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HomeMy WebLinkAbout17 TUSTIN LEGACY DDA 03-03-03AGENDA REPORT Agenda Item Reviewed: City Manager Finance Director _~o MEETING DATE: MARCH 3, 2003 TO: FROM: SUBJECT: WILLIAM HUSTON, CITY MANAGER CHRISTINE SHINGLETON, ASSISTANT CITY MANAGER TUSTIN LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT (DDA 03-01) FOR PARCEL 33 SUMMARY Approval is requested of a Disposition and Development Agreement (DDA 03-01) between the City of Tustin and WL Homes LLC (Developer) for the sale and development of Parcel 33 at Tustin Legacy (Project). RECOMMENDATION That the City Council: , Adopt Resolution No. 03-33 finding that (a) an Initial Study evaluated the Project (DDA 03-01) and all pending development entitlement applications in light of the MCAS Tustin Final Joint Program EIS/EIR (MCAS Tustin FEIS/EIR) certified by the City on January 16, 2001 and the adopted Mitigation Monitoring Report Program for the MCAS Tustin FEIS/EIR to determine whether, in accordance with CEQA requirements, any additional environmental documentation is required in connection with approval of the DDA 01-03 and other pending entitlement applications; (b) based on findings in the Initial Study (i) the environmental effects of the Project are within the scope of the MCAS Tustin FEIS/EIR and were fully examined in the MCAS Tustin FEIS/EIR, (ii) no substantial changes are proposed in the Project or have occurred with respect to circumstances under which the Project is being undertaken since certification of the MCAS Tustin FEIS/EIR, (iii) no new information has become available since the certification of the FEIS/EIR, and (iv) pursuant to Public Resources Code Section 21116 and the requirements of CEQA regulations promulgated with respect thereto including Title 14 California Code of Regulations Section 15168 (c) no additional environmental analysis, action or document is required by the CEQA and (c) all applicable mitigation measures described in the adopted Mitigation Monitoring Report for the MCAS Tustin FEIS/EIR are incorporated into this Project or will be conditions of approval of pending entitlements for the Project. Page 2 March 3, 2003 Agenda Report Tustin Legacy DDA 03-01 , Subject to non-substantial modifications as may be determined necessary by the City's Special Counsel or the City Manager prior to execution, approve and authorize the City Manager, or designee, to execute DDA 03-01 between the City of Tustin and WL Homes LLC for Parcel 33 and to carry out all actions necessary to implement the DDA including execution of all related documents and, upon satisfaction of all conditions and obligations of Developer thereto, to transfer Parcel 33 to the Developer. , Authorize the waiver of parkland dedication fees for the 78 affordable housing units in the Project; and the provision of one acre of privately owned parkland on Parcel 33 to be accessible to the public and maintained by future residents of the Project with the fair market value of the one acre and improvements to the one acre as identified in DDA 03-01 to be a credit against the balance of required parkland dedication fees for the Project and the requirement that a balance of $1,544,493 in parkland dedication fees be paid to the City of Tustin pursuant to Sections 9331d(1)(c) and d(2)(b) of the Tustin City Code and in compliance with all provisions of DDA 03-01. FISCAL IMPACT Developer will pay the City $32,700,680 for Parcel 33 (the Base Purchase Price), plus a future subsequent participation in gross revenues when units in the Development are sold in the amount of 1% of the total sale price of each unit (estimated at $1,460,000). The 1% subsequent participation price can also increase up to 2% in the event that water and sewer connection fees are adjusted downward by IRWD. As the Council is aware, payment to the SAUSD of $60 million dollars was secured by a $38 million Revenue Anticipation Note and a $22 million dollar Revenue Anticipation Note issued by the Tustin Public Financing Authority (Authority) to Salomon Smith Barney. In addition to interest payments, the City's and Authority's obligation for repayment of the notes is timed to correspond to receipt of land sale proceeds from initial Tustin Legacy property sales. Pursuant to terms of the City's and Authority's agreement with Salomon Smith Barney, the City will repay a portion of the total obligation to Salomon Smith Barney with land sale proceeds from the Project. Since there will be an approximate one month delay in the Developer's original estimated escrow closing on