HomeMy WebLinkAboutStaff Report 368-05RECOMMENDATION
Staff recommends that Council:
1. Staff recommends that the City Council adopt the attached Budget Amendment
Ordinance (BAO) in the amount of 1,110,305 (Attachment A) from the Budget
Stabilization Reserve for the purpose of the acquisition of the POST property.
2. Approve and authorize the Mayor to execute the attached purchase agreement with the
Peninsula Open Space Trust (Attachment B) in the amount of $3,560,000 for the
acquisition of the Arastradero Gateway property.
BACKGROUND
In October 2002, POST purchased the 13-acre in-holding within the Arastradero Preserve,
formerly owned by Jacqueline Bressler, at a bankruptcy auction for $3,560,000. The parcel was
purchased with the intent of holding the parcel for open space purposes. POST offered the City
of Palo Alto the opportunity to purchase the Arastradero Gateway property at a guaranteed price
of $3,560,000. Since that time, at the Council's direction, staff and Vice Mayor Kleinberg and
Council Member Mossar as Mayor-appointed liaisons to a special fund-raising committee, have
been working to assertively pursue numerous grant and fundraising opportunities in order to
acquire the property. POST agreed to give the City until October 2005 to complete the purchase
of the property. If the City were unable or unwilling to purchase the property, the parcel would
be offered for sale on the open market.
Since 2002, staff has sought and obtained the following grants totaling $2,592,210 for the
purchase of the property:
Santa Clara County Park Charter Fund
California Coastal Conservancy
State of California Per Capita Program
State of California Land & Water Conservation
State of California Roberti -Z ' Berg-Harris Program
$1,000,000
$1,000,000
$ 266,000
$ 162,385
$ 163,825
In addition, POST has agreed to allow the City to apply jointly held mitigation funds in the
amount of $112,500 from the estate of Jacqueline Bressler towards the purchase of the property.
This amount has already been paid to the escrow account as a deposit on the purchase.
DISCUSSION
The purchase of the POST Arastradero Gateway parcel, which is geographically situated in the
center of the Enid Pearson Arastradero Preserve, would accomplish three main objectives. The
purchase would:
• Complete the Preserve and conserve the land as open space.
• Prevent the propeliy and its riparian habitat from being privately developed as a horne or
ranch that would compromise the scenic and recreational qualities of the Preserve.
• Expand recreational opportunities by providing a safer and more accessible trail route to
Arastradero Lake from the Preserve parking lot, and other low-impact uses.
Staff has actively pursued numerous public and private grant opportunities over the .past three
years. In addition to the grants outlined above, staff has also sought grants from the Gordon
Moore Foundation, California State Wildlife Conservation Fund and the Kr~sge Foundation.
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meeting certain funding restrictions established by the State, and the approval of a new project
proposal by the State Office of Grants and Local Services.
If the City chooses not to purchase the property, POST has informed the City that the property
would likely be sold to an individual who bid against POST in the bankruptcy sale, and who
continues to be interested in acquiring the property. If this property is not acquired and protected
as park land, the property would certainly be developed, compromising the scenic and
recreational value of the Preserve as well as creating a significant intrusion on habitat corridors.
The integrity of the site's riparian habitat and the surrounding watershed could also· be at
significant risk.
As discussed above, the City has the option of borrowing the funds necessary to complete the
purchase from POST. This alternative would cost the City $710,736 in interest over the ten-year
term of the loan. The proposed interest rate of 2% over prime (currently at 6.25%) compares
disfavorably'with the City's investment portfolio of 4.25%.
RESOURCE IMPACT
The City will acquire the property for the cost of $3,560,000. Closing costs, title insurance and
escrow fees will cost an additional $6,665. The City will use grant funds totaling $2,592,210, imd
$112,500 in mitigation funds to purchase the property. The balance will be paid from the Budget
Stabilization Reserve fund.
Of the $2,592,210 in grant funds awarded to the City, $2,343,860 will be deposited directly into
the escrow account. Funds from the Land and Water Conservation Program and partial funds
from the Per Capita Grant program and the Roberti-Z'Berg Harris Grant program totaling
$248,350 are reimbursable to the City after the close of escrow, The amount of $248,350 is a
portion of the $1,110,305 to be paid initially from the Budget Stabilization Reserve. Staff
anticipates reimbursement of the $248,350 withheld grant funds within three months of the close
of escrow. This amount will be applied back to the Budget Stabilization Reserve, leaving a
balance of$861,955 to be replenished to the Reserve by donations and grants.
