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Home My WebLink About07 AMENDMENT 4 TO SUBLEASE AGREEMENT WITH SOUTH ORANGE COUNTY COMMUNITY COLLEGE DISTRICTDocusign Envelope ID: 7573C612-77F6-4535-B95E-2F8B74E33879 AGENDA REPORT L8't MEETING DATE TO: FROM: SUBJECT: SUMMARY: OCTOBER 21, 2025 ALDO E. SCHINDLER, CITY MANAGER Agenda Item 7 Initial Reviewed: a� City Manager Finance Director N/A BRIAN MONCRIEF, DEPUTY CITY MANAGER — REAL PROPERTY AMENDMENT 4 TO SUBLEASE AGREEMENT WITH THE SOUTH ORANGE COUNTY COMMUNITY COLLEGE DISTRICT Request for approval of Amendment 4 to the Sublease Agreement with the South Orange County Community College District for a portion of the Advanced Technology Education Park campus at Tustin Legacy. Amendment 4 to the Sublease Agreement will extend the term of the Sublease Agreement by two (2) years to coincide with the term of the City's Lease in Furtherance of Conveyance (currently May 2052 unless extended in the future) to provide additional assurances for tenants in negotiations with the South Orange County Community College District. RECOMMENDATION: It is recommended that the City Council authorize the City Manager to execute Amendment 4 to the Sublease Agreement with the South Orange County Community College District subject to any non -substantive modifications as may be deemed necessary and/or recommended by the City Attorney. a6Y97_1IIIIIIIIII1►yil:7_To6 There is no fiscal impact associated with this item. CORRELATION TO THE STRATEGIC PLAN: Amendment 4 to the Sublease Agreement with the South Orange County Community College District contributes to the fulfillment of the City's Strategic Plan Goal A: Economic and Neighborhood Development. Specifically, this item implements Strategy 1, which is to develop critical phases of Tustin Legacy. This item also contributes to the fulfillment of the City's Strategic Plan Goal D: Strong Community and Regional Relationships. Specifically, this item implements Strategy 2, which is to enhance collaborative efforts with agencies within and outside Tustin on issues of mutual interest and concern. Docusign Envelope ID: 7573C612-77F6-4535-B95E-2F8B74E33879 City Council Agenda Report Amendment 4 to Sublease with SOCCCD October 21, 2025 Page 2 BACKGROUND AND DISCUSSION: The City and the Department of the Navy (Navy) entered into a Lease in Furtherance of Conveyance (LIFOC) on May 13, 2002 as part of the original "Agreement between the United States of America and the City of Tustin, California for the Conveyance of a Portion of the Former Marine Corps Air Station Tustin" (EDC Agreement) that resulted in the City leasing from the Navy portions of former Marine Corps Air Station (MCAS) Tustin while environmental investigation and remediation is performed by the Navy. Since 2002, portions of the original LIFOC property have been conveyed to the City, with approximately 145 acres of land still subject to the LIFOC. The LIFOC term is through 2052 and allows for the City to sublease property to other entities under certain conditions and restrictions. Certain other parcels of former MCAS Tustin were subject to Public Benefit Conveyances (PBC) but not necessarily a LIFOC, for uses such as the County of Orange (County) Social Services campus, a City community park and a County regional park. One such PBC was on Reuse Parcel 2 for a 10-acre County law enforcement training center. In April 2004, the City and the South Orange County Community College District (SOCCCD) entered into a Conveyance Agreement for establishment of a new community college campus called the Advanced Technology Education Park (ATEP) campus on approximately 67 acres of property within Neighborhood A of the Tustin Legacy Specific Plan. Approximately 37 acres of the original ATEP campus configuration were conveyed in fee from the City to SOCCCD, and approximately 30 acres were subleased to SOCCCD under a Sublease Agreement between the City and SOCCCD as those portions of the original ATEP campus fell within part of the LIFOC property. In May 2013, the City, SOCCCD and the County entered into land exchange agreements to adjust existing property boundaries and ownership within Neighborhood A to create development efficiencies and consolidations of land for each party. These land exchange agreements resulted in: 1. City: Transferred approximately 14 acres of land south of Valencia Avenue to SOCCCD, and in return received approximately 9 acres of land from SOCCCD north of Valencia Avenue that ultimately increased the size of Veterans Sports Park site and approximately 5 acres of land from SOCCCD to expand the site of the new/current Army Reserve location. 