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HomeMy WebLinkAboutMINUTES - 08162005 - D5 { 4 i Contra TO. REDEVELOPMENT AGENCY ..- FROM. JOHN SWEETEN, EXECUTIVE DIRECTOR Costa DATE: August 16, 2005 g •' tunty r SUBJECT: Owner Participation Agreement with Palecek imports, Inc., and Richmond Land Group, LLC, North Richmond Area. SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: HOLD Public Hearing and CONSIDER ADOPTION of a Resolution Approving and Authorizing the Redevelopment Director to enter into an Owner Participation Agreement (OPA)' with Palecek Imports, Inc., and Richmond Land Group, LLC for the property located at 601 Parr Boulevard in North Richmond. FISCAL IMPACT: No General Fund money will be used on this project. The Agency's financial obligations under the OPA are from budgeted funds. BACKGROUND/REASONS FOR RECOMMENDATION: A major goal of the North Richmond Redevelopment Project Plan is to facilitate economic development and to attract private investment in the region. An OPA with Palecek enables the Redevelopment Agency to achieve this goal while providing much needed jobs for the North Richmond community. Palecek proposes to relocate its furniture manufacturing, warehousing, and distribution businesses from three separate locations into one 25-acre site at +601 Parr Boulevard in North Richmond, the former Crown Cork and Seal Building. Palecek recently purchased this underutilized site for $8.2 million dollars and have entitlement proceedings underway to add another $3.6 million in additional improvements and upgrades. Improvements include upgrading and expanding the current manufacturing facilities (See site map on Exhibit A and site improvements on Exhibit B). These improvements will generate approximately $100,000 per year in property tax increments in North Richmo an ill help support other redevelopment activities within the project area. CONTINUED ON ATTACHMENT: ® YES SIGNATURE: [RECOMMENDATION OF COUNTY ADMINISTRATOR ❑ RE M NDATI OF BOARD COMMITTEE E;--APPROVE OTHER It / SIGNATURES}: ACTION OF BO ON + APPROVED AS RECOMMENDED ❑ OTHER ❑ VOTE OF SUPERVISORS: I HEREBY CERTIFY THAT THIS IS A TRUE ANC CORRECT COPY OF AN ACTION TAKEN ANC UNANIMOUS(ABSENT ENTERED ON THE MINUTES OF THE BOARD Of AYES: NOES: SUPERVISORS/AGENCY ON THE DATE SHOWN. ABSENT: ABSTAIN: ATTESTED Contact: James Kennedy JOHN SWEETO,CLERK OF THE BOARD OF (925)335-7225 SUPERVISOR AGENCY SECRETARY prig: Redevelopment Agency cc: County Administrator B Deputy Public Works Via Redevelopment Agency Palecek Cushman Wakefield Goldfarb&Lipman Attachment G:\CDBG-REDEV\redev\JKennedy\board.rda.8A5.Palecek public hearing.doc PUBLIC BENEFIT Since November 2004, Agency staff has worked with the Applicant to secure the necessary land use permits, and to provide a fair financial assistance package. Palecek had siting options, therefore in order to achieve the goal of maintaining and providing job opportunities in North Richmond financial incentives were warranted. The North Richmond Municipal Advisory Council endorsed the recommended action in May 2005. Palecek will comply with all County and Agency policies regarding hiring preferences. Palecek plans to relocate its entire 229 person workforce to 601 Parr Boulevard. A condition of the OPA is to enter into a first source hiring agreement which shall remain in effect until 2027, the due date that the North Richmond Redevelopment expires. Palecek's growth projections (5-10 years) indicate a double digit growth rate which translates into additional employment opportunities for North Richmond residents. Palecek is also agreeing to designate 601 Parr Blvd. as the point-of-sale for any retail sales by the firm, thereby creating additional sales tax revenue for the County. REVOCABLE GRANT The OPA provides for financial assistance in the form of a revocable grant in the amount of Five Hundred Thousand Dollars ($500,000). This grant will be made under the authority of California Health and Safety Code Section 33444.6 which permits the Agency to assist businesses financially in order to develop or rehabilitate a property that will be used for industrial or manufacturing purposes. The grant amount reflects the estimated gap between the costs of the property acquisition, construction of the development, private debt, and the equity proceeds that can be reasonably obtained by an owner in the private market to pay for such costs. Palecek Imports, Inc. is developing and upgrading 9,950 square feet of warehouse space at 601 Parr Boulevard, North Richmond. In order to make the necessary improvements to the property, and to make relocating 229 employees economically feasible, the Agency proposes to provide assistance in the form of a grant to fund extraordinary costs related to infrastructure and drainage. These extraordinary costs are a direct result of substandard drainage conditions at the site which do not typically exist in other competing locations. The grant will be used to address the infrastructure deficiencies resulting from the lack of any public drainage system at the facility, as well as the resulting requirement that the owner comply with the National Pollutant Discharge System (NPDES) to install a new drainage control system. The conditions of approval require that the owner must collect and