HomeMy WebLinkAbout08 EXTENSION AND AMENDMENT OF ENA WITH CD-CW LLCDocusign Envelope ID: 25A14DB5-A92C-4524-8315-164EOAC095D2
MEETING DATE
TO:
FROM:
SUBJECT:
SUMMARY:
Agenda Item
AGENDA REPORT Reviewed:
City Manager
Finance Director
DECEMBER 2, 2025
ALDO E. SCHINDLER, CITY MANAGER
BRIAN MONCRIEF, DEPUTY CITY MANAGER — REAL PROPERTY
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EXTENSION AND AMENDMENT OF EXCLUSIVE NEGOTIATING
AGREEMENT WITH CD-CW (TUSTIN) LLC FOR A PORTION OF
LAND AT TUSTIN LEGACY
Request for approval of an extension of the Exclusive Negotiating Agreement with CD-CW
(Tustin) LLC to continue the negotiating period for the disposition and development of a
portion of Disposition Area 8B at Tustin Legacy for up to an additional 180 days.
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Approve an extension of the Exclusive Negotiating Agreement for an additional
period of 120 days with a secondary 60-day extension subject to the approval of the
City Manager in their sole discretion in accordance with Section 4.2 of the Exclusive
Negotiating Agreement, as amended.
2. Authorize the City Manager to execute an amendment to the Exclusive Negotiating
Agreement reflecting the two extensions as requested by CD-CW (Tustin) LLC,
establish a milestone schedule of performance for CD-CW (Tustin) LLC to adhere
to, clarify Exclusive Negotiating Agreement extension deposit amounts and that they
may be applied to the purchase price deposit but shall remain non-refundable, and
make any non -substantive additions or modifications as may be deemed necessary
and/or recommended by the City's special real estate counsel or the City Attorney
prior to the end of the Exclusive Negotiating Agreement Negotiating Period.
FISCAL IMPACT:
The Exclusive Negotiating Agreement will be amended to require a $150,000 extension
deposit for the first 120-day extension and a $100,000 extension deposit for the second 60-
day extension. Pursuant to the Exclusive Negotiating Agreement, the City retains these
deposits if the Disposition and Development Agreement is not executed, or if the
Disposition and Development Agreement is executed but close of escrow does not occur.
Docusign Envelope ID: 25A14DB5-A92C-4524-8315-164EOAC095D2
City Council Agenda Report
CD-CW (Tustin) LLC ENA Extension and Amendment
December 2, 2025
Page 2
If the Disposition and Development Agreement is executed and close of escrow occurs, the
extension deposits (without interest accrued) are applicable to the purchase price and the
purchase price deposit.
CD-CW (Tustin) LLC also has a deposit account with the City that will continue to fund the
City transaction expenses incurred by staff and third -party consultants including the
retention of legal counsel associated with the negotiation and drafting of the transaction
documents.
CORRELATION TO THE STRATEGIC PLAN:
The extension of the Exclusive Negotiating Agreement with CD-CW (Tustin) LLC
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.
BACKGROUND AND DISCUSSION:
On September 19, 2023, the City Council authorized the City Manager to enter into an
Exclusive Negotiating Agreement (ENA) with CD -MS (Tustin) LLC to negotiate the
disposition and development of a portion of Disposition Area 8B at Tustin Legacy for a senior
congregate care facility project. The ENA provided for an initial negotiating period of 270
days from the effective date, which could be extended for one (1) additional period of 90 days
at the discretion of the City Manager, which was granted. On August 20, 2024, the City
Council authorized the City Manager to extend the ENA for an additional 90 days with an
option, at the City Manager's discretion, to grant a further extension of the ENA by an
additional 90 days to March 17, 2025, which was granted.
As part of the 90-day ENA extension request granted on December 16, 2024 until March 17,
2025, CD -MS (Tustin) LLC informed the City that it was necessary to re -vision the project to
evaluate (1) a standalone Active Senior Living component in lieu of Independent Living and
a standalone Assisted Living and Memory Care building and (2) a separately owned and
operated community focused on more active seniors with services that serve both
communities. This adjustment was needed to create a more favorable project for outside
investment and completion of the transaction documents. The Developer also committed to
milestones within this timeframe to evaluate Surplus Land Act (SLA) implications, update the
conceptual design for the new project, update the business plan reflecting the new design,
and identify terms and conditions of the draft transaction documents that would need to be
updated based on the new project.
