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HomeMy WebLinkAbout12 AMEMD ENA TLCP 9-19-05 8 AGENDA REPORT Agenda Item ---..!L Reviewed: rt City Manager Finance Director MEETING DATE: SEPTEMBER 19, 2005 FROM: WILLIAM A. HUSTON, CITY MANAGER CHRISTINE SHINGLETON, ASSISTANT CITY MANAGER TO: SUBJECT: AMENDMENT TO EXCLUSIVE AGREEMENT TO NEGOTIATE WITH TUSTIN COMMUNITY PARTNERS, LLC FOR THE TUSTIN LEGACY MASTER DEVELOPER SITE SUMMARY Approval is requested for an amendment to the Exclusive Negotiation Agreement (ENA) with Tustin Legacy Community Partners, LLC. RECOMMENDATION It is recommended that the City Council authorize the City Manager to execute the Third Amendment to the ENA between the City of Tustin and Tustin Legacy Community Partners (TLCP), LLC. FISCAL IMPACT TLCP have been depositing funds to cover City costs of planning and negotiations to date. The Amendment would provide for reimbursement to TLCP for the costs of a hydrology study in the event that a DDA is not executed or the ENA is termianted, at not to exceed a cost of $500,000. The costs for the hydrology study would be an allowable expense utilizing land sale proceeds. BACKGROUND The Tustin City Council previously selected TLCP (the "Developer") for negotiations on the development of an approximate 800 acre Master Developer site at Tustin Legacy. A Exclusive Negotiation Agreement (ENA) was executed for the project on November 1, 2003, and amended on October 18, 2004 (the "Second Amendment"). The City has expressed it$ desire for the Developer to expedite development within the Master Developer site, including infrastructure construction. In review of the critical path schedule for any development, a critical work effort that drives the schedule is the completion of a hydrology study. Since Developer is reluctant to commit to the financial Page 2 resources for completion of the hydrology study until completion and adoption of a Disposition and Development Agreement ("DDA") by the City Council, City has requested that Developer prepare and complete certain hydrological studies with respect to the planned development of the Master Development Site. In consideration for Developer's agreement to take on the risk of commencing with work immediately on the hydrology study, provisions of the Third Amendment propose that the City would reimburse Developer for the actual out-of-pocket costs incurred by Developer for said hydrology study, subject to the following conditions: 1. The City approves the contracts for the hydrology study. 2. The aggregate price to perform the hydrology study does not exceed $500,000, and; 3. Either (a) the City and Developer do not enter into a DDA pursuant to the process identified under the ENA, or (b) the ENA is terminated by City. In addition, the City would have the right to review and approve the scope of work for the hydrology study. The Developer would be required to keep the City informed on progress on the hydrology study and to seek City approval of any final report prior to distribution to other agencies. Developer would also agree that any meetings with outside agencies regarding the hydrology study would include City representatives. Any reimbursement to the Developer for the costs of the study would also be subject to the following conditions: 1. In the event that the ENA is terminated by the City or a DDA is not entered into, the Developer shall submit detail to the City setting forth the actual amounts expended by Developer relating to the study. 2. At the request of the City, Developer would transfer to the City all rights to any and all of the Developer work products, reports, consultant data and files related to the hydrology study, including products from Developer consultants authorized to prepare the study. 3. In the event that a DDA is executed by and between the City and Developer and/or its affiliates, the City shall not have any obligation to reimburse Developer or its affiliates for any expenses relating to the Hydrology Study. THIRD AMENDMENT TO EXCLUSIVE NEGOTIATION AGREEMENT THIS THIRD AMENDMENT TO EXCLUSIVE NEGOTIATION AGREEMENT (this "Third ENA Amendment") dated as of September 19, 2005 ("Amendment Effective Date") is entered into by and among THE CITY OF TUSTIN (the "City"), the Tustin Public Financing Authority (the "Anthority", and, together with the City, collectively, the "Agencies"), and TUSTIN LEGACY COMMUNITY PARTNERS, LLC, a Delaware limited liability company (the "Developer"). The Agencies and the Developer (collectively, the "Parties") hereby agree as follows: RECITALS A. Reference is made to that certain Exclusive Negotiation Agreement (Master Development Site) dated as of November 1,2003 (the "Effective Date"), by and among the Agencies and Developer (the "Original ENA"), the First Amendment to the Exclusive Negotiation Agreement (the "First Amendment"), and the Second Amendment to the Exclusive Negotiation Agreement (the" Second Amendment" and, together with the First Amendment and the Original ENA, collectively, the "Prior ENA"). B. The Parties now desire to amend the Prior ENA to provide for Developer's initiation of certain work products and the reimbursement to Developer of costs for said work products in the event of any future termination ofthe ENA or an inability to complete DDA negotiations, pursuant to the terms and conditions set forth below. NOW, THEREFORE, in consideration ofthe mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Agencies and Developer hereby agree as follows: AGREEMENT 1. Definitions. Capitalized terms used and not otherwise defined in this Third ENA Amendment shall have the same meanings given to them in the Original ENA. From and after the Effective Date set forth above, all references in the Prior ENA to "this Agreement" shall be deemed to refer to the Prior ENA as amended by this Third ENA Amendment. 