OFFICE OF THE CITY AUDITOR
Roland E. Smith, CPA
City Auditor

November 18, 2003

TO: President De La Fuente and Members of the City Council

SUBJECT: AN AGENCY RESOLUTION RESCINDING RESOLUTION NUMBER 8003-70, ADOPTED ON OCTOBER 21, 2003, AND ADOPTING A MITIGATED NEGATIVE DECLARATION AND AUTHORIZING THE SALE OF APPROXIMATELY 4.35 ACRES OF REAL PROPERTY LOCATED ON OAKPORT STREET NEAR HASSLER WAY FOR $3,318,047 TO, AND AUTHORIZING THE NEGOTIATION AND EXECUTION OF, A DISPOSITION AND DEVELOPMENT AGREEMENT WITH, HENDRICK AUTOMOTIVE GROUP FOR THE DEVELOPMENT OF AN INFINITI AUTOMOBILE DEALERSHIP

PURPOSE AND SCOPE

In accordance with the Measure H Charter Amendment, which was passed by the voters at the General election of November 5, 1996, we have made an impartial financial analysis of the accompanying Council Agenda Report, and Proposed Resolution. Our current report updates our Report No. 04025. (Copy attached.)

Since the Measure H Charter Amendment specifies that our impartial financial analysis is for informational purposes only, we did not apply Generally Accepted Government Auditing Standards as issued by the Comptroller General of the United States. Moreover, the scope of our analysis was impaired by Administrative Instruction Number 137, effective May 21, 1997, which provides only one (1) week for us to plan, perform and report on our analysis.

SUMMARY

At its October 21, 2003 meeting, the Council approved the sale of property from the Agency to Hendrick Automotive Group (Hendrick) for development of a new Infiniti dealership along Oakport Street near Hassler Way.

The project report and resolution are being revised because Hendrick has decided to decrease the size of the proposed dealership building from about 37,000 square feet to about 24,000 square feet in order to reduce costs. Under the revised proposal, Hendrick will still purchase approximately 4.35 acres of Agency and City land for $3,318,047, and the value of the project to the City will remain unchanged.

The site is adjacent to another parcel that the City sold to a Lexus dealership in 2001.

CONCLUSION

The Proposed Resolution appears to be reasonable.

Prepared by:

Jack McGinity, CPA

Issued by:

Roland E. Smith, CPA

Date report completed:
October 28, 2003