HomeMy WebLinkAboutRes SA-RDA 073 - Reject Bid - 128-Acre ParcelResolution No. SA-RDA 073
STAFF REPORT
SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY
PUBLIC WORKS DEPARTMENT
MEETING DATE: June 14, 2018
i;`I !,�
PREPARED BY: Cora L. Gaugush, Capital Improvement Projects Technician �
REQUEST: Reject the bid of $3,333,333.33, from Lewis Land Developers, LLC, of
Upland, California, for the 128 Acre Parcel of Vacant Land, South of
Gerald Ford Drive, North of Frank Sinatra Drive and West of Portola
Avenue (APN(S) 694-300-001; 694-300-002; 694-300-005; 694-300-014;
694-300-015; 694-310-002; 694-310-003; AND 694-310-006).
Recommendation
By Minute Motion, adopt Resolution to:
Reject the bid of $3,333,333.33, from Lewis Land Development, LLC, for
the 128 Acre Parcel of Vacant Land, South of Gerald Ford Drive, North of
Frank Sinatra Drive and West of Portola Avenue (APN(S) 694-300-001;
694-300-002; 694-300-005; 694-300-014; 694-300-015; 694-310-002; 694-
310-003; AND 694-310-006).
Strateqic Plan
The sale of this property is part of the winding down of the Palm Desert Redevelopment
Agency (RDA). Disposition of RDA assets by the Successor Agency to Palm Desert
Redeve�opment Agency (SARDA) for the market value of the property is one of the
specific goals given to staff by the City Manager.
This action will further the goals set in Envision Palm Desert under the Land Use, Housing
and Open Space section, by selling a vacant parcel of land in an undeveloped residential
area, and provide an opportunity for the property to be developed according to the
General Plan, approved Zoning and the Housing Element, while ensuring every effort is
made to obtain true market value.
Backqround Analvsis
On September 7, 2017, the Agency Board approved methods for disposal of property,
either by the City of Palm Desert or the Successor Agency to the Palm Desert
June 14, 2018 - Staff Report
Reject Bid for the 128 Acre Vacant Parcel of Land
Page 2 of 3
Redevelopment Agency (SARDA), and gave the Executive Director the authority to
determine the best method on a case by case basis.
The property in question is a remaining asset to be disposed of by the SARDA in the
process of winding down the business of the former Redevelopment Agency. A Request
for Qualifications/Proposals was sent to qualified respondents having the ability to master
plan, entitle and acquire the entire 128 acre site. On July 28, of 2016, the SARDA Board
approved an Exclusive Negotiating Agreement (ENA) with a local developer, Lewis Land
Developers, Inc. (Lewis). In August, of 2016, a Purchase and Sale Agreement (PSA) was
entered into between SARDA and Lewis in the amount of $13,085,000. In November
2017, at the request of the developer, the PSA was terminated.
After the termination of the PSA, the determination was made to dispose of this property
by sealed bid.
Staff advertised and called for bids for sale of the 128 acre parcel of vacant land. On May
14, 2018, sealed bids were opened and real aloud. Only one bid was received and the
result is as follows:
Lewis Land Develo ers, LLC U land, California $3,333,333.33
A current appraisal of the property was ordered from Capital Realty Analysts and received
on May 16, 2018. The report places the current appraised value of the property at
$7,195,000.
Analvsis
SARDA is tasked with disposing of the assets of the former Palm Desert Redevelopment
Agency for the benefit of the various affected taxing entities, in accordance with the terms
of the California Health and Safety Code. To that end, staff has carefully considered
various aspects of this item in making their recommendation. In consideration of the
variance in values between the current appraisal and the single received bid, staff
recommends rejecting the single bid received.
The property is listed on the Long Range Property Management Plan (LRPMP) to be sold
for appraised value. The LRMP requires that all proceeds of the sale be distributed as
property taxes to the affected taxing entities, in accordance with the terms of the California
Health and Safety Code. Each taxing entity including the City of Palm Desert will receive
a portion of the proceeds based on their respective tax rate. To ensure we have
adequately performed our due diligence regarding the value of the property staff
recommends re-advertising the property.
June 14, 2018 - Staff Report
Reject Bid for the 128 Acre Vacant Parcel of Land
Page 3 of 3
Fiscal Analvsis
In rejecting the bid, there is no fiscal impact associated with this action.
LEGAL REVIEW DEPT. REVIEW FINANCIAL CITY MANAGER
Approved as to Form REVIEW
--,
A-�'iL� - �.�li/��'
Timoth . Jo sson, P.E. Ja et Moore Lauri Aylaiarf�
RWG Independent Interim Director of irector of Finance City Manager
Public Works
APPLICANT:
ATTACHMENTS:
Resolution NO.
