HomeMy WebLinkAboutShank House - 204 Fifth Street - Robert A. and Maxine Butche U
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REDEVELOPMENT AGENCY ACTION RH 91-45
Date July 1, 1991
Submitted to: Honorable Mayor/Chairman & City Council/Redevelopment Agency Members
Submitted by: Michael T. Uberuaga, City Administrator/Chief Executive Tficer .OfJ
CA-aj<._� .
Prepared by: Barbara A. Kaiser, Deputy City Administrator/iconomic Development
Subject: Authorization for Reimbursement to Pier Realty for Shank House Restoration
Located at 204 - Sth Street in the Main-Pier Redevelopment Project Area
Consistent with Council Policy? PQ Yes [ ] New Policy or Exception
Statement of Issue, Recommendation,Analysis, Funding Source,Alterna ti
- — 7 " f 1911
STATEMENT OF ISSUE: �—
61TY 4LERK
On January 30, 1989, the Redevelopment Agency approved the use of the Shank House as a
relocation site for Pier Realty. The Agency and Pier Realty began constructing
improvements to the Shank House while the Butcher agreement and its subsequent
assignment to Pier Realty were being negotiated. All negotiations have ceased, the Shank
House has been selected as the site for a downtown Police substation, and Pier Realty has
found a new office site in Main Promenade. Pier Realty is requesting reimbursement for
the money they spent restoring the Shank House.
RECOMMENDATION:
Authorize staff to reimburse Pier Realty Company in the amount of $12,430.96 as
payment in full for restoration work completed and paid for by Pier Realty, as listed on
Exhibit "A."
ANALYSIS:
On January 30, 1989, the Agency approved the use of the Shank House as a relocation site
for Pier Realty. On July 17, 1989, the Agency authorized the execution of a Purchase &
Sales Agreement, as well as a Lease Agreement with Robert A. and Maxine Butcher for
Agency-owned property located at 204 - 5th Street (Shank House). The objective of these
agreements was to sell the Shank House to the Butcher's and lease it back with an option
to re-purchase it at 10% per annum. The Agency reserved the right to sublease, which
was anticipated to be with Pier Realty, and further, had the option to re-purchase the
Shank House once substitute property was offered and accepted by the Butchers.
Negotiations for the Shank House were limited to Pier Realty since they were relocated
from a month-to-month tenancy of a city-owned building located where the municipal
parking structure now stands on the second block of Main Street. Pier Realty is currently
located in the third block of Fifth Street in an Agency-owned facility which will be
removed or demolished when the Third Block West mixed use project commences.
Pin d/AA
As of May 20, 1991, the Agency had spent $210,976 in rehabilitating the Shank House.
Additionally, Pier Realty has spent $12,430.96 for improvements (See Exhibit "A") that the
Agency would have otherwise needed to complete.
Meanwhile, Pier Realty decided it was not economically feasible to proceed with the
sublease and assignment of the Butcher agreement as negotiated. On May 20, 1991, the
Council directed staff to complete the improvements for the Shank House to be used as a
police substation for the downtown area.
On May 16, 1991, Pier Realty submitted the attached letter dated May 15, 1991,
requesting reimbursement for the $12,430.96 spent by them for restoration work to the
Shank House.
ALTERNATIVE ACTION:
1) Deny the request for reimbursement of $12,430.96, and direct staff as appropriate.
FUNDING SOURCE:
Redevelopment Account E-TM-ED-810-6-10-00.
ATTACHMENTS:
1) Exhibit "A."
2) Staff Reports dated January 30, 1989; July 17, 1989; February 4, 1991; and
May 20, 1991.
3) Pier Realty letter package dated May 15, 1991
MTU/BAK/KBB:ls
9206r
EXHIBIT "A"
May 14 , 1991
City of Huntington Beach
Redevelopment Agency
2000 Main St.
Huntington Beach , CA 92648
RE: Restoration paid by Pier Realty, Inc (Van Tuyl-Kotsch )
204 5th St.
