HomeMy WebLinkAboutSS4 - Open Space Acquisition of Banning RanchCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No.SS 4
August 11, 2009
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: City Manager's Office
Sharon Wood, Assistant City Manager
949 - 644 -3222, swood @newportbeachca.gov
SUBJECT: Report of Funding Feasibility for Open Space Acquisition of Banning
Ranch
ISSUE:
What is the feasibility of funding for the acquisition of Banning Ranch as open space?
RECOMMENDATION:
The Banning Ranch Appraisal and Acquisition Ad Hoc Committee recommends that the
City continue its existing agreement with David Myerson of Resource Opportunity
Group,' LLC to explore potential opportunities for open space acquisition, as the
environmental and development review process for Newport Banning Ranch's
development proposal moves forward.
DISCUSSION:
Background:
The General Plan establishes open space as the primary use for Banning Ranch, and
provides that if it is "...not acquired for open space within a time period and pursuant to
terms agreed to by the City and the property owner, the site may be developed as a
residential village..., with a majority of the property preserved as open space."
The City Council set the following as a priority for 2008 and 2009: "Conduct an appraisal
of the Banning Ranch property and assess funding available for the purchase of the
property for open space." In February 2008, the Council appointed the Banning Ranch
Appraisal and Acquisition Ad Hoc Committee comprised of Mayor Selich and Council
Members Gardner and Rosansky.
Report of Funding Feasibility for Open Space Acquisition of Banning Ranch
August 11, 2009
Page 2
After research by staff on the qualifications and process for hiring an appraiser, the
Committee directed staff to retain David Myerson of Resource Opportunity Group, LLC
as the City's open space acquisition consultant. Mr. Myerson assisted the City with
selection of an appraiser, whose report was presented to the City Council in study
session on January 27, 2009.
Fundinq Feasibility Report:
Mr. Myerson's report on the feasibility of funding an acquisition of Banning Ranch for
open space is attached. In light of current economic and State fiscal conditions, he has
found that there is little likelihood of funding from State bonds or private foundations in
the near future. While some local sources, such as Measure M, might be available in
the next three to four years, these would not provide nearly enough for the estimated
$138,000,000 to $158,000,000 price for the entire property. In addition, it is the belief of
some agencies with whom Mr. Myerson spoke that the important habitat areas on
Banning Ranch should be preserved through the development entitlement process, and
public funding should not be used for acquisition of the entire property.
In light of these findings, Mr. Myerson is recommending that the City continue to explore
potential opportunities for creative acquisition scenarios through the environmental and
development review process. The City Council's Banning Ranch Appraisal and
Acquisition Ad Hoc Committee met on July 27, 2009, and reviewed Mr. Myerson's
report. They support his recommendation to continue exploring open space acquisition
possibilities as the City moves forward with review of the property owner's development
application. In addition, the Committee recommends that the City continue its
agreement with Mr. Myerson as a resource to monitor funding opportunities and explore
potential new alternatives for open space acquisition.
Public Notice:
Staff provided notice of this study session to those who have subscribed to receive e-
select alert messages on Newport Banning Ranch Updates, and to the list of interested
parties and property neighbors maintained by the City.
Submitted by:
Sharon Wood
Assistant City Manager
Attachment: Consultant Report
REPORT TO THE CITY COUNCIL
CITY OF NEWPORT BEACH
Approximately one year ago, Resource Opportunity Group LLC was retained by the City
of Newport Beach to assist in the following tasks:
1) Advise the City on methods and approaches for appraisal of the property known
as the Banning Ranch;
2) Assist the City in the selection process to engage an appraisal firm to assess the
fair market value of the Banning Ranch;
3) Assist the City to identify potential sources of conservation funds for possible
acquisition of the Banning Ranch and to assess the feasibility of such an
acquisition;
4) Perform other project related tasks as requested.
In the course of this assignment I worked closely with City Staff as directed, and
participated in several meetings with the Banning Ranch Appraisal and Acquisition Ad
Hoc Committee of the City Council.
Task 1: Advise the City on methods and approaches for appraisal of the property
In conversations with various appraisers and considering prior transactions of this nature,
the recommendation to the City was that a complete narrative appraisal of the subject
property was premature at this time. The suggestion instead was that the City retain an
appraiser to prepare a Consultive Pricing Study that would define a potential range of
values for the property. This method would allow the City to explore different
acquisition and development scenarios with the developer and community members.
This approach would also allow the City to control expenditures at this early stage of
negotiations.
Task 2: Assist the City in the selection process to engage an appraisal firm
In this regard, four firms were contacted to solicit Consultive Pricing Study proposals.
