HomeMy WebLinkAboutTPFA 02 DDA 06-01, TLCP 04-03-06
AGENDA REPORT
MEETING DATE: APRIL 3, 2006
TO: WILLIAM A. HUSTON, CITY MANAGER
FROM: REDEVELOPMENT AGENCY STAFF
SUBJECT: TUSTIN LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT 06-01
(MASTER DEVELOPMENT SITE)
SUMMARY
Approval is requested of a Disposition and Development Agreement (DDA) for the
Master Development site between the City of Tustin, Tustin Public Financing Authority,
and Tustin Legacy Community Partners, LLC ("TLCP" or the "Developer") for the sale
and development of certain property at Tustin Legacy ("Project").
RECOMMENDATION
That the City Council:
1. Adopt Resolution No.06-42 approving Tustin Legacy DDA 06-01 subject to any
non-substantive modifications as may be determined necessary as may be
approved by the City Manager, or as recommended by the City's special counselor
the City Attorney and authorize the City Manager and/or Assistant City Manager to
execute the document and to take all actions necessary or desirable to implement
the DDA including the execution of all related documents and instruments including
the Memorandum of DDA, Ground Leases, Bill of Sales, Quitclaim Deeds, any
necessary Subordination Agreements, any Assignment and Assumption
Agreements, any Certificates of Compliance, any City Estoppels, any Special
Restrictions and, upon satisfaction of all conditions and obligations of Developer
thereto and pursuant to the DDA, to transfer the subject site in phases to the
Developer.
That the Tustin Public Financing Authority:
2. Adopt Resolution No.06-01 approving an Addendum to the Final EIS/EIR for
the Disposal and Reuse Of MCAS Tustin (" FEIS/EIR") for DDA 06-01; and
adopting a revised Mitigation Monitoring Report.
3. Adopt Resolution No. 06-02 approving DDA 06-01 subject to any non-substantive
modifications as may be determined necessary as may be approved by the City
Manager, or as recommended by the City's special counselor the City Attorney and
authorize the City Manager and/or Assistant City Manager to execute the document
and to take all actions necessary or desirable to implement the DDA including the
execution of all related documents and instruments including the Memorandum of
DDA, Ground Leases, Bill of Sales, Quitclaim Deeds, any necessary Subordination
Agreements, any Assignment and Assumption Agreements, any Certificates of
Compliance, any City Estoppels, any Special Restrictions and, upon satisfaction of
all conditions and obligations of Developer thereto and pursuant to the DDA, to
transfer the subject site in phases to the Developer.
FISCAL IMPACT
The Project involves a number of phased sales over a period of time. Financial
modeling of the development economics by an appraiser has determined that there is a
negative land value of approximately $152 million dollars associated with the
development of Phase 1 due to costs for required backbone infrastructure, with positive
value of the overall project occurring only with the development of Phases 2 and 3 of
the Project. The Developer's subsequent purchase price for the property based on an
ultimate projected positive value for the project is $236 million dollars, which will be in
two payments: a Phase 2 payment in the amount of $150 million dollars in late 2009;
and; a Phase 3 payment, in an amount of $86 million in mid- 2011. Disposition of
Phase 4 is uncertain at this time and would be pending a future determination by the
City to convey the Hangar 15 parcel to the Developer. A separate valuation process
would be entered into with respect to Phase 4, if it is to be conveyed to the Developer.
Provisions of the DDA also require the Developer to make a Tustin Legacy Fair Share
Backbone Infrastructure contribution of approximately $228 million dollars, which share
will likely increase based on construction cost indexing and as there is refinement to
improvement plans. The Developer will be responsible as a credit against their fair
share obligation for construction of significant portions of the Tustin Legacy Backbone
Infrastructure (identified in the DDA as Developer's Backbone Infrastructure).
Developer is also responsible for all development risks and costs associated with the
project, and there is no minimum guaranteed financial return.
In the review of the Project and the rest of the development proposed at Tustin Legacy
(including projects under construction by other developers), the fiscal impact on the
City's General Fund has been evaluated by the David Taussig and Associates. With
the development of the Master Developer site and the rest of the Tustin Legacy project,
any General Fund impacts will be managed through a variety of financing techniques
which will not impact other portions of the City, including but not limited to the use of
Community Facilities Districts for certain municipal services to be provided at Tustin
Legacy (similar to the approach taken to support provision of services to WL Homes,
Tustin Field projects).
The Developer anticipates pursuing, with cooperation from the City, formation of a
Community Facilities District (CFD) to assist them in funding the design and
construction of qualified public facilities. Further, the Developer's proforma identifies
CFD funds as a revenue source that will partially assist them in bridging the financial
gaps associated with construction of Tustin Legacy Backbone Infrastructure. In other
words, any future CFD proceeds would be an offset against the Developer's investment
in public infrastructure. In addition, the City's costs of providing certain public services
including maintenance of public parkways, parks and open space, flood and storm
protection recreation program services will be partially off-set with the use of future
CFD's. Any future CFD's for infrastructure or services would require separate
discretionary approval by the City Council and would need to be consistent with the
City's adopted CFD Goals and Policies.
BACKGROUND
In early 2003, the City issued a Request for Qualifications (RFQ) for an 820 acre portion
of Tustin Legacy (the former MCAS Tustin), also called the Master Development site.
On November 1, 2003, the City Council selected TLCP as the Developer for the Master
Development site and entered into an Exclusive Agreement to Negotiate (ENA) with the
Developer ,a partnership of Centex Homes, Shea Properties, and Shea Homes.
To ensure that the community's vision and the public objectives for the Master
Development site were realized, an integral part of the ENA planning and negotiation
process was a collaborative process between the City and TLCP in preparation of a
Development Plan, including a Business Plan, and other documents. Provisions of the
ENA also required the Developer to respond to a number of City negotiating objectives.
