Report Prepared by: Kenneth Rozell, Senior Deputy City Attorney
Title
SUBJECT: Transfer All Parking Authority’s Interests in Parking Lot #1 to Merced Designated Local Authority, Authorize the City Manager to Accept Such Assets on the City’s Behalf, and Authorize the City Manager to Sign a Non-Exclusive Easement Over Parking Lot #1 for Access by Merced Lofts
REPORT IN BRIEF
Authorizes the Parking Authority of the City of Merced to transfer all of its interests in Parking Lot #1 to the Merced Designated Local Authority, authorizes the City Manager to accept and consent to the transfer of this asset to the City, and authorizes the City Manager to sign all necessary documents to convey a non-exclusive easement over Parking Lot #1 for access by Merced Lofts.
RECOMMENDATION
Parking Authority - Adopt Resolution PA 2016-04, a Resolution of the Parking Authority of the City of Merced authorizing the transfer of all of the Parking Authority’s interests in Parking Lot #1 to the Merced Designated Local Authority.
City Council - Adopt Resolution 2016-41, a Resolution of the City Council of the City of Merced, California authorizing the City Manager to accept and consent on the City’s behalf the transfer of Parking Lot #1.
City Council - Adopt a motion authorizing the City Manager to sign a non-exclusive easement agreement relating to Parking Lot #1 with Merced Lofts, LLC.
Body
AUTHORITY
City of Merced Charter, Section 200
CITY COUNCIL PRIORITIES
Not Applicable
DISCUSSION
Parking Lot #1 (APN 031-141-020) was created in 2002 as part of a Merced Redevelopment Agency mixed used project along Main Street - the Merced Lofts. Parking Lot #1 was originally owned by the Merced Redevelopment Agency and is located off of the alley that runs between “M” Street and Canal Street adjacent to the McNamara Plaza parking lot. (See Attachment 1.)
In order to access the Merced Loft’s parking lot, it is necessary for the tenants of the Merced Lots to drive across Parking Lot #1 in order to access the streets of downtown Merced. In addition, pedestrians exiting the Merced Lofts through the rear entrance must also walk across Parking Lot #1 in order to access the alleyway that gives access to downtown Merced. If there was no access across Parking Lot #1, then all access from the rear entrance and parking lot of the Merced Lofts would be cut off.
Although a non-exclusive easement agreement was drafted in 2003 between the former Merced Redevelopment Agency and the Merced Lofts, LLC to formalize the necessary easement across Parking Lot #1, this document was never finalized and recorded. However, for the past 13 years, access across Parking Lot #1 from the Merced Lofts has occurred as if such non-exclusive easement had been granted.
The current owner of the Merced Lofts is an escrow to sell the building to a third party. Because of the affordable housing component of the project, the City of Merced stands to receive as much as $293,219 at the close of escrow to be used for other housing projects in the City. (The final amount will be determined once the transaction closes.) One of the conditions of the escrow is that the necessary access easement be obtained across Parking Lot #1.
Because Parking Lot #1 was formerly owned by the Merced Redevelopment Agency, the issue of granting this issue is complicated. In January 2011, the City of Merced and the Merced Redevelopment Agency took a series of steps to protect the important assets of the Merced Redevelopment Agency from a then pending effort by the State of California pursuant to AB 1x 26 and AB 1x 27 to take these assets for the benefit of the State of California.
Like a number of other redevelopment agencies around the State of California, the Merced Redevelopment Agency transferred a variety of assets to another entity. For Merced, it was the City of Merced Public Financing and Economic Development Authority (“PFEDA”), a joint powers authority. Until all redevelopment agencies in California were dissolved as of February 1, 2012, PFEDA continued acting on behalf of the Merced Redevelopment Agency in fulfilling the agency's mission - including the construction of affordable housing and much-needed public infrastructure within the City of Merced.
PFEDA subsequently transferred certain assets to the City of Merced that had been the housing assets of the Merced Redevelopment Agency. PFEDA also transferred some parking-related assets to the Parking Authority of the City of Merced and retained some of those assets on its books.
In August 2014, the City Council authorized staff to begin the process of turning over to the Merced Designated Local Authority (the “DLA”) selected non-housing assets that had been owned by the Merced Redevelopment Agency. This asset transfer was, however, contingent upon the City and the State of California first resolving the amount of credit that PFEDA would receive for the redevelopment activities that were conducted by PFEDA between February 1, 2011 and February 1, 2012.
Although these issues are still outstanding, it is in the best interest of PFEDA, the Parking Authority and the City of Merced if their interests in specific assets are transferred to the DLA to help resolve this outstanding issue. (It should be noted that the City has strongly contested these claims by the State of California on a number of occasions.)
At the July 28, 2016 meeting of the Oversight Board to the DLA, the DLA was scheduled to consider the transfer of Parking Lot #1 to the City of Merced as a governmental purpose property upon receipt by the DLA of a duly adopted and signed resolution of the Parking Authority offering this asset to the DLA. Assuming the DLA adopted the necessary resolution at its meeting, then the only action necessary for Parking Lot #1 to be transferred to the City of Merced is the Parking Authority’s adoption of the necessary resolution.
Once the Parking Authority resolution is adopted and the City Council authorizes the City Manager to accept Parking Lot #1, then the City Council is authorized to grant the non-exclusive easement the Merced Lofts, LLC - thus facilitating the sale of the property. Once this easement is granted, then the sale of the Merced Lofts can occur - thus generating as much as $293,219 in funding for the City’s housing programs.
ATTACHMENTS
1. Map showing Parking Lot #1
2. Parking Authority Resolution
3. City Council Resolution
4. Non-Exclusive Easement Agreement