HomeMy WebLinkAboutStaff Report 6913
City of Palo Alto (ID # 6913)
City Council Staff Report
Report Type: Informational Report Meeting Date: 6/6/2016
City of Palo Alto Page 1
Summary Title: Sale of Transfer Development Rights for the Sea Scout
Building
Title: Status Report Update of the Sale of Transfer Development Rights for
the Sea Scout Building Located at 2560 Embarcadero Road
From: City Manager
Lead Department: Administrative Services
EXECUTIVE SUMMARY
This is an informational report and no action is required by the Council at this point. The
purpose of this report is to provide an update on the sale of Transferable Development Rights
(TDR) for the former Sea Scout Building located at 2560 Embarcadero Road and which is owned
by the City.
BACKGROUND
Environmental Volunteers (EV) is the tenant at the former Sea Scout Building. On January 19,
2016, the City Council reviewed several issues related to the Sea Scout building and the
relationship with EV that needed resolution. The following recommendations were approved
by Council motion:
A. Approve the Request for Proposal (RFP) for the sale of 2,500 square feet of Transferable
Development Rights (TDR) from the Sea Scout Building (without inclusion of parking
exemptions) at the minimum starting price of $225 per square foot; and authorize the
City Manager or his designee to execute and complete the sale of the subject TDR that
do not contain “Parking Exemption Rights” to the highest qualified bidder(s), at a price
not less than $225 per square foot; and
B. Authorize the City Manager or his designee to reimburse the Environmental Volunteers
(EV) in the amount of $300,000 from TDR proceeds for rehabilitation and capital
improvement expenses for the Sea Scout Building.
C. Reduce the payment from EV to the City for the construction cost of the public restroom
from $75,000 to $35,000.
D. Direct staff to return to Council, at a later date, regarding the TDR sale price and the use
of any excess funds above $300,000, and to transfer any excess funds to EV for the
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maintenance of the building, if allowed by the TDR Ordinance, or, if not allowable,
transfer the funds to a historic renovation fund.
For additional background information regarding the former Sea Scout Building, please refer to
CMR: 6372.
DISCUSSION
Following the Council’s direction, staff issued an RFP for the sale of TDR on March 1, 2016 and
closed the bidding process on March 31, 2016. TDR totaling 2,500 square feet were divided
into three lots of 800, 800 and 900 square feet to accommodate bidders who desired smaller
amounts of TDR footage. The City received three TDR proposals and selected the highest
qualified bids according to the terms and condition of the offering. Details of the proposals and
the result of the sale are shown in the table below. The price per square foot of $405 set a new
record for the sale of TDRs in the City of Palo Alto. The sale of 2,500 square feet generated a
total of $918,000.
Name
Lot
Number
Square
Footage
Bid Offered
Per SQ FT
Total Bid
Value
Mills Family LLC Lot One 800 $405 $324,000
Mills Family LLC Lot Two 800 $405 $324,000
Anthony A. Carrasco Lot Three 900 $301 $270,900
Total $918,900
Per Council’s direction, the City issued a payment to Environmental Volunteers in the amount
$265,000. The amount results from the deduction of $35,000, the amount of EV’s contribution
toward construction of a public restroom, from the TDR sales proceeds of $300,000.
In addition, staff researched Council’s question on whether it was possible to apply funds in
excess of $300,000 toward maintenance costs of the former Sea Scout building. Analysis of the
Ordinance indicated that such use is not allowed. Therefore, excess funds in the amount of
$653,900 will be dedicated toward rehabilitating other City owned historical buildings.
Resource Impact
The amount of $653,900 will reside in a holding account until the end use for the funds is
approved. The City will segregate the fund and accrue interest earnings consistent with the
interest earnings of the City’s investment portfolio to be used for rehabilitation of other City
owned historical properties.
Policy Implications
Sale of the TDRs allows for a final payment to EV and settles all outstanding issues relating to
the lease between the City and EV. This outcome is consistent with prior Council direction and
policy.
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Environmental Review
Sale of development rights for the former Sea Scout Building is Categorically Exempt from
California Environmental Quality Act (CEQA) review under CEQA guidelines section 15305,
Minor Alterations in Land Use Limitation. The rehabilitation project was Categorically Exempt
from CEQA review pursuant to CEQA guidelines section 15331, Historical Resource
Restoration/Rehabilitation, as a project limited to maintenance, repair, and rehabilitation in
accordance with the Secretary of Interior standards for historic preservation.