The planning and negotiation process is now completed, and City staff are prepared to
recommend to the City Council Tustin Legacy DDA 06-01. A summary list of each
original City negotiating objective in the ENA, and how the DDA achieves each objective
is attached (Attachment 1).
DISCUSSION
The primary purpose of the DDA is to effectuate the MCAS Tustin Specific Plan in
accordance with the terms and conditions of the Navy Conveyance Agreement and
Federal Quitclaim Deeds. The DDA provides for the Developer's phased purchase of a
large portion of the Master Development site (with certain public property to be retained
and other property to be dedicated to the City) leaving approximately 420 acres for
private development. Most of the land to be conveyed to the Developer is either
currently owned by the Tustin Public Financing Authority or the City of Tustin. A portion
of the property also includes parcels which the City currently leases from the Navy
under a Lease in Furtherance of Conveyance (LlFOC).
Summary of Development Program
The DDA provides for the phased development of the site by the Developer to consist of
the following development program, as more specifically defined in the DDA Scope of
Development (Attachment 28 to the DDA):
. Site Preparation and Demolition. Site preparation (including demolition,
deconstruction of existing structures on the property, and removal and abandonment
of existing utilities), and mass grading of the property.
. Residential Uses. Development of up to 2,105 dwelling units, including (regardless
of the total number of units constructed) a minimum of 453 Affordable Housing Units
on approximately 185 acres of land. Of the 453 units restricted to below market
rates, 126 units will be restricted for Very Low Income households, 95 units for Low
Income Households, and 232 Units for Moderate Income Households.
. Non-Residential Uses. Development of up to approximately 6.7 million square feet
of non-residential uses on approximately 234 acres. In the event that the City is not
able to convey the southerly hangar site (Hangar 29 parcel) to the TLCP, the revised
square footage will be 6.4 million square feet of non-residential uses. Non-
residential uses include:
0 Approximately 494,604 square feet of retail space on 29 acres;
0 Approximately 4,724,324 square feet of office space on 145 acres.
0 Approximately 299,074 square feet on the 15 acre Hangar 29 Parcel;
0 Approximately 627,046 square feet of industrial space on approximately 32
acres;
0 Approximately 158,994 square feet for a congregate care facility on
approximately 7 acres;
0 The development of a minimum of 500 hotel rooms which may be developed
in one or more hotel projects with not less than 250 hotel rooms in at least
one hotel project, and not less than 100 units in other hotel projects.
Conference facilities are required in at least one hotel project. A Health Club
is also required in the Community Core.
0 Other uses, including, without limitation, development of a minimum 25,000
square foot theater.
. Master Block (Main Street) and Community Core: A key planning and community
objective for the project was to establish a new center of urban activity in the City
and create a unique sense of place. To accomplish this objective, the DDA
establishes a fundamental requirement for development of a mixed-use Community
Core in Neighborhood D. There are a number of principles and working
assumptions in the Scope of Development which will govern the development of this
mixed-use portion of the Community Core.
. Public and Private, Open Space, and Other Uses. A total of 403 acres will be
devoted to a variety of private and public open space uses, greenbelt areas, trails,
schools, local rights-of-way and public infrastructure as follows:
0 50 acres will be devoted to educational uses including a 40 acre high school
site and a 10 acre elementary school site. The 10 acre site may be
expanded by an additional 5 acres, based on negotiations between the City
and the Tustin Unified School District.
0 A minimum of 170 acres will be developed as parks and recreational facilities,
open space, and greenbelt areas, with approximately 86 acres to remain in
public ownership and 84 acres to be privately owned. Public owned park
space will be in the form of the following facilities: a 10.4 acre detention sports
field facility in Neighborhood E; a 46 acre community park to include a tennis
facility and aquatic facilities; an adjacent 8.7 acre linear park in Neighborhood
D, and; in Neighborhood G, a 8.8 acre neighborhood park, an adjacent 3.9
acre community linear park, and a 5.3 acre neighborhood park (which may be
reduced if an additional 5 acres is needed for the school site) and an adjacent
3.1 acre portion of the community linear park.
0 Approximately 101 acres will be devoted to rights-of-way areas to
accommodate backbone roadways as part of the Tustin Legacy Backbone
Infrastructure Program and approximately 81 acres to accommodate Local
Infrastructure Work.
. Infrastructure and Public Facilities. Consistent with the DDA, the Developer will
install all necessary Tustin Legacy Backbone Infrastructure and Local Infrastructure
which include mass grading, local and backbone road improvements, backbone
storm drain and flood control facilities, backbone and local dry utilities, local water
and sewer improvements, landscaping and public and private park facilities, and
other on-site and off-site required environmental mitigation and community facilities.
Many of these facilities are public improvements, the cost of which the City or other
public entities would otherwise have to incur. The Tustin Legacy Backbone
Infrastructure costs are estimated at approximately $348 million (of which the
Developer's current fair share obligation is approximately $228 million) and Local
Infrastructure Costs ( one hundred percent Developer's obligation) are
approximately $204 million. To the extent that other Tustin Legacy developers are
responsible for certain portions of the Tustin Legacy Backbone Infrastructure
Improvements under the City's fair share program, estimated reimbursements from
these contributions to offset the Developer's costs or obligations are discussed in the
DDA. Cost estimates were developed by TLCP and reviewed by the City's public
works staff.
In-tract infrastructure, or infrastructure that is required within each future
development parcel, is not a Master Developer cost for this project since the
Developer will be selling development parcels (super pads) to vertical builders (this
includes vertical builders that are developer affiliates as well as non-affiliates). The
cost of in-tract infrastructure is a cost of the vertical builders and has been factored
into the estimate of development parcel sale revenue in the Developer's final DDA
proforma.
. Phasing. To achieve City objectives, the conveyance of the property will be in
phases, with stringent performance requirements associated with each phase. The
underlying rationale for this approach is that absent such requirements, as could
occur with a bulk sale, the City would have much reduced ability to ensure that the
property is developed on a time schedule and in a manner that furthers public
objectives.
