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HomeMy WebLinkAbout13 VESTAR EXTENSION 01-05-04AGENDA REPORT 13 Agenda Item Reviewed: City Manager ~.. Finance Director MEETING DATE: JANUARY 5, 2004 TO: FROM: SUBJECT: WILLIAM A. HUSTON, CITY MANAGER CHRISTINE SHINGLETON, ASSISTANT CITY MANAGER EXTENSION OF EXCLUSIVE AGREEMENT TO NEGOTIATE WITH VESTAR FOR THE TUSTIN LEGACY RETAIL SITE SUMMARY Approval is requested for a extension to the Exclusive Agreement to Negotiate with Vestar Development II, LLC for the disposition and development of the Tustin Legacy Retail Site. RECOMMENDATION It is recommended that the City Council authorize the City Manager to execute an extension to the Exclusive Agreement to Negotiate (ENA) between the City of Tustin and Vestar Development II, LLC subject to legal review of any extension document by the City's special real estate counsel Gilchrist & Rutter. FISCAL IMPACT Vestar Development II, LLC have previously deposited a $100,000 good faith with the original execution of the ENA. The intent of the continuing negotiation period is to resolve site plan issues that the Community Development Department has in order that the Agency may then complete a final Disposition and Development Agreement (DDA) for City Council consideration. There will likely be direct financial impacts from the eventual development of the Tustin Legacy Retail site including receipt of revenues from sales tax and property tax and the cost of providing service to the site. Fiscal impacts will be evaluated as part of the negotiation process and summarized for the City Council when the DDA is brought forward for consideration. BACKGROUND The Tustin City Council conditionally selected Vestar Development II, LLC as the developer of the Tustin Legacy Retail Site. A subsequent ENA was executed for the project on July 1,2003 which provided for a 120 day negotiation period with the Page 2 William A. Huston January 4, 2004 Extension of ENA opportunity for several 30 day time extensions to the negotiation period which periods expired on December 30, 2003. Unfortunately, until resolution of Concept Plan and Site Plan issues identified by Community Development on the project, the Developer and Agency have been unable to complete negotiations on the final DDA (a draft DDA was previously completed and transmitted to Developer in September). Based on the Agency's assessment, the Developer has made reasonable and sufficient progress towards fulfillment of the requirements of the ENA. Accordingly, we would recommend an extension of time of the negotiation period identified in the original ENA to permit completion by the Developer of the Concept and Site Plan submittals and all negotiaitons on the first draft of the DDA until February 25, 2004, unless additional time is necessary subject to mutual written agreement of the Developer and City. All other terms of the ENA would continue to remain in effect. Christine Shingleton Assistant City Managed../' FIRST AMENDMENT TO EXCLUSIVE NEGOTIATION AGREEMENT (PARCELS 10 and 11) THIS FIRST AMENDMENT TO EXCLUSIVE NEGOTIATION AGREEMENT ("Amendment") is enteredinto as of December __., 2003 ("Effective Date") by and between THE CITY OF TUSTIN (the "City") and VESTAR DEVELOPMENT II, LLC, an Arizona limited liability company (the "Developer") with respect to certain land referred to herein as "Parcels 10 and 11". The City and the Developer (collectively referred to herein as the "Parties") hereby agree as follows: 1.0 Introduction. 1.1 The parties entered into that certain Exclusive Negotiation Agreement regarding Parcels 10 and 11, which agreement was effective as of July 1, 2003 (the "Original ENA"). 1.2 Section 4.2 of the Original ENA roads in part as follows: "4.2 Period of Negotiations. "4.2.1 If on the 120th day follOwing the Effective Date (or within any extension of time approved by the City and the Developer in accordance with the terms of this Section 4.2), the Developer has not signed and submitted a DDA in form and substance approved by the Assistant City Manager, then this Agreement shall automatically terminate. On or before the date that is five business days prior to expiration of this Agreement, the Developer may request in writing from the City an extension of the 120-day exclusive negotiation period for an additional 30 day period. Upon receipt of such written request, the City will determine whether in its sole judgment reasonable and sufficient progress has been made toward fulfillment of the requirements of this Agreement, and if it so determines, may grant the requested extension to the Developer, with such extension granted in writing. The exclusive negotiation period may be extended by mutual agreement of the Developer and the City for up to two (2) additional periods of thirty (30) days each. During the initial term of this Agreement and any extensions thereof, the Developer and the City shall each negotiate diligently and in good faith with each other to achieve a DDA. "4.2.2 Notwithstanding the period of exclusivity set forth in Section 4.2.1, it is the intent of the Parties to negotiate and prepare definitive documentation reflecting the transaction for execution and delivery on or before the date that is 120 days following the Effective Date. Thus, unless otherwise extended in writing by the Parties, this Agreement shall automatically terminate at the end of the period set forth in Section 4.2.1, and except as specifically set forth in Sections 4.3, 4.4, 9.1 and 9.2 of this Agreement, no Party shall have any liability hereunder following termination of this Agreement. "4.2.3 The City hereby delegates to the Assistant City Manager the authority to grant the extensions specified in Section 4.2.1 upon determination by. the Assistant City Manager in her sole and absolute discretion that the Developer [JRA:jra/ENA amendment 10503-98719_2.DOCJ122203/4182.005] has negotiated diligently and in good faith and that reasonable and sufficient progress has been made toward fulfillment of the requirements of this Agreement. No such extension of time shall be effective unless it is in writing. "4.2.4 Notwithstanding the 120 day period of exclusive negotiations established by this Agreement, if the Parties should fail to make substantial progress toward completing documentation by the date which is 90 days following the Effective Date, then either Party may terminate this Agreement at any time thereafter upon three (3) days written notice to the other Party." "4.2.5 ..... "4.2.6 Provided that the Developer fully and timely complies with its obligations, including but not limited to its obligations described in Sections 2.1 and 6.6, the City shall deliver to the Developer an initial draft of the DDA no later than sixty (60) days following the Effective Date. Developer acknowledges that its submission to the City of various items referred to in Section 6.6 is required by the City in order for the City to prepare timely a proper initial draft DDA. In the event the City fails to deliver to the Developer an initial draft of the DDA within said 60-day period, for reasons other than a failure of the Developer to comply timely with its obligations, the 120-day period for exclusive negotiations described in Section 4.2.1 shall be extended by one day for each day the City is delayed in delivering the draft DDA." 1.3 The one hundred twenty (120) day period for exclusive negotiations between the Parties referred to in Section 4.2.1 of the Original ENA expired on October 28, 2003. 