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File Number: 14-492 ·The lease does not provide terms for early termination On March 5, 2001, the Redevelopment Agency adopted a resolution whereby the City guaranteed the Friends of San Leandro Creek lease. Funding for the lease was provided by the Creekside Plaza developer who placed $250,000 in a fund to pay the lease. It was originally envisioned that when this funding was depleted in 2013, either Alameda County or the Agency would purchase the property for Friends of San Leandro Creek. In 2008-09 Friends of San Leandro Creek, working in conjunction with Alameda County Flood Control, were in serious negotiations with the Oliver Partnership for purchase of the site for $550,000 to be paid by Alameda County. The purchase, however, was not finalized and the vision for the site as an environmental education center did not materialize. When the dissolution of the Redevelopment Agency began in February 2012, the Lease Guarantee for Friends of San Leandro Creek was placed on the semi-annual Recognized Obligations Payment Schedule (ROPS). Analysis In May 2012, with the knowledge that the $250,000 set aside to pay the lease was approaching depletion, Friends of San Leandro Creek’s Chairperson and City staff met with Mr. Steve Oliver to discuss the possibility of terminating the lease or having the Oliver Partnership donate the land to Friends of San Leandro Creek. On May 17, 2013 the State Department of Finance objected to the lease guarantee on the Recognized Obligations Payment Schedule based on a determination that the Redevelopment Agency was not the sole Guarantor because the City was also a guarantor. Combined with Friends of San Leandro Creek’s inability to make lease payments, this determination made the lease a responsibility of the City. The City has been paying the lease out of the General Fund since early 2014. As of March 2014, the projected remaining cost of the lease over the next nine years is approximately $300,000. 777 Alvarado Street is envisioned in the Downtown Transit Oriented Development Strategy as part of a future residential development on the former World Savings parcels on Alvarado currently owned by Wells Fargo. Density of 65 - 100 units per acre is envisioned and 777 Alvarado Street, along with the fire training facility, could provide a linear park along the creek, similar to the Cherrywood linear park. Based on the cost of the remaining lease and the future value of the property, staff pursued the process of property acquisition. The Lease Agreement provides a process whereby three qualified brokers (one selected by the City, one selected by the Oliver Partnership and one selected by both parties) would provide written opinions of the value of the property. The purchase price would be the median of the brokers’ opinions of value. The brokers’ opinions of the value of the property ranged from $242,535 to $375,500 with a median price of $275,400. The current projected cost breakdown for the acquisition of 777 Alvarado Street is as follows (all costs are approximate): Page 2 City of San Leandro Printed on 11/25/2014