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HomeMy WebLinkAboutRDA CHAMPION DEVEL CO 9-06-88Ad~ ~== ~Ik I r~ ~ REDEVELOPMENT AGENCY DATE: SEPTEIqBER 6, 1988 ~ ........ TO: FROM: SUBJECT: NILLZAM A. HUSTON, EXECUTIVE DTRECTOR COMMUNZTY DEVELOPMENT DEPARTMENT EXCLUSIVE AGREEMENT TO NEGOTIATE WITH CHAMPTON DEVELOPMENT COMPANY - SOUTHEAST CORNER OF MAXN AND NEWPORT RECOMMENDAT]:ON i · i It ts recommended that the Redevelopment Agency approve the attached Exclusive Agreement to Negotiate wtth Champion Development Company, BACKGROUND ii As the Agency is aware, there has been interest expressed over the last several years with the potential development of three separate parcels at the southeast corner of Newport Avenue and Main Street in the South Central Redevelopment Area. As shown on the attached map (Attachment I), two of the lots have minimum visibility and access to Newport Avenue. Should the lot directly facing Newport be developed individually, the possibility of development on the rear lots for a commercial use would be highly unlikely. It was, therefore, the City Council's finding that limited access and traffic issues along Newport Avenue necessitated that the properties be developed as a package in a comprehensive, cohesive manner. This goal was reinforced by the City with the following actions' 1. The City Council rezoned the subject property in August 1987 to Planned Community Residential (PCC) requiring a master development plan for the site and conditional use permit for any project. Guidelines for considering specific development proposals were also developed by resolution as follows: a. Consolidation of lots shall be incorporated wherever feasible; b. Development of single parcels at the expense of limiting future potential development of other parcels in the same district and which are adjacent to the area being considered, shall be discouraged; c. The intent of the development plan shall be to al low maximum visibility and accessibility of all parcels in the same district which are adjacent to the property being considered; and City Counci 1 Report Exclusive Agreement - Champion Development Co. September 6, 19.88 Page two d. Development plans proposed for Planned Community Commercial properties should incorporate uses which contribute to the general fund wherever possible. 2. The Redevelopment Agency in early June 1988, transmitted a letter to property owners describing its goals and objectives for development of the subject property and requesting proposals or a statement of interest from owners on participating in a future project on the site. While no valid development proposal was received on the subject property, Champion Development Company who have been interested in the site for some time entered into an escrow agreement for the purchase of Parcel #1. The owners of Parcel #! have also transferred their owner participation rights to Champion. With assignment of owner participation rights, Champion Development have submitted an extremely preliminary proposal for development of the entire 1.48 acre site and are now requesting that the Redevelopment Agency reward them an exclusive right to negotiate for development of the site. Champion would intend to develop an approximate 18,500 square feet, high quality, and a high sales volume retail center on the site. They have submitted letters of interest on the site from Music Plus and Shrouds Linens. They are not interested in building a typical strip center or La Mancha type project but instead would utilize architecture and significant landscaping to make a s ta teme n t. Agency approval of an Exclusive Offer to Negotiate would provide Agency staff with 120 days to negotiate with Champion on specific conditions of development including any anticipated Agency assistance that might be requested by the developer. A copy of the Negotiation Agreement is attached for Agency consideration. A background description of the Champion Development Company is attached as Attachment II. L Christine )~. Shin~ton Director of Commu~rity Development CAS:ts Attachments: Attachments ! and II Exclusive Agreement to Negotiate Site map Community DeveloPment Department ATTACHMENT I Site Map ATTACHIqENT TX .- DEVELOPER BACKGROUND CDC is a joint venture between Long Beach Service Corp., a wholly owned subsidiary of Long Beach Savings and Loan and Champion Group Ltd., a limited partnership with Champion Associates, Inc. As general partner, Robert Champion has a majority interest in the limited partnership and is President and majority stockholder of Champion Associates, Inc. Robert Champion will be the pri nci pal-i n-charge. The purpose of this joint venture is to develop quality, promotional retail projects throughout Southern California. To date, the venture is involved in 9 projects i ncl udi ng: 1. A 240,000 sq.ft, shopping center in Simi Valley known as Mountaingate Plaza which is being expanded to include a enclosed food pavilion, G-plex theatre, 10,000 sq.ft, dinner house, a new 45,000 sq.ft, supermarket and 30,000 sq.ft, of retail shops. 2. New commercial storefronts in Chatsworth, Long Beach and West Los Angeles. 3. Small retail centers in Huntington Beach, La Mesa, and Arcadia. 4. An office building in Kearney Mesa. Robert Champion has developed over 300 commercial projects in the last 14 years. He owned Swensens Ice Cream Company of Southern California from 1976 to 1980. In 1980 he sold out to a major conglomerate and joined La r4ancha Development Company. In 1983, he became Executive Vice-President and left in 1986 due to a disagreement with major stockholders over the direction of the company. Long Beach Savings and Loan is a Federal Savings and Loan with over 500,000,000 in assets and a net worth in excess of $17,000,000. Long Beach Service Corp. is a wholly owned subsidiary. LBSC is committed to making an equity investment of 20) in the proposed project. EXCLUSIVE AGREEMENT TO NEGOTIATE THIS EXCLUSIVE AGREEMENT to Negotiate ("AGREEMENT") is made this day of September, 1988, by and between the TUSTIN COMMUNITY REDEVELOPMENT AGENCY "AGENCY") and CHAMPION DEVELOPMENT COMPANY ("DEVELOPER"}. RECITALS The Parties