HomeMy WebLinkAboutRDA 2 NEGOTIATE DDA 04-19-04
A G END A REPORT
Agenda Item
Reviewed:
City Manager ~4-
Finance Director ¿7 ~
RDA2
MEETING DATE:
APRIL 19, 2004
TO:
WILLIAM A. HUSTON, EXECUTIVE DIRECTOR
FROM:
REDEVELOPMENT AGENCY STAFF
SUBJECT:
EXCLUSIVE AGREEMENT TO NEGOTIATE A DISPOSITION AND
DEVELOPMENT AGREEMENT (DDA) FOR THE PROPERTY ON THE
SOUTHWEST CORNER OF NEWPORT AVENUE AND EL CAMINO REAL
SUMMARY
Agency approval is requested to enter into exclusive negotiations for a site in the Town
Center Project Area. The Agency, by law, may enter negotiations with private developers
and property owners seeking to develop projects in Redevelopment Project areas that are
consistent with the goals and objectives of the Agency.
RECOMMENDATION
It is recommended that the Redevelopment Agency authorize the Executive Director or
Assistant Executive Director to execute an Exclusive Agreement to Negotiate between the
Tustin Community Redevelopment Agency and Makena Great American Newport
Company, LLC.
FISCAL IMPACT
The action at this time will have a negligible fiscal impact on the Redevelopment Agency.
If the negotiations result in a Disposition and Development Agreement (DDA), the fiscal
impact of such an agreement will be discussed if Agency approval of a DDA is requested
in the future.
BACKGROUND
In September 2003, the Agency received a request from Makena Great American Newport
Company, LLC (the "Developer') for assistance in purchasing a Caltrans surplus site
located along the 1-5 freeway for the purpose of assembling larger site for development of
a retail center located at 14001 Newport Avenue. The Caltrans site is contiguous to the
southerly boundary of the Newport Avenue property that was recently acquired by the
Developer. Formerly the site of Tustin Transmission, the property is vacant and in need of
redevelopment. Attached is a summary of their professional experience.
William A. Huston
Exclusive Agreement to Negotiate: Newport and EI Camino Real
April 19,2004
Page 2
Also attached is a proposed Exclusive Agreement to Negotiate between the
Redevelopment Agency and the Developer. The Agreement commits the Agency to
negotiating in good faith with the intent of entering into a Disposition and Development
Agreement (DDA) for the redevelopment of the property. It does not commit the Agency to
any expenditure of funds nor does it commit the Agency to providing financial assistance
at this time. Agency staff will seek specific Agency negotiating direction in any financial
discussions. If, after negotiating in good faith, the Agency and developer fail to reach a
DDA, neither party is liable to the other.
The Exclusive Right to Negotiate will allow the developer to proceed in completing
preliminary design drawings, detailed economic and cost evaluations, and allow him to
begin serious discussions on the necessary financing for the project.
The Exclusive Agreement to Negotiate provides for a 90-day negotiating period, which can
be extended for 30 days if a DDA has been prepared by the Agency and executed by the
developer but not yet approved by the Agency Board, or for 30 days if, in the determination
of the Executive Director, the major business terms of a DDA and Ground Lease have
been reached, or by mutual agreement of the Agency and the developer. In furtherance of
the negotiation process, the developer shall prepare and submit to Agency staff the
following documents and perform the following acts with the following time periods:
. Identification of all developer agents and other authorized participants in the
proposed project within 10 days after execution of the Agreement;
. Identification and qualifications for project architect, engineer and related
development consultants within 15 days after execution of the Agreement;
. Demonstration of financial capacity and capability to perform its obligations under
the Agreement including identification of equity capital and financing sources for
construction and permanent financing of the proposed project within 30 days after
execution of the Agreement;
. Submission of an overall financial pro forma to the Agency within 45 days after
execution of the Agreement to demonstrate the economic feasibility of the proposed
project;
. Preliminary design drawings and related documents for the proposed project reflect
the City and Agency planning and design criteria for the project site; and
William A. Huston
Exclusive Agreement to Negotiate: Newport and EI Camino Real
April 19,2004
Page 3
. Draft Disposition and Development Agreement within 90 days following the
execution of the Agreement unless extended for additional time as may be
permitted by the Redevelopment Agency.
FINDING OF BENEFIT
This site is located in the Town Center Project Area. On March 6, 2000 the Tustin
Community Redevelopment Agency adopted a five-year Implementation Plan for the Town
Center and South/Central Redevelopment Project areas for fiscal years 2000-2001
through 2004-2005. The Implementation Plan was composed of two parts, a five-year
plan for Redevelopment activities and a five-year plan for housing activities. Anticipated
accomplishments and expenditures for the five-year period included the rehabilitation of
substandard and deteriorating structures to improve building conditions, increase
functionality and desirability, and to integrate design characteristics with the aim of creating
a cohesive commercial district in the Town Center Project Area.
