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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
Dept: Development Services N A L
Date: March 23,2004 0 R \ G \
Subject: Public Hearing and oral bids: 4:00
p.m. and Awarding of Bid m Sale of City
Property located at the northwest comer of
Little League Drive and the 1-215 frontage
road.
From: JAMES FUNK, Director
File No. 15.05-215B
Synopsis of Previous Council Action: MCC Date: 04-05-2004
03-19-01 - Authorization was given to proceed with the sale of City property located on the
northwest comer of Little League Drive and the 1-215 Freeway Frontage Road.
07-23-01- Resolution No. 2001-236 was adopted establishing fair market value and giving notice
inviting bids for sale of said City property.
09-24-01 - Public Hearing was held; no written or oral bids were submitted.
02-02-04 - Resolution No. 2004-37 establishing fair market value and giving Notice Inviting Bids was
approved.
03-15-04 - Public hearing was opened and matter continued to 04/05/04
Recommended Motion:
I. That the hearing accepting oral bids be closed.
AND
2. That the written bid in the amount of $
be awarded to
OR
3. That the oral bid in the amount of $ be awarded to
OR
3. That all bids be rejected and that staff be authorized to proceed with the sale of the 5 acre City
owned parcel to the Economic Development Agency for the amount of $95,000.
~~
James Funk
Contact person: LASZLO "Les" FOGASSY
Phone: 5026
Supporting data attached: Staff Report, Maps, Bid Ward: 5
Summary
FUNDING REQUIREMENTS: Amount: None (Closing costs to be deducted from sales
proceeds )
Source: (Aeet. No.) N/A
(Aeet. Description) N/A
Finance:
Council Notes:
Agenda Item No.
~
'1/5/DLf
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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
Staff Report
SUBJECT:
Oral Bids: 4:00 p.m. and Awarding of Bid --- Sale of City Property located at the northwest
corner of Little League Drive and the 1-215 frontage road.
BACKGROUND:
In 1997, the City acquired approximately 95 acres of vacant land in the northwest portion ofthe
City, generally located northeasterly of the 1-215 Freeway and northwesterly of Little League
Drive. The property consisted of a 90-acre parcel and a non-contiguous 5-acre parcel. This
acquisition was a result of a foreclosure action, which became necessary due to a default on
assessment payments for Community Facilities District No. 995 (Verdemont Infrastructure
Fees). The 90-acre parcel was conveyed to the Economic Development Agency, but the 5-acre
parcel was retained for a possible fire station site. It was later determined that a site more
centrally located in the Verdemont area would be selected for a fire station. That acquisition was
completed last year.
On March 19,2001, an appraisal was obtained from Len Lichter, and the fair market value was
determined to be $124,000. This appraisal was based on sale comparisons in adjacent
communities. Resolution No. 2001-236 was adopted, establishing the appraised value as the fair
market value and giving a Notice Inviting Bids. No bids, written or oral, were received.
In October of2003, a new updated appraisal was prepared by Smothers Appraisal. The appraised
amount was $90,000. Although the amount was less than the previous appraisal prepared in
2001, comparables used in 2001 were from neighboring communities, since that is all that was
available at that time. The 2003 appraisal used comparables that were available for the
immediate area, including a recent sale on Little League Drive.
Recently, several developers indicated an interest in buying this parcel for residential
development. The property needed to be sold through the competitive bid process. On February
4, 2004, Resolution No. 2004-37 was approved, establishing the fair market value of $90,000
and giving Notice Inviting Bids. Bids were to be submitted by 2:00 p.m., February 19,2004, at
which time bids were opened and declared. Two bids were submitted by the 2:00 p.m. deadline.
The first bid was submitted by John Pavelak from Century Crowell Communities, LP. The
second bid was submitted by James R. Watson from Watson & Associates. A third bid was
submitted by Felix Robles from GFR Enterprises but was submitted after the 2:00 p.m. deadline
and thus was returned to the bidder unopened. The two bids accepted were both submitted with
the minimum 10% bid deposit as required.
Century Crowell submitted a bid in the total amount of $151,000, subject to the following terms:
$15,100 bid deposit submitted with bid; $15,100 to be deposited prior to close of escrow (thus
total cash amount is $30,200). The balance of $120,800 is to be secured by a Note and Deed of
Trust with annual payments of$12,080, plus interest at the rate of8%. Century Crowell stated to
the City's Real Property Supervisor that it would not request a subordinated Deed of Trust at this
time; thus the note would be backed by a First Deed of Trust on the property. Since it is
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Staff Report - Continued
unknown at this time how long the Note would actually run for, it is difficult to estimate what the
future value of the Note would be.