convey and improve the drainage system to the point of adequacy, a cost that is estimated to exceed over$1 million dollars. In most locations where basic infrastructure is in existence the owner would not be subjected to such a massive infrastructure obligation. The provision of a revocable grant reflects several high cost characteristics of the site. Total acquisition and improvement costs for the property at over $60 per square foot exceed other competitive sites, which have a range of $45-50 per square feet for completed building improvements. The cost of drainage improvements causes the total acquisition and improvement budget for the property to exceed the cost range that is supportable by purely private investment using standard measures of return, including a) competitor facility costs; b) the amount supportable by net operating income; and c) costs associated with competitive locations The proposed $500,000 Agency grant will, in effect, mitigate the cost characteristics of the North Richmond location, thereby bringing the amount required to be financed by Palecek down to the high end of the range of privately supportable investments. With this level of Agency assistance, the owner believes that it can achieve an overall acquisition and site improvement budget that is financially feasible within the private sector and competing jurisdictions. Without such Agency assistance, the Owner's proposed redevelopment of, and relocation to, the property would not be economically feasible. No other public assistance will be provided for this project. G:\CDBG-REDEV\redev\JKennedy\board.rda.8.05.Palecek public hearing.doc DRAINAGE A significant infrastructure deficiency in the area is the lack of drainage facilities. As a result, Palecek will have to install and maintain an on-site retention facility at their expense. Additionally there is a lack of a coordinated and cohesive plan of finance to address these deficiencies. The site is located in the unformed Drainage Area 82, therefore no drainage fees can be assessed on this application. Nonetheless, Palecek agreed to abide by the rules and regulations of the National Pollutant Discharge Elimination System (NPDES) to collect and convey and improve the downstream drainage system to the point of adequacy. To address infrastructure deficiencies in the North Richmond area the Agency is currently undertaking a comprehensive planning and fundraising analysis of infrastructure needs. Palecek has agreed to participate on a fair share basis in the formation of one or more public improvement districts that address these deficiencies. RADIANT AVENUE Radiant Avenue is a substandard road abutting the site to the west. Improving the road in the future may require the right-a-way to be widened. The OPA provides the Agency with an option to purchase the required right-a-way (approximately 16,000 square feet) in the future at today's value of $8 /square foot. The Agency would exercise its option only when the road rights are needed by other property owners/developers. The Agency would sell its interest concurrent with exercising its option resulting in no net costs to the Agency ENVIRONMENTAL REVIEW/CEQA The project is categorically exempt under the California Environmental Quality Act (CEQA) pursuant to 14 California Code of Regulations Section 15303(c). ATTACHMENTS: Exhibit A- Site Map Exhibit B - Site Improvements G:\CDBG-REDEV\redev\JKennedy\board.rda.8.05.Palecek public hearing.doc EXHIBIT A SITE MAP \p11111 *cling Ln ,y t fan Pablo 47 20 At i MP#dl All {: `�a-.. ..,w y.-.w -•.fi�y��3`,.:.q t.� '.A'.}-: t•.y• �j�}�.` aNrMK• y.�•,'.7l�{.$}�y, :.. ►mored :MPraWc'toc-oat:Ln...._.. `id• :: Twra �a�• �1�4e�C'yE 0 mkiade.-D ;r AA r,B J/Vd :r an Pab#o.. ittp://test.ccmap.us/outpt EXHIBIT B SITE IMPROVEMENTS • Enclose 9,950 square feet of warehouse between east and west wings • Remove warehouse windows and replace with fiberglass material • Repair electric, plumbing and sprinklers • Remodel and build restrooms and lunchroom(s)to meet ADA and other requirements • Reinforce building to meet seismic requirements • Install lock doors • Remove monitoring wells • Remove water tank • Repair pavement • Construct curb and sidewalk • Enhance lighting • Landscape • Paint exterior G:\CDBG-REDEV\redev\JKennedy\board.rda.8.05.Palecek public hearing.doc THE REDEVELOPMENT AGENCY OF CONTRA COSTA COUNTY, CALIFORNIA Adopted this Order on August 16, 2005,by the following vote: rdo? - - 46 AYES: Uj ali9i Kep�j'Des QuIe"'ZIC-ci 6tr[ciucr Qt-,g NOES: ABSENT: ABSTAIN: Resolution No.: 40ad/6 SUBJECT: (1) approving the grant and expenditure of$500,000 of Agency funds to facilitate the construction and renovation of certain manufacturing improvements at 601 Parr Boulevard in the North Richmond Redevelopment Project Area by Palecek Imports, Inc. and Richmond Land Group, LLC, (collectively, the "Owner"), (2) approving execution of an Owner Participation Agreement with the Owner, and(3)making findings and approvals pursuant to the California Community Redevelopment Law. The Contra Costa County Redevelopment Agency RESOLVES THAT: The Board of Supervisors of the County of Contra Costa adopted the Redevelopment Plan for the North Richmond Redevelopment Project Area by Ordinance No. 87-50 on July 14, 1987, as subsequently