REPORT TO THE CITY IN ITS CAPACITY AS HOUSING SUCCESSOR TO THE REDEVELOPMENT AGENCY OF THE CITY OF FRESNO AND FRESNO REVITALIZATION CORPORATION DATE: March 18, 2021 FROM: MARLENE MURPHEY, Executive Director SUBJECT ..Title Actions pertaining to property located at 887 Fulton Street (APN 468-282-21T). 1. Adopt a finding of Categorical Exemption pursuant to Article 19, Section 15332 (Class 32-infill) of the California Environmental Quality Act (CEQA) 2. Approve a Purchase and Sale Agreement between the Housing Successor and Noyan Frazier LP for property located at 887 Fulton Street. Sponsors: Executive Director, Fresno Revitalization Corporation ..Body RECOMMENDATION It is recommended that the City of Fresno in its capacity as Housing Successor approve an agreement with Noyan Frazier LP for the sale of property at 887 Fulton Street. EXECUTIVE SUMMARY The buyer, Noyan Frazier LP has analyzed the property for development purposes through an ENA that expires April 11, 2021. Based upon extensive analysis Noyan Frazier intends to privately develop market rate housing and has tendered an offer to purchase the property "as is" at its fair market value (FMV). BACKGROUND The Disposition and Development Agreement (DDA) for the South Stadium area focuses on Phase 1 development known as "The Park" located at the northwest corner of Inyo and Fulton Streets. The .79 acre site will be developed by Noyan Frazier Capital LP into multi-story mix of affordable and market rate housing over ground floor retail scheduled to commence construction in November of this year. The DDA identified a property located in the same block at the southwest corner of Fulton and Kern Streets as a potential future phase. The site, owned by the City Housing Successor, is under an Exclusive Negotiation Agreement with "The Park" developer, Noyan Frazier that expires April 11, 2021. The ENA calls for the close of escrow no later than December 31, 2021 The property located at 887 Fulton Street is comprised of an approximate 11,250 square foot (sf.) lot and a long vacant, commercial retail structure of about 33,750 sf. The property was very recently appraised at $775,000.00. During the ENA period, the developer expended considerable effort to evaluate the building and site for the most cost effective approach to the highest and best use. Working with professionals in remediation, demolition, architecture, financial services and related areas substantial investment was made in the course of due diligence. The Developer is considering approximately 48 market rate residential units in four stories over ground floor retail with a project cost estimate of $13 million. The projected start of construction is September 2023. The Developer Noyan Frazier is seeking to purchase 887 Fulton Street at its appraised value. The attached Purchase and Sale Agreement is summarized as follows: Purchase Price: Appraised value of $775,000 Initial Deposit: Within 5 days of Council Approval Buyer deposits to escrow $20,000 of which $5,000 shall be non-refundable and $15,000 shall be fully refundable during the Due Diligence period. Due Diligence Period: The Buyer has One Hundred and Eighty days (180) from date of Council approval to perform due diligence at buyer expense. At the Expiration of Due Diligence and if Buyer moves to "Closing" the deposit is released to Seller and becomes non-refundable but applicable to the purchase price. Closing: On or before December 31, 2021 Buyer shall pay seller the purchase price of $775,000 minus any paid deposits and any customary pro rations that are allocated between buyer and seller. Closing Extension: Buyer is allowed a one-time 180 day extension to close on the property. In consideration for the extension, Buyer will deposit and release to Seller an additional deposit of $180,000 payable in advance in six equal monthly installments of $30,000 due no later than the first day of each month. All additional deposits shall become non-refundable but applicable to purchase price. Extended Closing: Buyer shall close no later than June 30, 2022. Seller Buy-Back: If Buyer does not start substantial construction within three years from close of Escrow, seller will have the right to Buy-Back the property from Buyer at the selling price or current market value whichever is less. The property, purchased with housing set-side funds, is being sold for FMV and the sale proceeds will go into the Low and Moderate Income Housing Fund to be used for the provision of affordable housing. During the ENA period, the Developer paid an exclusive negotiating fee of $5,000 pursuant to the ENA to offset the costs of maintaining the property for prior years under an ENA (e.g. property taxes) and for updated appraisal. Similarly, the proposed PSA retains $5,000 of the initial deposit as nonrefundable and non-applicable to the purchase price to cover maintenance, including taxes, until close of escrow. The PSA terms provide for closing December 31, 2021 with a one-time 180 day extension that would result in closing no later than June 30, 2022. Since the property is subject to an ENA it is not subject to the newly adopted provisions of the Surplus Land Act provided disposition of the property is completed no later than Dec, 31, 2022 In order to discourage land banking, the PSA provides a buy back option at the original sale price or FMV whichever is less if substantial construction has not begun within three years following Closing. ENVIRONMENTAL FINDINGS Staff has performed a preliminary environmental assessment and determined that it falls within the Categorical Exemption set forth in CEQA Guidelines Section 15332 as Infill Development. The potential future development of residential units over ground floor retail is consistent with existing Downtown Core General Plan land use designation and zone district. The proposed project is on a .79 acre site downtown, and is therefore within City limits and on a site that is under five acres. The project site is not a habitat for any endangered, rare, or threatened species, and can be adequately served by all required utilities and public services. Finally, approval of this project will not result in any significant effects related to traffic, noise, air quality or water quality. Furthermore, staff has determined that none of the exceptions to Categorical Exemptions set forth in the CEQA Guidelines section 15300.2 apply to this project. LOCAL PREFERENCE Local preference was not considered because this agreement does not include a bid or award of a construction or services contract. FISCAL IMPACT The PSA's provision for a non refundable deposit in the amount of $5,000 will help to offset costs such as taxes and utilities during the due diligence period. Attachments: Purchase and Sale Agreement