All four firms submitted proposals, and all four firms were interviewed telephonically.
One firm, Buss - Shelger Associates was invited to meet with the Appraisal and
Acquisition Ad Hoc Committee of the City Council. Subsequently, Buss - Shelger
Associates was selected to prepare a Consultive Pricing Study. The completed report was
presented to the full City Council at its January 27, 2009 public meeting and study
session.
See Appendix A — Summary of Consultive Pricing Study
3
Task 3: Assist the City to identify potential sources of conservation funds
This was probably the most challenging task in the assignment. Given the current
unsettled economic conditions faced by potential funders, both public and private,
identifying sources of conservation funding was more time consuming than anticipated.
What follows are brief summaries of discussions with funding agencies and private
foundations, who may be expected to have an interest in the conservation of the Banning
Ranch.
1) California State Coastal Conservancy — In a telephone conversation with Mary
Small, South Coast Regional Manager:
Mary Small is familiar with the Banning Ranch and the efforts to preserve its
wetland and upland areas. The Coastal Conservancy has been a major contributor
to preservation efforts along the California coast for many years. The remaining
budget allocation from all bond sources for Orange County however, is not that
large due to previous acquisition projects at Bolsa Chica and elsewhere. If there
were to be a financial contribution to a consortium of fenders, the Coastal
Conservancy believes it would only be able to play a small and insignificant role
in the acquisition. Mary told me that it is her belief that the most important
wetland and upland habitat should be preserved through the entitlement process.
That would be the preferred outcome. The pressure for remaining Prop. 84 funds
is tremendous, and no additional funding sources are anticipated in the near term
due to continuing budget difficulties.
2) Orange County Transportation Authority (OCTA) Measure M Mitigation
Funds — In a telephone conversation with Dan Silver, member of the
Environmental Oversight Committee on funding priorities:
Dan Silver is very familiar with the Banning Ranch, having heard from advocates
for preservation for many years. While Banning Ranch would likely qualify for
funding from Measure M, such approval would likely not result in allocations for
3 -5 years. He estimates that there may be approximately $30 million for each of
the next 3 — 4 years for project application, but that the first 2 to 3 years already
have priority projects ready to go, with others lined up for consideration. Even if
the Environmental Oversight Committee and other agency decision - makers
decided to allocate a portion of the annual allotment to the Banning Ranch, tax
revenues supporting the allocations are not likely to show an increase over the
projected $30 million or so, leaving an acquisition effort far short of the
anticipated necessary funds to pull down the entire 400 acre ranch. Dan Silver
was also hopeful that the entitlement process would ensure the preservation of
priority wetland and upland areas. In fact, he mentioned that one of the funding
criteria will be to respond to the question: "why doesn't the permitting process
require the preservation of sensitive habitat "?
See Appendix B — Measure M Funding Requests and Related Correspondence
N
3) The Wildlands Conservancy —Ina telephone conversation with David Myers,
Executive Director:
The Wildlands Conservancy (TWC) is a private foundation located in Oak Glen,
California (near Yucaipa and Redlands). I believe they are the largest private
non - profit landowner in California of conservation lands. One of the foundation's
long -time project interests is the Santa Ana River corridor. TWC helped bring the
Prop. 84 Bond measure to the ballot, resulting in Santa Ana River funding
allocations. They assisted in the efforts to create a public trail along the length of
the river corridor. They are however, not interested in participating in a funding
consortium for the acquisition of the Banning Ranch because they believe as well,
that the entitlement process should result in the appropriate conservation and
public access /use of the property.
4) Resources Law Group, representing the Resources Legacy Fund and Fund
Foundation — In a telephone conversation with Mary Scoonover, Attorney for the
Resources Law Group:
Resources Law Group is uniquely qualified to speak about these issues as they
have been at the center of the grant community for many years, having been in
charge of re- granting for the Packard Foundation land acquisition program, along
with other high profile organizations.
Private foundation endowment portfolios have suffered large declines along with
the rest of the investing community. Thus, their available budgets for programs
of all types, including acquisition projects have been slashed. Some funds have
closed down altogether and others have halted all expenditures pending a further
review later in 2009 and 2010.
Many of these foundations and grant - making organizations have decided to utilize
this time to "re- vision" their mission and priorities. Preliminary results from
these internal discussions seem to indicate that many of them may seek to adjust
their future grants to target more specifically some of the missing components in
the acquisition process. So, for example, connecting local communities via river
parkways is a major focus. Especially where those connections can include
underserved communities. Examples of this would be the Los Angeles River
revitalization project, Otai River, San Joaquin and Tuolumne Rivers. While it is
true that the Banning Ranch property would be the downstream anchor point for a
Santa Ana River parkway, the City of Newport Beach and surrounding
communities are not perceived as underserved.
