HomeMy WebLinkAboutITEM 11 -DDA FLIGHT PRESENTATION - 11.15.16Flight Venture LLC
DDA –Office Campus
JOINT VENTURE BETWEEN LINCOLN PROPERTY COMPANY
COMMERCIAL AND ALCION VENTURES
Highlights
1.Purchase Price –Phase 1
2.Purchase Price –Phase 2
3.Schedule of Performance
4.Non-Compete Covenant
5.Horizontal Improvements
6.Remedies in the Event of Material Default by Developer
Purchase Price
Phase 1
◦$25,984,847 or say $26,000,000
Phase 2
◦$31,390,643 or say $31,400,000… if taken down within 12 months of Phase 1 conveyance
◦Price escalates at 3.0% per year for first 5 years
◦Price escalates at 6.0% per year for years 6 through 10
◦Price at year 10 is $47.2m (rounded)
Total Purchase Price (Phase 1 plus Phase 2)
◦$57,375,490 ($57.4m) to $73,264,952 ($73.3m) depends on Phase 2 take down
$31
$32
$33
$34
$35
$37
$40
$42
$45
$47
$30
$32
$34
$36
$38
$40
$42
$44
$46
$48
$50
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Option Years
Phase 2 –Land Price during Option Period
3% annually
6% annually
Phase 2 –Purchase Price Adjustments
during the Option Period
Years
Purchase Price
(Phase 2 only)
TOTAL
(Phase 1 + Phase 2)
2017 1 $ 31,390,643 $ 57,375,490
2018 2 $ 32,332,362 $ 58,317,209
2019 3 $ 33,302,333 $ 59,287,180
2020 4 $ 34,301,403 $ 60,286,250
2021 5 $ 35,330,445 $ 61,315,292
2022 6 $ 37,450,272 $ 63,435,119
2023 7 $ 39,697,288 $ 65,682,135
2024 8 $ 42,079,125 $ 68,063,972
2025 9 $ 44,603,873 $ 70,588,720
2026 10 $ 47,280,105 $ 73,264,952
Phase 1
Office Campus
17.5 acres
not less than 369,500 GBA -not more than 390,440 GBA (includes office and food hall)
Schedule –Conveyance and Construction
Conveyance anticipated March 2017… latest August 31, 2017
Can be extended if Developer pays $250,000… 6 month extension (Aug’17 to Feb’18)
Constructed over 20 months… ready for occupancy 2018
Conveyance Requirements
Developer required to have:
a) 100% financing including equity and debt for not less than 350,000 GBA
b) Permit ready to start construction
Phase 2
Office Campus
21.2 acres
not less than 400,000 GBA -not more than 479,560 GBA
Conveyance Requirements
Depends on Developer exercising option… 10 years to exercise, must renew annually
Phase 2 takedown cannot precede Phase 1
To exercise option Developer must meet minimum leasing/sale requirements:
◦232,050 GBA must be leased on Phase 1, or
◦Developer shall have a binding contract(s) to sell or lease at least 100,000 GBA
of office uses to a build-to-suit user(s) within Phase 2.
Developer required to have:
◦100% financing including equity and debt for not less than 400,000 GBA
◦Permit ready to start construction
Schedule of Performance
“Outside” dates by which Developer must performance without defaulting
Phase 1 –Minimum Improvements
◦Horizontal Improvements -completed within 24 months (commencement + construction
period) includes grading, infrastructure and roads… except cap/paving of roadways
◦Horizontal and Vertical Improvements -Developer must complete the construction of all
horizontal improvements and minimum vertical improvements, meaning the office campus,
within 39 months (commencement + construction period)
Phase 2 –Minimum Improvements
◦Same as shown in Phase 1, if the option is exercised
OFF-SITE REIMBURSABLES
OFF-SITE NON-REIMBURSABLES
ON-SITE REIMBURSABLES
(PHASE 2)
Horizontal Improvements
Phase 1 Off-Site Improvements -Reimbursable
◦Installation of Flight (former Aston)… City will retain ownership
◦Installation of Barranca median turn lane and signals at Flight Way (former Aston)
◦Armstrong Avenue… cap and stripe from Barranca to Warner including installation of sidewalk
Phase 1 Off-Site Improvements -Non-Reimbursable
◦Barranca ROW… installation of deceleration lane (Armstrong to Airship)
Phase 2 On-Site Improvements –Credit in-lieu of Cash Option Payments
◦Fencing around the site
◦Flight road extension (E/W road)
◦Airship road full build-out (N/S road)
◦Developer reimbursed only on balance of On-Site Improvements if Option not exercised
Non-Compete –Office Development
Why?
◦Developer making a significant investment in a large-scale speculative office development.
Property Impacted
◦City controlled stand-alone office building sites for-sale to private third parties within Tustin Legacy.
Phase 1 -extinguishes the earlier of:
◦315,000 GBA leased/sold by the Developer or by October 1, 2020 (4 years).
◦During this period, up to 150,0000 GBA of office uses may be constructed in non -FLIGHT projects if the office
uses are located in a mixed-use project; the ground floor cannot be occupied by office users.
Phase 2 -extinguishes the earlier of:
◦360,000 GBA being leased/sold or 3 years from the close of escrow on Phase 2.
◦Up to 100,000 GBA of office uses may be constructed in non-FLIGHT projects if the office uses are located in a
mixed-use project and the ground floor is not-occupied by office users. This would change only if no permits
were issued for mixed-use office during Phase 1; in that event, the total would increase to 200,000 GBA.
◦A total of 250,000 GBA of office space located in mixed-use projects can be constructed if Phase 1 and Phase 2
were to be constructed concurrently.
Repurchase/Reversion
o Right of Repurchase
o Right of Reversion
Can only be exercised by the City if the there is a Material Default by the Developer and the
Developer fails to cure the default.
Staff Recommendation
1.Design and quality of the project… a unique project attracting innovative companies adding
to and reinforcing the City’s vision for Tustin Legacy.
2.An employment center, that complements the existing and planned residential and retail
uses at Tustin Legacy.
3.Ability of the Developer to deliver the project in a timely manner.
4.Fair Market Valued transaction.