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HomeMy WebLinkAbout18 TLCP RESPONSE TO ACTION TAKEN ON 6-15-10- +~ Agenda Item 18 AGENDA REPORT Reviewed: ~ .. City Manager ~' Finance Director N/A MEETING DATE: JULY 6, 2010 TO: WILLIAM A. HUSTON, CITY MANAGER & EXECUTIVE DIRECTOR OF TUSTIN PUBLIC FINANCING AUTHORITY FROM: REDEVELOPMENT AGENCY SUBJECT: TUSTIN LEGACY COMMUNITY PARTNERS, LLC's RESPONSE TO ACTIONS TAKEN ON JUNE 15, 2010 IN RESPONSE TO UNCURED MATERIAL DEFAULTS UNDER THE MASTER DEVELOPER DISPOSITION AND DEVELOPMENT AGREEMENT (MASTER DEVELOPMENT) BETWEEN THE CITY, TUSTIN PUBLIC FINANCING AUTHORITY AND TUSTIN LEGACY COMMUNITY PARTNERS, LLC. SUMMARY The Tustin City Council and Tustin Public Financing Authority took certain actions at their meeting on June 15t", in response to uncured Material Defaults of Tustin Legacy Community Partners, LLC ("TLCP" or the "Developer") with regards to the Tustin Legacy Disposition and Development Agreement (Master Development) ("DDA"). The City Council requested that it be informed at its meeting on July 6th of the Developer's response and the automatic options that were applicable to the City Council's actions of June 15, 2010. FISCAL IMPACT Fiscal Impacts of each option for cure were identified in the City Council staff report of June 15, 2010. RECOMMENDATION Receive and File. BACKGROUND The City Council and Tustin Public Financing Authority at their meeting of June 15, 2010 moved to direct staff to take all actions necessary and appropriate to implement Option 1 contained in the Staff Report and as identified in Attachment 1, provided Condition A (also identified in Attachment 1) was satisfied by Tustin Legacy Community Partners, LLC. If Condition A and Option 1 did not get timely satisfied (by 5:30 PM on July 6, 2010), then the City Council directed staff to take all actions necessary or appropriate to implement Option 2 as identified below. Page 2 The City Council also asked Staff to provide a report to the Council on the Developer's response and the applicable Option that was being taken by Staff based on the Council's actions on June 15~" and Developer's response. Staff will be available on July 6t", to provide an oral update and to answer any additional City Council questions. ~~ ~'r~' ~ Christine Shinglet Assistant City Manager Attachment 1 Page 3 ATTACHMENT 1 JUNE 15, 2010 ACTIONS IN RESPONSE TO UNCURED MATERIAL DEFAULTS UNDER THE DDA (MASTER DEVELOPER) BY TUSTIN LEGACY COMMUNITY PARTNERS, LLC Condition A On or before July 6, 2010, at 5:30 p.m., TLCP shall have provided fully, non-redacted copies of the related loan documents to City negotiators. Option 1 1. Approve a Termination and Settlement Agreement, Joint Escrow Instructions and General Release Agreement (the "Termination Agreement") which indicates the terms under which the City would offer Tustin Community Partners, LLC ("TLCP" or "Developer") a consensual termination of the DDA, and authorize the City Manager and Executive Director of the Tustin Public Finance Authority to execute the Termination Agreement and take all actions necessary to implement the Termination Agreement including the execution of all related documents and instruments, subject to any non- substantive modifications as may be determined necessary as may be recommended by the City Attorney or City's special counsel. In the event that City staff and legal counsel are unable to obtain agreement and execution of the Termination Agreement by TLCP by July 6, 2010 at 5:30 p.m., City staff and legal counsel are authorized to pursue actions identified under Option 2. 2. Issue to TLCP a written Notice of Non-Compliance under Section 4.2 of the Tustin Legacy Development Agreement ("DA") 06-02 specifying the grounds and facts demonstrating TLCP's non-compliance with the terms of the Development Agreement, and all other non-compliance procedures contained in the Development Agreement. Option 2 1. Terminate the DDA and license granted to TLCP pursuant to Section 5.2 of the DDA with respect to any and all portions of the Developer Parcels as defined in the DDA (the "DDA Termination"), effective immediately. Inform TLCP and TLCP's Permitted Mortgagee in writing of the DDA Termination. The foregoing termination shall not be deemed to terminate or to effect any rights or obligations of Permitted Mortgagees under the DDA, including, without limitation, Article 16 thereof. 2. Instruct the City Attorney to re-enter the 335.76 acres that have been previously conveyed to TLCP (the "Phase I Property") and to revest title thereto in the City (the "Right of Reversion", as described in the DDA), such title to be subject to the lien of Permitted Mortgagee, including providing Developer and Permitted Mortgagee with Page 4 direction provided to exercise its Right of Reversion, but also subject to any provisions of the DDA which take precedence over the rights of a Permitted Mortgage. 3. Instruct the City Attorney to pursue recovery of the amount of the Developer's deficit in the Fair Share Contribution to the City in the amount of $269,479,445, and certain attorney fees and consultant fees in the amount of $39,532 due and owing to the City contained in the Notice of Deliquency and Claim of Lien (the "Lien") recorded against the Property, including recovery of any additional costs associated with such Lien recovery. 4. Instruct the City Attorney to exercise the City's rights under its performance bonds for certain work not yet completed within the Project including, but not limited to: a. A $353,000 Faithful Performance Bond for required Tract 17144, Warner Avenue Storm Drain improvements from Red Hill Avenue to Armstrong Avenue (Safeguard Insurance, No. 5034354). b. A $176,500 Labor and Materials Bond for the required Tract 17144, Warner Avenue Storm Drain Improvements from Red Hill Avene to Armstrong Avenue (No. 5034254). c. A $500,000 Faithful Performance Bond for required Tract 17144, Neighborhood E, Phase 1 Local Storm Drain Improvements (Safeguard Insurance, No. 5034271). d. A $250,000 Labor and Materials Bond for the required Tract 17144, Neighborhood E, Phase 1 Local Storm Drainage Improvements (No. 5034271). e. A $50,000 Maintenance Bond for required Tract 17144,Neighborhood E, Phase 1 Loca Storm Drain Improvements not completed (Safeguard Insurance, No. 5034272). f. A $3,435,500 Faithful Performance Grading Bond for mass grading for Tract 17026 (Safeco Insurance Company of America, No. 6409181). g. A $1,020,400 Faithful) Performance Grading Bond for rough grading for Tract 17144, Neighborhood E (Safeco Insurance Company of America, No. 6409186). 5. Instruct the City Attorney to review all other rights and remedies under the DDA for non-performance and report back to the City Council to ensure adequate recovery from TLCP of all damages incurred by the City due to Developer's failure to perform its obligations under the DDA. 6. Issue to TLCP a written Notice of Non-Compliance under Section 4.2 of the Tustin Legacy Development Agreement (DA) 06-02 specifying the grounds and facts demonstrating TLCP's non-compliance with the terms of the Development Agreement, and all other non-compliance procedures contained in the Development Agreement.