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Home My WebLink About05 DISP/DEV AG 1ST AM 04-07-03AGENDA REPORT Agenda Item Reviewed: City Manager Finance Director MEETING DATE: APRIL 7, 2003 TO: FROM: SUBJECT: WILLIAM HUSTON, CITY MANAGER CHRISTINE SHINGLETON, ASSISTANT CITY MANAGER FIRST AMENDMENT TO DISPOSITION AND DEVELOPMENT AGREEMENT FOR PARCEL 33 SUMMARY Minor, non-substantive modifications to the Disposition and Development Agreement (DDA 03-01) for Parcel 33 have been necessary. RECOMMENDATION That the City Council receive and file the First Amendment to DDA 03-01 and by such action validate the City Manager's execution of the First Amendment to DDA 03-01. FISCAL IMPACT No additional fiscal impacts are anticipated beyond those identified for DDA 03-01. BACKGROUND AND DISCUSSION The City Council, at a regular meeting on March 3, 2003, authorized execution of a Disposition and Development Agreement (DDA 03-01) between the City of Tustin and WL Homes LLC, doing business as John Laing Homes, for Parcel 33. The City Council's approval was subject to non-substantial modifications to the DDA as were deemed necessary by the City's Special Counsel and City Manager also authorizing all actions necessary to implement DDA 03-01 including execution of all related documents. After execution of DDA 03-01 by WL Homes on March 7, 2003, the primary lender for WL Homes requested several, non-substantial modifications early during the week of March 10th to the DDA. Said modifications were negotiated and approved by the City's Special Counsel. Consistent with the City Council's previous action on DDA 03-01, a William Huston April 7, 2003 Page 2 minor First Amendment to DDA 03-01 for Parcel 33 was prepared and executed by the principal parties, which is attached for the City Council's information. Attachment: First Amendment to DDA 03-01 FIRST AMENDMENT TO DISPOSITION AND DEVELOPMENT AGREEMENT FOR PARCEL 33 This FIRST AMENDMENT TO DISPOSITION AND DEVELOPMENT AGREEMENT FOR PARCEL 33 ("Amendment") is entered into as of March ~'/ , 2003 (the "Effective Date") by and between the CITY OF TUSTIN (as de£med in Section 1.4.1 of the Original DDA, "City") and WL HOMES LLC, a Delaware limited liability company (as defined in Section 1.4.2 of the Original DDA, the "Developer"). The City and the Developer are - sometimes referred to herein individually as a "Party" and collectively as the "Parties." RECITALS A. The City and the Developer entered into that certain Disposition and Development Agreement for Parcel 33 dated as of March 10, 2003 (the AOriginal DDA~) pursuant to which, among other things, the City agreed to sell, and the Developer agreed to purchase the Property as defined in the Original DDA and the parties agreed to a scope of development and schedule of performance for development of the Property and the Adjacent Parcel (as defined therein). Initially capitalized terms not defined herein shall have the respective meanings assigned to such terms in the Original DDA. B. The City and the Developer each desire to amend the Original-DDA as set forth below. The Original DDA as amended by this Amendment is referred to herein as the "Agreement". AGREEMENT NOW, THEREFORE, in consideration of the foregoing Recitals, which are hereby incorporated into the operative provisions of this 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 to Mortgagee Protection Provisions. 1.1 Section 2.2.2 ofthe Original DDA is hereby amended by adding at the end thereof, as a new paragraph, the following sentence: "Not. withstanding any provision of this Agreement to the contrary, a transfer to a Permitted Mortgagee or its wholly-owned designee which acquires title by reason of a purchase described in Section 2.2.4(b) shall be a Permitted Transfer." 1.2 The reference to "Sections 2.7.24, 2.7.25 and 2.7.26" contained in Section 2.7.3(e)(ii)(y) of the Original DDA are hereby deleted in their entirety and replaced with a reference to "Sections 2.7:24 and 2.7.25" only. 1.3. Section 2.7.14(b) of the Original DDA is hereby deleted in its entirety and replaced with the following: "(b) Notwithstanding any other provision of this Agreement to the contrary, if any Potential Default or Material Default shall occur which, pursuant to any provision of this Agreement, entitles the City to terminate this Agreement or to exercise its Right of Reversion, the City shall not be entitled to terminate this Agreement or to revest any portion of the Site as to any Permitted Mortgagee, unless (i) the City, following the expiration of any periods of time given Developer in this Agreement to cure such Potential Default or Material Default, shall have given written notice to such Permitted Mortgagee stating the City's intent to terminate this Agreement, and (ii) within ninety (90) days after delivery of such notice, such Permitted Mortgagee shall fail to: (A) cure each Potential Default or Material Default if the same consists of the nonperformance by Developer of any covenant or condition of this Agreement requiring the payment of money by Developer to the City other than payments required under Sections 4.2.3, 8.1.6, 8.2 or 8.5.2 of _ the. Agreement; and (B) if any Potential Default or Material Default is not required to be cured pursuant to clause (A) above, either, in Permitted Mortgagee's sole discretion, (a) cure each such Potential Default or Material Default, or (b) commence, or cause any trustee under the Permitted Mortgage to commence, within ninety (90) days after the provision of written notice by the City to the Permitted Mortgagee as provided above, and thereafter to diligently pursue to completion (i) steps and proceedings to foreclose on the interests covered by the Permitted Mortgage or (ii) acquisition of the Site by deed in lieu of foreclosure. Any Potential Default or Material Default--which-does not ir~v°tve a covenant or condition of this Agreement requiring the payment of money by the Developer to the City shall be deemed cured if any Permitted Mortgagee shall diligently pursue to completion steps and proceedings to foreclose under the Permitted Mortgage or to acquire the Site by deed in lieu of foreclosure as provided above and shall, upon acquiring title to all or any portion of the Site, thereafter undertake its obligations with respect to the portion of the Site owned by it pursuant to Section 2.7.10." 