The proposed project is consistent with the Implementation Plan for the Town Center
Project Area. It will remove a blighting influence in the Project Area by clearing existing
improvements which are characterized by economic obsolescence and deferred
maintenance and developing a commercially viable retail and office project. It is
anticipated that the proposed project would bring new commercial uses to the Old Town
Tustin commercial area and stimulate economic development activity in the Project Area.
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Attachments
S:\RDA\RDA report\Aprl19 04 Makena Cai Trans ENA Report.doc
SUMMARY PROFESSIONAL EXPERIENCE
Makena GreatAmerican leads the way-in the
acquisition and developmentof "A'iocatlon"
small commercial shopping centers and corner
properties in Southern California...
e continue to seize the unique opportunity to acquire and develop
operties left vacant by the mass exodus of major oil companies.
e focus on these and related smail corner properties because of
e lack of competition, high level of tenant interest amt our proven
(perience in specialized, smaller real estate projects.
I recognizing opportunities, taking advantage of possibilities, and
¡tperforming expectations, Makena Great American is one of the
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REVISED 4/1/04
Makena
Acquisition and Development History
PROPERTY STATUS PURCHASE PRICE II
1. Magnolia & Talbert former Exxon $ 950,000
Fountain Valley, CA 10,000 sf retail
closed 10/1/95
2. Nohl Ranch Rd. & 55 Freeway former Exxon 750,000
Orange, CA closed 7/1/95
3. Alondra & Studebaker former Exxon 750,000
Norwalk, CA closed 9/28/95
4. Springdale & Westminster former Exxon 350,000
Westminster, CA closed 11/1 /95
5. lake Mead Blvd. & Pecos Road vacant land 435,000
Las Vegas, Nevada closed 2/28/96
6. Ignacio & Oak Grove former Exxon 650,000
Concord, CA closed 3/1/96
7. Arlington & Sepulveda former Unocal 950,000
Torrance, CA former KFC
closed 3/29196
8. Azusa & Colima former Chevron 1,500,000
Hacienda Heights, CA closed 7/22/96
9. 110&PCH former Exxon
Wilmington, CA closed 10/3/96 480,000
10. Brookhurst & Edinger former Exxon
Fountain Valley, CA closed 11/15/96 950,000
11. 190th & Entradero former Shell
Torrance, CA closed 11/1 /96 575,000
12. Golden West & PCH
Huntington Beach, CA closed 1/15/97 950,000
13. Hawthorne/405 Fwy
Torrance, CA closed 12/97 400,000
14. Avenida Pico/lnterstate 5 Former Chevron
San Clemente, CA Closed 6/15/98 650,000
PROPERTY STATUS PURCHASE PRICE
15. 405 Freeway/Wilmington Ave. Former Industrial Project 1,040,000
Carson, CA Closed 6/3/98
16. long Beach Blvd. & Wardlow Former Chevron 825,000
long Beach, CA Closed 9/15/98
17. Magnolia & Trask Former Chevron 650,000
Garden Grove, CA Closed 3/15/99
18. PCH & 19th street Former Unocal 400,000
Sunset Beach. CA Closed 4/21/99
19. Main & PCH Former Shell 740,000
Seal Beach, CA Scheduled close 04/15/00
20. EI Camino & Camino Estrella Former Unocal 400,000
San Clemente, CA Closed 12/15/99
21. Warner & Dyer Former Crazy Horse 2,265,000
Santa Ana, CA Closed 10/28/99
22. Caldwell & Hwy 99 Fast Food Parcel 350,000
Visalia, CA Closed 12/99
23. Ximeno & PCH Walgreens Sublease 750,000
long Beach, CA
24. Beach & Warner former Texaco Xpress lube 325,000
Huntington Beach, CA
25. Tustin Market Place former Beacon Bay lube 340,000
Tustin, CA
26. lakewood & Firestone Former Washington Mutual 1,300,000
Downey, CA Bank
Closed 1/27/00
27. Alondra & Studebaker Mobil Gas Station 1,100,000
Norwalk, CA Closed 4/21/00
Re-purchased
28. Dyer & 55Fwy escrow closed 1,450,000
Santa Ana, CA 8/31/02
29. Vermont & Sepulveda former Shell Station 725,000
Harbor City, CA closed escrow 8/24/01
30. Redhill & 1-5 former Texaco Station 900,000
Tustin, CA closed escrow 11/1/01
PROPERTY STATUS PURCHASE PRICE
31. Euclid & Chapman former Texaco 725,000
Garden Grove, CA closed escrow 5/31/02
32. Artesia & Prairie former Unocal 400,000
Torrance, CA closed escrow 9/20/02
33. Artesia & Prairie adjoining retail center 1,300,000
Torrance existing retail (rehab)
Closed escrow 9/20/02
34. Cherry & Wardlow former gas (independent) 380,000
long Beach closed escrow 8/31/02
35. Cherry & Wardlow Adjoining industrial bldg 840,000
long Beach closed escrow 7/15/02
36. EI Toro & Schwartz former Shell station 875,000
lake Forest closed escrow 6/10/02
37. Sepulveda & Anza former Shell station 825,000
Torrance closed 12/1/02