entered into this Agreement on the basis of the following facts, understandings, and intentions: A. The Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California (Health and Safety Code Sections 33000 et seq.). B. The Agency desires to effectuate the Redevelopment Plan for the South Central Redevelopment Project Area by providing for the development of a commercial retail center on an approximate 1.48 acre site (the "SITE") within the South Central Redevelopment Project Area, which is shown on the site map attached hereto and incorporated herein as EXHIBIT A, also known as parcels 1, 2, 3, Assessor's Parcel Map book 500, page, 171. C. The Developer, a California corporation, represents that it has the necessary expertise, experience, and financial capability to undertake the development contemplated herein. The term "Developer", as used herein, includes Exclusive Agreement to Negotiate Page two the principals, partners, and joint venturers of Developer. · D. The Agency and Developer desire, for the period set forth herein, to negotiate diligently and in good faith to prepare a Disposition and Development Agreement ("DDA") whereby the Developer would acquire property and develop thereon. NOW, THEREFORE, and in consideration of the mutual covenants hereinafter contained, it is mutually agreed upon by the parties as follows: Section 1. NATURE OF NEGOTIATIONS A. Good Faith. The Agency and the Developer agree that for the period set forth in Section 2 herein, they will negotiate diligently and in good faith to prepare and enter into a Disposition and Development Agreement for the development of the site. The development will be subject to all rules, regulations, standards, and criteria set forth in the Redevelopment Plan, the City's General Plan, applicable zoning regulations, and with such other requirements as may be contained in the DDA. B. Purchase Price and Other Consideration. The purchase price, land write down, rental, and other considerations paid by the Developer under the DDA will be established by the Agency after negotiations with the Exclusive Agreement to Negotiate Page three Developer. Such purchase price, land write down, rental, and other considerations will be based upon such factors as market condi.tions, · density of development, cost of development, risk to the Developer, estimated and actual profit, estimated and actual sales prices and rentals, public purpose, and fair value for the uses permitted to be developed. C. Exclusivity.. The Agency agrees for the period set forth in Section 2 not to negotiate with any other person or entity regarding development of the SITE without the approval of Developer. Section 2. PERIOD OF NEGOTIATIONS. i i The period of negotiation shall be one hundred twenty (120) days from the date this Agreement is signed by the Agency, and this Agreement shall terminate after the expiration of such period unless extended as follows' A. For sixty (60) days if a DDA has been prepared by the Agency and executed by the Developer and has been submitted to the Agency but has not yet been approved by the Agency Board; or B. By mutual agreement of the Parties. Exclusive Agreement to Negotiate Pa ge fo ur Developer understands and acknowledges that if negotiations culminate in a DDA, such DDA shall be effective only after and if the DDA 'has been considered and approved by the Board of Directors of the Agency after a public hearing thereon as required by law. Section 3. PROPOSED DEVELOPMENT The proposed development to be negotiated hereunder shall be a high volume retail center approximately 18,000 square feet in size. Section 4. DEVELOPER'S RESPONSIBILITIES During the period of negotiation, Developer will prepare such studies, reports and analysis, contractors and. lenders, and 'perform such analysis of prevailing and future market conditions, as shall be necessary to permit Developer to determine the feasibility of development of the Site as described in this Agreement. During the period of negotiation, the Developer shall submit to the Agency the following: 1. Monthly written reports advising the Agency of Developer's progress in analyzing the feasibility of the proposed development and shall supplement such reports from time to time as may be requested by the Agency. Exclusive Agreement to Negotiate Page fi ve 2. A preliminary site plan and architectural elevations for the proposed development wi th a description of the scope of development, including building square foo.tage, land area, building height and other factors descriptive of the proposed development in sufficient detail to allow the Agency to determine the scope and character of the development. 3. A schedule of the estimated period for completing construction and improvements of the proposed developmen.t. 4. A financial proforma for the proposed development including an estimate of development costs, project name, and project return adequate to enable the Agency to evaluate the economic feasibility of the proposed development and to determine conditions under which the proposed development may be feasible. 5. Full disclosure of Developer's principals, partners, joint venturers, negotiators, consultants, professional employees, or other associates of the Developer who are participants or principals in the proposed development, and all other relevant information concerning the above. Developer will provide the Agency with the names of the members of its negotiating team. Exclusive Agreement to Negotiate Page six 6. Statement of financial conditions in sbfficient detail to demonstrate developer's financial capabilities; those of its principals, partners and joint venturers to satisfy the commitments necessitated by the .' Project. To the extent Developer wants such financial statements to remain confidential, they shall be supplied to the Agency only if the confidentiality of the statements can be maintained. 