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CITY OF SAN BER,QRDINO -REQUEST ~R COUNCIL ACTION
From: Ways & Means Committee
Subject: Request to Reduce Price of Kellogg
Library - Mr. Elijah Singletary
Dept: Council Office
D8~: March 16, 1989
Synopsis of Previous Council action:
Ways & Means heard item and recommended 90 day extension to contract
(review & analyze)
Council approved 90 day extension
Ways & Means recommended 30 day extension to review new information.
Council approved 30 day extension.
Ways & Means recommended 60 day extension.
Council approved 60 day extension for City Attorney opinion.
Disapproval of request by Ways & Means. 90 day extension to permit
financing.
Mr. Singletary to be advised of amount owed by Finance Director.
Advised by Ways & Means that full amount must be paid by 3/20/89 or
building reverts to owner.
5/23/88 -
6/ 6/88 -
9/26/88
10/ 3/88 -
10/10/88 -
10/24/88
12/12/88 -
2/13/89 -
Recommended motion:
That the request be officially denied, purchasers Yvonne Everett &
Tamario Funn (daughters of Mr. Singletary) be advised immediately
that their agreement calls for full and final payment on March 20,
1989 and if contract is not complied with, the property reverts to
the City.
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SignatuG
Contact person:
Philip A. Arvizo
Phone:
5208
Supportinll data ettached: Agreement, Resolution Extension Ward:
Not1ce to Purchasers, Final Opinion
FUNDING REQUIREMENTS: Amount: N/A
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Source: (Acct. No.1
(Acct. Description)
Finance:
Council Notes: The Common Council cannot approve an offset to the cost of this
property since it is prohibited by Article 16, Section 5 of the State
Constitution (qrant aid to a church orqanizationl
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AGREEMENT FOR ~RCHASE AND SALE OF REAL ESTATE
(Kellogg Library)
THIS AGREEMENT FOR PURCHASE AND SALE OF REAL ESTATE is made
and entered into this
day of
, 1983, by and
5 between the CITY OF SAN BERNARDINO, a municipal corporation,
6 hereinafter referred to as "City", and YVONEE EVERETT and TAMARIO
7 FUNN, individuals, hereinafter referred to as "Purchasers".
8
1. City agrees to sell and Purchasers agree to buy the
9 following described premises: Those certain premises located at
10 1320 Muscott Street in the City of San Bernardino, County of San
11 Bernardino, State of California, more particularly described as
12 follows: Lots 60 and 61, Tract No. 6637 as per plat thereof
13 recorded in Book 83 of Maps, page 53, records of the County
14 Recorder of San Bernardino County, State of California, which
15 property was formerly known as the Kellogg Library property.
16
2. Consideration and Forfeiture. The Purchasers agree to
17 pay for said premises the sum of $50,000.00, payable as follows:
18 $4,500.00 heretofore paid by Purchasers and their predecessors in
19 title, pursuant to the lease with option to buy previously in
20 agreement as to this property, whereunder lease payments were to
21 be credited against purchase price; receipt of this $4,500.00 is
22 hereby acknowledged by City; the remaining $45,500.00 shall be
23 paid in installments, including interest on all unpaid principal
24 from date hereof until date of payment at the rate of 7\ per
25 annum. The first installment of $275.00 to be paid July 1, 1982,
26 and a like amount shall be paid on the same day of each month
27 thereafter until July 1, 1988, at which time the entire balance
28 of principal and interest outstanding shall be paid in full.
29 The amount of the final payment, however, shall be the total of
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'the Purchasers shall be paid with lawful money of the United
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!'States of Amerlca.
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lease payments made between July 1, 1982, and the date of actual
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principal and
interest then due.
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All
payments to be made by
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Credit shall be given to Purchasers for all
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execution of this agreement, which payments shall be applied as
6 payments on this contract. Possession has previously been
7 delivered to the Purchasers, and Purchasers shall remain in
8 possession pursuant to this agreement, unless such possession is
9 terminated by the termination of this agreement.
10
3. Taxes and Assessments. The Purchasers shall pay all
11 taxes and assessments from date hereof, including any and all
12 taxes and assessments assessed or levied against said property
13 hereafter. There shall be no prorating of taxes.
14
4. Deed, Title. City on receiving payments of all amounts
15 of money mentioned herein, shall execute a grant deed for said
16 property in favor of said Purchasers and shall deliver said deed
17 to said Purchasers; as of the date of delivery of deed, the City
18 shall supply Purchasers with a policy of title insurance or
19 certificate of title, to be issued by a reliable title company,
20 which shall show the title to said property to be merchantable and
21 free from taxes, assessments, liens and encumbrances, except such
22 thereof as are set forth herein and such thereof as may be
23 suffered or created hereafter by the Purchasers. The City' shall
24 pay for said evidence of title.