2. SOCCCD: Transferred approximately 9 acres of land north of Valencia Avenue and approximately 5 acres south of Valencia Avenue to City and approximately 10 acres south of Valencia Avenue to County, and in return received approximately 15 acres of land from City south of Valencia Avenue and approximately 10 acres south of Valencia Avenue from County creating more contiguous parcels. 3. County: Rescinded its PBC on Reuse Parcel 2 of approximately 10 acres of land, and in return received approximately 10 acres of SOCCCD property for a new animal shelter site. Docusign Envelope ID: 7573C612-77F6-4535-B95E-2F8B74E33879 City Council Agenda Report Amendment 4 to Sublease with SOCCCD October 21, 2025 Page 3 Concurrently with these land exchanges and the Third Modification to the EDC Agreement, the City and SOCCCD negotiated a Development Agreement (DA) and an Amended and Restated Conveyance Agreement that reflected the property exchanges and granted entitlements for the ATEP campus for all of SOCCCD's fee and subleased property, as well as for use of Reuse Parcel 2 (even though it was not leased by City or subleased to SOCCCD at that time). Two (2) amendments to the Sublease Agreement were executed in 2013 and 2014 to reflect the changes in SOCCCD owned or subleased property. After all exchanges and updates, there are currently 30.1 acres owned in fee by SOCCCD and 31.3 acres that are subleased to SOCCCD due to their location in LIFOC property. On April 5, 2022, the City Council authorized the City Manager to execute amendments to two (2) agreements related to the 31.3 acre subleased portion of the ATEP campus: 1. Modification One to the LIFOC a. Parties: City and Navy b. Terms: i. Incorporated Reuse Parcel 2 into City LIFOC property ii. Allowed for City to sublease the property to SOCCCD iii. Allowed for site clean-up and building demolition by SOCCCD 2. Amendment 3 to the Sublease Agreement a. Parties: City and SOCCCD b. Terms: i. Incorporated Reuse Parcel 2 into City/SOCCCD subleased area ii. Relieved SOCCCD of $550 monthly Operating Expenses fee iii. Obligated SOCCCD to maintain and secure Reuse Parcel 2 iv. Extended term of sublease to May 2052 consistent with City LIFOC term for approximately two (2) acres of the subleased area (Saddleback at ATEP area). The previous term was tied to the earlier of Navy conveyance or December 31, 2050. SOCCCD is currently in negotiations with two (2) tenants to potentially lease the remaining portions of property SOCCCD acquired in fee from the City (approximately 10 acres) and those portions of property the City currently subleases to SOCCCD due to their location in the LIFOC boundary area at the ATEP campus (approximately 30 acres). To provide additional assurances for the tenants proposing to lease the subleased portions, SOCCCD is requesting that the term of the Sublease Agreement for the remaining subleased area be extended to the term of the LIFOC (currently May 2052 unless extended in the future) as was done under Amendment 3 to the Sublease Agreement for the Saddleback at ATEP area. Docusign Envelope ID: 7573C612-77F6-4535-B95E-2F8B74E33879 City Council Agenda Report Amendment 4 to Sublease with SOCCCD October 21, 2025 Page 4 On September 29, 2025, the SOCCCD Board of Trustees approved Amendment 4 to the Sublease Agreement and staff recommends approval by the City Council. Signed by- * EAUt W*t f SECB22E593C74F8... Brian Moncrief Deputy City Manager — Real Property Attachments: Signed by: 6EB4E312626A465... Kenneth Piguee Real Property Manager 1. Amendment 4 to the Sublease Agreement with SOCCCD Docusign Envelope ID: 7573C612-77F6-4535-B95E-2F8B74E33879 AMENDMENT NO.4 TO SUB -LEASE BETWEEN THE CITY OF TUSTIN AND THE SOUTH ORANGE COUNTY COMMUNITY COLLEGE DISTRICT FOR A PORTION OF MCAS TUSTIN THIS AMENDMENT NO.4 TO SUB -LEASE (this "Amendment No. 4"), is made this day of , 2025 (the "Effective Date") by and between the CITY OF TUSTIN, a municipal corporation organized under the laws of the State of California ("Landlord"), and the SOUTH ORANGE COUNTY COMMUNITY COLLEGE DISTRICT, a public agency ("Tenant"). RECITALS A. Pursuant to that certain "Lease in Furtherance of Conveyance between the United States of America and the City of Tustin, California for Portions of the Former Marine Corps Air Station Tustin" between Landlord and the United States of America, acting by and through the Department of the Navy (the "Navy") and dated as of May 13, 2002, as amended by that certain Lease Modification One thereto dated April 6, 2022 (as amended, the "LIFOC"), Landlord holds a leasehold interest in a portion of the former MCAS Tustin property. B. Pursuant to that certain "Sub -Lease between the City of Tustin and the South Orange County Community College District for a Portion of MCAS Tustin" dated April 29, 2004, as amended by Amendment No. 1 thereto dated August 8, 2013, Amendment No. 2 dated August 7, 2014 and Amendment No. 3 dated April 11, 2022 (collectively, the "Sublease"), Landlord subleased the Leased Premises described therein to Tenant. All capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the Sublease. C. Tenant is in the process of developing and leasing for development a mixed -use educational and commercial project known as the Advanced Education and Technology Park ("ATEP") on the Leased Premises and certain real property located adjacent thereto and owned in fee by Tenant (collectively, the "ATEP Campus"). The Leased Premises include Tenant's development of the Saddleback Improvements on a portion of the Leased Premises referred to herein as the "Saddleback Premises". In addition, Tenant is currently in the process of negotiating two separate ground leases with two prospective tenants (each, a "Prospective Tenant") to sub -sublease all or a portion of the balance of the Leased Premises for educational purposes. Tenant has entered into an Access and Option Agreement with each Prospective Tenant. D. Development of the ATEP Campus is subject to the terms of that certain "Development Agreement and Amended and Restated Agreement for Conveyance of a Portion of MCAS Tustin and the Establishment of an Advanced Technology Educational Campus" between Landlord and Tenant recorded in the Official Records of Orange County, California (the "Official Records") on May 23, 2013 as Instrument No. 201300312995, as amended by an Amendment No. 1 thereto dated July 8, 2014 and recorded July 9, 2014 as Instrument No. 2014000272537 and re -recorded August 7, 2014 as Instrument No. 2014000318112 in the Official Records (as amended from time to time, the "DA"). Landlord and Tenant further entered into an Implementation Agreement dated as of July 16, 2015, as amended by that certain Amendment no. 1 thereto dated April 11, 2022 (as amended from time to time, the 5764-44062\1715059.5 Docusign Envelope ID: 7573C612-77F6-4535-B95E-2F8B74E33879 "Implementation Agreement" and collectively with the DA, the "DA Documents") setting forth more detailed provisions for implementation of the requirements of the DA. The DA Documents include, among other terms, (i) restrictions on uses that may be developed and operated on the ATEP Campus as set forth in Article 5 of the DA (the "DA Use Restrictions"), (ii) procedures for review and approval of site improvement documents as set forth in Articles 4 and 5 of the Implementation Agreement (the "DA Design Review Provisions") and (iii) provisions for conveyance of fee title to the Leased Premises (or portions thereof) to Tenant promptly upon the Navy's conveyance thereof to Landlord, as set forth in Article 9 and Article 10 of the DA (the "DA Conveyance Provisions"). E. In connection with Tenant's development of the Saddleback Improvements on the Saddleback Premises, Landlord and Tenant entered into Amendment No. 3 pursuant to which Landlord and Tenant agreed, that the term of the Sublease solely with respect to the Saddleback Premises will extend "through the date which is the earlier of (i) the date on which Tenant acquires fee title to the Saddleback Premises, (ii) the date which the Sublease or this Lease terminates due to Tenant's material default; provided that Landlord agrees that upon Landlord's approval of a grading permit for the Saddleback Premises pursuant to the DA, Landlord waives its right to terminate the Sublease for such material default, but retains all other rights and remedies it may have, or (iii) the date on which Landlord's leasehold interest in the Saddleback Premises arising under the LIFOC expires pursuant to the terms thereof." F. Landlord and Tenant now