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HomeMy WebLinkAbout03 LAGUNA GARDENS 04-01-96 RDA NO. 3 4/1/96 Intor-Gom DATE' APRR, 1, 1996 TO: FROM: SUBJECT: WILLIAM A. HUSTON, EXECUTIVE DIRECTOR REDEVELOPMENT AGENCY STAFF EXCLUSIVE RIGHT TO NEGOTIATE: LAGUNA GARDENS RECOMMENDATION It is recommended that the Redevelopment Agency authorize the execution of an Exclusive Right to Negotiate Agreement between the Tustin Community Redevelopment Agency and Charles H. Fry. FISCAL IMPACT This action will have no direct fiscal impact on the Redevelopment Agency. If the negotiations result in a Disposition and Development Agreement (DDA), the fiscal impact of such an agreement will be discussed if Agency approval of a DDA is requested in the future. DISCUSSION Mr. Charles H. Fry has entered into escrow for the purchase of Laguna Gardens, a 64 unit apartment complex at 1361 E1Camino Real. Mr. Fry has approached the Agency for financial assistance to provide for a significant upgrading and rehabilitation of the complex and its conversion to condominiums. Mr. Fry intends to upgrade both the exterior and interior of the units, as well as the common areas, and to market the units for sale to low-to-moderate income buyers. The Redevelopment Agency has stated that one of its goals is to reduce rental units in the City and encourage ownership units. The proposed project would meet this goal. Attached is a proposed Exclusive Right to Negotiate Agreement between the Redevelopment Agency and Mr. Fry. The Agreement only commits the Agency to negotiating in good faith with the intent of entering into a Disposition and Development Agreement. It does not commit the Agency to any expenditure of funds at this time nor does it commit the Agency to providing financial assistance. If both parties negotiate in good faith but fail to reach a Disposition and Development Agreement, neither party is liable to the other. The Exclusive Right to Negotiate provides for a 120 day negotiating period, which can be extended for 60 days if a DDA has been executed by the developer but not yet approved by the Agency or for 30 days if the major business terms of an agreement have been reached, and/or by mutual agreement of the Agency and Mr. Fry. William A. Huston April 1, 1996 Page 2 In addition to requiring Mr. Fry to negotiate in good faith with the Agency, the Exclusive Right to Negotiate also requires the developer to: · Provide on-going stares reports of all matters and studies being undertaken on the project. · Within thirty (30) days of execution, provide development concept plans to the Agency and City which meet the requiremems for the City's entitlement processing. Within thirty (30) days of execution, provide a financing plan and economic projection for the site. · Within twenty (20) days of execution, provide full disclosure of the development team. · Demomtrate to the Agency the developer's financial capacity to undertake the project. · Make every attempt to maintain the existing tenants on the site during the negotiation and subsequent conversion process. This Exclusive Right to Negotiate will allow the developer to cominue his escrow with the current property owner and allow him to begin to hold serious discussions to arrange the necessary financing for the project. FINDING OF BENEFIT This site is not in either the Town Center Project Area or the South Central Project Area. However, the conversion of Laguna Gardens to owner-occupancy for low-to-moderate income households is a benefit to the Town Cemer Project Area. State Redevelopment Law allows for the expenditure of housing set-aside funds outside of a Redevelopment Project Area if the City Council and the Agency make a finding that such an expenditure will benefit the project area. If financial assistance is provided for this project thrOugh a DDA, Agency staff will prepare and present for City Council and Agency consideration a resolution making the required legal finding. ~develo ~ Manager EXCLUSIVE AGREEMENT TO NEGOTIATE , THIS EXCLUSIVE AGREEMENT TO NEGOTIATE ("AGREEMENT") is made this day of April, 1996~ by and between the TUSTIN COMMUNITY REDEVELOPMENT AGENCY ("AGENCY") and CHARLES H. FRY ("DEVELOPER"). Each of the Agency and Developer are sometimes referred to as the "Party" and collectively as the "Parties." ~ RECITALS The Parties entered' into this Agreement on the basis of'the following facts, understandings, and intentions: A. The Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing .under the Community Redevelopment Law of the State of California (Health and Safety Code Sections 33000 et seq.). B. The Agency des ires to encourage and effectuate the .redevelopment of certain real property (the "Site") which would benefit the Town Center Redevelopment Project Area and which is located at 1361 E1 Camino Real and depicted on the "Site Map" attached hereto Exhibit A and incorporated herein by reference. C. 