HomeMy WebLinkAboutHAROLD AND NANETTE JONES - 1995-11-06Councii/Agency Meeting Held: L-
Deferred/Continued to:
if Approved ❑ Conditionally Approved O Denied City Cleric's Signa re
Council Meeting Date: November 6, 1995 Department ID Number. RAA 95-43
CITY OF HUNTINGTON BEACH
REQUEST FOR REDEVELOPMENT AGENCY ACTION
SUBMITTED TO: Honorable Chairman and Redevelopment Agency Members
SUBMITTED BY: Michael T. Uberuaga, Executive Direct
a
PREPARED BY: David C. Biggs, Director of Economic Development
SUBJECT: REDEVELOPMENT AGENCY PURCHASE OF OCEAN VIEW
ESTATES 17051 Ellis Avenue) MOBILE HOME UNIT #44
Statement of Issue, Funding Source. Recommended Action, Alternative Action(*). Analysis, Environmental Status, Attachment(s)
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Statement of Issue: Harold and Nanette Jones have requested that the Redevelopment
Agency approve the sale of their mobile home to a third party for $35,000 cash. The Agency
has the option to either purchase the home for the full "agreed value' of $91,018 or allow the
Jones' to sell to a third party. If a third party sale is completed, then the Agency must pay the
difference between the sale price and the "agreed value` ($91,018-$35,000=$56,018) to the
Jones,' as outlined in the Driftwood Acquisition and Relocation Agreement. The third party
will retain all rights under the Relocation Agreement unless the Agency exercises its option to
purchase the mobile home.
Funding Source: Main -Pier Redevelopment Account TM-ED-801-6-10-00.
Recommended Actions: Motion to:
1. Authorize the Executive Director to execute documents necessary to purchase 7051
Ellis Avenue, Space 44 at the agreed value of $91,018.
2. Direct Agency staff to work with the Real Estate Services Division to develop a plan for
the rental of the Agency -owned mobile homes (Spaces 15, 19, 20, 31 & 44), and return
to the Agency at a future meeting with draft rental agreements and a proposed rent
structure.
RAMS-43.DOC
10125195 B: 6 M
REQUEST�FOR REDEVELOPMENT AGEIJt:Y ACTION
MEETING DATE: November 6, 1995 DEPARTMENT ID NUMBER: RAA 95-43
Alternative Action(s):
1. Elect to not purchase 7051 Ellis Avenue, Space 44, for the agreed value. The Jones'
Will then sell their mobile home to a third party and the Agency will have to pay the
difference between the sales price and the agreed value; and the third party will retain
all rights under the Relocation Agreement.
Analysis: On August 5, 1988, the Agency entered into a Disposition and Development
Agreement with The Robert Mayer Corporation for the development of The Waterfront
Project. As a part of that agreement, the Agency entered into a relocation agreement with
the Driftwood Mobile Home Park residents. Section XI(B) of the Agreement states that:
1. Right of Resale and Price Guarantee:_ Any Tenant who relocates to Ocean View Estates
I or 11, and after the second year following occupancy, is unable to sell the mobile home for a
price equal to the Agreed Value for a period of no less than ninety (90) days, may then offer
to sell to the Agency for the Agreed Value. The Agency may elect, within thirty (30) days
following written notice of the offer to sell, to either:
(a) Acquire Tenant's mobile home at the Agreed Value and pay all costs
occasioned by the sale; or
(b) Permit Tenant to sell the mobile home on the open market and immediately
upon close of escrow, if the Tenant receives less than 'the Agreed Value (before paying any
liens), the Agency shall pay the difference to Tenant, but if the Tenant receives more than
the Agreed Value, Tenant shall retain all safe proceeds;
(c) Failure by the Agency to provide Tenant with written notice of its election
within thirty (30) days of receipt of the offer to sell 'by the Agency shall be deemed to be
rejection of the offer and an agreement to proceed under paragraph 13.1.(b) of this Section!