Huntington Beach , CA 92648
Date Vendor Work Preformed Amount
2/17/89 Oceanview Paint Co. Woodwork Prep. $ 546 . 00
2/17/89 t, if 11 11 it48 . 49
2/24/89 Chadwick Roofing New Roof 2 , 500 . 00
3/23/89 Reimbursed by City 11
" <2 , 500. 00>
2/25/89 Oceanview Paint Co. Woodwork Prep. 336 . 00
3/06/89 679 . 91
3/10/89 444. 83
3/14/89 693 . 12
3/22/89 TWN Custom 500. 00
3/30/89 Oceanview Paint Co. 291 . 11
3/31/89 to 11 ff ff 376 . 00
3/31/89 TWN Custom 796 .00
3/31/89 Oceanview Paint Co. ft96 . 00
4/30/89 Benson Glass Replace Windows 198. 48
5/09/89 TWN Custom Woodwork Prep. 1 , 926 . 02
5/23/89 Cooper Floors Sand Floors 1 , 866 . 00
5/19/90 GTEL Wire Structure 1 , 499 . 00
2--7/89 Mlinik Remove Tile , etc. 600 . 00
6/27/90 B & G Plumbing Remove Old Plumbing 480 . 00
1989-90 South Shores Ins . Insurance 517 . 00
1990-91 South Shores Ins . Insurance 537 . 00
Total $12, 430.96
_ � VELU MEiV-1 raCNGY ,tip i ! ON
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Submitted to: Honorable Chairman and Redevelop m nt Agency Members
Submitted by: Paul Cook, Executive Director
Prepared by: Douglas La Belle, Deputy City Administrator/Economic Development
AUTHORIZE WULLNER PROPERTY (SHANK HOUSE) AS RELOCATION SITE
Subject: FOR PIER REALTY, AND AUTHORIZE FINAL PREPARATION OF
APPROPRIATE AGREEMENTS
Consistent with Councii Policy? Yes ( } New Policy or Exception
Statement of Issue, Recommendation, Analysis, Funding Source, Alternative Actions, Attachments: L?L 1
STATEMENT OF ISSUE:
The Redeve'opment Agency has acquired on a willing-seller basis a number of properties
in the second block of Main Street, bounded by 5th, Walnut and Olive Avenues, as a
catalyst for the second block new construction/rehab project currently underway.
Correspondingly, the Agency staff has been working to relocate a number of businesses
within the Main Street Phase I and Second Block retail parking structure project
elsewhere within the downtown area. One such business is Pier Realty who is presently a
tenant of the city in the second block. Agency staff has also been working with a third
party (Mr. & Mrs. Robert A. Butcher) seeking a replacement funding source for furthering
our Main-Pier redevelopment activities.
RECOMMENDED ACTION:
1) Authorize the staff to finalize an agreement between Robert A. & Maxine Butcher and
the Huntington Beach Redevelopment Agency that will provide for the sale of certain
Agency-owned properties to the Butchers, with a lease back to the Agency with
options to repurchase; and.
2) Approve the use of the Shank property as a relocation site for Pier Realty, and direct
staff to complete the assignment of the Butcher agreement, with an option to
purchase, to the Pier Realty principals that will provide for the ongoing use of that
property by Pier Realty.
ANALYSIS:
A third party funding source that will assist the Huntington Beach Redevelopment Agency
in furthering its downtown redevelopment efforts without placing additional funding
requirements on the city of Huntington Beach, has been identified. The Agency has
previously purchased a number of properties within the Main-Pier Project Acea on a
willing-seller basis, and is currently land banking those properties for future
redevelopment projects within the Core area. The proposed agreement in concept, with
, 7
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P10/1/135
the Butchers, provides for them purchasing various properties owned by the Agency
totaling approximately $1 Million, thus providing an additional funding source for future
downtown redevelopment efforts. The agreement would provide for lease payments
commencing at 10% interest and the option to purchase. During the terms of the
agreclnent, the Agency could substitute other properties under its control, should any of
those properties encumbered by the outstanding agreement be needed for redevelopment
purposes. The properties we have identified in the second block that would be sold to the
Butchers are Wullner (Shank house), 5th and Walnut, $450,000; Terry Body Shop, 212 Fifth
Street, $315,00; and the Burnes property, Fifth and Walnut, $285,000.
In addition, as part of our relocation efforts, we have identified a specific user for the
Wullner property (Shank house) who desires not only to lease that property from us, but to
assume an assignment of our responsibility to Butcher under that agreement. That party
would be the principals of Pier Realty, Natalie Kotsch and Tom Van Tuyl. Our obligations
under the Butcher agreement, would be assigned to the Pier R It Group, who in turn,
would have an option to purchase property from us or our on ina uisition cost,
plus all i nrnvr'mPn?4 t at the gency will have made to the property at the time of ids
purchase by Pier Realty.
In staff's analysis, proceeding with the above transactions, will facilitate many of our
objectives within the Core area by providing an additional funding source for needed
redevelopment efforts, providing for the relocation of a viable business back into the
project area, and the preservation and restoration of a significant historic structure, that
being the Shank house.
