HomeMy WebLinkAbout2017/11/7 Item 10 - Revised ResoItem #10
Revised 11/7/2017
RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA APPROVING AN AGREEMENT FOR
DEFERRAL OF DEVELOPMENT IMPACT FEES BETWEEN
THE CITY AND SETHI MANAGEMENT, INC. FOR
APPROXIMATELY $1.3 MILLION IN FEES IN CONNECTION
WITH A 204 -ROOM HOTEL PROJECT AT 2424 FENTON
STREET
WHEREAS, development of hotels in eastern Chula Vista has been a challenge for
investors and developers due to the high cost of development and construction; and
WHEREAS, Sethi Management Inc. has secured financing to develop a 204 -room hotel
project at 2424 Fenton (the "Project") but requires the deferral of certain development impact
fees to a future point of stabilized operations in order for the project to be fiscally feasible; and
WHEREAS, the proposed Project will be of public benefit by providing new, highly
amenitized visitor accommodations, creating jobs, and generating Transient Occupancy Tax
revenues to the City; and
WHEREAS, the proposed Agreement for Deferral of Development Impact Fees
(Agreement) provides necessary financial assistance by allowing for the deferral of Public
Facilities Development Impact Fees (PFDIF) and Transportation Development Impact Fees
(TDIF), with a total deferral amount of approximately $1.3 million; and
WHEREAS, the terms of the Agreement include interest accrual at a fair market rate of
two percent (2%) per annum, with the principal and all interest accrued thereon, due and payable
fifty-four (54) months from the issuance of the Certificate of Occupancy for the Project, with
repayment secured by a Deed of Trust recorded against the property/Project; and
WHEREAS, Chula Vista Municipal Code (CVMC) Section 3.54.050 authorizes the
deferral of TDIF "...on the basis of demonstrated economic hardship on the condition that: (1)
the use offers a significant benefit; (2) the amount deferred bears interest at a fair market rate so
as to constitute an approximate value equivalent to a cash payment; and (3) the amount deferred
is adequately secured by agreement with the applicant"; and
WHEREAS, Section 1-100 of the Chula Vista Master Fee Schedule establishes fee
waiver and deferral authority and procedures for all fees included in the Master Fee Schedule,
requiring certain findings and due consideration "...be given to terms and conditions involving
interest on amount deferred and security to assure the eventual collection"; and
WHEREAS, the PFDIF is included in the City's Master Fee Schedule and there are no
additional fee deferral requirements included in Chapter 3.50 of the CVMC (Development
Impact Fees to Pay for Various Public Facilities); and
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Resolution No.
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WHEREAS, the applicant will not have sufficient funds to meet the TDIF or PFDIF
obligations for the Project until operations stabilize, approximately fifty-four (54) months after
issuance of the certificate of occupancy for the Project, resulting in an economic hardship if the
TDIF and PFDIF are not deferred; and
WHEREAS, the Project is expected to provide significant benefits, including generation
of approximately $800,000 in TOT to the City annually, as well as creating 50 fulltime and 20
part-time jobs; and
WHEREAS, the Agreement provides for fair market interest at the rate of two percent
(2%) per annum; and
WHEREAS, the Agreement is secured by a Deed of Trust recorded against the
property/Project; and
WHEREAS, the Project therefore meets all criteria for deferral of TDIF and PFDIF
pursuant to CVMC 3.54.050 and Section 1-100 of the Chula Vista Master Fee Schedule,
respectively, including significant benefits, interest, and security.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula
Vista, that it hereby approves the Agreement for Deferral of Development Impact Fees, between
the City and Sethi Management Inc., in the form presented, with such minor modifications as
may be required or approved by the City Attorney, a copy of which shall be kept on file in the
Office of the City Clerk, and authorizes and directs the Mayor to execute the same.
Presented by: Approved as to form by:
Kelly G. Broughton, FASLA Glen R. Googins
Director of Development Services City Attorney