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Home My WebLink About2000-12-11 City Council (12)TO: City of Palo Alto City Manager’s Report HONORABLE CITY COUNCIL 2 FROM:CITY MANAGER DEPARTMENT:ADMINISTRATIVE SERVICES DATE:DECEMBER 11, 2000 CMR: 436:00 SUBJECT:APPROVAL OF THE ACQUISITION OF THE PINKERTON PROPERTY LOCATED AT 806-808 WAVERLEY STREET AND APPROVAL OF A RELATED BUDGET AMENDMENT ORDINANCE IN THE AMOUNT OF $400,000 RECOMMENDATION Staff recommends that Council: 1)Direct staff to purchase the residential property, known as the Pinkerton Property, located at 806-808 Waverley Street; and 2)Approve a Budget Amendment Ordinance (BAO) in the amount of $400,000 for purchase of the property. BACKGROUND On April 10, 2000, Council adopted Ordinance 4628 to provide an additional appropriation of funds for the acquisition of a portion of the property owned by the Palo Alto Medical Foundation (PAMF). In Section 2 of that Ordinance, $12,000 was appropriated to fund PAMF’s existing lease agreement for a 5,000 square foot parcel owned by the Pinkerton family. Located at 806-808 Waverley Street, this parcel is within the boundaries of the property identified for park purposes (see map Attachment A). PAMF’s lease on the parcel expires in 2064. The City assumed the lease when it acquired fee title to the remaining park parcel. The current lease payment is $1,082 per month or $12,984 per year, with increases every five years in accordance with the current Consumer Price Index (CPI). Taxes are approximately $2,600 per year. CMR:436:00 Page t of 3 DISCUSSION The Pinkerton family has offered to sell the property to the City for $400,000, or $80 per square foot. This compares, favorably to current market rates in this area (see Attachment B: Offer Letter dated August 29, 2000). The cost to purchase the property now at $400,000 is far lower than the estimated cost of the annual lease payments through the year 2064. Staff estimates that lease payments through the year 2064, assuming a 3 percent increase in the CPI each year, would total $2,500,000. In addition, property taxes would total close to $350,000 by 2064. If the City purchases the parcel, it will no longer be required to pay property taxes. Should the City decide not to purchase the parcel of land, the City would still be required to either purchase the property upon expiration of the lease in 2064, or vacate that portion of the park. RESOURCE IMPACT The attached BAO in the amount of $400,000 to purchase the Pinkerton property will be funded from the General Fund Budget Stabilization Reserve. Staffwill return to Council for approval of a Capital Improvement Project which will include improvement costs of the Pinkerton parcel as part of the new park development. Maintenance costs will be included in the operating budget as development of the new park is completed. POLICY IMPLICATIONS Acquisition of the Pinkerton parcel does not represent any change to existing City policies. ENVIRONMENTAL ASSESSMENT This project is exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to Section 15325 of the CEQA guidelines. ATTACHMENTS Attachment A: Attachment B: Attachment C: Attachment D: Budget Amendment Ordinance Budget Amendment Ordinances Impacting General Fund Reserves Approved to Date in 2000-01 Map of parcel Offer letter from the Pinkerton family PREPARED BY: Martha Miller, Financial Analyst CMR:436:00 Page 2 of 3 DEPARTMENT HEAD APPROVAL: CITY MANAGER APPROVAL: CARL Services Assistant City Manager Charles V. Pinkerton Sharon Currier Daniel L. Pinkerton Helen A. Trimpi CMR:436:00 Page 3 of 3 ATTACHMENT A ORDINANCE NO. ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR THE FISCAL YEAR 2000-01 TO PROVIDE AN ADDITIONAL APPROPRIATION OF $400,000 FOR THE ACQUISITION OF THE PINKERTON PROPERTY LOCATED AT 806-808 WAVERLEY STREET WHEREAS, pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Council on June ~19, 2000 did adopt a budget for fiscal year 2000-01; and WHEREAS, on April i0, 2000, Council adopted Ordinance No. 4628 to provide additional appropriation of funds for the acquisition of a portion of the property owned by the Palo Alto Medical Foundation (PAMF); and WHEREAS, included in the Ordinance is the sum of $12,000 to fund the City’s assumption of an existing lease held by PAMF of a 5,000 square foot parcel owned by the Pinkerton Family, located at 806-808 Waverley Street; and WHEREAS, the Pinkerton family has offered to sell the property to the City for $400,000; and WHEREAS, the Council desires to accept the offer, and approve an additional appropriation of $400,000 to purchase the property; and WHEREAS, City Council authorization is needed to amend the 2000-01 budget as hereinafter set forth. NOW, THEREFORE, the Council of the City of Palo Alto does ORDAIN as follows: SECTION I. The sum of Four Hundred Thousand Dollars ($400,000) is hereby appropriated to the non-salary category in the General Fund and the General Fund Budget Stabilization Reserve is correspondingly reduced. SECTION 2. The additional appropriation of funds from the General Fund Budget Stabilization Reserve is a one-time cost and there will be future year ongoing costs as a result of this ordinance. SECTION 3. This transaction will reduce the General Fund Budget Stabilization Reserve from $14,069,753 to $13,669,753. SECTION 4. As specified in Section 2.28.080(a) of the Palo Alto Municipal Code, a two-thirds vote of the City Counci! is required to adopt this ordinance SECTION 5. This project is exempt from the provisions of the California environmental Quality Act (~CEQA") pursuant to Section 15325 of the CEQA guidelines. SECTION 6. As provided in Section 2.04.350 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST:APPROVED: City Clerk Mayor APPROVED AS TO FORM:City Manager Senior Asst. City Attorney Director of Services Administrative o!pJo ATTACHMENT B Budget Amendment Ordinances Impacting General Fund Reserves Approved-To-Date in 2000-01 ~ ~_’~Placeholders Impact on the:"Already In~e= Cost Revenue 2000.01 Adopted General FundBAODescription¯:BSRBudget ~ EstlmaL~d Future Year Ongoing Costs Estimated Beginning Budget Stabilization Reserve (BSR) Balance Adopted Budget Addition to BSR Public Safety Building - CIP 19820 Planning Transcription Services Office of Transportation Safety Grant Cubberley Theatre Chiller Replacement - CIP 10120 Arts Council Silicon Valley Grant Police Department Grants (1) Zoning Ordinanqe Update Friends of the Palo Alto Library Granl Office Space Renovation - CIP 10020 Acquisition of Pinkerton Property $13,385,753 $1,075,000 ($74,000)($74,000) ($40,000)($40,000) ($187,065)$187,065 $0 ($22,000)($22,000) ($5,192)$5,192 $0 ($277,314)$277,314 $0 ($110,000)$110,000 $0 ($59,000)$59,000 $411,000 $156,000 ($255,000) ($400,000) $40,000 $17,000 $188,000 BSR Balance After BAO’s (1) Of this amount $121,259 will be deposited in the General Fund and $156,055 deposited in the Special Revenue Fund. i .......................... ~ ...................,W~:VER~:E-Y..-.-’S-T~EE.T.- PALO ’ALTp ;;>. City of Palo Alto Administrative Services Department P.O.Box 10250 Attn: William W. Fellman Manager, Real Property ATTACHMENT D AUO ,2 ;9 ;2000 Re: 806-808 Waverley St. property Dear Sirs: In your letter of July 29, 2000 you mentioned that the City of Palo Altowas interested in purchasing our property on Waverley St. You estimated that the current value computed hoin !he terms of the lease is about $185,000. From what we can determine, land pdces in this area of Palo Alto are in the vicinity of $100 per square foot. The figure of $185, 000 would be only $37 per square foot. We would not be highly motivated to sell our income-producing lot for that price. We have previously turned down offers from the Clinic to sell but if your offer were to be closer to the market price, we would indeed be interested in selling. Before the 99 year lease expires on October 31, 2064, the number of owners of the property will have expanded to an estimated 50 to 70. This would constitute a major complication for both sides. A sale now, or soon, would be advantageous to all. We, therefore, offer to sell our lot to the City of Palo Alto for $400,000. This offer expires in 60 days. You are free to discuss this matter with any of us at your discretion. Our phone numbers are provided below. Sincerely, Oharles V, Pinkerton 1-5:30-824-4307 ! Sharon Currier 1-831~88-~5 Daniel L. Pinke~on ~5-0778 -- ~ele~A. Tdm~l ~25-77~