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HomeMy WebLinkAbout28 2ND AMD TO DDA 06-01 06-05-07Agenda Item ~ • Reviewed: ,,;, 1"1V ~l r ~!-1 ~~0~~ City Manager Finance Director NIA MEETING DATE: JUNE 5, 2001 T0: UIIILLIAM A. HUSTON, CITY MANAGER FROM: REDEVELOPMENT AGENCY STAFF SUBJECT: SECOND AMENDMENT TO TUSTIN N LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT 06-01 (MASTER DEVELOPMENT SITE) SUMMARY Approval is requested of a Second Amendment to the Disposition and Development Agreement (DDA) for the Master Development site between the City of Tustin, Tustin Public Financing Authority, and Tustin Legacy Community Partners, LLC ("TLCP" or the "Developer") for the sale and development of certain property at Tustin Legacy ~"Project"). RECOMMENDATION That the City Council approve and authorize the City Manager, or Assistant City Manager to execute the Second Amendment to DDA 06-01 and to carry out all actions necessary to implement the amendment including execution of all related douments and instruments. That the Tustin Public Financing Authority approve and authorize the City Manager, or Assistant City Manager to execute the Second Amendment to DDA 06-01 on behalf of the Tustin Public Financing Authority and to carry out all actions necessary to implement the amendment including execution of all related documents and instruments. FISCAL IMPACT The project involves no direct fiscal impacts on the City of Tustin anticipated at this time that were not considered in the original DDA 06-01. BACKGROUNDIDISCUSSION The original DDA 06-01 was entered into by and between the City of Tustin and Tustin Legacy Community Partners, LLC ~TLCP), a Delaware limited liability company on May 3, 2006. The original DDA sets forth the parameters of development and conveyance by the City of Tustin and Tustin Public Financing Authority (hereinafter the "Agency") of certain property at Tustin Legacy (the former MCAS Tustin) to TLCP. Members of TLCP at the time included Centex Homes (as to a 50% interest}, Shea Homes Limited Partnership (as to a 25% interest) and Shea Properties, LLC (as to a 25% interest) (collectively, the "Developer"). The City and Tustin Public Financing Authority subsequently entered into the First Amendment to the Tustin Legacy DDA on May 29, 2007. On May 7, 2007 the City Council reviewed a request to authorize the withdrawal of Centex Homes from the TLCP partnership and for a reconfiguration of the ownership of the TLCP entity. The City Council approved the transfer request authorizing the removal of Centex Homes from any contractual obligations under the DDA and their withdrawal from the TLCP entity. Additionally, as part of the reconfiguration, Shea Homes will retain its 25 membership interest in TLCP and Shea Properties II, LLC (a new entity) would be admitted to TLCP as a member and will assume Centex's original 50% membership interest as well as replace Shea Properties, LLC and assume its 25% membership interest. The restructuring authorized by the City Council was approved subject to certain conditions of approval including but not limited to TLCP entering into an amendment to the DDA to document the definition of the "Developer" and change in managerial control of the TLCP partnership, all expressly requiring all new TLCP members to also acknowledge the DDA obligations and to assume and agree to perform as a member of TLCP all current DDA obligations. The City's special real estate counsel has prepared the attached Second Amendment to the DDA consistent with the City Council's actions on May 7, 2007. Environmental Determination The proposed Second Amendment to the DDA is not subject to CEQA. CEQA only applies to actions that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the action is not subject to CEQA. (14 Cal. Code Regs 15061(b)(3)). In this case, the Second Amendment has been prepared to facilitate the transfer of obligations under the DDA to a revised developer entity. The proposed amendment has no effect on the nature or scope of development that is contemplated at Tustin Legacy. Therefore, there is no possibility that this paper transfer of obligations will have any significant direct or indirect physical effect on the environment. Christine Shingleton Assistant City Manag Attachments: DDA Amendment SECOND AMENDMENT TO DISPOSITION AND DEVELOPMENT AGREEMENT (AVAILABLE FOR PUBLIC REVIEW AT THE CITY CLERK'S OFFICE, 300 CENTENNIAL WAY, TUSTIN, CA. SECOND AMENDMENT TO TUSTIN LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT (MASTER DEVELOPER) This SECOND AMENDMENT TO TUSTIN LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT (MASTER DEVELOPER) ("Amendment") is entered into as of June , 2007 (the "Effective Date") by and between the CITY OF TUSTIN (as more fully defined in Section 1.4.1 of the Original DDA (as defined below), "City") and Tustin Legacy Community Partners, LLC, a Delaware limited liability company (as defined in Section 1.4.2 of the Original DDA, the "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 Tustin Legacy Disposition and Development Agreement (Master Developer) dated as of May 3, 2006, as amended by that certain First Amendment to Tustin Legacy