1.4 By agreements in writing the Parties agreed to extend the period of exclusive negotiations until December 30, 2003. 1.5 The City timely delivered to the Developer the initial draft of the DDA referred to in Section 4.2.6 of the Original ENA. 1.6 The Parties now desire to further extend the period of exclusive negotiations until February 26, 2004. 2.0 Agreement. 2.1 The Parties hereby agree that Section 4.2.1 of the Original ENA is amended to read as follows: "If on February 26, 2004 (or within any extension of time approved by the City and the Developer in accordance with the terms of this Section 4.2), the Developer has not signed and submitted a DDA in form and substance approved by the Assistant City Manager, then this Agreement shall automatically terminate. On or before the date that is five business days prior to expiration of this Agreement, the Developer may request in writing from the City an extension of the exclusive negotiation period for an additional 30 day period or for such longer [JRA:jra/ENA amendment 10503-98719_2.DOC/122203/4182.005] period, not to exceed up to 90 days, as the City may determine in its sole discretion to grant. Upon receipt of such written request, the City will determine in its sole discretion whether reasonable and sufficient progress has been made toward fulfillment of the requirements of this Agreement and whether or not to grant the requested extension to the Developer. During the term of this Agreement (including any extensions thereof granted by the City), the Developer and the City shall each negotiate diligently and in good faith with each other to achieve a DDA." 2.2 The Parties hereby agree that Section 4.2.2 of the Original ENA is amended to read as follows: "Notwithstanding the period of exclusivity set forth in Section 4.2.1, it is the intent of the Parties to negotiate and prepare definitive documentation reflecting the transaction for execution and delivery on or before February 26, 2003. Thus, unless otherwise extended in writing by the Parties, this Agreement shall automatically terminate on February 26, 2003, or, if such period is extended pursuant to Section 4.2.1, on the last date of such extension period, whether or not the parties have agreed upon a form of DDA, and except as specifically set forth in Sections 4.3, 4.4, 9.1 and 9.2 of this Agreement, no Party shall have any liability hereunder following termination of this Agreement." 2.3 The Parties hereby agree that Section 4.2.3 of the Original ENA is amended to read as follows: "4.2.3 The City hereby delegates to the Assistant City Manager the authority to grant the extensions specified in Section 4.2.1. No such extension of time shall be effective unless it is in writing. 2.4 The Parties hereby agree that Section 4.2.4 of the Original ENA is amended to read as follows: "4.2.4 Notwithstanding the period of exclusive negotiations established by this Agreement, if the Parties should fail to make substantial progress toward completing documentation at any time, then either Party may terminate this Agreement at any time thereafter upon three (3) days written notice to the other Party." 2.5 Section 4.2.6 of the Original ENA is deleted. [JRA:jra/ENA amendment 10503-98719_2.DOC/122203/4182.005] 3.0 Continued Effectiveness of the Original ENA. Except as expressly modified as provided in this Amendment, the Original ENA shall remain in full force and effect. 4.0 Modifications or Amendments. No amendment, change, modification or supplement to this Amendment shall be valid and binding on any of the Parties unless it is represented in writing and signed by each of the Parties hereto. 5.0 Applicable Law. This Amendment shall be governed by, interpreted under, construed and enforced in accordance with the laws of the State of California, irrespective of California's choice-of-law principles. 6.0 Further Assurances. Each of the Parties hereto shall execute and deliver at their own cost and expense, any and all additional papers, documents, or instruments, and shall do any and all acts and things reasonably necessary or appropriate in connection with the performance of their respective obligations hereunder in order to carry out the intent and purposes of this Amendment. 7.0 Counterparts. This Amendment may be executed in two or more separate counterparts, each of which, when so executed, shall be deemed to be an original. Such counterparts shall, together, constitute and shall be one and the same instrument. This Amendment shall not be effective until the execution and delivery by the Parties of at least one set of counterparts. The Parties agree to recognize execution of this Amendment by facsimile signatures; provided, however, that such execution by facsimile shall not be effective unless a manually executed copy of the signature page is promptly sent by United States, postage prepaid, and such manually signed page is actually received by the other Party within ten (10) days of its execution. The Parties hereby authorize each other to detach and combine original signature pages and consolidate them into a single (continued on next page) [JRA:jra/ENA amendment 10503 -98719_2.DOCJ 122203/4182.005] identical original. Any one of such completely executed counterparts shall be sufficient proof of this Amendment. IN WITNESS WHEREOF, the City and the Developer have signed this Amendment as of the date first set forth above. "CITY" City of Tustin Dated: By: ATTEST: By:. Dated: Pamela Stoker City Clerk William Huston, City Manager APPROVED AS TO FORM Special Counsel for the City GILCHRIST & RUTTER PROFESSIONAL CORPORATION Dated: Dated: James R. Andrews "DEVELOPER" VESTAR DEVELOPMENT II, LLC By: NalTle · Its: By: N alne: Its: [J RA:jroJENA amendment 10503-98719_2.DOC/122203/4182.005 ]