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97-0415_CAPISTRANO UNIFIED SCHOOL DISTRICT_E1_Agenda Report0 AGENDA ITEM April 15, 1997 TO: Honorable Mayor and City Council FROM: George Scarborough, City Manager SUBJECT: Joint Public Hearing for Consideration of Proposed Second and Amended Agreement for Cooperation Between the San Juan Capistrano Community Redevelopment Agency/City of San Juan Capistrano and the Capistrano Unified School District Conduct a Public Hearing regarding the proposed Second Amended and Restated Agreement for Cooperation between the City of San Juan Capistrano ("City"), San Juan Capistrano Community Redevelopment Agency ("Agency") and the Capistrano Unified School District ("District"). 2. Approve the Agreement between the City and Agency relating to transfer of and quitclaim of undivided interests in 7 acres (Kinoshita land). Approve the proposed Second Amended and Restated Agreement for Cooperation between the City, Agency, and District, and authorize the City Manager and Executive Director of the Agency to execute final documents, including authorization to make minor changes to the documents, to insure that the transaction is completed in a timely manner. 4. Adopt an Agency Resolution Making Health and Safety Code Section 33433 Findings Regarding the Disposition of Certain Agency -owned Lands. In 1983, the Agency entered into an Agreement for Cooperation with the Capistrano Unified School District. In 1986, the Agency and City entered into the Amended and Restated Agreement for Cooperation (First Amended Agreement) with the District providing for a number of obligations to be performed by both parties., including those stated in the Original Agreement. Briefly, the First Amended Agreement called for the District to convey a school parcel generally bounded by El Camino Real, La Zanja, Camino Capistrano and Acjachema, including the Stone Field and excluding the Library parcel, to the Agency. It was anticipated that the Agency/City would build a city hall/cultural center at this site. In return, the Agency would: construct on behalf of the District a gymnasium at CapistranoValley High School; construct a 50 -meter competition swimming pool; relocate District's adult education facilities on the school parcel to a permanent site; and convey fee FOR CITY 000.%1CIL AGLi Agenda Item -2- April 15, 1997 title of a 2.5 acre site to the District. The agreement also provided for sharing of tax increment between the parties. In the last several years, it has become apparent that the total cost to the Redevelopment Agency to complete all of the obligations of the Agency/School District "Cooperation Agreement" will exceed the Agency's tax increment resources and other assets. Total costs of these various obligations are approximately $5.5 million, whereas the level of present and future tax increment from the existing project area has not grown sufficiently to meet this obligation (see Financial Considerations section of this report). Furthermore, the priorities of both the School District and the Agency have changed over time. Accordingly, the District and City/Agency have been in discussions for some months to revise and amend these obligations in the following respects: City/Agency is to convey to District a 7 -acre parcel which is currently a part of the former Kinoshita 56 open -space acres owned jointly by City and Agency. District will construct a school facility on this parcel, Appraisals have been prepared establishing a purchase price of approximately $2.4 million dollars. The exact figure has not been established in that the District requires a lengthy appraisal review by officials in Sacramento. Accordingly, section 4.2 of the Second Amended Agreement at page 3 provides a purchase price of $2.4 million, subject to a 10% deviation (that is, up to $240,000), plus or minus, as finally determined by the state land appraiser. The 7 -acre parcel is referred to in the agreement as "Elementary School 664640007 Parcel". District shall execute a promissory note for the amount of the purchase price which shall ultimately be paid to Agency from future tax increment proceeds which the District would have received but for this agreement. Repayment of the note will begin on the eleventh anniversary date from when the District initially begins to receive their share of tax increment from the Agency. In addition, the Cooperation Agreement provides that the District shall receive a credit equal to the value of 2.5 acres to be applied against the purchase price as consideration for the fact that the District will release the Agency from a number of obligations under the existing agreements as noted below. 