HomeMy WebLinkAboutAgenda Packet 1993/04/01
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NotU:e is hereby given t1wt the Mayor and Chaimum of the RedeveloJlllUnI Agency 1uu ctUkd and will convene
. a Joint WorlsessionlMeeting of the RedeveloJlllUnI Agency and City Cowu:il on Thursday, April1, 1993, 6:00 p.m. in
the Cowu:il eotiference Room located in the City HaD Building, 276 Fourth Avenue, Chula VLI1a, California to consider,
deJiberrzte and ad upon the following:
J:;... ~<..
7im Ntukr, MayorlChaimum
SPECIAL WORKSESSIONIMEETING OF THE REDEVELOPMENT AGENCY/
CITY COUNCIL OF THE CITY OF CHULA VISTA
Thursday, April I, 1993
6:00 p.m.
Council Conference Room
City Hall Building
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. CDMPLlANCE WITH AMERICANS WITH DISABILITIES ACT .
The City 01 Chula Vista. in complying with the Americans with Disabilities Act /ADA/.
request individuals who require special accommodation to access, attend, and/or
participate in a City meeting, activity, or service request such accommodation at
least forty-eight /48/ hours in advance for meetings and five /51 days for scheduled
services and activities. Please contact the Secretary to the Redevelopment Agency
for specific information at /6 t 91 691-5047. California Relay Service is available for
the hearing impaired.
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CALL TO ORDER
1. ROLL CALL: Members Fox _. Horton _. Moore _. Rindone _. and Chairman. Nader _
BUSINESS
2.
AGENCY
RESOLUTION 1312
APPROVING FOURTH AMENDMENT TO THE AGREEMENT FOR PURCHASE
OF SHINOHARA PROPERTY LOCATED AT 4705 OTAY VALLEY ROAD - On
2/5/93. the Redevelopment Agency reviewed the status of the proposed Auto Sales Park
(in closed session) recommendations for changes. Major changes include reduction of
the first phase development site, commensurate reduction in purchase price, increased
loan to the property owner to cover increased grading costs, including relocation of
contaminated soils for eventual removal. and reimbursement of additional funds to the
Auto Sales Park developers to cover losses due to delays and changes in the size of the
site. In order to effectuate the changes which were reviewed and approved by the
Agency. it is necessary to consider and approve a Fourth Amendment to the Purchase and
Sales Agreement. approve a Loan Agreement for the provision of additional funds to
coniplete the grading activities. and relocate contaminated soils; and consider and approve
an Implementation Agreement to the Disposition and Development Agreement. Staff
recommends this item be continued to the meeting of April 13, 1993. (Director of
Community Development)
v
AGENDA
B.
AGENCY
RESOLUTION 1313
3.A.
AGENCY
RESOLUTION 1314
B.
COUNCIL
RESOLUTION 17054
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April 1, 1993
APPROVlNG THE FIRST IMPLEMENTATION AGREEMENT TO THE
DISPOSITION AND DEVELOPMENT AGREEMENT APPROVED SEPTEMBER
15, 1992 BY AND AMONG THE REDEVELOPMENT AGENCY AND THE DGF
FAMILY LIMITED PARTNERSlllP, DAVID D. ORDWAY, CHRlSTlNA L.
ORDWAY, TRAVIS A. RENEAU, AND MARGARET L. RENEAU
APPROVlNG THE COOPERATION AGREEMENT BETWEEN THE
REDEVELOPMENT AGENCY AND THE CITY FOR THE PROVISION OF
FlNANClALASSlSTANCE PURSUANT TO THE TERMS AND CONDITIONS OF
THAT CERTAlN DISPOSITION AND DEVELOPMENT AGREEMENT BY AND
AMONG THE REDEVELOPMENT AGENCY OF THE CITY, AND THE DGF
FAMILY LIMITED PARTNERSlllP, DAVID D. ORDWAY, CHRISTlNA L.
ORDWAY, TRAVIS A. RENEAU, AND MARGARET L. RENEAU _ The Agency
approved a Disposition and Development Agreement (DDA) with the Auto Sales Park
Developers on 9/15/92 for redevelopment of the Shinohara site. The DDA contained
certain obligations to make certain incentive and post incentive payments to assist in the
establishment of the Auto Sales Park. The payments will require fmanciaI assistance
from the City which is formalized by the Cooperation Agreement for consideration by
the Agency and Council. Staff recommends this item be continued to the meeting of
April 13, 1993. (Director of Community Development)
APPROVlNG THE COOPERATION AGREEMENT BETWEEN THE
REDEVELOPMENT AGENCY AND THE CITY FOR THE PROVISION OF
FINANClAL ASSlSTANCE PURSUANT TO THE TERMS AND CONDITIONS OF
THAT CERTAlN DISPOSITION AND DEVELOPMENT AGREEMENT BY AND
AMONG THE REDEVELOPMENT AGENCY OF THE CITY, AND THE DGF
FAMILY LIMITED PARTNERSlllP, DAVID D. ORDWAY, CHRlSTlNA L.
