Report Prepared by: Frank Quintero, Deputy City Manager
Title
SUBJECT: Adoption of Resolutions Declaring City-Owned Property as Surplus Land and Exempt Surplus Land Including the Former Merced Sun Star Facility (Assessor Parcel Number 007-350-009) and Properties Located in the Airport Industrial Park Including (Assessor Parcel Numbers (059-300-026, 059-420-012, 059-420-013, 059-420-046, and 059-420-073)
REPORT IN BRIEF
The Surplus Lands Act requires the City to declare City-owned properties as surplus land or exempt surplus land before they are sold to be developed with something other than a qualified public agency use. If surplus land, the City must issue a 60-day Notice of Availability to give housing sponsors registered with the State and certain public agencies priority to make an offer to purchase the sites.
The City Council will consider a Resolution declaring a City-Owned property known as the former Merced Sun Star site as surplus land. The City Council will also consider a Resolution declaring City-owned properties in the vicinity of the Merced Regional Airport as exempt surplus land.
RECOMMENDATION
City Council - Adopt a Motion:
A. Approving Resolution 2021-101 of the City Council of the City of Merced Declaring Certain Property as Surplus Land and Directing the City Manager to Follow the Procedures Set Forth in the Surplus Lands Act for its Disposition; and,
B. Approving Resolution 2021-102 of the City Council of the City of Merced Declaring Certain Properties as Exempt Surplus Land and Directing the City Manager to Follow the Procedures Set Forth in the Surplus Lands Act for their Disposition.
Body
ALTERNATIVES
1. Approve as recommended by staff; or
2. Approve, subject to conditions as specified by the City Council; or
3. Deny the request; or,
4. Refer back to staff for reconsideration of specific items as requested by the Council; or
5. Defer action until a specified date
AUTHORITY
Charter of the City of Merced, Section 200
CITY COUNCIL PRIORITIES
City of Merced 2021-2022 Adopted Budget, Section 7, Economic Development and Airport, Economic Development, Goals - “Facilitate business development (job creation and investment) and catalyst projects in Merced’s economic centers.”
City of Merced 2021-2022 Adopted Budget, Section 7, Economic Development and Airport, Economic Development, Goals - “Focus on investment opportunities in the Airport Industrial Park.”
DISCUSSION
Background
The City of Merced (“City”) owns seven properties that it intends to sell for non-public uses. One property is known as the former Merced Sun Star site. The other five properties are near the Merced Regional Airport. Table 1 lists each property’s parcel number, size, zoning, and land use. Attachments 1 and 2 present maps of the properties.
Table 1
Property Details
|
# |
APN and/or Address |
Lot Size (±AC) |
Lot Size (±SF) |
Land Use |
Zoning |
Airport Compatibility Zone |
|
1 |
007-350-009-000 3033 G Street |
5.50 |
239,580 |
P-D #4 |
Office Commercial |
n/a |
|
2 |
059-300-026-000 |
1.60 |
69,696 |
I-L |
Light Industrial |
Zone B1 |
|
3 |
059-420-012-000 |
4.60 |
200,375 |
I-L |
Light Industrial |
Zone B2 |
|
4 |
059-420-013-000 |
4.90 |
213,444 |
I-L |
Light Industrial |
Zone B1 |
|
5 |
059-420-046-000 |
2.03 |
88,427 |
I-L |
Light Industrial |
Zone B1 |
|
6 |
059-420-073-000 |
5.45 |
237,402 |
I-L |
Light Industrial |
Zone B1 |
State law known as the Surplus Lands Act (the “Act”) requires the City to declare City-owned properties as surplus land or exempt surplus land before they are sold to be developed with something other than a qualified public agency use. Assembly Bill 1486 amended the Act effective January 1, 2020 to impose more strict requirements on what qualifies as surplus land and to guide the notification and negotiation process. If surplus land, the City must issue a 60-day Notice of Availability to housing sponsors registered with the California Department of Housing and Community Development (HCD) and certain public agencies, giving them priority to make an offer to purchase the sites.
