REPORT TO THE CITY COUNCIL FROM: NICHOLAS D. MASCIA, PE, Assistant City Manager Interim Director - Capital Projects Department SCOTT L. MOZIER, PE, Director Public Works Department BY: ANTONIO M. BUELNA, PE, Assistant Director Capital Projects Department, Capital Administration Division NANCY BRUNO, Supervising Real Estate Agent Capital Projects Department, Capital Administration Division SUBJECT ..Title Actions pertaining to the acquisitions of fee title interest of parcels to benefit the Blackstone McKinley BNSF Grade Separation Project (Council Districts 1 and 7); 1. Approve the Agreement for Purchase and Sale of Real Property and Escrow Instructions to acquire fee title interest of seven (7) improved parcels, collectively 3.0-acres (130,716 square feet), identified as Assessor's Parcel Numbers 451-071-07, 451-071-08, 451-071-09, 451-071-10, 451-071-23, 451-071-25, and 451-071-38, owned by Rocking Rail LLC, a California limited liability company for an amount of $4,500,000.00, for the construction of the Blackstone McKinley BNSF Grade Separation Project. 2. Approve the Agreement for Purchase and Sale of Improvements Pertaining to the Realty and Business Furniture, Fixtures, and Rolling Stock and Escrow Instructions to acquire all improvements, business fixtures and rolling stock as identified in the associated Bill of Sale, owned by Jet Black Logistics, Inc., a California corporation, doing business as E-Z Haul Ready Mix and Star Building Supplies for an amount of $2,872,250.00 for the construction of the Blackstone McKinley BNSF Grade Separation Project. ..Body RECOMMENDATIONS Staff recommends the City Council 1) approve the Agreement for Purchase and Sale of Real Property and Escrow Instructions to acquire fee title interest of seven (7) improved parcels, collectively 3.0-acres (130,716 square feet), identified as Assessor's Parcel Numbers (APN's) 451-071-07, 451-071-08, 451-071-09, 451-071-10, 451-071-23, 451-071-25, and 451-071-38 (the Subject Property), owned by Rocking Rail LLC, a California limited liability company (the Property Owner) for an amount of $4,500,000.00 for the construction of the Blackstone McKinley BNSF Grade Separation Project (the Project), and authorize the Capital Projects Director or their designee to sign all documents necessary to complete the subject acquisition, and 2) approve the Agreement for Purchase and Sale of Improvements Pertaining to the Realty and Business Furniture, Fixtures, and Rolling Stock and Escrow Instructions to acquire all improvements, business fixtures, and rolling stock as identified in the associated Bill of Sale (the Business Assets), owned by Jet Black Logistics, Inc., a California corporation, doing business as E-Z Haul Ready Mix and Star Building Supplies (the Assets Owner) for an amount of $2,872,250.00 for the construction of the Blackstone McKinley BNSF Grade Separation Project and authorize the Capital Projects Director or their designee to sign all documents necessary to complete the subject acquisition. EXECUTIVE SUMMARY The acquisition of the Subject Property will provide the City with fee title interest of the real property located at 1538 North Blackstone Avenue and 1815 East Home Avenue, Fresno, California, which are necessary to construct the Project and will eliminate two existing at-grade crossings by grade separating North Blackstone Avenue and East McKinley Avenue under the BNSF Railway Mainline Track. The additional parcels included in the Subject Property are being acquired as part of a negotiated settlement to avoid the filing of an eminent domain action. The Project requires the fee title acquisition of the Subject Property, improved with commercial structures containing businesses known as E-Z Haul Ready Mix and Landscape Supply, and Star Building Supplies. The City needs to acquire the property interest described above to certify the Project and construct the proposed Project improvements. The Property Owner and the City came to a mutually agreed upon total amount of $4,500,000.00 as just compensation for the acquisition of the Subject Property. The Assets Owner and the City came to a mutually agreed upon total amount of $2,872,250.00 as just compensation for the purchase of the Business Assets, which includes the improvements pertaining to realty and rolling stock. The total combined amount is $7,372,250 for the purchase of the Subject Property and Business Assets. The Property Owner signed the Agreement for Purchase and Sale of Real Property and Escrow Instructions on December 16, 2024. The Assets Owner signed the Agreement for Purchase and Sale of Improvements Pertaining to the Realty and Business Furniture, Fixtures, and Rolling Stock and Escrow Instructions on December 16, 2024. On December 12, 2024, the Council adopted a Resolution of Necessity for the Initial Parcels in case negotiations with the owners failed. However, City staff are hopeful that with the executed Agreements between the parties for the Subject Property, the escrows will close successfully. The Subject Property is occupied by the owner's businesses, who is entitled to relocation assistance pursuant to the