ORDWAY, TRAVIS A. RENEAU, AND MARGARET L. RENEAU
4. MIDBAYFRONT DEVELOPMENT AGREEMENT ISSUES - On 10/27/92, the City Council approved and
adopted the Chula Vista Local Coastal Program Resubmittal (LPC No.8) based upon the Bayfront Planning
Subcommittee's Alternative Plan and corresponding General Plan Amendment. On 1/15/93, the California Coastal
Commission adopted LCP No. 8 with modifications. On 10/17/92, Council directed staff to undertake development
agreement negotiations. The Redevelopment Agency held a worksession/meeting on March 4, 1993 and reviewed
the status of the Midbayfront project as well as eight issues in connection with the Development Agreement. The
Agency gave direction to staff and requested a worksession/meeting be held on April 1, 1993 for further analysis
of these issues.
ORAL COMMUNICATIONS
This is an opportunity for the general public to address the Agency on any subject matter within the Council'sjurisdiction
that is !1!!J. an item on this agenda. (State law, however, generally prohibits the City Council from taking action on any
issues not included on the posted agenda.) If you wish to address the Council on such a subject, please complete the
yellaw "Request to Speak Under Oral Communications Fonn" available in the lobby and submit it to the City Clerk prior
to the meeting. Those who wish to speak, please give your name and address for record purposes and follow up action.
Your time is limited to three minutes per speaker.
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AGENDA
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April 1. 1993
OTHER BUSINESS
5. DIRECTOR'S REPORTIS)
a. Scheduling of meetings.
6. CHAIRMAN'S REPORTIS)
7. MEMBERS' COMMENTS
The Redevelopment Agency will adjourn to a Closed Session to discuss the following:
Instruction to negotiate/property acquisition for Midbayfront (William Barkett, owner,
parcel bounded by Chula Vista Nature Interpretive Center to the north; Bay Boulevard
to the east; San Diego Bay to the west; and "F" Street to the south) pursuant to
Government Code Section 54956.8.
ADJOURNMENT
The worksession/meeting will adjourn to a Special Meeting of the Redevelopment Agency of Tuesdav.
Aoril13. 1993 at 6:00 o.m., immediately following the City Council Meeting, in the Council Chambers,
Public Services Building.
[C:IWP51IAGENCYIAGENDASI04-01-93.AGD]
REDEVELOPMENT AGENCY AGENDA STATEMENT
Item :L
Meeting Date 04/01/93
ITEM TITLE:
A.
RESOLUTION 1312 Approving Fourth Amendment
to the Agreement for Purchase of Shinohara Property Located at
4705 Otay Valley Road
B. RESOLUTION 1313 Approving the First Implementation
Agreement to the Disposition and Development Agreement
Approved on September 15, 1992 By and Among the
Redevelopment Agency of the City of Chula Vista and the DGF
Family Limited Partnership, David D. Ordway, Christina L.
Ordway, Travis A. Reneau, and Margaret L. Reneau
SUBMITTED BY: Community Development Director {_ S .
REVIEWED BY: Executive Director JG. ~ ~ (4/5ths Vote: Yes No X)
BACKGROUND: On February 5, 1993 the Redevelopment Agency gave instructions to
negotiators regarding the Auto Sales Park (in closed session) major deal points promulgated by
the discovery of contaminated soils on the development site. Major changes include a reduction
of the size of First Phase development site, commensurate reduction in purchase price, increased
loan to the property owner to cover increased grading costs including relocation of contaminated
soils for eventual removal, and reimbursement of additional funds to the Auto Sales Park
developers to cover losses due to delays and changes in the size of the site. Negotiations were
successful, and in order to effectuate the instructions of the Agency, it is necessary to consider
and approve a Fourth Amendment to the Purchase and Sales Agreement (with the property
owner, Jimmie and Judi Shinohara), and consider'andapprove an Implementation Agreement
to the Disposition and Development Agreement with the Auto Sales Park developers. This
Agenda Statement presents the Fourth Amendment to the Purchase and Sales Agreement and
Implementation Agreement for consideration by the Agency. The Loan Agreement will be
presented separately at a later date.
RECOMMENDATION: That the Agency adopt the resolutions.
BOARDS/COMMISSIONS RECOMMENDATION: Not applicable.
DISCUSSION:
The Redevelopment Agency was recently advised that the Auto Sales Park project was delayed
because of contaminated soils on the Shinohara property. Recently, TorStan Environmental
Sciences, Inc., (TorS tan) under contract with Mr. Shinohara tested the groundwater in the
vicinity of the contaminated soils and determined that the groundwater is clean. However,
because of the presence of contaminated soils, the difficulty and expense in mitigating the
contamination and consequent reduction in the size of the Auto Sales Park site, there were
several new deal points which the Agency considered in order for the project to move forward.
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Page 2, Item ~
Meeting Date 04/01/93
These include the following:
· Change in the developable area from 19.2 to 17.63 acres.
