Honorable Members of the Economic Development Committee. Miguel A. Santana, City Administrative Officer~\r

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1 FORM GN. 16 CITY OF LOS ANGLS INTRDPARTMNTAL CORRSPONDNC Dte: April 7, 214 C F #:::::::::::::: Assignment No To: Fm: Honorble Members of the conomic Development Committee Gerry F. Miller, Chief Legisltive Anlyst Miguel A. Sntn, City Administrtive Officer\r Subject: OPTION AGRMNTS PROPRTIS FOR CRA/LA FUTUR DVLOPMNT SUMMARY On Februry 1, 212, the former Community Redevelopment Agency of the City of Los Angeles ("Former CRA") ws dissolved pursunt to the Cliforni Stte Legislture nd Governor encting Assembly Bill )(126 ("ABX126"), the Redevelopment Dissolution Act ("Dissolution Act"). On Februry 3, 212, CRNLA, Designted Locl Authority ("CRA/LADLA") ws estblished to serve s the successor gency of the Former CRA nd chrged with winding down its ffirs including the disposition of ll rel pperty nd interests held by the Former CRA. The Dissolution Act, s mended by AB1484 in June 212, llows successor entities to retin former gency ssets for future redevelopment s identified in n existing redevelopment pln or community pln ("Future Development" pperties). This report requests uthority to negotite Option Agreements giving the City the rights to mnge nd mrket nine (9) such Future Development pperties for disposition nd development ("Option"), to ensure the pperties re developed in mnner tht best serves the City's interests.. For ech optioned Future Development pperty, the Offices of the Chief Legisltive Anlyst ("CLA"), City Administrtive Officer ("CAO"), nd the Myor will work with the respective Council Office to develop pln for disposition nd development. Within the Option term, the City will hve the right to select developer nd purchse the pperty fm CRLADLA for development. By the end of ech Option term, if the City does not hve development greement with developer, the City my either exercise the option to ',purchse t fir mrket vlue, or llow the pperty to revert to CRNLADLA to sell. The only costs ssocited with the execution of these Option greements will be :;pr,?8r,yrntte?t!eto ensure the vlue of the

2 2 the Option term. Pperty mintennce will be performed by City workers or contrctors nd cost estimtes re currently being solicited. This report further requests uthority to negotite Option rights for one dditionl pperty for totl of ten pperties. On Mrch 18, 214, the Office of the Myor formlly requested tht CRNLADLA rectegorize the pperty fm For Sle to Future Development. Upon ppvl of CRNLADLA Governing nd Oversight Bords nd the Stte Deprtment of Finnce ("DOF"), the City my enter into n Option Agreement s described bove. All pperties re described lter in this report. The pperties fm which the City is interested in securing option rights fm CRNLA DLA re subject to the negotition of Option Agreements. At the conclusion of DOF's review of CRNLADLA's pperty disposition strtegy, the CLA nd CAO will pvide the Council with finl list of pperties, finl Option Agreement terms, cost estimtes for pperty mintennce nd request uthority to enter into Option Agreements. Long Rnge Pperty Mngement Pln On June 27, 212, the Stte Legislture nd Governor encted AB1484 which mde technicl nd substntive mendments to the Dissolution Act llowing for certin flexibility nd locl benefits in connection with pperty disposition for successor gencies tht hve received DOF Finding of Completion ("FOC''). A FOC signls tht successor gency hs stisfied its obligtions resulting fm DOF's due diligence review of its finncil reports. AB1484 estblished the Long Rnge Pperty Mngement Pln ("LRPMP") s the mechnism for plnning nd seeking ppvl for the disposition of CRAlLADLA ssets. As per the sttute, the LRPMP must contin n inventory of ll CRAlLADLAowned rel pperties, extensive informtion chrcterizing ech pperty, nd pposl for how to use or dispose of ech pperty in one of four ctegories including Government Use, Retention for Future Development, Retention to Fulfill n nforceble Obligtion, nd Pperty for Sle. AB1484 pvides for the successor gency's retention for redevelopment of pperties tht meet certin distinguishing chrcteristics s follows:» Pperty identified for use or development in Redevelopment Plns» Pperty identified for use or development in FiveYer Implementtion Plns»Pperty identified for use or development in Community Pln, Generl Pln, or Specific Pln» Pperty encumbered with obligtions relted to federl funding The City's working gup on issues relted to the Former CRA's dissolution, composed of the Office of the Myor, CLA, CAO, Deprtment of Public Works Bureu of ngineering (BO), GSD, Deprtment of Recretion nd Prks (RAP), conomic nd Workforce Development Deprtment (WDD), nd the City's outside legl counsel on redevelopment dissolution, Richrds Wtson & Gershon, worked with respective Council Offices to identify which of the CRNLADLA pperties represent prticulrly importnt

