To: Board of Supervisors
From: Warren Lai, Public Works Director/Chief Engineer
Report Title: Purchase of Real Property located at 2555 El Portal Drive, San Pablo
☒Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
DECLARE that a notice of intention to purchase the Real Property located at 2555 El Portal Drive, San Pablo, California, having Assessor’s Parcel Number 416-140-047-0 (Property), was duly published in the Contra Costa Times, as required by Government Code section 25350 and in compliance with Government Code section 6063.
DECLARE that this Board hereby consummates the purchase of the Property according to the terms and conditions of the Purchase and Sale Agreement between the County and Seller dated February 1, 2022.
ACCEPT the grant deed from Clarence Perry, LLC (Seller), for the purchase of the Property.
APPROVE the purchase price of $21,320,000 (Purchase Price) and AUTHORIZE the Auditor-Controller to wire approximately $5,345,400, payable to WFG National Title Insurance Company (Title Company), 4160 Dublin Blvd., Suite 410, Dublin, CA 94568, ABA No.: 121000248, Account No.: 4943546242, Escrow Number 24-108434, Attn: Evelyn Bowens, Escrow Officer, (925) 847-9570, which amount is equal to the Purchase Price and estimated closing costs, less $16,000,000 of Homekey grant funds being deposited into escrow by the State.
DIRECT the Real Property Division to have the declaration of restrictive covenants required by the California Department of Housing and Community Development (HCD), restricting the use of the Property to providing permanent supportive housing for persons experiencing, or at risk of experiencing, homelessness, delivered to the Title Company for recording in the Office of the County Recorder.
FISCAL IMPACT:
The purchase of the Property will be funded through (i) a grant of $16,000,000 from the State’s Homekey Program, (ii) a grant of $2,048,505 from the State’s Whole Person Care program, and (iii) a one-time allocation of Measure X funds approved by the Board on November 16, 2021. Measure X funds in the amount of $3,261,495 will be used for the property acquisition and a further $1,938,505 will be used to fund closing costs, landscaping, furniture, and operating reserves for the housing program.
BACKGROUND:
On August 9, 2019, the County received a notice from the California Department of Health Care Services informing the County that it had been awarded $2,048,505 in one-time funds for use in Whole Person Care pilot programs that provide housing services to individuals experiencing homelessness or who are at risk of homelessness.
On November 16, 2021, this Board approved an allocation of $5,200,000 of one-time Measure X funds to be used toward the purchase of the Property, subject to supplemental funds for the purchase being made available through the Homekey Program.
On December 14, 2021, this Board authorized the Health Services Director to apply to HCD for up to $32,400,000 of grant funding from the Homekey Program to purchase the Property. The County’s application to HCD proposed the acquisition of the Property and the renovation of the existing two-story building on the Property to create 54 studio apartments for use as permanent supportive housing for persons experiencing, or at risk of experiencing, homelessness.
On February 1, 2022, in support of the County’s application to HCD for Homekey funding, this Board authorized the Public Works Director to enter into a lease with the Property owner, under which the owner would construct tenant improvements specified by the County to renovate the building, and a Purchase and Sale Agreement (PSA), governing the County’s purchase of the Property. The Board action taken on February 1, 2022, stipulated that acceptance of the grant deed formalizing the County’s purchase of the Property would be the subject of a subsequent Board action.
On November 21, 2023, the County received a letter from HCD notifying the County that it had been awarded $16,000,000 of Homekey Program grant funds for the purchase of the Property.
Under the PSA, the term “Base Price” means the result obtained by subtracting from $19,106,987, or adding to $19,106,987, as applicable, the sum of certain variables described in the Work Letter that is part of the lease between the County and the Seller. The PSA limits the purchase price of the Property to an amount that does not exceed the sum of the “Base Price” and the “Change Order Component”. By applying the variables in the Work Letter and based on the purchase price limit in the PSA, the purchase price is $21,320,000.
In accordance with the County’s application for Homekey funds and the award letter, the Property will be used by the County to provide permanent supportive housing for qualifying individuals.
CONSEQUENCE OF NEGATIVE ACTION:
If the County does not purchase the Property upon the completion of the building renovations, the County will be required to begin making monthly lease payments to the owner in the amount of $86,400 per month for the first year, increasing annually thereafter.