The Jones' listed their mobile home for sale. for the agreed value of $91,018 for a ninety (90)
day period beginning July 24, 1995. As of the date this RAA was prepared (Oct. 25, 1995),
the home has been on the market for the required ninety days, though a cash offer for
$35,000 was submitted to the Jones' approximately thirty (30) days after it was first listed.
Under the relocation agreement, the Agency has the first option to purchase the mobile
home for the agreed value. If not, the tenant may then sell the home to a third party for a
negotiated price. The Agency must make up the difference between the agreed value and
the actual sales price.
RAA95.43.00C -2- 10125195 8:38 AM
REQUEST FOR REDEVELOPMENT AGEk6 ACTION
MEETING DATE: November 6,1995 DEPARTMENT ID NUMBER: RAA 95.43
Further, according to the City Attorney, (Attachment No. 3), the third party retains the same
rights as the seller under the relocation agreement. In order to break the perpetuity cycle,
the Agency can purchase the mobile home and then dispose of it as it wishes. Recognizing
the current budget dilemma, staff still recommends the purchase of these homes where
financially feasible —as it will save the Agency and the City money over the long tern.
The Agency Members who attended the Economic Development Committee of
October 13 1995, reached a consensus that the Agency -owned homes should be rented on
a month -to -month basis. Staff will develop a strategy for the rental of the Agency -owned
homes with staff from Real Estate Services and will return to the Agency with the strategy at
a future meeting.
Environmental Status: NIA
1. Offer to Purchase Dated August 24,1995
2. Letter from Jones' Representative, Jim Rankin
3. City Attorney Opinion—RLS # 95413
4. Request for Agency Action Dated July 5, 1995
Dale And Debra Wilson
RAA95.43.DOC -3- 10/24/95 3:25 PM
1 14
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MANUFACTURED HOME — PURCHASE ORDER
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WAR►1ING. UNLESS A CHARGE IS INCtUDEC FOR PUBLIC LABIL-
ITY OR PROPERTY DAMAGE INSURANCE, COVERAGE IS NOT IN-
CLUDED IN THE AGREEMENT.
NOTICE: NO PERSON IS REOUTAED AS A CONDITION PRECEDENT
TO FINANCIHti TI4E PURCHASE OF A MANUFACTURED HOME TO
PURCHASE INSURANCE THROUGH A PARTICULAR INSURANCE
AGENT OR BAOI(ER.
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THE MANUFACTURER STATES THAT THE INSULATION THAT HAS BEEN
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TYPE
1►aC3 MESS
W rAGToa
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NQTICETO TI(E PURCHASERS) —DO NOT SIGN THE PUR-
CHASE AGREEMENT BEFORE YOU READ IT, OR IF IT CON-
TAINS ANY B: ANK SPACES TO BE FILLED IN. YOU ARE EN-
TITLED ?O A COMPLETELY FILLED IN COPY OF THAT
DOCUMENT.A ND,IF PURCHASINGMANUFACTUREO HOME
OR MOBILE I.OME COVERED BY WARRANTY, A COPY OF
THE WARRANTY.
THE PARTIES AGREE TO THE PURCHASk AND SALE OF THE
AFOREDCSCR BED MANUFACTURED HOME UPON THE TERMS
AND CONDITIONS SET FO ABOVE AS WELL N HE
REVERSE SIDE OF THIS R MEAT, !/
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NOTICk - )F THE PURCHASE OF THIS MOCKE HOLE IS 9-
"ARCED. IH WIIOLE OR PART THE LENOER IS TO COMPLEI° A
SECUAII V AGREEMENT IN COPAPLIA*JCE VIFT14 REGULATIr'N 7
112 CTR 22*,.17 and 22S.18).
NOTICE TO THEPUACIIASER(S)-COVPLAINr^.CONCFw,.,..