Watson & Associates submitted a bid in the total amount of $95,000 subject to the following:
$9,500 bid deposit submitted with bid; balance of $85,500 to be deposited prior to sale of
escrow.
The bid submitted by Century Crowell represents the highest overall written bid. However, the
bid submitted by Watson & Associates represents the highest all cash written bid. Section
2.65.060 of the San Bernardino Municipal Code states that the City may accept a note and deed
of trust. Thus, the highest all cash bid may be determined to be the highest bid if the Mayor and
Council choose not to accept terms.
Current procedures allow for oral bids to also be made and received subject to the following
conditions: (1) The initial oral bid must be at least 10% higher than the highest written bid
accepted; (2) Subsequent oral bidding shall be in increments of at least $100. If the bid of
$151,000 (with terms) is accepted as the highest and best written bid, oral bidding, if any, will
start at $166,100 ($151,000 + 10%). If the bid of $95,000 (all cash) is accepted as the highest
and best written bid, oral bidding, if any, will start at $104,500 ($95,000+10%).
On March 15, 2004, a public hearing was opened and the matter continued to April 5, 2004.
Since the opening of the public hearing, Executive Director Gary Van Osdel of the Economic
Development Agency informed the City Administrator that EDA is currently working with
Empire Land LLC to develop and master plan th~ 90 acre site, northwesterly of, but not directly
adjacent to this 5 acre parcel. The Executive Director believes it may be beneficial for overall
development of the two sites to put this parcel under the ownership and control of the Agency.
The Executive Director indicated that the EDA would be willing to purchase the land from the
City for $95,000, subject to approval of the Mayor and Common Council and the Community
Development Commission.
Since City owned land may be transferred to another public agency, without the need for
competitive bidding, the Mayor and Council may reject all bids and approve the sale of this site
to the Agency, for an amount equal to or greater than the fair market value.
FINANCIAL IMPACT:
Revenue in the amount of at least $95,000 from sale proceeds, less closing costs.
RECOMMENDATION:
That all bids be rejected and that that staff be authorized to proceed with the sale of said City
owner property to the Redevelopment Agency in the amount of$95,000.
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ORIGINAL
CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
From: JAMES FUNK, Director
Subject: Oral Bids: 4:00 p.m. and Awarding of
Bid --- Sale of City Property located at the
northwest comer of Little League Drive and the
1-215 frontage road.
Dept: Development Services
Date: February 24, 2004
Synopsis of Previous Council Action:
File No. 15.05-215B
MCC Date: 03-15-2004
03-19-01- Authorization was given to proceed with the sale of City property located on the
northwest comer of Little League Drive and the 1-215 Freeway Frontage Road.
07-23-01 - Resolution No. 2001-236 was adopted establishing fair market value and giving notice
inviting bids for sale of said City property.
09-24-01 - Public Hearing was held; no written or oral bids were submitted.
02-02-04 - Resolution No. 2004-37 establishing fair market value and giving Notice Inviting Bids was
approved.
Recommended Motion:
1. That the hearing accepting oral bids be closed.
AND
2. That the written bid in the amount of $
be awarded to
3. That the oral bid in the amount of $
OR
be awarded to
~F~
James Funk
Contact person: LASZLO "Les" FOGASSY Phone: 5026
Supporting data attached: Staff Report, Maps, Bid Ward: 5
Summary
FUNDING REQUIREMENTS: Amount: None (Closing costs to be deducted from sales
proceeds )
Source: (Acct. No.) N/A
(Acct. Description) N/A
Finance:
Council Notes:
Agenda Item No.
3J
3JJ5JOr
CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
Staff Report
SUBJECT:
Oral Bids: 4:00 p.m. and Awarding of Bid m Sale of City Property located at the northwest
comer of Little League Drive and the 1-215 frontage road.
BACKGROUND:
In 1997, the City acquired approximately 95 acres of vacant land in the northwest portion of the
City, generally located northeasterly of the 1-215 Freeway and northwesterly of Little League
Drive. The property consisted of a 90-acre parcel and a non-contiguous 5-acre parcel. This
acquisition was a result of a foreclosure action, which became necessary due to a default on
assessment payments for Community Facilities District No. 995 (Verdemont Infrastructure
Fees). The 90-acre parcel was conveyed to the Economic Development Agency, but the 5-acre
parcel was retained for a possible fire station site. It was later determined that a site more
centrally located in the Verdemont area would be selected for a fire station. That acquisition was
completed last year.