2. The existing obligations by Agency to construct the pool, relocate buildings, and convey a 2.5 acre parcel to District shall be released and forgiven by District. In addition, the District will convey fee title to the "Library" parcel to City. Agenda Item 0 0 -3- April 15, 1997 4. District will also lease (at no cost) the Stone Field to City. Term of the lease is 25 years with an option to renew. (The lease is attached as Exhibit D). 5. The existing tax increment sharing provisions of the original and first amended agreements shall remain in place. Other Aspects of the Transaction: A. Purchase and Sale Agreement. The Purchase and Sale Agreement is attached to the Cooperation Agreement as Exhibit B. This document sets up the mechanics of the escrow process. It also incorporates as an exhibit a "maintenance" agreement providing for 50-50 cost sharing of the access road on City land which the District will use to allow its employees and members of the public to access the 7 - acre parcel. Various use restrictions are set forth in the Maintenance Agreement. B. The City/Agency Agreement. Presently, the City owns a 4/5 "undivided" interest in the entire 56 acres, of which this 7 -acre area is now a part. The Agency owns a 1/5 undivided interest in the remaining 49 acres of open space. Mechanically, it will be necessary for the Agency to quitclaim its 1/5 interest in the remaining larger remnant and in turn the City to quitclaim its 4/5 interest in the 7 acres so that the net result is that the Agency will have fee title to the 7 acres. When this is accomplished through the escrow process, the Agency would then as a last step convey fee title to the 7 acres to the District. The Agency/City agreement establishes this framework. C. CEQA. The Planning Department has determined that CEQA does not apply to any of these transactions. (See Memorandum from Tom Tomlinson dated March 10, 1997). The District, as lead agency, has already prepared a Negative Declaration for the school site on the 7 acres. D. Health & Safety Code Section 33433 Report/Public Hearing Requirement. Under redevelopment law, the Agency must prepare a report discussing the financial aspects (particularly the appraisal process) with respect to proposed disposition of Agency -owned land. Therefore, in compliance with Health & Safety Code Section 33433, attached is the Agency Director's report, dated March 27, 1997, to the Agency spelling out the appraisal for the property and the projected costs of sale connected with the proposed sale of the 7 acres and school parcel to the District. 0 0 Agenda Item -4- April 15, 1997 Also, a public hearing is required with respect to the proposed sale of land by Agency. Accordingly, a public hearing notice advertising this matter as a joint Agency/City public hearing was placed in the newspaper pursuant to Government Code Section 6066. Health & Safety Code Section 33433 also requires the adoption of a resolution making certain findings (see attached resolution). Not Applicable Under the existing agreements, the Agency is obligated to construct on behalf of the District a gymnasium at CapistranoValley High School; construct a 50 -meter competition swimming pool; relocate District's adult education facilities on the school parcel to a permanent site; and convey fee title of a 2.5 acre site to the District. The agreement also provided for sharing of tax increment between the parties. The Agency met its obligation to construct the gymnasium at Capistrano Valley High School. The construction was completed for $2.3 million in 1992. Upon completion of the construction, the Agency received clear title to Parcel "A" of the Serra High School site. This area encompasses the tennis courts and open area adjacent to the Library Site. The cost of the remaining obligations is as follows: Construction of the 50 -meter competition swimming pool $1,500,000 Relocation of the District's adult education facilities from the Serra High School Site to another permanent site. $4015000 Total cost of physical obligations 5.515.000 Present value of tax increment sharing agreement 5 0 0 The value of the Agency's physical obligations is currently shown as a debt of the Agency. The tax increment sharing agreement is reflect in future years as an annual obligation of the Agency. Under the proposed Second Amended and Restated Agreement the District will release the Agency from the remaining physical obligations indicated above in exchange for the return of Parcel "B" of the Serra High School Site and a credit equal to the value of 2.5 acres to be applied against the purchase price of the School Parcel 664640007 as noted below. Parcel "B" includes Serra High 0 0 Agenda Item -5- April 15, 1997 School, other school related buildings and Stone Field. Upon reconveyance of the property to the District, the City will lease Stone Field for a period of 25 years. The proposed Second Amended and Restated Agreement also