25
5. Default by Purchasers. Should the Purchasers fail to
26 make said payments or any thereof when due or fail to comply with
27 the conditions, covenants and agreements set forth herein, the
28 amounts paid hereon may be retained by the City as the
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~consideration for
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making this agreement and thereupon the City
2 shall be released from all obligation in law or equity to convey
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Isaid property and any occupancy of said property thereafter by
Isaid Purchasers shall be deemed to be and be a tenancy at the
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5 pleasure of the City and said Purchasers shall never acquire and
6 expressly waive any and all rights or claims of title because of
7 such possession.
8
6. Legal Expenses. Should the City sue the Purchasers to
9 enforce this agreement or any of its terms, the Purchasers shall
10 pay a reasonable attorney fee and all expenses in connection
11 therewith.
12
7. Surrender Upon Termination. Upon revocation, surrender
13 or other termination of this agreement, Purchasers shall quietly
14 and peaceably surrender the property occupied by them under this
15 agreement in as good condition as same was at the time of
16 Purchasers' entry thereof.
17
8. Insurance. Purchasers agree to procure and maintain in
18 force during the term of this agreement, at their expense, a
19 policy or policies of insurance against loss or damage to the
20 premises and appurtenances and permanent equipment resulting from
21 fire, lightning, vandalism, malicious mischief, and such perils
22 ordinarily defined as "extended coverage" and other perils in a
23 minimum amount of $50,000.00. City shall be an additional insured
24 under such policy of insurance, and a copy of such policy of
2S insurance shall be provided to City's Risk Management Division.
26 Purchasers agree to obtain a written obligation from the insurers
21 to notify City in writing at least 30 days prior to cancellation
28 or refusal to renew any such policy or policies. Purchasers agree
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Ithat, if such insurance policies are not kept in force during the
lentire term of this agreement, City may, but shall not be required
'to, procure the necessary insurance, pay the premium therefor, and i
that such premiums shall be repaid to City as an additional I
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installment for the month following the date on which such
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6 premiums are paid. Failure of Purchasers to maintain insurance in
7 full force shall constitute a default.
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9. Assignments. Purchaser shall not assign this agreement
9 without obtaining the prior written consent of the City.
10
10. Agreement Applicable to Successors, Etc. This agreement
11 and the terms, covenants and conditions hereof apply to and are
12 binding upon the heirs, successors, executors, administrators and
13 assigns of the parties hereto.
14
11. Nondiscrimination. The Purchasers hereby covenant by
15 and for themselves, their heirs, executors, administrators and
16 assigns, and all persons claiming under or through them, and this
17 agreement is made and accepted upon and subject to the following
IS conditions: that there shall be no discri~ination against or
19 segregation of any person or group of persons on account of race,
20 color, creed, national origin, or ancestry, in the leasing,
21 subleasing, transferring, use, occupancy, tenure or enjoyment of
22 the premises hereby sold, nor shall the Purchasers themselves, or
23 any person claiming under or through them, establish or permit any
24 such practice or practices of discrimination or segregation with'
25 reference to the selection, location, number, use, or occupancy of
26 tenants, lessees, sublessees, subtenants, or vendees in the
21 premises herein sold. The provisions of this paragraph shall be
28 included in the deed to be given as a covenant running with the
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: 12. Notices. All notices herein required shall be in
3 writing and delivered in person or sent by certified mail, postage
~ prepaid, addressed as follows:
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City:
Purchasers:
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City of San Bernardino
300 North "0" Street
San Bernardino, CA 92418
Attn: Real Property Division
Dept. of Public Works/
City Engineer
Yvonne Everett
589 West McKinley Street
Rialto, CA 92376
9
Tamario Funn
201 East Fourth Street
San Bernardino, CA 92401
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13. Remedies. The remedies herein given to the City shall
11 not be exclusive of any other remedy, but City shall, in case of
12 default or breach, or for any other reason herein contained, have
13 every other remedy given by this agreement and by law or equity,
14 and shall have the right to maintain and prosecute any and every
IS such remedy, contemporaneously or otherwise, with the exercise of
16 the right of forfeiture, the right of possession or any other
17 right herein given in event of breach.
18
14. Effective Date. This agreement is effective as of the
19 30th day of June, 1982, nunc pro tunc.
20 IN WITNESS "HEREOF, the parties hereto have executed this
21 Agreement for Purchase and Sale of Real Estate on the day and year
22 first above written.
