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HomeMy WebLinkAbout17 AMD PMT AGMT W/VESTAR 01-02-07AGENDA REPORT MEETING DATE: JANUARY 2, 2006 TO: WILLIAM A. HUSTON, CITY MANAGER FROM: CHRISTINE A. SHINGLETON, ASSISTANT CITY MANAGER SUBJECT: FIRST AMENDMENT TO INFRASTRUCTURE CONSTRUCTION AND PAYMENT AGREEMENT WITH VESTAR/KIMCO TUSTIN, L.P. ("DEVELOPER") FOR THE 'DISTRICT' AT TUSTIN LEGACY SUMMARY: City Council authorization is requested for an Amendment to an Infrastructure Construction and Payment Agreement forthe District at Tustin Legacy. RECOMMENDATION: It is recommended that the City Council subject to any non-substantive modifications as may be determined necessary by the City's Tustin Legacy Special Counsel or City Attorney, approve and authorize the City Manager, or designee to execute a First Amendment to the Infrastructure Construction and Payment Agreement ("Amendment") between the City of Tustin and, the Developer and to carry out all actions necessary to implementtheAmendment and Original Agreement. FISCAL IMPACT: The original Infrastructure Construction and Payment Agreement is an implementing agreement previously described and required by DDA 04-02. It involves the City commitments to reimburse the Developer for any costs incurred by the Developer in excess of their identified contribution to the Tustin Legacy Backbone Infrastructure Program. The Amendment will significantly increase the City's estimated reimbursement obligations to an amount of approximately $46.4 million dollars. BACKGROUND: The City Council previously approved an Infrastructure Construction and Payment Agreement ("Original Agreement")which was executed on June 8, 2005 and Disposition and Development Agreement (DDA) for the District at Tustin Legacy on July 20, 2004. Page 2 The DDA required the Developer's design and construction of certain Tustin Legacy Backbone Infrastructure and Developer's fair share contribution toward Tustin Legacy Backbone Infrastructure. The Original Agreement, required by the DDA governs the construction of Developer's design and contraction of certain Tustin Legacy Backbone Infrastructure and the repayment by the City of excess contributions of Developer to the Tustin Legacy Backbone Infrastructure. Provisions of the Original Agreement provide for reconciliation of certain Tustin Legacy Backbone Infrastructure costs by the City and a determination as to what reimbursement City will be responsible for providing to Developer. The Original Agreement estimated Developer's construction of Tustin Legacy Backbone Infrastructure as approved by the City's Public Works Director at an amount of $55,682,205. Provisions of the Original Agreement anticipated that modification to the amount of improvements could be approved by the City and Developer. The Developer has now completed design on all improvements and public bids have been awarded for all improvement segments. Modification to Exhibit A of the Agreement (the estimated Release Prices for each infrastructure segment) is now determined necessary by both parties to reflect the actual bids and work underway. The The revised estimate of .construction as approved by the City's Public Works Diretor is an amount of $82,760,694, an increase of $27,078,489 from the original estimated release prices for each infrastructure segment. Cost increases are largely related to the increased cost of concrete and steel and inflationary increases across construction trades. A copy of the proposed Amendment is attached. Pursuant to the Original Agreement, to the extent the Developer's costs for Tustin Legacy Backbone Infrastructure exceed the amount of $36.3 million dollars (established as the Developer's capped fair share obligation) such difference under the Original Agreement is required to be reimbursed to Developer by City after city's final acceptance of all required infrastructure segments and developer's expenditure of the $36.3 million dollars. The proposed Amendment would necessitate a reimbursement to Developer of $46,460,694 to the extent that certain funds identified in the Agreement are available, until paid in full. The following sources were the identified funding sources for such repayment 1. City's land sale proceeds from the first escrow closing on the District at Tustin Legacy in an amount not to exceed $7.5 million dollars, provided that the City's obligation to reimburse Developer utilizing these funds shall terminate if reconciliation under procedures in the Agreement is not completed and funds paid to Developer before May 13, 2004. 