'Developer desires to acquire a 64-unit existing apartment project and to rehabilitate said units and convert them to a 64- unit Ownership project (hereinafter referred to as "Project").. D. Developer represents that it has the ne, cessary expertise, experienCe, and financial capability to undertake the development contemplated herein and that it is not intending to joint Venture or partner development of the Site. E. The Parties desire, for the period set forth herein,, to negotiate diligently and in good faith the terms and conditions of a Disposition and Development Agreement ("DDA") which will specify rights, obligations and.method~of participation of the Parties with respect to development of the Site. NOW, THEREFORE, and in consideration of the mutual covenants hereinafter contained, the Parties mutually agree as follows: 1.0 NATURE OF NEGOTIATIONS , , 1.1. Good Faith. The Agency and Developer agree that for the period set' forth in Section 2 and provided that Developer is not in default on any of the obligations under this Agreement, they will negotiate in good faith with respect to a DDA to be entered into between the Parties for development of the Project on the Site. Developer acknowledges that members~of the Agency may, from time to time, have contact with other developers respecting the Site, and that such contact is expressly permitted so.long as such members do . not actively engage in negotiation with respect to the Site. 1.2- Tenant Relations Developer agrees that every attempt will be made to retain existing tenants on the Site and to facilitate tenants continuing to reside on the Site for as long as possible prior to ~evelopment of the Site without undue pressure,from Developer, particularly anticipating a necessitY ~or phasing of anY development. .~ 1.3 Essential Terms Developer's redevelopment rights and obligations shall be as specifically ~et forth- in the DDA and shall include without limitation the fOllowing: a. Design of the Project, subject to approval rights of the Agency and compliance with ~11 City ,requirements and regulations, including without limitation, applicable zoning. b. Construction'of improvements comprising the project, the completion of which 'shall be (i) guaranteed.by Developer upon terms mutually agreeable to the Parties, and (ii) fr~e of mechanics' liens 'and liens other than those respecting the financing of the acqUisition of the Site and'the development of the Project. c. Operation and maintenance of the Project. d. Restrictions on transfer of the Project, Developer's interest in the DDA, and control of Developer. e. Reimbursement to the Agency of costs incurred in connection with the DDA,and the Project. f. Security to assure Developer's performance under th~ DDA. ~ g. Developer will assume the full and complete responsibility to makeall investigations of Surface and subsurface conditions as may be necessary, or appropriate and to evaluate the suitability of the Site for the development' Neither the Agency nor the City shall make any representations or warranties concerning 'the Site, its suitability for the use intended by Developer, or the surface or subsurface conditions of the 'Site. 2.0. PERIOD OF NEGOTIATION The Parties.agree to negotiate for a period of one hundred twenty (120)~days from th~'date this Agreement is signed by the Agency, and this Agreement shall terminate after the expiration of such period unless extended as follows: A. For sixty (60) days if a DDA has been prepared by the Agency and executed by Developer and has been submitted to the Agency but has not yet been approved by the AgencY Board; or 'B. For thirty (30) days if the major business terms have been agreed to and the Executive Director determines that further negotiations are likely to result in a written DDA; or C. 'By mutual written agreement of the Parties. Upon termination of this Agreement, any interest that Developer may have hereunder shall cease, and Agency shall have the right to thereafter deal with the Site as it shall determine in its 3 sole discretion, subject to the rights of Developer as the fee owner of a certain portion of the Site. Developer understands and acknowledges that if negotiations culminate in a DDA, such DDA shall be effective only after and if the DDA has been considered.and approved by the Agency Board after a public hearing as required by law. 3.0 PLANS, REPORTS, STUDIES AND INVESTIGATIONS Upon request by the Agency, Developer shall provide the Agency, w~thout coSt or expense to Agency, copies of all plans, reports, studies, .or investigations (collectively, "Plans") prepared by or on behalf of Developer with respect to the Site and the Project. All Plans shall be prepared at Developer's