CD -MS (Tustin) LLC also requested to form a Joint Venture (JV) with a new operator,
Clearwater Senior Living (Clearwater), to replace the former proposed operator, Morningstar
Senior Living, LLC. Clearwater has extensive experience managing Active Senior
communities and currently operates Assisted Living and Memory Care communities in North
Tustin and Newport Beach. Accordingly, the special purpose entity for the project has
Docusign Envelope ID: 25A14DB5-A92C-4524-8315-164EOAC095D2
City Council Agenda Report
CD-CW (Tustin) LLC ENA Extension and Amendment
December 2, 2025
Page 3
changed to incorporate Clearwater and is now referred to as CD-CW (Tustin) LLC
(Developer).
The re -visioned project features separate parcels for Active Senior Living and Assisted
Living/Memory Care. In industry terms, Active Senior refers to a more engaged and active
resident within the Independent Living use category. As such, the Active Senior Living
component serves as an age restricted residential project component without the same level
of built-in commercial services as the prior Independent Living use and pursuant to the
requirements of the SLA will provide 15% of the Active Senior Living residential units as
affordable to lower income households. The prominent corner of Warner Avenue and
Armstrong Avenue is designated for Active Senior housing, maintaining the same high quality
architectural standards as the previous project design. The revised layout includes a central
corridor with shared amenities such as a space intended for physician visits, a physical
therapy office, a grab -and -go market, coffee and espresso bar, and a salon. Additionally,
Active Senior residents will have access to a luxury clubhouse dining room, with the second
floor of the clubhouse featuring an indoor/outdoor community space for events, offering
scenic views of the Santa Ana Mountains. The re -visioned project has been submitted under
a new entitlement process given the significant changes from the previous project design.
On March 4, 2025, the City Council amended the ENA and approved a 270-day extension
as requested by the Developer in order to allow time to process a new entitlement submittal
for the re -visioned project and negotiate a Disposition and Development Agreement (DDA).
At the same time, the City Council also formally approved Clearwater as the new operator.
In accordance with the ENA, the Developer provided the required $100,000 extension
deposit.
During the current 270-day extension period the Developer has met required milestones such
as submitting and diligently processing entitlements for the re -visioned project, submitting
updated iterations of the business plan, and negotiating the DDA in good faith with the City.
To date across both the original and revised project, the Developer has expended
approximately $3.5 million in advancing the transaction documents, entitlements and design
development drawings for the project which includes payment of all City staff and third party
consultant and legal counsel costs in relation to the project.
The ENA Negotiating Period, with the previously approved extensions, will expire on
December 12, 2025. The Developer has submitted an ENA extension request letter to the
City dated November 12, 2025, requesting to extend the ENA Negotiation Period for two
additional periods of 120 days and 60 days in order to complete the transaction documents
and entitlement process as well as select an equity partner. The first additional ENA
Negotiating Period extension of 120 days requires approval by the City Council and will
require a $150,000 extension deposit and the second extension of 60 days will require a
$100,000 extension deposit and may be extended by the City Manager if the Developer has
accomplished the milestones identified in the ENA extension request letter. Extension
deposits are applicable to the purchase price and purchase price deposit, but would remain
non-refundable in the event the DDA is not executed or close of escrow does not occur.
While interim milestones demonstrate progress toward an equity partnership, the primary
Docusign Envelope ID: 25A14DB5-A92C-4524-8315-164EOAC095D2
City Council Agenda Report
CD-CW (Tustin) LLC ENA Extension and Amendment
December 2, 2025
Page 4
milestone, in the first 120-day ENA Negotiating Period extension, is the execution of the
Equity Partner Agreement — formally establishing a key component of the project's financing
structure. To that end, the Developer has committed to completing the following milestones
per the respective extension period.
120-dav Extension Period Milestones:
1. Select Equity Partner
2. Complete Design Development Plans
3. Entitlement Submittal Completion
4. Commence Construction Drawings
5. Execute Equity Partner Agreement
60-dav Extension Period Milestones:
6. Entitlement Hearings before Planning Commission and City Council
7. Execute DDA
City staff and the Developer will continue to hold bi-weekly meetings or more frequently as
needed throughout the remaining ENA Negotiating Period in order to advance the project
and negotiations. Staff intends to provide regular updates to the City Council on milestone
progress throughout the ENA Negotiating Period via briefings and/or Ad Hoc committee
meetings.