THE PUPC•1ASE SHALL BE REFERRED TO THE GEALER AI.C.0
TNCC)rAPLA1NTISNOT RESOLVED.MAY01:REFERRED TOTHE
pEPARTFArNT OF HOUSING AI40 COMMUNITY DEVELOPMENT,
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19171 MAGNOLIA #16
HUNTINGTON BEACH, CA 92646
Gregory A: $yawn
Office of the Director
Housing
Redevelopment
FM: Jim Rankin
J & R Mobile Homes
(714) 963-4123
9-13-95
Re: Driftwood Mobilehome Aquisition and Relocation Agreement
( Page 31 Section B I
Mr Brown:
This part of the agreement was asked for by the city
to be ince>;ted into this agreement.
In 1988 when customers lined'up'to buy - I1.m shure
this made good sense but in todays market it doe's not.
I have the Jones home (ocean view 144) listed for
sale.
I have a customer that i, willing to pay cash for
it (35K) which is a good offer in todays market.
According to the Aquisition and relocation agreement
the Jones's must attempt to sell the home at the agreed upon
figure for no less than 90 days. in this case the figure
is $91,016.00
This is asking the customer to pay 2.6 times market
value.
This is asking the customer to wait 90 days before
they can even make a market value offer on it.
To me this is like telling the customer to go find
another home to buy.
Please ank the city counsel to do what is good for
all involved including the city of Huntington Beach and wave
the 90 day clause as time is of the essence.
Thank You
im Rankin
J&R Mobile Homes
TOdAL P.eI
14B CITY OF HUNTINGTON BEACH
INTER -DEPARTMENT COMMUNICATION
TO: RAY SILVER, Assistant City Administrator
FROM: GAIL HUTTON, City Attorney
DATE: September 11. 1995
RECEIVED
FCOtti MIC Q� YELCin ery i
SUBJECT: RLS # 95-413; Ramifications of Lease with Ocean View Estates I
Residents
Background:
Current mobile home owners in Ocean View Estates I COVE 11 who previously
relocated from Driftwood Mobile Home Park want to sell'their mobile homes; however,
because they do not have a lease, it is unclear to mortgage lenders that the buyers
have the right to stay on the land and for what period of time. If buyers and lenders are
not satisfied that there is a guaranteed right to remain for a long period of time, it
depreciates the value of the homes and in some cases renders them unmarketable.
Thus, the homes are less marketable then they would be if a transferable lease were in
place. The Agency also owns four units and wants to be able to sell them.
Under the Mobile Home Acquisition and Relocation Agreement (RA) of September 1,
1988, 28 individual owners relocated to OVE I under the'lmmediate Buyout Option of
Phase An and the'Optional Immediate Buyout Option of Phase B," which were options
enabling homeowners to move, remain or have their homes purchased, at least in part
by the city.
The RA provides for the eventual construction of another mobile home park, Ocean
View Estates 11 (OVE 11). The relocated owners in OVE I are to receive leases under a
Master Lease for a period of 25 years commencing when OVE Il is completed.
Currently, OVE 11 has not been started, let alone completed. OVE I exists, and OVE If
was planned, on land designated as public park land. However, the Intent was that the
mobile homes would remain there for only twenty-five years and thus were always
Intended to be temporary. At this time. because the development of two more hotels
near the Hilton is not feasible, and the hotel development schedule is directly related to
the building of OVE I, there are no immediate plans to commence construction of OVE
11. This fact precludes the twenty five year Master Lease from becoming effective
because, as noted above, the Master Lease is not effective until the completion date of
OVE 11. If the Master Lease does not become effective, then the rights of the owners
are not limited to twenty five years and their rights under the RA are maintained. RA ,
op. 29 30.
0
r '• Page 2
RE: RLS 95-4.13 OVE Residents
The current tenants of OVE I have three options available: (1) remain in their homes,
(2) sell to the City, or (3) sell to a 3rd party. Each of these options presents a problem if
the RA remains valid and a specific lease term is not provided.
uestion #1:
What are the impacts of a new short term lease upon the parameters of the Driftwood
.,'Acquisition and Relocation Agreement?