· Additional funds totaling approximately $1.2 million which will be necessary to
complete the grading of the property and relocation of contaminated soils.
· Issues concerning a maximum timetable for removal of contaminated soils from
the site.
· Additional compensation requested by the Auto Sales Park developers from the
owner due to the reduction in the size of the site, delays, and the presence of
contaminated soils.
Fourth Amendment to Purchase and Sales A!!reement
On February 5, 1993 the Redevelopment Agency authorized a loan to Mr. Shinohara to complete
the grading using other property owned by the Shinoharas as collateral. A condition of the loan
required Mr. Shinohara to reimburse the Auto Sales Park developers for $150,000 to cover
expenses caused by the delay, reduction in the site, and presence of contaminated soils. The
Agency also required that all contaminated soils be removed from the site within four years from
the closing date on the property. The Fourth Amendment to the Purchase and Sales Agreement,
attached hereto, embodies all of these conditions including reduction in sales price due to the
reduction in the square footage of the site which can be developed at this time.
The Redevelopment Agency and the Shinoharas entered into an Agreement for purchase of the
property located 4705 Otay Valley Road on September 10, 1990 which presumed 20 developable
acres. That Agreement was amended on December 18, 1990 (First Amendment) and again on
September 3, 1991 (Second Amendment). Subsequent to further negotiations between the
property owners and the Council Subcommittee which resulted in a reduction of the sales price,
a Third Amendment was approved on September 8, 1992 which reduced the sales price by
$700,000 to a total $4,650,000. In addition, the Agency agreed to pay $435,600 to assist in
grading the property (pursuant to the First Amendment). The total acquisition price thus totaled
$5,085,600. The Purchase and Sales Agreement and Amendments 1-3 are attached as Exhibits
A, B, C and D respectively.
The Fourth Amendment includes the following conditions:
[1] The property being acquired is reduced from 19.2 to 17.63 acres and redefined.
Additional properties which are adjacent to the development site and originally
constituted portions of the sales property are referred to in the Fourth Amendment
as "wetlands" and "holding site". The "holding site" is upland area which will
be used to stockpile hazardous soils until they can be remediated or removed from
the site. The "holding site" is approximately 1.6 acres. The "wetland" site was
02-.2.
Page 3, Item ;J..,
Meeting Date 04/01193
originally to be dedicated to the City for use as park land. In lieu of dedication
at this time the Agency is accepting an irrevocable offer to dedicate which may
be executed at a future date by the City or the Agency subject to determination
that the property does not contain any hazardous soils.
[2] The purchase price and grading costs (originally approved at $4,650,000 and
$435,600 respectively) is reduced to reflect the reduction in size of the property.
The purchase price is further reduced by $150,000 which will be rebated to the
Auto Sales Park developers to cover their additional expenses. The new purchase
price is $4,113,631 and the grading costs which the Agency agreed to pay at 50
cents per square foot is modified to $399,406. To date, the Agency has paid
$3,989,923 towards the purchase price. This includes payments to cover grading
and related costs which previously commenced on the site. Therefore, the
Agency has $523,114 remaining to be paid before the total current purchase price
has been paid in full to the owner.
[3] The closing date has been re-set to April 30, 1993 (or sooner) assuming that no
further contamination is discovered on the site and all other conditions are
satisfied. This includes that on or before the closing date the seller shall complete
a Work Plan to the satisfaction of the State Hazardous Materials Management
Division (HMMD) and to the satisfaction of the Auto Sales Park developers. The
owner shall also furnish a certification by TorStan that the site is clean.
[4] The owner agrees to complete the grading work within 90 calendar days
following the close of escrow.
[5] The seller will pay $150,000 to the Auto Sales Park developers to settle certain
claims arising from the reduction in the site, delay in planning processing, and
the presence of contaminated soils. These funds are included in the reduction of
the purchase price as noted above. This payment is conditioned upon the Auto
Sales Park developers providing an executed Release of any further claims against
the Seller for delays or development modifications as a result of this discovery
of contaminated materials on or before the close of escrow. The Agency is also
executing that release for the benefit of the Seller.
[6] The Shinoharas will deliver to the Agency an executed Irrevocable Dedication of
the wetland parcel. The Agency agrees that, provided the seller can reasonably
demonstrate to the satisfaction of the Agency that the wetlands are free of
hazardous substances prior to the expiration date of the dedication (ten years), the
Agency shall accept the dedication of the property.
[7] The Fourth Amendment notes that on or before the close of escrow the seller and
the Auto Sales Park developers will enter into an agreement concerning future
acquisition of the holding and the remediation or removal of contaminated soils
within four (4) years of the close of escrow. The future price of delivery of the
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Page 4, Item ~
Meeting Date 04/01/93
holding site is predicated upon the current price of the remainder of the property
($58,000).
First Implementation Agreement
This agreement parallels and compliments the Fourth Amendment to the Purchase and Sales
Agreement. The Agreement restates the conditions cited above for the purpose of incorporating
them into the DDA. In addition, the Agreement indicates that staff will cooperate and expedite
the processing of plans for expansion of the Auto Sales Park on the Borst Property ( to the east
of Phase I).