Disposition and Development Agreement (Master Developer) dated as of March 29, 2007 (as amended, the "Original DDA") pursuant to which, among other things, the City agreed to sell and/or lease or sublease, and the Developer agreed to purchase and/or lease or sublease, the Property (as defined in the Original DDA) and the Parties agreed to a scope of development of the Property. Initially capitalized terms not defined herein shall have the respective meanings assigned to such terms in the Original DDA. B. The Original DDA was memorialized in that certain Memorandum of Tustin Legacy Disposition and Development Agreement, which was recorded May 8, 2006 as Instrument No. 200600308658 of the Official Records of Orange County ("Official Records"). C. In connection with the restructuring of the Developer to permit Centex Homes to withdraw from the Developer and to permit Shea Properties II, LLC to acquire the interests of Centex Homes and Shea Properties, City and the Developer each desire to amend the Original DDA and adopt this Amendment as set forth below. The Original DDA as amended by this Amendment is referred to herein as the "Agreement". 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 of the Original DDA. The following sections of the Original DDA are, effective as of the Effective Date, hereby amended as follows: 18403:6588635.4 (a) Section 3.2.1 of the Original DDA is hereby amended and restated as follows: "3.2.1 Phase I Closing_Date. The "Phase I Closing Date"; shall mean June 19, 2007 except that such date may be extended upon mutual written agreement of the parties." (b) Section 3.2.5 is amended to add a new Section 3.2.5(g), which shall read as follows: "(g) Tustin Library Contribution. Reference is made to that certain letter agreement dated May 1, 2007 sent by the Developer to the City regarding the Tustin Library Project (the "Library Letter Agreement"). The Developer shall obtain for the benefit of the City the Letter of Credit (as defined in the Library Letter Agreement) and shall maintain the Letter of Credit in accordance with the terms of the Library Letter Agreement, and the City shall be permitted to draw upon the Letter of Credit in accordance with the terms of the Library Letter Agreement, the terms of which are incorporated herein by this reference. The Letter of Credit shall be deposited into Escrow as set forth in the Library Letter Agreement and shall be delivered to the City only upon the Phase I Close of Escrow." (c) Section 4.1.2 of the Original DDA is hereby amended and restated as follows: "4.1.2 Developer Changes. Any change (i) of the members of the Developer which results in a Transfer of Control, (ii) in a member of the Developer, or of any of such member's constituent entities or persons, or the ownership or control of any of any member of the Developer or any such member's constituent entities or persons which in the case of a change described in this clause (ii), results in a Transfer of Control, (iii) in that certain Second Amended and Restated Limited Liability Company Agreement of Tustin Legacy Community Partners, LLC dated March 30, 2007 among Shea Homes and Shea Properties II (the "Operating Agreement"), shall be subject to the City's prior written approval. Any addition or substitution of members in the Developer shall be subject to the City's prior written approval. The Developer shall provide to City on or before the execution of this Agreement a certificate showing the organizational structure of the Developer, the authority granted to the officers of the Developer and each Key Employee and the reporting responsibilities ofeach officer and Key Employee, and shall from time to time provide updated certifications in the event of changes to any of the foregoing or at the request of the City." (d} Section 4.1.3 of the Original DDA is hereby amended and restated as follows: 18403:6588635.4 2 "4.1.3 Key Employees. The Developer represents and warrants that the Develo er's key employees or representatives ("Key Employees") who will be p directly involved in the development, so long as each is employed by Developer, are as follows: Les Thomas-President, Shea Homes Southern California Colm Macken-Chief Executive Officer, Shea Properties II Steve Stambaugh-Chief Financial Officer, Shea Properties II Simon Whitmey-General Manager, Tustin Legacy Community Partners Ken Nishikawa-Director of Engineering Elizabeth Cobb-Director of Community Development Brian Mangano-Director of Operations Steve Center-Senior Vice President of Commercial Leasing and Marketing Lee Pacheco-Director of Finance , The Developer shall ensure that the Key Employees remain involved in the development of the Project in their respective capacities as they exist as of the date of this Agreement unless the City consents in writing, such consent not to be unreasonably withheld, conditioned or delayed." (e) Section 4.1.4 of the Original DDA is hereby amended and restated as follows: "4.1.4 Financial Status. The Developer understands and agrees that the City reserves the right at any time to reasonably request from the Developer additional information, including information, data and commitments to ascertain the depth