desire to further amend the Sublease to extend the term of the Sublease as to the entirety of the Leased Premises until such time as Tenant acquires fee title thereto in order to preserve Tenant's right to obtain fee title to the Leased Premises in the event that the term of the DA expires prior to conveyance to Tenant of fee title thereto and to otherwise ensure the ability of the Prospective Tenants to develop and occupy the proposed improvements in the manner contemplated in the DA Documents. NOW THEREFORE, in accordance with the foregoing and in consideration of the promises and mutual covenants hereinafter set forth, Landlord and Tenant agree to amend the Sublease as follows: 1. Term of Sublease. Section 2.1 of the Sublease is hereby amended to delete the last sentence of such section and replace it with the following sentence: "Without limiting the foregoing, in the event that the Term of this Lease would otherwise expire prior to Tenant's acquisition of fee title to the Leased Premises, then the Term of this Lease shall be automatically extended as to the entirety of the Leased Premises through the date which is the earlier of (i) the date on which Tenant acquires fee title to the Leased Premises, (ii) the date which this Lease terminates due to Tenant's material default; provided that Landlord agrees that upon Landlord's approval of a grading permit for any portion of the Leased Premises pursuant to the DA, Landlord waives its right to terminate this Lease for such material default for such portion, but retains all other rights and remedies it may have, or (iii) the date on which Landlord's leasehold interest in the Leased Premises arising under the LIFOC expires pursuant to the terms thereof." 2. DA Use Restrictions. Without limiting any other provisions of the Lease, Sections 4.1, 8.1 and 8.9 of the Lease shall not, as of the Effective Date, be applicable to the use and occupancy of the Leased Premises. The use and occupancy by Tenant or any sub -tenant of 2 5764-44062\1715059.5 Docusign Envelope ID: 7573C612-77F6-4535-B95E-2F8B74E33879 Tenant shall be governed by Section 11.1 of the DA, which replaces Sections 4.1, 8.1 and 8.9 in their entirety, and the obligation of Tenant or any sub -tenant of Tenant to comply with legal requirements, obtain permits and licenses and pay required fees shall be governed by the provisions of the DA Documents relating thereto. 3. DA Design Review Provisions. Notwithstanding the provisions of Section 9.0 of the Lease, design and construction of the Saddleback Improvements and any future replacements or alterations thereof, as well as the improvements proposed by the Prospective Tenants and any future replacements or alterations thereof, shall be governed solely by the DA Design Review Provisions and other provisions of the DA Documents. In the event of any conflict or inconsistency between the provisions of Section 9.0 of the Lease on the one hand and the DA Design Review Provisions or other provisions of the DA Documents on the other hand, the DA Design Review Provisions or other provision of the DA Documents shall prevail. 4. DA Conveyance Provisions. The DA Conveyance Provisions are hereby incorporated by reference into this Lease with respect to the entirety of the Leased Premises as if set forth herein. For the avoidance of doubt, in the event that Tenant has not acquired fee title to the Leased Premises prior to expiration of the term of the DA (as such date may be extended, the "DA Expiration Date"), the DA Conveyance Provisions shall continue to be in full force and effect with respect to the Leased Premises (or any portion thereof) until the expiration of the Term of the Lease. 5. Full Force and Effect. Except as modified by this Amendment No. 4, the Sublease shall remain in full force and effect. 6. Counterparts. This Amendment No.4 may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. [Signature Page Follows] 5764-44062\1715059.5 Docusign Envelope ID: 7573C612-77F6-4535-B95E-2F8B74E33879 IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment No. 4 as of the Effective Date set forth above. CITY OF TUSTIN: ALDO E. SCHINDLER City Manager Approved as to Form: David E. Kendig, City Attorney SOUTH ORANGE COUNTY COMMUNITY COLLEGE DISTRICT: ANN-MARIE GABEL Vice Chancellor, Business Services Approved as to Form: SOCCCD Counsel, Jackson Tidus al Elizabeth T. Hall, Esq. 5764-44062\1715059.5