That the Successor Agency:
A.  Authorize GM Properties, Inc. to list the property commonly known as a portion of the La Habra Marketplace Parking Lot, APN 018-381-64, for sale, to solicit sealed bids to be opened at a public bid opening, and authorize the Executive Director to execute any agreements necessary for this process; or alternatively,

B.  Authorize GM Properties, Inc. to list the Property on the Ten-X auction platform in an open bid process, and authorize the Executive Director to execute any agreements necessary for this process.

The Successor Agency to the La Habra Redevelopment Agency ("SA") is required by state law to wind down the activities of the City's former Redevelopment Agency. Among those activities is to dispose of any properties owned by the former Redevelopment Agency. To date, there remains one parcel of land still owned by the former Redevelopment Agency, a 2.8-acre parking lot commonly known as a portion of the La Habra Marketplace Parking Lot, APN 018-381-64 ("Property").

On June 2, 2022, the Orange County Oversight Board ("OB") directed the SA to dispose of the property in compliance with the disposition requirements of agency-owned property under the state Surplus Land Act ("SLA"). On April 6, 2023, staff received a final determination letter from the California Department of Housing and Community Development ("HCD") stating that the property met SLA's qualifications for "exempt surplus land." On April 24, 2023, the SA's legal counsel, Best Best & Krieger LLP, received an appraisal for the Property from Anderson & Brabant, Inc. that established an appraised value for the Property at $30,000. On September 18, 2023, the SA approved an Agreement with GM Properties, Inc. (Broker) to act as the listing agent for the Property, and on October 17, 2023, the broker listed the property for sale.
 

On December 18, 2023, the SA, at their regularly scheduled meeting, approved Resolution No. 2023-04, approving a Quitclaim deed (Attachment 1) conveying the Property from the SA to the City of La Habra ("City"), for a purchase price of $57,500, and forwarded the proposed property sale to the OB for approval. On January 16, 2024, pursuant to California Health and Safety Code Section 34181, the OB considered a resolution to approve the sale of the Property from the SA to the City. Following public testimony and discussion, the OB rejected the SA's request for the OB to approve a resolution for the conveyance of the Property from the SA to the City of La Habra.

In an effort to fulfill the SA's responsibility to sell the subject Property in a timely manner and for the highest amount, staff recommends that the SA direct staff to move forward with one of the two property disposition options described below, with the first option being staff's recommendation. For either of these options the SA's Broker will notify parties that had previously indicated an interest in purchasing the Property to advise them that the property is once again being marketed for sale. In addition, both options will require interested parties to submit their bids via a standardized purchase and sale agreement prepared by the SA's legal counsel.

Recommended Option - Utilize the SA's Broker to List the Property for Sale and Have Sealed Bid Offers Submitted to the City Clerk’s Office

If this option is approved by the SA, the Broker will once again list the Property for sale and solicit offers. Interested parties will be instructed to submit offers directly to the City Clerk's office no later than a date and time that will be determined. In addition to the Broker's marketing process for the Property, a notice regarding the Property's availability for purchase will also be published in the Orange County Register. Interested parties will be required to submit sealed bids, which will be date and time-stamped by the City Clerk's Office and then opened at a public bid opening at a date and time to be determined. As noted above, the terms of the Property sale will require bidders to conform to a standardized purchase and sale agreement provided by the SA's Broker. Bidders will also be required to provide a completed W-9 form, and proof of funds. Staff anticipates that this process will take two to three months to allow sufficient time for the Property to be marketed.

The benefit of this recommended approach is that it provides for a less complicated, more streamlined bid/sale process, as the SA's Broker would be the only consultant involved with the sale process. This process would also be markedly less costly than utilizing an auction platform. The main disadvantages of this approach compared to the alternative described below, are that fewer bidders may become aware that the property is for sale, and that the process will require the City Clerk staff to be responsible for the receipt and opening of bids in a transparent manner. That said, the City Clerk's staff is well-trained and experienced at administering sealed bid processes as the City routinely conducts this type of process when awarding certain public works construction contracts.

