HomeMy WebLinkAbout07 REIMBURSEMENT OF INFRASTRUCTURE DESIGN COSTS AND RESOLUTION OF EXCLUSIVE NEGOTIATING AGREEMENT WITH OMBRP LLCll1,'�Y O
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AGENDA , • �
Agenda Item 7
Reviewed:
City Manager
Finance Director
MEETING DATE: NOVEMBER 6, 2018
TO: JEFFREY C. PARKER, CITY MANAGER
FROM: ECONOMIC DEVELOPMENT DEPARTMENT
SUBJECT: REIMBURSEMENT OF INFRASTRUCTURE DESIGN COSTS
AND RESOLUTION OF EXCLUSIVE NEGOTIATING
AGREEMENT WITH OMBRP LLC
SUMMARY:
This item brings closure to outstanding issues with the Community Core Development
(Neighborhood D North) negotiations between the City and OMBRP LLC (OMBRP).
RECOMMENDATION:
Staff recommendation is that the City Council:
1. Approve reimbursement of the Community Core Development (Neighborhood D
North) infrastructure design costs; and
2. Authorize the City Manager to execute the termination letter for the Exclusive
Negotiating Agreement with OMBRP LLC.
FISCAL IMPACT:
The City would be reimbursing OMBRP for the Community Core Development
infrastructure design costs totaling $470,756.90. The funds have been appropriated as
part of the FY 18/19 budget.
CORRELATION TO THE STRATEGIC PLAN:
Goal A — Economic and Neighborhood Development
BACKGROUND:
The City and OMBRP have been working toward a development plan for the
Community Core since November 2015. OMBRP took the lead in contracting for public
infrastructure design with five consultants. Staff is recommending reimbursement of
third -party costs associated with infrastructure design with the proviso that all contracts
Agenda Report
November 6, 2018
Page 2
are assigned to the City including all deliverables (i.e., plans and specifications). The
design and engineering of this public infrastructure will be beneficial to the City in the
continued master development of the Community Core. As indicated under "Fiscal
Impact," the total is $470,756.90.
Staff and OMBRP, over the last three years, have worked on a development plan to
meet the goals of the City and OMBRP. The parties have mutually agreed to terminate
the Exclusive Negotiating Agreement (ENA). Development of the site, at the current
time, is not financially feasible due to: 1) high costs for installation of regional
infrastructure specific to the site; 2) uncertainties regarding the release of Lease in
Furtherance of Conveyance (LIFOC) parcels from the Department of the Navy which
comprise a significant portion of the development site; and, 3) cash flow that impacts
the ability of the City to sell LIFOC parcels in order to fund infrastructure within the
development site. The attached Termination Letter outlines the reasoning for the
termination and the terms and conditions of the termination of the ENA.
Joh Buchanan
�- t ector of Economic Development
6?
I
Kenneth Piguee
Management Analyst II
Ryan Swiontek
Senior Management Analyst
Attachment: Termination Letter with OMBRP LLC
OMBRP LLC
3200 PARK CENTER DRIVE, SUITE 1000
COSTA MESA, CALIFORNIA 92626
(714) 427-6868
October 26, 2018
VIA EMAIL AND U.S. MAIL
City of Tustin
300 Centennial Way
Tustin, California 92780
Attention: John A. Buchanan, Director of
Economic Development
Ubuchanan@tustinca.org]
Jeffrey C. Parker
City Manager
City of Tustin
300 Centennial Way
Tustin, California 92780
Uparker@tustinca.org]
Re: Exclusive Negotiating Agreement for Community Core Development dated as of
November 3, 2015 ("Original ENA") by and between the City of Tustin (`City") and
OliverMcMillan Tustin Legacy, LLC, a Delaware limited liability company
("OM"), as amended by that certain First Amendment to Exclusive Negotiating
Agreement for Community Core Development dated as of May 15, 2018 by and
between OMBRP LLC, a Delaware limited liability company ("OMBRP") and the
City of Tustin (the Original ENA and First Amendment, collectively, the "ENA")
Ladies and Gentlemen:
As you are aware, pursuant to the above -referenced ENA, City, OMBRP and OMBRP's
predecessor, OM, have been in negotiations with respect to the proposed development of
portions of Tustin Legacy (as defined in the ENA) referred to in the ENA as the "Property", the
"Conditional Property" and the "AP Property". Capitalized terms used in this letter and not
defined shall have the meanings set forth in the ENA.
Regrettably, despite expenditure by City, OMBRP and OM of considerable time and money
investigating the Property, the Conditional Property and the AP Property and the proposed
development contemplated by the ENA, both we and the City have come to the ultimate
conclusion that the proposed development is not feasible at this time. Factors contributing to this
decision include the high cost and extent of the infrastructure necessary to support the Project
and the uncertainty of the timing for release of portions of the Property from the LIFOC.
Accordingly, this letter will acknowledge our mutual agreement to formally terminate the ENA
and the ENA Negotiating Period upon the terms set forth herein.