There are four phased conveyances identified in the DDA. Phase 1, in September
2006; Phase 2, in September 2009; Phase 3, in 2011, and: potentially Phase 4, as it
relates to the Hangar 29 Parcel, is uncertain at this time and would be pending a
future determination by the City.
Other Key Business Terms of the DDA:
. City and Other Governmental Approvals. The DDA will require the TLCP and
Vertical Builders to secure all required land use entitlements from the Tustin
Planning Commission and City Council as defined by the Schedule of Performance
(DDA Attachment 17). A concept plan, design review and subdivision maps
pursuant to governmental requirements will be required by or Planning Commission
and City Council, as applicable. The DDA also provides for review of more detailed
construction plans at later stages of design development to assure conformity with
DDA requirements and entitlements that may be granted by the City.
. Completion of Tustin Legacy Backbone Infrastructure, Local Infrastructure
Work and In-tract infrastructure. All infrastructure will be constructed in
compliance with all provisions of the DDA, including the schedule of performance
and with all "Conditions of Approval" stipulated by the Planning Commission, City
Council, and other applicable governmental agencies with jurisdiction.
. Development Costs. The DDA requires the Developer to fund all project
development costs, including but not limited to, the acquisition of the site,
construction of on-site and off-site Tustin Legacy Backbone Infrastructure and Local
Infrastructure.
. Completion of Construction. Vertical Builder improvements are expected to be
constructed within stipulated time frames. Progress on this construction will be a
precondition to phased conveyances.
. Purchase Price/Fair Market Value. There is no purchase price for conveyance of
property in Phase 1 due to the DDA requirement for the Developer to construct
significant Tustin Legacy Backbone Infrastructure and Local Infrastructure in this
Phase. The purchase price required in Phase 2 would be $150 million and $86
million in Phase 3, to be paid in cash at each closing. In the event of a decision at a
later time to convey Phase 4 to TLCP, the DDA provides for completion of an
appraisal to determine value at that time.
The purchase price to be paid by the Developer in Phase 2 and 3 is not less than the
fair market value of the site based on an independent appraisal and the project does
not require any public subsidy.
. Profit Participation Payments. Beginning in 2011, in addition to the required
purchase price for the property to be paid as set forth above, the Developer shall
pay to the City profit participation payments, which are dependent upon the
economic performance of the Project. The profit participation payments shall be
equal to 50% of the excess cash flow over the Developer's threshold Internal Rate of
Return of 20%, and a developer profit amount equal to the greater of 15% or the
prorated dollar equivalent of developer total profit estimated for the Project in the
final DDA proforma at build-out (see DDA Attachments 14 A and 14 B). At each
Participation payment, estimated participation payments are calculated and the City
retains 50% of the amount in excess of the developer threshold profit levels. The
City is required to deposit 50% of the balance of the remaining participation payment
into a reconciliation account through no later than December 30,2016. If Developer
has, at that time, not achieved the required economic performance levels in the
DDA, the City would release only those funds in the reconciliation account to the
Developer necessary to cause developer to achieve their performance levels with no
obligation to pay the developer any amount greater than what remains in the
reconciliation account. Any amount remaining or not paid to the Developer in the
reconciliation account becomes the property of the City.
. Condition of the Property. Developer shall accept the property in an "as is, where
is, condition.
. Other Provisions. The DDA includes other provisions which are typical to such
agreements. These include, but are not limited to: restrictions on the ability of the
Developer to transfer the DDA, certain rights of reversion or repurchase in favor of
the City in the event of an inability to cure certain defaults by the Developer, use
restrictions and non-discrimination provisions, maintenance covenants, requirements
for insurance including environmental insurance, and indemnification, including
environmental indemnification in favor of the City and default provisions and
remedies.
Environmental Documentation
In considering approval of the DDA, the City and Public Financing Authority has
complied with the requirements of the California Environmental Quality Act and the
applicable state and local implementing guidelines (collectively "CEQA") through the
preparation of an Addendum (including a minor Errata to the Addendum) to the Final
Environmental Impact Statement/Environmental Impact Report (FEIS/EIR) for the
Reuse and Disposal of MCAS Tustin. It has been recommended that the City Council
take their action on the Addendum and adopt modifications to the Mitigation Monitoring
Report in conjunction with their action on Zone Change 05-002. A similar resolution
with applicable findings for approval and adoption of the Addendum and the
modifications to the Mitigation Monitoring Report is attached for action by the Tustin
Public Financing Authority.
Financial Considerations
While land payments are anticipated in late 2009 and in 2011 from the project and the
possibility of subsequent participation payments beginning in 2011, the anticipated
future proceeds from the proposed transaction are considerably down the road and
need to be viewed in the context of larger City-wide financial needs.
. The City, as a whole, has significantly suffered from the negative financial impact of
the federal government's decision to close MCAS Tustin in 1991.
. The City was designated in 1992 as the Lead Agency for preparation of the all of the
required planning documents to guide the reuse of the former MCAS Tustin
property. The City got out ahead early on funding design on initial phased
infrastructure, a large cost of which deferred other capital improvements in the City.
The City's expenditure of millions of dollars for its extensive planning and initial
design efforts, including commitment of City staff time and efforts during the years
that followed the original base closure decision and up to the present has permitted
us to move forward with a successful reuse effort but at a cost that should be
recouped.
. A base closure also represents severe, unanticipated and on-going impacts to a
community until redevelopment is completed which can have serious long term
negative impacts including the following impacts:
>- The closure resulted in the loss of between 9,000 and 12,000 jobs regionally. In
addition, nearly 4,000 Marines and their dependents have transitioned out of the
Tustin and the Orange County region which has negatively affected local
businesses and the Tustin economy.
>- Various economists have concluded that expenditures from military families at
MCAS Tustin resulted in a loss of between $21 million dollars directly and $175
million dollars indirectly of potential capital infusion into the surrounding
community and a loss of approximately $500,000 annually in lost sales tax
revenue to the City based on the average sales tax expenditures per resident.
