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HomeMy WebLinkAbout06 - Future Use of City Owned Property at Brookhurst and Adams in Huntington BeachCITY OF NEWPORT BEACH OFFICE OF THE CITY MANAGER April 22, 1966 COUNCIL: 661 P QIS OSITION: TO: CITY MANAGER n - FILE: 3 7 FROM: Administrative Assistant SUBJECT: FUTURE USE OF CITY OWNED PROPERTY AT BROOKHUR'T AND ADAMS IN HUNTINGTON BEACH. The City's parcel of property located at the southeast corner of Brook- hurst and Adams in Huntington Beach, measuring approximately 300' x 300', is now being leased to Columbia Outdoor Advertising for billboard advertising purposes. The current lease agreement yields the City a flat $450 per month. Since this agreement expires on December 31, 1966, the City should now plan for the future use of this property. We currently have three abandoned water wells on the property. Although we have no reason to utilize these wells at this time, it is conceivable that at some future date, the Metropolitan Water District water supply may be so limited as to necessitate City use of these wells as a supplemental water source. Because of this factor, it is desirable for the City to retain ownership of the property rather than dispose of it at this time. We will, thus, be able to re- serve our pumping rights in the Santa Ana Gap Water Basin in order that we may be in a position to supplement any possible future water needs. It would be desirable, therefore, to consider capping the existing wells underground and maintain access to these wells via manhole covers. This will allow the balance of the property to be utilized for revenue -producing purposes which will more than offset the costs of maintaining the abandoned water wells. Several proposals have thus far been received for the leasing of this property for commercial purposes. Zoned C-1 by the City of Huntington Beach, most all types of commercial uses are now allowed at this location. Using the property in some manner other than for billboard advertising purposes will enable the property to generate between $12,000 and $15,000 per year for the City of Newport Beach. The following list of proposals is indicative of the interest in the property and what the City could derive from same by utiliking the property in this manner: 1. We have received from Gulf Oil Company a proposal to lease a portion of the property for a six to nine pump gas station. The lease pro- posal calls for a period of twenty years plus one five year option at a minimum rental of $500 per month against one cent per gallon if greater than the minimum rental, plus all taxes. This proposal purports to use a portion of the property measuring 150' x 150', or 22,500 square feet of the available property (approximately 90,000 square feet), thus leaving the balance of the property available for alternative uses. -1- 2. An offer has been received from Jack -in -the -Box, Incorporated, to lease another portion of the property for a restaurant. This pro- posal calls for a twenty year lease at a minimum rental of $300 per month. This lessee would use a portion of the property measur- ing 100' x 150', or 15,000 square feet of the available property. 3. Other offers are expected to be forthcoming in the immediate future to utilize still additional portions of the property which would be available if the City entered into lease agreements with the above - mentioned organizations. 4. Another offer on file is from Sakioka Farms, owner of the contigu- ous land formerly owned by the City of Newport Beach, to lease the entire parcel now owned by the City for purposes of constructing a partial parking lot to serve a proposed shopping center to be erected on the adjacent property owned by Sakioka. This proposal calls for a twenty-five year lease at a rental of 6% of the fair market value per year payable in a manner at the City's option. The fair market value would be determined by formal appraisal or by some other manner deemed equitable by both parties. The rental monies would also be adjusted periodically in accordance with the cost of living increase as determined by the United States Bureau of Labor Statistics Consumer Price Index for the Los Angeles -Long Beach Metropolitan Area. Under all proposals listed above, the City of Newport Beach would retain all rights, title and interest in and to the oil, mineral and water rights, and have the right to install underground facilities for the purpose of augmenting the City's water supply as may be deemed necessary at some future date. Although the property has not as yet been formally appraised, we have good reason to be- lieve that it is now worth between $100,000 and $150,000, thus insuring us a minimum rental from Sakioka of $500-per month, and probably bringing the total monthly revenue up to $1,000 or more, assuming that either several lease agree- ments were consummated at that aggregate amount, or that through negotiation via the formal and informal bid procedure a single lease agreement could be realized which would generate this amount of revenue for the City. Recommendations: 1. In order that the City can maximize its revenues by leasing this property and still ensure long-term stable tennants, it is recom- mended that the City Council authorize this office to have the property appraised. This will provide us with an intelligent basis for negotiating a reasonable lease arrangement for the future use of the property. The following appraisal firms have indicated a willingness to ap- praise the property and have indicated the'cost of same: (a) Tait Appraisal Company - $375.00 (b) J. A. Gallagher & Associates - $400.00 to $500.00 (c) Frederick M. Hurd - $475.00 (d) Joseph A. Mueller - $750.00 (e) Goode & Goode - $1,500.00 -2- JPD/mjc 2. It is recommended that the firm of Tait Appraisal Company be retained to provide this service. They have not only proposed to do this work at less cost than the other firms, but also have sufficient experience to conduct the appraisal in a satisfactory manner and provide the City with a report which will include the desired information. The cities of Costa Mesa and Claremont highly recommend their work. 3. After the property has been appraised, it is recommended that we follow-up on the various lease proposals received to date and other proposals which would be solicited, and through further negotiation in open Council session, determine the highest and best uses of the property. This will provide the City with the means of maximizing our revenues consistent with the most desirable long range uses of this City owned parcel. JAMES P. 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