TO: MAYOR AND CITY COUNCIL MEMBERS, CITY OF CHINO
FROM: JACKIE MELENDEZ, ASSISTANT CITY MANAGER
SUBJECT
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Purchase of Real Property at 13218 6th Street.
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RECOMMENDATION
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1) Appropriate $1,127,000 from the General Fund balance, 2) Adopt Resolution No. 2025-026, authorizing the Agreement for Purchase and Sale of Real Property and Joint Escrow Instructions to acquire the commercial property at 13218 6th Street from SKS Property Investment LLC in the amount of $1,100,000, including $4,500 for escrow and title fees, $4,500 for conducting due diligence, and $18,000 for remediation of the Business Environmental Risk (BER) findings, for a not to exceed total of $1,127,000; and 3) authorize the City Manager to execute all documents on behalf of the City.
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FISCAL IMPACT
By approving the Purchase Agreement, fees, and remediation of BER findings, there will be a reduction in the FY 2024-25 General Fund balance in the amount of $1,127,000. There is sufficient General Fund balance for this transaction. There are sufficient funds for the initial deposit of $30,000 in the current Administration Department Budget.
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above further the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Positive City Image
• Responsible Long-Range Planning
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Expenditure: 1009020-48000- Acct Recommended |
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BACKGROUND
The property at 13218 6th Street has a history of commercial use as a neighborhood market, with operation dating back to before 1959 and the most recent tenant being El Pueblo Market. The City has been in discussions with the current owner regarding the potential purchase of this property for several months. A purchase price of $1,100,000 has been agreed upon, and the owner has indicated a preference for an expedited closing.
The subject Property is located adjacent to City-owned properties used for public parking and across the street from the Neighborhood Activity Center. The site includes a commercial building of approximately 2,700 square feet on a 7,296 square foot lot. Based on a review of comparable sales in the vicinity, City staff has assessed the agreed-upon purchase price of $1,100,000 as consistent with market value. The Property is currently leased to an entity owned and controlled by owner which entity operates a business. The lease will be terminated by the owner prior to closing.
ISSUES/ANALYSIS
Property Analysis and Purchase Agreement Terms
The El Pueblo Market property, located at 13218 6th Street, has a General Plan land use designation of Public and is currently zoned Public (P). These designations are described as primarily intended for public uses or institutions, including civic centers and related uses, and support government, civic, cultural, recreational, health, and infrastructure aspects of the community.
The subject property and surrounding area are situated within the City’s Civic Center Master Plan, approved in December 2022. This plan outlines a vision for the revitalization of the historic Civic Center area, focusing on a mixed-use environment with outdoor spaces and civic facilities. Staff indicates that acquisition of the property is consistent with the City’s General Plan Public land use goals and could allow for flexible future use in alignment with the Civic Center Master Plan, potentially for public parking or other City purposes related to downtown redevelopment. The property's location within the civic center area and proximity to the Carolyn Owens Community Center are noted as potentially suitable for such uses.
Due Diligence Findings:
A Phase I Environmental Site Assessment was conducted, which did not recommend a Phase II assessment. The Phase I report identified a potential Business Environmental Risk (BER) related to the possible presence of asbestos and lead-based paint due to the building's age.
A Building Inspection Report identified potential improvements or corrections totaling approximately $18,000 if the existing building were to continue in use.
Purchase Agreement Terms:
The City and the property owner have negotiated a Purchase Agreement with the following key terms:
• Listed Price: $1,200,000
• Purchase Price: $1,100,000
• Deposit: $30,000
• Escrow Company: Fidelity National Title Company
• Title Insurance: ALTA (non-extended) owner’s policy through Fidelity National Title Company, with exceptions approved by the City.
• Due Diligence Period: 45 days from the City's receipt of all required information. This period may be extended by 10 days after receipt of a Phase II report if recommended by the Phase I. A License Agreement dated April 24, 2025, allowed the City to begin due diligence work, the cost of which is the City's responsibility.
• Close of Escrow: 15 days after the expiration of the due diligence period.
• Representations & Warranties: Limited from the owner; the City will acquire the property in "AS-IS" condition.
• Costs: The owner will pay for the owner’s title insurance policy, the natural hazard report, and half of the escrow charges. The City will pay half of the escrow charges and all due diligence costs.
• Liquidated Damages: The City has the right to terminate the agreement during the due diligence period with a full return of the deposit. Termination after this period may result in forfeiture of the $30,000 deposit as liquidated damages.
• City Manager Authority: The Purchase Agreement grants the City Manager the authority to execute all transaction documents, including modifications, amendments, and time extensions.
Planning Commission Approval:
At its meeting held on May 21, 2025, the Planning Commission, with a vote of 6-0-1, with Commissioner Fraga absent, found the acquisition as being in conformance with the general plan.
Attachments: Resolution 2025-026 including Purchase and Sale Agreement