38. Alondra & 605 Fwy former Shell station 650,000
Norwalk closed 5/31/03
39. Beach Blvd. & Westminster former Mobil station
Westminster closed 12/1/03 1,375,000
40. Oso Parkway vacant land 925,000
Mission Viejo closed escrow 8/1/03
41. Newport Avenue former gas
Tustin escrow to close 5/1/04 1,600,000
42. Eucild & Trask vacant land
Garden Grove escrow to close 6/15/04 1,100,000
43. Carson & Pioneer vacant land
Lakewood escrow to close 8/1/04 400,000
44. University & Chicago vacant land
Riverside escrow closed 1/15/04 2,100,000
45. Beach & Edinger vacant land
Westminster 2 acres
escrow to close 8/1/04 3,351,000
46. Bonanza Rd. & Eastern former Chevron
las Vegas, NV escrow to close 6/30/04 600,000
PROPERTY STATUS PURCHASE PRICE
47. lamb & lake Mead Rd. former Chevron
las Vegas, NV escrow to close 6/30/04 600,000
48. RoseCrans & Talbot dealer first right of refusal
San Diego former Chevron
escrow to close (to follow) 750,000
49. Magnolia & Madison former Chevron
EI Cajon, CA escrow to close 6/30/04 575,000
50. W Indian School Rd & N67 Ave former Chevron
Phoenix, Al escrow to close 6/30/04 625,000
51. Corbin & Nordhoff Way former Chevron
Northridge, CA escrow to close 6/30/04 1,175,000
52. E Flamingo & Sandhill former Chevron
las Vegas, NV escrow to close 6/30/04 600,000
53. Boulder Hwy & Desert Inn former Chevron
Las Vegas, NV escrow to close 6/30/04 525,000
EXCLUSIVE AGREEMENT TO NEGOTIATE
EXCLUSIVE AGREEMENT TO NEGOTIATE
THIS EXCLUSIVE AGREEMENT TO NEGOTIATE ("AGREEMENT") is made
this day of , 2004 ("Effective Date"), by and between the
TUSTIN COMMUNITY REDEVELOPMENT AGENCY ("AGENCY") and MAKENA
GREAT AMERICAN NEWPORT COMPANY, LLC ("DEVELOPER"). Each of the Agency
and Developer are sometimes refeITed to as the "Party" and collectively as the "Parties."
1.0
INTRODUCTION.
The Parties entered into this Agreement on the basis of the following facts,
understandings, and intentions:
1.1 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 a/California (Health and Safety Code Sections 33000 et seq.).
1.2 The Agency desires to encourage and effectuate the redevelopment of certain real
property located in the Town Center Redevelopment Plan area of the City of Tustin generally
bounded on the north by EI Camino Real, on the east by Newport Avenue, on the south by the I-
S Santa Ana Freeway ramp, and on the east by EI Camino Way, in furtherance of the Agency's
revitalization efforts and in accordance with all City requirements, including the Town Center
Redevelopment Plan, and the City's General Plan and Zoning Code.
1.3 The Parties desire, for the period set forth herein, to negotiate diligently and in
good faith the teITIIs and conditions of a Disposition and Development Agreement with respect to
the following land ( with the exclusions set forth below, the "Property"): (a) that certain parcel
located at 14011 Newport Avenue and owned by the Department of Transportation of the State
of California ("Caltrans"), depicted on Exhibit A attached hereto and incorporated herein by
reference (the "Caltrans Parce)"); (b) a parcel cuITently owned by the Developer and located
adjacent to the Caltrans Parcel at 14001 Newport Avenue and 770 EI Camino
Real,("Developer's Parcel"). which is depicted on Exhibit B attached hereto and incorporated
herein by reference; (c) parcels that the Developer has represented it intends to place under
contract ("Developer Acquisition Parcels") located at 750, 730 EI Camino Real and 725 EI
Camino Way depicted on Exhibit C attached hereto and incorporated herein by reference; and (d)
excluding a ten foot frontage along the Cal Trans Parcel and Developer's Parcel to be either
dedicated or retained by City in fee as right of way for Newport A venue and such easements and
other interests in property, if any, required by the City and/or utility purveyors for the provision
of public infrastructure. Developer has requested that the Agency acquire the Caltrans Parcel,
and in turn, for consideration to Agency, to transfer the Caltrans Parcel to Developer for use in
redeveloping the Property. The DDA, if agreed upon and executed, will specify the rights,
obligations and method' of participation of the Parties with respect to the acquisition of the Cal
Trans Parcel by Agency provided Cal Trans approves the acquisition by Agency, acquisition of
the Developer Acquisition Parcels, and development of the Property by the Developer.
2.0
AGREEMENT TO NEGOTIATE.