ALTERNATIVE ACTIONS:
1) Do not proceed with agreements with the Butchers for sale of various Agency-owned
parcels in the second block of Fifth Street; and
2) Do not proceed with using the Shank house as a relocation site for Pier Realty, and
direct staff to see'., additional proposals.
FUNDING SOURCE:
None required as a result of this action.
ATTACH2AENT:
1) Site Map.
PEC/DLB:lp
4386h
T REQUEST FC. . . REDEVELOPMEN , .uEN �Y ACTION
APp.RC>-V _ RH 89-31
CI TY COU[V"
�- / --- - 19. .. Date July 17, 1989
Honorable C�airn-tan.-ands ev'2 o m Fi�ge cy Members
Subrt)itted to: -
Paul Cook, Executive Director
Submitted by:
Douglas La Belle, Deputy City Administrator/Economic Development
Prepared by:
APPROVAL OF PURCHASE AND SALE AGREEMENT AND LEASE AGREEMENT
Subject: WITH ROBERT A. & MAXINE BUTCHER FOR THE AGENCY PROPERTY AT 204
FIFTH STREET
Consistent with Council Policy? Yes ( ] New Policy or Exception
Statement of Issue, Recommendation, Analysis, Funding Source, Alternative Actions, Attachments: f ,
STATEMENT OF ISSUE:
The Redevelopment Agency has recently approved in concept, the sale of certain
Agency-owned property for financing purposes. The attached Purchase and Sale
Agreemert and related lease provides for the sale of a parcel of Agency-owned property
in exchange for the fair-market value of that property.
RECOMMENDATION:
Approve and authorize the execution of the Purchase and Sale Agreement and Lease
Agreement with Robert A.,-and Maxine Butcher for Agency-owned property located at 204
Fifth Street.
ANALYSIS:
The Agency has previously authorized the acquisition of various properties within the
downtown core area of our Main-Pier Project Area as amended. To date, the Agency has
acquired approximately thirty individual .parcels of land for current and future
redevelopment projects. Some of the parcels we have acquired are within the second
block of Main-Pier identified as the Main Street new construction/rehab project. Two of
those properties are envisioned to remain as rehab properties for an indefinite period of
time. We have an opportunity to obtain a one-time funding source that will assist the
Agency in furthering its redevelopment efforts through the sale of these properties to
another party, that party being Robert A. and Maxine Butcher. In terms of this
transaction, the Agreement provides for the conveyance of property at our purchase
price, which for the parcel in question, is $450,000. Correspondingly, the Agency will
lease the parcel back with an option to repurchase at 10% interest per annum. The
Agency has the right to sublease the property, which we will do, and further, has the
option to substitute other property for this property at any time within the first ten years
or to repurchase the property once substitute property is offered and rejected by the
Butcher's. After ten years, substitute property of equal value need not be offered to
repurchase. h0
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In staff's analysis, the conveyance of this property provides the Agency with an excellent
Opportunity to continue its redevelopment efforts, utilizing this funding source at a very
kivorable interest rate.
AI:fERNATiVI ACl-I0N:
1) Do not approve the attached Purchase and Sale Agreement and Lease Agreement.
2) Modify the terms of the Agreement.
FUNDING SOURCE:
1) None required as a result of this action.
ATTAC1-1MENTS:
1) Purchase and Sale Agreement and Lease Agreements.
PECIDLB:Ip
,1569h
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REC -o"ST FOR CITY COI,*iL/
REDEVELOPMENT AGENCY ACTION
ED 90-47
Date February 4, 1991
Submitted to: Honorable Mayor/Chairman & City Council/Redevelopment Agency Members
Submitted by: Michael T. Uberuaga, City Administrator/Chief Executive O ice
Prepared by: Barbara A. Kaiser, Deputy City Administrator/Economic Development
Subject: ACTIONS RELATED TO 204 FIFTH STREET (SHANK HOUSE) MAIN-PIER
REDEVELOPMENT PROJECT
Consistent with Council Policy? C4 Yes [ ] New Policy or Exception
Statement of Issue, Recommendation, Analysis, Funding Source, Alternative Actions, Attachments:
STATEMENT OF ISSUE:
On 'July 17, 1989, the Agency approved a Purchase and Sale Agreement and Lease
Agreement with Robert A. and Maxine Butcher for Agency property located at 204 Fifth
Street also known as the Shank House. The objective of these agreements was to sell
the property at 204 Fifth Street and lease the parcel back with an option to repurchase
at 10% interest per annum. In addition, on January 30, 1989, the Agency approved the
use of the Shank House as a relocation site for Pier Realty and directed staff to
complete the assignment of the Butcher agreement to the Pier Realty principals that
would provide for the ongoing use of that property by Pier Realty. These transactions
are now recommended for approval.
