CITY COUNCIL AGENDA ITEM
Meeting Date: April 25, 2006
Subject/Title: Approve the sales price, method to select buyer, and sales
strategy criteria for 2010 Elkins Way at Sunset Industrial Complex; direct
staff to commence request for proposals to sell 2010 Elkins Way
Prepared by: Gina Rozenski, Redevelopment Manager
Submitted by: Howard Sword, Community Development Director
Approve the sales price, method to select buyer, and sales strategy criteria
for 2010 Elkins Way at Sunset Industrial Complex; direct staff to commence
request for proposals to sell 2010 Elkins Way, a 2.0 acre lot on the corner
of Sunset Road and Elkins Way.
• In 1999, City Council authorized the purchase of approximately 40 acres of
property located at the northeast corner the 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 June 4, 2002, the Planning Commission certified the Environment Impact
Report for the Sunset Industrial Complex, and on June 6 the Notice of
Determination was filed with the County.
• On July 23, 2002 the City Council adopted Ordinance 710 approving the PD
Zoning for Sunset Industrial Complex, and also awarded the construction
contract for the Sunset Industrial Complex Improvements Project (CIP No.
336-3128) to Teichert Construction.
• On November 26, 2002 the City Council approved a sales strategy for
property located at the Sunset Industrial Complex and adopted criteria for
the selection of successful candidates to purchase the subject property.
• On October 28, 2003, the City Council approved the Sunset Industrial
Complex sales strategy criteria ranking and preliminary lot layout which
included the cul-de-sac site plan.
• On January 27, 2004, the City Council amended Planned Development Zone 56
to allow for an increase in the square footage designated for retail uses
directly associated with the primary industrial uses with Subareas A and B,
and to allow smaller lot sizes in Subarea C, in the Sunset Industrial
• On April 2, 2004, the first Final Map for Sunset Industrial Complex,
Subdivision 8588, was recorded.
• On April 13, 2004, the City Council approved the Purchase Agreements for
the first phase of sales.
• On June 7, 2004, the second Final Map for Sunset Industrial Complex,
Subdivision 8842, was recorded.
• From April 2004 to September 2004, twelve escrows closed.
• On September 28, 2004, the City Council approved selection of a purchase
proposal for 385 Carrol Court at Sunset Industrial Complex (this lot was
available due to its original buyer choosing to drop out).
• On May 12, 2006, the third map for Sunset Industrial Complex, Subdivision
MS 360-04, was recorded.
• From October 2004 to current, five escrows closed.
• On December 13, 2005, the City Council authorized staff to exercise the
City’s option to repurchase 2010 Elkins Way owned by Pottery World following
the expiration of the building permit issuance deadline.
• In March 2006, the City closed escrow for 2010 Elkins Way, and is
currently the owner.
The Sunset Industrial Complex was an economic development strategy
envisioned by the City and Redevelopment Agency to voluntarily relocate
members of the redevelopment project areas, our business community and
surrounding areas to a more appropriate location zoned for light industrial
employers. In 2003, the City Council set a sales price of $5.50 per square
foot for all parcels at Sunset Industrial Complex.
The qualifications and identities of the buyers are of particular concern to
the City, and it is because of such qualifications and identities that the
City entered into the Purchase Agreements with the selected buyers. 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.
In December 2005, the City Council authorized staff to re-purchase 2010
Elkins Way, a 2.0 acre site, from Pottery World for not performing its
obligations. The repurchase price was $479,160, the same amount as the
original sale. This escrow closed in March 2006.
It is timely for the City Council to now consider the sale of 2010 Elkins
Way including 1) the sales price, 2) the method of selecting a buyer, and 3)
sales strategy criteria to rank the purchase proposals.
Approval of Sales Price
According to a professional appraisal dated March 2, 2006, the real property
valuation of 2010 Elkins Way is $653,400 or $7.50 per square foot. Staff
recommends that the City Council sell 2010 Elkins Way for the appraised
value of $653,400 for two reasons. The first reason is that the end of 2005
brought several court rulings filed by the State Department of Industrial
Relations (DIR) involving government agencies and prevailing wages. The DIR
is carefully reviewing cases where government agencies transfer property for
less than fair market value to private parties and determined that when this
occurs, prevailing wages for on-site improvements are mandated. After
diligent judicial process, DIR has received several court rulings in favor
of their position that prevailing wages are required. Payment of prevailing
wages for on-site construction and improvements will, in all likelihood,
make a development financially infeasible, and cause the City’s economic
development strategy for Sunset Industrial Complex to collapse. It is
recommended that the City avoid a review and legal challenge from the DIR by
selling the property for its appraised fair market value. A second reason to
sell 2010 Elkins Way at the appraised value is to avoid any appearance of a
gift of public funds.
Method of Selecting a Buyer
In 2003, the City Council directed staff to send out requests for proposals
to interested parties to purchase property at Sunset Industrial Complex. The
first response was overwhelming, and with further subdividing of the parcels
at Sunset, all respondents were accommodated, thereby exhausting the list of
proposals. When one of the original respondents dropped out, with Council
approval, staff sent out a second request for proposal, specifically for the
available one acre site at 385 Carrol Court, and specifically for SubArea B
of PD 56. In 2004, the Council selected one of the four proposals received.