2. City's land sale proceeds from any subsequent Developer closing on the District at Tustin Legacy in an amount not to exceed $3.5 million dollars, provided that the City's obligation to reimburse Developer utilizing these funds shall terminate if reconcilation under procedures in the Agreement is not completed and funds paid to Developer before May 13, 2009. Page 3 3. The City's receipt of reimbursement funds from IRWD for water and sewer utilities constructed by Developer as part of Tustin Legacy Backbone Infrastructure (currently estimated at $11,390,376 with the Amendment. 4. To the extent that the City determines to issue bonds covering all or any portion of Tustin Legacy with a plan of work that includes Developer's Backbone Infrastructure work. The Developer is currently tentatively exploring the potential issuance of Community Facilities District funding for certain of the Developer's obligations in an amount of approximately $16 million dollars. 5. The City's receipt of land sale proceeds from the Master Developer footprint ( Planning Areas 7,8,9-12,13, 14, and 15) which are. in excess of the cost of Tustin Legacy Backbone Infrastructure design and construction costs for the Valencia North Loop Road and Armstrong Infrastructure project (CIP N0.7139}. As you know, the first land sale payment from Tustin Legacy Community Partners is not anticipated until September 2008 in the amount of $150 million dollars. City staff ,will be .available to answer any questions regarding either the First Amendment orthe Original Agreement. Christine Shingleton Assistant City Manager Doug Anderson for Tim D. Serlet Director of Public Works /City Engineer FIRST AMENDMENT TO INFRASTRUCTURE CONSTRUCTION AND PAYMENT AGREEMENT This FIRST AMENDMENT TO INFRASTRUCTURE CONSTRUCTION AND PAYMENT AGREEMENT (this "Amendment") is entered into as of January 2, 2007 (the "Effective Date") by and between the CITY OF TUSTIN ("City") and Vestar/KIMCO TUSTIN, L.P., a California limited partnership ("Developer"). The City and the Developer are sometimes referred to herein individually as a "Party" and collectively as the "Parties." RECITALS A. City and the Developer entered into that certain Infrastructure Construction and Payment Agreement dated June 8, 2005 ("Original Agreement"), pursuant to the Tustin Legacy Disposition and Development Agreement (Retail Development) dated as of June 21, 2004, as amended ("DDA") pursuant to which, among other things, the Developer agreed to: (i) pay the Project Fair Share Contribution (as defined in the DDA) with respect to the Tustin Legacy Backbone Infrastructure Program and (ii) (x) to design and construct those portions of the Tustin Legacy Infrastructure Program denominated in the DDA as "Developer's Backbone Infrastructure Work" and (y) to maintain the same until the City's acceptance of such completed Tustin Legacy Backbone Infrastructure Program Improvements. The physical infrastructure improvements which are a part of Developer's Infrastructure Backbone Infrastructure Work are referred to as the "Facilities" and were set forth in Exhibit A of the Original Agreement and further broken down by Segments as described in Exhibit A. Under terms of the DDA and the Original Agreement, Developer shall be entitled to reimbursement from the City upon Final Completion of Developer's Backbone Infrastructure Work (as defined in the DDA) in the event that Developer's Backbone Infrastructure Payment (as defined in the DDA) exceeds the Project Fair Share Contribution, subject to compliance with all applicable provisions of the Original Agreement. B. Provisions of the Original Agreement provided for an Estimated Release Price for a Segment which was attached as Exhibit A of the Original Agreement. Provisions of Section 3.3.2 of the Original Agreement also provide that the city and Developer