Signed by:
Brian Moncrief
Deputy City Manager — Real Property
Attachments:
Signed by:
oivi, �Wibin�t,�
Ryan wionte
Deputy Director of Real Property
1. Letter requesting extension of ENA from the Developer dated November 12, 2025
Docusign Envelope ID: 25A14DB5-A92C-4524-8315-164EOAC095D2
rconfluent
edevelopment
November 12, 2025
VIA ELECTRONIC MAIL and
VIA FEDERAL EXPRESS
OVERNIGHT DELIVERY
City Manager
City of Tustin
300 Centennial Way
Tustin, CA 92780
Attention: Aldo Schindler
Email: CityManager&tustinca.org
WITH COPIES TO:
Real Property Division
City Manager's Office
City of Tustin
300 Centennial Way
Tustin, CA 92780
Attention: Brian Moncrief
Email: DCM-RP(ctustinca.org
City Attorney
Woodruff, Spradlin & Smart
555 Anton Blvd., Suite 1200
Costa Mesa, CA 92626
Attention: David Kendig, Esq.
Email: dkendi woodruff.law
Hepner & Myers LLP
1241 Johnson Avenue, Suite 360
San Luis Obispo, CA 93401
Attention: Amy E. Freilich. Esq.
Email: afreilichkHepnerMyers.com
Re: Request for Extension pursuant to that certain Exclusive Negotiating Agreement (Tustin
Legacy Portion of Disposition Area 813 with an Effective Date of September 19, 2023 (as
amended, the "ENA"), entered into by and among the City of Tustin ("City") and CD -MS
(Tustin) LLC, a Colorado limited liability company ("Developer").
Dear Mr. Schindler:
Confluent Development, LLC, a Colorado limited liability company ("Confluent") is the Manager for the
Developer. Please note that unless otherwise stated, capitalized terms used below shall have the same
meaning as set forth in the ENA.
In March, Confluent was granted a 270-day Exclusive Negotiation Agreement (ENA) extension to achieve
key milestones, including completion of schematic design and renderings for the redesign, completion of
new underwriting for the project, submission of formal entitlements, and discussing and agreeing to terms
in the DDA. We are pleased to report that these milestones have been successfully completed, and
Confluent is now proposing an additional ENA extension to select our equity partners, complete our
entitlements, and execute the DDA, for our project.
2215 Market St (303) 573-6500
Denver, CO 80205 www.ConfluentDev.com fax (303) 573-6503
Docusign Envelope ID: 25A14DB5-A92C-4524-8315-164EOAC095D2
Operator
Our new operating partner Clearwater Senior Living, headquartered in Newport Beach, has invested
significant time and funds in our project. Clearwater at North Tustin was recently recognized as Best
Assisted Living and Best Memory Care, and Clearwater at Newport Beach was awarded with High
Performing accolades for Caregiving (Assisted Living) and Food & Dining (Assisted Living and Memory
Care) by U.S. News. Their stellar reputation for providing exceptional care and creating, luxury senior
living communities, provides a competitive advantage both for attracting investors and building long-term
relationships with community members.
Clearwater's high standards with meticulous attention to detail will bring a truly unique, best -in -class
Active Senior housing community to the Tustin Legacy neighborhood. Under our joint venture agreement,
Clearwater is sharing all pursuit costs with Confluent and engaged its preferred equity partner, which has
invested in other senior communities in Orange County. The onboarding of Clearwater as our new
operating partner since our last ENA extension has been seamless, and the Clearwater team has been fully
engaged in the project since that time.
Design
Confluent completed schematic design in July on schedule, and design development (DD) commenced in
August, we will achieve the 50% DD milestone later this month. The site plan, parking, unit mix, floor
layouts, exterior design and common areas have been refined and solidified. At the end of design
development, the project will have a very detailed set of drawings that will be the basis for construction
documents.
This project is uniquely designed for the Tustin Legacy community, maintaining the same high
architectural standards of the previous design and providing a wide array of luxury amenities across the
Active Senior Living and Assisted Living/Memory Care parcels. The two projects will share a central
corridor, connecting the projects seamlessly and providing residents with access to a full spectrum of
lifestyle and care options. The project boasts market -leading amenities including multiple dining venues,
second floor rooftop deck, fitness and wellness center, theatre, salon, pickleball court and more. Special
attention was paid to connecting residents with the outdoors, apartments will have balconies or patios, and
spacious courtyards will support a wide array of activities and social gatherings.
New Construction/Planned Communities
Construction is underway on The James, an 8-story and 350-unit infill Independent Living, Assisted
Living, and Memory Care project, within close proximity to our site. The project will open in the summer
of 2027 approximately 1 year ahead of the opening of our project. Our team has taken this into account
while refining the community's design and pivoting toward an Active Senior model. Our strategy focuses
on attracting a younger Independent Living resident, offering larger units and providing more open space
at a modest price point — areas we believe provide a competitive advantage for our development. The
James is the only community under construction or planned in the primary market area that will directly
compete with our project. An aging supply with an average age of 31 years old and only 3 properties in
the primary market area offering the full continuum of care (IL/AL/MC), the timing to deliver new age -
restricted, Active Senior living units with care could not be better.