The terms and conditions of the Fourth Agreement and Fourth Implementation Agreement have
been negotiated by Agency staff pursuant to direction from the Agency on February 5, 1993
(closed session meeting). The two Agreements have been prepared by Special Counsel, Kenneth
Johnson, Esquire, of Sheppard, Muller, Richter & Hampton, and have been reviewed by the
Shinoharas and their legal counsel, and by the Auto Sales Park developers. The two Agreements
are presented to the Agency with a recommendation for approval.
FISCAL IMPACT: The Fourth Amendment to the Purchase and Sales Agreement and First
Implementation Agreement results in a net reduction in the purchase price from $4,650,000 to
$4,113,631, or a reduction of $536,369. The Agency grading costs are reduced from $435,600
to $399,406, or a reduction of $36,194. The Auto Sales Park developers will be paid $150,000
from the purchase price above on behalf of the owner of the property in settlement of their
claims. In addition, the Agency will loan the Shinoharas up to $1.2 million to complete the
grading of the property and relocation of contaminated soils. This loan is secured by other
property owned by the Shinoharas with adequate valuation.
[C:IWP51IAGENCYIRA4S14-AMEND.RA4]
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March 25, 1993
PLEASE NOTE:
The Redevelopment Agency's Special Counsel, Kenneth Johnson, Esq., of
Sheppard, Mullin, Richter, and Hampton is finalizing the Fourth Amendment to
the Agreement for Purchase of the Shinohara Property.
It was not completed at the time of distribution of the Agency Packets. However,
it will be sent under separate cover in advance of the April I meeting.
4~~
Berlin Bosworth
Secretary to the Redevelopment Agency
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RESOLUTION 1312
RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA
VISTA APPROVING THE FOURTH AMENDMENT TO THE AGREEMENT FOR
PURCHASE OF SHINOHARA PROPERTY LOCATED AT 4705 OTAY VALLEY
ROAD
WHEREAS, Jimmie Shinohara and Judi Shinohara (Seller) are the owners of land
commonly known as 4705 Otay Valley Road, in the City of Chula Vista within the Otay Valley
Road Redevelopment Project Area (property); and
WHEREAS, the Redevelopment Agency and the Seller entered into an agreement for
the purchase and sale of the property, entitled Agreement for Purchase of Shinohara Property
Located at 4705 Otay Valley Road, dated September 10, 1990; and
WHEREAS, the original agreement was first amended by a document entitled First
Amendment to the Agreement for Purchase of Shinohara Property Located at 4705 Otay Valley
Road, dated December 18, 1990; said amendment to require Seller to grade and compact the
property, and to further provide that the Agency pay to Seller the additional sum of $435,600
for the compaction and grading work; and
WHEREAS, the original Agreement was amended by a document entitled Second
Amendment to the Agreement for Purchase of Shinohara Property Located at 4705 Otay Valley
Road, dated September 3, 1991; said Amendment authorizing the Agency to make progress
payments for grading of the property and to obtain fee title to that portion of the property needed
for the widening of Otay Valley Road; and
WHEREAS, the original Agreement was amended by a document entitled Third
Amendment to the Agreement for Purchase of Shinohara Property located at 4705 Otay Valley
Road, dated September 4, 1992; said Amendment authorizing a reduction in the purchase price
for the property; and
WHEREAS, additional issues have arisen which have been discussed and agreed upon
by the Agency and the Seller including reduction in size of the property to be conveyed and
corresponding reduction on the purchase price and grading allowance, removal of contaminated
soil and the satisfaction of claims by the proposed redeveloper of the site; and
WHEREAS, a Fourth Amendment to the Purchase agreement entitled Founh
Amendment to the Agreement for Purchase of Shinohara Property Located at 4705 Otay Valley
Road, copy of which is on file in the Office of the Secretary to the Redevelopment Agency and
known as document RACO-05-93, has been prepared describing and resolving the additional
issues to the satisfaction of the Agency and Seller.
WHEREAS, the changes embodied in the Fourth Amendment do not create the
potential for significant governmental reports and a CEQA exemption will be filed upon the
Agency's approval of the Fourth Amendment.
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Resolution 1312
Page 2
NOW, THEREFORE, THE REDEVEWPMENT AGENCY OF THE CITY OF
CHULA VISTA does hereby f"md, order, determine, and resolve as follows:
1. The Redevelopment Agency hereby approves the Fourth Amendment to the
Agreement for Purchase of Shinohara property located at 4705 Otay Valley Road.
2. The Chairman of the Redevelopment Agency is hereby authorized to execute said
amendment on behalf of the Redevelopment Agency in the form of document RACO-05-93, as
such form may require technical correction or additions as may be deemed necessary by Agency
General Counsel to effectuate the interest of the parties. The Chairman is also authorized to
execute any and all exhibits and any and all other instruments and documents as determined
necessary by the Agency General Counsel to effecutate the terms and provisions of the Fourth
Amendment to the Agreement for purchase of Shinohara property located at 4705 Otay Valley
Road.