Parcel 33 (from March 17, 2003 to April 18, 2003), the Developer has also agreed to reimburse the City its required interest payments to Salomon Smith Barney at escrow closing in the amount of $5,600 per day for each day Page 3 March 3, 2003 Agenda Report Tustin Legacy DDA 01-03 beyond March 18, 2003 whether or not there is an escrow closing (from March 17 to such date of escrow closing or any termination date of the DDA). BACKGROUND AND DISCUSSION In accordance with the Defense Base Closure and Realignment Act of 1990, as amended, the Federal Government after its decision to close MCAS Tustin designated the City of Tustin in 1992 as the Lead Agency or Local Redevelopment Authority for preparation of a reuse plan for MCAS Tustin. The MCAS Tustin Reuse Plan was adopted by the City Council on October 17, 1996 and amended in September, 1998. On July 2, 2002, MCAS Tustin was closed. In May 2002 the Navy approved an Economic Development Conveyance of property at MCAS Tustin and agreed to convey a large portion of the former MCAS Tustin to the City (Navy Conveyance Agreement). A total of 977 acres was conveyed to the City by Federal Quitclaim Deed on May 13, 2002 with approximately 176 acres of remaining property to be subsequently conveyed once it is determined suitable for transfer. On February 3, 2003 the City adopted the MCAS Tustin Specific Plan (the "Specific Plan") by Ordinance No. 1257 setting forth the zoning and entitlement framework for future development of Tustin Legacy. The Specific Plan conforms to and implements the Reuse Plan and the General Plan. In order to effectuate development of Tustin Legacy through the sale and development of property in accordance with applicable federal and local requirements, the City in November 2001 issued a Request for Proposal (RFP) for Planning Area 20 of the Reuse Plan in Tustin Legacy. The culmination of the RFP process was the City Council's selection of WL Homes, LLC, a Delaware limited liability company, also known as John Laing Homes as the developer of Planning Area 20. The City Council authorized staff on July 1, 2002 to negotiate a Disposition and Development Agreement with the Developer for development of Planning Area 20. DISCUSSION The purpose of the DDA is to effectuate the Reuse Plan and Specific Plan in accordance with the terms and conditions of the Navy Conveyance Agreement and Federal Quitclaim Deeds, through the disposition and development of Planning Area 20. The Agreement provides for the Developer's purchase from the City, on an as-is basis, Page 4 March 3, 2003 Agenda Report Tustin Legacy DDA 01-03 of an approximate 25.3 acre parcel described in the Specific Plan as disposition parcel 33 and the Developer's purchase of an immediately adjacent 6.3 acre parcel owned by the Irvine Company. In the event the Developer is unsuccessful in purchasing the adjacent property, the City will work cooperatively with Developer in their processing of any revised entitlement applications. The DDA further provides for the development of the site by the Developer to consist of both Vertical and Horizontal Improvements as shown on the Preliminary Plan. Vertical Improvements consist of 376 residential units to be offered for ownership tenure only in four product types to include single family cluster patio homes (126 units or 34% of the units); paired patio homes (52 or 14% of the units), multiple family cluster townhouses (140 units or 3% of units) and row-towns (58 or 15% of units). Based on direction from the Ad Hoc Council Committee and RFP Technical Evaluation Team, the 447 units originally proposed by the developer in its RFP have been reduced by 71 units or 16%. Vertical Improvements will also include an accompanying set of amenities, all further identified in the DDA's Scope of Development. Horizontal Improvements will be constructed to include public and private infrastructure improvements such as roadways and utilities. The DDA will require the Developer to secure all required land use entitlements from the Tustin Planning Commission and City Council within the times established in the DDA. Vertical and Horizontal Improvements will be constructed in compliance with all provisions of the DDA and with all "Conditions of Approval" stipulated by the Planning Commission, City Council and other applicable governmental agencies with jurisdiction. A concept plan, design review and tentative tract map approvals will be scheduled for Planning Commission and City Council action as applicable, and these entitlements will be a condition of any escrow closing. The DDA requires