3 development opportunities for the City to pvide wellpying jobs, ffordble housing, ctlytic commercil pjects, nd other public benefits to communities.

3 3 development opportunities for the City to pvide wellpying jobs, ffordble housing, ctlytic commercil pjects, nd other public benefits to communities. Bsed on those discussions, the City compiled list of desired pperties nd requested tht CRAlLA DLA include the pperties s Future Development in the LRPMP. CLA nd CAO stff lso met with ech respective Council Office to discuss how pperty in their district hd been ctegorized in order to pvide n opportunity to ddress ny questions or concerns. As result, the pperties identified in this report were selected by the gup to be pursued s Future Development sites nd mke up the entire list of Future Development pperties currently listed in the LRPMP. The remining CRAlLA DLA pperties fll under Government Use, Retin to Fulfill n nforceble Obligtion, or Pperty for Sle, s defined by AB1484. Pperties Recommended for Future Development In lignment with the City's request, the LRPMP identifies totl of nine (9) CRAlLADLA pperties consisting of vrious prcels s Future Development pperties under the Dissolution Act. The nine pperties re situted thughout the City but specificlly in Council Districts One, Three, ight, Ten, Fourteen, nd Fifteen. A summry of the pperties recommended for Future Development is included s Attchment A. For ll nine pperties, GSD would serve s the City's recipient deprtment to mnge ech pperty while in the City's possession, with the ssistnce of pperty mintennce contrctors. Council District One (1 pperty) The pperty locted within the Westlke, McArthur Prk Redevelopment Pject Are, commonly referred to s the Westlke Theter, consists of single prcel tht is ppximtely 2,681 squre feet of lnd designted for commercil retil spce. The theter is historiclly designted building tht is currently vcnt nd borded. Federl funds were initilly used in the Former CRA's cquisition of the pperty. In the future, the pperty my be pposed for entertinment, commercil retil, nd/or housing use. Council District Three (2 pperties) The first pperty locted within the Resed/Cnog Prk Redevelopment Pject Are consists of four prcels totling ppximtely 92,79 squre feet of lnd designted for commercil uses. There re two vcnt commercil buildings tht re pposed for demolition by the CRAlLADLA in the summer of 214. The site is commonly referred to s the Resed Town Center nd ws previously pposed for lrge commercil retil center thugh public/privte prtnership development. Commercil retil nd/or mixeduse development my be pposed in the future for the site. The second pperty, lso within the sme redevelopment pject re, consists of two prcels combined totling ppximtely 2,27 squre feet of lnd designted for commercil use. One prcel contins the former Resed Theter which is now vcnt nd borded up. The second prcel is vcnt, unimpved prking lot tht is currently fenced off, locted directly behind the theter. The pperty my be pposed for mixeduse development including commercil, entertinment, nd/or housing use.

4 Council District ight (1 pperty) The former Bethune Librry site locted within xposition/university Prk Redevelopment Pject Are is lso designted s Future Development site.