Presented by:
Approved as to form by:
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Chris Salomone, Executive Secretary and
Community Development Director
Bruce M. Boogaard
Agency General Counsel
'The resolution is being sent forward
without the concurrence of Agency's
General Counsel. Agency's General
Counsel will review prior to the meeting.
[C ,\ WP51IAGENCYIRESOS\4-AMEND I.RESJ
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RESOLUTION 1313
RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF
CHULA VISTA APPROVING THE FIRST IMPLEMENTATION
AGREEMENT TO THE DISPOSITION AND DEVELOPMENT AGREEMENT
APPROVED ON SEPTEMBER 15, 1992 BY AND AMONG THE
REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA AND THE
DGF FAMILY LIMITED PARTNERSHIP, DA VIDD. ORDWAY, CHRISTINA
L. ORDWAY, TRAVIS A. RENEAU AND MARGARET L. RENEAU
WHEREAS, the Redevelopment Agency of the City of Chula Vista (Agency)
entered into a Disposition and Development Agreement (DDA) in the DGF Family Limited
Partnership, David D. Ordway, Christina L. Ordway, Travis A. Reneau and Margaret L.
Reneau, (Auto Sales Park developers), said agreement approved by the Agency on September
15, 1992 for the development of real property (the "site") located at 4705 Otay Valley Road in
the City of Chula Vista; and .
WHEREAS, the Agency and the current owner of the site have previously entered
into that certain Agreement for purchase of the site dated September 10, 1990, which Agreement
has heretofore been amended three times and shall, concurrently herewith, be amended a fourth
time pursuant to the terms of a Fourth Amendment; and
WHEREAS, pursuant to the DDA, it was agreed that the current property owner
would undertake certain grading work to meet the rough grading requirements of the Auto Sales
Park developers. During the course of the grading work, certain hazardous substances were
discovered on the site which have resulted in the reduction of the site and establishment of the
Holding Parcel for temporary stockpiling of the hazardous substances; and
WHEREAS, the discovery of hazardous substances and subsequent reduction in
size of the site requires the execution of a First Implementation Agreement to address issues
including new description of the site, revised purchase price and grading allowance, future
disposition of the holding site, completion and approval of the workplan for relocation and
removal of the hazardous substance, completion of grading work, and other financial and
development issues; and
WHEREAS, the First Implementation Agreement to the DDA has been prepared
to address these issues, a copy of which is on file in the office of the Secretary to the
Redevelopment Agency and known as document RACO-06-93; and
WHEREAS, the execution of the First Implementation Agreement to the DDA
does not present the potential for significant environmental impacts and a CEQA exemption will
be filed upon the Agency's approval of the First Implementation Agreement.
NOW, THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY
OF CHULA VISTA does hereby f"md, order, determine, and resolve as follows: that the
c2 -1
Resolution 1313
Page 2
First Implementation Agreement to the Disposition and Development Agreement approved on
September 15, 1992 by and among the Redevelopment Agency of the City of Chula Vista, the
DGF Family Limited Partnership, David D. Ordway, Christina L. Ordway, Travis A. Reneau
and Margaret L. Reneau, said First Implementation Agreement attached hereto as though fully
set forth herein, is hereby approved.
BE IT FURTHER RESOLVED THAT the Chairman of the Redevelopment
Agency is hereby authorized to execute said Agreement on behalf of the Agency in the form of
document RACO-06-93, as such form may require technical corrections or additions as may be
deemed necessary by Agency General Counsel to effectuate the interest of the parties. The
Chairman is also authorized to execute any and all exhibits and any and all other instruments and
documents as determined necessary by the Agency General Counsel to effectuate the terms and
provision of the First Implementing Agreement to the Disposition and Development Agreement.
Submitted by
Approved by
c~~
Chris Salomone, Executive Secretary
and Community Development Director
Bruce M. Boogaard
Agency General Counsel
The resolution is being sentfoward without
the concurrence of Agency's General
'Counsel. Agency's General Counsel will
review prior to the meeting.
[C,WPS1IAGENCYIRESOSI4-AMEND2.RES]
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EXHIBIT A
Agreement- for
Purchase of Shinohara Property
located at-
4705 Otay Valley Road-
1. Parties.
This agreement made this September 10, 1990 for the purposes
of reference only and effective as of the date last executed, is
made between the Redevelopment Agency of the City of Chula Vista,
a political subdivision of the State of California ("Agency") and
not the City of Chula Vista ("City") which is not a party to this
agreement, and the Jimmie Shinohara and Judi Shinohara ("Seller"),
individuals, and is made with reference to the following facts and
definitions:
2. Recitals and Definitions.
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2.1.
"Property" .
The property which is the subject matter of this agreement is
all of the property owned by the Sellers located in the vicinity of
southeast quadrant of the otay Valley Road and Interstate 805,
commonly known as 4705 Otay Valley Road, consisting of
approximately 31 acres of land, and which is legally described as
set forth in the attached Exhibit A, incorporated herein by
reference, and diagramatically presented by the assessor's record,
attached hereto as Exhibit B, and incorporated herein by reference
("Property").
