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
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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.
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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
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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
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