MEETING DATE:
SEPTEMBER 24, 2024
SUBJECT:
Title
RESOLUTION NO. 2024-9358 -AUTHORIZING THE CITY MANAGER TO COMPLETE NEGOTIATIONS, FINALIZE, AND EXECUTE ALL DOCUMENTS RELATED TO A PURCHASE AND SALE AGREEMENT NECESSARY FOR THE ACQUISITION OF REAL PROPERTY AT 0 ARMORLITE DR, SAN MARCOS, CA (ASSESSOR’S PARCEL NUMBER 219-163-60-00, KARL STRAUSS PROPERTY) FOR THE DEVELOPMENT OF A FUTURE FIRE STATION, AND AMENDING THE FISCAL YEAR 2024-25 CAPITAL IMPROVEMENT PROGRAM BUDGET TO APPROPRIATE FUNDS RELATED TO THE PURCHASE
Body
Recommendation
Recommendation
1. ADOPT a resolution authorizing the City Manager to negotiate, finalize, and execute a purchase and sale agreement and all related documents necessary for the acquisition of real property located at 0 Armorlite Dr APN 219-163-60-00 for the construction of a future Fire Station.
2. AMEND the Fiscal Year 2024-25 Capital Improvement Program Budget to appropriate $4.1M to finance the purchase of the property.
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Board or Commission Action
Not Applicable
Relevant Council Strategic Theme
Economic Development
Planning for the Future
Relevant Department Goal
Continuing to Maintain Fiscal and Financial Health of the City
Introduction
At the December 12, 2023 City Council workshop, the City council received the results of the updated 2022 Standards of Cover (“SOC”) study. As a result of the meeting, the City Council directed staff to begin the process of exploring options for a fifth fire station location within the City. Previously, a fire station feasibility project was also budgeted in the City’s capital improvement budget as FC013 for the purposes of identifying optimal locations for a fifth fire station in-line with the recommendations of the SOC study. Associated Microbreweries LTD (DBA Karl Strauss brewers) (“seller”), is in the process of disposing of a parcel in the area and agreed to negotiate with the City for a purchase of the parcel identified as APN 219-163-60-00. At this time, the City and seller have reached agreeable terms and the City is seeking approval for the purchase and acquisition of APN 219-163-60-00 (“property”) for $3.75M. The City seeks to appropriate $4.1M total for the purchase and other associated costs. The costs would be funded by the general fund reserve while still maintaining the City’s reserve balance requirement per policy.
Discussion
At the December 12, 2023 City Council workshop, the City council received the results of the updated 2022 Standards of Cover study from Citygate Associates. The study showed that the City fire department has longer than recommended response times for 4 out of 5 surveyed categories. Further reports from City staff showed an increase of nearly 37% in fire and emergency service calls in the past 10 years, and the City overall has seen a population growth of 5.4% during the same period, which has significantly contributed to response times falling outside of targeted goals. Several other factors such as traffic patterns, geography/street layout of the city and others exacerbate these challenges. Furthermore, anticipated future developments of several multistory, multi-family buildings including two buildings in North City that will exceed 10 stories in height are an additional factor anticipated to put further strain on response times at current fire staffing levels. Therefore, Citygate Associates strongly recommended the construction of a fifth fire station to respond to increasing demand, as the most recent fire station was constructed in 2007 in the San Elijo Hills area.
While short-term measures were implemented at the direction of council to address the current emergency service utilization, such as the implementation of a basic life support (BLS) ambulance to absorb some of the current increasing call volume during peak times, Citygate noted that long-term management of current response time demand would require a fifth fire station to be constructed as an essential part of responding to the ongoing volume as well as managing the City’s anticipated future growth. Therefore, the City Council directed staff to begin the process of locating and planning the development of a fifth fire station to address the needs of the community of ensuring public safety and a high quality of life.
Based on the data provided by Citygate associates, City staff focused on locating a fire station within an area that would improve fire response times. During the course of the City’s efforts to locate a fire station, the City was made aware of a potentially viable parcel located at 0 Armorlite Dr., APN219-163-60-00, within the recommended area that the seller was interested in disposing of. Staff evaluation of the property did confirm it to be a viable potential property for the construction of a fifth fire station.
The owner agreed to engage in discussions with the City about a purchase agreement, and after these discussions the City and seller have agreed to terms for the purchase of the parcel for a cost of $3.75M. Market analysis in the surrounding area shows that the suggested purchase price is appropriate for the type and size of the parcel
Therefore, the City Manager is seeking approval of a purchase and sale agreement between the City (“buyer”) and Karl Strauss Brewers (“seller”) for the acquisition of the property located at 0 Armorlite Drive for the ultimate purpose of a future fire station. Staff recommends appropriating $4.1M in general fund reserves in the FY 2024-25 budget for this action, which would cover purchase price and all associated fees, document costs, entitlement costs, etc. The appropriation of these funds would not result in any adverse impact to the City’s reserve balance, which would still maintain a 40% minimum threshold. The purchase is a one-time infrastructure expense that is an eligible use of the reserve balance, per policy, and does not represent a change in the normal annual operating expenditure budget of the general fund. Delay in approval of the purchase and sale agreement could result in the loss of the parcel which resides in the optimal area recommended for development of a future fire station per the SOC study, and/or an increase in purchase price resulting from changes in the real estate market. Alternative means of financing the acquisition of the property would be via a loan, bond, or other interest-bearing means. The use of general fund reserves ensures that the City does not incur additional costs related to the acquisition via interest, fees, and other costs associated with these sources, thereby ensuring future fiscal stability and health of the City.
In order to track ongoing feasibility and pre-planning efforts, the appropriation will be part of the current Fire Station Feasibility study project CIP #FC013 in the Capital Improvement Program Budget, which will expand in scope to include other land acquisition and non-construction planning work related to the fifth fire station. Construction costs related to the fifth fire station would not be a part of the current project and will be appropriated via budget adoption in a subsequent fiscal year budget development process.
Environmental Review
Not applicable.
Fiscal Impact
Approval of the resolution would amend the FY 2024-25 Capital Improvement Program budget to appropriate $4.1 million in general fund reserves to CIP# FC013 for the purchase of a property located at 0 Armorlite Dr. APN 219-163-60-00.
Attachment(s)
Exhibit A -DRAFT Purchase and Sale Agreement for APN 219-163-60-00
Exhibit B - CIP # FC013 Budget Sheet
Attachment 1: Reso 2024-9358
Prepared by: Janet Brotherton Sr. Management Analyst
Reviewed by: Donna Apar, Finance Director
Reviewed by: Isaac Etchamendy, Development Services Director
Submitted by: Donna Apar, Finance Director
Approved by: Michelle Bender, City Manager