23 CITY OF SAN BERNARDINO
ATTEST:
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By
Mayor
City Clerk
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Tamario Funn
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~pproved as to form:
~~~g
City A orney
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I RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE
I EXECUTION OF A CONTRACT FOR PURCHASE AND SALE OF REAL ESTATE
i (KELLOGG LIBRARY) TO YVONNE EVERETT AND T~~ARIO FUNN.
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RESOLUTION NO.
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BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AS FOLLOWS:
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SECTION 1. Recitals.
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(a) Following open competitive bidding, and after
8 determination that such property was excess to the needs of the
9 City, a lease agreement with option to purchase was entered into
10 between the City of San Bernardino as lessor, and Hardy Brown,
11 Cheryl Brown and Elijah S. Singletary as lessee, dated the 26th
12 day of June, 1979, wherein lessee leased the former Kellogg
13 ~ibrary property from City for a period of three years, with an
14 option to buy the property for a price of 550,000.00.
15
(b) An assignment of interest in lease agreement was
16 executed by Hardy Brown and Cheryl Brown and accepted by Elijah S.
17 Singletary, dated the 28th day of April, 1982, which assignment
18 was approved by the Ci ty of San Bernard ino.
19
(c) An assignment of interest in lease agreement with option
20 to purchase was executed by Elijah S. Singletary as assignor and
21 Yvonne Everett and Tamario Funn as assignee, dated the 17th day of
22 June, 1982, which assignment was approved by the City of San
23 Bernardino.
24
(d) On June 7, 1982, by motion made, seconded and
25 unanimously carried, the City Attorney was directed to prepare a
26 lease purchase agreement with the present lessees of the City-
27 owned property at 1320 Muscott Street, for the period July I, 1982
28 through June 3D, 1985, substantially in conformance with the
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1 recommendations contained in the City Administrator's memorandum
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,dated June 4, 1982.
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The memorandum from the City Administrator
. specified that the purchase price was to be changed from
4 $50,000.00 to $45,500.00, "to reflect monthly credits of $4,500.00
S accrued during the past three years."
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(e) On June 21, 1982, the Mayor and Common Council approved
7 execution of a lease agreement with Yvonne Everett and Tamario
8 Funn relating to a three-year extension of the lease agreement
9 with option to purchase of the Kellogg Library at 1320 Muscott
10 Street. The form of lease agreement submitted to and approved by
11 the Mayor and Common Council did not include any extension of the
12 option to purchase, but provided that the option to purchase was
13 terminated.
14
(f) On July 9, 1982, the lease agreement with Yvonne Everett
15 and Tamario Funn relating to a three-year extension of the lease
16 agreement was executed by the parties.
17
(g) An agent for lessees now claims that, had lessees been
18 advised that the lease agreement would not include the extension
19 of the option to purchase, and that the option to purchase would
20 end as of June 30, 1982, the option to purchase would have been
21 exercised prior to its expiration. That agent further alleges
22 that he was assured by the then City Administrator of the City of
23 San Bernardino, and was reassured by the action of the Mayor and
24 Common Council of June 7, 1982, that the option to buy would be
25 extended for an additional three years, and that lessees have been
26 prejudiced by their detrimental reliance upon such assurances.
27 Lessees have expended substantial amounts in improving the
21 property and in making structural alterations and in installing
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lequiPment peculiarly suited to the premises, in reliance upon thei
ieventual right to purchase, according to the claims of their
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lagent.
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(h) The Mayor and Common Council have reviewed the
S background of this dispute, and are satisfied that lessees did in
6 fact detrimentally rely upon the action of the Mayor and Common
7 Council and assurances by the then City Administrator, and do
8 further find that lessees had reason to believe that the option to
9 buy would be extended, and that such reliance has detrimentally
10 affected lessees, and has caused them to forego the right to
11 exercise the option which was in existence until June 30, 1982.
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SECTION 2. Findings. The Mayor and Common Council hereby
13 specifically find that, had lessees understood that the option to
14 buy would not be extended beyond June 30, 1982, the option to buy
IS would have been exercised at that time; in order to compromise the
16 disputed claim at this time, the Mayor and Common Council find
Ii that the interests of justice require that the parties be restored
18 to the position in which they were prior to June 30, 1982, and
19 that lessees be given the opportunity to exercise the option to
20 purchase the property.
21
SECTION 3. Implementation. In order to compromise and
22 settle a disputed claim, and to effect justice in this matter, the
23 Mayor and Common Council hereby authorize and direct the Mayor of
24 the City of San Bernardino to execute on behalf of the City a land
25 contract for the purchase and sale of the former Kellogg Library
26 property by the City to Yvonne Everett and Tamario Funn, effective
27 nunc pro tunc as of June 30, 1982, a copy of which is attached
2J hereto and incorporated herein by reference.