Answer fl
None.. The RA is superseded upon completion of construction of Ocean View Estates II
as the Master Lease would limit the mobile homeowners to a twenty five year period.
Absent the Master Lease, the tenants have the right to remain on the property for
infinite duration subject to renegotiation of the RA . In addition, by terms of the RA, the
tenants' rights are fully assignable to heirs, successors, and purchasers.
Analysis:
The RA specifically states that the City has no obligation to begin construction of OVE II
unless the City decides to commence development of any portion of the development
site (Waterfront Area) beyond Conversion Prase A. It Is at the Developer's option to
develop the area and once the development commences past Phase A, the City's
obligation to construct OVE 11 is triggered under Paragraph I(C)(3)(b). Alternatively, if
there is no planned construction past Conversion Phase A, then the City is under no
obligation to construct OVE 11 pursuant to Paragraph V (B)(4)(e)(iii). Failure to construct
OVE II at that time will put the City in breach of the agreement. Although the breach is
an issue, it is not relevant to the discussion of a lease with the current OVE I residents.
Whether or not development continues in the Waterfront area, the residents of OVE 1
are rightfully on the land under the RA . Due to the fact the OVE 11 is not being
developed the RA has the potential of infinite duration.
The tenants' rights are clearly delineated in Paragraph IX of the RA .
"A. Tenant hereby agrees that he/she has no right to possess or own the
property upon which Ocean View Estates I and 11 shall be located except as a
Tenant of a mobile home park and said right shall cease automatically
twenty-five (2S) years after the area known as Ocean View Estates II first
opens for occupancy."
In addition, under Paragraph IX, Sections F. I & J. these rights are assignable. The RA
does not discuss any change in the rent to be charged upon the passage of time;
71aveleudJMW
Page 3
RE: RLS 95-413 OVE Residents
therefore, the existing fcrmula under the RA pursuant to Paragraph V (B)(2)(c)(vi)
should be followed:
"(vi) Rent Abatement: A Tenant electing this Option will receive a one hundred
percent (100%) abatement of his/her space rent for the first twenty-four (24)
months of his/her residency at Ocean View Estates 1. If, by that date, Ocean
View Estates 11 has not been completed, the rent shall thereafter be set at
the same rate as those tenants who resided there prior to the date of this
Agreement Upon completion of Ocean View Estates 11, the rental rate shall be
set by the Association."
Under the terms of this provision, the tenants cannot be charged any more rent than
Me tenants who resided there prior to the Driftwood Relocation program; Le., the
Huntington Shores residences. The rent is subject to reasonable increase as long as it
is across the board to new and old tenants.
Question #2-
What are the effects and implications of a new shorter term lease with the OVE I
tenants?
Answer#2:
The lease will allow the tenants to sell their property more readily and for a better price,
thereby reducing the City's financial expenditures as the city has a buyout obligation if
the homes cannot be sold at market rate; however, the lease will not limit the tenants'
rights to possesslon"under the RA and the tenants' thus may remain in possession
beyond the term of the lease.
Analysis:
At this time, counsel for the OVE I tenants has agreed to a 25 year lease to expire in
2016. Under the original agreement, the Master Lease for OVE 11 would have expired
In approximately 2013. The new lease terms for OVE I could put the City in a similar
position as was anticipated under the original agreement; however, the lease will not ,
allow the City to regain possession of the land for a public park. On the other hand, the
lease will assist the tenants in marketing the property to third parties and should reduce
the City's liability in making up the difference between the sale price and the Agreed
Value of the property under Paragraph Xl (8) of the RA .
Unfortunately, the lease will have no impact beyond the present as the tenants will not
be bound to vacate at the termination of the lease. The tenants may remain in
possession well beyond the terms of the lease. Further, any heirs, assignees,
successors and purchaser from the tenants will have the same rights. Any attempt to
Page 4
RE: RLS 95-413 OVE Residents
affect the RA through the new lease would be ineffective. If the new lease is written to
supersede the RA , then any subsequent renegoliat:on will not impact the new lessees
and they will not be bound to any changes made to limit their rights to the land in
perpetuity. If the new lease does not supersede, the owners rights will continue to be
perpetual.