2.1 For a period of ninety (90) days from the Effective Date, unless extended in
writing or earlier teITIIinated by mutual agreement in accordance with provisions of this
183212,1
April 13,2004
Agreement, the Parties agree to negotiate diligently with the intent of agreeing upon and entering
into a DDA governing the acquisition of the CaJ Trans Parcel, the Developer's acquisition of the
Developer Acquisition Parcels and the development of the Property by the Developer of a high
quality commercial center including pedestrian improvements, and a complete set of
accompanying high quality amenities, to function as a entry statement into Old Town Tustin, as
more fully described in a letter to Developer dated January 15, 2004 from the City (the
"Project").
2.2 This Agreement is solely an exclusive right to negotiate and is not a final
agreement. The Parties do not intend this to be a purchase agreement, option or similar contract
or to be bound in any way by this Agreement, other than to establish a period of negotiations
during which time each Party shall negotiate with the other in good faith.
2.3 Execution of this Agreement is not intended to confer any third party beneficiary
rights in or to create any liability on the part of the Agency or City to any third parties.
3.0
DEVELOPER REPRESENT A TIONS.
3.1 The Developer represents that it has the necessary expertise, experience, and
financial capability to undertake the development contemplated herein.
3.2 The Developer represents and agrees that its acquisition of the Caltrans Parcel
from Agency and its other undertakings pursuant to this Agreemènt are and shall be used for the
timely redevelopment of the Property and not for speculation in land holding.
3.3 Developer represents and agrees that prior to issuance of a certificate of
occupancy for the Project; the DDA shall include restrictions upon assignment, sale, and
encumbrance of the Project and the Property without approval of the City, which shall include
restrictions on transfer of control of Developer.
4.0
NEGOTIATIONS.
4.1 Good Faith Nel!otiations. The Agency will prepare the first draft of the DDA
and submit it to the Developer for review and comment. The Agency and Developer agree for
the period set forth in Section 2.1 to exclusively negotiate with one another diligently and in
good faith to prepare a final DDA and related documents to be entered into between the Agency
and the Developer with respect to the Project and development of the Property
4.2
Period of Nel!otiations.
4.2.1 If on the 90th day following the Effective Date (or within any extension of
time approved by the Agency and Developer in accordance with the terms of this Section), the
Developer has not signed and submitted a DDA in form and substance approved by the Agency,
then this Agreement shall automatically terminate. On or before the date that is five business
days prior to the expiration of this Agreement, the Developer may request in writing from the
Agency an extension of the 90-day exclusive negotiation period for an additional 30 day period.
Upon receipt of such written request, the Agency will determine in its sole judgment that
reasonable and sufficient progress has been made toward fulfillment of the requirements of this
183212.]
April 13.2004
Agreement, and if it so determines may grant the requested extension to the Developer, with
such extension granted in writing.
4.2.2 The Agency hereby delegates to the Executive Director the authority to
grant the extensions specified in Section 4.2.1.
4.2.3 Notwithstanding the 90-day exclusive negotiation period, if the Parties fail
to make substantial progress toward completing the 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.
4.2.4 Upon agreement by the Developer and Agency staff to a form of DDA
acceptable to each, the Developer shall execute said form of DDA and the DDA shall constitute
Developer's offer to develop the Property upon the terms and conditions set forth therein. The
Developer acknowledges that any DDA shall require approval of the Tustin Community
Redevelopment Agency and hereby agrees that upon submittal by the Developer to the Agency
of its fully executed DDA, the Developer shall not withdraw such offer for a period of sixty (60)
days following submittal of the executed DDA to the Agency during which period the City shall
(a) determine whether it desires to enter into such DDA, and (b) it does so desire, take all actions
necessary to authorize the execution of and execute the DDA. If the Agency has not considered
the DDA by such 60th day, this Agreement shall automatically terminate and the Deposit shall
be allocated in accordance with Section 4.3.
4.3
Deposit and Costs.
4.3.1 Prior to the execution of this Agreement by the Agency, Developer shall
submit to the Agency a deposit in the sum of fifty thousand ($50,000) (the "Deposit") in the
form of cash or a certified cashier's check.
4.3.2 From and after the Effective Date, the Deposit may be used by the Agency
to pay the Agency's costs incurred in connection with the drafting, negotiation, execution,
implementation and/or termination of this Agreement and the drafting, negotiation, execution
and implementation of the DDA including the Agency's title and survey costs, incurred with
respect to the Property and all fees and costs incurred for legal counsel, financial and other
consultants, engineering and otherwise, including the cost of acquisition of the Caltrans Parcel
("Agency Transaction Expenses"). Determination of costs, expenses and fees constituting
Agency Transaction Expenses will be made by the Agency in its sole discretion and Developer
shall upon request be entitled to receive summary notices from the Agency setting for the
Agency Transaction Expenses to be retained by the Agency. In the event that this Agreement
terminates or is terminated by either Party without a DDA being executed by the Parties, then
subject to Section 4.3.4, the Deposit will become non-refundable as and to the extent necessary
to pay Agency Transaction Expenses incurred with respect to costs or services performed by or
on behalf of the Agency through the termination date of this Agreement.
