There were a few articles last week concerning the proposed sale of two downtown properties on the 1000 block of Texas Street acquired by the former Fairfield Redevelopment Agency. The land and buildings were acquired in 2005 and 2006 at the then fair market value of $775,000 to assist in combating blight within the City Center Redevelopment Project Area.
The two homes on the properties were in poor condition and demolished shortly after the acquisition to prepare the sites for redevelopment.
As our readers may well be aware, the state eliminated all redevelopment agencies in 2011 and mandated the sale of all agency holdings. The Purchase and Sale Agreement presented last week to the Successor Agency Board for the now-vacant parcels was for the current fair market value of $150,000. This sale has been the subject of articles in the media expressing critical opinions about the sale due to the agency’s financial loss on the specific transactions.
We wanted to let our readers know a few of the facts that the authors of last week’s articles left out. The proposed sale of the two downtown lots are part of a larger package. These parcels represent only two of nine former redevelopment agency properties that the Department of Finance is requiring be sold. As with any portfolio, losses and gains should be reviewed against the entire portfolio, not just a single sale. In addition, when looking at sales, one must consider overall market conditions.
Since the dissolution of redevelopment, the Successor Agency has cataloged all properties owned by the former Fairfield Redevelopment Agency into a Long Range Property Management Plan that must be approved by the Department of Finance prior to the conveyance of property. Not all properties must be sold. The Department of Finance can also approve the Successor Agency’s conveyance of “government purpose property” (public parking lots, street rights of way, public buildings, etc.) to the city or another government agency prior to approving the Long Range Property Management Plan.
Fairfield cataloged 23 properties in its Long Range Property Management Plan to the Department of Finance for approval in August 2013. The Department of Finance has approved the transfer of 14 “government purpose” properties, including active rights of way such as a portion of Highway 12 and the Interstate 80 widening project underway near Costco. The remaining nine properties to be sold subject to approval of the Department of Finance are two downtown lots, the former Fresh Choice property, 15 acres on Business Center Drive; 6.7 acres near Suisun Valley Road and I-80, the former Fairfield Bowl property, the 28-acre former Dixon Hill reservoir site, the land underneath the Solano mall sign and a small parcel used for a parking lot near Chevy’s restaurant.
In addition to the downtown lots currently proposed for sale, Fairfield’s Successor Agency has received letters of intent to purchase the former Fresh Choice property and the 15 acres on Business Center Drive. Negotiations are underway for the two future purchase and sale agreements that would go to the Success Agency Board, the Oversight Board and the Department of Finance for approval to sell the respective properties.
Staff estimates that the total value of the proceeds from sales, including the downtown lots, will net the Successor Agency more than $1.8 million. The sale proceeds would be distributed as property tax to local taxing entities or used for fulfilling enforceable obligations.
As with any real estate portfolio (albeit public or private), the sale of any one asset can trigger a loss (or a gain). For example, the 1.25-acre site encompassing the Fresh Choice property was purchased in 1976 for approximately $64,000 and ground leased to Fresh Choice for a restaurant building. The Successor Agency now owns the land along with a building worth significantly more than the original land cost, so there will be a substantial gain at time of sale (the exact opposite from the downtown lots wherein the buildings were demolished).
The goals of redevelopment included economic development, attracting businesses and eliminating blight. Assembling land for future development helped meet these goals. The virtues of redevelopment have been the subject of many debates and will surely continue. We are compelled to note, however, that Fairfield would not have a regional shopping mall if redevelopment had not purchased and assembled the land. The same can be said about numerous other improvements around town.
Isolating and sensationalizing a single transaction makes great headlines. Reality is balanced with much less shock and awe. We hope the perspective in this column provides some broader background and a clarification for readers.
Economic Notes is an update from Fairfield City Hall written by Brian Miller and Karl Dumas of the Fairfield Planning and Development Department. They can be contacted at 428-7461 or email at firstname.lastname@example.org or email@example.com.