HomeMy WebLinkAboutRes 99-95 and 382 DDA - California State University PALM DESERT REDEVELOPMENT AGENCY
MEMORANDUM
DATE: OCTOBER 14, 1999
TO: CITY MANAGER, HONORABLE MAYOR AND MEMBERS OF THE
CITY COUNCIL
HONORABLE CHAIRMAN AND MEMBERS OF REDEVELOPMENT
AGENCY BOARD
FROM: EXECUTIVE DIRECTOR, REDEVELOPMENT AGENCY
SUBJECT: DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN PALM
DESERT REDEVELOPMENT AGENCY AND CALIFORNIA STATE
UNIVERSITY
Recommendation:
That the City CounciUAgency Board open the joint public hearing and following testimony take
the following actions:
1. That the City Council adopt Resolution No. 99-95 - A Resolution of the City of Palm
Desert Approving the Conveyance to the Trustees of California State University of
Approximately 40 Acres of Real Property Located at the Northeast Corner of Frank
Sinatra Drive and Cook Street.
2. That the Agency Board adopt Resolution No. 382 - A Resolution of the Palm Desert
Redevelopment Agency Approving the Conveyance to the Trustees of California State
University of Approximately 40 Acres of Real Property Located at the Northeast
Corner of Frank Sinatra Drive and Cook Street.
Background:
This report summarizes the terms and conditions of that certain Disposition and Development
Agreement (the "DDA")between the Palm Desert Redevelopment Agency(the "Agency") and
California State University("the Developer") concerning the proposed sale of certain real
property by the Agency to California State University(CSU). The report is created to comply
with the requirements of California Health and Safety Code Section 33433.
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Summary of DDA
The Agency is the owner of certain real property in the City of Palm Desert, on the northeast
corner of Frank Sinatra and Cook Street.
Under the basic terms of the agreement:
L The Agency agrees to transfer 40 acres to CSU, and CSU is obligated to relocate and
operate the Coachella Valley Center of Cal State San Bernardino. The exact location of
the 40 acres will be determined at a later date.
2. CSU agrees to use the site only for the operation of the Center or as part of a University
Campus for 25 years.
3. Agency agrees to reserve an adjacent 160 acres for 10 years for a future CSU campus if
one is built.
4. CSU is to begin construction of the first building within 5 years otherwise the property
reverts back to the Agency.
5. CSU is to establish the University Planning Committee to review development of the site
and to make recommendations to the President of CSU.
REVIEWED AND CONCUR:
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Carlos L. Ortega��`� �
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Executive Director City Manager
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Attachments
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PROPOSED SALE OF LAND TO CSU
REPORT PURSUANT TO SECTION 33433 OF THE
CALIFORNIA HEALTH AND SAFETY CODE
This report was prepared to comply with the requirements of California Health and Safety Code
Section 33433. The report contains the following sections: Section 1, A summary of the terms
and conditions of the proposed Disposition and Development Agreement (the "DDA")between
the Palm Desert Redevelopment Agency (the "Agency") and the Trustees of the California State
University("CSU") concerning the proposed acquisition by CSU of certain real property owned
by the Agency; Section 2, The cost of the DDA to the Agency; Section 3, the estimated value of
the interest to be conveyed, determined at the highest and best uses permitted under the
Redevelopment Plan; Section 4, the estimated value of the interest to be conveyed, determined at
the use and with the conditions, covenants and development costs required by the DDA (the
"reuse value"); and Section 5, Recommended Findings to be included in the resolution approving
the sale.
SECTION 1: Summary of the DDA
� Reference is made to the DDA for full particulars of any provision described herein,
and in the event of any inconsistency between the provisions herein and the DDA, the DDA
shall controL
A. The Subject Property
The Agency is the owner of certain real property(the "Site") in the City of Palm Desert
(the"City") located at the northeast corner of Frank Sinatra Drive and the Cook Street
Extension, northeast of the Desert Willow Golf Resort at Palm Desert, within a mile of
Interstate 10 and four miles from State Route 11 l. The Site is depicted in Exhibit A of
the DDA. For the purposes of the DDA, the site is composed of approximately 40 acres
and located immediately at the intersection of Frank Sinatra Drive and the Cook Street
Extension.
B. Disposition of the Site
1. The primary mission of CSU is to offer undergraduate and graduate instruction
through the master's degree in the liberal arts and sciences, and professional
education, including teacher education. Regional access to students is an integral
part of CSU's mission.
2. The Agency intends to transfer 40 acres (the "Site") to CSU; the purchase price to
be paid by CSU shall be $0.
3. Consistent with its mission, after satisfaction of all the conditions of the DDA,
CSU has made a firm commitment to accept the Site and relocate the Coachella
Valley Center of California State University, San Bernardino (the "Center") from
its current location in purchased quarters at the College of the Desert in Palm
Desert, California to permanent facilities to be developed on the Site. CSU
intends to construct and equip facilities for the Center on the Site with funds to be
raised through a capital campaign and a public/private partnership sponsored by
California State University, San Bernardino; such facilities will yield significant
educational, cultural and economic benefits to the Coachella Valley region.