RECOMMENDATION:
1. Conduct public hearing.
2. Direct the City Attorney's office to prepare such documents as required within 30
days.
ANALYSIS:
The Purchase and Sale Agreement between the Agency and Robert A. and Maxine
Butcher was approved on July 17, 1989. The terms of this transaction call for the
conveyance of the Shank House at the Agency's original purchase price of $450,000.
Correspondingly, the Agency would lease back the parcel with an option to repurchase
at 10% interest per annum. The Agency reserved the right to sublease, which was
anticipated to be with Pier Realty, and further, had the option to repurchase the Shank
House once substitute property is offered and accepted by the Butchers. After 10 years,
the substitute property of equal value need not be offered to repurchase.
ED 90-47
February 4, 1991
Page Two
Staff's analysis in recommending the Sales Agreement with the Butchers is that
conveyance of the subject property provided the Agency with an excellent opportunity
to continue its redevelopment efforts, utilizing this funding source at a favorable
interest rate. At the same time, it would provide a viable use for the historic Shank
House, recently renovated by the Agency. The Purchase and Sale Agreement is to be
updated to increase the purchase price from $450,000 to $600,000 with rents to be
$60,000 per year (10% of the sales price). No other changes are needed to this
Agreement. Use of the proceeds has as yet not been determined.
The Sublease Agreement with Option to Purchase with Van Tuyl and Kotsch includes the
following provisions:
1. The lease/option price is $600,000. Of this amount, approximately $19,000 will be
placed into an escrow account to be used for completion of improvements to the
building to allow for issuance of a Certificate of Occupancy. Any costs in excess of
this amount will be assumed by Van Tuyl and Kotsch.
2. The rents will be $60,000 per year.
3. The subleasee will accept the property in an "as is" condition.
4. A non-alteration clause to preserve the building in its restored condition will be
included.
S. Uses other than a parking lot on the parcel adjacent to the Shank House must be
approved by the Executive Director.
6. The Redevelopment Agency will remain in control of the property until the option
to purchase is exercised (anytime during the first ten years of the lease).
7. The subleasee will be given credit for an $90,000 facade grant since this building is
located in the second block of Main Street which is targeted for facade
improvement grants.
8. Other provisions as determined necessary by the Executive Director.
The Agency's obligations under the Butcher agreement will be assigned to the Pier
Realty group, who in turn, will have an option to purchase the property from the Agency
for $600,000. No provision for escalation of the purchase price due to inflation or
market value is included in the agreement.
As of April 30, 1990, the Agency has spent $210,936 in rehabilitating the Shank House
and approximately $100,000 in relocation costs, escrow costs and appraisal fees. The
House includes 1,600 sf. of usable space and will be used as offices for Pier Realty. It is
estimated that interior work to be completed will cost $25,000 and landscaping work an
additional $34,000. Under the subleasee agreement, the Agency will provide $19,000
with the subleasee assuming all other costs.
ED 90-47
February 4, 1991
Page Three
Calculations of the sales price of the Shank House to the subleasee are as follows:
Acquisition cost $ 450,000
Improvements 211,000
Subtotal $ 661,000
Less facade grant -80,000
Subtotal $ 581,000
Add costs for additional improvements 19,000
Total to subleasee $ 600,000
Negotiations for the Shank House were limited to Pier Realty since they were relocated
from a month-to-month tenancy of a city-owned building located where the municipal
parking structure now stands on the second block of Main Street. Pier Realty is
currently located in the third block of Fifth Street in an Agency owned facility which
will be removed or demolished when the Third Block West residential/commercial
project is started.
The staff recommendation is consistent with the action previously taken by the City
Council. Although the Section 33433 Report indicates a net gain of $173,000 and a
present value loss of $88,000 to the Redevelopment Agency, the major justification for
the project is the historic preservation of the Shank House. It should be noted that Pier
Realty will be paying a higher than fair market value for the lease of the property. In
exchange for this, Pier Realty has the option of acquiring the Shank House for $600,000
(current value), reselling the Shank House at a higher price later and keeping the profit
of this resale.
FUNDING SOURCE:
The $19,000 required to complete renovation of the Shank House will be deducted from
the $600,000 payment to be received from Robert A. and Maxine Butcher.