7. A statement of the methods of financing, agreements of financial commitment and the financing documents to be used in the proposed development. The Developer shal 1 negotiate exclusively wi th the Agency' s negotiating team regarding this Agreement and with no other persons unless expressly authorized to do so by the Agency's negotiating team. Developer's compliance with the provisions of this section shall be conclusive evidence that the Developer has "negotiated in good faith". Section 5. AGENCY'S RESPONSIBILITIES A. Agency.Assistance. The Agency shall cooperate fully in providing Developer wi th appropriate information and assistance. B. Financing. The Agency shall explore various methods of financing and financial assistance which may be permitted by law to make development of the Site economically feasible. Exclusive Agreement to Negotiate Page seven. Ce P~reparation.~of DDA. If agreement is reached on the business terms for inclusion in the DDA, the Agency shall prepare such DDA for consideration by the Developer. D. California Environmental Quality Act. The Developer will supply data and information to assist the Agency in the preparation of any environmental documentation as may be necessary for the proposed development. The Developer shall bear the expense of any required environmental documentation. Section 6. GOOD FAITH DEPOSIT Concurrently with the execution of this Agreement, Developer shall submit to the Agency a good faith deposit in the sum of five thousand dollars ($5,000) in the form of a cash deposit, cashier's check, .. irrevocable letter of credit, certificate of deposit of other form of security acceptable to the Agency to insure that the Developer will proceed diligently and in good faith to negotiate and perform all of the . Developer's obligations under this Agreement. If the deposit is in cash or a certified cashier's' check, it shall be deposited in an interest-bearing account in a bank or trust company selected by the Agency. Interest, if any, shall be added to the deposit and held as additional security for the £xclustve Agreement to Negotiate Page elght Developer' s obligations hereunder. Upon termination of this Agreement or when the Agency and Developer enter tnto a DDA, the Agency shall return the deposit to the Developer provided that the Developer has negotiated diligently and in good faith and carried out its obligations hereunder. If Developer has failed to do so, in as much as the actual damages which would result from a breach by Developer of 1ts obligations under this Agreement are uncertain and would be Impractical or extremely difficult to determine, Agency shall be entitled to retatn the enttre amount of said deposit, as liquidated and agreed upon damages. Section 7. MISCELLANEOUS A. As..stgnment Neither this Agreement nor any interest herein may be assigned or transferred, voluntarily or by operation of law, without written approval of the Agency. B. Indemnification Developer shall defend, indemnify and save harmless Agency and its officers and employees thereof from all claims, suits, or other actions of every name, kind and description, brought for, or on account of, injuries to or death of any person including but not limited to workmen in the public, or damage to property resulting from any willful misconduct or negligent acts, errors or omissions committed by Developer during the performance of the obligations rendered under this £xclusive Agreement to Negotiate Page ni ne Agreement, save and except claims arising through the sole and exclusive negligence or sole and exclusive willful misconduct of Agency and its · officers, employees and agents. The defense and indemntflcation by Developer shall include all costs and expenses, including attorneys' fees, incurred by Agency or its employees, officers or agents with respect to such claim, suit or action of every name. Developer shall, tf requested by Agency, defend any litigation arising out of such claim at the sole cost and expense of Developer. In addition to any remedy authorized by law, the good faith deposit provided by Developer under and by virtue of this Agreement as shall be considered necessary, tn the sole discretion of Agency may be retained by Agency until disposition has been made of such claim or claims for damages as aforesaid. C. No Commissions. The Agency shall not'be liable for any real estate commission or any broker's fees which may arise from performance of this Agreement by the Parties. The Agency represents that it has engaged no broker, agent, or finder in connection with this transaction; and the developer agrees to hold the Agency harmless from any claim by any broker, agent, or finder retained by the Developer. D. Ownership of Documents. If the negotiations contemplated by this Agreement do not result in the execution of a DDA, Developer shall transfer to Agency copies of any reports, studies, analysis, site plan layouts, Exclusive Agreement to Negotiate Page ten development cost estimates, engineering studies, memoranda, or similar documents rega'rdlng the proposed development and prepared during the period of negotiations, which copies shall become the property of Agency. Such transfer shall be made wtthout any representation or warranty by the Developer as to the accuracy or sufficiency of the contents of such documents and shall be made subject to the rights of the preparers of such documents including, wtthout limitation, the copyright (tf any) associated wtth such documents. E. ~urpose of Contract. It is expressly understood and agreed by the Parties hereto that this is an Agreement regarding the conduct of contract negotiations only and does not convey any interest in the Site whatsoever. It is fur.ther agreed and understood that this Agreement does not imply any obligation on the part of the Agency to enter into any DDA that may result in negotiations contemplated herein. F. Amendment. This Agreement may only be amended by a document in writing signed by the Parties hereto. Exclusive Agreement to Negotiate Page eleven IN WITNESS WHEREOF the Par'ties have executed this Agreement as of the date first above written. Dated Tustl n Community Redevelopment Agency By: ~on~ld B. Hoe~terey, Chairman Dated Champion Associates Inc., Dba Champion Development Company By: , President Approved as to form: Dated: By: , V~CeI President By: Ja~es G. Rourke, City Attorney EXHIBIT Site Map iV£V/PO~R T A M£NLIE' '~