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HomeMy WebLinkAbout14 3RD AMEND TO VESTAR/KIMCO AGREEMENT 01-02-08AGENDA REPORT MEETING DATE: JANUARY 2, 2008 TO: WILLIAM A. HUSTON, EXECUTIVE DIRECTOR FROM: CHRISTINE SHINGLETON, ASSISTANT CITY MANAGER SUBJECT: THIRD AMENDMENT TO INFRASTRUCTURE CONSTRUCTION AND PAYMENT AGREEMENT WITH VESTAR/KIMCO TUSTIN, L.P. ("'DEVELOPER") FOR THE DISTRICT AT TUSTIN LEGACY SUMMARY City Council authorization is requested for an amendment to the Infrastructure Construction and Payment Agreement for the District at Tustin Legacy. RECOMMENDATION It is recommended that the City Council, subject to any non-substantive modifications as may be determined necessary by the City's Tustin Legacy Special Counsel or City Attorney, approve and authorize the City Manager or Assistant City Manager to execute the Third Amendment to the Infrastructure Construction and Payment Agreement (the "Amendment") between the City of Tustin and the Developer and to carry out all actions necessary to implement the Amendment and Original Agreement. FISCAL IMPACT The Infrastructure Construction and Payment Agreement (the "Original Agreement") is an implementing agreement required by DDA 04-02. The Agreement and two previous amendments, modified certain commitments to reimburse the Developer for its identified contribution in excess of its fair share obligation related to the Tustin Legacy Backbone Infrastructure Program. The Third Amendment, reflects certain delays in portions of the infrastructure program being constructed and permits the City to release certain funds for portions of the project completed subject to all conditions in the Original Agreement and proposed amendment. BACKGROUND The City Council previously approved an Infrastructure Construction and Payment Agreement (the "Original Agreement") which was executed on June 8, 2005 and Disposition and Development Agreement (DDA) for the District at Tustin Legacy on July 20, 2004. The City Council subsequently approved and the City and Developer entered into the First Amendment to the Agreement on July 26, 2007 and a Second Amendment to the Agreement in conjunction with the Tustin Legacy/Retail Center Community Facilities District No. 07-01 (CFD 07-01) on September 1, 2007. With the exception of the Second Amendment to the Agreement which authorized releases of certain Vestar infrastructure reimbursements from CFD 07-01 proceeds, the Original Agreement provided for payments to Vestar for other infrastructure completions only after all infrastructure work required under the Original Agreement had been fully completed. It is now estimated that a major portion of the infrastructure will be completed shortly with the exception of certain storm drain work in Irvine and Tustin in Warner Avenue and Barranca Parkway which will not be completed until late in 2008. Given that the circumstances related to these delays are not directly caused by Vestar, City staff and Vestar are desirous of amending the Agreement in order to provide some relief to Vestar so that certain reimbursements to Vestar can be made under certain circumstances. The Tustin Legacy Special Counsel and Public Works Director have reviewed the attached Third Amendment to the Infrastructure Construction and Payment Agreement and staff recommend its adoption. Christine A. Shingleton For Tim Serlet Assistant City Manager Public Works Director. S:\RDA\RDA ReportWgenda Report 1-02-08.Doc THIRD AMENDMENT TO INFRASTRUCTURE CONSTRUCTION AND PAYMENT AGREEMENT This THIRD AMENDMENT TO INFRASTRUCTURE CONSTRUCTION AND PAYMENT AGREEMENT (this "Third Amendment") is entered into as of , 2008 (the "Effective Date") by and between the CITY OF TUSTIN ("City") and VESTAR/KIMCO TUSTIN, L.P., a California limited partnership ("Developer"). The City and the Developer are sometimes referred to herein individually as a "Party" and collectively as the "Parties." RECITALS A. City and Developer entered into that certain Infrastructure Construction and Payment Agreement dated June 8, 2005 ("Original Agreement", to which reference is made for the meaning of each capitalized term used, but not defined herein), pursuant to the Tustin Legacy Disposition and Development Agreement ("Retail Development") dated as of June 21, 2004, as amended ("DDA") pursuant to which, among other things, the Developer agreed to: (i) pay the Project Fair Share Contribution (as defined in the DDA) with respect to the Tustin Legacy Backbone Infrastructure Program, and (ii) to design and construct "Developer's Backbone Infrastructure Work" (as defined in the DDA), and (iii) to maintain the same until completion of Developer's Backbone Infrastructure Work. The physical infrastructure improvements which are a part of Developer's Infrastructure Backbone Infrastructure Work are referred to as the "Facilities" and were set forth in Exhibit A of the Original Agreement and further broken down by "Segments" as described in Exhibit A. B. City and the Developer entered into the First Amendment to Infrastructure Construction and Payment Agreement dated July 26, 2007 ("First Amendment"), in order to amend and modify Exhibit A to the Original Agreement, which sets forth the description of the Segments and the Estimated Release Price for each Segment. C. City and the Developer entered into the Second Amendment to the Infrastructure Construction and Payment Agreement dated September 1, 2007 ("Second Amendment") to provide for the City's acquisition of one of the Segments identified in the First Amendment from the Developer and the payment to Developer of the purchase price for such Segment, which purchase price was payable solely from proceeds of Community Facilities District No. 07-01 (Tustin Legacy/Retail Center) Special Tax Bonds, Series 