2.2 "Net Useable Land Area."
As used herein, Net Useable ~nd Area shall mean that area
within the Property which will support, without substantial
recompaction, according to building industry standards, commercial
buildings, and which are not identified "wetland areas" under
federal or state laws, rules and regulations, but excludes land
mass used for pUblic right of way (roads, gutters, parkway,
sidewalk, etc.). The actual "Net Useable Land Area" shall be
defined by a survey of the site prior to close of escrow.
2.3 "Non-Net Useable Land Area."
As used herein,
within the Property
Area."
Non-Net Useable Land Area shall mean that area
which is not part of the "Net Useable Land
shin2.wp
September 10, 1990
MOU re Purchase of Shinohara Property
Page 1
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3. Warranty and Representation.
3.1. Sellers warrant and represent that the Net Useable Land
Area of the Property, as defined herein, is approximately 20 acres.
This warranty and representation is separate and independent of a
similarl condition precedent to sale or recission.
3.2. Sellers warrant and represent that they are the fee
owners:.of' thE!:~ope.rty,:: and: thatet:ttle "thereto is not. encumbered. in
a way. that .would prevent the full commercial useability of the
site. .:c- ~ c.. ,.._
-; .:::. _"-:. -.::.:-.:.::...._ s:.:..:.-::.:_-~:.=::.:- .-. :.:_
4; ': Terms: and::Coriditioiis:'-'
Now~ therefore, the parties hereto, in exchange for the mutual
consideration promised herein, agree as follows:
~.1. Duty to BUy and Sell.
Seller agrees to sell the Property
designee ("Agency's Designee"), and Agency
cause the Agency's Designee to acquire, the
of the Property from Sellers, for the Price
subject to the conditions herein stated.
to Agency, or their
agrees to buy, or to
Net Useable Land Area
and on the Terms and
4.2. Price.
4.2.1. Purchase Price.
Agency shall pay at the times and in the amounts herein
specified, to Seller, Five Million Three Hundred Fifty Thousand and
00/100 ($5,350,000.00) Dollars for the Net Useable Property
("Purchase Price" or alternatively "Price"), without regard to the
useable portion.
4.3. Terms.
The Primary Purchase Price shall be paid in the following
amounts and at the times designated:
4.3.0.1.
$350,000 not later than September 14,
1990 ("Down Payment").
4.3.0.2. $400,000 not later than October 7, 1990
("First Installment Payment").
4.3.0.3. $2,980,000 not later than December 15,
1990 ("Second Installment").
4.3.0.4. The balance, without interest, shall be
shin2.wp
September 10, 1990
MOU re Purchase of Shinohara Property
Page 2
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3 2h
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1
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at Agency' s option, but paid not later
than the date of resale of the Property
by Agency for reuse, not to exceed .two
years from the Effective Date of this
. agreement ("Balance").
4.4. Delivery of Title.
:O:."1'~:-Ti't1.e:i'Gha):I>:)De7.del~verea:.:t6 "Agency f..Or. to such designee, at
such time as Agency shall tender the Balance.
4.5. Conditions of Duty to Purchase/Right of Agency to
RescIss1.bn.~ -:..: :.: ::,. .'.: :
The conditions contained herein condition the duty of the
Agency. to purchase. the Property, but they are not intended to
interfere with the payment schedule hereinabove set forth. If
paym~nt is made according to the schedule set forth above, and one
of the following conditions occur subsequent thereto which
terminates the duty to purchase, the .occurance of the condition
shall operate as a right of the Agency to rescind the transaction
and, upon exercising said right, a duty of the parties to return
the consideration heretofore paid.
4.5.1.
4.5.2.
4.5.3.
Title. Sellers have to be able to deliver Fee
Title without significant exceptions that will
interfere with the commercial "buildability"
of the Net Useable Land Area of the Property.
Environmental Condition. The land is sub-
stantially free of toxic or hazardous mat-
erials, and all permits from the required
environmental xegulatory agencies can and will
be secured."
Survival of Legally Required Public Hearings.
city and the Agency shall have the right to
conduct such hearings as they are required to
conduct bylaw, and in regard thereto, reserve
the right to the use of their full and
unfettered discretion in concluding on the
issues for which those public hearings were
required ("Public Hearing Issues"). Such
public hearings include, but may not be
limited to:
4.5.3.1.
California Environmental Quality Act.
4.5.3.2.
shin2.wp
September 10, 1990
Health and Safety Code Section 33431.
MOU re Purchase of Shinohara Property
Page 3
~-13
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4.5.4.
4.5.5.
4.5.6.
~ ~
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4.5.3.3. Health and Safety Code Section 33433.