ALTERNATIVE ACTIONS:
1. Do not amend the Butcher agreement to increase the purchase price.
2. Do not enter into a Sublease Agreement with Van Tuyl and Kotsch.
Staff recommends serious consideration of alternative actions number- I and 2 and
reconsideration of the entire proposal. Although preservation of the Shank House is a
valid historic preservation objective, concerns remain as to the location of the Shank
House, value of the vacant property for development purposes, the economic loss to the
Agency of this proposal and the private profit that may be generated by the sublease.
� _ Q 3
�D 90-47
Page four
February 4, 1991
ATTACHMENTS:
1. Redevelopment Agency Action dated January 30, 1989 (Pier Realty)
2. Redevelopment Agency Action dated July 17, 1989 (Butcher)
3. Section 33433 Report
4. Agreements
N,ITU/BAK:sar
8264r
REQUES . FOR CITY COUNCIL ACTION
Date May 20, 1991
Submitted to: Honorable Mayor and City Council Members
Submitted by: Michael T. Uberuaga, City Administrato �-- �
Prepared by: Ronald E. Lowenberg, Chief of Police -
DOWNTOWN POLICE SUBSTATION
Subject: -,rn
Consistent with Council Policy? [ J Yes [ ) New Policy or Exception
Statement of Issue, Recommendation,Analysis, Funding Source, Alternative Actions,Attachments:
STATEMENT OF ISSUE:
With the continuing revitalization of the downtown district, it has
been determined that a need exists to .place a .Police Department
substation in the downtown area. Staff has been exploring alternative
locations, and has identified the second block of Main Street (Robert
Koury retail space) and the Shank House (at 5th Street and Walnut
Avenue) as potential locations for the substation.
RECOMMENDATIONS:
1. Direct staff to effect improvements to the Shank House as
requested by the Police Department, in accordance with the Secretary
of the Interior's guidelines for historical rehabilitation;
2. Allocate funds of approximately $40,000 to complete such
improvements by transferring unencumbered Main Pier Redevelopment
funds to the General Fund and crediting this amount as Agency debt
repayment; and
3. Allocate funds of $152, 00 from the General Fund for two additional
police officers to provide full-time, year-round personnel for the
substation.
ANALYSIS:
Staff has been reviewing .alternative locations for a downtown Police
Substation. Two sites have been identified. The first is located in
the second block of Main Street in retail space to be owned and
operated by Robert Koury. Attached is a letter outlining the terms
and conditions of a proposed lease with Mr. Koury for a three-year
period at a cost of $61,452, plus expenses estimated at $13, 428.
An alternative site is the Shank House located at 204 5th Street, at
the northeast corner of 5th and Walnut, and owned by the Redevelopment
Agency. There are currently no planned uses for the site. Staff
pin s,as
Page Two
REQUEST FOR CITY COUNCIL ACTION-DOWNTOWN POLICE SUBSTATION
intended to solicit proposals to lease the building for retail/office
use in the near future. The Shank House could house the Police
Department substation and other community uses such as the Conference
& Visitors Bureau and an outreach center for the Huntington Youth
Shelter. Sharing the Shank House with other users would provide
additional savings for the City/Agency in that we currently provide
$18, 000 to the Visitor's Bureau for rent payments and the Youth
Shelter is willing to pay a minimal rent amount.
Staff has obtained a cost estimate of $38,255 to complete improvements
.(list attached) to the Shank House to convert it to a substation,
including parking and handicap access. The Redevelopment Agency is
not allowed to directly provide facilities for the Police Department
but can repay Agency debt to the General Fund, from which funds can
then be allocated to the Police Department substation. It is intended
that the Police Department substation be open by June 12 , 1991, in
time for deployment of the summer beach detail, which will work out
of the substation, as well as the regularly assigned officers.
The Police Department believes that the substation must be manned on
a year-round basis. Minimum staffing to accomplish this will require
two additional police officer positions at a cost of $76, 000 each or
a total of $152 , 000 per year.
Furnishing of the Shank House substation site will cost a total of
$14,515 or $16,915 for the Main Street location. Staff anticipates
that the majority of the furnishings are already available.
FUNDING SOURCE:
Main Street location. - Under the current agreement with Mr. Koury to
purchase the retail portion of the Main Promenade garage, he has the
option to acquire 40 parking spaces from the City/Agency in the
garage. Mr. Koury has suggested an arrangement whereby rent costs
will be offset against the cost of purchasing these additional parking
spaces. In effect, the city would still be paying rent of $61,452 but
allowing a credit for the parking space acquisition rather than
issuing a check.
Shank House location. - Rehabilitation of this facility will be
funded from the General Fund by transferring Main/Pier Redevelopment
Project unencumbered funds to the General Fund for this purpose.
Funding of the two police officers positions:
Option #1 Five percent utility tax applied to Cable T.V. as was
discussed in last week's budget workshop.
