollection was refreshed when Council Member Rosenbaum brought in the February 11, 1994, Council minutes that morning, and he reviewed the files. There was a wealth of information, some of which was not readily available. Ms. Fleming said the zoning was open space. Council Member Huber asked whether the sale was a bankruptcy trustee sale. Mr. Calonne said the sale was on a deed of trust. He believed the sale was an indication that the property was not in a bankruptcy proceeding.
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Council Member Huber clarified the City did not know the value of the property for anything other than open space. Mr. Yeats said that was correct. He was originally informed that the minimum bid was $1.8 million, but it was now $1,500,100. Planning and Community Environment Director Ed Gawf said the zoning was open space which allowed one unit on the parcel with a maximum building coverage of 6,000 square feet. There were provisions for accessory buildings. Council Member Mossar said Mr. Borock indicated his recollection
was that the property Αwas not a legal parcel.≅ She asked if the City Attorney had any information. Mr. Calonne said that had not come up in the analysis had done going back to 1990. Council Member Mossar assumed the control the City had over what was built on the parcel was limited to the open space regulations. Mr. Calonne said that was correct. Council Member Mossar said there were view corridor issues related to the Arastra area and asked how that pertained to the subject parcel. Mr. Calonne was unsure about view corridor but said there was a wide scenic setback that was an issue for the Gateway project. Council Member Mossar asked if the scenic setback changed what could be built on the property. Mr. Gawf said the setback was 200 feet. His understanding was the setback issue was a problem on the site. Council Member Ojakian asked what fund the money would come from if the Council chose to bid on the property. Ms. Fleming said staff would have to look at the reserve resources, and there were options within that. Council Member Ojakian had a conversation with a resident and the debate was whether the City could afford to have a park in the flatlands area and currently consider paying for a park in the foothills. Ms. Fleming said that was a policy decision for the Council to make. There was a defined amount of money, but it was a policy
call as to how the resources were used. Staff=s obligation was to
tell the Council what the resources were, and the Council=s decision was where it chose to make the investment. The City faced
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the issue of a park at the old Palo Alto Medical Foundation (PAMF) site; however, she was unsure whether the Council had interest in purchasing the parcel. Vice Mayor Wheeler said there were risks in purchasing the property and risks in not purchasing the property. The risks needed to be weighed against potential opportunities. She asked whether anyone could speculate on what might be future opportunities if a) the Council determined it was not going to bid on the property on Thursday, November 4, 1999; and b) no private party obtained the property on November 4, 1999. She asked whether there were other options to pick up the property. Mr. Calonne said there was nothing that would happen in connection with the foreclosure sale that would stop the City from acquiring
the property through condemnation for park purposes. The Αflavor≅ of the trustee sale was it was a good deal. The Council needed to be cautious in weighing that incentive against the real interest in acquiring the property. A property in disclosure was a property in distress, and one would assume that a willing buyer would have come forward with the money if that was a desirable transaction. There was nothing that would happen on November 4, 1999, that would stop the Council in the future from attempting to take the property. Vice Mayor Wheeler clarified the Council had the condemnation process open if the Council took no action and no one else took action on November 4, 1999. Ms. Fleming said even if the property were purchased, the City would still have an option to go through the fair market price. Vice Mayor Wheeler asked if no one came forward on November 4, 1999, would the bank end up with the property. Ms. Fleming said that was correct. Vice Mayor Wheeler asked whether the City had an opportunity to deal with the bank. Mr. Calonne said that dialogue was opened in the summer of 1994 when the City let the bank know the City might be interested in the property. The bank was cautious about who owned what. MOTION: Council Member Kniss moved, seconded by Mossar, that the Council express desire to obtain the property located at 1525 Arastradero Road (Bressler Property) and direct staff to proceed with a bid on the property at a reasonable price. Further, the Council would go into Closed Session pursuant to the authority granted by the Government Code for purposes of instructing the negotiating team as to what the price should be. Council Member Kniss had followed the piece of property for a long
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time, including when the City was originally involved in setting up the open space district. The Council always believed it spent too much money on the purchase of open space. There were few capital investments that improved with time and became more valuable with age. The City had an opportunity that might not evolve as anticipated, but the issue needed to be considered in closed session. Council Member Mossar had looked at the property with wonderment and desire for the prior two years. She viewed the opportunity to acquire property for open space openings as important even though it seemed expensive. The City needed to maintain every option available to purchase the property. The Council worked hard to protect open spaces, from the urban edge to the ridge line and beyond to the sea, and would not be doing due diligence in sharing the responsibility in affording the public and future generations that open space holding. There were significant habitat values on the property, and the opportunity to restore the stream to its natural state was of great value. Council Member Rosenbaum understood the viewpoints expressed by members of the public but noted the Council had obligations over a wide range of services for the City. The subject property was not virgin open space and was occupied for many years until a fire destroyed it. He had no objection to restoring the use and added that if someone wanted to build a new house, the City had open space regulations such as 200 foot setbacks, 3-1/2 percent coverage, and site and design control. The Council should pay
attention to the City Attorney=s cautions and not attempt to act precipitously by making a bid on November 4, 1999. Council Member Huber opposed the motion for the same reasons he did in 1994. He agreed there were limited resources available and other urban parks that the City would be better spending money completing or purchasing. Council Member Ojakian opposed the motion for the reasons stated by Council Member Huber. There might be funding from other sources to help purchase the property. Vice Mayor Wheeler opposed the motion. There were significant risks of putting together something too quickly, including financial risks and possible additional liens and obligations. As the City Attorney indicated, there was ample opportunity during the prior years for a public entity to purchase the property for open space purposes, but that failed to occur. She suggested the way to consider purchasing the property for open space purposes was to wait until November 4, 1999. If nothing happened at the Trustee Sale, the Council could agendize the item and research the project in a proper way to come up with an offer for the property. Mayor Fazzino felt the property was ideal as open space; it was a
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gateway to the foothills and part of the broader Arastra property. The land, once pristine, could be pristine again. The City should move in that direction. The money seemed a small amount to pay for what would become a legacy for future generations. He hoped the Council would place the item on the agenda in the near future to pursue purchase of the property. MOTION FAILED 3-4, Fazzino, Kniss, Mossar Αyes,≅ Eakins, Schneider absent. Council Member Kniss assumed the staff would follow the matter closely and monitor whatever happened on November 4, 1999. Ms. Fleming said staff could be more vigilant in reviewing legal ads. If the Council wanted to actively pursue the property, the matter needed to be placed on an agenda with directions to staff. The Council could indicate that the City Attorney and City Manager should find a way to notify the bank that, if such action was imminent in the future, the bank let the City know. Other specific actions such as beginning negotiations needed to be agendized. CLOSED SESSION 2. Conference with Real Property Negotiator City Negotiator: June Fleming Property: 1525 Arastradero Road Potential Negotiating Parties: Jacqueline Bressler or Alan Scott Koenig, Trustee Subject of Potential Negotiation: Price Authority: Government Code section 54956.8 ADJOURNMENT: The meeting adjourned at 7:15 p.m ATTEST: APPROVED:
City Clerk Mayor NOTE: Sense minutes (synopsis) are prepared in accordance with Palo Alto Municipal Code Sections 2.04.180(a) and (b). The City Council and Standing Committee meeting tapes are made solely for the purpose of facilitating the preparation of the minutes of the meetings. City Council and Standing Committee meeting tapes are recycled 90 days from the date of the meeting. The tapes are available for members of the public to listen to during regular office hours.
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