REPORT TO THE CITY COUNCIL FROM: GEORGEANNE A. WHITE, City Manager Office of the City Manager BY: KELLY TREVINO, Acting Director Economic Development Department SUBJECT ..Title Actions pertaining to the sale of an approximate14.58� acre property located at the southwest corner of West Herndon and North Brawley Avenues, (Council District 2): 1. Adopt a finding pursuant to the California Environmental Quality Act (CEQA) Guidelines Section 15312/Class 12 (Surplus Government Property Sales) for the proposed project as the property has been declared surplus and is not located in an area of statewide, regional, or areawide concern identified in Section 15206(b)(4) 2. ***RESOLUTION - Finding there are substantial community benefits resulting from the sales agreement that justify a price less than market value as outlined in Fresno Municipal Code Section 4-204 relating to the disposition of real surplus property APN 507-030-48ST (Herndon and Brawley Avenue) (Subject to Mayor's Veto) 3. 3. Authorize the City Manager or designee to execute the Purchase and Sale Agreement with Lakhjit S. Sandhu, MD upon approval from the California Department of Housing and Community Development in compliance with the Surplus Land Act. ..Body RECOMMENDATION Staff recommends the City Council authorize the sale of surplus property owned by the City of Fresno located at the southwest corner of West Herndon and North Brawley Avenues, APN 507-030-48ST to Lakhjit S. Sandhu, MD for $1,850,000, adopt a finding of no possibility of significant effect pursuant to Section 15061 of the California Environmental Quality Act (CEQA), and Categorical Exemption pursuant to CEQA Guidelines Section 15312, approve the recommendation of the City Manager's Office to select the proposal of Dr. Sandhu, pass the resolution authorizing the sale price which is below the 2016 appraised value of the property based on findings of good cause and clear and convincing benefit to the public under Fresno Municipal Code (FMC) Section 4-204(d)(4), and authorize the City Manager, or their designee, to sign all documents necessary to complete the subject transaction. Additionally, based on the analysis, this proposed site will provide an added medical component and value to the community that is highly needed. EXECUTIVE SUMMARY Pursuant to City Council direction, RFP No.10100 was issued seeking proposals to purchase and develop the City owned parcel at the southwest corner of West Herndon and North Brawley Avenues near the Sierra Skypark Airport ("SSPA"). The site contains approximately �14.58 acres of vacant land that was declared surplus property by the City Council in March 2020 by Resolution No. 2020-056. In total, 3 proposals were received and evaluated according to a "Best Value" basis that provides the highest economic and financial benefit to the City in accordance to the provisions of FMC Section 4-203 and 4-204. It's recommended that Council consider authorizing the sale in the amount of $1,850,000 to Lakhjit S. Sandhu, MD. BACKGROUND The City of Fresno proposes to sell surplus real Property owned by the City, totaling approximately �14.58 acres of vacant land, (APN 507-030-48ST) located in North Fresno at the southwest corner of West Herndon and North Brawley Avenues, near the SSPA. Due to its close proximity to SSPA, it is subject to the Fresno County Airport Plan Land Use Compatibility Plan (Fresno County ALUCP), which in turn places development, density, and height restrictions on this parcel. On January 13, 2022, the City Council approved Resolution No. 2022-006 finding good cause and clear and convincing benefit to vary from the RFP process outline in FMC Section 4-204 relating to the disposition of real surplus property. The Resolution authorized the City Manager to issue the RFP as detailed below: * Advance the RFP process and allow 14 days for proposal submittals * Bypass the selection of a formal committee and allow the City Manager's Office to work with the Economic Development Department to issue the RFP * Request all proposers submit their "Last, Best and Final" offer * Provide Council with a copy of all proposal submittals * Negotiate, and return to Council for approval of a Formal Agreement when terms and conditions have been finalized The City issued RFP No. 10100, for the parcel on February 7, 2022 and closed the submittal date on February 22, 2022. In total 3 RFPs were received to purchase and develop APN 507-030-48ST. ECONOMIC IMPACT Staff conducted an economic impact analysis for all RFP's submitted. This analysis was based upon the RFP guidelines and the information that was provided by the interested parties. Using the computer software program, IMPLAN, staff was able to compute the projected economic impact for all submitted RFP's. It was determined, based upon the economic impact analysis, that the RFP submitted by Lakhjit S. Sandhu, MD was the highest yield for the community and the surrounding areas. Buyer has expressed an interest in