Bid Sheet
Vicinity Map
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RESOLUTION NO. SA-RDA 073
A RESOLUTION OF THE BOARD OF THE SUCCESSOR AGENCY TO THE PALM
DESERT REDEVELOPMENT AGENCY REJECTION OF A BID FOR THE 128 ACRE
PARCEL OF VACANT LAND, SOUTH OF GERALD FORD DRIVE, NORTH OF FRANK
SINATRA DRIVE AND WEST OF PORTOLA AVENUE (APN(S) 694-300-001; 694-300-
002; 694-300-005; 694-300-014; 694-300-015; 694-310-002; 694-310-003; AND 694-310-
006) PURSUANT TO THE LONG RANGE PROPERTY MANAGEMENT PLAN AND
TAKING RELATED ACTIONS
RECITALS:
A. Pursuant to AB X1 26 (enacted in June 2011) and the California Supreme Court's
decision in California Redeve/opment Association, et al. v. Ana Matosantos, et al., 53 Cal. 4th 231
(2011), the former Palm Desert Redevelopment Agency (the "Former Agency") was dissolved as of
February 1, 2012, the Successor Agency to the Palm Desert Redevelopment Agency (the "Successor
Agency"), as the successor entity to the Former Agency, was constituted, and an board of the
Successor Agency (the "Board") was established.
B. AB X1 26 added Part 1.8 (commencing with Section 34161) and Part 1.85 (commencing
with Section 34170) to Division 24 of the California Health and Safety Code ("HSC") (such Parts 1.8
and 1.85, including amendments and supplements enacted after AB X1 26, being referred to herein
as the "Dissolution Act").
C. Pursuant to the Dissolution Act, the Successor Agency is tasked with winding down the
affairs of the Former Agency.
D. Pursuant to HSC Section 34175(b), all real properties of the Former Agency transferred to
the control of the Successor Agency by operation of law.
E. On May 5, 2014, the Oversight Board adopted Resolution No. OB-073, approving a Long-
Range Property Management Plan (the "Original LRPMP") which addresses the disposition of the real
properties owned by the Successor Agency.
F. On June 2, 2014, the State Department of Finance (the "DOF") approved the Original
LRPMP.
G. On September 21, 2015, the Oversight Board approved an amendment to Original LRPMP
(the "LRPMP AmendmenY'),
H. On December 9, 2015, the DOF approved the LRPMP, as amended.
I. Pursuant to HSC Section 34191.3, the DOF-approved LRPMP shall govern, and supersede
all other provisions of the Dissolution Act relating to, the disposition and use of the real property assets of
the Former Agency.
J. In April 2018, the Successor Agency released a Notice Inviting Bids regarding the 128 Acre
Parcel of Vacant Land, South of Gerald Ford Drive, North of Frank Sinatra Drive and West of Portola
Avenue,
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Resolution No. SA-RDA 073
K. The materials made available to the potential bidders included the Development Summary
and the current Preliminary Title Report.
L. Per the result of the sealed bid opened on May 14, 2018, the highest bid received was in the
amount of $3,333,333.33 (the "Rejected Bid"), received from Lewis Land Developers, LLC, (the "Rejected
Bidders").
M. An appraisal of the property was ordered from Capital Realty Analysts and received on May
16, 2018. The report places the current appraised value of the property at $7,195,000.
N. The Board is adopting this Resolution to reject the bid for the sale of the 128 Acre Parcel
of Vacant Land, South of Gerald Ford Drive, North of Frank Sinatra Drive and West of Portola
Avenue pursuant to the LRPMP.
NOW, THEREFORE, THE BOARD OF THE SUCCESSOR AGENCY TO THE PALM DESERT
REDEVELOPMENT AGENCY DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. The above recitals, and each of them, are true and correct.
Section 2. The Board hereby directs the rejection of the sole bid received for the 128 Acre Parcel
of Vacant Land, South of Gerald Ford Drive, North of Frank Sinatra Drive and West of Portola Avenue from
the Rejected Bidders.
Section 3. The members of this Board and the staff of the Successor Agency are hereby
authorized, jointly and severally, to do all things which they may deem necessary or proper to
effectuate the purposes of this Resolution.
APPROVED and ADOPTED this day of , 2018.
AYES:
NOES:
ABSENT:
ABSTAIN:
SABBY JONATHAN, CHAIR
ATTEST:
RACHELLE D. KLASSEN, SECRETARY
OVERSIGHT BOARD FOR THE SUCCESSOR AGENCY TO THE
PALM DESERT REDEVELOPMENT AGENCY
C — PURCHASE BID
128 Acre Parcel Vacant Land
South of Gerald Ford Drive, North of Frank Sinatra Drive
and West of PorEola Avenue
T�: CITY OF PALM DESERT, "CITY"
TO: SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT
AGENCY, "AGENCY"
DATE: Mav 14. 2018
BIDDER: Lewis Land Deve{opers, LLC
The UNDERSIGNED, "BIDDER", having careful(y examined the site and the Contract
Documents for the pu�chase of the 128 Acre Parcel of Vacant Land located South af
Gerald Ford Drive, North of Frank Sinatra Orive, and West of Portola Avenue (APN 694-
300-a01; 694-300-002; 694-300-005; 694-300-014; 694-300-015; 694-314-002; 694-310-
003; 694-310-006), hereby submits a bid ta pu�chase the 128 vacant parce( of land in
accordance with the Contract Documents, including Addenda No(s). i& 2 for the
amount stated in this Purchase Bid.