Option #2 - To be funded using General Fund Reserve.
Page Three
DOWNTOWN POLICE SUBSTATION
ALTERNATIVE ACTION:
1. Execute the lease for the Main Street location and allocate
funding of $152, 000 for the two full-time officers, or;
2. Discontinue efforts to locate a police substation in the downtown
area
ATTACHMENTS:
1) Letter from Jerome Bame dated May 7, 1991
2) Letter to Carol Kanode dated May 2, 1991
3) Shank House Restoration List of Work to be Done
4) Memo from Lt. Patrick Gildea to Chief R. E. Lowenberg, dated
May 13, 1991.
MTU:PG:bmr
15 May 1991
Honorable Peter Green
Mayor, City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Dear Mayor Green:
Please find enclosed some lengthy reading concerning our involvement
with the "Shank House." There is certainly more to the story, and, if
you have further interest, I would indeed be pleased to meet and confer.
I feel Redevelopment probably had to happen in downtown since normal
evolution was not allowed in the 30 prior years. However, the delays and
uncertainties have caused much anxiety and financial adversity to those
involved.
Ours is one of many stories.
Please approve our request for financial reimbursement.
Thanks for your concern.
Sincerely,
T IE A. KOTSCH
Enclosures
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CITY
322 5th Street • Huntington Beach, California 92648 714.536.9326
OPEN LETTER
Since 1982, when I asked our Board of Realtors to sponsor a day trip to San
Diego to preview their Redevelopment Agency and Redevelopment district, we have
been on the "trawna train" of redevelopment.
I personally attended and/or chaired many, many hundreds of hours of meet-
ings which included Ordinance Committee, Project Area Committee, Local Coastal Plan,
Specific Plan, Blue Ribbon. etc. During this time I chaired the Downtown Mer-
chants' Guild. Our office was the headquarters for all events (with great annoy-
ance to our staff), such as street fairs, fiestas and meetings. There was a need
for merchants to survive while redevelopment waxed and waned.
Tom Tinscher (Staff-Redevelopment Director) relied heavily on our help to
acquaint him with both business tenants and property owners. When Tom left he
believed every project was viable. Doug LaBelle's tenure was not as community
oriented but dealt more with legalese as was necessary. Pacific Relocation and
Denise Dalhausen were very involved with residential and business tenants as the
eviction notices were eventually served.
During this time, Pier Realty purchased a house on 2nd Street for reloca-
tion - which was subsequently down-zoned to residential. We then purchased a
property at 619 Main with great reluctance since it was not a totally viable
location. The Wallner property at 204-5th Street became available. Since I was
a strong proponent of historic restoration in the Second Block, we deemed it to
be a good location since Walnut was to be an important arterial.
The City completed purchase in the Fall 1988 and tenant relocation was
lengthy and difficult. We finally were able to walk through with Paul Larkin in
November of 1988. We had a tennite'inspection January 10, 1989 while some tenants
still occupied the premises.
We had hoped to relocate directly from our office at 220 Main Street into
204-5th Street (Shank House). We had to move temporarily to modular buildings
at 322-5th Street.
Most of the eight rooms at 204-5th Street (Shank House) were equipped with
kitchens and there were six complete bathrooms.
Our first projects were to tear out temporary or added walls and kitchens
and bathrooms.
We tore out ceramic tile, etc. , floors throughout the lower level to reveal
wood flooring. When the carpet in the dining room was removed, heavily thi.mned
plywood floor was discovered. This was removed and most floors were rough sanded
by Blake Flooring.
The floors and arch were sagging and needed some structural support. We
suggested that screw jacks, permanently installed, would solve the problem. How-
ever, Public Works staff decided that the project needed more structural work and
should be put out to bid. There in lies our nemesis!
322 5th Street • Huntington Beach, California 92648 • 714.536-9326
OPEN r.F-= (Continued)
We had estimated'$30,000 for renovations. We had re-roofed, gutted plwnb-
ing, floors, walls for approximately $10,000 and many volunteer hours by family
and friends.
The city staff and I were cooperating and working together so that we could
occupy the building expediently. Also having another viable and restored build-
ing would be of great benefit to the overall appearance of downtown.
When it became evident that the building needed more major repairs than
anticipated, an agreement was formulated that the Redevelopment Agency and Public
Works would send out RFP's and accept bids.
The cost to us for the building would still be $450,000 and the additional
expense of repair would be added at the time we exercised our Option to Purchase.
Staff was overseeing the project and paying increments.
The contractor was made aware that he was to do as close as possible to an
historic restoration as indicated by City Council (Grace Winchell) .