sole cost- and expense, and Developer agrees to indemnify, defend and hold the- Site and the City, AgencY and its representatives, employees, staff members, officials, directors, attorneys, successors and assigns (collectively, "Representatives") harmless from any losses, liabilities, claims, causes of action, injury or expenses, including without limitation, reasonable attorneys' feesand costs (collectively, "Losses and Liabilities") arising from or in any way related to the cost of preparation of such Plans. If this Agreement'is terminated for any reason, the Agency may request that Developer transfer ownership rights to any or all Plans identified by the Agency. Upon such request, Developer shall deliver to the Agency copies of all Plans requested by the Agency together with a biil of sale therefor, which Plans sha~l thereupon be the sole property· of the Agency, 'free of all claims or interests of Developer or any other person or entity'. Upon the Agency's acquiring title to any or all of the Plans, the Agency shall'be · permitted to use, grant, license.or otherwise dispose of such Plan~ to any person or entity for development of the site or any~ other purpose.; provided,.however, that Developer shall have no liability whatsoever to the Agency or any transferee of title to the Plans in connection with the use of the Plans. 4.0 DEVELOPER' S RESPONSIBILITIES · During the period of negotiation, Developer' shall prepare and submit to the Agency the following documents and perform the following acts, all in f. urtherance of the negotiation process 4.1 Status Reports Developer agrees to make oral and written reports advising the Agency and/or its staff of all matters and studies being made, including Developer's progress in analyzing the feasibility of~the Project as may be requested by the Agency or its staff. · 4.2 Desiqn Review It is understood and agreed to by Developer that planning and design review approval by the Agency and the. City will be required~for the development. .Developer and the proposed architect shall meet with. representatives of the Agency and the City to review and come tO a clear understanding'of the planning and design criteria required by the Agency and the City. Developer shall submit to the Agency and the city, within thirty (30) days after the date of this Agreement, mOre refined development concept plans that will meet the Agency's planning and design criteria. 4.3 Financinq Plan/Economic Projection Within thirty (30) days after the date of this Agreement, Developer Shall submit a financing plan and economic projection for the site. The financing plan shall include a detailed statement about the overall costs of construction and the source and availability of equity capital, construction and long-term development ~inancing. 'The economic projection shall estimate income' to be derived from the Project, operating costs and debt service and shall include a proforma statement of Project return adequate to enable the Agency to' evaluate the economic feasibility of the proposed development of the Project. 4.4 Development-Team Developer shall within twenty (20) days of execution of this Agreement submit in writing to the Agency full disclosure of the names of Developer's agents, authorized negotiators, consultants, professional employees, or other associates.of Developer who may be participants in development of the Project, and other relevant information concerning the above such· as addresses, telephone numbers, employers. Developer shall also designate and submit in. writing to the Agency the names of all Developer's lead negotiators, who shall have authoritY to make decisions on its behalf. .. 4.5 Financial Status Developer shall demonstrate to the Agency the.financial capacity and capability to perform its obligations under this · Agreement and the DDA. Developer's most recent financial statement and .the financial statements of its key principal shall be submitted, to the Agency within thirty (30) days of execution of this Agreement. To the extent DeveloPer wants such financial statements to remain confidential, they shall be supplied to the .Agency with a request that the confidentiality of the statements be maintained. .If Developer determines to joint venture or partner development of the Site, or if DeveloPer determines ~o form a new legal entity to develop the Site, Developer shall promptly inform the Agency of such determination. The assignment of Developer's rights under this Agreement, the new .entity, partnership or joint venture may be approved in writing by the Agency, providing Agency is satisfied that the new entity, partnership or joint venture has the financial capability to perform under this Agreement and the DDA. 4.6 . Additional Information Developer understands and agrees that the Agency reserves the right at any time to request from Developer additional information, 'including information, data and commitments ''to ascertain the depth of Developer's capability and desire to develop the Site expeditiously. The Agency will provide a reasonable time in which Developer may obtain and submit to the Agency such additional information. 