183212.1
April 13.2004
4.3.3 If a DDA is executed, the City shall be entitled to retæn the full amount of
the Deposit and shall apply or credit the Developer with the full amount of the Deposit at the
time of close of escrow for the Cal Trans Property toward the Agency's purchase price of the Cal
Trans property, notwithstanding any deduction by the Agency for Agency Transaction Expenses.
4.3.4 The Developer may terminate this Agreement in the event that during the
course of investigations and evaluation of the Property and the Project, it determines in good
faith that the Project is not feasible or financeable. In such event, the Agency shall return to the
Developer any portion of the Deposit that is not applied to the Agency to defray Agency
Transaction Expenses. The Parties acknowledge and agree that it would be extremely difficult if
not impracticable, if not impossible, to ascertain with any degree of certainty prior to signing this
Agreement the amount of damages which would be suffered by the City in the event of
Developer's breach of this Agreement or of its obligation to negotiate in good faith and agree
that the Deposit shall represent the Parties reasonable estimate of damages suffered by the City
in such event.
4.3.5 The Developer acknowledges that the DDA shall require, in addition to
the EAN Deposit, supplemental deposits from the Developer as security for performance by the
Developer of its obligations under the DDA, including the Agency's full costs for acquisition of
the Cal Trans Parcel, and all legal costs incurred by the Agency including costs incurred for
legal counsel, financial and other consultants, engineering and otherwise, associated with the
negotiation of the DDA, any property acquisition and all actions necessary to implement the
DDA.
5.0
TERMS OF NEGOTIATION
5.1 Compliance with Laws. The proposed Project to be negotiated hereunder shall
include the development and use of the Property in a manner consistent with the Town Center
Redevelopment Plan, City's General Plan, and Zoning Code and in compliance with all federal,
state, regional and local laws, statutes, ordinances, rules and regulations.
5.2 Terms of Ne2otiation. The Parties agree that it is their intent, upon entry into this
Agreement, to negotiate a DDA addressing, among other things, the following:
(a) Subject to Caltrans' approval, Agency's acquisition of the Caltrans Parcel
for sale to Developer in an "As Is" condition, in its present state and condition with all faults, if
any, for Developer's use in redeveloping the Property, including the terms and conditions of the
property transfer, such as the manner of conveyance, the conditions precedent to conveyance, the
legal description of the portions of the Cal Trans property to be conveyed to Developer and of
that to be retained in fee or easement by the City for the purposes identified in Section 1.3. A
Phase I Environmental Site Assessment Report ("Phase I Report") has been prepared for the
Caltrans Parcel and has been provided to Developer. Such Report is on file with the City's
Department of Public Works and is incorporated herein by this reference. The Developer
acknowledges that the City has made no representations or warranties of any kind whatsoever
either expressed or implied with respect to the Cal Trans Parcel or any portion thereof.
Developer shall be required to defend, indemnify and hold harmless the Agency and City of
Tustin from any and all claims, expenses, liabilities, losses, penalties or enforcement actions
related to the Caltrans Parcel from the time of its transfer to the Agency and in perpetuity. The
183212.1
April 13, 2004
Developer shall also be required to obtain Pollution Legal Liability insurance coverage naming
the Agency and the City of Tustin as additional insureds in an amount and for such duration and
with a self-insured retention amount to be detennined to address pollution risks in the vicinity of
the Site and potentially on the Site. Coverage shall be required to include remediation and
defense costs as well as bodily injury and property damage for on and off-site preexisting or
subsequently created known and unknown pollution conditions.
(b) Detennination of the purchase price to be paid by the Developer for the
Cal Trans Parcel which shall not be less than the Agency's purchase price for the Property from
Cal Trans including all Agency Transaction Costs.
(c) Developer's obligation to attempt in good faith to acquire the Developer
Acquisition Parcels.
(c) Developer's dedication in fee to the City for right of way purposes of ten (10)
feet of frontage along Newport Avenue from the Cal Trans Parcel and Developer Parcel. [I don't
think this is necessary for the Caltrans ParceL]
(d) The Project shall be designed, subject to approval rights of the Agency
and compliance with all requirements and regulations of the City of Tustin ("City'), including
without limitation, the requirements of this Agreement, the applicable zoning and the items
described in the City's letter to Developer dated June 15, 2004. Developer shall be required to
design and construct the Project at its own cost and expense in accordance with a scope of
development and a schedule of perfonnance to be negotiated as part of the DDA. Funding of all
project costs shall be the responsibility of the Developer. The Developer acknowledges and
agrees that implementation of the Project will occur without the need for any expenditure by or
loan from the Agency to the Developer and that the Closing on the Cal Trans Parcel and on the
Developer Acquisition Parcels shall be subject to no financing or leasing contingencies
whatsoever.
(e) The Construction of improvements comprising the Project, the completion
of which shall be (i) guaranteed by Developer upon tenns mutually agreeable to the Parties, and
(ii) free of mechanics' liens and liens.