Much of the work performed was satisfactory, however, some is quite unsatis-
factory and incomplete.
The most astounding fact is the cost and all. the work that must yet be com-
pleted before occupancy.
The contractor tried to install non-historic type shingles - Sergio Martinez
(Staff) brought it to my attention agid, fortunately, that action was abated. I had
previously researched the shingles, scoring each shingle and installation. I
gave this information to Staff.
Jim Zeithing was the contractor to score the shingles and Wineeda Roofing
installed.
I do not know who on Staff inspected and approved workmanship. There are
many items I find very unsatisfactory.
One of which is the fireplace. The green original tiles were removed and
trashed. In their place a brick fireplace was very poorly installed. Only conso-
lation, I hope this can be tiled again.
The matching of wood trim leaves much to be desired and some trim is. totally .
unacceptable.
The entire wood floor that had been sanded was protected by heavy construction
paper prior to contractor's arrival.. That paper was reinoved and great damage with
machinery and grime and oil has been inflicted on the floors. This will involve
many dollars if it can be repaired.
Oil sealant was spilled on floors in different locations.
Incorrect wood flooring replacement was done in some rooms.
I feel, according to the bid, that flooring was to be provided in the bath-
rooms, i.e. , tile, and bathroom fixtures were to be installed.
-2-
OPEN LETTER (Continued)
It has been two years and none of the interior decorating has been done and
that will take many weeks.
Soon this 300 block will need to be vacated. It is indeed unfortunate that
there have been so many delays.
Our first Council approval was January 30, 1989. Please find enclosed.
July 31, 1989 - Draft sub-lease agreement reviewed and returned.
April - 1990 - Contractor left site. Completed?
July - 1990 - Letters to City Administrator - Call for Action
Fall - 1990 - Two Staff meetings
February 1991 - New terns -- Not acceptable..
-3-
�Iay 14 , 1991
City of Huntington Beach
Redevelopment Agency
2000 Main St .
Huntington Beach , CA 92648
RE : Restoration paid by Pier Realty, Inc (Van Tuyl-Kotsch )
204 5th St .
Huntington Beach , CA 92648
Date Vendor Work Preformed Amount
2/17/89 Oceanview Paint Co . Woodwork Prep. $ 546 . 00
2/17/89 1, 11 " 11 1148 . 49
2/24/89 Chadwick Roofing New Roof 2 , 500 . 00
3/23/89 Reimbursed by City 11 11 <2 , 500 . 00?
2/25/89 Oceanview Paint Co. Woodwork Prep. 336 . 00
3/06/89 679 . 91
3/10/89 444 . 83
3/14/89 693 . 12
3/22/89 TWN Custom 500 . 00
3/30/89 Oceanview Paint Co . 291 . 1. 1
3/31/89 11
" " 11376 . 00
3/31/89 TWN Custom 796 . 00
3/31/89 Oceanview Paint Co . 96 . 00
4/30/89 Benson Glass Replace Windows 198 . 48
5/09/89 TWN Custom Woodwork Prep. 1 , 926 . 02
5/23/89 Cooper Floors Sand Floors 1 , 866 . 00
5/1.9/90 GTEL Wire Structure 1 , 499 . 00
2--7/89 Mlini.lc Remove 'Tile , etc . 600 . 00
6/27/90 B & G Plumbing Remove Old. Plumbing 480 . 00
1989-90 South Shores Ins . Insurance 517 . 00
1990-91. South Shores Ins . Insurance 537 . 00
Total $12 , 430 . 96
16 July 1990
Mr. Michael T. Uberuaga
City Administrator
City of Huntington Beach
Huntington Beach, CA 92648
Dear Mike:
You did a fine presentation at the Local Governmental
Relations meeting at the Board of Realtors on Thursday, July
12th.
Our concern is our need to inject some immediacy in
resolving the financial portion of our lease option on
204-5th Street. This delay is causing us great hardship.
Because of the delay in completion we have lost two very
fine Realtors who were waiting for our office to be
completed.
In addition, every completed project enhances the down-
town.
I have left messages with Pat Spencer, Don Brennan,
Keith Bohr, etc.
I know you have many "irons in the fire" but we need
your leadership.
Sincerely,
NATALIE A. KOTSCH
VE
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CITY OF HUI-.' � GI_0r1 BEACH
CITY COU1\ L OFFICE
27 July 1990
Mr . Michael Uberauga
City Administrator
City of Huntington Beach
City Hall
Huntington Beach, CA 92648
Dear Mike:
Items to discuss with you:
1 . Lease Option numbers for 204-5th Street .