» In Orange County, defense procurement awards decreased from $3.22 billion in
1987 to 2.26 Billion in 1992, after the closure decisions. During this same time
period, the City of Tustin experienced a 56% decrease in defense procurement
awards.
The City also has adopted a Seven Year Capital Improvement Program through fiscal
year 2011-12, which totals over $300 million dollars and for which a large portion of the
funding for said improvements is yet to be determined or uncertain.
CONCLUSION
The Master Development site is the largest portion of the Tustin Legacy project and is
a critical element of the overall development of Tustin Legacy. Given the site's central
location in Orange County, the site presents a unique opportunity to create an
extraordinary environment. The Development program and DDA respond to all City
objectives identified in Attachment 1 (attached to this staff report). The benefits to be
derived from the project are numerous and will have long lasting impacts to the City and
community. The financial commitments by Developer have been fully evaluated and
the DDA protects the interests of the City.
Gerry Trimble and Jerry Keyser with the firm of Keyser Marston and special counsel
Clay Gantz and Ted Sabieni with the firm of Steefel, Levitz and Weiss were of
tremendous assistance to staff on this matter and in drafting of the DDA. Additional
assistance in preparation of the DDA was also provided by George Schlossberg and
Barry Steinberg, base closure and environmental special counsel with the firm of Kutak
Rock, and from City Attorney Doug Holland..
Christine Shingleton
Assistant City Manager
Attachments:
1. City of Tustin Negotiating Objectives- Tustin Legacy Community
Partners Transaction
City Council Resolution No. 06-42
Public Finance Authority Resolution No. 06-01
Public Finance Authority Resolution 06-02
DDA 06-01-Due to the size of the DDA, a copy is on file at the
City Clerk's office
ATTACHMENT 1
City of Tustin Negotiating Objectives
Tustin Legacy Community Partners Transaction
. Maximize Land Value
. Reinvest Project Proceeds
for Long Term Value
Creation
.
Minimize City Risk
.
City Participation
.
Completion Guarantee
. Completion of Public
Improvements
City of Tustin Negotiation Objectives
Tustin Legacy Community Partners Transaction
Achieved. Land payments will total $236 M, with subsequent participation also possible. This is
more than the appraised market value of the land
Achieved. As consideration for transfer to developer of the Phase I property, the Developer is
required to complete backbone infÌastructure work, local infÌastructure work, pay certain other
expenses and perform other obligations in the DDA, all which constitute an offset against land
value, and which will enhance the long term value of the project. No land payment required in
2006 because of the infÌastructure investment required of the Developer in Phase I to bring the
property to a developable condition. Due to the size of the infÌastructure investment in Phase I,
the land's residual value is a negative $152M. The DDA also requires adoption of specific design
guidelines and requires use of high quality materials, construction and amenities throughout the
project which will create long term value.
Achieved. The DDA protects the City's interest since the property will not be conveyed to the
developer in each Phase until completion of preconditions to conveyance; including construction
of infÌastructure and compliance with DDA provisions. Developer is responsible for all
development risks and costs associated with the project. The City, has not guaranteed a minimum
financial return to the Developer nor will it subsidize any Developer shortfalls.
Achieved. The City would receive compensation in the form of a 50% share of Developer profit
beginning in 20 II, provided the Developer exceeds certain minimum profit thresholds.
Achieved. The Developer is providing a minimum deposit, and will provide perfonnance bonds
and executed subdivision improvement agreements for completion ofDDA infÌastructure
obligations in conjunction with subdivision map approvals. The proposedphased conveyance
schedule, will protect the City against the Developer "cherry picking" the project and completing
the most profitable parcels first. The City also retains a right of reverter under the DDA, until
completion of defined improvements.
Achieved. The DDA assures completion of backbone infrastructure and local infrastructure
pursuant to a schedule of performance and as a condition for subsequent land conveyances and as
necessary to support development of the project.
.
Environmental
Indemnification
.
Protection and
Enhancement ofthe
General Fund
City Cost Recovery
.
.
Planning and Community
Objectives
. Establish a New Center of
Activity in the City and
Region
.
Create a unique sense of
place
Achieved. The Developer covenants responsibility for compliance with all environmental laws
and regulations in the DDA and indemnifies the City, the Tustin Public Finance Authority, and the
Tustin Community Redevelopment Agency arising out of the release, existence, presence or
disposal of hazardous substances after execution of the DDA.
Achieved. The DDA protects the City against liability for cost overruns and also provides tools
that may be employed to offset General Fund servicing and maintenance costs including the City's
cooperation in considering Developer fonnation of Community Facilities Districts for the project.
Achieved. The Developer is responsible for all predevelopment costs that have included staff
time, consultants, outside counsel and other legitimate expenses required to complete the Master
Development Plan and DDA. Subsequent to DDA execution, costs associated with oversight of
the DDA and the real estate transaction will be a Developer reimbursement to the City in an
amount not to exceed $4,048,270. All other city costs will be recovered through the City's
nonnal entitlement and plan review fee structures.
Achieved. The Developer will be responsible for securing and maintaining the property at their
costs in a clean, safe and secure condition.
Achieved. The Developer anticipates cooperation from the City in fonnation of one or more
Community Facilities District for backbone infrastructure only and certain municipal service cost
recovel}'.
Achieved. The Plan will create an exciting new master planned community that will contribute to
the quality oflife and economic vitality of the City of Tustin. The project is proposed not simply
as an extension of surrounding uses, but a vibrant and complimentary activity center that gains its
identity through an engaging and interconnected pattern of development, with a linear park as a
central organizing feature and the "heart and soul" ofthe project. Additionally, the Community
CorelMaster Block is oriented in such a manner as to provide synergy with the Vestar commercial
development at Jamboree Rd. and Barranca Pkwy currently under construction.
