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Agenda Item
ASR
Control 21-000806 |
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MEETING DATE: |
10/05/21 |
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legal entity taking action: |
Orange County Flood Control District |
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board of supervisors
district(s): |
All Districts |
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SUBMITTING
Agency/Department: |
County Executive Office (Approved) |
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Department contact
person(s): |
Thomas A. Miller
(714) 834-6019 |
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James Treadaway (714) 647-3948 |
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Subject: Approval of Highest Bidder
for Purchase of the Greenspot Property
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ceo CONCUR |
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Clerk of the Board |
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Concur |
Approved Agreement to Form |
Discussion |
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3 Votes Board Majority |
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Budgeted: N/A |
Current Year Cost:
N/A |
Annual Cost:
See Financial Impact Section |
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Staffing Impact: |
No |
# of Positions:
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Sole Source:
No |
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Current Fiscal Year Revenue: See Financial Impact Statement
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Prior Board Action: 01/12/2010
#29, 06/22/21 #71 |
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RECOMMENDED ACTION(S):
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1. |
Accept the highest bid offer of $31,815,000 from San Bernardino Valley Municipal Water District for the purchase of the 1,657-acre parcel of surplus property owned by the Orange County Flood Control District in the City of Highland, California. |
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2. |
Authorize the Chief Real Estate Officer or designee to execute the Offer and Agreement to Purchase Real Property, including any amendments that do not materially alter the agreement or increase the Orange County Flood Control District’s obligations therein or are required by law to close escrow, for the sale of the 1,657-acre parcel of surplus property owned by the Orange County Flood Control District in the City of Highland, California with San Bernardino Valley Municipal Water District with a sales price of $31,815,000.
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3. |
Authorize the Chief Real Estate Officer or designee, on behalf of the Orange County Flood Control District, to take all actions necessary to complete the transaction in compliance with Offer and Agreement to Purchase Real Property and close escrow as set forth herein including the disbursal of applicable fees and payments, including but not limited to signing any and all documents related to the sale and disposition of the property. |
SUMMARY:
Approval and execution of the Offer and Agreement to Purchase
Real Property for sale of the 1,657-acre parcel of surplus property owned by
the Orange County Flood Control District in City of Highland, California, will
allow the Orange County Flood Control District to recoup its costs associated
with the property and dispose of property that is not required for flood
purposes.
BACKGROUND INFORMATION:
The Orange County Flood Control District (District) owns a 1,657-acre property (Greenspot Property) located in the City of Highland, California (City). The Greenspot Property was acquired in 1997 as a borrow site for the construction of Seven Oaks Dam as part of the Santa Ana River Project. The construction of the Seven Oaks Dam was completed in 1999 pursuant to a Local Cooperation Agreement (LCA). In accordance with the LCA, responsibility for disposal of the Greenspot Property was delegated to the District.
On January 12, 2010, the Orange County Board of Supervisors (Board) approved the selection of Lewis Investment Company, LLC (Lewis) as the primary developer to assist with the entitlement of the Greenspot Property. The Lewis development proposal included a master-planned community of approximately 3,632 residential units on the Greenspot Property (Project). On November 18, 2010, the District and Lewis entered into a Developer Contract and, pursuant to an Assignment and Assumption of Contract of the same date; Lewis assigned all of its right, title, interest and obligations under the Developer Contract to LCD Greenspot, LLC (LCD Greenspot).
In August 2016, the City voted unanimously to approve the Project. Shortly thereafter, two public interest groups filed lawsuits in San Bernardino Superior Court challenging the City’s approvals and qualified a referendum for the November 2018 ballot to overturn the City’s approvals. In June 2018, the Court ruled against the City’s approvals based on an inadequate environmental review that failed to analyze the Project’s scope and other impacts identified in the City’s General Plan. On August 8, 2018, at the request of the District, the City rescinded its approvals and the San Bernardino County Registrar of Voters removed the referendum from the ballot.
On June 22, 2021, the Board acting on behalf of the District adopted a resolution declaring the Greenspot Property to be surplus and the District’s intent to sell the Property through a competitive bid process and authorized the use of a licensed real estate broker, Park Place Partners, Inc. dba Land Advisors Organization (Land Advisors Organization), to assist with the sale (Resolution). The Board also approved the following documents related to the sale of the Property:
• Termination of Developer Contract & Close-Out Agreement with LCD Greenspot,
• Procedure for Sale of Property,
• Request for Offers/Bid Instructions,
• Offer and Agreement to Purchase Real Property, and
• Sole Source Agreement with Land Advisors Organization.
Once a week for three consecutive weeks, the County published the Resolution and a Notice of Intent to Sell Real Property (Notice) in the Orange County Reporter. Specifically, the Notice appeared in the Orange County Reporter on June 30, 2021, July 7, 2021, and on July 14, 2021. The County also posted the Resolution and Notice at the Hall of Administration located at 333 W. Santa Ana Blvd., Santa Ana, California.
On July 13, 2021, the County Executive Office Real Estate, on behalf of the District, released the Request for Offers/Bid Instructions (Solicitation) requesting submission of written sealed bids for the purchase of the Property. Written bids were due by 2:00 p.m. on August 30, 2021. Following the receipt of written bids, responsive bidders were invited to submit oral bids starting at 1:00 p.m. on September 8, 2021.