There are two options available to the Council related to the method to
select a buyer for 2010 Elkins Way. The first is to return to the existing
list where three candidates remain. However, this 2004 proposal was
specifically for a one acre site at 385 Carrol Court, specifically for
SubArea B of PD 56, and for a specific sales price of $5.50 per square foot.
In contrast, 2010 Elkins Way is two acres, is in SubArea A that allows
slightly different uses than SubArea B, and has an appraised value of $7.50
per square foot. Legal challenges can reasonably be expected if the City
chooses to use an old list for a newly available parcel that has different
parameters, and an argument can be made regarding a perceived unfairness to
new interested parties.
To avoid a legal challenge from parties that may have been interested in a
parcel in 2004, but elected to not submit a proposal because they needed
more than one acre or desired more flexible zoning not allowed in SubArea B,
staff recommends a second option: City Council direct staff to advertise the
availability of the two acre site at 2010 Elkins Way and send out fresh
requests for purchase proposals at the appraised sales price, with intent to
rank the proposals for Council selection. This process is similar to the
first two offerings prepared by the City for Sunset Industrial Complex.
Sales Strategy Criteria
The qualifications and identities of the buyers at Sunset Industrial Complex
remain a particular concern to the City. In November 2002, the City Council
approved the 36-maximum-point sales strategy criteria. For both rounds,
purchase proposals were evaluated and scored to determine the successful
candidates by assigning points based on several factors including existing
business location, business type, business operation, job generation and
Since the completion of the first two rounds of purchase proposals, a couple
of important events have transpired which results in a valid need to adjust
the point system. Specifically, the Downtown Specific Plan was approved in
December 2005, and the Brentwood Boulevard Specific Plan is queued for
preparation. Relocation of industrial uses from both the Merged
Redevelopment Project Areas is now more critical in order to implement the
town center and grand boulevard concepts and vision. Voluntary relocation
opens future redevelopment opportunities as the City re-invents and invests
in the specific plan areas, and industrial uses are prime examples of the
type of businesses that the City envisioned for Sunset. Based on this, staff
recommends that the sales strategy criteria be amended to increase the
relocation from the Merged Redevelopment Project Areas by two (2) points,
resulting in a maximum point award of 38, rather than the original 36. The
recommended, adjusted sales strategy criteria is attached for Council
consideration and approval.
Upon receipt of the purchase proposals, the scoring and ranking will be
prepared by Economic Development and Redevelopment staff, and brought to the
Economic Development Subcommittee for a recommendation to the Council. This
is the same process used in the first two rounds.
Staff recommends the City Council:
1) Approve the sales price of $7.50 per square foot for 2010 Elkins Way.
2) Approve and direct staff to proceed with a fresh request for purchase
proposals to select the buyer of 2010 Elkins Way.
3) Approve the revised sales strategy criteria to evaluate and score the
submitted purchase proposals.
Setting the sales price for 2010 Elkins Way at the appraised value of $7.50
per square foot will result in a sale of $653,400, less escrow fees. The
estimated sales impact is approximately $2.00 per square foot more than the
original sales offering in 2003. The rankings will be brought to the Council
at a later date to approve the selection of a purchase proposal for 2010
1) Map identifying 2010 Elkins Way
2) Revised Sales Strategy Criteria
SUNSET INDUSTRIAL COMPLEX
SALES STRATEGY CRITERIA
(38 possible points)
Existing Business Location Priorities (10 Possible Points)
Relocation from Brentwood Redevelopment Agency’s Project Areas. (10
Relocation from the City of Brentwood not within the Redevelopment
Agency’s Project Areas (5 Points)
Relocation of businesses that have moved out of Brentwood within the past
four years due to the lack of a suitable building site in the City. (5
Relocation from unincorporated areas surrounding the City of Brentwood as
defined by the attached map listed as Figure 2 and titled Brentwood Planning
Area in the Brentwood General Plan, 2001 – 2021. (3 Points)
Relocation from Far East Contra Costa County as defined as lands to the
south and east of Somersville Road. (1 Point)
Business Types (5 Possible Points)
Industrial business operations not conducive or desirable in business or
high tech parks. (5 Points)
Business with limited permitted locations in Brentwood. (4 Points)
Business providing support services not available to local businesses. (3
Business Operation (8 Possible Points)
Owner-occupied business that will conduct primary operation from the
property. (8 Points)
Business with long term pre-lease that accomplishes other criteria
objectives. (5 Points)
Business that will conduct satellite operation from the Site. (3 Points)
Employment Impact (5 Possible Points)
Number of jobs that are reported to the State Franchise Tax Board as
located in the City of Brentwood. (0 - 5 Points Possible)
Fiscal Impact (10 Possible Points)
Sales tax generated by business. (0 - 5 Points Possible)
Property tax increment generated by improvements to the property. (0 - 5