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HomeMy WebLinkAboutRDA MOD TO DPA 07-02-90Ar AGE,4DA DATE: JULY 21 1990 TO: WILLIAM HUSTON, CITY MANAGER FROM: COMMUNITY DEVELOPMENT DEPARTMENT REDEVELOPMENT AGENCY NO. 5 7/2/90 Inter - Com SUBJECT: REQUEST FOR MODIFICATION TO DEVELOPMENT PARTICIPATION AGREEMENT (DPA) WITH REDHILL EDINGER PARTNERSHIP FOR PACIFIC COMMERCIAL CEN'S'ER AT 1426 - 14R1 EDTWaRE - RECOMMENDATION It is recommended that Agency deny the request for a DPA modification. BACKGROUND The Redevelopment Agency at its meeting on June 18th continued their discussion of this matter to allow the proposed church to continue to explore alternative church site locations. Mr. Wolfe contacted staff June 26th and indicated that he had not found an acceptable alternative site for his facility. The May 21st and June 18th staff reports are attached for the Agency's background information. It is not believed at this time that any additional information has been submitted which would warrant an amendment to the original Development Participation Agreement for the project. Christine Shingleton Director of Community Development CAS:mas Attachments PATE: June 28, 1990 WILLIAM HUSTON, CITY MANAGER TO: Inter - Com CITY ATTORNEY FROM: TUSTIN COMMUNITY REDEVELOPMENT AGENCY; SOUTH SUBJECT: CENTRAL PROJECT AREA; PROPERTY REDIILLEDINCER PARTNERSHIP (NORTHWEST CORNER OF REDHILL AND EDINCER) The Redhill Edinger Partnership, a Californiaimiteed d partnership, the developer and owner of the propey northwest corner of Redhill and Edinger, has made a request of the Tustin Community Redevelopment Agency for an amendment to or deviation from the obligations imposed upon the developer and upon the subject property by the Development participation Agreement entered into between the Tustin Community Redevelopment Agency and Redhill Edinger Partnership on February 71 1986. The request of the developer is for Agency approval to permit a church on the subject property contrary to the provisions of the Development Participation Agreement, which prescribes that the property shall be developed and used as "an integrated complex consisting of two research and development buildings totalling 62,100 square feet and one restaurant of 5470 square feet on a 4.7 acre site". The Agency agreed to pay and did pay the developer for the actual cost of construction of the off --site public improvements, up to but not in excess of the sum of $250,000.00, these improvements being those which would otherwise have been required to be installed and paid for by the developer. To now revise the agreement and/or to permit the Redhill Edinger Partnership to deviate from the terms of the Development Participation Agreement would be inconsistent with the purpose and intent of the agreement and inconsistent with the purpose and intent of the California Community Redevelopment Law. A community redevelopment agency is authorized by statute to assist in the development of property, using public funds for such purposes, provided that the intent and purpose of the project is to develop properties and uses which may not, otherwise be developed and which development will benefit the Project Area. To permit the developer to receive the benefits of the Development Participation Agreement but not be required to conform to the obligations it imposed on the developer would smack of a gift of public funds. It is understood, from the presentation of the developer's representative that the developer has experienced financial difficulties with the property. While that fact may create a desire to assist the developer in overcoming its financial difficulties, the Redevelopment Agency must keep in mind that it is in essence a trustee of public funds and must make its decisions 4 - r 1 Intercom to: WILLIAM HUSTON, CITY MANAGER June 28, 1990 Page -2- v -N for the best interests of the Redevelopment Agency and such action must be consistent with the California Community Redevelopment law and further the aims of the Redevelopment Plan. Clearly the Redevelopment Plan does not provide for churches in the Project Area and the basic purpose and intent of a redevelopment project is to generate tax increment revenue, which a church does not produce. If the governing body of the Tustin Community Redevelopment Agency is to permit a church to be situated on the subject property, it must first make findings, based upon substantial evidence, that to grant such permission will further the Redevelopment Plan of the South Central Redevelopment Project Area and will be consistent with the requirements and limitations of the California Community Redevelopment La�V/7 t would appear difficult to do so. 1 JGR;kbg;R;6/28/90(8\931.rr)(4-5) J W ROURRE Ci y Attorney GE.NDA5 --70 DATE: TO: FROM: SUBJECT: MAY 21, 1990 WILLIAM A. HUSTON, CITY MANAGER COMMUNITY DEVELOPMENT DEPARTMENT -r�VLLOPHLNT AGENCY NO. 6 5/21/90 Inter - Com REQUEST FOR MODIFICATION TO DEVELOPMENT PARTICIPATION AGREEMENT (DPA) WITH RED ]TILL 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. DACKGROUND 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 cis "Tustin Commerce Center") totall.i.ng 62,100 square feet situated on the north-east corner of Red Ilill Avenue and Ldinger Avenue. As part of the Agreement, the developer also aclreed to use restrictions recorded against the property which _limited the subject site to the intended a es. 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'- request in light of the original .revenue projections made for the project and also to determine consistency of the request with the Draft Pacific Center East Specific Plan under preparation. A discussion of each of these items follows. 