Homeless Shelter Costs For Grownups: Property Records Indicate NLB Yr Round Homeless Shelter Property (6841-45 Atlantic) Sold For $2.0 Mil In Dec. 2013; Should Council OK Buying It For $9.5 Mil (Includes Paying $1.5 Mil To Phase Out Liquor Store)?
|(February 2, 2019, 6:00 a.m.) -- L.A. County property records indicate the parcels that city staff proposes to purchase for a year-round homeless shelter ("state of the art village style campus for homeless services") at 6841-45 Atlantic Ave. (former Atlantic Farms site north of the 91 freeway) last sold in December 2013 for $2 million.
On Feb. 5, 2019, city staff will ask the City Council to approve buying it for $9.5 million, a sum that includes paying the proprietor of "Eddie's Liquor" roughly $1.5 million to phase out the business, which the City will allow to operate on the site until Jan. 5, 2020 while paying rent to the City totaling roughly $43,000.
The L.A. County Assessor's office indicates the properties sold in December, 2013 for $2 million (info is included on pages here and here). City staff's agendizing memo seeks Council approval to spend $9,591,540 on the purchase, doesn't mention the 2013 sale price and states in pertinent part:
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[Agendizing memo text] The Subject Property is approximately 99,534 square feet and is improved with 3 commercial/industrial buildings totaling 28,084 square feet. The Seller has agreed to sell the Subject Property, as well as the Seller-operated business, Eddie's Liquor #1, to the City for an all-inclusive amount not to exceed $9,491,540, which includes land and improvements, liquor license, furniture, fixtures and equipment, inventory, goodwill, and compensation for relocation benefits. In addition to the all-inclusive purchase price, an additional amount of up to $100,000 will be expended for acquisition costs, including appraisal, environmental investigation, and escrow and closing fees.
Since the agendizing memo didn't attach an appraisal, LBREPORT.com asked City of LB Director of Economic Development, John Keisler, if one was performed, sought basic information about it and requested its disclosure as a public record. Mr. Keisler replied via email:
"An Independent appraisal was completed for the property at the City's request/expense. The land and improvement fair market value is $7,540,000. The total purchase price negotiated also includes purchase of the liquor store, F&E, and any goodwill and relocation claims. The appraisal will not be made available until acquisition of all of the property is completed pursuant to California Government Code 6254(h). (The cited CA Gov't section doesn't require government entities to disclose the "contents of real estate appraisals...made for or by the state or local agency relative to the acquisition of property...until all of the property has been acquired or all of the contract agreement obtained.")
And what about verbiage in the agendizing memo that states the "purchase price is a less costly alternative to a judicial resolution and potential litigation costs"? Mr. Keisler replied; "As to the acquisition being less costly than judicial settlement, additional funding would not be needed to engage trial attorneys or compel trial testimony from real estate experts. Further, the negotiated settlement is more expedient and time is of the essence for this project as the funds received from the State need to be expended by mid-2020."
So from where is the City getting the $9.5 mil purchase price?
On November 13, 2018, the City Council authorized the City Manager to execute an agreement to receive and expend grant funding from the Business, Consumer Services and Housing Agency Homeless Coordinating and Financing Council (HCFC), in the amount of $9,387,420 for Homeless Emergency Aid Program (HEAP), Continuum of Care allocation. HEAP funding, offered through the State's FY 19 budget, provides $500 million in one-time funds to enable local jurisdictions to provide immediate emergency assistance to individuals experiencing homelessness. Of the amount awarded, $8 million is designated for a year-round shelter and has been appropriated in the Health Fund in the Health and Human Services Department. Additionally, the City recently closed escrow for the sale of the Broadway Block Site B at 200-232 Long Beach Boulevard. Of the total amount anticipated to be received for Broadway Block Site B property, $1,591,540 is available and recommended for the acquisition of the property located at 6841-6845 Atlantic Avenue...
And regarding Fiscal Impact
...The Broadway Block Site B site was originally thought to be wholly-owned by the Successor Agency and proceeds were planned to be allocated consistent with City Council policy direction, 75 percent for the City's for non-recurring economic programs in the former Downtown Project Area, and 25 percent for non-recurring economic programs with a Citywide impact. It has since been determined that 52 percent of the Broadway Block Site B was owned by the City, and not the Successor Agency. This change in ownership is anticipated to result in additional funds being remitted to the General Fund. Future tenant improvements to the Subject Property would be subject to a separate future approval process with costs expected to be up to $3,400,000 from County Measure H funds.
By LBREPORT.com's unofficial reckoning, the City-acknowledged acquisition cost ($9.5 mil) plus the cost of subsequent improvements to produce the "state of the art village style campus for homeless services" (up to $3.4 mil) would total up to $12.9 mil.
That's up to $12.9 million to provide the physical facility for 125 year-round shelter beds and associated facilities. By our math, that's $103,200 per shelter bed and associated facilities (12,900,000/125=103,200)...and that doesn't include the future continuing annual taxpayer costs (from sources not discussed in the agendizing memo) to operate, maintain and staff the facility.
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