Achieved. The project will have unique identity and sense of place that will clearly distinguish
itself in Tustin and in the region. It has a compact and walkable pattern of development, an inter-
related system of open spaces, a vibrant mixed use core, active pedestrian oriented streets, a
. Establish a Complimentary
Relationship with the
Surrounding Community
. Create Livable
Communities
i!m'I.~""'lUla'
. Sociable Neighborhoods
. Integration with Public
Uses
. A Mixed Use Core
. Interconnected Open
Spaces
. Human Scale
comprehensive circulation system that provides linkages throughout the project, and a high
standard of quality.
Achieved. The project will enhance the quality oflife in the existing community, and
establishes a complimentary relationship with the surrounding community. It does not
intensify any traffic or other environmental impacts previously evaluated for the Tustin
Legacy project.
Achieved. The community will contain a diversity of housing types, affordable to a wide
range of economic levels, and provide a wide array of commercial uses. Neighborhoods
with pedestrian friendly streets and local serving parks, with schools and commercial
amenities nearby.
Achieved. The new master planned community is designed so housing, jobs, and daily
needs are within easy access. As many activity centers as possible in the project are all
located within easy walking distance.
Achieved. New public uses and open spaces will be conveyed to public sector partners and
are an integral part of the project, providing education, open space and recreational
facilities. Siting of these facilities is designed so that there is a natural synergy between
the uses and the neighborhoods in the project.
Achieved. A vibrant mixed portion of the Community Core, entitled the Master Block has
been identified. It will be a natural gathering place for residents and is envisioned to be a
pedestrian friendly precinct with bustling streets, plazas, and promenades, kept lively day
and night by a diversity of activity. The mix of uses in this core area will include ground
floor retail, upper floor residential units, office space, hotels, and other activities such as
conference facilities and entertainment uses.
Achieved. The community will contain a minimum of 170 acres of public and private
parkland in the fonD of square, greens, lineal parks, pocket parks, greenbelt areas,
neighborhood and community parks all of which will be linked throughout the project's
neighborhoods.
Achieved. Development standards for the project have been designed to give life and definition to
the public realm of streets and open spaces, to promote a friendly and comfortable pedestrian
environment, and to reinforce the community's distinctive identity and sense of lace.
. Sustainable Design Achieved. The design of the project has endeavored to meet the needs of the present without
compromising the ability of future generations to meet their needs. The design and characteristics
of the ro'ect su ort sustainable design.
DISPOSITION AND DEVELOPMENT AGREEMENT
PROVIDED UNDER SEPARATE COVER
(AVAILABLE FOR PUBLIC REVIEW AT THE CITY CLERK'S OFFICE, 300
CENTENNIAL WAY, TUSTIN, CA, AND AVAILABLE FOR PURCHASE AT THE
CITY CLERK'S OFFICE.)
CITY COUNCIL RESOLUTION NO. 06-42
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF TUSTIN, CALIFORNIA, APPROVING THE
TUSTIN LEGACY DISPOSITION AND DEVELOPMENT
AGREEMENT FOR THE MASTER DEVELOPMENT
SITE
The City Council of the City of Tustin does hereby resolve as follows:
I. The City Council finds and determines as follows:
A. Pursuant to the Defense Base Closure and Realignment Act of 1990,
(Part A of Title XXIX of Public Law 101-510; 10 U.S.C. Section 2687
Note), as amended (the "Base Closure Law") the Federal Government
determined to close the Marine Corps Air Station-Tustin ("MCAS Tustin")
located substantially in the City of Tustin, California. In 1992, the City was
designated as the Lead Agency or Local Redevelopment Authority for
preparation of a reuse plan for MCAS Tustin in order to facilitate the
closure of MCAS Tustin, and its reuse, in furtherance of the economic
development of the City and surrounding region. The MCAS Tustin Reuse
Plan, developed in accordance with this procedure, was adopted by the
Tustin City Council (the "City Council") on October 17, 1996 and amended
in September 1998 (the "Reuse Plan").
B. In May 2002, the Navy approved an Economic Development Conveyance
of Property at MCAS Tustin and agreed to convey 1153 acres of MCAS
Tustin to the City pursuant to that certain Agreement between The United
States of America and Tustin for the Conveyance of a portion of the
former Marine Corps Air Station Tustin, dated May 13, 2002 (the
"Conveyance Agreement"). On May 13, 2002, a total of 977 acres,
including the Developer Fee Parcels which are the subject of this
Agreement, were conveyed by the Federal Government, acting by and
through the Navy, to the City by Federal Deed; in accordance with the
provisions of the Conveyance Agreement. Additional acreage, including
the Developer Lease Parcels, are leased by the City pursuant to that
certain Lease in Furtherance of Conveyance, dated May 13, 2002,
between the Federal Government, acting by and through the Navy, as
ground lessor, and the City, as ground lessee (the "LlFOC"). The portion
of MCAS Tustin located within the City is referred to as "Tustin Legacy."
C. On February 3, 2003, the City approved and adopted the MCAS Tustin
Specific Plan/Reuse Plan by Ordinance No. 1257 setting forth the zoning
and entitlement framework for future development of Tustin Legacy.
Since its initial adoption, the City approved (i) Specific Plan Amendment
Onrdasharedlrdareso I uti on 104-02. DOC
04-03 on March 7, 2005 (Ordinance 1297), (ii) Specific Plan Amendment
04-01 on March 7, 2005 (Ordinance 1294 and 1295), and (iii) Specific
Plan Amendment 05-01 (Ordinance 1299) on June 5, 2005. In addition,
the City and the Developer filed Application No. 05-002 seeking to amend
the Specific Plan.
D. On June 2, 2003, the City Council and Tustin Community Redevelopment
Agency (the "Agency") adopted the MCAS Tustin Redevelopment Plan
(the "Redevelopment Plan"). To assist in implementation of the
Redevelopment Plan, the Agency and City of Tustin also adopted a five
year implementation plan (the "Implementation Plan") pursuant to Section
33490 of the Redevelopment Law as part of the adoption of the
Redevelopment Plan;
E. The City of Tustin and Tustin Community Redevelopment Agency are now
engaged in the implementation of the Reuse Plan, Specific Plan and
Redevelopment Plan.
