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HomeMy WebLinkAboutRDA CMS DEVELOPMENT 09-06-88 ..... REDEVELOPMENT AGEh~CY ~ ..~ NO. 7 TO: FROM: SUBJECT: WILLIAN A. NUSTON, EXECUTIVE DIRECTOR COMMUNITY DEVELOPMENT DEPARTMENT EXCLUSIVE AGREENENT TO NEGOTIATE NITH CMS DEVELOPMENT - PROPERTY IH VICINITY OF NEWPORT AVENUE ANO SANTA ANA (I-5) FREE#AY RECOI~ENDATION It is recommended that the Redevelopment Agency approve the attached Agreement to Negotiate with CMS Development Company. BACKGROUND The subject site is approximately 3.98 acres in size and is generally bound on the north by the Interstate 5 freeway, on the east by Newport Avenue, on the south by Mitchell Avenue and on the west by a small frontage along "B" Street which currently contains existing non-conforming multiple family structures. The site which is currently in eight ownerships is also located in the South Central Redevelopment Area. It has been generally believed that incremental development of individual parcels without a comprehensive development plan for the site would render certain properties in the area undevelopable for commercial use. This is due to current lot configurations in the area which create irregular lots with minimum visibility and access. In order to assure comprehensive development of all parcels to their fullest potential, the City has taken the following actions to date: le The City Council rezoned the subject property in August, 1987 to Planned Community Commercial (PCC) requiring a development plan for the site and conditional use permit for any project. Guidelines for review of specific development proposals were also adopted 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; Ce The intent of the development plan shall be to allow maximum visibility and accesibility of all parcels in the same district which are adjacent to the property betng considered; and J City Counctl Report September 6, 1988 Exclusive Agreement to Negotiate Page t~o d. Development Plans proposed for Planned Community Commercial properties should incorporate uses which contribute to the general fund wherever possible. 2. The Redevelopment Agency transmitted in late December, 1987 a letter to property owners describing the goals and objectives for the development of the subject site and requesting proposals or a statement of interest from owners about participation in any future project on the site. Wi th only one property o~ner responding and supporting any Agency activities for the site, the Agency in early 1987 authorized staff to Informally solicit preliminary development proposals for the site. Staff have recently received a preliminary development proposal for the site from CMS Development Co,any who have been extremely successful in negotiating offers to purchase four of the etght ownership parcels within the project site (Exhibit B-I). With the executed offers, the developer anticipates that development of the site and acquisition of additional parcels could be accomplished in phases and in harmony wtth one another as follows: a. A specialty center at the southeast corner of the site best characterized as service oriented with the commitment of a Carl's Jr. Restaurant. b. An office complex or hotel for the portions of the site directly north of the proposed specialty center along the I-5 freeway. c. The southerly portion of the site would consist of support restaurants or service commercial uses which would compliment the entire project. To assist them in future site acquisition and to reduce potential speculation, CMS Development is now requesting that the Redevelopment Agency enter into a 180 day exclusive agreement to negotiate with them for development of the site. The agreement terms would provide the applicant with an opportunity to more specifically define the character of the proposed project and to continue the acquisition process on the site. Agency staff during the peri od of negotiation would also be prepared to determine potential commitments to be required of the developer as well as to evaluate more detailed financial proforma information to determine the need for any Agency assistance the Developer may request. k,,. eom munity Development Department Ci ty Counctl Report September 6, 1988 Exclusive Agreement to Negotiate Page three A background description of CMS Development and its President, Cody Small is attached as Exhibit C. A copy of the proposed Exclusive Agreement to Negotiate is also attached. CAS'pef Attachments' Exhtbits A, B and C Exclusive Agreement to Negotiate Corn rnunity Development Depar~rnen~ EXHIBIT A Site Map Mitchell Ave EXHif~[T B-1 Property Profile Summary SF Acre Owner Phase I Parcel 1 5,445 0.13 