may make modifications in the composition and description of a Segment, or in the amount of the Estimated Release Price for a Segment, from time to time as the City and Developer deem such modifications to be appropriate. C. City and the Developer each desire to now amend and modify Exhibit A which sets forth the description of the Segments and Estimated Release Price for each Segment. AGREEMENT NOW, THEREFORE, in consideration of the foregoing Recitals, which are hereby .incorporated in the operative provisions of this Amendment by this reference and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Parties further agree as follows: 1. Modification to Exhibit A. Exhibit A of the Original Agreement is hereby deleted in its entirety and replaced with a revised Exhibit A in the form attached hereto as Attachment 1. 2. Miscellaneous. 2.1 Agreement Ratified. Except as specifically amended or modified herein, each and every term, covenant and condition of the Original Agreement as amended is hereby ratified and shall remain in full force and effect. Each and every reference to the "Agreement" in the Original Agreement shall be deemed to refer to the Original Agreement as amended by this Amendment. 2.2 Binding Agreement. This Amendment shall be binding upon and inure to the benefit of the parties hereto, their legal representatives, successors and permitted assigns. 2.3 Governing Law. This instrument shall be interpreted and construed in accordance with the laws of the State of California. IN WITNESS WHEREOF, City and the Developer have executed this Amendment as of the date first set forth above. CITY OF TUSTIN Dated: By William Huston, City Manager APPROVED AS TO FORM Special Counsel for City STEEFEL, LEVITY & WEISS A PROFESSIONAL CORPORATION By: DEVELOPER: VESTARI KIMCO TUSTIN, L. P., a California limited partnership By: Vestar California XXX, L.L.C., An Arizona limited liability company Its: General Partner Dated: B y: Name: Title: ATTACHMENT 1 REVISED EXHIBIT A EXHIBIT A (Revised) FACILITIES The following improvements will be constructed as part of the Infrastructure Construction and Payment Agreement. Improvement costs also include water quality related work and work within and/or related to contaminated areas, engineering design, environmental evaluations, professional services, construction management, bonding and insurance fees, and property acquisition. Total Cost = $ 55,682,205 $82,760,693 ROADWAY SEGMENTS 1. Barranca Parkway between Jamboree Road and west of future Tustin Ranch Road with continued taper excluding the transition westerly to Armstrong Avenue: Roadway improvements including curbs, gutters, pavement, median modification, sidewalk and Class I trail on north side of Barranca Parkway, landscaping, signing and striping, storm drain, dry utilities (electric, gas, telephone, cable, etc.), and street lights. Includes improvements at the intersection of Jamboree Road/Barranca Parkway, and improvements along the frontage of the U.S. Army Reserve property (Parcel 9). Improvement Costs = $9,225,747 2. Tustin Ranch Road from south of Barranca Parkway to Warner Avenue: Roadway improvements including new and relocated curbs, gutters, pavement, median, sidewalks, landscaping, signing and striping, interim signing and striping, storm drain, dry utilities (electric, gas, telephone, cable, etc.), and street lights. Includes interim intersection improvements on Von Karman Avenue, south of Barranca Parkway and along the frontage of the U.S. Army Reserve property (Parcel 9). Improvement Costs = $8,903,344 3. Park Avenue (formerly identified as the South Loop Road} from Tustin Ranch Road through a new extension of Warner Avenue to a new intersection at the on and off ramps for southbound Jamboree Road to Warner Avenue: Roadway improvements including curbs, gutters, pavement, sidewalks, landscaping, signing and striping, storm drain, dry utilities (electric, gas, telephone, cable, etc.), and street lights. Includes construction of a new driveway to serve the existing Single Room Occupancy (SRO) development in Irvine. Improvement Costs = 17,940,716 4. Warner Avenue from Tustin Ranch Road to east of Jamboree Road: Roadway improvements including