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CITY COUNCIL AGENDA ITEM NO. 5

Meeting Date: May 23, 2006

Subject/Title: Adopt a Resolution approving and authorizing City Manager or her designee to execute second amendments to Purchase Agreements for two sales at Sunset Industrial Complex to extend closing dates, to revise when the use of site for the business operation commences, and to prohibit the business operation from current locations.

Prepared by: Gina Rozenski, Redevelopment Manager

Submitted by: Howard Sword, Community Development Director

RECOMMENDATION
Adopt a Resolution approving and authorizing City Manager or her designee to execute second amendments to Purchase Agreements for two sales at Sunset Industrial Complex to extend closing dates, to revise when the use of site for the business operation commences, and to prohibit the business operation from current locations.
PREVIOUS ACTION
 City Council authorized the purchase of approximately 40 acres of property located at the northeast corner of Tresch and Sunset Roads.

 City Council authorized the 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 sales and authorized the City Manager to execute documents necessary to close the transactions.

 On September 14, 2004, the City Council authorized the City Manager to execute Purchase Agreements for the sale of Lot 22 to Pizzagoni Towing.

 On September 28, 2004, the City Council authorized the City Manager to execute a Purchase Agreement for the sale of Lot 4 to Vornhagen Body & Paint.

 On January 24, 2006, the City Council authorized the City Manager to execute Amendments No. 1 to the Purchase Agreements with Pizzagoni Towing and Vornhagen Body & Paint to extend escrows to May 1 and June 1, 2006, respectively.

BACKGROUND
The first phase of sales was initiated in December 2003 by the execution of Memorandums of Understanding that outlined the intent of the City and the Purchasers. In January 2004, the Council approved the Purchase Agreements, deposits were made, and escrows were opened. City staff then took the necessary steps for final map approvals, preparation of new legal descriptions, and creation of benefit assessment districts and covenants and restrictions on the properties.
Fourteen of the seventeen parcels have closed escrow, and one is ready to close in a few weeks. Two Purchase Agreements that have not closed include:

Pizzagoni Towing (3.7 acres). As a condition of purchase, buyers are required to provide evidence of financing sufficient to acquire the property, pay development fees and complete construction of the improvements for the business operation on the property. Staff has received assurances from Pizzagoni’s lender that such a letter is forthcoming, but they won’t issue it until the Planning Commission approves the design review. While the City Council approved an amendment to extend this escrow to May 1, 2006, the Pizzagoni design review application is not expected to be agendized for Planning Commission until late July 2006. Therefore, the closing date for this Purchase Agreement needs to be extended.
Vornhagen Body & Paint (1.0 acre). Mr. Vornhagen received design review approval from the Planning Commission in September 2006 for 385 Carrol Court. The City has received the buyer’s evidence of financing, and this escrow is ready to close. However, the buyer is interested in submitting a proposal to purchase the 2-acre site at 2010 Elkins Way, which has a submittal deadline of June 8. Rather than closing on 385 Carrol Court, Mr. Vornhagen wishes to leave the escrow open until his proposal for the 2-acre site is either accepted or denied by the City Council. If accepted, Mr. Vornhagen will release the 1-acre site on Carrol Court; if denied, Mr. Vornhagen will close on the Carrol Court site. In January 2006, the City Council approved an amendment to extend this escrow to June 1, 2006. Since the submittal deadline for purchase proposals for the 2-acre site is June 8, Mr. Vornhagen is requesting that his escrow for the Carrol Court site be extended until after the Council makes its decision. Council selection of a buyer for the 2-acre site will likely come before the Council in late June or early July. Therefore, the closing date for this Purchase Agreement needs to be extended.

The qualifications and identities of the buyers were 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. Relocation of industrial employers from areas within the Merged Redevelopment Project Areas received additional points during the purchaser selection process by the Council. Pizzagoni and Vornhagen currently operate their businesses from the Merged Redevelopment Project Areas and are prime examples of the type of businesses that the City envisioned for Sunset Industrial Complex.

