REPORT TO COUNCIL
SUBJECT
Title
Authorize the City Manager to Execute a Purchase and Sale Agreement with Feather River Land Trust for the Loyalton Property.
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
The City of Santa Clara (City) owns and maintains approximately 10,270 rural acres of undeveloped land (Property or Loyalton Property) in Lassen and Sierra Counties near the California-Nevada border. More specifically, the Property is located in northeastern California, about 30 miles north of Truckee, CA, 110 miles northeast of Sacramento, CA, and about 20 miles northwest of Reno, NV. The Property is referred to locally as the Trosi Ranch, and within the City as the Loyalton Ranch Property. The City purchased the Property with electric utility funds in 1977 for $1,613,850 or $157/acre. The City’s Electrical Department, Silicon Valley Power (SVP), is responsible for the maintenance of the Property. The following Council reports provide additional background and detail on the Loyalton Property:
• August 17, 2021- RTC 21-715
• December 14, 2021 - RTC 21-1577
• March 8, 2022 - RTC 22-316
The property has historically been used as seasonal grazing land and continues to be used as grazing land since the City’s purchase in 1977. Since the property was purchased, grazing leases have been issued to various ranchers to graze cattle. Currently SVP leases the property for cattle grazing
According to City records, the property was acquired with the intent to develop a geothermal power plant. After studies were performed in the early 1980’s, it was discovered that the geothermal potential for the land was much lower than anticipated. The anticipated geothermal plant was never developed. Though the geothermal plant was not deemed feasible, many other uses for the land were investigated, such as quarrying, wind, and solar power. None of the proposed projects considered were productive enough to be economically viable to develop. Some non-traditional ventures that were reviewed included a ski resort and a pheasant farm. These were also rejected as being outside the City’s scope of operations.
The City declared the Loyalton Property as surplus land on June 7, 2022 (RTC 22-768) in accordance with the Surplus Land Act (Government Code sections 54220-54234). On December 8, 2022, the City submitted all appropriate documents to the State of California and completed the Surplus Land Act process on January 9, 2023. On July 2023, the City executed a contract with CBRE, Inc. for brokerage services in connection with the sale of the Loyalton Property.
DISCUSSION
The City placed the Loyalton Property on the market on September 12, 2023 (Attachment 1). The City conducted extensive outreach and marketing in an effort to obtain as many bids as possible. Ultimately one offer was received from the Washoe Tribe working with the Feather River Land Trust as the Buyer.
Property Use by the Washoe Tribe
The Washoe Tribe has informed the City that the property sale has many benefits for the Washoe Tribe and the area. Per their communications, the sale will protect the multiple cultural and historical sites and artifacts on the Property. It will also protect species and wildlife on the land, in particular the Loyalton deer herd, which is of high importance to the California Department of Fish and Wildlife (CDFW) and within their conceptual area protection plan (CAPP). This sale would also go towards the Governors 30 by 2030 initiative with the goal of protecting 30 percent of California by 2030. The Washoe Tribe and Feather River Land Trust have also started to work on a visioning plan which will provide guidance on the land use and land activities on this property for the future.
Some of the key themes include:
• Return/promotion of health of keystone species, wildlife corridors, native plants important for traditional foods, tools, and medicines.
• Gathering place(s) on the land, trails, interpretation, return of ceremony.
• Education and training for the Tribe (including younger generation, language, traditional lifeways/culture camps, history, certifications, and climate adaptation)
• Economic development, including restoration contracts (fire recovery, erosion, meadows), classes, and career development
• Sacred site protection
• Washoe Tribe food sovereignty
Purchase and Sale Agreement Key Terms
After the completion of negotiations between City staff and the Feather River Land Trust (Buyer), the parties agreed to enter into a Purchase and Sale Agreement (PSA - Attachment 2), subject to City Council approval. Some of the key elements of the PSA include:
• Purchase Price - $6.0 million subject to Buyer’s appraisal
– Loyalton Property must appraise for $6 million otherwise Buyer has an option to terminate the Agreement.
– NOTE - If the appraisal amount is at least $5 million, it is likely, though not guaranteed, that the Buyer will still want to move forward with the purchase and seek an amendment to the Agreement.
• Buyer informed the City that they are subject to a limitation whereby they cannot exceed 20% above appraised value. If the appraised value is at least $5.0 million the Buyer could still offer $6.0 million under their policy.
• Any sale price below $6.0 million would require an amendment to the Agreement and such amendment will require City Council approval.
• Appraisal - Within ten days after the Execution Date, the Buyer will select a private state-licensed appraiser who is acceptable to the Seller and Buyer's public funding partner(s) (e.g., state agency)
– Buyer will have thirty (30) Business Days to review the Appraisal
– Buyer may elect to terminate this Agreement if the Appraisal is not approved by the public funding partner(s)
• Closing - On or before 10 months after the execution date except that Closing may be extended if (1) Buyer's public funding partner(s) has not assured payment; or (2) Such time period necessary for Seller to remove title exceptions and other encumbrances
• Deposit - $100,000 to be deposited no later than 5 business days after execution of the agreement; refundable if (1) Buyer's public funding partner(s) fails to fund purchase; (2) Appraisal is less than $6 million; (3) City refuses to remove Buyer’s exceptions to title; or (4) At or prior to the end of Due Diligence Buyer fails to approve the condition of property. The deposit applies to the purchase price.
• Diligence Period - The period commencing the Execution Date and ending ninety (90) days after the Execution Date or as extended by Buyer and Seller through mutual agreement in writing, or if a Phase II environmental report is required.
• As-is - Buyer acquires property as-is and releases City from any other obligations upon completion of sale.
• Environmental Release - Buyer will indemnify and hold harmless the City from any and all hazardous materials liability, whether hazardous material contamination occurred prior to or after Buyer’s purchase.
ENVIRONMENTAL REVIEW
Staff recommends that the City Council determine that the proposed purchase and sale of the Loyalton Property is exempt from the California Environmental Quality Act (“CEQA”) pursuant to section 15312 (Class 12 - Sale of Surplus Land) of Title 14 of the California Code of Regulations. This exemption is applicable because (1) the Loyalton Property is surplus land, and (2) the purchase and sale agreement does not contain any development obligations or commitments requiring additional environmental review.
FISCAL IMPACT
The sale price is $6.0 million. The closing costs and commission are expected to be approximately $450,000. Funding is available in the Electric Utility Fund for costs related to the sale. Revenue from the sale will be incorporated in the SVP budget upon finalization of sale.
COORDINATION
This report has been coordinated with the Finance Department and City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov>.
RECOMMENDATION
Recommendation
1. Determine the proposed action is exempt from CEQA pursuant to Sections 15312 (Class 12 - Sale of Surplus Land) of Title 14 of the California Code of Regulations; and
2. Authorize the City Manager or designee to execute a Purchase and Sale Agreement (Agreement) with Feather River Land Trust for the Loyalton Property in the amount of $6 million and on the terms presented and take any necessary actions to implement and administer the Agreement, including, execution of a grant deed and an assignment agreement.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Listing Advertisement
2. Purchase and Sale Agreement