For City Council Meeting March 26, 2024
TO: Honorable Mayor and City Council
APPROVAL: David Carmany, City Manager
FROM: Colby Cataldi, Director of Community Development
Title
Consideration of Bid from Newland Real Estate Equities, LLC for acquisition of Miro Way Parcels
RECOMMENDATION
Staff recommends that the City Council (1) accept the bid from Newland Capital Group, Inc. to purchase seven parcels on Miro Way, approve a Purchase and Sale Agreement with Newland Real Estate Equities, LLC, (2) authorize the City Manager to execute all required documents and (3) authorize the City Clerk to file a Notice of Exemption with the County Clerk to the Board of Supervisors
Body
Request City Council to Accept the Bid from Newland Real Estate Equities, LLC (Buyer) to Purchase Seven Parcels as depicted in Attachment 2 (0264-211-15, 0264-211-20, 0264-212-17 (ptn), 0264-212-44, 0264-212-45 (ptn), 0264-212-46, and 0264-212-54) on Miro Way and Approve, authorize the City Manager to Execute All Required Documents and Authorize the City Clerk to File a Notice of Exemption with the County Clerk to the Board of Supervisors.
BACKGROUND
On April 26, 2022, the City Council/Successor Agency adopted Resolution No. 7860 to declare, among others, six (6) parcels of land as Surplus Land, including an approximately 3-acre City-owned parcel (APN 0264-211-15) located on the southeast corner of Linden Avenue and Miro Way (the “City Parcel”) and five (5) Successor Agency owned parcels (APNs 0264-212-17, -44, -45, -46, and -54) consisting of approximately 11 acres south of Miro Way (the “Agency Parcels”). The City/Successor Agency subsequently complied with the requirements of the Surplus Land Act and received letters of compliance from the California Department of Housing and Community Development. Lewis- Hillwood Rialto, LLC (“LHR”) owns an approximately 7-acre parcel (“LHR Parcel”) situated between the City Parcel and the Agency Parcels. The assemblage of the City Parcel, the Agency Parcels, and the LHR Parcel (collectively, the “Property”) is shown in Figure 1, below.
Figure 1
Pursuant to a Collective Disposition Agreement with LHR approved by the City Council/Successor Agency on September 27, 2022, the City and Successor Agency agreed to dispose of their respective parcels collectively with LHR’s disposition of its parcel. The City noticed and conducted a sealed bid sale process for the Property on December 16, 2022. However, no conforming bids were received. A second sealed bid sale process was noticed and conducted by the City on March 10, 2023, and one conforming bid was received from Newland Capital Group, Inc. During the discovery period it was determined by the buyer, that they could not proceed under the terms and conditions of the disposition. The timeframe to negotiate the final terms had expired and the City and Buyer terminated the discussions.
On October 23,2023, the City received an unsolicited offer from Newland Capital Group, which include the following terms:
• Process options for both a 2 and/or 3 building site development plan
• Purchase Price: $68 per square foot or $61,649,771.04
• Earnest Money Deposits (7% of the purchase price):
o $1M non-refundable*
o $1M non-refundable upon Submittal of Public Review Draft SEIR to City*
o $1M non-refundable upon Final EIR prepared and submitted*
o $1.315M non-refundable after planning commission meeting*
• Earnest Money Deposits shall be returned to the Buyer if the Seller does not secure approval for the above-referenced 2 and 3 building industrial warehouse plans with the CEQA plan approved and all appeal periods exhausted.
ANALYSIS/DISCUSSION
The attached Agreement (Attachment 1) has been reviewed and accepted by all parties and provides the time for the following five conditions to be accomplished, all of which are conditions for the close of escrow:
• The completion by LHR and the City of an amendment to the Renaissance Specific Plan to revise the permitted land uses therein for the Property by eliminating the park and school site designations and replacing them with business center land uses to support industrial warehousing and similar development, including authorization for a conceptual industrial development on the Property;
• The completion by LHR and the City of an amendment to the Development Agreement (the “DA Amendment”) to be consistent with the Specific Plan Amendment;
• The completion of all necessary CEQA approvals related to the Specific Plan Amendment and DA Amendment;
• Approval of the Agreement by the Countywide Oversight Board in connection with the Successor Agency owned parcels; and
• Approval of the Agreement by the California Department of Finance, also in connection with the Successor Agency owned parcels.
All other terms and conditions contained in the Agreement are typical of for the sale of large tracts of undeveloped property.
ENVIRONMENTAL IMPACT
The proposed action is exempt from the provisions of the California Environmental Quality Act (“CEQA”) pursuant to Section 15312 of the State CEQA Guidelines, as a sale of surplus government property.
GENERAL PLAN CONSISTENCY
The proposed action fulfills the following General Plan Goal and Policy related to Economic Development:
Goal 3-1: Strengthen and diversify the economic base and employment opportunities and maintain a positive business climate.
Policy 3-1.4: Encourage the consolidation of smaller lots of industrial and commercial areas to attract larger industrial businesses or commercial projects.
LEGAL REVIEW
The City Attorney's Office has reviewed the agreement and approved it as to form.
FINANCIAL IMPACT
No impact at this time.