Where acquisition of open space can foster awareness in underserved
communities on issues such as the connections between obesity, exercise and
health, clean water, urban parks and public education, these issues rise to the top
of the list in terms of priority funding. Grants are also being considered by
5
foundations where they will empower local communities to engage each other in
public discussions about the above mentioned topics.
5) Stimulus Funds — My research into this funding arena was greatly limited by my
lack of previous experience in utilizing this mechanism to gather acquisition
funds from State and Federal sources related to Stimulus legislation. It appears
that most of the application procedures noted deadlines in the first 6 months of
2009, as the stated goal for these funds was to "stimulate" the economy as quickly
as possible. That said, many of the programs were quite limited in scope and
individual project grants were under $1,000,000. An example of one land
acquisition program: Acres for America. Fund the acquisition of forest land on an
acre per acre basis to mitigate for impacts created by Wal -Mart in its domestic
operations. Program total: $5,000,000. Award ceiling: $500,000. The list goes
on and on. If the City is desirous of further research into this funding arena, it
may warrant more specialized expertise.
At the City's request, I also spoke with representatives of the Banning Ranch
Conservancy and other parties interested in preservation of the Banning Ranch property.
1) Banning Ranch Conservancy — In a meeting and subsequent telephone
conversations with Terry Welsh and Steve Ray, representing the Conservancy,
concern was expressed that as the Environmentally Sensitive Habitat Area
(ESHA) boundaries have not been ultimately decided, likely development
scenarios and resulting valuation ranges cannot be accurately determined at this
time. Terry believes this uncertainty impacts the validity of the Pricing Study's
conclusions and its usefulness in informing the City Council regarding decisions
affecting the Banning Ranch property. Per Terry, "as ESHAs are generally not
considered to have development potential, the final figure for the Buss - Shelger
comparative pricing study of the Banning Ranch property could be looked at as a
"ceiling ", with the final value to be determined once all of the appropriate surveys
and studies have been conducted, and the appropriate agencies and governmental
bodies have decided on ESHA boundaries ". Finally, the Conservancy
representatives acknowledged that this will be a long -term project and the
organization must continue to build internal capacity in the areas of science,
education, and advocacy to meaningfully participate in the process. The
Conservancy has continued to submit comments to the City on published
environmental documents, and has embarked upon an effort to raise awareness of
conservation funding requirements through periodic presentations to public
agencies as appropriate.
2) Friends of Harbors, Beaches and Parks - In a telephone conversation, Jean
Watt, representing Friends of Harbors, Beaches and Parks, expressed concern that
the City of Newport Beach not rush to any conclusion that might preclude an
acquisition or conservation plan for the entire 400 acre site. She noted that her
experience in other conservation projects has taught her that these development
projects can take many years to completely unfold, and market and/or regulatory
6
trends can influence the final outcome of a proposed project long after the initial
environmental documents are submitted.
3) The Conservation Fund — In a telephone conversation, Scott Ferguson, Southern
California Program Director noted the difficult fiscal environment in which all
organizations engaged in land acquisition currently operate. Scott agreed that the
most likely funding candidates have already been approached, and that
fundraising efforts will likely be a long -term process. We agreed it is likely that
an organization such as the Conservation Fund with experience in transactions
such as this will be required to shepherd the process for the conservation
community.
Assignment Conclusion
As a result of my meetings and conversations with the above referenced public agencies
and private foundations, it does not appear that sufficient funds would be available to
acquire the entire 400+ acres of the Banning Ranch in any reasonable timeframe. State
bond funds are currently unavailable due to budgetary constraints and it is unknown
when those funding sources might become available for new projects. Local funding
sources might be more readily available, but not at the level that would make possible a
successful acquisition transaction of the Ranch.
If, as some have suggested, that regulatory authorities ultimately downsize the proposed
development project resulting in a reduced land valuation, new opportunities may arise
for conservation funding to be applied to various acquisition scenarios at the Banning
Ranch if economic conditions are favorable. It must be pointed out however, that
portions of this property carry a significant per -acre valuation which must be prioritized
alongside other state -wide acquisition projects.
Thus, I recommend patience and a steady course through the environmental review
process that, along with evolving market conditions and agency financing guidelines,
may yield creative acquisition scenarios, not yet contemplated.