the Developer to fund all Project development costs including but not limited to, the acquisition of the site, construction of on-site and off-site improvements and all public utility improvements related to developing the site. The DDA also provides for review of design plans at later stages of design development to assure conformity with DDA requirements. The following discussion describes in greater detail a number of key features of the DDA. Preliminary Design Concept and Housing Products Clustered single family patio homes would be located along a portion of the westerly and northeasterly portion of the site and will be two stories. Units would have two and Page 5 March 3, 2003 Agenda Report Tustin Legacy DDA 01-03 three bedrooms and range in size from approximately 1,370 to 1,510 square feet. The paired patio homes would be located in the interior of the Project and are proposed to be two stories with three and four bedrooms each ranging in size from approximately 1,790 to 2,085 square feet. Both single family detached patio homes and paired patio homes are proposed with two car garages. The cluster townhouse product is proposed to be two to three stories with two and three bedroom units on top of two car garages ranging in size from 1,070 to approximately 1,375 square feet. Vehicular access will be provided through an interior courtyard with no garages directly accessible from the street system. Units would be primarily located along Edinger Avenue and parallel to the Southern California Regional Rail Authority railroad right-of-way on the north side of the Project site. The row town product would be predominantly located along the main entries into the project at Edinger and Harvard. These two story loft style units are over flexible ground floor space. They would be three story units with three bedrooms ranging in size from 1,571 to 1,572 square feet with vehicular access to the home and garage at the rear of each unit. All units are proposed with two car garages. Affordable Housing To comply with affordability requirements of the Specific Plan, the developer proposes to accommodate 78 affordable units in the Project, including 22 very Iow-income units, 13 Iow-income units and 43 moderate-income units. Each of the affordable housing units will have Affordable Housing Covenants to be recorded against the units requiring the units to remain affordable to the specific qualifying affordability category they are initially sold a period of 45 years. If the original purchaser of an affordable unit decides to sell before the 45 years have run, the unit must be sold to a household which meets the appropriate income level, respectively. Parks, Open Space and Community Amenities The Preliminary Plan includes over 4.6 acres of community open space in the form of pedestrian paseos and pocket green areas, including a 1.33 acre private recreational area. The 1.33 acre private park would include a community swim center and a community clubhouse accessible only to residents with a one acre portion of the park to be accessible to the general public and to include multi-purpose park/field area to be used for active recreational open space. Page 6 March 3, 2003 Agenda Report Tustin Legacy DDA 01-03 Pursuant to the MCAS Tustin Specific Plan, all developments are required to pay a parkland dedication in-lieu of fee subject to provisions of the City's parkland dedication ordinance which permits a credit for private recreational open space provided in a development and any City Council approved waiver of fees for provision of affordable housing units or modification of parkland requirements as may be approved by the City Council with approval of a specific DDA. Accordingly, provisions of the DDA propose a reduction in the developer's fee obligation for the Project based on the 78 restricted affordable housing units as well as a credit for the 1 acre portion of the private park site which will be accessible to the public, and approximately $316,733 in park facility improvements on the 1 acre portion of the private park site. This will necessitate the Developer's recordation of a perpetual access and parkland easement to ensure continued access for the public. After deducting the affordable housing and parkland credit, The developer will be required to provide a parkland fee in the amount of $1,544,493. Developer will also design and construct a proposed regional bike trail constructed to County standards along the northerly side of the site to be ultimately connected on its west edge to future bike trail improvements within future