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I I HEREBY CERTIFY that the foregoing resolution was duly
:adopted by the Mayor and Common Council of the City of San
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IBernardino at a
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on the
.,t~ day of
Jl1r..e
, 1983, by the following
C vote, to wit:
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Council Members
AYES:
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regulc:r
meeting thereof, held
Ca~t~ne~~, ~ei!l~. I!e~nan~ez,
'''arks * 0niel. Frazier. St~~.cJ"'J.e~
NAYS:
':-lnne
ABSENT:
!:one
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City
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'_,L?'Sh
Clerk
The foregoing resolution is hereby approved this
of
, 1983.
Jun~
Approved as to form:
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City At orney
day
Mayor of the City of San Bernardino
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CITY OF
San Bernardino
I'UILIC WOItKS DI'ARTIII.'
A 0 G E A G H A A 0 G A A V E
OIRECTOR OF PUBLIC WORKS/CITY ENGINEER
May 12, 1988
File So. 15.06-70
Yvonne Everrett
Taaario FWID
1322 Medical Center Drive
San Bernardino. CA 92411
Pursuant to your agreement with the City of San Bernardino, dated June 30,
1983. for the purchase of that certain real property located at 1322 Medical
Center drive. this is to inform you that the final pa>~ent will be due on
July 1, 1988. The amount that will be due after the May and June payments,
will be $40,135.70. This amount reflects the agreed purchase price of
S50,000.00 with credit for payments made prior to July 2, 1982 in the amount
of $4,500.00, plus credit for payments made thereafter, with interest from
~'e 30, 1983,at the rate of 71 per annum. Please refer to said agreement for
further detail s.
The enclosed amortization schedule shows the amounts applied to principle and
the amounts applied to interest.
Please advise this office of your intentions regarding the purchase of this
property at your earliest convenience so that we may begin processing the
necessary paperwork.
Should you have any questions regarding this matter, please contact Hr. Les
Fogassy in the Real Property Section, at 384-5111.
Sincerely,
JU>u G. HARDGRAVE
Director of Public Works/City Engineer
J.;;~~
LElfIS E. LITTU.?I ~
Real Properly Engineer
LF:lf
encl
cc: James Robbins, Acting City Ad8inistrator
,~
300 NORTH '0' STREET, SAN BERNARDINO
CALIFORNIA 12"1.0001 ".,1....,11
PRIDE ./
~;fRESS
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AMORTIZATION SCHEDULE: PRINCIPLE AMOUNT:$45,500.00 RATE : 7\ PER ANNUM
MONTH II PMT PRINCIPLE INTEREST BALANCE
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07-82 1 275.00 275.00 0.00 45,225.00
08-82 2 275.00 275.00 0.00 44,950.00
09-82 3 275.00 275.00 0.00 44,675.00
. 10-82 4 275.00 275.00 0.00 44,400.00
11 -82 5 275.00 275.00 0.00 44,125.00
12-82 6 275.00 275.00 0.00 43,850.00
01-83 7 275.00 275.00 0.00 43,575.00
02-83 8 275.00 275.00 0.00 43,300.00
03-83 9 275.00 275.00 0.00 43,025.00
04-83 1 0 275.00 275.00 0.00 42,750.00
05-83 11 275.00 275.00 0.00 42,475.00
06-83 12 275.00 275.00 0.00 42,200.00
07-83 1 3 275.00 28.83 246.17 42,171.17
08-83 1 4 275.00 29.00 246.00 42.142.17
09-83 1 5 275.00 29.17 245.83 42, 1 12.99
10-83 1 6 275.00 29.34 245.66 42,083.65
11-83 1 7 275.00 29.51 245.49 42,054.14
12-83 1 8 275.00 29.68 245.32 42,024.46
01-84 1 9 275.00 29.86 245.14 41,994.60
02-84 20 275.00 30.03 244.97 41,964.57
03-84 21 275.00 30.21 244.79 41,934.36
04-84 22 275.00 30.38 244.62 41,903.97
05-84 23 275.00 30.56 244.44 41,873.42
06-84 24 275.00 30.74 244.26 41,842.68
07-84 25 275.00 30.92 244.08 41,811.76
08-84 26 275.00 31. 10 243.90 41,780.66
09-84 27 275.00 31 .28 243.72 41,749.38
10-84 28 275.00 31.46 243.54 41,717.92
11-84 29 275.00 31 .65 243.35 41,686.27
12-84 30 275.00 31.83 243.17 41,654.44
01-85 31 275.00 32.02 242.98 41,622.42
02-85 32 275.00 3Z.20 242.80 41,590.22
03-85 33 275.00 32.39 242.61 41,557.83
04-85 34 275.00 32.58 242.42 41,525.25
05-85 35 275.00 32.77 242.23 41,492.48