F. Pursuant to an extensive developer selection process, Tustin Legacy
Community Partners (the "Developer") was selected to develop the master
development site at Tustin Legacy (the "Property"). On November 1,
2003, the City and the Developer entered into an Exclusive Agreement to
Negotiate (as the same may be amended from time to time, the "ENA")
with the objective of reaching agreement on the terms of a Disposition and
Development Agreement.
G. In furtherance of the Reuse Plan, the Specific Plan, and the
Redevelopment Plan, the City desires to cause the development of the
property of a high quality mixed use development, consisting of
approximately 2,105 dwelling units; including 453 units at Affordable
prices at below market rates, up to 6,739,042 square feet of non-
residential space to include approximately 494,604 square feet of retail
space, 4,724,324 square feet of office space, approximately 627,046
square feet of industrial space, an aggregate of 500 hotel rooms,
approximately 55,000 square feet of theaters and other specialized uses,
approximately 299,074 square feet on the Hangar 29 Parcel, and certain
Tustin Legacy Backbone Infrastructure, Local Infrastructure, and
appurtenant improvements (collectively the "Project").
H. In its current condition, the Property is a blighting influence on the MCAS
Tustin Redevelopment Project Area (the "Redevelopment Project Area"),
and the Project will remove this blighting influence and provide a high
quality mixed use development; and
I. The public improvements contemplated for the Project; including the
requirement of construction of the Tustin Legacy Backbone Infrastructure
rdasharedlrdareso I uti on 104-02. DOC
and the Developer's fair share contribution to be such a benefit to the
Redevelopment Project Area or the immediate vicinity in which the Project
is located.
J. It is the City's desire to effectuate development of the project through the
sale, leasing, and development of such property in accordance with a
Disposition and Development Agreement, all in conformance with
Governmental Requirements and in substantially the form on file with City
Clerk, pursuant to which, among other matters:
1 ) The City will sell the property to the Developer for a purchase price
of not less than $236,000,000, plus potential additional profit
participation as set forth in the DDA; and
2) The Developer will develop the Project on the Property in
accordance with the DDA; and
K. Whereas, in considering approval of the DDA, the City has complied with
the requirements of the California Environmental Quality Act and the
applicable state and local implementing guidelines (collectively "CEQA")
through the preparation of a Addendum to the Final Joint Environmental
Statement/Environmental Impact Report (FEIS/EIR) for the Reuse and
Disposal of MCAS Tustin.
K. City Staff has prepared, and the City Council has reviewed and approved,
a staff report in connection with the DDA setting forth:
1) A copy of the proposed Disposition and Development Agreement.
2) A summary which describes and specifies all of the following:
a) The Disposition by the City of the property to the Developer,
and the development of the development on the Property by
the Developer
b) The related physical actions to be undertaken and achieved
by the DDA. The estimated value of the interests to be sold
to the Developer, determined at the highest and best uses
permitted under the plan; and
c) The estimated value of the interests to be sold, determined
at the uses and with the conditions, covenants, and
development costs required by the sale; and
d) An explanation of why the sale of the property will assist in
the elimination of blight with reference to all supporting facts
and materials needed upon making this explanation.
rdash aredlrdareso I uti on \04-02. DOC
L. The DDA contains all of the terms, covenants, conditions, restrictions,
obligations, and provisions required by state and local law; and
M. The City Council has duly considered all of the terms and conditions of the
DDA, and believes that the Project is in the best interests of the City of
Tustin and the health, safety, morals, and welfare of its residents, and is in
accord with the public purposes and provisions of applicable state and
local law and requirements; and
II. The City Council hereby finds and determines, based upon substantial
evidence provided in the record before it that:
A. The foregoing recitals are true and correct.
B. The City Council has received and heard all oral and written testimony to
the proposed DDA and to the Developer's proposed development of the
Property in connection therewith, and to any other matters pertaining to
this transaction.
C. The sale of the Property by the City of Tustin will assist in the elimination
of blight in the Redevelopment Project area, and is consistent with the
Implementation Plan adopted by the City of Tustin and Agency for the
Redevelopment Plan, will provide significant job generating uses
furthering the City and Agency's economic development goals and be
consistent with the Conveyance Agreement, and will provide needed retail
services and open space and recreational opportunities to the community,
and will assist in the California affordable housing crisis by providing 453
units of additional affordable housing.
D. The DDA provides for disposition of the Property to the Developer only if
certain predisposition conditions are met.
E. The consideration for the City's disposition of the Property, pursuant to the
DDA, is not less than the fair market value of the Property in accordance
with conditions, covenants, and development costs required by the DDA
and that the sale of the Property is for more than its fair market price as
determined by an independent appraisal. This finding is based on the
facts and analysis set forth in the Recitals and supporting documents,
which may be briefly summarized as follows:
1 ) The Fair Market Value of the Property based on an independent
appraisal has been determined to be in a range of between
$194,000,000 to $216,000,000. The appraiser has also determined
that there is a negative land value of approximately $152 million
dollars associated with development of Phase 1 due to costs
required for backbone infrastructure that would be incurred during
that phase, with any positive value for the overall project accruing
only with development of Phase 2 and 3 of the Project.
rdasharedlrdareso I uti on \04-02 .DOC
2) The purchase price to be paid for the Property by Developer under
the DDA is $236,000,000 with $150,000,000 to be paid with the
Phase 2 conveyance, and $86,000,000 to be paid in the Phase 3
conveyance.
F. The foregoing findings are based upon the record of the public meeting on
the DDA.
III. The DDA, a copy of which is on file with the Office of the City Clerk, is hereby
approved subject to any non-substantive modifications as may be determined
necessary as may be approved by the City Manager's office, or as
recommended by the City's special counsel of City Attorney.