provides for the continuation of the tax increment sharing agreement. The shared tax increment will be deposited into the School Facilities Fund. The fund may be expended for acquisition or lease of real property and/or capital improvement projects located within the City of San Juan Capistrano with the priority being the payment of the purchase price of the Elementary School Parcel 66464007 as noted below. Other permissible uses include but are not limited to: the construction of a fifty (50) meter competition swimming pool at Capistrano Valley High School; District administrative office and operations facilities; and the construction, expansion, addition to, or reconstruction or modernization of permanent school buildings, facilities, structures or other permanent public improvements. Agency staff projects tax increment sharing deposits to the fund to begin in Fy 2009-10 The Purchase and Sale Agreement attached to the Agreement as Exhibit B provides for the sale by the Agency and acquisition by the District of an approximately seven acre site adjacent to the Sports Park known as School Parcel 664640007. The Agency will sell the property to the District for its appraised value of $2,400,000 plus or minus 10% as determined by the State of Office of Public School Construction. The Agency's value in this property based on original cost plus carrying costs is approximately $1.7 million. The District will execute a promissory note to the Agency for the purchase price less a credit equal to the value of 2.5 acres to be applied against the purchase price. The total amount to be paid under the promissory note is estimated to be $1.6 million. The promissory note is non-interest bearing and requires the payments of the purchase price to begin in the 11th year following the first deposit of shared tax increment to the school facilities fund. The District will convey the Library parcel and lease Stone Field to the City in exchange for the value of the interest on the promissory note. Notice of this public hearing was published in the Orange County Register News on March 27, 1997 and April 3, 1997 as required. Mr. Dave Doomey Assistant Superintendent, Facilities Planning Capistrano Unified School District 32972 Calle Perfecto San Juan Capistrano, CA 92675 Agenda Item -6- April 15, 1997 By Motion, a. Approve the Agreement between the City and Agency relating to transfer of and quitclaim of undivided interests in 7 acres (Kinoshita land). b. Approve the proposed Second Amended and Restated Agreement for Cooperation between the City, Agency, and District, and authorize the City Manager and Executive Director of the Agency to execute final documents, including authorization to make minor changes to the documents, to insure that the transaction is completed in a timely manner. c. Adopt an Agency Resolution Making Health and Safety Code Section 33433 Findings Regarding the Disposition of Certain Agency -owned Lands. d. Adopt an Agency Resolution Making Health and Safety Code Section 33433 Findings Regarding the Disposition of Certain Agency -owned Lands. Do not approve the proposed Second Amended and Restated Agreement and Resolution Request additional information from staff. RECOMMENDATIONS: Conduct a Public Hearing regarding the proposed Second Amended and Restated Agreement for Cooperation between the City of San Juan Capistrano ("City"), San Juan Capistrano Community Redevelopment Agency ("Agency") and the Capistrano Unified School District ('District"). 2. Approve the Agreement between the City and Agency relating to transfer of and quitclaim of undivided interests in 7 acres (Kinoshita land). Approve the proposed Second Amended and Restated Agreement for Cooperation between the City, Agency, and District, and authorize the City Manager and Executive Director of the Agency to execute final documents, including authorization to make minor changes to the documents, to insure that the transaction is completed in a timely manner. Agenda Item -7- April 15, 1997 4. Adopt an Agency Resolution Making Health and Safety Code Section 33433 Findings Regarding the Disposition of Certain Agency -owned Lands. 7-11�\-- City Manager Attachments: 1. Second Amended and Restated Agreement for Cooperation (w/Exhibits) 2. Health and Safety Code Section 33433 Report 3. Resolution Making Health and Safety Code Findings 4. Agency/City Agreement Regarding Transfer of Interest in 7 Acres 5. Memorandum dated March 10, 1997 from Tom Tomlinson regarding CEQA NOTE: Exhibits are in Council packets only; copies are available in City Clerk's office for review e" Liu CD tr W 0 Z a Q W V 1 . 1 N .�v 1/Y/Gis �r ."Z1; •: . V 1 ,Li•• V -1. Q' iZr7H z/ 7i d 7R,%Y4W .3 A 001 C. 15 IYIAII't " M W �� VI •i N .�v 1/Y/Gis �r ."Z1; •: . V 1 ,Li•• V -1. Q' iZr7H z/ 7i d 7R,%Y4W .3 A 001 C. 15 IYIAII't