The property is currently managed by the City under the terms of a cooperative management
agreement approved by Council on November 10, 2003. Once the property is purchased, the
management agreement will be terminated and the City will assume full responsibility for the
property. The acquisition of the property would have very slight impacts on the workload of park
rangers. The property is completely surrounded by the Enid Pearson Arastradero Preserve and
can be easily monitored by rangers from adjoining trails and roads. There will be a slight
increase in operational costs estimated at $2,000 arinually for the maintenance of the property.
POLICY IMPLICATIONS
This recommendation does not represent any change to existing City policies. The acquisition
and protection of open space land is consistent with Policies N-2 and N-4 of the Natural
Environment element of the Comprehensive Plan. The purchase of this property to expand open
space and recreational opportunities has been an objective of the City since 1978 when former
Mayor Sher attempted to purchase the property from Mrs. Bressler. Numerous subsequent
attempts have been made to acquire the property from the Bressler family. Since the property
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Grantor Amount
Santa Clara Park Charter Fund $1,000,000
California Coastal Conservancy $1,OOO,OQO
State Of California Per Capita Program $ 266,000
State of California Land & Water $ 162,385
Conservation
State of California Roberti-Z'Berg-$ 163,825
Harris Program
Total Grants $2,592,210
Other Sources -Mitigated Fund $ 112,500
Total Funds Available $2,704,710
Less: Fund Withheld ($248,350)
Funds Available at the Close of Escrow $2,456,360
F. The City agreed to purchase the Property from POST for
$3,560,000. Since the City has a total available amount of
$2,456,360, a balance of $1,110,305 which include closing cost~
of $6,665, is still needed to close the escrow; and
G. City Council authorization is needed to amend the fiscal
year 2005-06 budget as hereinafter set forth; and.
H. The additional appropriation of funds from the General
Fund Budget Stabilization Reserve is a one-time cost and future
year General Fund ongoing costs are anticipated.
SECTION 2. The sum of One Million One Hundred Ten Thousand,
Three Hundred Five Dollars ($1,110,305) is hereby appropriated
from the Budget Stabilization Reserve of the General Fund to
provide additional fund for the purchase of ~he Property from
POST.
SECTION 3. The Budget Stabilization Reserve is hereby decreased
by One Million One Hundred Ten Thousand Three Hundred Five Dollars
($1,110,305) with a remaining balance of Twenty Million Three
Hundred Sixteen Thousand Six Hundred Ninety Five Dollars
($20,316,695) as shown in Exhibit A.
SECTION 4. 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 5. The Council of the City of Palo Alto hereby
finds that this project is exempt from the provisions of the
California Environmental Quality Act, and therefore, no
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BELOW, BUYER AND SELLER AGREE TO THE TERMS OF THIS LIQUIDATED
DAMAGES PROVISION.
SELLER'S INITIALS: BUYER'S INITIALS:
ARTICLE 3
CONDITIONS TO CLOSING
3.1 Buyer's Conditions to Closing. The Close of Escrow on the Property and Buyer's
obligation under this Agreement to purchase the Property shall be subject to the satisfaction, at or
prior to the time stated herein, ofthe following conditions, with Buyer to retain the right to waive
in writing, in whole or in part, any of the following conditions at or prior to the time stated herein
for satisfaction of such conditions or for approval or disapproval by Buyer:
3.1.1 Intentionally Omitted.
3.1.2 Contingency Period. Buyer shall have until the earlier of (i) September 15,
2005, or (ii) sixty (60) days following the Effective Date (the "Contingency Period") to conduct
such studies or investigations of the Property (including, without limitation, environmental
testing) or matters pertaining thereto as Buyer may deem appropriate to ascertain whether the
Property is suited to Buyer's intended purposes, and to deliver to Seller and Escrow Holder its
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written notice of approval. If Buyer does not give Seller and Escrow Holder written notice of
approval on or before the expiration of the Contingency Period, then this condition shall be
deemed satisfied and Buyer shall be deemed to have approved the Property.