The County received four sealed written bids in response to the Solicitation. On August 30, 2021, the four written bids were opened. They are listed below, alphabetically, and include:
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BIDDER |
BID PACKAGE
COMPLETE |
BID DEPOSIT
INCLUDED |
BID AMOUNT |
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Redlands Parks Conservancy |
YES |
YES |
$25,000,000 |
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Richland Real Estate Fund, LLC |
NO |
NO |
$16,000,000 |
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San Bernardino Valley Municipal Water District (SBVMWD) |
YES |
YES |
$25,000,100 |
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Shopoff Advisors LP |
YES |
YES |
$25,000,000 |
Bids from Redlands Parks Conservancy, SBVMWD and Shopoff Advisors LP (Responsive Bidders) met the bid requirements, as previously approved by the Board, and were deemed responsive. The Richland Real Estate Fund, LLC bid was deemed non-responsive because it did not meet the minimum bid requirement of $25 million and it did not include the $25,000 bid deposit.
On September 8, 2021, the District accepted oral bids from the Responsive Bidders. A total of 18 orals bids were received from the Responsive Bidders including nine from SBVMWD, eight from Shopoff Advisors LP, and one from Redlands Parks Conservancy. The highest oral bid received was from SBVMWD in the amount of $31,815,000. As required, SBVMWD submitted a cashier’s check in the amount of $500,000 payable to the Orange County Flood Control District and signed a new Offer and Agreement to Purchase Real Property with the new bid amount. The $31,815,000 bid from SBVMWD, as the highest bid, is submitted to the Board for approval.
With the Board’s approval of the highest bidder and execution of the Offer and Agreement to Purchase Real Property the 120-day escrow period shall commence. Prior to close of escrow, SBMVWD is required to pay into escrow:
• The balance of the purchase price; and
• An amount sufficient to pay for all of their closing costs, as calculated by the Escrow Holder.
The District will deliver a Quitclaim Deed and other documents as are required into escrow. Lewis, as well as the County’s brokers in the transaction, Land Advisors Organization, will be paid through escrow in the amounts set forth below.
If escrow does not close within the original 120 calendar day term, or within the term of any authorized extension, the District may cancel escrow. In such event, the Escrow Holder will remit to the District all escrow payments made by SBVMWD, except an amount equal to escrow and title cancellation fees, which shall be retained by the Escrow Holder. The District is required to disburse this remittance in accordance with Clause 15 of the Offer and Agreement to purchase Real Property entitled Liquidated Damages.
Compliance with CEQA: This action is not a project within the meaning of CEQA Guidelines Section 15378 and is therefore not subject to CEQA, since it does not have the potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. The approval of this agenda item does not commit the County to a definite course of action in regard to a project since the approval includes execution of an Offer and Agreement to Purchase Real Property for sale of the 1,657-acre parcel of surplus property owned by the Orange County Flood Control District in City of Highland, California. This proposed activity is therefore not subject to CEQA. Any future action connected to this approval that constitutes a project will be reviewed for compliance with CEQA.
FINANCIAL IMPACT:
The following fees shall be paid from the Property sale proceeds pursuant to the:
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Termination of Developer Contract and
Close-Out Agreement with LCD Greenspot |
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Initial Payment |
$2,122,749 |
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Sales Proceeds Payment |
$209,075 ($200,000 + $9,075) |
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Total Payment |
$2,331,824 |
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Sale Proceeds Payment: For an Adjusted sales price of the Property over $30 million; LCD Greenspot shall receive $200,000, plus 0.5 percent of the Adjusted Sale Price for that portion above $30 million (with no limit).
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Sole Source Agreement with Land Advisors
Organization |
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Broker's Fee |
$250,000 |
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Success Fee |
$204,450 |
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Total Payment |
$454,450 |
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Success Fee: The Success Fee is equal to 3 percent for every dollar above the minimum asking price of $25 million.
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Greenspot
Property Revenue Split Estimates |
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A |
Highest Bid |
$31,815,000 |
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B |
Lewis Termination Fee + Sales Proceeds Payment |
-$2,331,824 |
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C |
Land Advisor's Brokers Fee |
-$454,450 |
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D = (A-B-C) |
Net Proceeds from Highest Bid |
$29,028,726 |
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E |
70% to State of California* |
-$20,320,108 |
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F = (D - E) |
30% to Local Sponsors |
$8,708,618 |
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G |
7.03% to San Bernardino County Flood Control & Water Conservation District |
-$612,216 |
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H |
5.27% to Riverside County Flood Control & Water Conservation District |
-$458,944 |
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I = (F- G- H) |
87.7% to Orange County Flood Control District |
$7,637,458 |
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J |
50% to County of Orange - Real Estate Development Program Fund 135 |
-$3,818,729 |
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K = (I - J) |
50% to Orange County - Flood Control District Fund 400 |
$3,818,729 |
*Final number to be remitted to the State of California is yet to be determined depending on what District costs will be deducted from the Net Proceeds.
STAFFING IMPACT:
N/A
REVIEWING AGENCIES:
OC Public Works
ATTACHMENT(S):
Attachment A – Offer and Agreement
to Purchase Real Property