06-85 36 275.00 32.96 242.04 41,459.52
07-85 37 275.00 33.15 241.85 41,426.37
08-85 38 275.00 33.35 241.65 41,393.02
09-85 39 275.00 33.54 241.46 41,359.48
10-85 40 275.00 33.74 241. 26 41,325.74
11-85 41 275.00 33.93 241.07 41,291.81
12-85 42 275.00 34.13 240.87 41,257.67
01-86 43 275.00 34.33 240.67 41,223.34
'()2-86 44 275.00 34.53 240.47 41,188.81
'03-86 45 275.00 34.73 240.27 41,154.08
04-86 46 275.00 34.93 240.07 41,119.15
'05-86 47 275.00 35.14 239.86 41,084.01
'06-86 48 275.00 35.34 239.66 41,048.67
07-86 49 275.00 35.55 239.45 41,013.11
08-86 50 275.00 35.76 239.24 40,977.36
09-86 51 275.00 35.97 239.03 40,941.39
10-86 52 275.00 36.18 238.82 40,905.22
11-86 53 275.00 36.39 238.61 40,868.83
12-86 54 275.00 36.60 238.40 40,832.23
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MONTH II PMT PRINCIPLE INTEREST B"L"NCE
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01-67 55 275.00 36.61 236.19 40.795.42
02-67 56 275.00 37.03 237.97 40,758.39
03-87 57 275.00 37.24 237.76 40.721.15
04-87 58 275.00 37.46 237.54 40,683.69
05-87 59 275.00 37.68 237.32 40,646.01
06-87 60 275.00 37.90 237.10 40,608.11
07-87 61 275.00 38.12 236.88 40,569.99
08-87 62 275.00 38.34 236.66 40,531.65
09-87 63 275.00 38.57 236.43 40.493.08
10-87 64 275.00 38.79 236.21 4(;,454.29
11-87 65 275.00 39.02 235.98 40,415.27
12-87 66 275.00 39.24 235.76 40,376.03
01-88 67 275.00 39.47 235.53 40,336.56
02-68 66 275.00 39.70 235.30 40,296.85
03-88 69 275.00 39.94 235.06 40,256.92
04-88 70 275.00 40.17 234.63 40,216.75
05-88 71 275.00 40.40 234.60 40,176.35
06-88 72 275.00 40.64 234.36 40.135.70
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CITY OF SAN BERNARDINO
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300 NORTH "0" STREET. SAN BERNARDINO. CALIFORNIA 92418
JAMES F. PENMAN
CITY ATTORNEY
1714) 384-5355
February 10, 1989
Opinion No. 89-3
10.39
WAYS AND MEANS COMMITTEE
Re: Sale of Kellogg Library
ISSUES
You have asked several questions of us regarding the sale of
the Kellogg Library property to its present lessee, as follows:
1. Whether the City can sell the Kellogg Library to the
present lessee who is a church?
2. Whether the original bid process would preclude the City
from offsetting the purchase price of this property by amount of
improvements?
3. Whose obligation are the costs of improvement when the
lease is silent?
4. Whether the offset in the purchase price of the
improvements made would be considered a gift?
5. If this is a gift, can a public agency make a gift of
public funds to a church?
BACKGROUND
On June 26, 1979, after the bid process was completed, the
City of San Bernardino entered into a lease/purchase option
agreement with Hardy and Cheryl Brown and Elijah Singletary.
This property is located at 1320 Muscott Street, also known as
the Kellogg Library.
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Ways and Means Committee
February 10, 1989
Page Two
The parties to the agreement changed on July 9, 1982, to
Yvonne Everett and Tamario Funn who are the daughters of Elijah
Singletary. The term of the agreement was from July 1, 1982 to
June 30, 1985 in the amount of $275.00 per month. Of the $275.00
per month for the lease, $125.00 of this amount was to be
credi ted towards the purchase price of $50,000. The overall
purchase price of $50,000 was reduced to $45,500 to reflect a
S4,500 credit towards the purchase from the prior three years of
1979 to 1982.
On June 6, 1983, by resolution of the Mayor and Common
Council, the terms of the agreement was effected to extend the
length of time on the option to purchase the property. The term
of this contract was from June 30, 1982 to July 1, 1988 at which
time the entire balance became due and payable.
Elijah Singletary has now requested of the City seeking
relief from the original terms of the contract through a
reduction in the purchase price. The basis of this request is
that Mr. Singletary has spent substantial sums in improving this
property by re-roofing, replacing the air-conditioning, asphalt,
painting stripes on the parking lot, an addition of an office and
~itchen.
This building was and is being used for the purposes of a
:::hurch.
The lease agreement is silent with respect to improvements
to the property.
Mr. Singletary is requesting that the purchase price of the
building now be reduced by the cost of the improvements made to
the building.
ANALYSIS
The five questions raised will be discussed in numerical
order as outlined above.
1. Article #16, Section 5 of the California State
Constitution says:
"Neither the Legislature nor any county, city and
county, township, school district or other municipal
corporation shall ever make an appropriation or pay
from any public fund whatever or grant anything to, or
in aid of, any religious sect, church, creed, or
sectarian, purpose, or help to support or sustain any
school, college, university, hospital or other
institution controlled by any religious creed, church,
or sectarian, denomination whatever, nor shall any
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Ways and Means Committee
February 10, 1989
Page Three
grant or donation of personal property or real estate
ever be made by the State, or any city, city and
county, town or other municipal corporation for any
religious creed, church or sectarian purpose whatever,
provided that nothing in this section shall prevent the
Legislature granting aid pursuant to Section 3 of
Article XVI."
The constitutional prohibition is clear in its restrictions
of public funds in aid of religious purposes.
However, religious organizations are ordinarily subject to
the police power of the state as other organizations. For
example, religious organizations must conform to building safety
regulations, the operators of church vehicles must obey traffic
laws and the like. (25 Ops Atty Gen 309.)
This is not to suggest that there is no wall of separation
between church and state, but that wall rests upon a not
inflexible general principle, rather than a rigid concept of
absolute disassociation, (25 Ops Atty Gen 309 at 311).
There is a three part test to determine whether the
governmental act violates the establishment clause:
1) law in question must reflect a clearly secular
legislative purpose;
2) it must have a primary effect that neither
advances nor inhibits religion;
3) it must avoid excessive governmental entanglement
with religion. Committee for Public Education and
Religious Liberty v. Nyquist (1973) 413 U.S. 756.
Turning to the first test, it is not uncustomary for
the City of San Bernardino to sell its surplus property through a
public bid process. The bid process itself suggests that the
sale is open to the publiC at large and saleable to the highest
bidder, which affords the conclusion that this property is
available to anyone, and thus not in aid of a religious
organization and is available to secular and non-secular
organizations alike. Clearly, the sale and lease of property is
a secular purpose.
Turning to the second test, the primary effect of the sale
of surplus municipal property is to get rid of property not
needed by the City.
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February 10, 1989
Page Four
The case of Kellogg Library is a lease purchase agreement to
lease/and or purchase city owned property.
Certainly under this test, the City could sell property to a
religious organization who met the legally prescribed criteria
for the sale, as well as to a non-religious group, and by its
actions do nothing which would be viewed as unequal treatment of
a religious organization.
Certainly, the action to sell this property places no
financial burden on the city.
In looking specifically at the sale of the property, it is
an arms-length transaction between a potential buyer and seller
where both are motivated by their own self-interest. In the bid
process the purchaser is motivated by submitting the bid at the
highest price to be awarded the bid, yet at a price which is
economically feasible to the purchaser. Likewise, neither the
seller is motivated to receive the highest price they can get for
the property to be sold. In neither case can it be said to be in
the aid of the other. Moreover, there can be no justification
for the unequal treatment of a religious organization having
submitted the highest bid, to be denied the right to acquire the
property (25 Ops Atty Gen 309, 313). Likewise, the "separation
doctrine" nor the "no aid to religion" requires the City to
prevent a religious group from participating in the sale. (25
Ops Atty Gen 309, 313).
Similarly, a long-term lease to a religious organization is
also permissible. (See 25 Ops Atty Gen 309 at 314 and 60 Ops
Atty Gen 269 at 278).
There is nothing in the lease provisions or purchase option
that inhibits or advances religion.
Turning to the third test, a prohibition against excessive
government entanglement in religion note that relationships
between church and state are inevitable.
"The Supreme Court recognizes its inability to
perceive with invariable clarity 'the lines of
demarcation in this extraordinarily sensitive area of
constitutional law' and concedes that today the line of
separation far from being a 'wall', is a blurred,
indistinct, and invariable barrier depending on all
circumstances of a particular relationship."
(California Educational Facilities Authority v. Priest
(1974) 12 Cal 3d 593, 599)
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February 10, 1989
Page Five
Thus, in looking, at the entanglement issue as it relates to
the sale of the library, it is clear that this transaction is no
different from any lease or sale of property in which the City
would so engage in an arms-length economic transaction which does
not, by its terms, implicate any religious entanglement.