The City plans on selling the sites listed in Table 1 (“Properties”) for a non-public agency use. Site 1, known as the Merced Sun Star property, must be declared as surplus land. Sites 2 through 6 are all near the Merced Regional Airport. They are exempt surplus land because the Merced County Airport Land Use Compatibility Plan prohibits residential use on the sites.
Surplus Land Declaration: Merced Sun Star Site
The former Merced Sun Star site at 3033 G Street in Merced was purchased by the City in August 2017 with the original intent to transition the facility into the new Police Department headquarters. The City no longer needs the site for a public use. The City issued two Request for Proposals in September 2019 and October 2020 inviting developer proposals to purchase and develop the site with an office commercial use consistent with its land use and zoning designation.
Only the Merced City School District responded to the 2019 Request for Proposal, and later withdrew their interest. The October 2020 Request for Proposal did not yield any responses. Subsequently, the City received an offer for the Sun Star facility from a local developer offering full asking price.
Before selling the property on the open market, the Act requires the City to declare the property as surplus land and issue a Notice of Availability to housing sponsors registered with HCD and local public agencies within the property’s jurisdiction, such as the County, parks districts and school districts. These parties have a 60-day period to inform the City in writing if they are interested in the property. If a written notice is received, the City must enter in a 90-day period of good faith negotiations (begins on the first day after the end of the 60-day notice period). If the price or terms cannot be agreed upon after the 90-day period, the City may sell the property to other parties.
If the City receives more than one letter of interest during the 60-day period, first priority must be given to entities proposing to develop housing where at least 25 percent of the units will be affordable to lower income households. If more than one such proposal is received, priority will be given to the proposal with the greatest number of affordable units. If more than one proposal specifies the same number of affordable units, priority will be given to the proposal that has the lowest average affordability level.
Even if the Notice of Availability does not result in any offers or successful negotiations, the Act imposes requirements on properties that are subsequently sold on the open market and developed with 10 or more units. At least 15 percent must be sold or rented to lower income households with an affordability period of 55-years for rental and 45-years for ownership housing (Government Code Section 54233).
Note that the Act does not impose any requirements on sale price so the land may be sold for fair market value, even if for affordable housing. The Act also does not impose requirements to alter local land use or zoning that might prohibit a residential use.
Exempt Surplus Land Declaration: Airport Industrial Area Parcels
The Act allows the City to declare certain properties as exempt surplus land if supported by written findings. Sites 2 through 6 are near the Merced Regional Airport. They are exempt surplus land under Government Code Section 54221(f)(1)(G) because they are subject to valid legal restrictions, not imposed by the City, that prohibit housing.
The Merced County Airport Land Use Compatibility Plan adopted June 21, 2012 (“County Plan”) assigns land use compatibility zones to ensure that any development near the airport is compatible with Federal Aviation Administration and other regulations. Sites 2 through 6 are within the B1 and B2 land use compatibility zones (Attachment 3). The County Plan prohibits single-family and multi-family residential dwellings because they are in areas that exceed the maximum Community Noise Equivalent Levels that are acceptable for residential uses.
The resolution declaring an exemption will be sent to HCD at least 30 days prior to disposition as required by the Act.
Summary of Recommended Action
City staff recommends adopting a resolution declaring the Merced Sun Star site as surplus land and authorizing staff to carry out the notification and disposition process required by the Act (Attachment 4).
City staff recommends adopting a resolution declaring the Airport Industrial Area parcels as exempt surplus land and authorizing staff to carry out the notification and disposition process required by the Act (Attachment 5).
IMPACT ON CITY RESOURCES
Use of the General Fund is not required to adopt the respective Resolutions.
ATTACHMENTS
1. Site 1 - Merced Sun Star
2. Sites 2 - 6 Airport Industrial Park
3. Airport Land Use Compatibility Zones
4. Resolution - Declare Land Surplus (Merced Sun Star)
5. Resolution - Exempt from Surplus Land Act (Airport Industrial Park)