4.5.3.4. Conditional Use Permit/Variances
city and Agency agree to deliberate with all
due diligence on any public hearings required
of them by law. If, after said public
hearings, the city or the Agency conclude, for
reasons inherent in the Public Hearing Issues,
that there is any basis for the rejection of-
the proj ect, the City and the Agency shall
have the right to rescind this transaction. -
"Net Useable Land Area" is less than 20 acres
and Agency makes a tender of rescission on the
basis of the failure of this condition
precedent before December 1, 1990.
Substantial recompaction of the site will be
required, according to standard building
standards, on the Net Useable Land Area in
order to construct buildings on any portion
thereof and Agency makes a tender of
rescission on the basis of the failure of this
condition precedent before December 1, 1990.
The parties acknowledge that recompaction may
be caused by loose earth -_ as well as by
expansive soil. Recompaction at a cost of
greater than $.50 per cubic foot of soil
needed to be recompacted will be deemed
"substantial".
Geologic condition, including faults, exist on
the site wh~ch shall interfere with the
commercial - useability of any portion of the
Net Useable Land Area.
If rescinded, Seller shall repay all previously paid consid-
eration up to $750,000 immediately, and Seller shall repay all
other monetary consideration by payment of a note secured by trust
deed dated and effective as of the date of rescission by the
Agency, which shall bear and accrue interest, compounded monthly,
at the Prime Rate of the Bank of America, Los Angeles Main Office
Branch, after 60 days, the principal and all accrued but unpaid
interest shall be due upon sale, but in no event, later than 6
months after date of note. Seller agrees to use good faith and
best efforts to resell the Property as soon- as possible after
rescission by the Agency.
shin2.wp
September 10, 1990
MOU re Purchase of Shinohara Property
Page 4
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WE HAVE SPECIFICALLY READ AND UNDERSTAND OUR DUTY TO RETURN THE
CONSIDERATION UPON THE OCCURANCE OF ANY OF THE FOREGOING CONDITIONS
AND MORE SPECIFICALLY UPON FAILURE OF THE PROPERTY TO YIELD 20
ACRES OF NET USEABLE LAND AREA.
Jimmie Shinoha~ . Judi Shinohara;.L
4.6. se~~o~ Performance.
Simultaneous with the delivery of the Down Payment, Sellers
shall encum~er record-, title -with a.,performance trust deed in such
form as meets with ::the approval' of the~ Agency-'s' general. legal
counsel to secure the performance of.this agreement.
,:-G::.~'::~;:
. -.. --.
. ."... - ..- -.
4.7. Exercise of Powers of Eminent Domain'.
The Agency acknowledges that this purchase of the Property by
the Kgency is an exercise of the Agency's power of eminent domain,
and thAt in the absence of this Agreement, the Agency represents
that it would have condemned the Property and acquired it in
eminent domain.
4.8. Bargain Voluntary Sale.
Agency furthermore stipulates and acknowledges that it would
have been required to pay $8.00 per square foot of Net Useable Land
Area based on the market value of the land as established by the
three offers attached hereto as Exhibit B, and $.80 per square foot
of Non-Net Useable Land Area. Sellers intend, and the. parties
hereto agree, that this difference in value is and shall constitute
a charitable contribution to the Agency, and accepts any differen-
tial between that and the actual purchase price required to be paid
as a charitiable donatation to the".Agency.
4.9. Waiver of Rights under Eminent Domain.
"'-\
Sellers agree to waive
relocation benefits or to
development of the Property.
their rights, if any should exist, to
owner participation in the future
4.10. Delivery of Possession.
Sellers shall deliver possession, and vacate the premises, 90
days after Agency tenders the Balance of the Price.
4.11. Risk of Losses.
Risk of losses due to fire, earthquake, flood or other natural
calamity shall pass to Agency only at the time of delivery of
pOSsession.
shin2.wp
September 10, 1990
MOU re Purchase of Shinohara Property
Page 5
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4:12.
Irrevocable License to Enter.
Until. Agency actually acquires record title to the subject
Property, Agency is hereby granted the full and unfettered right to
enter all "and any part of the property to conduct such tests,
surveys, examinations, audits or" for such other purposes that are
reasonably related to accomplishing the Agency's objectives under
this agreement.._
4.13. Liability for Road Widening.
- ~. -~.-~ -- _.._._-~ --- -_..:.. -,.~- - ~-'.....- -----._. . ~_. -
":::-~ Ag_eney",agree:s:~thq:t;:.; l,l:nl~s ~thi~"- t:r;:ansac;ti~nis rescinded" for
the::-f'ailure "OCt-_the -_co_nditions-~herein set "forth, - Agency shall hold
Sellers harmless with regard to any costs for the widening of Otay
Valley Road.
4.14.
Escrow; Execution of Documents.
The parties hereto agree to open an escrow with an escrow
agent of Seller's choice with the consent of Agency which consent
shall not be unreasonably withheld, and to execute such documents
as may be necessary to accomplish the purposes and intent of this
agreement. The costs of the escrow and the costs of sale and
purchase, including typically prorated costs shall be divided
according to standard industry practices for the San Diego County
area.