2. Turning to the bid process, the particular purpose
behind the bid process is to guard against favoritism,
improvidence, extravagance and corruption, and to secure the
best work or supplies at lowest price, these statutes,
ordinances, etc. were enacted for the benefit of property holders
and taxpayers. 25 Ops Atty Gen 309, 313. (See also McQuillan,
Municipal Corporations, 3d Ed. Vol. 10, Section 29.29).
San Bernardino City Charter Section 40(a) is relevant and
reads as follows:
"( a) Purchase and Sale of Property. Council
shall have power to purchase, lease, receive
and hold real and personal property within or
without the city limits, and to control, sell
and dispose of the same for the common
benefit; provided that the sale or disposal
of real property which is appraised at a
value in excess of $2,000 shall be approved
by a five-sevenths (5/7) vote of the Council
and shall be subject to competitive bidding
and no bid shall be awarded for a sum less
than the minimum price approved in a
resolution of the Council which provides for
the notice inviting bids."
Thus, by Charter provisions no sale or disposal of property
may be made which is in excess of $2,000 without 5/7 vote of the
Council and through a bid process.
Therefore the elements in the Charter which must be complied
with to sell or dispose of property valued in excess of $2,000
are:
1) approval by 5/7 vote of council:
2) be subject to competitive bidding:
3) bid shall not be awarded for a sum less than
the minimum price set forth in the council resolution
providing for notice inviting bids.
Turning to the Kellogg Library property as it relates to
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Ways and Means Committee
February 10, 1989
page Six
Charter Section 40(a), Resolution No. 13118 was passed by
Council on January 11, 1978.
In this resolution the Council determined that the said
property should be sold, leased or leased with option to
purchase.
AlSO, the Council invited competitive bidding for the sale,
lease or lease with purchase option at a selling price of
S50,000. Term of lease was for 15 years.
If the lessee declined to exercise the option, the 10% of
purchase price paid to the City for the option and all lease
payments made to the City would not be refundable. The vote on
this resolution was unanimous.
Therefore, the requirements of Charter Section 40(a) have
been satisfied.
This property went through a competitive bid process.
Specifically bid No. 5074 for an outright purchase of S50,000;
3id No. 5074a, Lease with Option to Purchase, 550,000 purchase
price, 3 year lease of $250.00 per month; Bid No. 5074b, Lease
Only, 5 year lease of 5250.00 per month. The successful bidder
~as the present lessee for a lease option to purchase. The bid
process was satisfied.
What presently is being requested, is to offset the agreed
~pon purchase price by the dollar amount of the improvements done
by the lessee, rather than a reduction in the actual purchase
price, thus not implicating the original bid process or requiring
a new one.
3. Turning to the issue of improvements, improvements or
betterments to realty have been defined as improvements on real
property which are more extensive than ordinary repairs and
enhance, in a substantial way, the value of the property. 37 Cal
Jur 3d 601. The addition of a roof, air conditioning unit,
striping and asphalt, fall within the category of improvements.
Permanent improvements to land become as much realty as the
land itself, (Dishman v. Union Oil Co. (1956) 145 CA 2d 261) as
an example, the improvement of a roof. Examples which have been
held to be improvements include additions to existing buildings,
installation of plate glass, the clearing of land of wild growth,
grading for cultivation, and construction of a private road to
name a few. The term "improvement" broadly covers all additions
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ways and Means Committee
February 10, 1989
Page Seven
or alterations which may be made by the tenant for the
convenience of his business on the premises.
The general rule is that in the absence of other equities or
agreements to the contrary, permanent improvements made to real
property, other than by the owner, belong to the owner. Callnon
v. Callnon, (1935) 7 CA 2d 676, and the non-owner is not
entitled to reimbursement for improvements voluntarily made to
another's land in the absence of an express or implied agreement.
Callnon v. Callnon, supra, Kershman v. Kershman, (1961) 192 CA 2d
18.
This rule has been codified by statute in California Civil
Code Section 1013 which reads as follows:
"When a person affixes his property to the
land of another, without an agreement
permitting him to remove it, the thing
affixed, except as otherwise provided in this
chapter, belongs to the owner of the land,
unless he chooses to require the former to
remove it or the former elects to exercise
the right of removal provided for in Section
1013.5 of this Chapter.
AS to the applicability of Section 1013 to this set of
facts, the City as lessor, has not requested the removal of the
improvements and the lessee does not contemplate removing a
portion of the roof, for example, under the provisions of Section
1013. 5 . Accordingly, the exceptions stated in Section 1013 do
not apply to this lessee.
