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HomeMy WebLinkAbout08 4TH AMEND TO TUST LEGACY DDA 04-02 11-06-071-~+- Agenda Item 8 AGENDA REPORT Reviewed: City Manager -.:, Finance Director MEETING DATE: NOVEMBER 6, 2007 TO: WILLIAM A. HUSTON, CITY MANAGER FROM: CHRISTINE A. SHINGLETON, ASSISTANT CITY MANAGER SUBJECT: FOURTH AMENDMENT TO TUSTIN LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT (DDA 04-02) (RETAIL DEVELOPMENT) SUMMARY: City Council authorization is requested for approval of a Fourth Amendment to the Tustin Legacy DDA 04-02 between the City of Tustin and Vestar/Kimco Tustin, L.P. (the "Developer") RECOMMENDATION: It is recommended that the City Council 1. Adopt Resolution No. 07-85 finding that the Fourth Amendment to DDA 04-02 is within the scope of the Final Joint Program EIS/EIR for the Reuse and Disposal of MCAS Tustin and no additional analysis, action or document are required under CEQA. 2. Subject to any non-substantive modifications as may be determined necessary by the City's Tustin Legacy Special Counsel, approve and authorize the City Manager or Assistant City Manager to execute the Fourth Amendment to DDA 04-02 between the City of Tustin and Vestar/Kimco Tustin, L.P. and to carry out all actions necessary to implement the amendment including execution of all related comments. FISCAL IMPACT: It appears that the draft loan documents between Lehman Brothers Bank and Vestar/Kimco Tustin, L.P. will be in the approximate amount of $206,000,000. The Lender is currently completing the appraisal of the property, and we understand that the appraisal will be an amount adequate to ensure that the remaining equity is sufficient for the project, particularly in light of the performance bond that the City has in place with the developer for completion of off-site infrastructure improvements. Page 2 BACKGROUND: The City Council previously approved Disposition and Development Agreement (DDA 04-02) which was executed on July 20, 2004, a First Amendment to the DDA on March 25, 2005, a Second Amendment to the DDA on June 8, 2005, and a Third Amendment on November 3, 2006 (collectively, the "Original DDA"). Provisions of the Fourth Amendment to DDA 04-02 will permit Vestar/Kimco Tustin, L.P. ("Vestar" or the "Developer") to finalize a permanent loan on their project, the "District at Tusitn Legacy". Vestar is in the process of completing a permanent loan with Lehman Brothers Bank, FSB to replace the existing construction loan on the project. Pursuant to the Original DDA, any transfer prior to issuance of a Certificate of Compliance requires City approval. Lehman Brothers is insisting that there be a so-called "Special Purpose Entity" (bankruptcy remote) inserted as the General Partner or Managing Member of Vestar/KimcoTustin, L.P., the Borrower. As a result, the Fourth Amendment to the DDA would authorize Vestar California XXX, LLC, the General Partner of Vestar/Kimco Tustin, L.P., to transfer its general partnership interest in Vestar/Kimco Tustin, L.P. to a new Special Purpose Entity (Vestar Tustin, L.L.C.), which will be a wholly owned subsidiary of Vestar California XXX, L.L.C. This new entity will become the General Partner of Vestar/Kimco Tustin, L.P. in place of Vestar California XXX, L.L.C. Vestar has represented with this proposal required by the lender that there will no major change in the substance of ownership, but simply the insertion of the Special Purpose Entity which is wholly owned by the original entity of Vestar California XXX, L.L.C.; the entity will now be owned 99% by Vestar California XXX, L.L.C. and 1 % by Hanley Tustin, Inc., which will serve as the Managing Member of Vestar Tustin, L.L.C. As you may be aware, Lee Hanley is the the Chairman and CEO of Vestar. The Developer would continue to be Vestar/Kimco Tustin, L.P. The Fourth Amendment has been reviewed by the Developer and is acceptable. However, the City will defer actual execution of other subordination and estoppel documents for the loan as required by the City subject to the following City conditions: 1. Vestar bringing up to date all balances on expenses billed for inspections on on-site and off-site Backbone Infrastructure due through October 31, 2007. 2. Vestar providing verification of the creation of Vestar Tustin, L.L.C, including a copy of any executed operating agreement between Vestar California XXX, L.L.C and Hanley Tustin, Inc., as Managing Member of the new entity Vestar Tustin, L.L.C. with terms which reflect the representations that Vestar has made to City as part of the permanent lending documents. Page 3 City staff will be available to answer any questions regarding the Fourth Amendment to DDA 04-02. The environmental certification for the proposed action is attached as Resolution 07-05 and the Fourth Amendment to the DDA is also attached. Christine A. Shingleton Assistant City Manager RESOLUTION NO. 07-85 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, FINDING THAT PURSUANT TO PUBLIC RESOURCES CODE SECTION 2116 AND SECTION 15168(c) OF STATE CEQA GUIDELINES THE PROJECT IS WITHIN THE SCOPE OF THE FINAL JOINT PROGRAM MCAS ENVIRONMENTAL IMPACT STATEMENT/ENVIRONMENTAL IMPACT REPORT (MCAS TUSTIN EIS/EIR), AS AMENDED BY ADDENDUM AND NO NEW ENVIRONMENTAL DOCUMENT IS REQUIRED; APPLICABLE MITIGATION MEASURES HAVE BEEN INCORPORATED INTO THE PROJECT The City Council of the City of Tustin does hereby resolve as follows: I. The City Council finds and determines as follows: A. That Fourth Amendment to DDA 04-02 is considered a "Project" pursuant to the terms of the California Environmental Quality Act; B. That the Marine Corps Air Station (MCAS) Tustin Reuse Plan/Specific Plan Final Environmental Impact Statement/Environmental Impact Report was certified by the City Council on January 16, 2001, and subsequently amended by supplement and addendum (collectively, the "FEIS/EIR"). The FEIS/EIR considered the potential impacts associated with development on the former Marine Corps Air Station, Tustin, including development of commercial uses within Planning Areas 16, 17 and 19 of the MCAS Reuse Plan (Specific Plan). C. The minor changes contained in the Fourth Amendment to the Disposition and Development Agreement are financial only and do not involve any physical changes to the project; all potential impacts of the Project were addressed by the certified FEIS/EIR, no additional impacts have been identified, and all applicable mitigation measures in the FEIS/EIR will be implemented through the Mitigation Monitoring Program for the original DDA 04-02 and the City entitlement conditions of approval already approved for the development site. II. The City Council hereby finds that the Fourth Amendment to DDA 04-02 for this Project is within the scope of the previously approved MCAS Tustin Final Program EIS/EIR previously certified, that the environmental effects of the Project are within the scope of the MCAS Tustin FEIS/EIR and were fully examined in the MCAS Tustin FEIS/EIR; that no substantial changes are proposed in the Project or have occurred with respect to circumstances under which the Project is being undertaken since certification of the MCAS Tustin FEIS/EIR; no new information has become available since the certification of Resolution No. 07-85 Page 1 of 2 III. the MCAS Tustin FEIS/EIR, and pursuant to Public Resources Code Section 2116 and the requirements of CEQA regulations promulgated with respect thereto including Title 14 California Code of Regulations Sections 15162 and 15168(c), no additional environmental analysis, action or document is required by the CEQA. PASSED AND ADOPTED at a regular meeting of the Tustin City Council held on the 6th day of November, 2007. LOU BONE Mayor PAMELA STOKER City Clerk STATE OF CALIFORNIA ) COUNTY OF ORANGE ) SS CITY OF TUSTIN ) I, Pamela Stoker, City Clerk and ex-officio Clerk of the City Council of the City of Tustin, California, do hereby certify that the whole number of the members of the City Council of the City of Tustin is five; that the above and foregoing Resolution No. 07-85 was duly passed and adopted at a regular meeting of the Tustin City Council, held on the 6th day of November, 2007, by the following vote: COUNCILMEMBER AYES: COUNCILMEMBER NOES: COUNCILMEMBER ABSTAINED: COUNCILMEMBER ABSENT: PAMELA STOKER City Clerk Resolution No. 07-85 Page 2 of 2 FOURTH AMENDMENT TO TUSTIN LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT (RETAIL DEVELOPMENT) This FOURTH AMENDMENT TO TUSTIN LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT (RETAIL DEVELOPMENT) (this "Amendment") is entered into as of , 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 VESTAR/KIMCO TUSTIN, L.P., a California limited partnership (as more fully defined in Section 1.4.2 of the Original DDA ("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 (Retail Development) dated as of July 20, 2004, as amended by that certain First Amendment to Tustin Legacy Disposition and Development Agreement (Retail Development) dated as of March 25, 2005, that certain Second Amendment to the Tustin Legacy Disposition and Development Agreement (Retail Development) dated as of June 8, 2005, and that certain Third Amendment to the Tustin Legacy Disposition and Development Agreement (Retail Development) dated as of November 3, 2006 (collectively, 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 for the Property. Initially capitalized terms not defined herein shall have the respective meanings assigned to such terms in the Original DDA. . B. City and the Developer each desire to amend the Original DDA 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. Modifications 1.1 Article 2 of the Original DDA is hereby amended and supplemented to add a new Section 2.2.10 which shall read in its entirety as follows: "2.2.10 Transfer of Interests in Vestar California XXX, L.L.C. to Facilitate Financing. The Developer shall be permitted to transfer all of the right, title and interest of its General Partner, Vestar California XXX, L.L.C., to a new entity, Vestar Tustin, L.L.C., provided that Vestar Tustin, L.L.C. is 18405:6620235.3 and at all times prior to the Recordation of a Final Certificate of Compliance with respect to the Project will remain wholly-owned by Vestar California XXX, L.L.C. and Hanley Tustin, Inc. (which serves as Managing Member of Vestar Tustin, L.L.C.) and/or the direct or indirect owners of Vestar California XXX, L.L.C. The Developer shall provide the City with the names of all Persons who own, directly or indirectly a five percent (5%) or more interested in Vestar Tustin, L.L.C. and such other relevant information as the City may reasonably request in connection with its consent rights." 1.2 The definition of the term "Permitted Mortgagee" contained in Attachment No. 3 of the Original DDA is hereby amended and restated to read in its entirety as follows: "'Permitted Mortgagee' shall mean a Mortgagee meeting the criteria set forth in Section 15.2 and accordingly entitled to the Permitted Mortgagee protection provided by this Agreement. For purposes of any acts under a Permitted Mortgage with respect to and/or following a Foreclosure thereunder, "Permitted Mortgagee" .shall mean such Permitted Mortgagee or any wholly-owned subsidiary thereof designated by the Permitted Mortgagee to take title to the foreclosed property. The assignment of a loan (or any portion thereof) by a Permitted Mortgagee (acting in an individual capacity or as agent for other lenders) shall not give rise to any requirement that each lender participating in such assignment itself be a Permitted Mortgagee, so long as (a) at the inception of the loan, the originating and agent lender is a Permitted Mortgagee, and (b) at the time of any subsequent granting of a participation in or assignment of the loan, the agent lender is a Permitted Mortgagee. The granting by any Permitted Mortgagee of participation interests (i.e., interests in the loan where there is no privity of contract between the grantee of such participation interest and the Developer) shall not give rise to any requirement that the recipient of such participation interest be a Permitted Mortgagee. The securitization of a loan by a Permitted Mortgagee shall not give rise to any requirement that a securitization trust that may acquire all or any portion of such loan be a Permitted Mortgagee, and such securitization trust acquiring all or any portion of such loan shall be a Permitted Mortgagee, so long as (i) such loan is a permanent loan which is replacing a construction loan or a prior permanent loan, and (ii) such loan is fully funded at the time of such securitization." 2. Miscellaneous 2.1 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. Each and every reference to the "Agreement" in the Original DDA shall be deemed to refer to the Original DDA as amended by this Amendment. 18405:6620235.3 2 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. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 18405:6620235.3 3 IN WITNESS WHEREOF, City and the Developer have executed this Amendment as of the date first set forth above. City of Tustin, California By: William Huston, City Manager ATTEST: By: Pamela Stoker City Clerk Dated: APPROVED AS TO FORM Special Counsel for the City Steefel, Levitt & Weiss A Professional Corporation By: Clayton B. Gantz Vestar/Kimco Tustin, L.P. a California limited partnership By: Vestar California XXX, L.L.C., an Arizona limited liability company Its: General Partner By: Name: Title: Manager 18405:6620235.3 4