Peters Canyon Channel right- of-way. A perpetual easement will provide for pedestrian and bicycle access to the public across the bike trail and also require maintenance and repair of the bike trail by the development. Infrastructure The DDA requires the developer to complete all off-site and on-site infrastructure improvements necessary for development of the site as well as funding of the Project's Fair Share of the Tustin Legacy backbone infrastructure payment. The Project contribution to the Backbone Infrastructure Program is currently estimated at $4,960,000. The developer intends to finance the cost of infrastructure with a combination of equity and debt to the extent approved by the City in the future. Certain funded on-site improvements (related to regional bike trail) and the Backbone Infrastructure Fee may be expenses reimbursable through a future assessment district or community facilities district. Developer will be required to post performance bonds for completion of all improvements including the Fair Share Tustin Legacy Backbone Infrastructure payment. Page 7 March 3, 2003 Agenda Report Tustin Legacy DDA 01-03 Purchase Price The DDA provides that the City receive $32,700,680 for parcel 33 or approximately $1,292,517 per acre and future subsequent profit participation when each unit is sold equal to 1% of the total sale price of each unit. Based on the developer's initial development pro forma projections, it is estimated that the City's profit participation will be approximately $1,460,000 through the final unit sales in the Project. In the event that IRWD reduces water and sewer connections fees adopted for the site by IRWD on February 10, 2003, to the fee structure previously in place, the subsequent profit participation may increase up to 2% of the total sale price of each unit. The sale price of Parcel 33 is consistent with and not less than the fair market value of the property based on a recent independent appraisal of the Site subject to DDA 03-01. While not part of the DDA and not related to the market price of the property, the Developer has volunteered to make a separate voluntary charitable contribution, by separate instrument to the City of Tustin, for the future Tustin Library Expansion project in the amount of $1 million dollars. General Provisions The DDA includes other provisions which are typical to such agreements. These include, but are not limited to, a schedule of performance, restrictions on the ability of the Developer to transfer the DDA, a right of reversion in favor of the City in the event of an uncured default by Developer, use restrictions and non-discrimination provisions, maintenance covenants, requirements for insurance including environmental insurance, and indemnification, including environmental indemnification in favor of the City and default provisions and remedies. Given the desire to move this project forward, there may be minor corrections to the DDA necessary prior to execution as determined by the City's special counsel based on any issues that may arise with the lender for the Developer, Housing Capital. Environmental Determination Pursuant to the National Environmental Policy Act (NEPA) as implemented by the Council on Environmental Quality Regulations (40 CFR parts 1600-1608) and the California Environmental Quality Act (CEQA) (Calif. Public Resources Code Sec. et. Seq. 21000) and the State CEQA Guidelines (Title 14 Cal. Code of Regulations, Section 16000 et. Seq.), the City of Tustin and Department of Navy completed a Final Joint Page 8 March 3, 2003 Agenda Report Tustin Legacy DDA 01-03 Program Environmental Impact Statement/Environmental Impact Report for the Disposal and Reuse of the Marine Corps Air Station (MCAS) Tustin (the MCAS Tustin FEIS/EIR). The MCAS Tustin FEIS/EIR was certified as adequate under CEQA by the Tustin City Council on January 16, 2001. Based on the FEIS/EIR, the City Council adopted a General Plan Amendment and the MCAS Tustin Specific Plan. An Initial Study has been prepared for DDA 03-01 and pending entitlement applications for the Project and is attached to this report. Based upon review of the project and the FEIS/EIR, it has been determined that environmental issues related to the Project have previously been addressed and evaluated in the MCAS Tustin FEIS/EIR. No additional environmental analysis or action is required. Mitigation measures identified in the MCAS Tustin FEIS/EIR, as applicable, are included in the DDA or will be conditions of approval of pending entitlements for the Project; therefore, staff recommends that