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Agenda Item
ASR
Control 24-000467 |
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MEETING
DATE: |
07/23/24 |
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legal entity taking action: |
Board
of Supervisors |
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board of supervisors district(s): |
2 |
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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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Veronica
McNamara (714) 347-4954 |
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Subject: Offer to
Convey and Purchase 1015 and 1055 North Main Street, Santa Ana
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ceo CONCUR |
County Counsel Review |
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: Yes |
Current
Year Cost: See Financial
Impact Section |
Annual
Cost: N/A |
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Staffing
Impact:
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No |
#
of Positions: |
Sole
Source: N/A |
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Current Fiscal Year Revenue: N/A
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Prior Board Action: 10/18/2011 #9; 12/16/2003 #73;
11/14/2000 #S51B |
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RECOMMENDED
ACTION(S):
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1. |
Authorize the Chief Real Estate Officer
or designee to conduct due diligence investigations and provide notice of,
accept and execute the Offer to Convey and Purchase and Sale Agreement with
SIC/LEED 1015 Santa Ana, LLC, a Delaware limited liability company after
satisfactory completion of due diligence, which is anticipated to be
concluded on, or before, November 29, 2024, in substantially the forms
attached, with minor modifications that do not increase the cost or liability
to the County, upon County Counsel approval, and take all subsequent actions
to effectuate the purchase of the office facilities and parking structure
located at 1015 and 1055 North Main Street, Santa Ana, California, and the
two nearby parking lots bordering East 11th and North Spurgeon Street, for
$980,000. |
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2. |
Authorize the Chief Real Estate Officer
or designee to execute the Certificate of Acceptance for the Grant Deed and
the Assignment and Novation Agreement in substantially the form as
attached, make minor modifications to
documents that do not materially alter the terms of the transaction, sign or
re-sign documents and related transactional and escrow documents, direct
recordation of documents including but not limited to the Grant Deed and
acceptance documents through the escrow process, and perform all related
actions necessary to complete the transactions for the purchase, by the
County, of the office facilities and parking structure located at 1015 and
1055 North Main Street, Santa Ana, California, and the two nearby parking
lots bordering East 11th and North Spurgeon Street. |
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3. |
Authorize the Chief Real Estate Officer
or designee to spend up to $450,000 for costs related to due diligence
investigations, escrow and other related costs, and upon satisfactory
completion of all due diligence, to implement the funding plan to complete
the purchase of the office facilities and parking structure located at 1015
and 1055 North Main Street, Santa Ana, California, and the two nearby parking
lots bordering East 11th and North Spurgeon Street. |
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4. |
Direct the
Auditor-Controller, upon notification from the Chief Real Estate Officer or
designee to issue payments of a total amount not to exceed $450,000 to
vendors for payment of due diligence, title research, land survey,
engineering reports, hazardous material assessment report(s), trust deed
clearance fees, forwarding fees, subordination fees, utility prorations and
other costs and fees associated with the due diligence, escrow and title
research as applicable. |
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5. |
Direct the
Auditor-Controller, upon notification from the Chief Real Estate Officer or
designee to issue payments to SIC/LEED 1015 Santa Ana, LLC, a Delaware
limited liability company or deposit funds in escrow for SIC/LEED 1015 Santa
Ana, LLC, a Delaware limited liability company's account for payments of a
total amount not to exceed $980,000 for the full and final purchase price of
the office facilities and parking structure located at 1015 and 1055 North
Main Street, Santa Ana, California, and the two nearby parking lots bordering
East 11th and North Spurgeon Street. |
SUMMARY:
Acceptance and
execution of the Offer to Convey and Purchase and Sale Agreement with SIC/LEED
1015 Santa Ana, LLC, a Delaware limited liability company after satisfactory
completion of due diligence will allow for the purchase by the County of the
office facilities and parking structure located at 1015 and 1055 North Main
Street, Santa Ana, California, and nearby parking lots, pursuant to a lease
conveyance agreement, to retain the current use as the headquarters for the
Orange County Department of Child Support Services and the Orange County
Probation Administrative Office, and ensure continuation of services at that
location.
BACKGROUND
INFORMATION:
On November 14, 2000, the Orange County
Board of Supervisors (Board) approved a lease between the County of Orange
(County) and Main Street-Santa Ana, LLC (MSSA) for the facilities and parking
structure located at 1015 and 1055 North Main Street, Santa Ana, and two nearby
parking lots bordering East 11th and North Spurgeon Street (collectively the
Property), for occupancy by the Orange County District Attorney, Family Support
Division, now known as the Orange County Department of Child Support Services (CSS). MSSA subsequently sold the Property to Santa
Ana Arts, LLC (SAA) and, on December 16, 2003, the Board authorized entering
into a new, renegotiated Lease Agreement (Lease) with SAA for twenty-one years,
which included an Offer to Convey (Offer) that provides the County an option to
purchase the Property at the end of the Lease term for the price of
$980,000. In 2005, SAA sold the Property
to the current owner, SIC/LEED 1015 Santa Ana, LLC (Lessor). On October 18, 2011, the Board approved an
amendment to the Lease to expand the Lessor’s repair and maintenance
obligations and responsibilities.