Maintenance and operational costs for the Center will be paid by CSU.
4. The Agency agrees to transfer the Site to CSU when the Site is ready for
development by CSU as part of the Center.
5. At the close of escrow for the Site, the Agency shall transfer fee simple title of all
of the Site to CSU. Escrow shall close after satisfaction of the following
conditions: CSU shall have committed to the Agency, in writing, to relocate the
Center to the Site and to operate it therefrom.
6. CSU shall begin construction of the Center within 5 years after the transfer of the
Site..
SECTION 2: Cost of the Agreement(The "DDA") to the AgencX
The cost of the DDA to the Agency is comprised of 3 components: (1) The land acquisition cost;
(2) The cost of any improvements to be provided by the Agency; and(3) The estimated interest
on the source of funds to finance the agreement (the "Land Carry Cost").
A. Land Acquisition Cost
The Agency acquired the subject land in September 1993 as a result of an Exchange
Agreement for a price of$51,735 per acre. Therefore the land acquisition cost can be
expressed, as follows:
Acres Sq. Ft.
1. Amount of land 40 1,742,400
2. Cost/acre;/sq. ft. 51 735 1.19
3. Total Cost $2,069,400 $2,069,400
B. Cost of Anv Improvements to be Provided bv the A�ency
The Agency will neither provide nor pay for any of the improvements. CSU will be
solely responsible for providing and paying the construction costs of all the
improvements, including the infrastructure.
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C. Calculation of the Expected Land Carr�
The land acquisition cost was financed by a combination of a bond issue and a loan from
the City. The apportioning of the Land Carry Cost is as described in the following table:
Bonds Citv Loan
1. AmountofFunds $1,069,400 $1,000,000
2. The Agency's estimated cost of funds rate 6.125% 5.40%
3. Expected payment term (years) 30 30
4. Estimated interest cost (NPV)per acre 33,266 39,862
5. Times number of acres 20.67 19.33
6. Land Carry Cost $ 687,632 $ 770,504
D. Total Cost of the DDA to the A e�nc_X
Improvement Land Carry
Land Cost Cost Cost Total Cost
1. Total amount $2,069,400 $0 $1,458,137 $3,527,537
2. Per acre 51,735 0 36,453 88,188
3. Per square foot $1.19 0 $0.84 $2.02
SECTION 3: The estimated value of the interest to be conveyed, determined at the highest
and best uses permitted under the Redevelopment Plan.
Knowledgeable real estate professionals have concluded that because of its zoning and location,
the subject Site has a valuation of$72,000 per acre. Therefore, the fair market value of the Site
can be expressed as follows:
Acres Sq. Ft.
l. Amount of Land 40 1,742,400
2. Value/acre; /sq. ft. $ 72,000 $ 1.65
3. Total Value $2,880,000 $2,880,000
SECTION 4: The estimated value of the interest to be conveyed, determined at the use and
with the conditions. covenants and development costs required bv the DDA(the "Fair
Reuse Value"1.
In accordance with the terms and conditions of the DDA, CSU is required to develop the Site
solely as the permanent Coachella Valley Center of California State University, San Bernardino.
Pursuant to the audited budget of the CSU system for the latest fiscal year, total expenses are
approximately equal to total revenues, so the CSU system is essentially operated as a nonprofit
entity. Capital funding for acquisition and construction for the CSU system is accomplished by
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the State issuing General Obligation Bonds. According to the Dean of the Center,because of the
current backlog of approved projects, it would take at least 15 years before the State could issue
bonds to pay for the land and improvements for the subject project, and no other State funds are
available for this purpose.
Therefore, because of the land usage and the timing of facilities development imposed on
CSU by the terms and conditions of the DDA,the fair reuse value of the "interest to be
conveyed" is essentially $0.
SECTION 5: Findings to be included in the resolution a�proving the sale.
The resolution shall contain the following findings: (1) The sale or lease of the property will
assist in the elimination of blight; (2) The sale or lease of the property is consistent with the
implementation plan adopted pursuant to Section 33490 of the California Health and Safety
Code; and one of the following two additional findings; (3) The consideration is not less than the
fair market value at its highest and best use in accordance with the redevelopment plan, or(4)
The consideration is not less than the fair reuse value at the use and with the covenants and
conditions and development costs authorized by the sale.
The following findings can be included in the resolution approving the sale:
FINDING#1: The Site is currently completely unimproved, and the development of the
CSU project will assist in the elimination of blight in the area.
FINDING #2: Sale of the Site is consistent with the implementation plan adopted
pursuant to Section 33490 of the California Health and Safety Code.
FINDING#3: The consideration($0) is not less than the fair reuse value ($0).
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