Rancho Palos Verdes City Council
   

NOVEMBER 3, 2004 AGREEMENT TO PURCHASE OPEN SPACE PROPERTY NOVEMBER 3, 2004 AGREEMENT TO PURCHASE OPEN SPACE PROPERTY

TO: HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL

FROM: CITY ATTORNEY

DATE: NOVEMBER 3, 2004

SUBJECT: AGREEMENT TO PURCHASE OPEN SPACE PROPERTY

RECOMMENDATION

  1. Approve the Agreement to purchase approximately 39 acres of land in Agua Amarga Canyon and approximately 424 acres of land within the Portuguese Bend Area of the City from Palos Verdes Portuguese Bend, LLC.

2. Adopt Resolution No. 2004- , amending Resolution No. 2004-45, the Budget Appropriation for FY04-05, to increase the Environmental Excise Tax (EET) Budget.

BACKGROUND

For many years, the City and the Palos Verdes Peninsula Land Conservancy ("Conservancy") have been working together to acquire property to incorporate into a nature preserve ("Preserve"). To that end, the Forrestal property was acquired in 1996, and the Barkentine Property was acquired in 2001. As part of this effort, the City also has been preparing a NCCP Subarea Plan, which was approved by the City Council on August 31, 2004. A historical chronology of the City’s NCCP efforts from 1996 to the present is attached.

As part of this effort, the City previously entered into purchase agreements with the owners of the two remaining significant properties that could be incorporated into the Preserve and had those properties appraised. However, those purchase agreements were never performed due to lack of funding.

Due to the efforts of the representatives from the Conservancy and the Director of Planning, and with the approval of the NCCP by the City Council, significant progress has been made toward securing the funding from the State. In addition, members of the negotiating team also have been meeting with representatives of the owners of the two remaining large parcels in an attempt to negotiate the terms of agreements to purchase the properties. Negotiations with the owner of the properties that lie largely within the Portuguese Bend area (approximately 424 acres) and within Agua Amarga Canyon (approximately 39 acres) have progressed to a point that the essential terms have been finalized. Accordingly, the attached agreement is being presented to the City Council this evening for review and approval. (This agreement also will be presented to the Conservancy’s Board of Directors for approval by that body.)

DISCUSSION

The essential terms of the attached agreement are:

1. 461 acres will be purchased for the price of $17,057,000, which is $37,000 per acre.

2. The due diligence period to review the title report is October 29, 2004, and the due diligence period to inspect the Properties, including a Phase 1 environmental review, will expire on November 12, 2004. The City already has retained the services of the consultant who inspected the Barkentine Property for the Phase 1 environmental inspection of these properties, and the consultant has assured the City that the work can be completed by the November 12th deadline. Accordingly, the deadline that is established by the Agreement appears to be realistic.

3. Escrow opens with a deposit of $100,000. It is contemplated that the City and the Conservancy each will put $50,000 into escrow for the deposit. Funds must be deposited within two days of the opening of escrow. The escrow must open within three business days of the effective date of the Agreement.

4. The buyer and the seller each will pay for 1/2 of the escrow and title fees.

5. Closing of the escrow will occur no later than August 15, 2005, or ten business days after the Buyers receive the funds to pay the purchase price or six months after the meeting of the Wildlife Conservation Board when the acquisition is discussed, whichever occurs first.

6. If, despite everyone’s best efforts to obtain the funding, the City and the Conservancy do not obtain the funds in the amount of the purchase price from the various sources or due to any other default or breach by the buyers, then the seller will keep the deposit as liquidated damages. However, in that event, the Seller still will convey approximately 3 acres at the top of Agua Amarga Canyon to the City, so that this land will be conveyed as consideration for the deposit. This assures that the deposit is not lost even if the transaction to purchase all of the properties cannot be completed due to lack of funding.

7. Fee simple title to the approximately 461 acres will be granted to the City at closing, subject to a conservation easement in favor of the Conservancy on all but 25 acres of the property (which under the NCCP can be used for active recreational purposes), both of which will be insured by a standard title policy.

8. The agreement acknowledges that the Seller has participated in the NCCP process and from time to time objected to the adoption of the NCCP. Because of this agreement to sell the property to the City, the Seller does not want to be under a continuing obligation to object to other documents that the City will approve in connection with the NCCP, such as the final approval of the Implementing Agreement or the agreement with the Conservancy. Accordingly, the City is agreeing to waive any claim that the Seller did not timely object to the NCCP or otherwise exhaust Seller’s administrative remedies regarding the NCCP.

  1. Attached to the agreement will be a release of all claims by the Seller and its related entities relating to any actions or inaction by the City with respect to development of the property that occurred prior to the close of the transaction that would form the basis of a claim or lawsuit against the City. That document has not yet been finalized for distribution. We expect to be able to distribute it to the City Council on Monday or Tuesday at the latest.

CONCLUSION

Approval of an agreement to purchase the remaining properties is another significant step toward making the Preserve a reality because it will assist in the efforts to obtain funding both from the State and from private sources. Accordingly, the negotiating team and Staff recommend that the City Council approve the attached agreement.

ALTERNATIVE ACTION

1. Give the negotiating team additional directions.

2. Do not approve the attached agreement.

FISCAL IMPACT

The City will be placing $50,000 into escrow. If the transaction is not completed, that money will not be refunded. However, it will be used, along with the $50,000 placed into escrow by the Conservancy, to purchase approximately 3 acres at the top of Agua Amarga Canyon. Although the City has budgeted $1,000,000 for the purchase of Portuguese Bend Open Space, none of those funds can be accessed within the time frame required by the agreement. Therefore, staff recommends that $50,000 of Environmental Excise Tax (EET) funds be utilized as the City portion of the escrow deposit. EET funds are generated by fees charged for new construction projects and are restricted for use for capital projects and land purchases. An additional $4,000 is required for the Phase 1 studies now underway and $6,000 additional is requested to insure that funds are available for the City share of escrow and other possible closing costs.

Respectfully Submitted,

__________________________

Carol Lynch

City Attorney

Reviewed,

_________________________

Les Evans

City Manager

Attachment: NCCP chronology

Agreement

Budget Resolution