On March 19,2001, an appraisal was obtained from Len Lichter, and the fair market value was
determined to be $124,000. This appraisal was based on sale comparisons in adjacent
communities. Resolution No. 2001-236 was adopted, establishing the appraised value as the fair
market value and giving a Notice Inviting Bids. No bids, written or oral, were received.
In October of 2003, a new updated appraisal was prepared by Smothers Appraisal. The appraised
amount was $90,000. Although the amount was less than the previous appraisal prepared in
2001, comparables used in 2001 were from neighboring communities, since that is all that was
available at that time. The 2003 appraisal used comparables that were available for the
immediate area, including a recent sale on Little League Drive.
Recently, several developers indicated an interest in buying this parcel for residential
development. The property needed to be sold through the competitive bid process. On February
4, 2004, Resolution No. 2004-37 was approved, establishing the fair market value of $90,000
and giving Notice Inviting Bids. Bids were to be submitted by 2:00 p.m., February 19, 2004, at
which time bids were opened and declared. Two bids were submitted by the 2:00 p.m. deadline.
The first bid was submitted by John Pavelak from Century Crowell Communities, LP. The
second bid was submitted by James R. Watson from Watson & Associates. A third bid was
submitted by Felix Robles from GFR Enterprises but was submitted after the 2:00 p.m. deadline
and thus was returned to the bidder unopened. The two bids accepted were both submitted with
the minimum 10% bid deposit as required.
Century Crowell submitted a bid in the total amount of $151,000, subject to the following terms:
$15,100 bid deposit submitted with bid; $15,100 to be deposited prior to close of escrow (thus
total cash amount is $30,200). The balance of$120,800 is to be secured by a Note and Deed of
Trust with annual payments of$12,080, plus interest at the rate of8%. Century Crowell stated to
"
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Staff Report - Continued
the City's Real Property Supervisor that it would not request a subordinated Deed of Trust at this
time; thus the note would be backed by a First Deed of Trust on the property, Since it is
unknown at this time how long the Note would actually run for, it is difficult to estimate what the
future value of the Note would be,
Watson & Associates submitted a bid in the total amount of $95,000 subject to the following:
$9,500 bid deposit submitted with bid; balance of $85,500 to be deposited prior to sale of
escrow.
The bid submitted by Century Crowell represents the highest overall written bid. However, the
bid submitted by Watson & Associates represents the highest all cash written bid. Section
2.65.060 of the San Bernardino Municipal Code states that the City may accept a note and deed
of trust. Thus, the highest all cash bid may be determined to be the highest bid if the Mayor and
Council choose not to accept terms.
Current procedures allow for oral bids to also be made and received subject to the following
conditions: (l) The initial oral bid must be at least 10% higher than the highest written bid; (2)
Subsequent oral bidding shall be in increments of at least $100, At this time we are not aware of
any potential oral bidders, though all bidders were made aware of the oral bid procedure. The
City Attorney's office has given staff the opinion that regardless of which of the two written bids
bid is selected for award, oral bids must still begin at 10% higher then the highest written bid. In
this case, oral bidding will need to start at $166,100 ($151,100 + 10%).
Staffis recommending that the bid be awarded to the highest all cash bid (Watson & Associates),
since there is the risk of the real estate market entering into a recession mode within the next 2 to
3 years. At terms proposed by Century Crowell, it would take about 4 years to generate the same
capital as the all cash sale.
FINANCIAL IMPACT:
Revenue in the amount of at least $95,000 from sale proceeds, less closing costs.
RECOMMENDATION:
Award bid, oral or written, to the highest and best bid.
Location of
City property
to be sold
No Scale
5th St.
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VICINITY MAP
EXHIBIT 1
CITY OF SAN BERNARDINO
DEVELOPMENTSER~CESDEPARTMENT
REAL PROPERTY SECTION
Proposed sale of City property located at
the northwest corner of the 1-215
Frontage Road and Little League Drive
~ indicates un-incorporated areas
~ wilhin Cit 's S here of Influence
File No.: .I 5. (!'J~ 2,:z.t)
Created by: LFu~S.f)
Date: cf1.4/c,
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