Parcel 2 15,500 0.36 Parcel 3 26,400 0.61 Parcel 13 21,755 0.50 Phil Schindler Whitney Sharpe Texaco/Tom Lewis Noah 'Sag raves Phase II Parcels 21-24 59,252 1.36 Robert Laird Phase III Parcel 4 23,944 0.55 Parcel 5 9,471 0.22 Parcel 25 8,470 0.19 Alta Dena Dairy Stueve Brothers David Sosin gned offers (offers enclosed) Parcels 1, 2, 3, 13 E]~HIBIT B-2 ......... ::::::i!ii!!i::::.. ...... :::::::::::::::::::::::::::::::: :::::::::::::::::::::::::::::: ..... · .iiiiii!!! .......... ~ ======================== ....... ~ ...::.:::::::::.. ::iiiiiiiiiiii?i!!!iii::..!!!iii!!ii!:::::: ...... ::: .............. ......... :~::::::: :::::::::::::::::::::: ;/~1 TCHEL L A VENUE SUBJECT PROPERTIES NORTH NOT TO SCALE EXHIBIT C-1 HISTORY AND PHILOSOPHY OF CMS DEVELOPMENT COMPANY Cody M. Small: His involvement in real estate spans over twelve years in all aspects of shopping center development. Cody holds a Bachelor of Science degree in finance from San Diego State University. After eight years with the Grubb & Ellis Company, Cody spent two years at Sterik Development Company as Acquisitions and Development Director with responsibilities for land acquisition, lease negotiations, and construction administration. In 1986, Cody formed a Retail Division in conjunction with Nexus U.S.A. Equities for the development of commercial retail properties located in Southern California. In that capacity, Cody participated in a select number of partnerships involving Nexus U.S.A. Equities. In 1988 formed the CMS Development Company to specialize in the acquisition, development, management and sale of income-producing property. With an extensive background in development and brokerage, CMS Development was created to focus on strong professional relationships, flexibility and team work. The company's foundation for success revolves around long term relationships and long term ownership of projects. Since 1978, Cody Small has been involved in more than fifty-five commercial properties and has developed, as a partner, seven, shopping centers with a fair market value of more than 50,000,000. Over the years Cody has established long term relationships with major retailers including Ralphs Market, Vons, Alpha Beta, Stater Bros., Safeway Stores, Target, Longs Drugs, CVS Drugs, Home Depot, Mervyns, Montgomery Wards, K-Mart, Ross Stores, Jack-in-the-Box, Federated Group, Carls Jr., and many others. In addition, there are solid working relationships with many lenders and insurance companies. See attached for tenants and references. EXHIBIT C-2 MAJOR COMMERCIAL DEVELOPMENTS (PARTIAL LISTING) NEXUS TOWN CENTER RIVERSIDE Riverside, CA 12 acres - 110,000 SF of buildings Major Tenants - Stator Bros., Longs Drugs, Jack in the Box LINCOLN PARK SHOPPING CENTER Buena Park, CA 11.5 acres - 145,000 SF of buildings Major Tenants - Thrifty Drugs, Big 5 Sporting Goods, Trak Auto; and Bank of America EUCLID CRESCENT CENTER Anaheim, CA 10.5 acres - 133,305 SF of buildings Major Tenants - Design Depot (a division of K-Mart) Wherehouse Records and Tapes Athletic Shoe Factory PARK CENTER PROMENADE Santa Aha, CA 1.39 acres - 15,936 SF of buildings Major Tenants - Carls Jr., Kinkos Copies, Beef Bowl, One Hour Foto Analinc Ohio Casualty Insurance Anaheim, CA 3.2 acres - 38,000'SF of buildings Major Tenant - Ohio Casualty Insurance Company CMS DEVELOPMENT COMPANY 3199 A-3 Airport Loop Drive Costa Mesa, CA 92626 (714) S50-1S15 EXHIBIT C-3 REFERENCES TENANTS MICHAEL T. SLATON VICE PRESIDENT WALTER FORD DIRECTOR OF REAL ESTATE STATOR BROS. 21700 BARTON ROAD COLTON, CA 92324 (714) 783-5002 ARTHUR P. GARCIA DIRECTOR OF REAL ESTATE FEDERATED DEPARTMENT STORES, INC. RALPHS DIVISION' 14000 RIVERSIDE DRIVE SHERMAN OAKS, CA 91423 (818) 990-7890 JIM McINTYRE VICE 'PRESIDENT OF REAL ESTATE ALPHA BETA COMPANY - AMERICAN STORES 777 SOUTH HARBOR BOULEVARD LA HABRA, CA 90631 (714) 738-2201 DAVE SABEY LEGAL COUNCIL/REAL ESTATE DIVISION LONGS DRUGS 141 N. CIVIC DRIVE WALNUT CREEK, CA 94596 (415) 994-6762 RICHARD FIELDS REAL ESTATE REPRESENTATIVE CVS DRUGS 1534 BROOKHOLLOW DRIVE SANTA ANA, CA 92705 (714) 545-8705 · ELAINE CUBELLIS REAL ESTATE DEPARTMENT THRIFTY CORPORATION 3424 WILSHIRE BLVD. LOS ANGELES, CA 90010 (213) 251-6000 JIM LLOYD DIRECTOR OF REAL ESTATE HOME DEPOT 601 PLACENTIA FULLERTON, CA 92631 (714) 738-5200 BOB ROSCOE REAL ESTATE REP. - WESTERN REGION MONTGOMERY WARDS 1 MONTGOMERY WARDS PLAZA CHICAGO, ILLINOIS 60671 (312)467-7497 DAVID MECKLER DIRECTOR OF REAL ESTATE ROSS DEPARTMENT STORE 626 FORBES BLVD. SOUTH SAN FRANCISCO, CA 94080 (415) 790-4400 JOHN ORTEGA PRESIDENT CLOTHESTIME 5325 EAST HUNTER ANAHEIM, CA 92807 (714) 779-5881 ..LENDING INSTITUTIONS/JOINT VENTURE PARTNERS MARK