The URL can be used to link to this page

Home My WebLink AboutRDA MOD TO DPA 05-21-90AGENDAS 9d DATE: TO: FROM: SUBJECT: MAY 21, 1990 WILLIAM A. HUSTON, CITY MANAGER COMMUNITY DEVELOPMENT DEPARTMENT '�VELOPMENT AGENCY NO. 6 A. 5/21/90 Inter - Com REQUEST FOR MODIFICATION TO DEVELOPMENT PARTICIPATION AGREEMENT (DPA) WITH RED HILL EDINGER PARTNERSHIP FOR PACIFIC COMMERCIAL CENTER AT 1421 - 1481 EDINGER RECOMMENDATION It is recommended that the Agency deny the request for modification to the subject agreement. BACKGROUND In January of 1986 the Redevelopment Agency entered into a Development Participation Agreement (hereinafter referred to as "Agreement") with Red Hill Edinger Partnership who agreed to construct a 5,470 square foot restaurant (now known as Chelsea's) and two research and development buildings (now known as "Tustin Commerce Center") totalling 62,100 square feet situated on the north-east corner of Red Hill Avenue and Edinger Avenue. As part of the Agreement, the developer also agreed to use restrictions recorded against the property which limited the subject site to the intended uses. Specifically, the R&D buildings were to be occupied by R&D uses only and the same with the restaurant. The use covenants established in the Agreement, were binding on the Developer and any successor in interest to the property until November 22, 2006 unless provisions were made in the Agreement for earlier termination, Under the Agreement, the Agency committed to reimburse the developer for actual costs of specific off-site improvements, in an amount not to exceed $250,000. As an additional separate concession, the City also agreed to relieve the developer of approximately $111,780 in Interim Circulation Improvement Fees within Specific Plan Area No. 7 (the Pacific Center East project area) . It was originally estimated that the return from the project in the form of annual sales tax and property tax increment would repay the Agency contribution within approximately 5 years. The developer has now requested that the allowable uses for the property be expanded to include all uses, including churches, which may be allowable under the current zoning for the site. It is the developer's belief that additional uses for the site will not be Redevelopment Agency Report Red Hill Edinger Partnership May 21, 1990 Page 2 detrimental to the neighborhood, nor will they place undue strain on resources and infrastructure in the area. STAFF ANALYSIS AND REPORT Staff has reviewed the developer's revenue projections made for the consistency of the request with Specific Plan under preparation. items follows. 1. Revenue Analysis request in light of the original project and also to determine the Draft Pacific Center East A discussion of each of these The original analysis of costs and revenues for the project indicated that return from the project in the form of sales taxes and property tax increment would repay the Agency contribution on the project within approximately five years or up to seven years if one takes into consideration the waiver of circulation improvement fees in the amount of $111,780. This original estimate was based on the use restrictions imposed on the site particularly the encouragement of retail uses (the restaurant and ancillary commercial uses located within the R&D buildings). An examination of revenues received to date on the project have indicated that the project to date has generated approximately $76,050 less revenue than the original $250,000 contribution that the Redevelopment Agency made to the proj ect or approximately $187,825 below the combined Redevelopment Agency contribution and Interim Circulation fee waiver made by the City. Since use restrictions on the site were the original basis for the Agency's contribution to the site, it will be important to maintain the potential for uses on the site which produce revenue in order for the City to fully recover its original contribution to the project. Until a full return on the Agency and City's financial contribution to the project, staff would not support an expansion of permitted uses on the site and removal of current use restrictions contained in the Agreement. The developer knowingly agreed to such restrictions and use covenants on the property through year 2006. In addition, approving such a request could set the precedent for other future requests from projects the Agency has financially assisted and also required Community Development Department Redevelopment Agency Report Red Hill Edinger Partnership May 21, 1990 Page 3 use restrictions on including the Tustin Plaza and Plaza La Fayette projects. 