AGENDA ITEM
TO: HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM: CARLO TOMAINO
CITY MANAGER
SUBJECT:
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SIGNAL HILL, CALIFORNIA, OBJECTING TO THE PUBLIC TAX SALE OF THE PROPERTY LOCATED AT 1800 EAST SPRING STREET AND AUTHORIZING AN APPLICATION TO PURSUE ACQUISITION OF THE PROPERTY PURSUANT TO CHAPTER 8 OF PART 6 OF DIVISION 1 OF THE CALIFORNIA REVENUE AND TAXATION CODE
Summary:
The Los Angeles County Treasurer and Tax Collector scheduled the property at 1800 East Spring Street, currently occupied by Tesla, for a tax-defaulted sale. Following the City Council's direction to preserve the City's ability to evaluate options related to this strategically important commercial property, staff recommends the City Council adopt a Resolution objecting to the public sale and authorizing staff to submit a Chapter 8 application to the Los Angeles County Treasurer and Tax Collector. The proposed action would provide time for staff to complete due diligence efforts; it would not authorize the expenditure of public funds to acquire the property. Staff would return to the City Council at a later date for further consideration.
Strategic Plan Goal(s):
Goal No. 1: Financial Stability. Ensure the City's long-term financial stability and resilience.
Goal No. 3: Economic and Downtown Development. Improve the local economy, support local businesses, and create a vibrant downtown core.
Recommendations:
1. Object to the public tax sale of the property located at 1800 East Spring Street, Signal Hill, California (the "Property")
2. Authorize the City to submit an application to the Los Angeles County Treasurer and Tax Collector to pursue acquisition of the Property pursuant to Chapter 8 of Part 6 of Division 1 of the California Revenue and Taxation Code; and
3. Authorize the City Manager, or designee, to execute and submit the documents necessary to preserve and advance the City's Chapter 8 application.
Fiscal Impact:
The City Council's adoption of the proposed Resolution would initiate the Chapter 8 process; it would not obligate the City to complete the acquisition or authorize the expenditure of public funds. The City would incur limited costs associated with the Chapter 8 application and due diligence, including appraisal, title, environmental, legal, and other professional services. Staff would use existing appropriations to fund these costs and return to the City Council if additional budget authorization becomes necessary. Should the Chapter 8 process advance, and staff recommends completing the acquisition, staff would return to the City Council with a comprehensive fiscal analysis, proposed funding source, due diligence findings, and any additional actions necessary.
Background:
The Los Angeles County Treasurer and Tax Collector recently scheduled the Property, located at 1800 East Spring Street, for a tax-defaulted property sale. The Property represents a strategically important commercial site within the City. Tesla operates a major automobile sales and service facility at the location and contributes to the strength of the City's commercial and automobile sales base. The Property is a significant commercial asset and the City seeks to preserve the economic productivity of the site, support continued commercial activity and protect the City's long-term fiscal interests.
Analysis:
Chapter 8 of Part 6 of Division 1 of the California Revenue and Taxation Code establishes a process through which eligible public agencies may seek to acquire tax-defaulted property outside the public auction process. Under this process, a public agency may object to the auction and request that the County instead pursue an agreement for a public agency to acquire the property. The City Council previously considered options related to the Property and directed staff to take the steps necessary to preserve the City's ability to pursue the acquisition through the Chapter 8 process.
To preserve this opportunity, the City must object to the public sale and submit the required application and supporting documentation to Los Angeles County. If the County accepts the City's request, the Chapter 8 process would require additional review and approvals before the City could acquire the Property. Those steps include preparation of an agreement with the County, a noticed hearing and approval by the Los Angeles County Board of Supervisors pursuant to Revenue and Taxation Code Section 3794.3, and approval by the California State Controller pursuant to Revenue and Taxation Code Section 3795. The current property owner also retains redemption rights until those rights terminate under the Chapter 8 process. Accordingly, City Council adoption of the resolution would preserve the City's acquisition opportunity but would not guarantee that the City ultimately acquires the Property.
Moreover, during the Chapter 8 process, the cost to acquire the Property would be calculated pursuant to Revenue and Taxation Code Section 3794.3. The City anticipates that the cost to purchase the Property pursuant to Chapter 8 would be at least Twenty-One Million Eight Hundred Fifty-Six Thousand Four Hundred Thirty-Eight Dollars ($21,856,438). The total cost would be finalized at the time the City Council considers any agreement with the County to purchase the Property.
Next Steps:
The proposed Resolution authorizes the City to object to the scheduled public sale and submit the documents necessary to pursue the Chapter 8 acquisition process if deemed appropriate. The attached Resolution also authorizes the City Manager, or designee, to coordinate with Los Angeles County and take the administrative actions necessary to preserve the City's acquisition opportunity (Attachment A). The Resolution does not authorize the City to initiate or complete the purchase or appropriate funding for the acquisition. Staff would return to the City Council for additional authorization after completing the necessary due diligence and obtaining sufficient information regarding the proposed acquisition terms. This proposed approach allows the City to preserve a potentially valuable acquisition opportunity without committing City funds before staff completes its analysis. For the City Council’s review, staff has also attached a letter to the County to initiate the process (Attachment B).
Reviewed for Fiscal Impact:
_________________________
Siamlu Cox
Attachment(s):
A. City Council Resolution No. 2026-08-6960
B. Letter to the Los Angeles County Treasurer and Tax Collector