(f) Restrictions on transfer of the Project, Developer's interest in the DDA
and control of Developer.
(g)
Security to assure Developer's perfonnance under the DDA.
(h) Developer shall assume the full and complete responsibility at its own cost
for surface and subsurface conditions on the Site (including the Caltrans Parcel). The Agency on
behalf of itself and on behalf of the City does not make any representations or warranties
concerning the Site, its suitability for the use intended by Developer, or the surface or subsurface
conditions of the Site.
(i) Developer shall agree to defend, indemnify and hold harmless the Agency and
City with respect to its acquisition and development of the Developer Acquisition Parcels
including any relocation claims or expenses, removal, exit or claims for loss of goodwill of any
property owner or tenant from the Developer Acquisition Parcels
183212.1
Ap,il13.2004
5.3 School Fees and Other Special Fees. The Developer acknowledges that the
Property is subject to imposition of developer school impact fess by the Tustin Unified School
District and may be subject to special assessments imposed by the Tustin Unified School District
, special Transportation System Improvement Fees (TSIA Fees) , Transportation Agency
Conidor fees, and may be subject to other special assessments
6.0
DEVELOPER'S RESPONSIBILITIES
6.1 Plans, Reports. Studies and Investil!:ations. Developer shall provide the
Agency, without cost or expense to the Agency, copies of all plans, reports, studies, or
investigations (collectively, "Plans") prepared by or on behalf of Developer with respect to the
Site and the Project. All Plans shall be prepared at Developer's sole cost and expense.
6.2 Status Reports. Developer agrees to make oral and written reports at such times
requested by the Agency advising the Agency and/or its staff of all matters and studies being
made, including Developer's progress in analyzing the feasibility of the Project, as may be
requested by the Agency or its staff.
6.3 Development Team. Developer shall within ten (10) days of the Effective Date
submit in writing to the Agency full disclosure of the names of Developer's agents, authorized
negotiators, professional employees, or other associates of Developer who may be participants in
development of the Project, and other relevant information concerning the above such as
addresses, telephone numbers, and employers. Developer shall also designate and submit in
writing to the Agency the names of all Developer's lead negotiators, who shall have authority to
make decisions on behalf of the Developer. Developer shall within fifteen (15) days of the
Effective Date submit for approval by the Agency's Executive Director, at his sole discretion, the
name(s) and qualifications statement of the proposed architect and related consultants for the
Project.
6.4 Financial Status, Developer shall demonstrate to the Agency the financial
capacity and capability to perform its obligations under this Agreement, and the DDA.
Developer's recent signed financial statements for the last two years (calendar or fiscal year) and
the financial statements of its key principal or principals shall be submitted to the Agency within
thirty (30) days of the Effective Date. To the extent Developer wants such financial statements to
remain confidential, Developer shall identify with specificity the documents which the
Developer wants the Agency to maintain as confidential documents and a statement of the
reasons why such documents are to be maintained as confidential documents, and a statement as
to why the request is consistent and complies with the provisions of the Public Records Act of
the State of California. If confidentiality is requested and if nondisclosure under the Public
Records Act is allowed, the statements shall be delivered to and maintained by the Agency
Counsel and copies not disseminated. To the extent permitted by law, the Agency, including
Agency Counsel, shall not make public disclosure of the statements. The Agency's negotiators
and consultants may review the statements as necessary as long as such parties agree to maintain
the confidentiality of such statements.
If Developer determines to joint venture or partner development of the Site, or if
Developer determines to form a new legal entity to develop the Site, Developer shall promptly
inform the Agency of such determination and submit to Agency joint venture's or partner's most
183212,1
Apdl 13.2004
recent financial statements and the financial statements of its key principals. The assignment of
Developer's rights under this Agreement, the new entity. partnership or joint venture may be
approved in writing by the Agency, provided the Agency, at its sole discretion, is satisfied that
the new entity, partnership, or joining venture has the financial capability to perform under this
Agreement and the DDA.
The Developer shall also be required to identify within 30 days of the Effective
Date, the following information:
(a) The sources for Developer's equity capital including internal and investor
financing for the Project in its entirety and by any phasing.
(b) If debt financing is proposed to be used, the Developer must demonstrate
the availability of funding sources which must be from a reputable institutional lender, as
approved by the Agency. These funding sources can be demonstrated by providing commitment
letters from viable sources. The Developer must also disclose the relationship between lender
and the Developer.
(c) If the Developer intends to obtain any permanent financing for the Project,
the Developer must identify these sources.
(d) Any additional information to determine financial capacity as may be
requested by the Agency.