2. Consistency with Pacific Center East Specific Plan - The Pacific Center East Specific Plan which has been in progress for the last 5 years is nearing its completion schedule. The Draft Specific Plan proposes the Chelsea's restaurant site to have a "Commercial Center" designation which would permit family and specialty restaurants as an outright permitted use. The land use designation for the existing Research and Development portion of the RESCO site is proposed as "Technology Center" in the Draft Specific Plan. Under the purpose and intent of the "Technology Center" designation, the uses for this category are for the development of a general research and development, industrial and high technology center, with opportunities for limited ancillary commercial and office uses. Principal land uses for the Technology Center are proposed to be limited primarily to research and development and industrial uses...". Specifically, the listed uses include: Research and Development (including laboratories, product development and manufacturing); ° Light industrial (including manufacturing assembly and distribution); ° Accessory office, and ° Accessory Commercial Uses As the Agency is aware, the delay in preparation of the Specific Plan has resulted based on the need to comprehensively plan and design solutions to the major impediments to growth in the area, particularly congestion on areawide arterials serving the project area, unacceptable levels of service at intersections and at freeway ramps and limited access. A comprehensive traffic study has been completed to address these issues within the Specific Plan area and land use restrictions are being drafted based on assumptions in the traffic study and the need to enhance capacity wherever possible. Community Development Department Redevelopment Agency Report Red Hill Edinger Partnership May 21, 1990 Page 4 The developer is now requesting that all uses currently allowed in the Industrial (IN) and Planned Industrial (PM) Districts be permitted on the project site. The request would permit uses not currently authorized by the Agreement and uses which are not anticipated to be permitted or compatible with the Draft Specific Plan. Some of these uses might include: administration and professional offices (as a primary use, not accessory to an R&D use), off-street parking lots, Building Yards, Churches, retail commercial uses (as a primary use not accessory to an R&D use), and professional, instructional, motivational, vocational and/or seminar schools. These potential uses are inconsistent with the current assumed uses approved in the Agreement and could have significant implications on the traffic study and land use assumptions prepared for the Pacific Center East Project Area. CONCLUSION Staff have investigated the status of the Agreement in terms of the original revenue estimates for the project and the consistency of the request with the Draft Pacific Center East Specific Plan. It is not believed that an amendment to the Agreement at this time would be in the Agency's or City's best interest. Christine A. Shingl on Director of Community Development CAS:kbc Attachments Community Development Department A REVIEW OF REVENUE ESTIMATES RESCO PROJECT FISCAL YEAR 1986-87 1987-88 1988-89 1989-90 Property Valuation(1) Restaurant 511673 1085057 1108227 1131854 R&D 2371526 3106431 3172130 4818710 TOTAL 2883199 4191488 4280357 5950564 RDA tax increment(2) 28832 41915 42804 59506 (less 20% housing set -a -side requirement) 5764 8383 8561 11901 Net RDA tax revenue 23068 33533 34243 47605 Sales tax revenue(3) ----- 4219 14485 16801 Total combined revenue 23068 37752 48728 64406 (1) net figure, 1985 taxable values already subtracted (2) 1% of property valuation (3) from all sales tax sources on site, only includes revenues received to date Community Development Department R E S C 0 C0MPAt-4I E' r f I a N ` 33SS VIA I iX) SLI171205 NEWPORT BEACH CALIFORNIA 42663 714 -G73 -a -M { April 20, 1990 i TEL hJo .1 -673-'�:`:�4? Ms. Christine Shingleton Director of Community Development CITY OF TUSTIN 340 Centennial Way Tustin, CA 92680 RE: DEVELOPMENT PARTICIPATION AGREEMENT ("DPA") WITH REDHILL EDINGER PARTNERSHIP AND TUSTIN COMMUNITY REDEVELOPMENT AGENCY FOR PACIFIC COMMERCENTER, 11421.1481 EDINGER, TUSTIN Dear Ms. Shingleton: Pursuant to the Development Participation Agreement ("DPA') dated January 6, 1986, Redhlli Edinger Partnership, the developer of the property located at 1421-1481 Edinger, Tustin, constructed two Research and Development ("R & D") buildings and a 5,470 square foot restaurant. The DPA allowed for R & D uses of the property along with the Restaurant. Subsequently, the City of Tustin expanded the allowable uses for the property I e tember, 1986 in Resolution 2361, which allowed retail uses for the premises subject to certain parking requirements. At this time, the Developer Is asking that the allowable uses for the property be exparided to include all uses, including churches, which may be allowable under the current zoning for the site. It is the developer's belief that additional uses for the site will not be detrimental to the neighborhood, nor will they place undue strain on resources and Infrastructure in the area. Since at least one lease for vacant space is contingent on this, time is of the essence in this matter. Should you have any questions, please contact me at (714) 673-6500 ext 231. Thank you for your consideration. Yours Truly, RESCO FINANCIAL (ja es K. Blram et Manager