Question 43:
Does Measure C -apply to a potential lease with the OVE tenants?
Answer #3• No.
Analysis -
Section 612(a) of the Huntington Beach Charter states as follows:
No public utility or park or beach or portion thereof now or hereafter owned or
operated by the City shall be sold, leased, exchanged or otherwise transferred
or disposed of unless authorized by the affirmative votes of at least a majority of
the total membership of the City Council and by the affirmative vote of at least a
majority of the electors voting on such proposition at a general or special
election at which such proposition is submitted.
Section 612(c) establishes an exception as follows:
Section 612(a) and 612(b) shall not apply;
(1) to libraries or piers.
(2) to any lease, franchise, concession agreement or other contract
where; the contract is to perform an act or provide a service in a public
park or beach AND
such act was being performed or service provided at the,same
location prior to January 2, 1989 AND
the proposed lease, franchise, concession agreement or other
contract would not increase the amount of park land or beach
dedicated to or used by tti"art erforming such act or
providing such service.
Huntington Beach Charter Section 612 should not be an obstacle to formation of a
lease arrangement with OVE I tenants based on the exception. The RA was completed
in September, 1988 and established the relocation of Driftwood tenants to OVE I. OVE
i was pre-existing and had maintained residences for the former tenants of Huntington
Shores. There was no increase of the land of the amount of park land to the city.
Page 5 I-..i
RE: RLS 95413 OVE Residents
Question #4•
What are the City's obligations under the Development and Disposition Agreement
(DDA) which may impact the lease?
Answer #4:
The City is obligated to relocate the tenants under the RA. The DDA discusses the RA
briefly; however. it does not impose additional duties beyond the requirements of the
RA. The DDA does nct expand the rights of the tenants nor does it limit the rights
given under the RA which stand as an independent document, separate from the DDA.
Conclusions:
1. A lease with the OVE I mobile home owners will be a temporary solution. It will
Increase marketability as the owners will be able to sell or refinance their homes;
however. those owners who do not sell will maintain the perpetual rights under the RA.
In addition, the new owners will acquire the perpetual rights under the RA, unless OVE
11 is completed or the RA is renegotiated.
2. The duty to build OVE 11 Is triggered by any construction beyond Phase A and at
that Ume, the City has a duty to build OVE II. 1f it were to be built, the RA would
terminate upon completion of OVE 11 and the mobile home owners would have only the
rights under a Master Lease.
3. To avoid later issues with the homeowners, it would be best to renegotiate the
RA to limit the interests of the OVE I homeowners.
4o-f GAIT. HUTTON,
City Attorney
fmm
WowleudJMV
v v
RCA ROUTING"'SHEET
INITIATING DEPARTMENT:
Economic Development
SUBJECT:
Ocean View Estates
COUNCIL MEETING DATE:
November 6, '1995
RCA -ATTACHMENTS
STATUS
Ordinance w/exhibits & legislative draft if applicable)
Not Applicable
Resolution wlexhibits & legislative draft if applicable)
Not Applicable
Tract Map, Location MaR and/or other Exhibits
Not Applicable
Contract/Agreement (wlexhibits if applicable)
Si ned in full by the City Attome
Not Applicable
Subleases, Third Party Agreements, etc.
A roved as to form by City Attome
Not Applicable
Certificates of Insurance LApproved by the Qt Attome
Not Applicable
Financial Impact Statement Unbud et, over $5,000
Not Applicable
Bonds if applicable)
Not Applicable
Staff Report if applicable)
Attached
Commission, Board or Committee Report If applicable)
Not Applicable
Findings/Conditions for roval and/or Denial
Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED
RETURNED
FOR RDED
Administrative Staff
Assistant City -Administrator (Initial)
,z
Cit Administrator Initial
City Clerk
EXPLANATION FOR RETURN OF ITEM: