HomeMy WebLinkAbout33-Council Office
. 'c1~Y OF SAN BERNARDQO - REQU8T FOR COUNCIL ACT'I6N
From: ways & Means Committee
Dept: Council Office
Subject: Request to Reduce Price of Kellogg
Library - Mr. Elijah Singletary
D~e: 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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Contact person:
Philip A. Arvizo
Phone:
5208
Supportinl! date ~ched: Aqreement, Resolution Extension Ward: 6
Not1ce to Purchasers, Final Opinion
FUNDING REQUIREMENTS: Amount: N/A
Source: IAcct. No.1
IAcct. OescriDtionl
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 oraanizationl
75-0262
Anpnrllll ItArn f\j",
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AGREEMENT FOR PURCHASE AND SALE OF REAL ESTATE
(Kellogg Library)
THIS AGREEMENT FOR PURCHASE AND SALE OF REAL ESTATE is made
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and entered into this
day of
, 1983, by and
S 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..
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1. City agrees to sell and Purchasers agree to buy the
10 1320 Muscott Street in the City of San Bernardino, County of San
9 fOllowing described premises: Those certain premises located at
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
IS property was formerly known as the Kellogg Library property.
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2. Consideration and Forfeiture. The Purchasers agree to
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Ipay for said premises the sum of $50,000.00, payable as follows:
$4,500.00 heretofore paid by Purchasers and their predecessors in
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title, pursuant to the lease with option to buy previously in
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agreement as to this property, whereunder lease payments were to
be credited against purchase price; receipt of this $4,SOO.OQ is
hereby acknowledged by City; the remaining $45,500.00 shall be
paid in installments, including interest on all unpaid principal
from date hereof until date of payment at the rate of 7' per
2S annum. The first installment of $275.00 to be paid July 1, i982,
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 tho final payment, however, shall be the total of
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qthe principal and interest then due.
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'the Purchasers shall be paid with lawful money of the United
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I'States of Amerlca.
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II lease payments made between July 1, 1982, and the date of actual
execution of this agreement, which payments shall be applied as
All payments to be made by
Credit shall be given to Purchasers for all
payments on this contract. Possession has previously been
delivered to the Purchasers, and Purchasers shall remain in
possession pursuant to this agreement, unless such possession is
terminated by the termination of this agreement.
3. Taxes and Assessments. The Purchasers shall pay all
taxes and assessments from date hereof, including any and all
taxes and assessments assessed or levied against said property
hereafter. There shall be no prorating of taxes.
4. Deed, Title. City on receiving payments of all amounts
of money mentioned herein, shall execute a grant deed for said
property in favor of said Purchasers and shall deliver said deed
to said Purchasers; as of the date of delivery of deed, the City
shall supply Purchasers with a polic~ of title insurance or
certificate of title, to be issued by a reliable title company,
which shall show the title to said property to be merchantable and
free from taxes, assessments, liens and encumbrances, except such
thereof as are set forth herein and such thereof as may be
suffered or created hereafter by the Purchasers. The City' shall
pay for said evidence of title.
s. Default by Purchasers. Should the Purchasers fail to
make said payments or any thereof when due or fail to comply with
the conditions, covenants and agreements set forth herein, the
amounts paid hereon may be retained by the City as the
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consideration
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for making this agreement and thereupon the City
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shall be released from all obligation in law or equity to convey
said property and any occupancy of said property thereafter by
said Purchasers shall be deemed to be and be a tenancy at the
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pleasure of the City and said Purchasers shall never acquire and
expressly waive any and all rights or claims of title because of
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such possession.
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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.
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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.
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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
27 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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\that, if such insurance policies are not kept in force during the
jentire term of this agreement, City may, but shall not be required
'to, procure the necessary insur~nce, pay the premium therefor, and
that such premiums shall be repaid to City as an additional
installment for the month following the date on which such
premiums are paid. Failure of Purchasers to maintain insurance in
full force shall constitute a default.