IV. The City Manager and Assistant City Manager are also hereby authorized to
take such actions, and execute such documents and instruments, as deemed
necessary or desirable to implement the terms of the DDA and all
attachments to the DDA including the Memorandum of DDA, Ground Leases,
Bill of Sales, Quitclaim Deed, any necessary Subordination Agreements, any
Assignment and Assumption Agreements, and Certificates of Compliance,
any Estoppels, any Special Restrictions, and other documents as necessary
and, upon satisfaction of all conditions and obligations of the Developer
thereto and pursuant to the DDA, to transfer the subject site in phases to the
Developer.
rdasharedlrdareso 1 uti on 104-02. DOC
PASSED, APPROVED, AND ADOPTED at a regular meeting of the Tustin Community
Redevelopment Agency held on the 3rd day of April, 2006.
Doug Davert
Mayor
PAMELA STOKER
City Clerk
STATE OF CALIFORNIA)
ORANGE COUNTY )
CITY OF TUSTIN)
I, Pamela Stoker, City Clerk and ex-officio Clerk of the Tustin Community
Redevelopment Agency of the City of Tustin, California, do hereby certify that the whole
number of the members of the Tustin Community Redevelopment Agency of the City of
Tustin is five; that the above and forgoing Resolution No. 06-42 was duly passed and
adopted at a regular meeting of the Tustin City Council, held on April 3, 2006, by the
following vote:
BOARDMEMBER AYES:
BOARDMEMBER NOES:
BOARDMEMBER ABSTAINED:
BOARDMEMBER ABSENT:
PAMELA STOKER
CITY CLERK
rdasharedlrdareso I u ti on \04-02. DOC
TUSTIN PUBLIC FINANCING AUTHORITY
RESOLUTION NO. 06-01
A RESOLUTION OF THE TUSTIN PUBLIC FINANCE
AUTHORITY OF THE CITY OF TUSTIN, CALIFORNIA
APPROVING AN ADDENDUM TO THE FINAL
ENVIRONMENTAL IMPACT STATEMENT!
ENVIRONMENTAL IMPACT REPORT FOR THE
DISPOSAL AND REUSE OF MCAS TUSTIN
("FEIS/EIR") FOR THE TUSTIN LEGACY
DISPOSTION AND DEVELOPMENT AGREEMENT
06-01 (MASTER DEVELOPMENT SITE); AND
ADOPTING A REVISED MITIGATION, MONI-TORING
AND REPORTING PROGRAM
The Tustin Public Finance Authority of the City of Tustin hereby finds determines and
orders:
A. That the Tustin Public Finance Authority proposes to enter into a
Disposition and Development Agreement with TLCP to facilitate the sale,
leasing, and development of Tustin Legacy, including the Master
Developer footprint ("DDA 06-01 "). The proposed DDA, which includes a
proposed Development Plan establishes certain key terms, including but
not limited to: (a) the phasing and conditions precedent to the City's
obligation to sell and convey and/or lease certain property within each
phase of the Master Developer footprint to the Master Developer; (b) the
purchase price of the property to be conveyed to the Master Developer;
and (c) establishes a schedule of performance for future development
including obligations for construction of Tustin Legacy Backbone
Infrastructure and Local Infrastructure.
B. That DDA 06-01 constitutes a "project" that is subject to the terms of the
California Environmental Quality Act ("CEQA") (Pub. Resources Code
§21000 et. seq.).
C. That On January 16, 2001, the City Council adopted Resolution 00-90
certifying the FEIS/EIR and adopting findings of fact, a statement of
overriding consideration, and a mitigation monitoring and reporting
program. The FEIS/EIR evaluated the environmental impacts of the reuse
and disposal of MCAS-Tustin, which included the adoption of a Specific
Plan and other implementing actions.
D. That the City, in coordination with Bonterra Consulting, prepared an
Environmental Analysis Checklist to evaluate the potential environmental
impacts of DDA 06-01 and its related Development Plan. The
Environmental Analysis Checklist demonstrates that DDA 06-01 does not
require the preparation of a Subsequent Environmental Impact Report
("SEIR") pursuant to Public Resources Code section 21166 and CEQA
Guidelines section 15162. However, because DDA 06-01 required
changes and additions to the FEIS/EIR, the City, in coordination with
Bonterra Consulting, prepared an Addendum to the FEIS/EIR (with minor
corrections, modifications addressed in an Addendum Errata), dated
March 2006 ( collectively the "Addendum").
E. That as documented in the Addendum, DDA 06-01 does not create any
new significant environmental effects or result in a substantial increase in
the severity of any of the environmental effects previously identified the
FEIS/EIR and addressed in the Findings of Fact and Statement of
Overriding Considerations that the City Council adopted pursuant to
Resolution 00-90. There have also been no changes in circumstances
since certification of the FEIS/EIR that create any new significant impact
or result in a substantial increase in the severity of any previously
identified significant. Finally, no "new information of substantial
importance" has surfaced since certification of the FEIS/EIR that must be
addressed in an SEIR pursuant to CEQA Guidelines section 15162,
subsection (a) (3).
F. That the Tustin Public Finance Authority has considered the Addendum
(along with a minor Addendum Errata) along with the FEIS/EIR prior to
making a decision on DDA 06-01 pursuant to CEQA Guidelines section
15164 and approves the Addendum, on file with the Department of
Community Development and City Clerk.
G. That DDA 06-01 would result in the same significant and unavoidable
impacts that were identified in the FEIS/EIR and these impacts are
overridden for the reasons set forth in the previously adopted Findings of
Fact and Statement of Overriding Considerations, attached to Resolution
00-90.
H. That the Addendum refined certain mitigation and implementation
measures that were previously adopted and incorporated into a Mitigation,
Monitoring and Reporting Program. The Tustin Public Finance Authority
therefore adopts the Revised Mitigation Monitoring and Reporting
Program, on file with the Department of Community Development and City
Clerk.
PASSED and ADOPTED at a regular meeting of the Tustin Public Finance
Authority of the City of Tustin held on , 2006.