developing the property located on the southwest corner of Herndon and Brawley Avenues, APN 507-030-48ST. The City of Fresno ("Seller") is the fee owner of the property. Financial terms * Purchase Price: $1,850,000.00 * Total Acreage: �14.58 acres or 635,104 square feet of undeveloped land area * Nonrefundable Deposit: Cashier's Check of at least 10% of the purchase price. * Buyer requests 45 day due diligence period * Buyer shall be responsible for providing funding for the acquisition and development of site * Affordable Housing Covenant as required by HCD The site is proximate to the SSPA which is a privately owned, public use general aviation airport. The SSPA Land Use Policy Plan was adopted by the Airport Land Use Commission (ALUC) and the current 1995 revisions is intended to be consistent with the City of Fresno's Specific Plan and zoning ordinance. The buyer is aware that a development project that is not in current compliance will require a site rezone and a Conditional Use Permit (CUP). Seller and the Planning and Development Department will work collaboratively towards rezoning efforts. However, the City of Fresno's recommendation will be based on the due diligence outcomes for the property and does not guarantee a final result. Buyer confirms that they are purchasing the Property in its "AS IS" condition and will rely upon their own investigation of the present condition of the property and all governmental laws and ordinances which might affect its use and development. The Agreement contains a reverter clause which would allow the City to exercise its reverter right should Buyer not construct on the Property a Class A Medical Office Building within 36 months of transfer of title in compliance with FMC 4-204(d)(5). SURPLUS LAND ACT This parcel is of no use to the City and was declared surplus by the City Council in March 2020 by Resolution No. 2020-056. Following Government Code Section 54230.5, notices of the potential sale were subsequently provided to the Department of Housing and Community Development (HCD) and all housing sponsors as required by the Surplus Property Land Act and no responses were received stating any interest in the property. As required by the Surplus Land Act (SLA), when surplus land is disposed, it is often required to maintain certain levels of affordability. An affordable housing covenant shall be recorded on the property at the time of sale pursuant to Government Code Sections 54233 and 54233.5, which requires that if 10 or more units of housing are developed on the property in the next 55 years, that 15% of the units will follow guidelines for affordable housing. Under SLA, the City is required to provide HCD notice of the disposition of any surplus property and given 30 days' time to respond or object to the sale of the property prior to the City being allowed to finalize any agreement. Once the terms of the final agreement are reached and approved by Council, the City will initiate notice to HCD. Assuming no objection is made, the City may finalize the agreement upon confirmation from HCD and record the Affordable Housing Covenant. DISPOSITION OF REAL PROPERTY (FMC SECTION 4-204) The City, prior to passing FMC 4-204, listed and advertised the property for sale through its broker and has since received multiple offers to purchase the land. These offers consisted of office, medical, or storage. Pursuant to FMC Section 4-204(d)(4), the City shall not approve any purchase and sale agreement, disposition and development agreement or any other agreement that would cause or allow City owned real property to be conveyed, except upon specified terms and conditions. One of those terms requires that purchase prices shall be at fair market appraised value, unless the Council makes findings there are substantial community benefits resulting from the sales agreement that justify a price less than market value. ENVIRONMENTAL FINDINGS Staff has performed a preliminary environmental assessment of this action and pursuant to California Environmental Quality Act (CEQA) Guidelines, Section 15312/Class 12 (Surplus Government Property Sales) has determined that there is no possibility that this action may have a significant effect on the environment, because it is merely a change of ownership. LOCAL PREFERENCE Local preference does not apply because the acquisition of the subject real property does not include a bid or award of a construction or services contract. FISCAL IMPACT The sale of APN 507-030-48ST is in Council District 2. There will be no immediate cost or revenue depletion to the City's General Fund due to this sale. The sale and purchase amount of $1,850,000 will be deposited into the General Fund. A portion of these funds will be used to pay recording fees, a real estate brokerage fee in the sum equal to 6% of the purchase price to be divided between the Seller's Broker 3% and Buyer's Broker 3% at closing of escrow. Attachments: CEQA Analysis Resolution Purchase and Sale Agreement