REPORT TO THE CITY COUNCIL
January 14, 2015
BY: R.RENENA SMITH, Assistant City Manager
SUBJECT
Title
1. ADOPT the Addendum to the Finding of Conformity prepared for Environmental Assessment No. R-15-005/C-15-025 for Rezone Application No. R-15-005 and Conditional Use Permit Application No. C-15-025, pursuant to CEQA Guidelines Section 15162 and 15164;
2. Authorize the City Manager or designee to execute a Ground Lease and Option to Purchase 3.34+/- acres located at the southwest corner of N. Brawley and W. Herndon Avenues, APN 507-030-12ST (Council District 2)
Body
RECOMMENDATION
Staff recommends that the City Council authorize the City Manager or designee to execute a Ground Lease and Option to Purchase 3.34+/- acres (Property) located at the southwest corner of N. Brawley and W. Herndon Avenues (APN 507-030-12ST).
EXECUTIVE SUMMARY
Garreks, Inc., a California Corporation (“Tenant”), is interested in purchasing the 3.34+/- acre parcel which is a portion of APN 507-030-12ST owned by the City of Fresno (“Landlord”) located on the southwest corner of N. Brawley and W. Herndon Avenues (“Property”) to operate a gas station/convenience store with the sale of beer and wine and a car wash (“Project”). The property is currently pledged as security for a bond owned by Landlord, which is to be repaid during the term of the Lease, in part from the rent. The initial term of the lease shall run through December 31, 2017, commencing on the effective date. Upon approval of all permits and entitlements necessary to complete the project, and provided that the Landlord has otherwise fully performed hereunder, the Tenant shall pay as full consideration under this lease $455,373. The property was last appraised on October 19, 2012 at a value of $455,373. Concurrent with the execution of this lease, Tenant shall pay a refundable deposit of $5,000, which will be credited toward the rent. At the end of the term, if Tenant is in compliance with all the material terms of this Lease, the option to purchase is exercised with a purchase price of $1.
BACKGROUND
Rezone Application No. R-15-005 and related Environmental Assessment No. R-15-005/C-15-025 was filed by Dirk Poeschel of Land Development Services, Inc., on behalf of Garrek’s Inc. Owner Gary Chester and approved by the City Council at a December 17, 2015 hearing. Rezone Application No. R-15-005 amended the Official Zone Map to reclassify the ±3.34-acre portion of property from the AE-5/UGM (Exclusive Five Acre Agricultural/Urban Growth Management) zone district to the C-5/UGM (General Commercial/Urban Growth Management) zone district. The C-5/UGM zone district is consistent with the Fresno General Plan land use designation of Commercial-General.
Staff recommends that the Council approve the ground lease of this ±3.34 acre property, with an option to purchase, from the City of Fresno (as lessor/seller) to Garreks, Inc., a California Corporation (as lessee/buyer) for the construction of a Chevron gas station with 12 fueling stations, a ±3,500 square-foot convenience store, and a drive-through car wash.
ENVIRONMENTAL FINDINGS
An addendum was prepared for this project in accordance with the requirements of the California Environmental Quality Act (CEQA) Guidelines Sections 15164 (see Exhibit A).
The adoption of Rezone Applicaton No. R-15-005, Conditional Use Permit Application No. C-15-025, and a ground lease of the 2.7 acre property, with an option to purchase, from the City of Fresno (as lessor/seller) to Garreks, Inc., a California Corporation (as lessee/buyer) was previously analyzed in Finding of Conformity prepared for Environmental Assessment No. R-15-005/C-15-025 and adopted by the Fresno City Council on December 17, 2015.
The project description of the Finding of Conformity included a ground lease of 2.7 acres of property, with an option to purchase. However, the total acreage of property being leased to Garreks, Inc. has been increased to 3.3418 acres to include a small additional portion of the parcel for access routing purposes. There is no increase in usable or buildable acreage. As such, the addendum analyzes the changes that have occurred as a result of this increase.
Based on the environmental review contained in the Finding of Conformity, the increase in acreage would not result in any new significant or substantial changes to the evaluation of the environmental resources within and outside the project area beyond those that were addressed in the Finding of Conformity.
Since the proposed project will not result in additional impacts, it may be determined that: (1) The project falls within the scope of Finding of Conformity prepared for Environmental Assessment No. R-15-005/C-15-025; (2) No substantial changes are proposed in the project which require major revisions to the previous environmental finding due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects; (3) No substantial changes will occur with respect to the circumstances under which the project is undertaken; and, (4) No new information, which was not known and could not have been known, at the time the environmental finding for Finding of Conformity prepared for Environmental Assessment No. R-15-005/C-15-025 was adopted, has become available.
Therefore, the City of Fresno has determined that an addendum to Finding of Conformity prepared for Environmental Assessment No. R-15-005/C-15-025 is appropriate given that none of the conditions described in Section 15162 of the CEQA Guidelines calling for preparation of a subsequent environmental assessment have occurred; and new information added is only for the purposes of providing minor changes or additions, in accordance with Section 15164 of the CEQA Guidelines.
LOCAL PREFERENCE
N/A
FISCAL IMPACT
At the end of the term, if Tenant is in compliance with all the material terms of this Lease, the option to purchase is exercised with a purchase price of $1. The property currently has outstanding debt service principle of $1,073,512. The City of Fresno Judgment Obligation Bonds, Series 2002 (Bonds) were issued pursuant to a Trust Agreement dated as of June1, 1994. The proceeds were applied to pay a litigation settlement and to take title to the property located on the southwest corner of Herndon and Brawley. The Bond Documents provide mandatory redemption, within six months following the sale of the property by the City for that portion of the bond used to take title of the property. The current balance that is required for redemption of this property is $538,425. The lease proceeds will be applied towards the redemption of the bonds associated to the property. Final maturity of the bonds is August 15, 2017 within the terms of the lease.
Attachments:
Blosser Property Ground Lease
Exhibit A - Addendum to EA No. R-15-005/C-15-025