4 4 Council District ight (1 pperty) The former Bethune Librry site locted within xposition/university Prk Redevelopment Pject Are is lso designted s Future Development site. It consists of one prcel of ppximtely 33,399 squre feet of vcnt, unimpved lnd with fence in need of replcement by the City, if trnsferred. The site my be pposed for housing with commercil or nonpfit component. Council District Ten (1 pperty) The pperty commonly referred to s Mrlton Squre is locted in the Crenshw, Amended Redevelopment Pject Are nd consists of seven prcels totling ppximtely 117,562 squre feet of lnd pposed for commercil retil spce. Federl funds were initilly used in the Former CRA's cquisition of the pperty. The re is mostly vcnt nd unimpved with one building tht is pposed for demolition by the CRAlLADLA in the summer of 214. The pperty is currently fenced off to prevent trespssing. Council District Fourteen (3 pperties) Bunker Hill Prcel Y1/Angels Knoll ("Y1") is locted in the Bunker Hill Redevelopment Pject Are nd comprised of single prcel of ppximtely 14,947 squre feet of sloped vcnt lnd. The pperty includes n uphill prk spce commonly known s Angels Knoll, grssy slope in the midsection, nd plz on the downhill section. ch individul section is currently fenced off nd inccessible to the public. The northern side of the pperty hs n ccessible stircse tht connects Hill Street to Olive Street. Adjcent to the stircse is the currently inoperble Angel's Flight funiculr which resides on n irspce esement. The Y1 pperty cn ccommodte mixeduse high rise development tht my include commercil, office, residentil, hotel, nd/or gund floor commercil. The second pperty commonly referred to s the First/Boyle TOO Site is locted in the Adelnte stside Redevelopment Pject Are. It is comprised of single prcel of ppximtely 14,6 squre feet of vcnt, unimpved lnd tht is fenced off. The pperty is clssified s trnsit oriented development ("TOD") site for its pximity to the Met Gold Line sttion. As such, the site my be pposed for commercil or mixeduse development with housing. Also in the Adelnte stside Redevelopment Pject Are is the First/Mission TOO Site consisting of single prcel of ppximtely 2,564 squre feet of lnd. The pperty contins 12, squre foot building with tennt nd surfce prking lot. The lese requires the tennt to be responsible for ll building mintennce nd the CRAlLADLA hs llocted funding in the lese for building impvements. Council District Fifteen (1 pperty) Wilmington Block 27 is locted in the Los Angeles Hrbor Industril Center Redevelopment Pject Are nd consists of 18 prcels combined totling ppximtely 6,452 squre feet of unimpved lnd. The site is currently being used on monthto

5 month bsis for truck prking thugh Permit to nter issued by the CRAlLADLA. There my lso be contmintion issues present tht the CRAlLADLA will be responsible to remedite.

5 5 month bsis for truck prking thugh Permit to nter issued by the CRAlLADLA. There my lso be contmintion issues present tht the CRAlLADLA will be responsible to remedite. In the future, the site my be developed for industril use. Contingent Pperties Recommended for Option Rights In ddition to the bove pperties, the Office of the Myor hs mde forml request to the CRAlLADLA to mend its LRPMP to chnge the ctegoriztion of one dditionl pperty in Council District 15 tht is currently ctegorized s For Sle under the LRPMP. The pperty is mde up of multiple prcels tht neighbor the Historic Wtts Trin Sttion Depot, Mrkhm Middle School, nd the Met Blue Line Sttion nd re further described in Attchment B. Stff believes it would be in the City's best interest to preserve the right to redevelop the pperty in the future for possible trnsit oriented development nd is therefore requesting chnge in LRPMP ctegory fm For Sle to Future Development. Such chnge would require the CRAlLADLA to seek ppvl fm its Governing nd Oversight Bords followed by DOF's review nd determintion. If ultimtely ppved by ll bodies, City stff will negotite n Option Agreement for the rights to mnge nd mrket the pperty for disposition nd development, returning to City Council for finl ppvl. Pcess for Negotiting Option Agreements for Future Development DOF issued Finding of Completion to CRAlLADLA on September 1, 213, beginning sixmonth period within which CRAlLADLA must dopt the LRPMP for submission to DOF. The LRPMP ws ppved by the CRAlLADLA Governing Bord on November 7, 213, nd its Oversight Bord on November 14, 213. Following those ppvls, the LRPMP ws trnsmitted to the DOF on November 27, 213 for further review nd ppvl. DOF hs not pvided timefrme in which finl ppvl would be determined but CRAlLADLA nd City stff nticipte receiving response in the spring of 214. Upon receipt of DOF's ppvl of the LRPMP, the CRAlLADLA nd City would hve three (3) months in which to enter into individul Option Agreements for the City's mrketing nd eventul cquisition of the Future Development pperties. Once the Option Agreements hve been executed, the City will hve two to three yers in which to mrket ech pperty nd implement pln of disposition nd development. The generl terms to negotite for ech Option Agreement include: 1. A specified period of time during which the City will be required to redy the pperty for ultimte development or disposition to developer. The time horizon will be specific to ech pperty nd its current stte of rediness. In the event the City cnnot fulfill this requirement or decides to opt out, the pperty will revert bck to CRAlLADLA t the end of the Option Agreement term. The CRAlLADLA would then likely dispose of the pperty under the Sle of Pperty ctegory requirements. 2. A requirement tht the City be responsible for mintining sset vlue, by ongoing pperty mngement, during the Option Agreement period. If the City fils to do