1. Revenue Analysis - 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 $111,730. 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 project 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 potentia] 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 on the site and removal of: current use restrictions contained in the Ac3r.eemcnt. The developer knowingly agreed to such restrictions and use covenants on the property through year 2.006. 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 Dep�irtnaent 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 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 .-in(] 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 u:�es. Principal land uses for the Technology Center are proposed to be limited primarily to research and development ane] 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 wherever possible. Community Development Department Redevelopment Agency Report Red hill Edinger Partnership May 21, 1990 Page 4 The developer is now requesting that till 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 rind 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. Z4 Christine A. Shingle -ton 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 DeDartment I Y-) FU April 20, 1990 s�5� v.�, i r► i Ms. Christine Shingleion I%FWFI:;T PEACH Director of Conut'runit Develu ment Y c�L CITY OF TUSTIN 300 Centennial Way Tustin, CA 92680 HE: DE=VELOPMENT PARTICIPATION AGREEMENT ('DPA-) WITH REDI-1111 EDINGER PARTNrRSHIP AND TU�TIN COMMUNITY REDEVELOPMENT AGENCY FOR PACIFIC COMMERCENTER, 1421-1481 EDINGERo TUSTIN Dear Ms. Shingloton: Pursuant to the Developmont Parlicipatlon Agreement ("DPA') dated January 6, 1986, Redhlll Edinger Partnership, 010 developer of the proporty located at 1421-1491 Edinger, Tustin, constructed two Nes.0arch and Development ('rt & O`) buildings and a 5,470 square fool rest;mirant. Tlio DPA allowed for H & D uror, of 1110 properly ,110rng with thu neslaurant. �ut,sfiquently, tilt City (-)f Tu sten expandod the allowable uses for the property ftLie tembor, 19136 in Hesoltrtion 2361, which allowed retail uses for the promises SuV;ecl to certain parking requlremenls. -- At At lhiS time, tho Devolopor Is asking that the all0w.-1hl0 uses for the property be exparided to includo all uses, Including churches, which may he allowable under the Current Mling for the site. It i the+ d volopor's boliot that additional uSos fol the site will niot I)u detrimental to the noighborhood, nor will they place undue :train on resources anti Infrastruci;ure in the area. Since at least ono loase for vacant space is contingont On tills, tinle is of the essence in this matter. Should you have any questions, please contact rl)e at (714) 673-6500 dart 231. Thank you for your consideration. Yours Truly, RESCO FINANCIAL yJaesjvK. Diram anager DATE: JUNE 18, 1990 TO: WILLIAM HUSTON, CITY MANAGER Inter -- Com FROM: COMMUNITY DEVELOPMENT DEPARTMENT SUBJECT: REQUEST FOR MODIFICATION TO DEVELOPMENT PARTICIPATION AGREEMENT (DPA) WITH RED HILL EDINGER PARTNERSHIP FOR PACIFIC COMMERCIAL CENTER AT 142 1481 ED N Ej RECOMMENDATION It is recommended that the Agency either: 1. Deny the request for modification, or 2. Continue the matter. BACKGROUND The Redevelopment Agency at its regular meeting of May 21st reviewed a request from the Red Hill Edinger Partnership to expand allowable uses on the site to allowable uses permitted under current zoning, including churches (subject to a Conditional Use Permit) on the subject property. (See attached staff report dated May 21, 1990). The matter was continued to permit staff to meet and share information with Mr. Wolfe representing the prospective church use. Staff- provided Mr. Wolfe with a list of approximately 15 alternative sites within the City's Industrial Zones. A number of the sites complied with the City's guidelines for church locations and there were approximately 6 sites which were impacted by the current church guidelines. The Planning Commission, however, does have the flexibility to review each request on an individual basis and approve a location that does not comply with the guidelines. Mr. Wolfe has reviewed a number of sites and for a variety of reasons approximately 9 sites have been eliminated largely due to existing condominium associations within a project not wanting a church use, there being a lack of parking, or a project was "for sale" instead of rent. He seems prepared to continue to explore all alternatives. He has, however, raised an issue about the Red Hill Partnership site. The City in September of 1986 approved a Conditional Use which permitted an expansion of retail uses as part of the research and development portion of the project (Resolution 2361). He feels that this may indicate a precedent for modifying the Development Participation Agreement (DPA) on the site. Redevelopment Agency Report Red Hill Edinger Partnership June 18, 1990 Page 2 Staff, however, in reviewing the matter and status of the DPA do not believe that the previous Planning Commission action in late 1986 negatively impacted the original revenue estimates for the project nor future consistency' with the Pacific Center East Specific Plan. The Executive Director at this time still does not believe that an amendment to the DPA, as requested would be in the Agency's or City's best interest. We would however, be prepared to continue to meet and provide assistance to the church or to explore other options and alternatives with the developer. - vax�(a� Christine Shingleton Director of Communit evelopment CAS:mas Attachments Community Development Department