In connection with the ENA, OMBRP entered into certain consultant agreements listed on
Exhibit 1 for design and engineering of portions of the Tustin Legacy backbone infrastructure
("Consultant Agreements"), which agreements will be of ongoing benefit to the City in its role
OMBRP, LLC
City of Tustin
Jeffrey C. Parker
October 26, 2018
Page 2
as master developer of Tustin Legacy. Pursuant to our discussions, OMBRP hereby agrees,
promptly following execution of the City of this letter, to assign the Consultant Agreements and
deliver the work product performed by the design and engineer consultants under the Consultant
Agreements ("Work Product") and in consideration for such assignment and delivery and the
other undertakings of OMBRP in this letter, the City shall pay to OMBRP the sum of Four
Hundred Seventy Thousand Seven Hundred Fifty Six and 90/100 Dollars ($470,756.90) (the
"Contract Amount") comprising the amounts paid by OMBRP to date under the Consultant
Agreements for preparation of the Work Product. In relation thereto, OMBRP has provided to
the City a schedule of the amounts invoiced and paid together with copies of all such invoices
and other backup materials that has been reviewed and approved by the City.
In connection with and as consideration to the City for its consent to the termination of the ENA,
OMBRP, on behalf of itself and its predecessors and successors in interest, including OM, and its
partners and joint venturers (including OM$RP, collectively, the "OM Parties") hereby:
1. relinquishes all right, claim and interest, if any, with respect to the Property, the AP
Property and the Conditional Property and development rights with respect to same and
acknowledges that such relinquishment includes relinquishment of the right to exclusively
negotiate with the City with respect to any portion of the Property, the AP Property or the
Conditional Property or any right to special or priority treatment with respect to development
of the Property, the AP Property or the Conditional Property in any future disposition or
attempted disposition of same by the City;
2. agrees to indemnify, defend, protect and hold harmless, the City and its elected
officials, employees, agents, representatives, consultants and contractors, from and against any
and all Claims arising in connection with, relating to, or resulting from the assertion by the
OM Parties, or any of them, of any right, claim or interest in the ENA or all or any portion of
the Property, the AP Property and/or the Conditional Property;
3. agrees that except with respect to the Contract Amount, there are no other sums
due or owing to OMBRP or any of the other OM Parties from City and OMBRP is solely
responsible for payment of all other expenses incurred by the OM Parties with respect to the
ENA and the transactions contemplated therein, including without limitation, any
compensation due to CBRE in accordance with a separate written agreement between
Developer and CBRE;
4. reaffirms and restates for the benefit of the City and the City Released Parties the
releases contained in Section 3.5 of the Original ENA as though made anew by OMBRP upon
the delivery by OMBRP of letter; and
OMBRP, LLC
City of Tustin
Jeffrey C. Parker
October 26, 2018
Page 3
5. agrees not to sue or assert, or to cause or assist any other person or entity to sue
or assert, any Claim or cause of action with respect to termination of the ENA, the failure of
the City or the City Parties to negotiate in good faith or exclusively pursuant to the ENA or to
enter into the DDA or any other Transaction Documents.
Lastly, the City and OMBRP agree that, provided that both City and OMBRP execute this letter,
the effective date of the termination of the ENA and the ENA Negotiating Period shall be
October 25, 2018 ("Termination Date"), notwithstanding that the City Council's consent to
such termination is anticipated to occur subsequent to the November 3, 2018 termination date set
forth in the ENA. Effective upon the Termination Date, except with respect to the provisions of
Sections 3.5, 4.5.3(d), (e) and (f), 4.6.2, 4.6.3, 4.6.4, 10.1, 10.2, 10.3, 10.5 and 10.9 of the
Original ENA and the provisions of Section 6 of the First Amendment, which shall survive the
termination of the ENA, and the rights and obligations of City and OMBRP set forth in this
letter, neither Party shall have any further liability under the ENA including, without limitation,
the obligations to negotiate in good faith under Sections 4.5.1 and 4.5.2 thereof.
As we have expressed repeatedly, we enjoy our working relationship with the City and desire
to continue to work with you in the future in the development of Tustin Legacy.
To confirm the City's agreement to the terms of this letter, we ask that you please execute this
letter in the space provided below.
Very truly yours,
OMBRP, LLC, a Delaware limited liability
company
By: Brookfield rouflllefnCalifornia Holdings LLC,
a Californ' IIIA
im liability company, its Managing
Member
AN6 P. Foley
Authorized Representative
(signatures continued on following page)
OMBRP, LLC
City of Tustin
Jeffrey C. Parker
October 26, 2018
Page 4
Accepted and Agreed:
City of Tustin
By:
Jeffrey C. Parker, City Manager
Approved as to Form:
David E. Kendig, City Attorney
OMBRP, LLC
City of Tustin
Jeffrey C. Parker
October 26, 2018
Page 5
EXHIBIT 1
CONSULTANT AGREEMENTS
1. Hunsaker & Associates
2. Morrow Management
3. NMG Geotechnical
4. CDM Smith
5. C2 Collaborative
On File with Economic Development Department