9. Assignments. Purchaser shall not assign this agreement
without obtaining the prior written consent of the City.
10. Agreement Aoplicable to Successors, Etc. This agreement
and the terms, covenants and conditions hereof apply to and are
binding upon the heirs, successors, executors, administrators and
assigns of the parties hereto.
11. Nondiscrimination. The Purchasers hereby covenant by
and for themselves, their heirs, executors, administrators and
assigns, and all persons claiming under or through them, and this
agreement is made and accepted upon and subject to the following
conditions: that there shall be no discri~ination against or
segregation of any person or group of persons on account of race,
color, creed, national origin, or ancestry, in the leasing,
subleasing, transferring, use, occupancy, tenure or enjoyment of
the premises hereby sold, nor shall the Purchasers themselves, or
any person claiming under or through them, establish or permit any
such practice or practices of discrimination or segregation with'
reference to the selection, location, number, use, or occupancy of
tenants, lessees, sublessees, subtenants, or vendees in the
premises herein sold. The provisions of this paragraph shall be
included in the deed to be given as a covenant running with the
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land.
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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 worksl
City Engineer
Yvonne Everett
589 West McKinley Street
Rialto, CA 92376
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Tamario FUM
201 East Fourth Street
San Bernardino, CA 92401
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
15 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.
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14. Effective Date. This agreement is effective as of the
19 I 30 th 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 or SAN BERNARDINO
ATTEST:
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By
Mayor .
City Clerk
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~pproved as to form:
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City A orney
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Funn
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I RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE
iEXECUTION OF A CONTRACT FOR PURCHASE AND SALE OF REAL ESTATE
I (KELLOGG LIBRARY) TO YVONNE EVERETT AND T~~ARIO FOHN.
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RESOLUTION NO.
: 3..~ ":'~
BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AS FOLLOWS:
SECTION 1. Recitals.
(a) Following open competitive bidding, and after
determination that such property was excess to the needs of the
City, a lease agreement with option to purchase was entered into
between the City of San Bernardino as lessor, and Hardy Brown,
Cheryl Brown and Elijah S. Singletary as lessee, dated the 26th
day of June, 1979, wherein lessee leased the former Kellogg
~ibrary property from City for a period of three years, with an
option to buy the property for a price of 550,000.00.
(b) An assignment of interest in lease agreement was
executed by Hardy Brown and Cheryl Brown and accepted by Elijah S.
dated the 28th day of April, 1982, which assignment
II Singletary,
was approved
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by the City of San Bernardino.
(c)
An assignment of interest in lease agreement with option
to purchase was executed by Elijah S. Singletary as assignor and
Yvonne Everett and Tamario Funn as assignee, dated the 17th day of
June, 1982, which assignment was approved by the City of San
Bernardino.
(d) On June 7, 1982, by motion made, seconded and
unanimously carried, the City Attorney was directed to prepare a
lease purchase agreement with the present lessees of the City-
owned property at 1320 Muscott Street, for the period July I, 1982
through June 30, 1985, substantially in conformance with the
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l\reCOmmendations contained in the City Administrator's memorandum
dated June 4, 1982. The memorandum from the City Administrator
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specified that the purchase price was to be changed from
$50,000.00 to $45,500.00, "to reflect monthly credits of $4,500.00
accrued during the past three years."
Ie) On June 21, 1982, the Mayor and Common Council approved
execution of a lease agreement with Yvonne Everett and ~amario
Funn relating to a three-year extension of the lease agreement
with option to purchase of the Kellogg Library at 1320 Muscott
Street. The form of lease agreement submitted to and approved by
the Mayor and Common Council did not include any extension of the
option to purchase, but provided that the option to purchase was
terminated.
(f) On July 9, 1982, the lease agreement with Yvonne Everett
and Tamario Funn relating to a three-year extension of the lease
agreement was executed by the parties.