5
APPENDIX A
SUMMARY OF CONSULTIVE PRICING STUDY
iUSS,�iI iEL.GER ASSQCIAns
.al Estate Consultants& Advisors
December 23, 2008
City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA 92258 -8915
Attn: Ms. Sharon Wood
Assistant City lbtanager
Re: Consultive Pricing Analysis
Potential Acquisition. Components
Banning Ranch, Newport Beach
Our File No. 4252 -08
Ladies k Gentlemen:
• a erua xcae.
sum 15&
Los An%da,Q bmia 90017
Tslmh.nc (213) 388-7272
F..: (219) 38832%:
F -MO: h.c hdgerWpubdlnet
Resource Opportunity Group
81161, Streat, Suite 301
Santa Monica. CA 90403
Mr. David Myerson
Proprietor
Buss- Shelgcr Associates has been requested to ascertain for the City the magnitude of capital funds
from various sources that will be required to purchase all or portions of the Banning Ranch,
depending on priorities. The current project proposes development on roughly one -half of the 402 -
acre Ranch; entitlements are being sought .for 1,375 dwelling units, 75- hotel rooms, 75,000 square
feet of commercial space plus visitor oriented facilities.
In order to assist the City in their deliberations, relevant market information has been assembled
involving properties with features similar to the various Banning Ranch components. 'these price
benchmarks have been applied to the subject components on both a- conservative and optimistic
basis. The market data program consists of the following broad categories.
• Larger coastal degraded wetlands purchases
• Sales of developable sites adjacent to wetlands
• Transfers of developable marine terrace
• Frivironmentally sensitive hillside acquisitions.
Extensive back up details on each data item has been retained in our files, to be included in a final
appraisal report if required, to the interest of providing concise results, the information will be
ihown in summary form. in our ensuing presentation with an analysis and pricing
recommendations. In the interest of efficiency, the conclusions may be found in the table on the
following page. Additionally, we have provided our.judgment as to the "bulk price" in the event
the entire Banning Ranch is sought for acquisition rather than smaller increments.
a
A Lowland Open Space 134.1
$ 81000,000
$ 8,700,000
B -1 Oil Recovery Site 11.7
1,300,000
1.500,000
B -2 Oil Recoven Site 4.8
900,000
1,000.000
B -3 Bencliland Opcn Space 43.5
615007000
7,600,000
- C -1 BencblandDevelopment 85.4
111,000,000
1281100,000
' C -2 Benchland Development 29.7
52,000.000
59,400.000
' D Hillside Open Space 93.1
4.200,000
4,700,00
TOTALS .............. .......................... 402.3
$184,000,000
$211,000,000
BULK PRICB(25% Discount) ............................. _...
$138,000,000
$158,000,000
- Set forth on the following pages may be found concise general _land use
comments.. market
information plus our recommendations pertaining to each land use category by panel as shown
above.
Respectfully submitted,
BUSS- SHELGER ASSOCIATES
Ronald L. Buss
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APPENDIX B
MEASURE "M" FUNDING REQUESTS AND RELATED
CORRESPONDENCE
CITY OF NEWPORT BEACH
OFFICE OF THE MAYOR
Mayor
April 15, 2009
EA'ward D. SeUch
Mayor Pro Tem
Mr. Peter Buffa
Keith D. Cum,
Chairman, OCTA
- CouncilAlmvers
550 South Main Street
Leslie 1. Daigle
Orange, CA 92863 -1584
Nancy Gardner
Michael F. Henn
Dear Chairman Buffa:
steven Rosanskv
Don Webb
The Newport Beach City Council has embarked on an effort to determine if
there is sufficient funding from various sources to acquire the 400 acre site
known as the Banning Ranch. This site lies partially in Newport Beach and
partially in the County's jurisdiction, north of Pacific Coast Highway adjacent
to the Santa Ana River.
The Newport Beach City Council authorized the City to request Measure "M"
environmental mitigation funding for this project, in addition to three otters,
on January 27, 2009; and that request was submitted to OCTA. I want to
make It clear that the City is not in any way in competition with the Banning
Ranch Conservancy for these funds. The City supports the acquisition of
Banning Ranch for open space by any party capable of purchasing, protecting
and maintaining it, and we support the request being made by the Banning
Ranch Conservancy as being consistent with ounown request.
The Banning Ranch property has significant wetlands and wildlife Value, and
deserves to be preserved for the enjoyment of all County and State residents.
The City Council believes the acquisition of Banning Ranch by the
Conservancy, the City or some other capable party meets the full intent of the
Measure M funding set aside for acquisition and restoration purposes, and
would be a great legacy for these Measure M funds.
We strongly support Measure M funding for Banning Ranch and will continue
our work to identify any additional funding needed.
