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HomeMy WebLinkAboutRDA 05 LAGUNA GDNS 10-21-96RDA NO. 5 10-21-96 DATE: OCTOBER 21, 1996 Inter-Com TO: FROM: SUBJECT: HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL WILLIAM A. HUSTON, CITY MANAGER~ LAGUNA GARDENS PROJECT--AMENDMENTS TO DISPOSITION AND DEVELOPMENT AGREEMENT At its September 3, 1996, meeting, the Redevelopment Agency Board approved the Disposition and Development Agreement (DDA) for the Laguna Gardens project. Close of escrow for the project has been delayed because the developer's lender has requested certain changes that require amendments to the DDA. The City, developer and lender are in the process of finalizing the changes. The proposed amendments will be provided to the City Council in final form on Monday. The amendment to the DDA covers three matters: Approval of increasing the first deed of trust from $3,400,000 to $3,600,000. Agency approval of the increase in the loan between the lender and developer is necessary because the DDA currently authorized the $3,400,000. The City, through the DDA, approved the first deed of trust amount (i.e., construction loan'obtained by the developer from Hawthorne Savings and Loan) because it mUst be assured that the loan-to-value ratio for the Project does not negatively affect the security of the amount being loaned by the .Redevelopment Agency. The amendment to the DDA will authorize the increase, but provide safeguards to the Redevelopment Agency. . Approval of the form of the performance bonds guaranteeing the lien-free completion of all the improvements. The DDA requires thc developer to provide the performance bond. The proposed amendment to the DDA will 'provide that the general contractor constructing the improvements will provide the bond with the Redevelopment Agency and developer as dual obligees. The amendment will authorize this change but in a way that adequately safeguards the Redevelopment Agency. Laguna Gardens Project--Amendments to DDA October 21, 1996 Page 2 o Approval of how the Redevelopment Agency's funds are disbursed. The DDA provides that the Redevelopment Agency's share of the construction costs will be paid to the developer at certain milestones in the project. The amendment to the DDA will provide that the Redevelopment Agency's funds will be paid directly to the lender which will then disburse the funds to the developer under the same conditions as provided for in the current DDA. The proposed changes to the DDA are technical and do not alter the project or level of Redevelopment' Agency assistance. Because the amendments require revision to a number of documents (promissory note, bonds, disbursement agreement, etc.), the final form of the DDA will not be ready until Monday, October 21. Staff will further review the changes with the Redevelopment Agency Board at the meeting.