Capital Partners
While still extremely challenging, there is equity seeking to deploy capital into select new developments.
Although our development equity raise will continue to compete with acquiring existing income -
generating assets — there is a growing contingent of investors looking to be the first to market ahead of the
anticipated shift in senior living development.
2215 Market St (303) 573-6500
Denver, CO 80205 www.ConfluentDev.com fax (303) 573-6503
Docusign Envelope ID: 25A14DB5-A92C-4524-8315-164EOAC095D2
Our project is one of the few assignments garnering interest from investors across the country. This is
attributed to the proven track record of Confluent and Clearwater, the premier location within a top 10
MSA, top -of -market luxury design and offering to residents, and the return/risk profile of the overall
project. We have initiated conversations with the leading investment brokers in senior housing, Newmark
and CBRE, who will perform a full -marketing process. Upon receiving award, the broker will drive the
marketing and solicitation process for the required equity for our project. As outlined below, the
anticipated timeline for obtaining equity commitments will take approximately 120 days. These brokers
have been extremely selective in the equity raises they are willing to take on and are excited about our
project.
Request for ENA Extension
Confluent is requesting a 120-day extension (the "First Extension") to the ENA with notice required by
November 12, 2025 and an additional 60-day extension (the "Second Extension") for a total of 180 days
to complete design development, start construction documents, select our equity partners, finalize the
negotiation of the DDA, and complete our entitlements. Upon receipt of the First Extension request and
the City Council approval of such request, Confluent shall provide to the City a One Hundred Fifty
Thousand Dollar ($150,000) non-refundable deposit within five calendar days from the date of approval.
Additionally, upon receipt of the Second Extension request and the approval by the City Manager for an
additional sixty (60) calendar days, Confluent shall provide to the City a One Hundred Thousand Dollars
($100,000) non-refundable deposit within five calendar days from the date of approval. The Extension
Deposits shall be non-refundable, provided that, if executed, the DDA shall provide that in all cases the
Extension Deposits shall be then applicable to both the Purchase Price Deposit and the Purchase Price for
the Development Parcel.
To date Confluent has invested $3,494,933 into the development of the project with an additional
investment of $3,460,000 for the balance of the preconstruction to groundbreaking. Below is a detailed
outline of our proposed milestones for the 180-day period requested:
Milestones: Days 1-120 (December 13 to April 11)
• Bi-Weekly — Continue meetings with Real Property and other City departments as applicable to
maintain open lines of communication to ensure advancement of both the project design and
business elements of the project.
• Bi-Weekly — Continue meetings with City Attorney and Developer Counsel to finalize Disposition
and Development Agreement (DDA).
• February — Entitlements Submittal deemed complete (except DA) by Staff and commence CEQA
review.
• February — Complete Design Development Plans
• February — Executed LOI with a qualified Equity group and fully engage their participation in the
finalization of the DDA
• March — Design Development Pricing Complete
• March — Initiate Construction Drawings
• March — Entitlements Submittal deemed complete (with DA) by Staff
• March — Initiate Planning Commission Hearing Notification
• March and April — Equity group fully engaged in the finalization of the DDA.
• April — Execute Agreement with Equity group
• April — Finalize negotiation of the DDA and Prepare for City Council hearings.
2215 Market St (303) 573-6500
Denver, CO 80205 www.ConfluentDev.com fax (303) 573-6503
Docusign Envelope ID: 25A14DB5-A92C-4524-8315-164EOAC095D2
Milestones: Days 120-180 (April 12 to June 10)
• Bi-Weekly - Continue meetings with Real Property and other City departments as applicable to
maintain open lines of communication to ensure advancement of both the project design and
business elements of the project.
• April — Present CUP, Design Review and DA to Planning Commission for approval.
• April — Initiate City Council Hearing Notification
• May and June — Present in a Hearing and 2nd Reading the DDA, CUP, Design Review and DA to
City Council for approval.
• June — Execute DDA and DA
• June — Submit Civil Construction Drawings to Public Works for Permit
• June — Submit Building Construction Drawings to Building Department for Permit
• June — ENA deadline to submit executed DDA and DA
Given the ENA criteria that the City Council must grant an extension for this phase of the ENA, Confluent
is asking for consideration of the significant funds and progress on the development. The additional time
will be required to bring a successful senior living project — to solidify our equity partners and execution
of our DDA — to the City of Tustin.
Please do not hesitate to reach out to me or my team with any questions.
Sincerely,
Matthew G. Derrick
Managing Director
Confluent Senior Living
2215 Market St (303) 573-6500
Denver, CO 80205 www.ConfluentDev.com fax (303) 573-6503