6 6 so, it my be held lible for ny loss of vlue incurred s result. The CAO is in the pcess of obtining cost estimtes for the ongoing mintennce of ech Future Development pperty. 3. An exclusive ssignment to the City of ll rights to negotite the ultimte vlue, disposition nd development of pperty while the Option Agreement period is ctive. 4. Milestones to be chieved during the Option Period demonstrting pgress leding to the pperty trnsfer. If the City requires n extension to the Option Period, it will need to pvide written request, pviding n explntion for ny delys, nd detiled description of wht will be chieved during the xtension Period. 5. A requirement tht the City submit Disposition Pln for ppvl by CRAlLADLA stff. The Disposition Pln must evidence tht the pperty will be developed for its originllyintended purpose under the Redevelopment nd/or Implementtion Plns nd the Fir Mrket Vlue will be pid. If the Disposition Pln pposes tht the pperty be sold for purpose other thn wht ws intended in the relevnt Pln documents nd/or pposes compenstion be less thn Fir Mrket Vlue, the Disposition Pln must be ppved by the CRA/LADLA Governing Bord nd Oversight Bord nd is subject to DOF review. The finl terms of ech Option Agreement will be presented to the City Council for review nd ppvl under seprte cover nd prior to their execution. FISCAL IMPACT There is no Generl Fund impct for the City of Los Angeles t this time. Upon DOF's ppvl of the LRPMP nd negotition of Option Agreements with CRA/LADLA, the City's future execution of Option Agreements on the pperties will entil pperty mintennce costs tht hve not yet been determined. A subsequent report seeking ppvl to execute instruments to trnsfer the pperties will include the costs ssocited with mintennce. There would be no costs ssocited with libility coverge since the City selfinsures rel pperty. If the City chooses to exercise the option to purchse fm CRA/LA, the fir mrket purchse price would represent Generl Fund impct.

7 7 RCOMMNDATIONS Tht the Council: 1. Authorize the Chief Legisltive Anlyst (CLA), City Administrtive Officer (CAO), nd the Office of the Myor to work with CRNLADLA nd the Deprtment of Finnce (DOF) to:. Negotite Option Agreements for the City's cquisition of nine (9) CRNLA DLA Retined for Future Development pperties, s identified in Attchment A; nd b. Negotite n Option Agreement for the City's cquisition of one (1) contingent CRAlLADLA Retined for Future Development pperty, s identified in Attchment 8; 2. Instruct the CLA nd CAO to:. Report to the Council nd Myor with the results of negotitions nd finl list of pperties nd cost estimtes, to seek further ppvl to enter into Option Agreements or other rel pperty trnsfer greements with CRAlLADLA nd relevnt prties, nd recommendtions for funding; nd b. Report to the Council nd Myor on ny CRAlLADLA pperties denied s Future Development by DOF nd ny legl prmeters vilble to the City to pursue remedition of such ction. Attchments: (A) Pperties Recommended for Future Development (8) Contingent Pperty Recommended for Future Development GFM:MAS/oi:jr

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