3.1.3 Title Policy. At the Close of Escrow on the Property, Escrow Holder
shall be willing and prepared to issue to Buyer a CLTA standard form owner's policy of title
insurance in the amount of the Purchase Price insuring Buyer's fee title to the Property, subject to
current, non-delinquent real property taxes and assessments, exceptions 1 through 7 to title
shown on the North American Title Company preliminary title report, number 56007-55170378,
Update No.1, dated July 18,2005, attached hereto as Exhibit A ("Title Report"), title matters
caused by Buyer or any of its agents, employees, consultants or contractors, title matters that
would be disclosed by an accurate survey of the Property or reasonable inquiry and the standard
printed exclusions to title in an CLTA standard form owner's policy of title insurance
(collectively, the "Approved Exceptions").
167348-0011200749.6 5
representations and warranties set forth in this Article 7 shall survive the Close of Escrow for a
period of six months followirig the Close of Escrow.
7.4 liAs Is" Purchase. BUYER SPECIFICALLY ACKNOWLEDGES AND
AGREES THAT SELLER IS SELLING AND BUYER IS PURCHASING THE PROPERTY
ON AN "AS IS WITH ALL FAULTS" BASIS AND THAT BUYER IS NOT RELYING ON
ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS
(EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT) OR IMPLIED, FROM
SELLER, ITS AGENTS, OR BROKERS AS TO ANY MATTERS CONCERNING THE
PROPERTY, INCLUDING WITHOUT LIMITATION: (i) THE QUALITY, NATURE,
ADEQUACY AND PHYSICAL CONDITION OF THE PROPERTY (INCLUDING,
WITHOUT LIMITATION, TOPOGRAPHY, CLIMATE, AIR, WATER RIGHTS, WATER,
GAS, ELECTRICITY, UTILITY SERVICES, GRADING, DRAINAGE, SEWERS, ACCESS
TO AND IMPROVEMENT AND MAINTENANCE OF PUBLIC ROADS AND RELATED
CONDITIONS), (ii) THE QUALITY, NATURE, ADEQUACY, AND PHYSICAL
CONDITION OF SOILS, GEOLOGY AND ANY GROUNDWATER, (iii) THE EXISTENCE,
QUALITY, NATURE, ADEQUACY AND PHYSICAL CONDITION OF UTILITIES
SERVING THE PROPERTY, (iv) THE DEVELOPMENT OR INVESTMENT POTENTIAL
OF THE PROPERTY, AND THE PROPERTY'S USE, HABITABILITY,
MERCHANTABILITY, OR FITNESS, SUITABILITY, VALUE OR ADEQUACY OF THE
PROPERTY FOR ANY PARTICULAR PURPOSE, (v) THE ZONING OR OTHER LEGAL
STATUS OF THE PROPERTY OR ANY OTHER PUBLIC OR PRIVATE RESTRICTIONS
ON USE OF THE PROPERTY, (vi) THE COMPLIANCE OF THE PROPERTY OR ITS .
OPERATION WITH ANY APPLICABLE CODES, LAWS, REGULATIONS, STATUTES,
ORDINANCES, COVENANTS, CONDITIONS AND RESTRICTIONS OF ANY
GOVERNMENTAL OR QUASI-GOVERNMENTAL ENTITY OR OF ANY OTHER PERSON
OR ENTITY, (vii) THE PRESENCE OF HAZARDOUS MATERIALS ON, UNDER OR
ABOUT THE PROPERTY OR THE ADJOINING OR NEIGHBORING PROPERTY, (viii)
THE STATUS OF ENTITLEMENTS, PERMITS AND APPROV ALS WITH RESPECT TO
THE PROPERTY, (ix) THE CONDITION OF TITLE TO THE PROPERTY, (x) THE
QUALITY OF ANY LABOR AND MATERIALS USED IN ANY IMPROVEMENTS ON THE
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Control Act (California Water Code Sections 13000 et seq.), and the Safe Drinking Water and
Toxic Enforcement Act (California Health and Safety Code Section 25249.5 et seq.)). The
provisions of this Section 7.5 (and the provisions of the general release set forth below) shall not
be applicable to a breach by Seller of any of the representations or warranties set forth in Section
7.1 above to the extent Buyer initiates a claim against Seller for such breach within six months
following the Close of Escrow hereunder. The provisions of this Section 7.5 shall survive the
Close of Escrow or earlier termination of this Agreement.
In connection with the paragraph above, Buyer expressly waives the benefits of Section
1542 of the California Civil Code, which provides as follows: "A general release does not
extend to claims which the creditor does not know or suspect to exist in his favor at the time of
. executing the release, which if known by him must have materially affected his settlement with
the debtor."
