REPORT TO THE CITY COUNCIL FROM: JENNIFER CLARK, Director Planning & Development Department BY: PHILIP SKEI, Assistant Director Planning & Development Department SUBJECT ..Title Actions pertaining to an Amended and Restated Agreement for Option to Purchase 959 N. Parkway Drive (District 3): 1. ***RESOLUTION - Finding good cause and clear and convincing benefit to the public to allow a purchase option on subject property for more than five years without a request for proposal process, allow close of escrow on the subject property to extend beyond 12 months of council approval, and allow the removal of a reverter clause; and finding substantial community benefits to justify a sales price less than fair market value pursuant to Fresno Municipal Code section 4-204 relating to the disposition of real property commonly known as 959 N. Parkway Drive, Fresno, CA (APN 449-324-11) (Requires 5 affirmative votes) (Subject to Mayor's veto) 2. Approve the Amended and Restated Agreement for Option to Purchase 959 N. Parkway Drive between the City of Fresno and Fresno Housing Authority in the amount of $1,000 ..Body RECOMMENDATION Staff recommends City Council approve a resolution finding good cause and clear and convincing benefit to the public to allow a purchase option on subject property for more than five years without a request for proposal process, allow close of escrow on the subject property to extend beyond 12 months of council approval, and allow the removal of a reverter clause; and finding substantial community benefits to justify a sales price less than fair market value pursuant to Fresno Municipal Code section 4-204 relating to the disposition of real property commonly known as 959 N. Parkway Drive; approve the Amended and Restated Agreement for Purchase Option of 959 N. Parkway Drive (Amended and Restated Option Agreement); and authorize the City Manager, or her designee, to sign all documents necessary to effectuate the Amended and Restated Option Agreement. EXECUTIVE SUMMARY Fresno Housing Authority (FHA) entered into a Purchase Agreement with the owner of 959 N. Parkway Drive on February 27, 2021. City Council approved an Assignment of Purchase Agreement with FHA for the City's acquisition of 959 N. Parkway Drive on December 9, 2021, which included the form of an Agreement for Option to Purchase 959 N. Parkway Drive with FHA (Option Agreement). The Option Agreement presented to Council on December 9, 2021, erroneously included FHA's original Purchase Agreement in the amount of $3,234,000 with the former owner as Exhibit B, rather than the intended Agreement for Purchase and Sale in the amount of $1,000, prepared by the City for future use if/when FHA chose to exercise the Option Agreement. The parties are seeking authority to execute and record the Amended and Restated Option Agreement with the revised purchase price of $1,000. The Option Window for FHA to exercise an exclusive option to purchase the Property begins on December 15, 2024, which represents three years after the City's close of escrow on the Property, and expires on December 15, 2036, which represents 12 years after the City's close of escrow on the Property, unless the Option Window is extended by the parties. In order for the Amended and Restated Option Agreement to be legally valid, Council, by a supermajority vote of at least five votes, must approve the Resolution authorizing deviations from FMC section 4-204 pertaining to the disposition of real property. City and FHA shall comply with all applicable requirements of the Surplus Land Act upon FHA's notice of exercising the Amended and Restated Option Agreement. BACKGROUND FHA entered into an Agreement for the Purchase and Sale of 959 N. Parkway Drive with the property owner on February 27, 2021, for the purchase price of $3,234,000, then agreed to assign the Purchase and Sale Agreement to the City. On December 9, 2021, Council approved an Assignment of Purchase and Sale Agreement for 959 N. Parkway Drive with the Housing Authority for the acquisition of 959 N. Parkway Drive, in consideration for one dollar ($1.00), and reimbursement expenses in the amount of $29,245, comprised of $20,000 for the initial escrow deposit, and $9,245 in due diligence expenses for an Appraisal Report and Phase 1 Environmental Assessment. Council also approved the form of an Option Agreement conditioned upon FHA's use of the property for the sole and exclusive purpose of developing permanent affordable and/or mixed-income housing. The terms of the Option Agreement included an Agreement for Purchase and Sale of Real Property attached as an exhibit. In error, the Purchase and Sale Agreement between the Housing Authority and former property owner for the amount of $3,234,000 was attached to the Option Agreement as Exhibit B, rather than staff's Purchase and Sale Agreement for $1,000. The Amended and Restated Option Agreement correctly represents the City and FHA's intent for the Option Agreement. If approved by Council, the parties will execute and record the Amended and Restated Option Agreement with the revised purchase price of $1,000. Thereafter, FHA will have until December 15, 2036, to exercise the Amended and Restated Option Agreement for the sole and exclusive purpose of developing permanent affordable and/or mixed-income housing. In order for the Amended and Restated Option Agreement to be legally valid, Council, by a supermajority vote of at least five votes, must approve the Resolution authorizing deviations from FMC section 4-204 pertaining to the disposition of real property. City and FHA shall comply with all applicable requirements of the Surplus Land Act upon FHA's notice of exercising the Amended and Restated Option Agreement. The City Attorney has reviewed and approved the Amended and Restated Option Agreement and Resolution as to form. ENVIRONMENTAL FINDINGS Staff previously performed a preliminary environmental assessment of this Project and determined it falls within the Categorical Exemption set forth in CEQA Guidelines Section 15301/Class 1 (existing facilities) which exempts projects involving a negligible or no expansion of an existing facility. This exemption applies because this project involves the purchase of Parkway Inn without expansion of the facility. Staff determined under the CEQA Guidelines this project fits within the definition of existing facilities in Section 15301/Class 1, as Categorically Exempt from further CEQA review. 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 is not applicable because of State funding. FISCAL IMPACT There is no impact on the City's General Fund as a result of this action. Attachments: -Amended and Restated Option Agreement -Resolution FMC 4-204