the City Council find that: (i) the environmental effects of the Project are within the scope of the MCAS Tustin FEIS/EIR and were fully examined in the MCAS Tustin FIES/EIR, (ii) no substantial changes are proposed in the Project or have occurred with respect to circumstances under which the Project is being undertaken since certification of the MCAS Tustin FEIS/EIR, (iii) no new information has become available since that the certification of the MCAS Tustin FEIS/EIR, and (iv) pursuant to Public Resources Code Section 21116 and the requirements of CEQA regulations promulgated with respect thereto including Title 14 California Code of Regulations Section 15168(c), no additional environmental analysis, action or document is required and no new mitigation measures would be required. All applicable mitigation measures described in the adopted Mitigation Monitoring Report for the MCAS Tustin FEIS/EIR are incorporated into this Project or will be conditions of approval of pending entitlements for the Project. Attachments: Resolution No. 03-33 DDA 03-01 Note: Due to the size of the DDA attachment, only a limited distribution was made. Copies are available for review in the Office of the City Clerk. RESOLUTION NO.03-33 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, FINDING THAT PURSUANT TO PUBLIC RESOURCES CODE SECTION 2116 AND SECTION 15168(c) OF STATE CEQA GUIDELINES THE PROJECT IS WlTHN THE SCOPE OF THE FINAL JOINT PROGRAM MCAS ENVIRONMENTAL IMPACT STATEMENT/ENVIRONMENTAL IMPACT REPORT (MCAS TUSTIN FEIS/EIR) AND NO NEW ENVIRONMENTAL DOCUMENT IS REQUIRED; APPLICABLE MITIGATION MEASURES HAVE BEEN INCORPORATED INTO THE PROJECT OR WILL BE CONDITIONS OF APPROVAL ON PENDING ENTITLEMENT APPLICATIONS The City Council of the City of Tustin hereby finds, determines and orders: A. That Disposition and Development Agreement (DDA) 03-01 and the respective development entitlement applications and plans (Concept Plan 02-001, Design Review 02-037, Conditional Use Permit 03-002, and Tentative Tract Map No. 16474) are considered collectively a "Project" pursuant to the terms of the California Environmental Quality Act; and B. That The MCAS Tustin Final Program EIS/EIR previously certified on January 16, 2001 was considered through an Initial Study for this Project. The City Council hereby finds: that this project is within the scope of the previously approved MCAS Tustin FEIS/EIR based on an Initial Study as well as the MCAS Tustin Specific Plan previously approved by the City Council on February 3, 2003 with adoption of Ordinance No. 1257; the effects of the project relating to all environmental impact issues were examined in the MCAS FEIS/EIR. The applicable mitigation measures developed in the MCAS Tustin FEIS/EIR are incorporated into DDA 03-01 or will be conditions of entitlement approvals (Concept Plan 02-001, Design Review 02-037, Conditional Use Permit 03- 002 and Tentative Tract Map 16474. C. That the environmental effects of the Project are within the scope of the MCAS Tustin FEIS/EIR and were fully examined in the MCAS Tustin FEIS/EIR; no substantial changes are proposed in the Project or have occurred with respect to circumstances under which the Project is being undertaken since certification of the MCAS Tustin FEIS/EIR; no new information has become available since that the certification of the MCAS Tustin FEIS/EIR, and pursuant to Public Resources Code Section 2116, and the requirements of CEQA regulations promulgated with respect thereto including Title Resolution No. 03-33 Page 2 14 California Code of Regulations Sections 15162 and 15168(c), no additional environmental analysis, action or document is required by the CEQA. PASSED AND ADOPTED by the City Council of the City of Tustin, at a regular meeting on the 3rd day of March, 2003. Tracy Wills Worley, Mayor Pamela Stoker City Clerk STATE OF CALIFORNIA ) COUNTY OF ORANGE ) CITY OF TUSTIN ) SS I, Pamela Stoker, City Clerk and ex-officio Clerk of the City Council of the City of Tustin, California, do hereby certify that the whole number of the members of the City Council of the City of Tustin is fine; that the above and foregoing Resolution No.03-33 was duly passed and adopted at a regular meeting of the Tustin City Council, held on the 3rd day of March, 2003, by the following vote: Pamela Stoker City Clerk DISPOSITION AND DEVELOPMENT AGREEMENT PROVIDED UNDER SEPARATE COVER (AVAILABLE FOR PUBLIC REVIEW AT THE TUSTIN BRANCH LIBRARY AND THE TUSTIN CITY HALL, CITY CLERK'S OFFICE, 300 CENTENNIAL WAY, TUSTIN, CA, AND AVAILABLE FOR PURCHASE AT THE CITY CLERK'S OFFICE.)