1.3 Section 2.7.21 of the Original DDA is hereby amended by deleting the second sentence thereof and replacing it with the following: "Upon acquisition of title to a portion of the Site by a Person, other than a Permitted Mortgagee or its wholly-owned designee, acquiring title through foreclosure, trustee's sale or deed in lieu of foreclosure or through sale, transfer or conveyance by any Permitted Mortgagee or its wholly- owned designee following its acquisition of title through foreclosure, tmstee's sale or deed in lieu of foreclosure, the acquiring Person and the City shall meet and confer in good faith to revise the Schedule of Performance as reasonably necessary to provide adequate time for such Person to satisfy the obligations of the Developer hereunder." 1.4 Section 2.7.24 of the Original DDA is hereby deleted in its entirety and replaced with the following: "2.7.24 New Agreement with Permitted Mortgagee. (a) In the event of termination of this Agreement for any reason (including by reason of.any Material Default by Developer or by reason of the disaffirmance thereof by Developer, as a debtor-in-possession, or by a receiver, liquidator or trustee for Developer or its property), the City, if requested by the most senior Permitted Mortgagee (or by the next most senior Permitted Mortgagee if Permitted Mortgagees with more senior priority do not so request) will enter into a new Agreement with the party requesting a new Agreement, provided that such party is the then-owner of the Site, upon the same terms, provisions, covenants and agreements set forth herein and commencing as of the date of termination of this Agreement ("New Agreement"), subject to the following: (i) the requesting party shall have provided written notice to the other party requesting the New Agreement within thirty (30) days after the date of termination of this Agreement; (ii) such Permitted Mortgagee shall pay to the City at the time of the execution and delivery of the New Agreement any and all sums which would, at the time of the execution and delivery thereof be due and unpaid pursuant to this Agreement but for its termination, and in addition thereto any expenses and reasonable attorneys' fees, to which the City shall have been subjected by reason of Developer's Material Default; and (iii) the Permitted Mortgagee shall be subject to the provisions of Section 2.7.9, 2.7.10 and 2.7.14 of this Agreement and shall perform and observe all covenants in this Agreement to be performed and observed by a Permitted Mortgagee and failure to do so shall, after notice and opportunity to cure as provided by this Agreement, be a Material Default under this Agreement.. (b) In the event of termination of this Agreement for any reason (including by reason of any Material Default by Developer or by reason of the disaffirmance thereof by Developer, as a debtor-in-possession, or by a receiver, liquidator or trustee for Developer or its property) the most senior Permitted Mortgagee, if requested by the City, and provided that such party is the then-owner of the Site, will enter into a new Agreement with the City requesting a new Agreement upon the same terms, provisions, covenants and agreements set forth herein and commencing as of the date of termination of this Agreement ("New Agreement"), subject to the 'following: (i) the City shall have provided written notice to the other party requesting the New Agreement within thirty (30) days after the date of termination of this Agreement; and (ii) the Permitted Mortgagee shall be subject to the provisions of Section 2.7.9, 2.7.10 and 2.7.14 of this Agreement and shall perform and observe all covenants in this Agreement to be performed and observed by a Permitted Mortgagee and failure to do so shall, after notice and opportunity to cure as provided by this Agreement, be a Material Default under this Agreement." - 2. Modification to Environmental Insurance Provisions. Section 11.1.4(a)of the Original DDA is hereby amended by deleting clause (i) thereof in its entirety and replacing clause (i) with the following clause (i): "(i) limitation on legal liability associated with Parcel I-A-1 to the limits of liability for loss, remediation expense and legal defense not to exceed an amount of Five Million Dollars ( $5,000,000);" 3. Miscellaneous. 3.1 Agreement Ratified. Except as specifically amended or modified herein, each and every term, covenant, and condition of the Original DDA as amended is hereby ratified and shall remain in full force and effect. '3.2 Bindine Agreement. This Amendment shall be binding upon and inure to the benefit of the parties hereto, their legal representatives, successors and permitted assigns. 3.3 Governing Law. This instrument shall be interpreted and construed in accordance with the law of the State of California. IN WITNESS WHEREOF, the City and the Developer have signed this Amendment as of the date first set forth above. Dated: City of Tustin William Huston, City Manager ATTEST: Pamela Stoker City Clerk Dated: q I D..,I O~ APPROVED AS TO FORM Special Counsel for the City GILCHRIST & RUTTER - PROFESSIONAL By: ~ ~N WL HOMES LLC, a Delaware, lira{ted liability company~~ ~ ~J By: k_./LaXy"w~ L~¢~,¢,<...._ _ Steve Kabel President, Sou~~ Region Mi~cl~if B'r~a~' a-e;rn ' Vice President, S~o~.u California Region