4.7 Contacts During Negotiations Developer shall~ only negotiate with the Agency's negotiating team as defined in writing by the Executive Director and with no other persons ~nless expressly authorized to do so by the Agency's negotiating team. During the period of negotiations, no statements shall be made by Developer to the media without the approval of the Agency'S negotiatingteam. Developer's compliance with the pr°visions of this Section shall be conclusive evidence that Developer has "negotiated in good faith." · 5.0 MARKET, ENVIRONMENTAL AND OTHER STUDIES Market and environmental studies and such other studies as the Agency deems appropriate shall be prepared, at DeVeloper's expense, to consider and analyze the~ financial impact of the proposed .development in the DDA. The Agency shall, at its sole discretion, select the consultant(s) to perform said studies and shall enter into contracts with the selected consultants. The Agency shall, at its sole discretion, have the right to direct said consultant(s) a~d its staff(s) and to terminate the contract of any consultant which the Agency believes is not adequately or objectively performing its obligations under said contract. 6.0 GOOD FAITH DEPOSIT Prior to the execution of this Agreement by the Agency, Developer shall submit to the Agency a good faith deposit in the sum of ten thousand dollars ($10,000) in the form. of a cash deposit, cashier's check, irrevocable letter of credit, or other form.of security acceptable to the Agency to insure that Developer will proceed diligently and in good faith to negotiate and perform all of Developer's obligations under this Agreement. If the deposit is in cash or a certified cashier's check, it shall be deposited in an interest-bearing account in a bank or trust-company selected by the Agency. Interest, if any, shall be added to the· deposit and held as additional secUrity for Developer's obligations hereunder. Upon termination or when the Agency and Developer of this Agreement enter into a DDA, the Agency shall return the deposit to Developer provided that Developer has negotiated diligently and in good faith and carried out its obligations hereunder. If Developer has failed to do so, inasmuch as the actual damages which would result from a breach by Developer of its obligations under this A~reement are uncertain and would be impractical or extremely difficult to'~determine, Agency shall be entitled to retain the entire original amount of said deposit plus interest, if any, which has accrued thereon, as liquidated and agreed damages. . By their respective initials set forth below, the Agency. and Developer acknowledge and agree that forfeiture of the original amount of the deposit (together With any interest earned and accrued thereon) is not in lieu of any other relief, right or remedy to which the Agency might be entitled by reason of De~eloper's default. Initials:. Developer Agency 7.0 MISCELLANEOUS 7.1 No Commissions The Agency shall not be liable for any real estate commission finder's fee or any broker's fees which may arise frOm this Agreement. The Agency represents.that it has engaged no broker, agent, or finder in connection with this Agreement; and Developer agrees to hold the Agency and its representatives harmless from any losses and liabilities arising from or in any way related to any claim by any broker, agent, or finder retained by Developer regarding this 'Agreement or development of the Project, or purchases/sale of other property at the Site. 8 7.2 No Aqency Duty .Except as expressly provided above, the Agency shall have no obligations or duties hereunder and no liability whatsoever in 'the event the Parties fail'to timely execute a DDA. Developer understands and acknowledges that the Agency does not presently own~he Site and that upon execution of the DDA, Developer will be involved in negotiations with the owner of the. Site in an attempt to acquire the Site by purchase. Developer .acknowledges and agrees that the Agency, as of' the execution hereof, has not agreed to fund, Subsidize or otherwise financially contribute toward the development of the Project. The Agency's financial and.other' involvement in the Project will be established by the DDA.' Any financial participation by the AgencY as established in the DDA will be determined by the Agency, ih its sole and absolute discretion, based upon such factors such as market conditions, density of development, cost of'development and rehabilitation