Thank you for your consideration.
Sincerely,
EDWARD D. SELICH
Mayor
City Hall • 3300 Newport Boulevard • Post Office Box 1768
Newport Beach California 92658 - 8915 • www.clty.newport- beach.ca.us
(949) 644 -3004
COPY
CITY OF NEWPORT BEACH
May 21, 2009
Chair Patricia Bates and Committee Members
Environmental Oversight Committee
Orange County Transportation Authority
550 South Main Street
P. O. Box 14184
Orange, CA 92863 -1584
Dear Chair Bates and Committee Members:
Your Committee has received three requests for Measure M environmental mitigation
funding related to the Banning Ranch property, located. in Newport Beach and its sphere
of influence. The purpose of this letter is to clarify the City's position on these requests
and eliminate confusion that may arise during the Committee's deliberations.
As background to these requests. Newport Beach adopted an updated General Plan in
-2006. The plan includes two options for the Banning Ranch property. The primary use
is open space -tithe site is acquired through public finding. If the site is not acquired for
open space within a time period and pursuant to terms agreed to by the City and the
property owner, the site may be developed for the alternative use, a residential village.
Even under the development option, -a majority of the property is to be preserved as
open space.
Both the City of Newport Beach and the Banning Ranch Conservancy submitted
requests for funding to assist in acquisition of the entire property, to implement the
General Plan's primary use for the property. As noted in Mayor Selich's letter of April
15, 2009, to OCTA Chair Peter Butte (attached), the City supports the acquisition of
Banning Ranch for open space by any party capable of purchasing, protecting and
maintaining it, and.the City supports the request of the Conservancy as being consistent
with our own request. In support of this position, the City has received a pricing study of
the property, and retained an open.spaoe acquisition consultant to help investigate the
availability of funds for acquisition of the property.
City Hall • 3300 Newport Boulevard • Post Office Box 1968
Newport Beach California 92658 -8915 • www.citymewport- beaoh.ca.us
IZ�,
i.eRer m Cnolr a,:b[c,o Sate: and LOrz,mlzee Member,
May 21,.2.x03
Pave 2
The property owners, Newport Banning Ranch LLC (NBR), and the City have begun the
process of public review of their development proposal, consistent with the alternative
use in the City's General Plan. As one means of complying with the General Plan
requirement that a majority of the property be preserved as open space, NBR also has
submitted a request for Measure M funding for private parties to acquire 80 acres of the
site to be used as a mitigation bank. The City is also supportive of this request, as it is
consistent with both land use alternatives in our General Plan.
Thank you for the opportunities to speak at your meeting of May 6, 2009, and to provide
further clarification in this letter. If you or your staff would like additional information or
clarification on the City's planning for Banning Ranch, please call me at 949 -644 -3222.
Sincerely,
Sharon Wood
Assistant City Manager
cc: Homer Bludau, -City Manager
Michael Mohler, Newport Banning Ranch LLC
Terry Welsh, Banning Ranch Conservancy
13
June 15, 20G9
Ms. Sharon Wood
Assistant City Manager
City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA 92658
Dear Ms. Wood,
Thank you for clarifying the city's position an the three Banning Ranch Property
requests submitted to the Orange County Transportation Authority (OCTA) for
the Renewed Measure M Freeway Environmental Mitigation Program funding.
We acknowledge the city's support for acquiring Banning Ranch for open space
by a party capable of purchasing, protecting, and maintaining the property.
The Environmental Oversight Committee (EOC) is currently developing an
approach for priorlizing properties submitted for early acquisitionlrestoration for
the Renewed Measure M Freeway Environmental Mitigation Program. Upon
completion, the EOC will make preliminary recommendations for early
acquisition and/or restoration funding to the OCTA Board of Directors; this is
anticipated to take place in the summer of 2009.
During fall 2009 and winter 2010, it is anticipated that early acquisitions may be
approved based on completion of the final step of the prioritization process,
which involves real estate appraisals and financial assessments. Ultimately,
properties or restoration projects processing the highest value that will benefit
the Renewed Measure M Freeway Environmental Mitigation Program will be
recommended to the OCTA Board of Directors for consideration for purchase
and/or funding.
Thank you for your interest in the freeway mitigation program. If you have any
questions, please contact Marissa E:iipino, OCTA Senior Community Relations
Specialist, at mespino@odamel or (714) 560-5607.
Sincere
r2a �Bates
Member, OCTA Board of Directors
Chair, Measure M Environmental Oversight Committee
PB:me
c: Environmental Oversight Committee Members
W2"�,rEA1,714)5WIDCTA (6184)