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7.1.F. - Page 1 <br /> REPORT <br /> To the Honorable Mayor and City Council <br /> From the Block 2 Subcommittee <br /> February 10, 2014 <br /> SUBJECT <br /> Appropriation of Proceeds from the Sale of Block 2 <br /> RECOMMENDATION <br /> Adopt a Resolution appropriating and transferring $2.7 million from Fund 681 (Parking <br /> Fund) to Fund 357 (Capital Outlay Fund) and leaving the remaining $11.3 million in the <br /> Parking Fund until further directed by the City Council. <br /> BACKGROUND <br /> In 2013 the City relocated the Redwood Creek culvert that bisected the Block 2 <br /> property, placing it in Middlefield Road. This capital project was an important storm <br /> drain project that benefitted the development of the City's Block 2 property. By <br /> relocating the culvert prior to the sale of the land, the City enabled the developer to <br /> proceed immediately with the construction of its new office building, rather than delaying <br /> that construction by six to nine months. <br /> Also, in order to transfer the City's property, Union Pacific Railroad Company needed to <br /> relinquish its potential interests in a portion of that property. The City negotiated a price <br /> with the railroad and completed the quitclaim process in March 2013. <br /> With the sale of the property to Redwood City Partners (Hunter Storm and Kilroy <br /> Realty), for $17,000,000 in October 2013, the proceeds were placed In the City's <br /> Parking Fund, in the amount of $14 million ($3 million was set aside in escrow for <br /> hazardous material disposal). <br /> ANALYSIS <br /> The culvert relocation project was funded through the City's Capital Outlay Fund in FY <br /> 2012-13. The final cost of the project, including construction, project management, <br /> design, and inspection was $2,344,954. When the project was established it was noted <br /> that the Capital Outlay Fund would be reimbursed from the sale of the Block 2 property. <br /> The subcommittee recommends that $2,344,954 be transferred from the Parking Fund <br /> to the Capital Outlay Fund. <br /> The Quitclaim agreement with Union Pacific Railroad was in the amount of $372,810. <br /> These funds were also provided to the Block 2 project from the Capital Outlay Fund. <br /> The subcommittee recommends that the Council authorize the transfer of this amount <br /> from the Parking Fund to the Capital Outlay Fund. <br />