2007 (the "CFD No. 07-01 Bonds"). D. The Original Agreement, as amended and modified by the First Amendment and Second Amendments, is referred collectively as the "Amended Agreement." E. With the exception of the Segment Release authorized by the Amended Agreement, Section 4.2 of the Original Agreement provides for payment and final reconciliation of the Developer Payments for other Segments only after "Final Completion" has occurred of all Developer's Backbone Infrastructure Work to the satisfaction of the City. It is now estimated that a major portion of the Backbone Infrastucture Work should be completed shortly with the exception of (i) storm drain work and related property acquisition in the City of Irvine as described in the side letter between the City and Vestar dated June 1, 2005; (ii) Barranca Parkway storm drain work and Warner Avenue storm drain work within the City of Tustin and related work as identified in Exhibit A of the First Amendment. Technical and scheduling problems have delayed completion of this work until late in 2008. Under the Original Agreement corresponding delays would result in a delay in reimbursement to Developer of the Actual Cost of Completed Segments above Developer's required Fair Share Contribution until completion of all Segments. Accordingly, the City and Developer desire to amend and modify the Amended Agreement in order to provide for some relief to Vestar to provide for reimbursements of completed Segments under certain conditions. AGREEMENT NOW, THEREFORE, in consideration of the foregoing Recitals, which are hereby incorporated in the operative provisions of this Third Amendment by this reference and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties further agree as follows: 1. Modification and Amendment of Amended Agreement. The Amended Agreement is hereby modified and amended as follows: 1.1 The Definition of "Completion" under Section 1.1 of the Amended Agreement is hereby modified and amended to read in full as follows: "Completion" means that for each Segment: (a) construction of that Segment is complete in conformity with this Agreement, the DDA and the Construction Contracts, with all systems (including mechanical, electrical, structural, communication and other systems, as applicable) in operating condition and ready for use such that the City may utilize such Segment for its intended purposes; (b) all work required by this Agreement, the DDA and Construction Contracts with respect to such Segment, including minor corrective work and minor deficient or incomplete work is complete, as evidenced by a certification by the project engineer(s) for the Segment, that such Segment has been completed in a good and workmanlike manner and substantially in accordance with the approved plans; (c) a Notice of Completion has been reviewed by the City and approved and recorded by Developer for such Segment and no claims, liens or stop payment notices filed within 30 days from the date of the Notice of Completion (or, if filed, paid, settled, or otherwise extinguished, discharged, released, waived, or bonded in accordance with Section 2.8); and (d) any and all mechanic's liens have been paid, settled or otherwise extinguished, discharged, released, waived or bonded in accordance with Section 2.8. 1.2 Subsection 4.2.1 (a) of the Amended Agreement is modified to read in full as follows: "Subsection 4.2.1 (a) The City shall have no obligation to reimburse Developer until the Final Completion has occurred and all Developer's Backbone Infrastructure Work has been fully completed to the satisfaction of the City with the exception that delay in completion of the following improvements identified herein shall not prevent the Developer from receiving partial reimbursements at the discretion of the Director upon completion of all other Facilities identified in Exhibit A of the Amended Agreement, subject to satisfaction of all other requirements of the Amended Agreement, including but not limited to maintenance of adequate security after the acceptance date of each Segment for the time frame identified in the Agreement and full security for the following improvements in an amount determined required by the Director: (i) Storm drainage facilities to be constructed in the City of Irvine within: a. Warner Avenue from east of Park Avenue to Peters Canyon Channel, and b. Barranca Parkway from Jamboree Road to Peters Canyon Channel. (ii) Barranca Parkway and Warner Avenue storm drain improvements and related work located between Jamboree Road and Tustin Ranch Road. 2. Miscellaneous. 2.1 Agreement Ratified. Except as specifically amended or modified herein, each and every term, covenant and condition of the Amended Agreement is hereby ratified and shall remain in full force and effect. Each and every reference to the "Agreement" in the First Amended Agreement and in the Second Amended Agreement shall be deemed to refer to the Amended Agreement as amended by this Third Amendment. 2.2 Binding Agreement. This Third Amendment shall be binding upon and inure to the benefit of the parties hereto, their legal representatives, successors and permitted assigns. 2.3 Governing Law. This instrument shall be interpreted and construed in accordance with the laws of the State of California. IN WITNESS WHEREOF, City and the Developer have executed this Third Amendment as of the date first set forth above. CITY OF TUSTIN Dated: , 2008 By: William Huston, City Manager APPROVED AS TO FORM Special Counsel for City STEEFEL, LEVITY & WEISS A PROFESSIONAL CORPORATION By: DEVELOPER: VESTAR/HIMCO TUSTIN, L.P., a California limited liability company By: Vestar Tustin, L.L.C., a Delaware limited liability company Its: General Partner By: Hanley Tustin, Inc., Its: Managing Member By: Name Title: