HomeMy WebLinkAbout01 AGREEMENT WITH VESTAR/KIMCO TO ISSUE CERTIFICATE OF COMPLIANCEAGENDA REPORT
MEETING DATE: AUGUST 9, 2017
Agenda Item
Reviewed:
City Manager
Finance Director()NIA
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: JEFFREY PARKER, CITY MANAGER
SUBJECT: AGREEMENT WITH VESTAR/KIMCO TO ISSUE CERTIFICATE OF
COMPLIANCE
SUMMARY:
Vestar/Kimco Tustin, L.P. ("Vestar/Kimco") has proposed an agreement to provide the
City with a letter of credit guaranteeing completion of certain infrastructure improvements
in exchange for issuance by the City of a "certificate of completion" under the terms of
Vestar/Kimco's existing Development and Disposition Agreement with the City.
RECOMMENDATION:
1. Approve and authorize the Mayor to execute the Agreement and Escrow Instructions
(Attachment will follow), subject to any non -substantive corrections or revisions as
approved by the City Manager and City Attorney; and
2. Authorize the City Manager or his designee to take any actions and sign any
documents approved as to form by the City Attorney as may be necessary to implement
the intent of Agreement and Escrow Instructions, including but not limited to additional
escrow instructions.
FISCAL IMPACT:
None. The Agreement would release one security for the completion of certain
infrastructure and replace it with another. The approval of this Agreement requires no
financial contribution by the City.
CORRELATION TO STRATEGIC PLAN:
Goal A: Economic and Neighborhood Development, Strategy A: Facilitate and complete
land transactions for early development opportunities. The proposed Agreement would
complete one of the first Disposition and Development Agreements at the Tustin Legacy
by issuing a Certificate of Completion of that agreement, and sets the stage for potential
land exchange with Vestar/Kimco for potential future expansion of the District by
Vestar/Kimco and the City's development of the adjacent property.
1262219.3
AGREEMENT WITH VESTAR/KIMCO TO ISSUE CERTIFICATE OF COMPLIANCE
August 9, 2017
Page 2
BACKGROUND AND DISCUSSION:
In 2004, Vestar/Kimco Tustin, L.P. ("Vesta r/Ki mco") and the City entered into a Disposition
and Development Agreement dated July 20, 2004 that was amended five times in the years
after its approval (as amended, the "DDA"). Pursuant to that DDA and a correlating
"Infrastructure Construction and Payment Agreement" that was also amended several
times, and concurrently with development of the District of Tustin Legacy Shopping Center
("The District"), Vestar/Kimco has constructed a series of infrastructure improvements and
the City has reimbursed it for a significant portion of those construction costs. The only
remaining infrastructure improvements that are required to be constructed that have not yet
been are certain Barranca Channel Storm Drain facilities.
Vestar/Kimco is in the process of refinancing its existing, expiring loan by means of a new
permanent loan. However, the new lender is requiring that the City issue a certificate of
compliance before it will make the loan. Under the DDA, the City is required to issue a
certificate of compliance when the project is done and certain conditions have been met,
among which is that all agreed-upon infrastructure improvements must have been be
completed.
Although the Barranca Channel Storm Drain improvements are not yet completed, the
proposed Agreement would provide that in exchange for the requested certificate of
compliance and the related documents, Vestar/Kimco would commit that it remains
obligated to construct the Barranca Channel Storm Drain facilities and will provide the City
with a $10 million letter of credit to secure completion of those facilities. The Agreement
and Escrow Instructions (Attachment 1) would effectuate that exchange.
The Agreement also has attached to it a Memorandum of Understanding providing a basic
framework for a possible future transaction that the City and Vestar/Kimco are still
negotiating that, if approved at a later date, would exchange properties and allow
expansion of the District.
Attachment
1. Agreement and Escrow Instructions
1262219.3