The City and both buyers have made good faith efforts to comply with our respective obligations as provided in the Purchase Agreements. Staff requests approval from the Council for a second amendment to extend the closing date for these two escrows as follows:

Pizzagoni Towing September 15, 2006
Vornhagen Body & Paint July 15, 2006

As consideration of their requests to amend the Purchase Agreements, both buyers agree to amend the Purchase Agreement to use the Sunset site for their business operation for a period of three (3) years from the certificate of completion, rather than the close of escrow date, and to not re-establish or operate their business operation from their current locations for the same period.
FISCAL IMPACT
None at this time.

Attachments:
Resolution
Amendments (2)
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD APPROVING SEPARATE SECOND AMENDMENTS TO THE PURCHASE AGREEMENTS FOR SUNSET INDUSTRIAL COMPLEX WITH KEVIN VORNHAGEN AND KRISTINA PIZZAGONI REYNOLDS TO EXTEND THE CLOSING DATES, TO REVISE WHEN THE USE OF SITE FOR BUSINESS OPERATION COMMENCES, AND TO PROHIBIT THE BUSINESS OPERATION FROM CURRENT LOCATIONS, AND DIRECTING STAFF TO TAKE ACTIONS AND AUTHORIZING THE CITY MANAGER TO EXECUTE AMENDMENTS AND ANY RELATED DOCUMENTS.

WHEREAS, on January 12, 1999, City Council authorized the purchase of approximately 40 acres of property located at the northeast corner of Tresch and Sunset Roads; and

WHEREAS, on February 8, 2000, City Council authorized the master-plan and environmental documents for approximately 132 acres of City-owned land northeast of Tresch and Sunset Roads to include a Wastewater Treatment Plan, Solid Waste Plan, Sports Park, Corporation Yard and Industrial Complex; and

WHEREAS, on July 23, 2002, the City Council adopted Ordinance No. 710 approving the Planned Development Zoning for Sunset Industrial Complex; and

WHEREAS, on September 14, 2004, the City Council authorized the City Manager to execute the Purchase Agreement with Kristina Pizzagoni Reynolds (“Pizzagoni”). The Purchase Agreement was executed on October 12, 2004; and

WHEREAS, on September 28, 2004, the City Council authorized the City Manager to execute a Purchase Agreement with Kevin Vornhagen (“Vornhagen”). The Purchase Agreement was executed on September 28, 2004; and

WHEREAS, on January 24, 2006, the City Council approved Amendments No. 1 to the Purchase Agreements with Pizzagoni and Vornhagen to extend their escrows to May 1 and June 1, 2006, respectively; and

WHEREAS, 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; and

WHEREAS, voluntary relocation of industrial employers from areas within the Merged Redevelopment Project Areas received additional points during the purchaser selection process by the Council, will open future redevelopment opportunities at vacated sites by the buyers, and both buyers are prime examples of the types of businesses envisioned by the City for Sunset Industrial Complex; and

WHEREAS, the Purchase Agreements includes Section 19 that allows the Purchase Agreements to be amended only by written instrument executed by City and Purchaser; and

WHEREAS, in consideration of a second amendment, Pizzagoni Towing and Vornhagen Body & Paint agree to also amend Section 2.01 of the Agreement to require them to use the sites for their business operation for a period of three (3) years from the certificate of completion, and to not re-establish or operate their business operation from their current location for the same period.

WHEREAS, the City, Pizzagoni and Vornhagen have made good faith efforts to comply with their respective obligations as provided in the Purchase Agreements.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Brentwood hereby approves and authorizes the City Manager or her designee to execute separate second amendments to the Purchase Agreements for Sunset Industrial Complex for Kristina Pizzagoni Reynolds and Kevin Vornhagen, or their designees, to extend the close dates, to revise when the use of site for business operation commences, and to prohibit business operations from current locations, and authorizes the City Manager or her designee to execute such other documents as may be needed to complete the transactions.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on the 23th day of May 2006 by the following vote:
 

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