CITY COUNCIL AGENDA ITEM
Meeting Date: December 13, 2005
Subject/Title: Authorize staff to exercise the City’s option to repurchase a
parcel at Sunset Industrial Complex owned by Pottery World following the
expiration of the building permit issuance deadline, and direct staff to
take actions and authorize the City Manager to draft and execute documents
and grant deeds necessary for the repurchase transaction.
Prepared by: Gina Rozenski, Redevelopment Manager
Submitted by: Howard Sword, Community Development Director
Authorize staff to exercise the City’s option to repurchase a parcel at
Sunset Industrial Complex owned by Pottery World following the expiration of
the building permit issuance deadline, and direct staff to take actions and
authorize the City Manager to draft and execute documents and grant deeds
necessary for the repurchase transaction.
City Council authorized the purchase of approximately 40 acres of property
located at the northeast corner of Tresch and Sunset Roads.
City Council authorized various consultant contracts to master-plan and
prepare environmental documents for approximately 132 acres of city owned
land northeast of Tresch and Sunset Roads to include a 49.2 acre Wastewater
Treatment Plant, 2.7 acre Solid Waste Plant, 37.7 Sports Park, 13.3 acre
Corporation Yard and a 28.4 acre Industrial Complex.
On April 13, 2004, the City Council approved the form of Purchase
Agreements and Grant Deeds for the first phase of 12 sales, and authorized
the City Manager to execute documents necessary to close the transactions.
The escrow with Pottery World for 2.0 acres at Sunset Industrial Complex
closed on July 28 2004, for $479,160.
The Sunset Industrial Complex was an economic development strategy
envisioned by the City and Redevelopment Agency to voluntarily relocate
members of our business community and surrounding areas to a more
appropriate location zoned for light industrial employers. Pottery World
proposed to open its third store at Sunset Industrial Complex specializing
in retail/wholesale statuaries, fountains, pots and home furnishings.
Pottery World would employ 10 to 15 employees and generate sales tax for the
City. Pottery World scored 15 out of 36 points during the Council’s
The Purchase Agreements between the City and buyers at Sunset Industrial
Complex includes a provision (Section 3.01) that allows the City the right,
at its option, to repurchase the site if the purchaser fails to obtain
building permits for construction of the proposed business operation within
eighteen (18) months after the escrow closing date. The Purchase Agreement
further provides the City the right, at its option, to repurchase the site
if the purchaser fails to obtain a certificate of completion eighteen (18)
months after issuance of building permits.
The qualifications and identity of the purchaser are of unique and
particular concern to the City, and it is because of such qualifications and
identity that the City entered into purchase agreements with the selected
purchasers. For that reason, and to encourage timely development while
discouraging pure speculation of the properties, the City intentionally
added the provision to repurchase the properties should a buyer not perform
its obligations outlined by the Purchase Agreement.
The City has sent three letters to Pottery World over the course of the past
year reminding them of the repurchase deadlines and outlining the estimated
time frames for design review and plan review approvals. Pottery World has
not submitted a design review application to the City as of this date. It is
highly unlikely that building permits will be issued for this development
prior to January 28, 2006, the deadline for pulling building permits in
accordance with Section 3.01 of the Purchase Agreement (July 28, 2004 + 18
Staff recommends the Council approve exercising its option to repurchase the
parcel owned by Pottery World following the expiration of the building
permit issuance deadline of January 28, 2006, and direct staff to take
actions and authorize the City Manager to draft and execute documents and
grant deeds necessary for this transaction. To exercise its right to
repurchase the Pottery World parcel, the City shall pay the original
purchase price of the site less any liens and unpaid assessments on the
site, in accordance with the Purchase Agreement’s terms and conditions.
The purchase price to buy back this property is $479,160, less liens and
unpaid assessments, plus miscellaneous legal, escrow and title costs,
It is anticipated that the parcel will be resold, using the original
solicitation and ranking system, at a price higher than the initial $5.50
per square foot. An appraisal of the property, at a cost of approximately
$4,000, will be performed to determine fair market value, and shall be
funded by the Redevelopment Agency. It is anticipated that the sale of the
parcel will not only recoup the repurchase and appraisal costs, but will add
another $250,000 to $350,000 in sale proceeds for the project.
The total cost of the repurchase and future appraisal is estimated at
$514,000 ($510,000 + $4,000), and shall be funded by the Redevelopment
Agency. A companion staff report for Agency consideration and approval to
fund the repurchase and appraisal costs is on tonight’s Agency agenda.