DOUG DAVERT
Chairman, Board of Directors
PAMELA STOKER
City Clerk
STATE OF CALIFORNIA)
ORANGE COUNTY )SS
CITY OF TUSTIN )
I, Pamela Stoker, City Clerk and ex-officio Clerk of the Board of Directors of the Tustin
Public Financing Authority, California, do hereby certify that the whole number of the
members of the Tustin Public Financing Authority is five; that the above and forgoing
TPFA Resolution No. 06-01 was duly passed and adopted at a regular meeting of the
Tustin Public Financing Authority, held on April 3, 2006, by the following vote:
BOARDMEMBER AYES:
BOARDMEMBER NOES:
BOARDMEMBER ABSTAINED:
BOARDMEMBER ABSENT:
PAMELA STOKER
City Clerk
TUSTIN PUBLIC FINANCING AUTHORITY
RESOLUTION NO. 06-02
A RESOLUTION OF THE TUSTIN PUBLIC
FINANCING AUTHORITY, CALIFORNIA, APPROVING
THE TUSTIN LEGACY DISPOSITION AND
DEVELOPMENT AGREEMENT 06-01 (MASTER
DEVELOPMENT SITE)
The Tustin Public Finance Authority does hereby resolve as follows:
I. The Tustin Public Financing Authority finds and determines as follows:
A. The Tustin City Council in Section I of Resolution No. 06-42 has made
certain findings regarding the background related to the Tustin Legacy
Disposition and Development Agreement 06-01 for the Master
Development Site and made certain findings which are incorporated
herein and affirmatively confirmed by the Tustin Public Financing Authority
as though fully set forth herein.
B. The Tustin Public Financing Authority hereby finds and determines, based upon
substantial evidence provided in the record before it that:
II. A portion of the Tustin Legacy Master Developer Site is owned by the
Tustin Public Financing Authority.
A. The foregoing recitals are true and correct.
B. The Tustin Public Financing Authority has received and heard all oral and
written testimony to the proposed DDA and to the Developer's proposed
development of the Property in connection therewith, and to any other
matters pertaining to this transaction.
C. The FEIS/EIR, the Addendum thereto, and the Public Financing Authority
and City Council's resolution relating to the Addendum, are the controlling
environment documents for the Project.
D. The sale of the Property by the City of Tustin and Tustin Public Financing
Authority will assist in the elimination of blight in the Redevelopment
Project Area is consistent with the Implementation Plan adopted by the
City of Tustin and Agency for the Redevelopment Plan will provide
significant job generating uses furthering the City and Agency's economic
development goals; is consistent with the Conveyance Agreement and the
Governmental Requirements will provide needed retail services and open
space and recreational opportunities to the community and will assist in
the mitigation of California affordable housing crisis by providing 453 units
of additional affordable housing.
E. The DDA provides for disposition of the Property to the Developer only if
certain predisposition conditions are met.
F. The consideration for the Tustin Public Financing Authority's and the City's
disposition of the Property, pursuant to the DDA, is not less than the fair
market value of the Property in accordance with conditions, covenants,
and development costs required by the DDA and that the sale of the
Property is for more than its fair market price as determined by an
independent appraisal. This finding is based on the facts and analysis set
forth in the Recitals and supporting documents, which may be briefly
summarized as follows:
1) The Fair Market Value of the Property based on an independent
appraisal has been determined to be in a range of between
$194,000,000 to $216,000,000. The appraiser has also determined
that there is a negative land value of approximately $152 million
dollars associated with development of Phase 1 due to costs
required for backbone infrastructure that would be incurred during
that phase, with any positive value for the overall project accruing
only with development of Phase 2 and 3 of the Project.
2) The purchase price to be paid for the Property by Developer under
the DDA is $236,000,000 with $150,000,000 to be paid with the
Phase 2 conveyance, and $86,000,000 to be paid in the Phase 3
conveyance.
G. The Project is in the best interests of the City of Tustin and the Tustin
Public Financing Authority and the health, safety, morals, and welfare of
its residents, and is in accord with the public purposes and provisions of
applicable state and local law and requirements.
H. The foregoing findings are based upon the record of the public meeting on
the DDA.
III. The DDA, a copy of which is on file with the Office of the City Clerk, is hereby
approved subject to any non-substantive modifications as may be determined
necessary as may be approved by the City Manager's office, or as
recommended by the City's special counselor the City Attorney.
IV. The City Manager and Assistant City Manager are also hereby authorized to
take such actions, and execute such documents and instruments, as deemed
necessary or desirable to implement the terms of the DDA and all
attachments to the DDA including the Memorandum of DDA, Ground Leases,
Bill of Sales, Quitclaim Deed, any necessary Subordination Agreements, any
Assignment and Assumption Agreements, and Certificates of Compliance,
any Estoppels, any Special Restrictions, and other documents as necessary
and, upon satisfaction of all conditions and obligations of the Developer
thereto and pursuant to the DDA, to transfer the subject site in phases to the
Developer.
PASSED, APPROVED, AND ADOPTED at a regular meeting of the Tustin Public
Financing Authority on the 3rd day of April, 2006.
Doug Davert
Chairman, Board of Directors
PAMELA STOKER
City Clerk
STATE OF CALIFORNIA)
ORANGE COUNTY )
CITY OF TUSTIN )
I, Pamela Stoker, City Clerk and ex-officio Clerk of the Tustin Community
Redevelopment Agency of the City of Tustin, California, do hereby certify that the whole
number of the members of the Tustin Community Redevelopment Agency of the City of
Tustin is five; that the above and forgoing Resolution No. 06-42 was duly passed and
adopted at a regular meeting of the Tustin Public Financing Authority, held on April 3,
2006, by the following vote:
BOARDMEMBER AYES:
BOARDMEMBER NOES:
BOARDMEMBER ABSTAINED:
BOARDMEMBER ABSENT:
PAMELA STOKER
CITY CLERK