CITY OF CARMEL-BY-THE-SEA Council Report January 7, 2014

To: From: Submitted by: Subject:

Honorable Mayor and Members of the City Council Ja son Stilwell, City Administrator Brian Roseth, Planning Consultant Consideration of a determination that leasing the Flanders Mansion is infeasible and directing staff to begin preparation resolutions and findings necessary to begin the process of selling the Mansion

Recommendation(s): Determine whether the City shou ld declare the lease alternative to be

infeasible and resume the process of selling the Flanders Mansion property. If so, provide guidance to staff on the following : Should parcel boundary 6.7, as was selected for the lease option, remain applicable to a sa le? Should deed restrictions limit occupancy to single-fam ily residential use? Should all mitigation measures identified in the EIR be included?

Direct staff to draft the required resolutions and findings to support the Flanders Mansion Sale Alternative. City Council review and approval of the documents would be scheduled for a future meeting.
Executive Summary: In January, 2013, the City Council reviewed the Environmental Impact

Report for Sale of the Flanders Mansion and selected the Lease Alternative with a reduced parcel boundary (Alternatives 6.4 and 6.7). Seven lease criteria were established (see Attachment-A). Staff was directed to begin immediate marketing of the property to find a lessee. If an acceptable lease was not approved by 7 May 2013, staff was to return to the City Council for consideration of new resolutions suitable for approval of a sa le of the Flanders Mansion Property as a single-fam ily residence. This deadline was subsequently extended at least twice.
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To date, marketing and lease negotiations have been unsuccessful. If the City Council determines that a lease in infeasible and that the property should be sold, the matter must be placed on a ballot for authorization by the voters. The recommended action will provide guidance to staff to prepare draft documents for City Council adoption of the Sale Alternative at a future meeting.
Analysis/Discussion: The City Council's adoption of the lease Alternative avoided the

significant environmental impact associated with loss of public parkland. If the City sells the property this impact cannot be avoided. Before adopting the Sale Alternative the California Environmental Quality Act requires that the City Council first conclude that the lease Alternative is

"infeasible for specific economic, legal, social, technical, or other considerations". The City also must specify the benefits and othe r overriding considerations that warrant taking the proposed action, in spite of the significant environmental impact. The City must document, in findings, the basis for both of these determinations. Since taking action in January 2013, the City advertised the availability of the property, circulated an RFP, reviewed subm itted proposals and pursued lengthy negotiations in an effort to find a suitable lessee. After a year's effort only three proposals have been received and no proposal has met the established criteria . If the City Council determines that the lease criteria were reasonable, and that efforts to find a lessee were sufficiently exhaustive, it may be reasonable to conclude that a lease is economically infeasible. Selling the property would require rescinding the resolutions adopted in 2013 and adopting new resolutions with findings supporting a sale. The City must then complete several additional steps before submitting a ballot measure to the electorate seeking authorization from the voters to sell parkland. After spending a year unsuccessfully searching fo r a lessee, and with a General Election scheduled in November 2014, the t iming is appropriate to consider whether to pursue a sale of the property. Council review and action in March. If the recommended action is taken, staff will prepare documents for City

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Fiscal Impact:

The cost for preparing the legal documents is estimated to be $13,000. If the resolutions are adopted, subsequent costs will be incurred for completion of the ballot measure and other elements of the parkland sale process.

Budgeted (yes/no):

Funding Source: General Fund

Previous Council Action/Decision History:

8 January 2013: Project se lection (Lease Alternative) 1 April 2013: Adoption of Resolutions/Find ings

Reviewed by:
City Administrator , Asst. City Admin. Public Safety Dir

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City Attorney Dir of CPB Library Dir

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Administrative Services Dir of Public Svcs Other

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Attachment-A

Minimum Lease Criteria for Flanders Mansion

Adopted by City Council: 8 January 2013

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The property must be used as a single-family residence during the lease term; Potential lessees must show sufficient liquid financial resources to restore and renovate the residence and grounds consistent with a preservation plan approved by the City according to historic preservation standards; The lessee must agree to conform to and implement all mitigation measures approved by the City Council; The lessee must restore the property on a timely basis} maintain the property throughout the lease} and return it to the City in its fully restored condition; Lessee must agree to pay market rent including all expenses (with possible allowances to offset improvements);
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Lessee must provide adequate insurance to protect the City from any and all liability and to indemnify and defend the City against any potential legal action ; and Offers that meet the minimum conditions will be evaluated upon receipt. Proposals to be evaluated upon receipt.

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