of the capability and desire of each of the Developer, Shea Homes, Shea Properties II, or other affiliate of the Developer, to develop the Project expeditiously." (~ ATransfer of aParcel to aPre-Approved Vertical Builder that has in the past developed or is as of the Effective Date developing real property within the area covered by the Specific Plan shall constitute a Permitted Transfer only if the conditions of Section 4.2.2(h} have been satisfted and, in addition, the prior written consent of the City to such Transfer shall have been obtained. Such consent maybe granted or withheld by the City in its sole discretion; provided, however, that if the City shall have failed to respond to any written request for consent pursuant to this Amendment and Section 4.2.2(h) within thirty (30) days after receipt thereof by the City, then the City shall be deemed to have consented to such Transfer. (g) Section 17.7 of the Original DDA is hereby amended and restated as follows: "17.7 Notices, Demands and Communications, between the Parties. All notices, demands, consents, requests and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed conclusively to have been duly given (a) when hand delivered to the other 18403:6588635.4 3 Party; (b) three (3) Business Days after such notice has been sent by United States mail via certified mail, return receipt requested, postage prepaid, and addressed to the other Party as set forth below; (c) the next Business Day after such notice has been deposited with a national overnight delivery service reasonably approved by the Parties (Federal Express, United Parcel Service and U.S. Postal Service are deemed approved by the Parties), postage prepaid, addressed to the Party to whom notice is being sent as set forth below with next-business-day delivery guaranteed, provided that the sending Party receives a confirmation of delivery from the delivery service provider; or (d) when received by the recipient Party when sent by facsimile transmission or email at the number or email address set forth below (provided, however, that notices given by facsimile or email shall not be effective unless either (i) a duplicate copy of such notice is promptly sent by any method permitted under this Section 17.7 other than by facsimile or email; or (ii) the receiving Party delivers a written confirmation of receipt for such notice either by facsimile, email or any other method permitted under this Section. Any notice given by facsimile or email shall be deemed received on the next Business Day if such notice is received after 5:00 p.m. (recipient's time) or on anon-Business Day. Unless otherwise provided in writing, all notices hereunder shall be addressed as follows: If to Tustin: Tustin City Hall 300 Centennial Way Tustin, CA 92780 Attention: City Manager and Attention: Assistant City Manager Facsimile: 714-83 8-1602 With a copy to: City Attorney, City of Tustin Woodruff Spradlin & Smart 701 S. Parker Street, Suite 8000 Orange, CA 92868-4760 Attention: Doug Holland, Esq. Facsimile: 714-835-7787 And a copy to: Steefel, Levitt & Weiss A Professional Corporation One Embarcadero Center, 30th Floor San Francisco, CA 94111 Attention: Clayton B. Gantz, Esq. Facsimile: 415-788-2019 18403:6588635.4 4 If to the Developer: Tustin Legacy Community Partners, LLC 250 Commerce, Suite 100 Irvine, CA .92602 Attention: General Manager Facsimile: 949-453-8994 With a copy to: Shea Homes LP Southern California Division 603 S. Valencia Avenue Brea, CA 92823 Attention: Les Thomas, President Facsimile: 714-792-25 5 8 With a copy to: Shea Properties II, LLC 26840 Aliso Viejo Parkway, Suite 100 Aliso Viejo, CA 92656 Attention: Colm Macken, CEO Steve Stambaugh, CFO Facsimile: 949-3 89-7466 Any Party may by written notice to the other Party in the manner specified in this Agreement change the address to which notices to such Party shall be delivered." (h) In addition to the specific amendments set forth above, from and aver the Effective Date, all references in the Original DDA to "Centex Corporation" or "Centex Homes" shall be of no further force or effect, and all references to "Shea Properties" shall be deemed to be references to Shea Properties II. 2. Modification of Attachment 5 entitled "GLOSSARY OF DEFINED TERMS". Attachment 5 to the Original DDA is, effective as of the Effective Date, hereby amended as follows: (a) The definitions of "Centex Corporation" and "Centex Homes" are deleted. (b) The definition of "Transfer of Control" is hereby amended and restated as follows: "Transfer of Control" shall mean any transfer that results in John Shea, Peter Shea, Edmond Sheaand/or their Immediate Family Members owning collectively, .directly or indirectly, less than ninety percent (90%) of the voting or economic interests in Shea Properties II or Shea Homes, in either event whether made in one transaction or in more than one transaction and whether occurring as 18403:6588635.4 5 a single event or a series of events. In addition, "Transfer of Control" shall also mean any change in membership interest of Shea Properties II and/or Shea Homes in the Developer which would result in (a) Shea Properties II and Shea Homes owning, in the aggregate, less