amended by Ordinance No. 99-06 on February 23, 1999, and as further amended by Ordinance No. 99-31 on June 8, 1999 (the "Redevelopment Plan"), which Redevelopment Plan sets forth a plan for redevelopment of the North Richmond Redevelopment Project Area(the "Project Area"). The Contra Costa County Redevelopment Agency(the "Agency") is responsible for administering the Redevelopment Plan to cause redevelopment of the Project Area, including construction,renovation, and reuse of underutilized property within the Project Area consistent with the Redevelopment Plan. The Owner has acquired that certain unused property containing approximately 25 acres located at 601 Parr Boulevard in the Project Area(the "Property"). The Agency and the Owner desire to enter into an owner participation agreement(the "OPA"), substantially in the form on file with the Agency Secretary, under which the Agency would provide a$500,000 construction grant to the Owner(the "Agency Grant")to assist the Owner in the construction and renovation of manufacturing and related facilities at the Property (the "Development"). 320\06\265229.1 The proposed Agency Grant will enable the Owner to relocate its furniture manufacturing, warehousing, and distribution business to the Property, thereby generating significant employment opportunities in the Project Area, redeveloping approximately 25 acres of extremely underutilized land in the Project Area, achieving major goals and objectives of the Redevelopment Plan for the Project Area, generating significant tax increment revenue for the Agency's redevelopment program, and stimulating further private sector reinvestment and redevelopment in the Project Area. Pursuant to Section 33444.6 of the Community Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the State of California(the "Law")), the Agency is authorized to provide the Agency Grant to enable the construction and renovation of the Development on the Property for manufacturing-related purposes upon finding that the Agency Grant is necessary for the economic feasibility of the development on the Property, and that such assistance cannot be obtained on economically feasible terms in the private market. The Agency has conducted a duly noticed public hearing on the OPA and the Agency Grant in accordance with the requirements of Section 33444.6 of the Law. The Development made possible by the Agency Grant pursuant to the OPA is categorically exempt from the requirements of the California Environmental Quality Act and the applicable state and local implementing guidelines ("CEQA")pursuant to 14 California Code of Regulations Section 15303(c). By staff report accompanying this Resolution and incorporated into this Resolution by this reference (the "Staff Report"),the Agency has been provided with additional information upon which the findings and actions set forth in this Resolution are based. NOW, THEREFORE, BE IT RESOLVED, that the Agency finds that the above recitals are accurate. BE IT FURTHER RESOLVED, in compliance with Section 33444.6 of the Law, that the Agency hereby approves the Agency Grant and finds and determines, based on the facts and analysis set forth in the Staff Report,that(a)the Agency Grant is necessary for the economic feasibility of the Development on the Property, and(b) the assistance provided by the Agency Grant cannot be obtained on economically feasible terms in the private market. BE IT FURTHER RESOLVED, that the Agency hereby approves the OPA and approves execution by the Agency Redevelopment Director(the "Agency Signatory") of the OPA in substantially the form on file with the Agency Secretary, with such changes as are approved by the Agency Signatory(such approval to be conclusively evidenced by the execution of the OPA). BE IT FURTHER RESOLVED, that the Agency hereby authorizes the Agency Redevelopment Director to execute such other documents and take such other actions on behalf of the Agency, including all actions described in Section 6.6 of the OPA, as are appropriate to effectuate the purposes of the OPA and this Resolution. 320\06\265229.1 2 .1 6rV;:r1,6r:00Z BE IT FURTHER RESOLVED, that the Agency finds and determines that the OPA, the Agency Grant, the Development of the Property pursuant to the OPA, and the actions set forth in this Resolution(collectively, the "OPA Actions") are categorically exempt from the requirements of CEQA pursuant to 14 California Code of Regulations Section 15303(c), and accordingly the Agency Signatory is authorized to file the appropriate notice of exemption pursuant to CEQA in connection with the OPA Actions. BE IT FURTHER RESOLVED, that the Agency designates the Secretary of the Agency as the custodian of the documents and other material which constitute the record of proceedings upon which the decision herein is based. These documents may be found at the office of the Agency at 2530 Arnold Drive, Suite 190, Martinez, California, 94553. BE IT FURTHER RESOLVED, that this Resolution shall take immediate effect from and after its passage. certify that this is a true and correct U-3py of an action taken and entered on the minutes of* the Boa of Supervisors on the date shown. ATTESTED the B r JOHN R. S r n!wr7N, Clerk of the Board.. of Su isors and County Administrator By Deputy 320\06\265229.1 3