6.5. Project Financial Proforma. Within forty-five (45) days following the Effective
Date, the Developer shall submit an overall Project financial feasibility proforma to include cost
and revenue data including information on the Project's financial return adequate to enable the
Agency to evaluate the Developer's Project and the economic feasibility of development and
operation of the proposed Project. The proforma information shall be provided as a static
analysis and as cash flow analysis. The static analysis must show the Project as if the Project
were completed in one phase at build out. The cash flow analysis shall address, as applicable,
phasing and fund disbursements over the term of the project, but for at least a 10 year period. All
assumptions, with the exception of interest costs associated with debt, should be consistent with
the static analysis and be fully explained with additional narrative provided as necessary. In
addition to submission of the financial feasibility proforma in written form, the Developer shall
submit both the static analysis and cash flow analysis in an electronic format, either on a 3 1/2
inch magnetic flopping disc or on a standard CD-Rom (writable 'R' disc only, and 'RIW
read/write disk is not acceptable). Variables used in the analysis are not to be embedded.
Acceptable electronic forms are Microsoft Excel 2000 (version 9.0) or Microsoft Excel 2002
(version 10). The Agency will also accept analyses developed using a dedicated real estate
software application provided all of the information requested in this Section 6.5 can be
produced with the software; however, the Developer will be expected to fund the Agency's
purchase of a CUITent version of the appropriate software if it is not available currently on the
Agency's computers.
6.6 Desi !Jl Review/Entitlements. It is understood and agreed to by Developer that
the quality, character, and uses proposed for the Project are of particular importance to the
Agency and that planning and design review approval by the Agency and the City will be
required for the development of the Site. Developer and the proposed architect shall meet with
183212.1
April 13,2004
representatives of the Agency and the City to review and come to a clear understanding of the
planning and design criteria required by the Agency and the City. Within ten (10) days following
the Effective Date, Developer and Agency shall agree upon a schedule for entitlement processing
based upon an initial draft to be submitted to the Developer by the City. Within the 45 days of
the Effective Date, the Developer shall submit for approval of the City preliminary design
drawings and related documents containing the overall plan for development of the Developer's
Project including the following:
(a) a site plan and design review submittal including all information as
required by the Tustin City Code and Department of Community Development and showing the
building layout, dimensions, floor plans, parking, landscaping and access on or related to each
individual parcel, preliminary materials call outs and conceptual building renderings;
(b) a Lot Line Merger Application request or a Tentative Subdivision map or
Parcel map to consolidate the parcels on the site, as may be required by the Department of
CommunityDevelopment;
(c)
A tentative development schedule; and
(d) Preliminary engineering and concept
improvements within the public right-of-way adjacent to the Site.
design
drawings
for
all
6.7 Additional Information. Developer understands and agrees that the Agency's
negotiating team reserves the right at any time to request from Developer additional information,
including information, data, and commitments to ascertain the depth of Developer's capability
and desire to develop the Site expeditiously. The Agency's negotiating team will provide a
reasonable time in which Developer may obtain and submit to the Agency such additional
information.
6.8 Contacts durin!! Ne!!otiations. Developer shall only negotiate with the Agency's
negotiating team as defined in writing by the Executive Director and with no other persons
unless expressly authorized to do so by the Agency's negotiating team. During the period of
negotiations, Developer shall make no statements to the media without the approval from the
Executive Director. Developer's failure to comply with the provisions of this Section shall be
conclusive evidence that Developer has not "negotiated in good faith."
6.9
Environmental and Other Studies.
6.9.1 CEOA Requirements. Compliance with the California Environmental
Quality Act ("CEQA") is a legal precondition to the final Agency action of approving and
executing the DDA. The Developer shall cooperate with the Agency and abide by the Agency's
CEQA guidelines and procedures, and fee requirements, which include but are not limited to,
the following obligations: (a) to deposit funds to pay all of the Agency's costs of preparing the
required environmental studies, (b) to supply information and otherwise assist the Agency to
enable the Agency to determine the environmental impact of the proposed Project, as described
in the DDA, and (c) to prepare such additional environmental documents, if any, as may be
determined by the Agency, to be required in connection with development of the Project.
183212.1
April 13.2004
6.9.2 Products, Reports, Studies and Investi2ations. In connection with the
proposed Project, the Developer shall be preparing and causing to be prepared architectural and
other products, surveys, plans, reports, tests, studies and investigations with respect to the
Property and Project (collectively, "Products"). All Products shall be prepared at Developer's
sole cost and expense. If this Agreement is terminated for any reason other than a material
breach or default hereunder by the City, then, with respect to all Products other than:
architectural products; financial or economic estimates, projections and evaluations; studies and
information related to potential tenants, lenders and investors, the Agency may request that the
Developer, for consideration to be mutually agreed, transfer Developer's rights to any or all of
the transferable products identified by the Agency, but in no event shall the cost to the Agency
exceed five hundred dollars ($500.00). Upon such request, the Developer shall deliver to the
Agency copies of all transferable products requested by the Agency together with a bill of sale
thereto, provided that the Developer makes no representation, WaITantee or guarantee regarding
the completeness or accuracy of the transferable products, and the Developer does not covenant
to convey the copyright or other ownership rights of third parties thereto. Such transferable
products shall thereupon be free from all claims or interests of Developer or any liens or
encumbrances.