Section 1013.5(a) of the Civil Code reads as follows:
"When any person, acting in good faith and
erroneously believing because of a mistake
either of law or fact that he has a right to
do so, affixes improvements to the land of
another, such person, or his successor in
interest shall have the right to remove such
improvements upon payment, as their interests
shall appear, to the owner of the land, and
any other person having any interest therein
who acquired such interest for value after
the commencement of the work of improvement
and in reliance thereon, of all their damages
proximately resulting from the affixing and
removal of such improvements."
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Ways and Means
February 10, 1989
Page Eight
Clearly reading the language of Section 1013.5, the lessee
never contemplated he was acting under a mistake of law or fact.
His purpose in providing the improvements was to inure to the
benefit of his business. He was aware of what and why he did
what he did at the time of doing. His only argument now is that
he wants to be reimbursed for the improvements. Therefore, he
does not fall within the provisions of Section 1013.5. Assuming
arguendo he did fall within the provisions of Section 1013.5, the
lessee would be liable to the City for any damages resulting from
the removal of any such improvements, which clearly is not the
lessee's intent to have to pay.
Moreover, the type of improvements which have been made, the
roof, air conditioning unit, asphalt, painting stripes on the
parking lot are integrally a part of the real property which
would cause substantial and irreparable damage if removed.
Accordingly, the maintenance of the property since 1979 is
part of a duty of the tenant to use ordinary care in the
preservation of the safety and good condition of the thing
leased. (California Civil Code Section 1928). As to those
general maintenance items, it is the duty of the lessee to keep
the premises in good condition during the term of his tenancy
relating to claims of ordinary wear and tear. A lessee having
been in a building for almost ten years should reasonably expect
to have maintained the premises. The cost of $14,000.00 which is
outlined as having been spent on maintenance would be estimated
to be approximately $1,500.00 per year or approximately $125.00
per month. A bargain on today's market.
The improvements, therefore, made by this lessee are not
subject to a reduction in the purchase price of the property,
absent an agreement to the contrary.
4. Turning to whether the offsetting of costs of
improvements would be a gift of public funds.
Gifts have generally been defined as a giving of a thing
without adequate consideration. Consideration is simply the
conferring of a benefit upon the promisor or a detriment to the
promisee. California School Employees Assn. vs. Sunnyvale
Elementary School District (1973) 36 CA 3d 46, 59.
The City derives no benefit from the giving of the
improvement nor is there a corollary detriment to the lessee
being asked in consideration of the reduced price. Therefore,
under this analysis, the offset of the purchase price would be a
gift.
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Ways and Means Committee
February 10, 1989
Page Nine
Where this issue comes up is as it relates to Article 16,
Section 6 of the State Constitution reads in pertinent part:
"The Legislature shall have no power to give or
lend or to authorize the giving or lending of the
credit of the State, or any county, city and county,
city, township or other political corporation or
subdivision of the State now existing or that may be
hereafter established in aid to any person,
association, or corporation, whether municipal or
otherwise .... nor shall it have power to make any gift
or authorize the making of any gift, of any public
money or thing of value to any individual, municipal or
other corporation whatever ...."
This section precludes gifts of public funds. However, the
fact that an individual or group may derive incidental benefit
from the donation does not preclude such if it is for a public
purpose. (See McQuillan, Municipal Corporations 3d Edition, Vol.
15, Sections 39.20 and 39.30).
There is a question whether this section is applicable to
charter cities. If this question became an issue, it would need
further research.
5. It is not necessary to reach the issue of whether the
San Bernardino City Charter which is silent on gifts on public
funds is applicable. A more direct prohibition can be reached in
Article 16, Sec. 5 of the State Constitution cited earlier. (See
Issue 1.)
After the conclusion is reached that the offsetting of the
purchase price is a gift of which the City does not derive any
benefits, it is not given for a public purpose, then the analysis
must turn to who does it directly aid. ,In this context the aid
1.s directly and clearly to the~_lessee>) a church, who then
purchases the property for a reduced-amount: No benefit, direct
or indirect, inures for a public purpose. Clearly, the
prohibition in Article 16, Section 5 of the State Constitution
would prevent what must be considered a grant of aid to a church
organization.
CONCLUSION
i
LIt is, therefore, the conclusion of this office
lease and sale of the property is permissible, but that
that the
an offset
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Ways and Means Committee
February 10, 1989
Page Ten
in the purchase price by the cost of the improvements made is
prohibited by Article 16, Section 5 of the State Constitution.
ectfully submitted,
ErfrciJ::: ~
Assistant City Attorney
DEB:ms
cc: Mayor
City Administrator
City Clerk
APPROVED:
"
~ "",_ J i _" --1_
,Yallles F. Penman
f.stty Attorney