than one hundred percent (100%) of the interests of the members in the Developer, (b) Shea Properties II owning, in the aggregate, less than seventy-five percent (75%) of the interests of the members in the Developer, or (c) Shea Homes owning, in the aggregate, less than twenty-five percent (25%) of the interests of the members in the Developer. Notwithstanding the foregoing, prior to the occurrence of a change in managerial control of the Developer, the Developer shall provide the City with a written explanation of the reason for such change in managerial control (including, without limitation, a change in the Developer's executive committee or the rights and powers of any member thereof) and the manner in which the Developer plans to proceed with the performance of its obligations pursuant to this Agreement after the effectuation of such change of managerial control. No such change of managerial control shall become effective if the City denies its approval of such proposed chan e of managerial control within fifteen (15) Business Days aver receipt of the g Developer's plan." as follows: (c) The definition of "Shea Properties" is hereby amended and restated "Shea Properties II" shall mean Shea Properties II, LLC, a Delaware limited liability company, and any successor in interest to Shea Properties II's rights pursuant to the Developer's Operating Agreement so long as John Shea, Peter Shea, Edmond Sheaand/or their Immediate Family Members own, directly or indirectly, at least ninety percent (90%) of the voting and economic interests in such successor." 3. Representation Regarding Attachment 15 Entitled "FORM OF PARTICIPATION PROVISIONS FROM DEVELOPER' S OPERATING AGREEMENT" The form of participation provisions attached to the Original DDA as Attachment 15 is a true, correct and complete copy of the Exhibit D to the Developer's Operating Agreement and is in full force and effect. 4. Acknowledgements by Members. Shea Homes and Shea Properties II, in their capacity as members of the Developer, but not individually, acknowledge the obligations created under the Agreement. 5. Miscellaneous. (a) Agreement Ratified. Except as specifically amended or modified herein, each and every term, covenant and condition of the Original DDA as amended is hereby ratified and shall remain in full force and effect. 18403:6588635.4 6 (b) Binding A Bement. This Amendment shall be binding upon and inure to the benefit of the parties hereto, their legal representatives, successors and permitted assigns. (c) Governing Law. This instrument shall be interpreted and construed in accordance with the laws of the State of California. (d) Exhibits. The Exhibits attached to this Amendment are hereby incorporated by this reference into this Amendment as though fully set forth in this Section. (e) Costs and Expenses. The Developer agrees to also pay all City staff time and expenses, including without limitation, the fees and expenses of City's outside legal counsel and financial consultants, in connection with the restructuring of the Developer, including without limitation the preparation of this Amendment. This obligation shall be in addition to and without limitation of the Developer's obligation under Section 1.12.2 of the Agreement to pay to the City any costs incurred by Tustin in administering the Agreement, the Developer's business plan, implementation activities and administrative expenses associated with the real estate portion of the transaction so that payments made under this Section 5(e) shall not be applied in reduction of the Developer's total reimbursement limit of $4,048,270.00 or annual reimbursement limits as shown in Table 4 of the Final DDAPrn-Forma. In furtherance of the foregoing, the Developer agrees to maintain a deposit of not less than $50,000 at all times until all of the City staff time and expenses in connection with the restructuring of the Developer, including without limitation the preparation of this Amendment are paid in full. [signature page follows] 18403:6588635.4 7 IN WITNESS WHEREOF, City and the Developer have executed this Amendment as of the date first set forth above. "CITY" CITY OF TUSTIN, CALIFORNIA Dated: By: William Huston, City Manager or Christine Shingleton, Assistant City Manager "AUTHORITY" TUSTIN PUBLIC FINANCING AUTHORITY Dated: By: William Huston, Executive Director or Christine Shingleton, Assistant City Manager ATTEST: By: Pamela Stoker City Clerk Dated: APPROVED AS TO FORM Special Counsel for the City STEEFEL, LEVITY & WEIS S A PROFESSIONAL CORPORATION By: Clayton B. Gantz 18403:6588635.4 "DEVELOPER" TUSTIN LEGACY COMMUNITY PARTNERS, LLC, a Delaware limited liability company By: Shea Properties II, LLC, a Delaware limited liability company, Managing Member By: _ Name: Its: By: _ Name: Its: 18403:6588635.4 By: Shea Homes Limited Partnership, a California limited partnership, a Member By: _ Name: Its: By: _ Name: Its: The undersigned, Centex Homes, executes this Amendment for the purposes of acknowledging and consenting to the terms thereof. Centex Homes, a Nevada general partnership, a Member By: Centex Real Estate Corporation, a Nevada corporation, By: _ Name: Its: 18403:6588635.4 1 ~