(g) An agent for lessees now claims that, had lessees been
advised that the lease agreement would not include the extension
of the option to purchase, and that the option to purchase would
end as of June 30, 1982, the option to purchase would have been
exercised prior to its expiration. That agent further alleges
that he was assured by the then City Administrator of the City of
San Bernardino, and was reassured by the action of the Mayor and
Common Council of June 7, 1982, that the option to buy would be
extended for an additional three years, and that lessees have been
prejudiced by their detrimental reliance upon such assurances.
Lessees have expended substantial amounts in improving the
property and in making structural alterations and in installing
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,equiPment peculiarly suited
~eventual right to purchase,
; agent.
to the premises, in reliance upon thei
according to the claims of their
(hl The Mayor and Common Council have reviewed the
background of this dispute, and are satisfied that lessees did in
fact detrimentally rely upon the action of the Mayor and Common
Council and assurances by the then City Administrator, and do
further find that lessees had reason to believe that the option to
buy would be extended, and that such reliance has detrimentally
affected lessees, and has caused them to forego the right to
exercise the option which was in existence until June 30, 1982.
SECTION 2. findings. The Mayor and Common Council hereby
specifically find that, had lessees understood that the option to
buy would not be extended beyond June 30, 1982, the option to buy
would have been exercised at that time; in .order to compromise the
disputed claim at this time, the Mayor and Common Council find
that the interests of justice require that the parties be restored
to the position in which they were prior to June 30, 1982, and
that lessees be given the opportunity to exercise the option to
purchase the property.
SECTION 3. Implementation. In order to compromise and
settle a disputed claim, and to effect justice in this matter, the
Mayor and Common Council hereby authorize and direct the Mayor of
the City of San Bernardino to execute on behalf of the City a land
contract for the purchase and sale of the former Kellogg Library
property by the City to Yvonne Everett and Tamario Funn, effective
nunc pro tunc as of June 30, 1982, a copy of which is attached
hereto and incorporated herein by reference.
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1 I I HEREBY CERTIfY that the foregoing resolution was duly
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adopted by the Mayor and Common Council of the City of San
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_ : Bernardino at a regul~r meeting thereof, held
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~ on the ;t~ day of ';11r.e , 1983, by the following
C vote, to wit:
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AYES:
Council Members
~a~~.":lnec.", ~eil~..'. Pe!"!\t:'.nrlez.
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'.C1rl<s. tiniel. Frazier. ~t~~.~J::le:':'
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NAYS:
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ABSENT:
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City
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Clerk
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The foregoing resolution is hereby approved this
day
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of
Jun~
, 1983.
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Mayor of the City of San Bernardino
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Approved as to form:
pIt~~J.R
City At orney'
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CITY OF
San Bernardino
'U.",IC _O.KI DIP".,II...,
ROGER G HARDGRAVE
OIRECTDIII OF PUBLIC WOAKSICIT., E~GINEEA
Hay 12, 1988
File So. 15.06-70
Y~'onne Everrett
TUlario FWID
1322 Hedical 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 Hedical
Center drive, this is to inform you that the final pa}~ent will be due on
July I, 1988. The amount that will be due after the Hay 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 S4,500.00, plus credit for payments made thereafter, with interest from
J~~e 30, 1983,at the rate of 71 per annum. Please refer to said agreement for
further details.
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.
SiDcerely,
Itub_ G. IIARDGJlAVE
Director of Public Vorks/City Engineer
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LElfIS E. LI'lTLI;;t ~
Real Property llIlgineer
LF:1f
encl
cc: James Robbins, ActiDC City AdIIinlstrator
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300 NORTH .0' STRIEt. SAN IE"NARDINO
CALIFORNIA .2.tl.0001 '..,....11...