BROWNSTEIN PRESIDENT FAR WEST REALTY ADVISORS 1800 AVENUE OF THE STARS, STE. 1114 LOS ANGELES, CA 90067 (213) 552-6216 JANE O'TOOLE VICE PRESIDENT - LENDING UNION BANK 18300 YON KARMAN IRVINE, CA 92715 (714) 553-7091 JIM LAURITZEN VICE PRESIDENT REAL ESTATE FINANCE BANK OF NEWPORT P.O. BOX 7890 NEWPORT BEACH, CA 92660 (714) 760-6000 DAN VOGELZANG VICE PRESIDENT REAL ESTATE SANWA BANK 1622 N. MAIN ST. STE. 500 SANTA ANA, CA 92701 (714) 667-1249 CITY REDEVELOPMENT AGENCIES/CONSULTANTS JIM DE STEFANO DIRECTOR OF DEVELOPMENT SERVICES CITY OF BUENA PARK 6650 'BEACH BLVD. BUENA PARK, CA 90620 (714) 521-9900 FELISE L. ACOSTA ROSENON, SPENACEK GROUP INC. 414 WEST FOURTH, STE. C SANTA ANA, CA 92701 (714) 541-4585 DAVID NARVESKY ECONOMIC DEVELOPMENT OFFICER 6650 BEACH BOULEVARD BUENA PARK, CA 90620 (714) 521-9900 CINDY NELSON SANTA ANA EXECUTIVE DIRECTOR OF COMMUNITY DEVELOPMENT AGENCIES 20 CIVIC CENTER PLAZA SANTA ANA, CA 92702 (714) 647-5360 KEVIN O' ROURKE CITY MANAGER CITY OF BUENA PARK 6650 BEACH BLVD. BUENA PARK, CA 90620 (714)521-9900 EXHIBIT C-4 CODY M. SMALL May 1988 433 Seaward Road Corona del Mar, CA 92625 (714) 850-1815 - work (714) 760-3692 - home · . MARITAL STATUS Married EDUCATION Bachelor of Science Degree in Finance San Diego State University EXPERIENCE 1988 - Present' CMS DEVELOPMENT COMPANY. Principal and Owner of development company. Primarily responsible for the development and management of commericial real estate. 1987 - 1988 NEXUS DEVELOPMENT COMPANY. Partner in Nexus, supervised all shopping center development activities for the company. Projects included Nexus Town Center Buena Park, Nexus Promenade Santa Ana, Nexus City Square Pavilion and Nexus Town Center Riverside. 1986 - 1987 STERIK DEVELOPMENT COMPANY. Acquisition and Development Director. Responsibilities were primarily to develop and rehabilitate the real estate controlled by Zody's. This program involved some 5,000,000 square feet of existing space in 36 stores, plus additional pad and side shop opportunities. 1978 - 1985 GRUBB & ELLIS COMPANY. Commercial salesman, 1978 - 1980. Commercial Broker since 1981. Primary responsibility was working in the Retail Division of Grubb & Ellis Company as a marketing and consulting specialist on community/neighborhood shopping center. HONORS PROFESSIONAL AFFILIATIONS AND LICENSES: SOCIAL AND ATHLETIC CLUBS: SPECIAL INTEREST: Salesperson of the Year - 1981 - Retail Division Salesperson of the Year - 1983 - Retail Division Salesperson of the Year - 1984 - Retail Division Salesperson of the Year - 1985 - Retail Division Senior Marketing Consultant Logging lease and sales transactions in excess of $100,000,000. International Council of Shopping Centers Newport Harbor Board of Realtors Real Estate Brokers License, State of California Balboa Bay Club, Newport Beach, CA John Wayne Tennis Club, Newport Beach, CA Magic Island, Newport Beach, CA Prior to joining Grubb & Ellis Company, played on the professional tennis circuit throughout the United States, Europe and Austral ia. 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 CMS 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 se_____~q.). B. The Agency desires to effectuate the Redevelopment Plan for the South Central Redevelopment Project Area by providing for the development of an approximate 3.98 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, 4, 5, 25, 13, 21, 23, and 24, Assessor's Parcel Map book 402, page 37. C. The Developer, a California sole proprietorship, represents that it has the necessary expertise, experience, and financial capability to undertake the development contemplated herein. The term "Developer", as used herein, Exclusive Agreement to Negotiate Page two includes the principals, partners, and joint venturers of Developer and all obligations of Developer herein shall be the joint and several obligations of such principals, partners, and joint venturers. . 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 the Site and develop it. 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 oonsiderations 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 conditions, · 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· iii The period of negotiation shall be one hundred eighty {180) days from the date this Agreement is signed by the Agency, and this Agreement shal1 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 Page four Developer understands and acknowledges that if negotiations culminate in a DDA; such DBA shall be effective only after and if the DBA 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 contemplated by this Agreement to be negotiated hereunder comprises three concepts for portions of the Site: A. A specialty center at the southeast corner of the Site best characterized as service oriented with the potential commitment of a Carl's Jr. Restaurant. B. An office complex or motor hotel for the portions of the Site directly north of the proposed specialty center. C. The southerly portion of the Site would consist of support restaurants or service commercial uses which would compliment the entire project. Section 4. DEVELOPER'S RESPONSIBILITIES During the peri od of negotiation, Developer will prepare such studies, reports and analysis, contractors and lenders, and perform such analysis of Exclusive Agreement to Negotiate Page fi ve 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. 