of the Project, risks associated with deVelopment of the Project, estimated or actual revenues and profit to be aerived from the Project, public purposes associated with deVelopment .of the Project, and other matters relevant to establishing the fair market value of the Project to be developed, the financial requirements of Developer respecting its acquisition of the Site and development of the Project and the financial benefit to be derived by the Agency from development of the Project. ~ By. its execution of this Agreement, the Agency is-not' cOmmitting itself to or agreeing to undertake; (i) any disposition of land to Developer; or (ii) any other acts or activities requiring the subsequent independent exercise of discretion by the Agency, the City or any agency or department thereof. The Parties recognize that one or more of the conditions to Developer's propo- sal set forth herein may fail to be met as a result of subsequent studies, reviews'and proceedings involving the exercise of discre- tion by the Agency, the City or any agency or department thereof. This Agreement does~ not constitute a disposition of property or exercise of control over property by the Agency or the City and does not require a public hearing. Execution of this Agreement by the Agency is merely an agreement to. enter~ into a period of exclUsive negotiations according to the terms hereof, reserving, final discretion and approval by the Agency and'the City as to any DDA and all proceedings and decisions in connection herewith. 7.3 Nonliability of Agency Officials and Employees No member, official, representative, 'director, staff member, attorney or.employee of~ t~e Agency shall ~be personally liable'to Developer or any successor in interest, in the event of any default or breach by the Agency or for. any amount which may become'due to Developer or to its successor, or on any obligations under the terms of this Agreement. - . 7.4 Public Hearings and Compliancc If the negotiations hereunder culminate in Developer and Agency staff concurring on the terms and provisions Of a DDA, such DDA will be considered for approval by the Agency only. after all required public hearings have been held and after compliance with all applicable laws and 6rdinances. 7.5. Entire 'Aqreement; Attorneys Fees This Agreement 'represents the entire agreement of the ~grties with respect to°the matters set forth herein and supersedes any prior negotiations or contemporaneous writings'or statements. This Agreement may not be amended except in a writing signed by both of the Parties hereunder. If either Party brings an action or files a proceeding in connection with the enforcement of its respective rights or as a consequence of'any breach by the other. Party of its obligations hereunder, then the prevailing Party in · such'action or proceeding shall be entitled to have its reasonable attorneys, fees'and out-of-pocket expenditures paid by the losing Party. 10 · 7.6 Covenant Aqainst Discrimination Developer shall not discriminate against, nor segregate, any person, or group of persons on account of sex, race, color, age, marital status, religion, handicaps, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor shall Developer establish or permit any such practice or practices of discrimination or segregation in the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site. , 7.7 Indemnity/Relocation From and after the execution of this Agreement, Developer .. hereby agrees to indemnify and hold harmless the Agency and.the City from and against all Losses and Liabilities related directly or indirectly to, or arising out of or in connection with any claim by occupants of the Site respecting relocation benefits as a result of this Agreement and/or the discussions between the Agency and Developer with respect hereto prior to approval of a DDA. 7.8 Notices Ail notices required or permitted hereunder shall be delivered in person, by overnight courier, or by registered or certified mail, postage prepaid, return receipt requested to such Party at its address shown below, or to any other place designated in writing by such Party. Agency: Tustin Community Redevelopment Agency 300 Centennial Way Tustin, California 92680 Attention: Executive Director Developer: Charles H. Fry 5000 Birch Street Suite 9400 Newport Beach, CA 92660 Any such notiCe shall be deemed received upon delivery, if delivered personally, one (1) day after delivery to the courier, if delivered by courier, and three (3) days after deposit into the United States Mail, if delivered by registered or certified mail. 11 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. Dated: AGENCY: Tustin Community Redevelopment Agency. Approved as to form: By: William. A. Huston Executive Director Lois Jeffrey Agency'Counsel DEVELOPER: By: Charles H. Fry 12