2. Hydrology Study. (a) Notwithstanding any other provisions ofthe Prior ENA, the City acknowledges and agrees that it desires Developer to prepare and complete at Developer's sole expense (subject to Developer's right to be reimbursed in accordance with this Third ENA Amendment) certain hydrological studies with respect to the planned development of the Master Development Site (the "Hydrology Study"). The City shall have the right to review and approve the scope of work under any and all contracts pursuant to which the Hydrology Study will be conducted and the price and 18403:6467670.4 terms thereof (provided that the price for such Hydrology Study will not exceed $500,000). In consideration for Developer's agreement to commence work immediately on the Hydrology Study, the City shall reimburse Developer for the actual out-of-pocket costs incurred by Deyeloper of said Hydrology Study if (i) the City has previously approved the contracts for the performance of the Hydrology Study pursuant to preceding sentence, (ii) the aggregate price for such contracts to perform the Hydrology Study does not exceed $500,000, and (iii) either (a) the City and Developer do not enter into a DDA pursuant to the process identified under the ENA, or (b) the ENA is terminated by the City. In proceeding with work on the Hydrology Study, Developer agrees to consult and keep the City informed on a regular basis of progress on the Hydrology Study and to seek the City's approval of any final report and conclusions prior to their presentation to other agencies, including but not limited to the Orange County Flood Control District. Since the City is the current property owner of property covered by the ENA, Deyeloper also agrees that any meetings with outside agencies regarding the Hydrology Study shall be coordinated to include City representatives, which representatiyes shall be as determined by the City's Public Works Director in its sole discretion. (b) Reimbursement to the Developer for the costs of the Hydrology Study shall also be subject to the following conditions: (i) In the event that the ENA is terminated by the City or a DDA is not entered into, the Developer shall submit a summary detail to the City setting forth the actual out-of-pocket amounts expended by Developer relating to the Hydrology Study to the date of such termination or cessation of negotiations by and between Developer and the City relating to the DDA, which summary detail shall, at the request of the City, be accompanied by invoices and other eyidences of payment reasonably satisfactory to the City. The City shall reimburse such amounts to the Developer, in the amount not to exceed the total not to exceed amount identified in the ENA for said Study and supported by a valid consultant contract. (ii) If requested by the City, Developer shall have transferred to the City all rights to any and all of the Deyeloper work product, reports, consultant data and files related to the Hydrology Study, including products from Developer consultants authorized to prepare the Hydrology Study (collectively, the "Hydrology Work Product"). Promptly following such request from the City, Developer shall have delivered to the City the Hydrology Work Product together with a valid and executed bill of sale relating thereto, provided, that the City shall not require Developer to make any representation, warranty or guaranty regarding the completeness or accuracy of such Hydrology Work Product. Developer shall have represented and warranted, however, that it has no claim or interest in such Hydrology Work Product and that there are no liens or encumbrances affecting such Hydrology Work Product, and such Hydrology Work Product shall be delivered free of all claims or interests of Developer and any other liens or encumbrances. Upon the City acquiring the Developer's rights to any or all ofthe Hydrology Work Product, the City shall be permitted to use, grant, license, or otherwise dispose of such Hydrology Work Product to any person or entity for 18403:6467670.4 development of the Project or for any other purpose; provided however, that the Developer shall have no liability whatsoever to the City or any transferee of title or any interest in and to the transferred Hydrology Work Product in connection with the use ofthe transferred Hydrology Work Product. (c) In the event that a DDA is executed by and between the City and Developer and/or its affiliates, the City shall not have any obligation to reimburse Developer or its affiliates for any expenses relating to the Hydrology Study. 3. Counterparts. This Third ENA Amendment may be executed in any number of counterparts each of which shall be deemed an original and all of which shall constitute one and the same agreement with the same effect as if all the parties had signed the same signature page. Any signature page of this Third ENA Amendment may be detached from any counterpart of this Third ENA Amendment and reattached to any other counterpart of this Third ENA Amendment identical in form hereto but having attached to it one or more additional signature pages. 4. ENA Remains in Effect. Except as specifically provided in this Third ENA Amendment, all of the terms and provisions of the Prior ENA remain unchanged and in full force and effect. 5. Effectiveness. This Third ENA Amendment shall be effective when it shall have been executed and delivered by the Agencies and Developer. 18403:6467670.4 IN WITNESS WHEREOF, the authorized representatives of the Parties hereto have executed this Agreement as of the date first set forth above. "CITY" City of Tustin By: William Huston City Manager "AUTHORITY" Tustin Public Financing Authority By: Name: Its: APPROVED AS TO FORM Special Counsel for the City STEEFEL, LEVITT & WEISS By: Clayton B. Gantz, Esq. 18403:6467670.4 TUSTIN LEGACY COMMUNITY PARTNERS, LLC, a Delaware limited liability company By: Centex Homes, a Nevada general partnership, a Member By: Centex Real Estate Corporation, a Nevada corporation, Managing Partner By: Richard P. Douglas Division President 18403:6467670.4 By: By: Shea Homes Limited Partnership, a California limited partnership, a Member By: J.F. Shea LLC, a Delaware limited liability company By: Jack Godard Assistant Secretary Shea Properties, LLC, a Delaware limited liability company, a Member By: Jack Godard Vice President - Manager Assistant Secretary