Alternative Option - List the Property Through the Broker with Ten-X, an Online Auction Platform

An alternative to the recommended property sale process described above, would have the SA's Broker facilitate the listing of the Property through an online auction platform named Ten-X. Ten-X is part of the CoStar family and offers an efficient and transparent way to sell commercial real estate. Based on Ten-X's property disposition process, their fees are paid by the buyer in the event of a successful sale, based on their own fee schedule (Attachment 2). 

Ten-X would take responsibility for all marketing materials for the Property, including access to documents describing any restrictions on the Property, such as the Grant Deed, Development Agreement, Owner Participation Agreement, Appraisal, etc. The property would be marketed for approximately two months by Ten-X. During this time frame, interested parties would be responsible to conduct their own due diligence and submit their qualifications to Ten-X to be eligible to participate in the auction. Bidders would be required to provide a completed W-9 form and proof of funds. Ten-X would pre-qualify all bidders prior to an auction. Similar to the recommended process described above, bidders would be required to conform to a standardized purchase and sale agreement prepared by the SA's legal counsel.

Ten-X would structure the transaction of the Property as an "Absolute Auction," where bidding would start at $1 and where there would be no reserve price (i.e. there would be no minimum price that the property must sell for). This means that the sale of the Property would be awarded to the highest bidder, regardless of price. Although the auction would have no reserve price, Ten-X is confident that the property will, at a minimum, sell for the appraised value of $30,000; however, there are no guarantees. The on-line auction would take place over two days. During the auction, prospective bidders will be able to see the highest submitted bid, but not the name of the bidders. Members of the public will also be able to monitor bids through Ten-X on a real-time basis as they are submitted. Following the auction, Ten-X will provide a complete list of bidders who participated in the auction, resulting in a very transparent process. In the event that the SA or OB do not approve the sale of the Property to the highest bidder, any deposited funds will be released back to the bidder. Ten-X will only receive its fee if the property closes escrow. 
 
The benefit of using Ten-X to market and sell the Property is a potentially larger pool of interested parties and greater transparency in the bidding process. The main drawbacks include a more complex bid/sale process, a potentially longer marketing period, and a markedly higher fee to sell the Property as fees would be payable to both the SA's Broker and to Ten-X. Higher transaction fees could arguably result in less net proceeds from the sale of the Property, which could potentially mean less net sales proceeds available to be disbursed to taxing entities.

Upon the successful and approved sale of the Property, the SA will be responsible to pay the Broker's commission and any closing/escrow fees as described below. The SA has funds available to cover the costs of these fees.

Examples of potential fees and costs have been estimated based on both Property sale options described above:

Fees for the Recommended Option - Utilize the SA's Broker to List the Property for Sale and Have Sealed Bid Offers Submitted to the City Clerk’s Office

For their services as Broker, GM Properties will receive a 5% commission. The commission and the closing/escrow fees will be paid by the SA. Should the purchaser have a representative broker, the 5% commission will be equally split between the listing and purchasing broker. Table 1 below provides estimates of how much the transaction fees would be based on various sales price examples.

If the SA were to choose the Alternative Property sale option, GM properties would still act as the SA's Broker and would receive a 5% commission. The Broker's commission and the closing/escrow fees will be paid by the SA. In addition, Ten-X would charge the buyer a premium per their fee schedule, which is set at a minimum of $10,000 (Attachment 2). Additionally, Ten-X would require the preparation of a Phase I & Property Condition Assessment no older than 90 days old, prepared by their third-party vendor. The costs for those reports would be paid for by the buyer as well and are estimated to cost approximately $2,200. The only instance where the SA would be responsible for any costs associated with the sale of the Property through Ten-X, would be if the SA decides to terminate the sale process prior to the auction date. As noted in the table below, the cost of the property reports and the additional Ten-X fee would result in overall transaction fees that would be at least $12,200 more than costs associated with the option recommended by staff.

Table 1: Fee Estimate Examples

Example Sales Price	5% Broker Commission	Closing/ Escrow Fees	Estimated Fee Total with Broker Only Option	Ten-X Fees	Estimated Fee Total including Ten-X Fees*
$200,000	$10,000	$2,000	$12,000	$12,200	$24,200
$100,000	$5,000	$1,800	$6,800	$12,200	$19,000
$30,000	$1,500	$1,700	$3,200	$12,200	$15,400

*It should be noted that there may be additional fees not included in this example.