CITY COUNCIL AGENDA ITEM
Meeting Date: July 11, 2006
Subject/Title: Approve the selection of Kevin Vornhagen’s purchase proposal
for 2010 Elkins Way at Sunset Industrial Complex based on Council-approved
Sales Strategy Ranking
Prepared by: Gina Rozenski, Redevelopment Manager
Submitted by: Howard Sword, Community Development Director
Approve the selection of Kevin Vornhagen’s purchase proposal for 2010 Elkins
Way at Sunset Industrial Complex based on Council-approved Sales Strategy
• City Council authorized the purchase of approximately 40 acres of property
located at the northeast corner the Tresch and Sunset Roads to master-plan
an expansion of the Sunset Sports Park and to create the Sunset Industrial
• 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
Planned Development 56 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 selected the successful buyers based
on the approved ranking system and approved the 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
within Subareas A and B, and to allow smaller lot sizes in Subarea C, in the
Sunset Industrial Complex.
• On April 13, 2004, the City Council approved the Purchase Agreements for
the first phase of sales.
• 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).
• Since April 2004, fifteen escrows have 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.
• On December 13, 2005, the City Council adopted Ordinance 819 amending
Planned Development Zone 56 to allow for indoor recreational uses in SubArea
• In March 2006, the City closed escrow for 2010 Elkins Way and is currently
• On April 25, 2006, the Council approved the sales price, the method to
select the buyer and adopted a sales strategy to sell 2010 Elkins Way,
located in SubArea A.
• On June 20, 2006, the Economic Development/Redevelopment Subcommittee met
to review the purchase proposal rankings.
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 and medium
The qualifications and identities of the buyers are of particular concern to
the City. For that reason, the City adopted a sales strategy ranking system
to fairly and objectively select qualified buyers that meet the economic
development objectives of Sunset Industrial Complex.
In December 2005, the City Council authorized staff to re-purchase 2010
Elkins Way, a 2.0 acre site, from Pottery World (map is attached). This
escrow closed in March 2006. In April 2006, the City Council approved the
sales price of $7.50/square foot for 2010 Elkins Way, approved the method of
selecting a buyer, and adopted a sales strategy to rank the purchase
Staff prepared and mailed 51 sales offerings, and advertised the
availability of the parcel twice in the local newspaper. Three purchase
proposals were received, scored and ranked in accordance with the sales
strategy criteria approved by City Council that considered business
location, type, job generation and economic impacts. The evaluation of the
three proposals is reflected in the following table.
1 Vornhagen Body and Paint 36 points
2 Kendall Auto Repair 33 points
3 RGM & Associates 23 points
The Economic Development/Redevelopment Subcommittee met on June 20 to review
the rankings of the purchase proposals. During the meeting, the scoring of
employment impacts was questioned by an applicant. Two of the three
proposals indicated the primary businesses would occupy only a portion of
the building and lease the remaining portions. SubArea A allows for many
uses with varying degrees of employee counts, ranging from light industrial
uses to indoor recreational uses. Industrial uses have a higher employee
count than indoor recreational uses such as a batting cage facility. Staff
has learned that several industrial spaces at Sunset Industrial Complex are
vacant, and owners are worried about their lack of rental revenues. It is
likely that if industrial leases are not secured for the remaining portions
of a building in SubArea A, then indoor recreational uses would be secured
as a contingency. Therefore, the scores in this category were based on the
employees generated from the primary business only. Staff felt the certainty
of the primary business rather than the uncertainty of future leases and
uses was an objective and fair method to score this category.
An applicant inquired whether the scoring system could be revised by the
City Council to award higher points for the Downtown Core rather than the
entire Redevelopment Project Area. The Subcommittee advised the applicant
that revising the scoring system, approved by the City Council prior to the
commencement of the application process, in mid-stream in the proposal
process was unlikely. However, if the scoring system were revised to
eliminate points for those outside the Downtown Core, the rankings would not
The Economic Development/Redevelopment Subcommittee recommends the selection
of Vornhagen Body & Paint as the successful candidate. Mr. Vornhagen agrees
with the terms and conditions of the proposed purchase agreement. The
purchase agreement for Mr. Vornhagen will be brought to the Council for
approval at a later date, if selected.
If selected, Mr. Vornhagen agrees to cancel his escrow for 385 Carrol Court
and open a new escrow for the purchase of 2010 Elkins Way. The availability
of 385 Carrol Court will be a sales opportunity brought to the Council at a
later date to approve a sales price and method to select a buyer.
The fiscal impact associated with selecting Mr. Vornhagen’s proposal is the
dissolution of his 2004 escrow for 385 Carrol Court for $5.50/sf. Most
likely that parcel will be sold at a sales price more reflective of the 2006
fair market value.
The sale proceeds of 2010 Elkins Way at $653,400, less escrow fees, will
first be distributed to the Redevelopment Agency to reimburse it for the
repurchase of 2010 Elkins Way from Pottery World, including but not limited
to the purchase price, appraisal, and escrow fees. The remaining proceeds
will then be shared between the City and Agency in accordance with their
1) Sales Strategy Criteria
2) Ranking Chart dated June 13, 2006
3) Map identifying 2010 Elkins Way
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
SUNSET INDUSTRIAL COMPLEX
SALES STRATEGY CRITERIA
(38 possible points)
Existing Business Location
(0-10) Business Types
(0-5) Business Operation
(0-8) Employment Impact
(0-5) Fiscal Impact
Proposing 21,000 sf bldg.; primary business to occupy 25% of bldg.
Expects 200% growth. 10 5 8 2
6 current employees;
10 future employees from primary business 8
Tax Increment on $4.0M = $40,000
Vornhagen Body & Paint
Proposing 26,000 sf bldg.; primary business to occupy 100% of bldg.
Expects 100% growth.
10 5 8 5
15 current employees; 30 future employees from primary business 8
Sales Tax: $7,930
Tax Increment on $3.5M = $35,000
RGM & Associates
Proposing 20,000 sf bldg.; primary business to occupy a portion of bldg.
Moving corporate offices and construction yard from Concord.
1 5 8 4
20 employees from primary business 5
No Sales Tax
Tax Increment on $3.6M = $36,000
Rank Business 0-38 Possible Points
1 Vornhagen Body & Paint 36 points
2 Kendall Automotive 33 points
3 RGM & Associates 23 points
• Sales tax is based on 12.12% of sales tax paid.
o 1 $2,000
o 2 $4,000
o 3 $6,000
o 4 $8,000
o 5 $10,000
• Tax increment is based on 1% of land, construction cost, fees and permits.
o 1 $20,000
o 2 $25,000
o 3 $30,000
o 4 $35,000
o 5 $40,000
• Employment impact is based on future employee count for primary business.
o 1 6 employees
o 2 12 employees
o 3 18 employees
o 4 24 employees
o 5 30 employee