ACQUISITION OF REAL PROPERTY LOCATED AT 2110, 2222 AND 2244 SOUTH AIRPORT WAY Stockton Redevelopment Agency October 7, 2008 City Council Agenda Item 6.13

Requested Action: Adopt a resolution authorizing acquisition of property located at 2222 and 2244 South Airport Way in the amount of $1.9 million and an option to purchase property located at 2110 South Airport Way in the amount of $100,000 for the right to purchase the property in the future for $750,000.

Background: July 2002: City Council adopted the South Stockton Redevelopment Plan August 2003: The Airport Corridor Action Team was created to assist in planning for neighborhood revitalization and the creation of economic stability in the vicinity of the Airport Way corridor July 2006: City Council approves allocation of Strong Neighborhoods Initiative Bond money for Fire Station #3 from existing location at First and Union Streets

Current Situation: The property located at 2110, 2222 and 2244 South Airport Way consists of three commercially zoned parcels totaling 2.85 acres and are improved with three buildings totaling approximately 30,700 square feet. The property owner desires to sell a portion of it to the Agency for the amount of $1,900,000; to donate a portion at no cost; and to sell an option for $100,000 granting the Agency the right to purchase a portion of the property in the future for $750,000.

Location Map:

Current Situation (Continued): The two southerly parcels are intended to be used for the relocation of Fire Station No. 3 presently located at First and Union Streets. That station is 50 years old, in need of repair or replacement, and its present location is impacted by recent and planned commercial development surrounding it. Modifications currently being made to Airport Way in the vicinity of the existing fire station also impact the circulation and ease of access for fire engines responding to calls for service.

Current Situation (Continued): It is intended that the subject parcels on Airport Way will house the truck and engine companies currently at the First Street property. This will free up the First Street property to be combined with other Redevelopment Agency owned property in the vicinity for development opportunities.

Current Situation (Continued): The parcel located at 2110 South Airport Way is known to have been contaminated by underground storage tanks from a former gas station. The Seller has offered the Agency an option to purchase the property within the next ten years or once it is cleared, whichever is earlier. The agreement provides for the City to pay an option price of $100,000 which, if subsequently exercised, allows the City to purchase the remaining property for a price of $750,000.

Current Situation (Continued): The Purchase and Sale Agreement is an all-inclusive agreement and addresses issues such as the seller’s relocation assistance, owner participation rights under the Redevelopment Plan and potential loss of business goodwill. The agreement provides that a portion of the Seller’s funds be held in escrow for up to 18 months to pay for costs related to any required tenant relocations on the parcels.

Current Situation (Continued):   Except for environment/hazardous materials issues for which the Seller will remain responsible, the property is being purchased in “as-is” condition.   Acquisition of these properties, including purchase of the proposed option rights, is seen as a target of opportunity for redevelopment of South Stockton

Financial Summary:  At the present time, $2,000,000 will be required to purchase and option these properties. In addition, up to $20,000 may be needed for miscellaneous closing costs for a total present cost of up to $2,020,000.  Acquisition will be paid from Strong Neighborhoods Initiative CIP-Redevelopment Agency South Stockton.  In the future, if the option is exercised, the purchase price of the option parcel will be $750,000 and there will likely be additional closing costs of up to $10,000 resulting in total future costs of up to $760,000.