Uniform Relocation Act. The City's relocation consultant has been in contact with the owner to assist in the relocation of their business. BACKGROUND The Blackstone Avenue and McKinley Avenue corridors serve as primary routes for the community, the City's Bus Rapid Transit system, emergency vehicles, and is also part of the Blackstone Smart Mobility Plan providing Class IV protected bicycle facilities along Blackstone Avenue through the Project area. The Project location has experienced the highest traffic volumes and number of accidents of any at-grade crossing on the BNSF corridor. The Blackstone McKinley BNSF Grade Separation Project will eliminate two existing at-grade crossings by grade separating North Blackstone Avenue and East McKinley Avenue under the BNSF Mainline Track. The City is progressing through the preliminary engineering and right of way phases of the Project. The Project costs for the right of way phase are funded by Measure C Grade Separation Program funds and Local Partnership Program Formulaic grant funds. The City retained Hamner, Jewell and Associates (HJA) to acquire parcels on its behalf for the Project. HJA retained K.R. McBay Appraisal Company (KRMAC) to prepare an appraisal report of fair market value of APNs 451-071-25 and 451-071-38 (the Initial Parcels) for the Project. On March 31, 2023, KRMAC prepared an appraisal report determining the fair market value of the Initial Parcels to be $1,060,000 as defined by Section 1263.320 of the Code of Civil Procedure. The appraisal was reviewed by RowLand Valuation who concurred with the value given by KRMAC. Pursuant to Section 7267.2 of the Government Code, an offer of just compensation in the full amount of the appraisal for the Initial Parcels was emailed and sent via USPS Certified mail to the Owner by HJA on September 7, 2023. A subsequent, supplemental offer to purchase the Improvements Pertaining to the Realty (IPR) on the Initial Parcels was made on December 14, 2023, in the amount of $384,765. The total combined purchase price for the Initial Parcels and IPRs was $1,444,765. During negotiations with City Staff and HJA, the Property Owner stated that the City's purchase of the Initial Parcels for the Project would leave the entity with uneconomic remnants and the business could not continue at this location. In addition, he stated the relocation of his businesses was not feasible due to related costs and environmental requirements. The Property Owner provided an independent appraisal of the Subject Property prepared by J. Hower and Associates (JHA) who determined the fair market value of the Subject Property to be $4,500,000. The City updated the appraisal for the IPRs to include all Business Assets on the Subject Property, not just the Initial Parcels, and it was determined the value was $2,472,250. The additional $400,000 is compensation for inventory on hand and possible Loss of Goodwill for the business, bringing the total compensation for the Business Assets to $2,872,250. On December 12, 2024, the Council adopted a Resolution of Necessity for the Initial Parcels in case negotiations with the owners failed. However, City staff are hopeful that with the executed Agreements between the parties for the Subject Property, the escrows will close successfully. The Subject Property is occupied by the owner's business, who is entitled to relocation assistance pursuant to the Uniform Relocation Act. The City's relocation consultant has been in contact with the owner to assist in the relocation of their business. Staff recommends the City Council authorize the Capital Projects Director or designee to sign all documents necessary to complete the subject acquisitions. The City Attorney's Office has reviewed and approved the Purchase and Sale Agreements and associated documents as to form. ENVIRONMENTAL FINDINGS This Project was found to be statutorily exempt by Fresno City Council on June 25, 2020, pursuant to California Public Resources Code Section 21080.13(a) and 15282(g) of the California Environmental Quality Act (CEQA) Guidelines. The Notice of Exemption was thereafter recorded with the Fresno County Clerk on July 30, 2020. The statute of limitations for challenges to this exemption has run pursuant to CEQA Guideline Section 15062(d). This Project will eliminate two railroad crossings and grade separate North Blackstone Avenue and East McKinley Avenue under the BNSF Mainline Track. LOCAL PREFERENCE Local preference was not considered because this agreement does not include a bid for or award of a construction or services contract. FISCAL IMPACT The proposed Blackstone McKinley BNSF Grade Separation Project is within Council Districts 1 and 7. These acquisitions will have no impact to the General Fund. All Project costs for the right of way phase are funded with Measure C and California Local Partnership Program Formulaic grant funds. All funds necessary for the acquisition are included in the current fiscal year budget as previously adopted by the City Council. Attachments: Purchase and Sale Agreement-Real Property Purchase and Sale Agreement-Business Assets Vicinity Map Location Map