PRIOE ~
9ESS
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AHORTIZ:'TION SCHEDUL.E: PRINCIPLE AHOUNT:$45,500.00 RATE : 7\ PER ANNUH
HONTH 11 PMT P R I NC I P L.E INTEREST BAL.ANCE
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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 10 275.00 275.00 0.00 42,750.00
05-83 11 275.00 275.00 0.00 42,475.00
06-83 1 2 275.00 275.00 0.00 42,200.00
07-83 13 275.00 28.83 246.17 42,171.17
08-83 14 275.00 29.00 246.00 42.142.17
09-83 1 5 275.00 29.17 245.83 42,112.99
10-83 16 275.00 29.34 245.66 42,083.65
11-83 1 7 275.00 29.51 245.49 42,054.14
12-83 18 275.00 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 32.20 242.80 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
115-86 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 P R I NC I P I..E INTEREST BA1..ANCE
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01-87 55 275.00 36.81 238.19 40,795.42
02-87 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 37.4& 237.54 40,683.63
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 &2 275.00 38.34 236.6& 40.531.65
09-87 63 275.00 38.57 236.43 . 4~.493.08
10-87 64 275.00 36.79 236.21 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
02-88 68 275.00 39.70 235.30 40,296.85
03-88 69 275.00 39.94 235.06 40.256.92
04-88 70 275.00 40.17 234.83 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 NOATH "0" STREeT. SAN BERNAROINO, CALIFORNIA 924'8
JAMES F, PENMAN
CITY ATTORNEY
'7'41384.5355
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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~ays and Means Committee
February 10, 1989
?age Two
The parties to the agreement changed on July 9, 1982, to
Yvonne Everett and Tamario Funn who are the daughters of Elijah
Sing1e~ary. The term of the agreement was from July 1, 1982 to
':;une 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
credit~d towards the purchase price of $50,000. The overall
purchase price of $50,000 was reduced to $45,500 to ref~ect a
54,500 credit towards the purchase from the prior three years of
:979 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
-;ime the entire balance. became due and payable.
Elijah Singletary has now requested of the City seeking
=elief from the original terms of the contract through a
=eduction in the purchase price. The basis of this request is
-;hat Mr. Singletary has spent substantial sums in improving this
?roperty by re-roofing, replacing the air-conditioning, asphalt,
painting stripes on the parking lot, an addition of an office and
~i tchen.
This building was and is being used for the purposes of a
church.
The lease agreement is silent with respect to improvements
~o 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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~ays 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
;overnmental 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 governmenta1 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 eal 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 lOt 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, $50,000 purchase
price, 3 year lease of $250.00 per month; Bid No.5074b, Lease
Only. 5 year lease of $250.00 per month. The successful bidder
Nas the present lessee for a lease option to purchase. The bid
process was satisfied.
1
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 improve_nts, improv_ents or
betterments to realty have been defined as improv_ents on real
property which are more extensive than ordinary repairs and
enhance, in a substantial way, the value of the property. 37 c.1
Jur 3d 601. The addition of a roof, air conditioning unit,
striping and asphalt, fall within the category of improve_nts.
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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~ays and Means Committee
February 10, 1989
?age 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
:acts, the City as lessor, has not requested the. removal of the
~mprovements 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(8) 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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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
benefi t 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 514,000.00 which is
outlined as having been spent on maintenance would be estimated
to be approximately 51,500.00 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 ia simply the
conferring of a benefit upon the promisor or a detriment to the
promisee. California SchoOl Emp10yeea Aaan. . va. Sunnyvale
Elementary School Diatrict (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
is 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
It is, therefore, the conclusion of this office that the
lease and sale of the property is permissible, but that an offset
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February 10, 1989
Page Ten
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in the purchase price by the cost of the improvements made is
prohibited by Article 16, Section 5 of the State Constitution.
ectfully submitted,
E~C~~:~
Assistant City Attorney
DEB:ms
cc: Mayor
City Administrator
City Clerk
APPROVED:
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A ,.~_ 1 i "
~lIles F. Penman
!Slty Attorney
.... JI't_