2. A preliminary site plan, architectural elevations for the proposed development with a description of the scope of development, including building square footage, land area, building height and other factors descriptive of the proposed development with 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 development. 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. Exclusive Agreement to Negotiate Page si x 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. 6. Statement of financial conditions in sufficient detail to demonstrate developer's financial capabilities; those of its principals, partners, joint venturers; and those of its prospective dealers to satisfy the commitments necessitated by the Project. Such financial statements are to remain confidential subject to the provisions of law. 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 shall negotiate exclusively with the Agency's negotiating team and with no other persons unless expressly authorized to do so by the Agency's negotiating team. During the period of negotiations, no statements will be made by the developer to the media without the approval of the Agency's negotiating team. Developer's compliance with the Exclusive Agreement to Negotiate Page seven ., . . provisions of this section shall be conclusive eVidence that the Developer has "negotiated in good faith". Section 5. AGENCY'S RESPONSIBILITIES A® Agency Ass_istance. The Agency shall cooperate fully in providing Developer with appropriate information and assistance. B. Financ~n9. 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. C. Preparation 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. O. Cal..iforn~a Env.i.r.o.nmental Qua)i~y~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. Exclusive Agreement to Negotiate Page eight 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 ten thousand dollars ($10,000) in the form of a cash deposit, cashier's check, irrevocable letter of credit, certificate of deposit or 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 Developer' s obligations hereunder. Upon termination of this Agreement or when the Agency and Developer enter into 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 its obligations under this Agreement are uncertain and would be impractical or extremely difficult to determine, Agency shall be entitled to retain the entire amount of said deposit, as liquidated and agreed upon damages. Exclusive Agreement to Negotiate Page ni ne Section 7. M~scellaneous A. Assignment. 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 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 indemnification 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, if 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 Exclusive Agreement to. Negotiate Page ten good faith deposit provided by Developer under and by virtue of this Agreement as shall be considered necessary, in the sole discretion of Agency may be retatned by Agency until disposition has been made of such clatm 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 c.ontemplated 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, development cost estimates, engineering studies, memoranda, or similar documents regarding the proposed development and prepared during the period of negotiations, such copies shall become the property of Agency. Such transfer shall be made without 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, without limitation, the copyright {if any) associated with such documents. · Exclusive Agreement to Negotiate Page el even E. Purpose 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 further 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. IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first above written. Dated Tustin Community Redevelopment Agency By: Ronald B. Hoesterey, Chairman Dated CMS Development Approved as to form: By: Cody M. Small, President Dated: By: James G. Rourke, City Attorney EXHIBIT A . Site Map Mi:chell Ave