7.0
MISCELLANEOUS
7.1 Real Estate Commissions. The Agency shall not be liable for any real estate
commission, finder's fee, or any broker's fees which may arise from this Agreement. The Agency
represents that it has engaged no broker, agent, or finder in connection with this Agreement, and
Developer agrees to hold the Agency and its representatives harmless from any losses and
liabilities arising from or in any way related to any claim by any broker, agent, or finder retained
by Developer regarding this Agreement or development of the Project, or purchases/sale of other
property at the Site.
7.2 No A2ency Duty. Except as expressly provided above, the Agency shall have no
obligations or duties hereunder and no liability whatsoever in the event the Parties fail to timely
execute an DDA
7.3 Developer acknowledges and agrees that the Agency, as of the execution hereof,
has not agreed to fund, subsidize, or otherwise contribute in any way toward the development of
the Project.
7.4 By its execution of this Agreement, the Agency is not committing itself or the
City to or agreeing to undertake: a) any disposition of land to Developer; or b) any other acts or
activities requiring the subsequent independent exercise of discretion by the Agency, the City, or
any agency or department thereof. The Parties recognize that one or more of the conditions to
Developer's proposal set forth herein may fail to be met as a result of subsequent studies,
reviews, and proceedings involving the exercise of discretion by the Agency, the City, or any
agency or department thereof.
7.5 This Agreement does not constitute a disposition of property or exercise of
control over property by the Agency or the City and does not require a public hearing. Execution
of this Agreement by the Agency is merely an agreement to enter into a period of exclusive
negotiations according to the terms hereof, reserving final discretion and approval by the Agency
and the City as to any DDA and all proceedings and decisions in connection herewith.
183212.1
April!3.2oo4
7.6 Non Liabilitv of Al!:encv and Citv Officials and Emulovees- No member,
official, representative, director, staff member, attorney, or employee of the Agency or the City
of Tustin shall be personally liable to Developer or any successor in interest, in the event of any
default or breach by the Agency or for any amount which may become due to Developer or to its
successor, or on any obligations under the terms of this Agreement.
7.7 Public Hearinl!:s and Comuliance. If the negotiations hereunder culminate in
Developer and Agency's Executive Director concurring on the terms and provisions of an OPA,
such OPA will be considered for approval by the Agency only after all required public hearings
have been held and after compliance with all applicable laws and ordinances. The Agency's
Executive Director's conCUITence with the terms and provisions of a proposed OPA under any
provision of this Agreement shall not be construed or interpreted as Agency approval or
acceptance of such terms. Such conCUITence shall be viewed as nothing more than the Executive
Director's willingness to recommend to the Agency Board that the Agency Board approve such
terms.
7.8 Entire Al!:reement; Attornevs Fees. This Agreement represents the entire
agreement of the Parties with respect to the matters set forth herein and supersedes any prior
negotiations or contemporaneous writings or statements. This Agreement may not be amended
except in writing signed by both of the Parties hereunder. If either Party brings an action or files
a proceeding in connection with the enforcement of its respective rights or as a consequence of
any breach by the other Party of its obligations hereunder, then the prevailing Party in such
action or proceeding shall be entitled to have its reasonable attorneys' fees and out of pocket
expenditures paid by the losing Party.
7.9 Covenant Al!:ainst Discrimination. Developer shall not discriminate against nor
segregate, any person, or group of persons on account of sex, race, color, age, marital status,
religion, handicaps, creed, national origin or ancestry in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the Site, nor shall Developer establish or permit any such
practice or practices of discrimination or segregation in the selection, location, number, use or
occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site.
7.10 Notices/Submittals. All notices required or permitted hereunder shall be
delivered in person, by overnight courier, or by registered or certified mail, postage prepaid,
return receipt requested to such Party at its address shown below, or to any other place
designated in writing by such Party.
Agency:
Tustin Community Redevelopment Agency
300 Centennial Way
Tustin, California 92780
Attention: Assistant Executive Director
Developer:
Makena Great American Newport Company, LLC
1450 EI Camino Real, Second Floor
Tustin, California 92780
Attention: Brett Blanchard
183212.1
10
April 13, 2004
Any such notice shall be deemed received upon delivery, if delivered personally,
one (1) day after delivery to the, courier, if delivered by courier, and three (3) days after deposit
into the United States mail, if delivered by registered or certified mail.
7.11
Developer.
Prohibition Al!ainst Assil!nment. This Agreement shall not be assignable by the
7.12 Governinl! LawlExciusive Venue. The Agreement shall be interpreted in
accordance with California law, without giving effect to choice of law provisions. The Parties
agree that in the event of litigation, the exclusive venue shall be in Orange County, California.
7.10
Counterparts. The Agreement may be signed in one or more counterparts.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
Dated:
AGENCY
Tustin Community Redevelopment Agency
By:
William A. Huston
Executive Director
Approved as to form:
Lois Jeffrey
Agency Counsel
Dated:
By:
Name:
Title:
183212,1
11
March 25. 2004