new and relocated curbs, gutters, pavement, sidewalks, landscaping, signing and striping, interim signing and striping, storm drain, dry utilities (electric, gas, telephone, cable, etc.), and street lights. Improvement Costs = $5,338,771 5. Jamboree Road adjacent to the project site: Roadway improvements including curbs and gutters, pavement repair and replacement, signing and striping, and landscape improvements in the area behind the curb within the public right-of-way. Improvement Costs = $602,502 STORM DRAIN FACILITIES SEGMENTS 1. Design and construction of the Barranca Parkway Storm Drain from the south side of Barranca Parkway to just west of Tustin Ranch Road: Improvements include the lowering and covering of the Barranca Channel and a short transition area in Barranca Parkway, lowering of the MWD 72" water line, and lowering of the IRWD 54" water line. Improvement Costs = $7,155,493 2. Design and construction of the storm drain in Barranca Parkway along the north side of Barranca Parkway from the west of Jamboree Road to the Peter's Canyon Channel as required in the City's Runoff Management Plan: Improvements include replacement in-kind of any improvements within the storm drain easement along the Barranca Parkway frontage as may be needed for connection to this facility. Improvement Costs = $4,419,806 3. Design and construction of the Warner Avenue storm drain from Tustin Ranch Road to Peters Canyon Channel as required in the City's Runoff Management Plan. Improvement Costs = $14,866,949 IRVINE RANCH WATER DISTRICT (IRWD) FACILITY SEGMENTS 1. Barranca Parkway between Jamboree Road and west of future Tustin Ranch Road with continued taperexcluding the transition westerlyto Armstrong Avenue: IRWD improvements including water, reclaimed water, and sewer installation. Improvements Costs for IRWD Facilities = $2,317,859 2. Tustin Ranch Road from south of Barranca Parkway to Warner Avenue: IRWD improvements including water, reclaimed water, and sewer installation. Improvements Costs for IRWD Facilities = $3,466,695 3. Park Avenue (formerly identified as the South Loop Road} from Tustin Ranch Road through a new extension of WarnerAvenue to anew intersection at the on and off ramps for southbound Jamboree Road to Warner Avenue: IRWD improvements including water, reclaimed water, and sewer installation. IRWD costs include costs for water, reclaimed water, and sewer installation in Warner Avenue per IRWD's request. Improvement Costs for IRWD Facilities = $4,705,612 4. Design and construction of an 18" sanitary sewer across Parcel 8 from Tustin Ranch Road near Park Avenue (formerly identified as the South Loop Road) to Armstrong Avenue. Includes preparation of an easement for the sewer. Improvement Costs for IRWD Facilities = - $900,11 TRAFFIC SIGNAL SEGMENTS 1. Design and construction of traffic signal modification at Barranca Parkway/Tustin Ranch Road. Improvement Costs = $607,079 2. Design and construction of traffic signal at Tustin Ranch Road/Park Avenue (formerly identified as the South Loop Road). Improvement Costs = $301,250 3. .Design and construction of traffic signal at Tustin Ranch Road/vvarner Avenue. Improvement Costs = $265,100 4. Design and construction of traffic signal at Park Avenue(formerly identified as the South Loop Road}IVVarnerAvenue. Improvement Costs = $301,250 5. Design and construction of traffic signal at Barranca ParkwaylMillikan Avenue. Improvement Costs = $413,074 6. Design and construction of traffic signal at Park Avenue (formerly identified as the South Loop Road)/vUarner Avenue ramps at Jamboree Road. Improvement Costs = $241,000 7. Design and construction of traffic signal modification at Barranca Parkway/Jamboree Road. Improvement Costs = $288,236 RIGHT-OF-WAY SEGMENT 1. Each acquisition by Developer of right-of-way in connection with the Developer's backbone infrastructure Work shall be treated as a separate Segment and only authorized for reimbursement based on actual acquisition costs up to the amount for each separate Segement. a. Barranca Parkway Storm Drain $200,000 b. Warner Avenue $300,000 Total Acquisition Costs = $500,000 S:1Doug & TrafficlTustin MCASIFinal Vestar Exhibit A -Revised 12-04-06.doc