By submitting this Purchase Bid, the undersigned agrees with the Agency:
That unless withdrawn in person or by some person authori2ed in writing by
entity submitting the bid, before the time specified in the Notice Inviting Bids for
the public opening of bids, this Bid constitutes an irrevocable offer for 90
calendar days after that date.
2 The Agency has the right to reject any or all Bids and to waive any irregulariEies or
informalities contained in a Bid.
3. That the sale of the property shall be awarded only by the goveming bodies of the
Agency. A Purchase and Sale Agreement shall be entered into only after approval
by the Board of the Successor Agency to the F'alm Desert Redevelopment Agency
(SARDA}, the Oversight Board of the Successor Agency to the Palm Desert
Redevelopment Agency (OB), and the State of California Depa�tment of Finance
(DOF}.
4. That the accompanying cash, certified or cashie�'s check or other security deemed
accepiable to the SARDA constitutes a guarantee that if a bid is accepted by the
above referenced parties, the bidder will execute a Purchase and Sale Agreement
and Escrow Instructions and deliver al( documents required by the SARDA,
sufficient to apen escrow, within 10 days after notice of award. If bidder fails to
C-1
execu#e and defiver said documents, the cash, check or security shall be retained
by the Agency, and is declared forfeited by the bidder.
5. ALL PROPERTY SOLD �AS IS° "WHERE !S" and "WlTH ALL FAULTS".
PROPERTY iS BElNG �FFERED AND SOLD IN ITS AS ISNVHERE IS
CONDITION AT THE TiME OF THE BID WITH ALL FAULTS INCLUDING ANY
HIDDEN DEFECTS OF ANY NATURE. SARDA AS THE SELLER MAKES NO
REPRESENTATIONS WARRANTIES OR GUARANTEES WHATSOEVER
EXPRESS OR IMPLIED REGARD(NG THE NATURE VALUE OR
MARKETABILITY.
iTEM DESCRIPTION
128 Acre Vacant Parcel of Land
APN (s) 694-300-OQ1; 694-300-002; 694-300-
405; 694-300-014; 694-300-015; 694-310-002;
694-310-003; 694-310-006
TOTAL AMOUNT BID IN FiGURES $ 3,333,333.33
BID AMOUNT
$3,333,333.33
TOTAL AMOUNT BID IN W�RDS Three Miliion, Three Hundred Thirty-three thousand
Three Hundred, Thirty-three � 33/100s Dollars
BIDDER'S CONTACT INFORMATlON
Name:
Add�ess:
Lewis Land Developers, LLC c/o Lewis Management Corp.
its Manager.
1156 N. Mountain Ave. Upland, CA,
Phone: ga9-985-Q979
Lewis Land Developets LLC by:
gy: Lewis Managemertt Corp. its manager
Signature (must otarized)
By:
Signature (mus be notarized)
Richa�d A Lewis, President
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A notary public or other officer completing this cert�cate verifies only the identity of the individual
who signed the document, to which this certificate is attached, and not the truthfulness,
accuracy, or valid+ty of that document.
State of California )
)
Caunty of Sf�nl Q�2n��rua )
On ��0. i� , 20 l8 before me, ����- A- ma�t�}-c—, ,�/oTt�Y f'�g��
personall appeared Qr�►� �-. c��-�,�
who proved to me on the basis of
satisfactory evidence to be the persan(s) whose name(s) is/are subscribed ta the within
inst�ument and ack�owledged to me that he/shelthey executed the same in hislher/their
authorized capacity(ies), and that by his/her/their signatures(s} an the instrument the
person(s), or the entity upon beha{f of which the person{s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal. Co� ��tf0i»
¢ M�► PueMc - CflMon�i�
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Signatu�e of Notary Public
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Klassen, Rachelle
From:
Klassen, Rachelle
Sent: Wednesday, June 13, 2018 3:53 PM
To: ' Bi II.Hoover@ lewismc.com'
Cc: Aylaian, Lauri; Gaugush, Cora
Subject: FW: Letter for Successor Agency
Attachments: 6-13-18 RAL letter to SARDA.pdf
Dear Mr. Hoover:
Thank you for your e-mail and letter, which will be distributed to the City Council and appropriate City staff for the June
14 agenda packets.