BUYER'S INITIALS: ___ _
ARTICLE 8
NOTICES
All notices called for pursuant to these instructions shall be given in writing by personal
delivery, or by facsimile (with copy of such notice sent on the same day by mail or overnight
private courier in accordance with the provisions herein) or by overnight mail or overnight
private courier. Facsimile notices shall be deemed received on the day sent if sent prior to 5 :00
p.m. P.S.T. or if sent after 5:00 p.m. P.S.T., then deemed received on the next day. Overnight
mail or couriered notices shall be deemed received the day following deposit into the U.S. mail
or delivery to the private courier. Mailed or couriered notices shall be addressed as set forth
below, but either party may change its address by giving written notice thereof to the other in
accordance with the provisions of this Article.
To Buyer:
167348-001/200749.6
City of Palo Alto
Office of City Manager
250 Hamilton Avenue
Palo Alto, CA 94301
Fax: (650) 323-1741
Phone: (650) 329-2472
ATTN.: Real Property Manager
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To Escrow Holder: North American Title Company
497 N. Santa Cruz Avenue
Los Gatos, CA 95030
Fax: (408) 354-3212
Phone: (408) 399-4100
ARTICLE 9
BROKER'S COMMISSIONS
Seller and Buyer each represent and warrant to the other that it has not dealt with any real
estate broker, agent or salesperson in connection with this transaction. Each party shall
indemnify, defend and hold harmless the other on account of any claims, demands, causes of
action, or judgments respecting payment of any sales commission, brokerage commission or
finder's fee, including attorneys' fees and court costs, arising from or brought by any third party
who has dealt or claims to have dealt with such indemnifying party pertaining to the Property.
The obligations under this Article 9 shall survive the Close of Escrow hereunder.
ARTICLE 10
GENERAL ESCROW INSTRUCTIONS
Except as otherwise expressly provided herein and in lieu of the general provisions of
Escrow Holder's standard form instructions, the following shall apply:
10.1 Deposit of Funds. All funds received in this escrow shall be deposited with a
state or national bank in an insured money market account and shall not be commingled with
other funds of Escrow Holder. All disbursements shall be made by check of Escrow Holder or
wire transfer.
10.2 Prorations and Adjustments. All prorations and/or adjustments called for in this
escrow are to be made on the basis of a thirty (30) day month.
10.3 Transaction Reporting. Escrow Holder is instructed to report this transaction on
Form 1099 pursuant to Section 6045 of the Internal Revenue Code as amended by the Tax
Reform Act of 1986.
167348-0011200749.6 15
ARTICLE 12
GENERAL PROVISIONS
12.1 Possession. Buyer shall be entitled to possession of the Property on the Closing
Date.
12.2 Entire Agreement. This Agreement (including, without limitation, the Exhibits
attached hereto) contains the entire agreement of the parties and supersedes any prior oral or
written agreements between them with respect to the subject matter contained herein; provided
however, that this Agreement shan not supersede the Settlement Agreement, which shall remain
in full force and effect. There are no representations, agreements, arrangements or
understandings, oral or written, between the parties relating to the subject matter of this
Agreement which are not fully expressed herein or in the Settlement Agreement in the event of
any discrepancies between any provision contained in the Settlement Agreement and a provisi(.)ll
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of this Agreement, this Agreement shall control.
12.3 Attorneys' Fees. In the event either party brings an action at law or in equity to
enforce, interpret or redress the breach of this Agreement, the prevailing party in such action
shall be entitled to its litigation expenses and reasonable attorneys' fees incurred in addition to all
other relief as may be allowed by law. "Prevailing party" within the meaning of this Section 12.3
shall include, without limitation, a pmiy who brings an action, which action is dismissed after the
other party's payment of the sum allegedly due or performance of the covenant allegedly
breached or if the party obtains substantially the relief sought by it in the action.
12.4 Amendment. This Agreement may be amended only by a writing signed by each
of the parties hereto.
12.5 Counterparts. This Agreement may be executed in counterparts, each of which
shall be an original, but all of which shall constitute one instrument.
12.6 Assignment. This Agreement shall not be assigned by Buyer without first
obtaining the prior written consent of Seller, which shall not be unreasonably withheld.
12.7 Successors. All terms and provisions of this Agreement shall be binding upon
and shall inure to the benefit of, and be enforceable by, the respective permitted assigns and
successors of Seller and Buyer.
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