HomeMy WebLinkAboutTPFA 02 2ND AMEND TO DDA 06-01 06-05-07,;~~ ,~~~
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AGENDA REPORT
Agenda Item TPFA 2
Reviewed:
City Manager
Finance Director NIA
MEETING DATE: JUNE 5, 2007
T0: WILLIAM 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, 2001.
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.
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Christine Shingleton
AssistantCity 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 asset 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
1
(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 maybe 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 poor 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 Ke~Employees. The Developer represents and warrants that the
Developer's key employees or representatives ("Key Employees") who will be
directly involved in the development, so long as each is employed by Developer,
are as follows:
Les Thomas-President, Shea Homes Southern California
Color 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 Proj ect 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."
(f) 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 satisfied and, in addition, the prior written consent of the
City to such Transfer shall have been obtained. Such consent may be 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 aver 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:bS8863S.4 3
Party; (b) three (3) Business Days aver 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 after 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:
deleted.
(a) The definitions of "Centex Corporation" and "Centex Homes" are
(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
change of managerial control within fifteen (15) Business Days after receipt of the
Developer's plan."
(c) The definition of "Shea Properties" is hereby amended and restated
as follows:
"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 specifcally 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:b588635.4
(b) Binding Agreement. 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"
Dated:
CITY OF TUSTIN, CALIFORNIA
By:
William Huston, City Manager or
Christine Shingleton, Assistant City
Manager
"AUTHORITY"
Dated:
TUSTIN PUBLIC FINANCING
AUTHORITY
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 & WEISS
A PROFESSIONAL CORPORATION
By:
Clayton B. Gantz
18403:b588635,4 g
"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 9
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 10