Rachelle Klassen
City Clerk
Ph:760.346.Ob11 Direct:760.776,b304
rklassen@cityofpalmdesert.org
From: Bill Hoover [mailto:Bill.Hoover@lewismc.com]
Sent: Wednesday, June 13, 2018 3:02 PM
To: Klassen, Rachelle <rklassen@cityofpalmdesert.org>
Subject: Letter for Successor Agency
Hi Rachelle
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Attached is a letter from Mr. Richard Lewis regarding the bid submitted by Lewis for the 128-acre Successor Agency
vacant property at Gerald Ford & Portola.
I spoke with Lauri who indicates that the proper method of entering this letter into the SARDA hearing record tomorrow
night is for me to send it to you with a request to circulate it to all members of the Agency and have it entered into the
record.
Please provide me a response to this email acknowledging receipt so I can confirm with Mr. Lewis that his letter has
been received. If I need to do something else to accomplish our goals, please provide me that information as well.
Thank you in advance
Bill Hoover
VP Development Feasibility
Lewis Management Corp.
1156 N. Mountain Avenue
Upland, CA 91786
BiII.Hoover@lewismc.com
(909) 579-5134 Direct/Fax
www.LewisGroupOfCompanies.com / www.LewisCareers.com
Follow Lewis Group of Companies
Linkedin Facebook Insta�ram Twitter
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Lewis Land Developers, LLC
I I 56 North Mountain A��enuc . P.O. Box 670 : Url�nd, Califomin 91785
Telcphone:(909)9a6-750f Fax:(909)949-b720
June 13, 201 S
Successor Agency for the Palm Desert RedevelopmenE Agency
c/o Ms. Lauri Aylaian
City Mana�;er
C(TY OT' PALM DCSERT
75-� l0 Fred Waring Dr.
Palm Desert, CA 92260-2578
Re: NII3 128 Acre Parcel Vacant Land south of Gerald Pord and west of Portola in the City
of Palm Descrt, CA.
Dear Ms. Aylaian,
The bid process for the above-referenced property was a valid and traditionally recognized
melllodology to sct the value of the property and was properly administered by City Staff.
The property was exposed to many pote�itial buyers. 'I'I�e process created initial interest from 3
devclopers, 2 of whom are based in the Coachella Valley. The developer prtviously determincd
by the City through a related RFQ process as the most qualified (Lewis) completely complicd with
the rules ancl re�ulatians af tt�e current bid process, includin� pledging a nonrefundable money
dcposit and was thc only onc ot� thc 3 to submit a bid.
Despite the validity of the process and the compliance of the bidder (Lewis), the bid received
si�nilicantly deviated from the opinion of value conlained in an appraisal report obtained by the
Cit}�. In order that the Successor A�ency can make an informed decision, we believe it is
incumbent to fully understand the source of the deviation. While we respect the appraiser's ability
and knowledge, we lound certain flaws. VVe understand the appraiser was brought in late duc to
thc untimcly death of the prior appraiser. V4'e request that any decision be deferred for two weeks
and thal SEaff be directed to work with the bidder to [uUy investibate and understand the �-ariances
betwecn the bid and appraisal, with the objective that there be Council consensus allowing the
ma[ter to be carried forward through the process to Oversibht I3oard and Departmeilt of Finance
for consideration.
During tlze negotiations of the Salc Agrccmcnt, we would bc l�appy to investi�;ate the parameters
of a windfall profits provision whereby, if Ehc real estate market in the Coachella Vallcy and Palm
Successor Agency
June 13, 20I8
Page 2
Desett improves, that the Successor A�ency and other a�encies, without risk or liability, could
share in the increased profits of the development with us, increasing lhe actual amount of cash
received by the city of Palm Desert.
The appraisal pr�cess attempts to estimate market value. Thc bid process results are the actual
market value. There can be no more accurate portrayal of the market value than what willing
buyers are willing to pay. T�his is the market value. It is not an estimate or projection. It is the
market value.
Pinally, we all recosnize the hausing crisis throughout the state. Acceleratin� this process will
brin� badly needed, high-quality and relatively attainable work-force housing to Palm Desert while
creating jobs during construction, substantial fees to the City and, equally important, substantial
property tax to the City. For example, using numbers far ease oFdiscussion, assumin� 800 homes
at the project at a$500,000 average saies price, the then assessed value would be $400 million
yearly. At approximately a 1.1% tax rate would the project would yield north of $4 million split
among various public agencies, without taking into consideration the affordable housing
development which provides the benefit of adding approximately 200 units of low-to-modcratc
income affordable housing to the housing stock.
We respectfully ask that you start the two-week process and ultimately accept our bid.
Sincerely,
LEWIS LAND DEVELOPERS, LLC
By Lewis Management Co ., its manager
Richazd A. Lewis
President
7
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