You were to set-up meeting per our conversation on
City Hall steps July 19th.
2 . Probability factor of moving one of the Pier struc-
ures unto the vacant lot at 204=5th Street. Would
be an asset to historic inventory.
3 . My client, Robert Terry of the late Terry Buick,
has an opportunity to acquire Daihatsu Dealership
for his Beach Boulevard property and Cal-Trans
lease. But , he needs City cooperation.
Looking forward to communication from you soon.
Sincerely,
NATALIE A. KOTSCH
4 February 1991
Ms. Barbara Kaiser
Economic Development
City Of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Re: 204-5th Street, Huntington Beach, CA
Dear Barbara:
At the present time we do not find it financially feasible to complete
the re-negotiated agreement from last summer regarding the Lease/Purchase
Option of the above property.
This is due to several major areas:
First, the cost of the rehab is considerably more than originally con-
templated.
Second, the delays over the past two years have caused us to lose several
key, top-producing and diversified Realtors that would have contributed con-
siderable revenues to our company to off-set additional occupancy costs.
Third, the present day economics calls for very prudent bu$iness consid,
erations.
We are still interested in the property and would like to discuss leasing
at competitive market rates and first right-of-refusal to purchase at appraised .
value.
Also, we have personally expended much time and planning and in excess of
$12,000.00 towards the rehabilitation.
We have always maintained an office that is supportive of downtown activi-
ties, i.e. , Downtown Merchants Guild, Pier Group, Surfing Museum, etc. This
property would provide us with opportunities to expand our community involve-
ment
We are very committed to the beneficial effect of the completed project.
.Respectfully,
THOMAS C. VAN TUYL NATALIE A. KOTSCH
322 5th Street • Huntington Beach, California 92648 • 714.536.9326
tj JAO
CITY OF HUNTINGTON BEACH
to"
INTER-DEPARTMENT COMMUNICATION
HUNTINGTON BEACH
To Barbara Kaiser From Gail Hutton
Director of Economic City Attorney
Development
Subject Date
Pier Realty Reimbursement June 19, 1991
for Shank House
Expenditures
Background:
You have asked us to express an opinion on the legality of a
reimbursement to Pier Realty for expenses incurred in work
performed at the Shank House in anticipation of a lease which
never materialized.
Question: May such expenses be reimbursed legally?
Answer : Yes .
Discussion:
Equitable principles provide a remedy to one who has in good
faith expended funds which benefit another. Such remedy is
either in quasi-contract or rescission of the lease agreement
which returns the parties back to their original positions .
So long as you have verified that the expenses claimed were in
fact incurred for the benefit and improvement of public
property and such public property improvements serve a public
benefit, there appears to be no legal basis upon which to deny
reimbursement. (See Sonoma v. State Board of Equalization
(1987) 195 Cal .App.3d 993, 241 Cal.Rptr. 215)
We note that Mr. Don Kiser has, by letter dated June 7, 1991
(attached) , verified the items of work on the public property
and further that the cost of work was reasonable. However,
there were no copies of invoices reviewed by Mr. Kiser.
Accordingly, we recommend that your staff provide the city
council with verification on the total $12,430 . 96 claimed, to
avoid the appearance of a gift of public funds .
Conclusion:
Reimbursement is appropriate on equitable grounds, so long as
the total amount paid has been verified.
GAIL HUTTON
City Attorney
cc: Arthur DeLaLoza, Deputy City Attorney
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CITY OF HUNTINGTON BEACH CITY 0 RNE3
INTER-DEPARTMENT COMMUNICATION HUNTINGTON BEACH
HUNTINGTON BEACH AN 1 U
To KEITH BOHR From DONALD W. KISER
REDEVELOPMENT SPECIALIST OPERATIONS MANAGER
Subject . 204 FIFTH STREET Date JUNE 7 , 1991
Please be advised that I have reviewed the list of items of work
submitted by Pier Realty regarding restorations at the subject
address.
I have no copies of the invoices for the work listed, with the
exception of the General Telephone wiring invoices. However,
knowing the structure ' s age and the fact it had been remodeled into
multiple apartments with bathrooms and kitchenettes, I consider the
items of work to have been necessary. Also, I consider the work was
in fact performed, since I had visited the site on several
occasions while the work was occurring.
The costs appear to be reasonable for the described work also. Had
these items of work not been performed by the listed vendors, the
City would have had to arrange to have them done, either by City
forces or contractors. I have no comment nor input regarding the
cost listings for. insurance.
I trust the above will assist you.
Donald W. Kiser
Operations Manager
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