1015 North Main Street is a two-story
office building containing 26,629 square feet and 1055 North Main Street is an
eleven-story office building containing 169,483 square feet for a combined
total of 196,112 square feet. The
buildings were constructed in 1963 and are situated on 1.72 acres of land. The adjoining parking structure is three
stories and contains approximately 300 parking spaces. The two nearby parking lots bordering East 11th and North Spurgeon Street provide
approximately 200 parking spaces and occupy 1.4 acres of land. The Property is generally located on the
northern side of Santa Ana approximately half a mile from the Civic Center and
lies between 17th Street to the north and Civic Center Drive to
the south with bus routes running along all three streets.
The Property is currently occupied by CSS,
Orange County Probation’s (Probation) Administrative Office, and Verizon,
pursuant to a separate lease with the Lessor.
Verizon occupies a 7,749 square foot suite on the 10th floor of 1055 North Main Street but is in the
process of relocating and should vacate the Property before transfer of
ownership.
CSS is the local agency responsible for
ensuring children receive financial support by providing services such as
establishment of parentage, establishment of court orders for financial and
medical support, enforcement of court orders for support, and collection and
distribution of payments. CSS supports
the community by offering workshops, performing community outreach, and
providing assistance to parents who may be struggling with meeting their
obligations.
Probation is a public safety agency that
serves the community using effective, research supported rehabilitation
practices and collaborative partnerships.
Probation assists the criminal court system through investigations,
probation reports and community supervision of approximately 10,000 adult and
800 juvenile clients on court-ordered probation or in diversion programs and
operates the juvenile hall, youth camp, and youth reporting centers.
The Offer was executed by SAA in 2003 and
transferred to the Lessor in 2005. In
order to exercise the Offer, the County must provide the Lessor notice of its
intent to purchase the Property between the commencement of the twentieth year
of the Lease and the one-year anniversary of the expiration of the Lease, from
January 1, 2023, through December 31, 2025. Once the purchase of the Property
is complete, CSS and Probation intend to continue operating the Property
consistent with its existing use. County
Executive Office (CEO) Real Estate in conjunction with CSS and Probation would
like to commence due diligence on the Property with the goal of taking
ownership immediately following the end of the Lease term on December 31,
2024. Upon the satisfactory completion
of due diligence, CEO Real Estate will provide appropriate notice to Lessor of
the County’s intent to purchase the Property and will execute the Offer and
other necessary documents to effectuate the transaction. Pursuant to the Lease terms, the $980,000
purchase price shall be paid in two increments of $490,000 each: one due at the
time the Purchase and Sale Agreement is executed, prior to close of escrow; and
one due within the one-year anniversary of the close of escrow; however, CEO
Real Estate will direct the Auditor-Controller to issue the final payment at
close of escrow to fully complete the acquisition of the Property without
delay. It is in the County’s interest to take ownership of the Property as soon
as possible due to the fact that the County would be exempt from paying
property tax upon transfer, therefore resulting in a savings to the County’s
cost to operate the facility.
The Offer and Purchase and Sale Agreement
also state that the Lessor is to provide either fee title or a 30-year lease
for an additional 205 off-site parking spaces within half a mile of the
Property or at a location approved by the County at market rate, but no more
than $100 per space per month. The Lessor has a Parking Lease Agreement
(Parking Agreement) to lease up to 205 parking spaces within the parking
structure located at 812 North Sycamore Street, Santa Ana, California (Sycamore
Parking Structure) for use by the County. CEO Real Estate is requesting
authority to accept the assignment of the Parking Agreement from the Lessor to
the County. Assignment of the Parking Agreement to County will allow for the
use of the Sycamore Parking Structure should the County have future need for
parking.
CEO Real Estate will commence due
diligence investigations, including procurement and review of the preliminary
title report, underlying title documents and a Phase I Environmental Site
Assessment for the purchase of the Property.
Due diligence will also include a land survey to support the issuance of
an American Land Title Association Policy and an estimation of the Property’s
market value. In the event that any
material issues arise during due diligence, CEO Real Estate will provide an
update to the Board with the relevant information.
In addition, OC Public Works will inspect
the building infrastructure and systems and conduct a Tier I structural/seismic
assessment of the Property, and CEO Risk Management will conduct a safety
inspection, as necessary. Based on this, CEO Real Estate, CSS, and Probation
recommend that the Board authorize the Chief Real Estate Officer or designee to
accept and execute the Offer and Purchase and Sale Agreement, upon satisfactory
completion of due diligence, to commence the process to take ownership of the
Property.
Compliance
with CEQA: This action is not
a project within the meaning of CEQA Guideline 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 it is for a delegation
of authority to approve the purchase of the office facilities and parking
structure, if appropriate after due diligence, to retain the existing use and
ensure continuation of services. The
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:
Appropriations of
$980,000 for the full and final purchase price of the property and parking
facility located at 1015 and 1055 North Main Street, Santa Ana, California, and
the nearby parking lots, and up to $450,000 for due diligence and escrow
related costs will be absorbed in Fund 15D, Countywide Capital Projects – Non
General Fund FY 2024-25 Budget.
STAFFING IMPACT:
N/A
REVIEWING
AGENCIES:
Child Support Services, OC
Probation
ATTACHMENT(S):
Attachment A – Purchase and Sale
Agreement
Attachment B – Grant Deed and Certificate of Acceptance
Attachment C – Location Map
Attachment D – Confirmation of Public Notice Publishing
Attachment E – Offer to Convey
Attachment F - Assignment, Novation and Consent Agreement