4.15. Agency's Right to Transfer Rights and Duties.
Agency shall, without waiver of their duties under this
agreement, have the right to transfer their duties to Agency's
Designee, and the right to require Sellers to perform for the
benefit of Agency's Designee, including the duty to transfer title
to Agency's Designee, unless an9 except Seller may suffer
substantial adverse tax consequenc~s as a result thereof.
4.16.
Palm Trees
Seller shall retain title to all palm trees on the property if
he shall remove same prior to the date upon which he is required to
deliver possession.
4.17. Warranty of Signatories.
Signatories hereto do hereby warrant that they have the
authority of their principals to bind the principals they purport
to represent.
(End of Page. Next Page is Signature Page.)
shin2.wp
September 10, 1990
MOU re Purchase of Shinohara Property
Page 6
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Signature Page to
Agreement for
Purchase of Shinohara Property
located at
4705 Otay Valley Road
Dated: September 10,. 1990
Redevelopment
Ci ty O~hUla
U
by: \ J~{
Gregor C
Agency of the
Vista
Appro~ as./"fo c02~t:
~L: If} ..~
John Goss,
it Executive Director
APP4.: ;!;. t
Bruce M. Boogaa
Agency General
Dated: September 10, 1990
Sellers:
Ricl1ilrd Kau
on behalf of the below
their signatures do
n:
parties if
not appear
.:d6'
di Shinohara
shin2.wp
September 10, 1990
MOU re Purchase of Shinohara Property
Page 7
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Exhibit A
property Legal Description
(Total Property, Not Just Net Useable Land Area)
The Land referred to herein is situated in the state of California,
County of San Diego, and is described as follows:
All of Lot 2 of the southwest quarter of the northwest quarter of
section 19, Township 18 south, Range 1 west, San Bernardino Base
and Meridian, according to united states Government Survey approved
September 11, 1879.
Excepting therefrom, the east 175 f~et and the west 650 feet of the
south 660 feet of the east 825 feet.
shin2.wp
September 10, 1990
MOU re Purchase of Shinohara Property
Page 8
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Diagram of Property
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September
MOU re Purchase of Shinohara
10,
1990
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EXHIBIT B
First Amendment to
Agreement for
purchase of Shinohara Property
located at
4705 Otay Valley Road
1. Parties.
This agreement made this December 19, 1990 for the purpsoes of
reference only and effective as of the date last executed, is made
between the Redevelopment Agency of the City of Chula Vista, a
polticial sUbdivision of the state of California ("Agency") and not
the city of Chula Vista ("city"), which is not a party to this
agreement, and Jimmie Shinohara and Judi Shinohara ("Seller"),
individuals, and is made with reference to the following facts:
2. Recitals.
a. Seller is the owner of land commonly known as 4705 Otay
Valley Road, in the City of Chula Vista, County of San Diego, more
legally described as set forth in the attached Exhibit A
("Property" or "Subject Property"); and,
b. Agency and Seller entered into an agreement for the
purchase and sale of the Subject Property, entitled "Agreement for
Purchase of Shinohara Property located at 4705 otay Valley Road"
dated for reference as of September 10, 1990 ("Original
Agreement"); and,
c. By virtue of section 4.5.4 of the Original Agreement, one
of the conditions precedent to the duty of Agency to acquire the
Subject Property, and of their right'to rescind the transaction and
have the consideration paid return'ed to them, was that the "Net
Useable Land" area is less than 20 acres; and,
d. Agency had commissioned an engineering study which has now
been completed and which has concluded that the Net Useable Land
area, in its present condition was substantially less than 20
acres, to wit: approximately 13 net useable acres unless substan-
tial removal and recompaction is performed; and,
e. Agency contends that they have the right not to complete
the purchase and to rescind the transaction and have the consider-
ation paid therefor returned to Agency; and,
f. Seller contends to the contrary
g. The parties desire to resolve their dispute without
shin4.wp
December 19, 1990
First Amendment to Shinohara Purchase Agreement
Page 1
:2. -.11
J '/S
litigation, and conclude the transaction contemplated by the
Original Agreement by amending the terms and conditions thereof in
the respects herein set forth only and in no other respects:
3. Terms and Conditons.
Now, therefore, the parties hereto agree as follows:
a. Seller hereby agrees that, not later than 120 days from
the effective date of this First Amendment, Seller will place the
property in a 'compacted state with a grade ("Specification Grade")
at the existing elevation as detailed on the topographic maps
prepared for the Redevelopment Agency in 1988, all of which is more
fully and specifically defined in specifications ("Specifications")
set forth in the attached Exhibit B ("Compaction Work") at Seller's
sole cost and expense Seller further aqrees that the removal and
recom~action will result in a new top of bank that is in the same
location as the 1988 Top of Bank Boundary shown in Exhibit B.
i. Agency shall have the right of on-site work inspec-
tion by a designee of its choice for the purpose of as-
suring that the work of compaction is performed to the
specifications required.
b. Agency hereby waives the benefit of the condition prece-
dent contained in section 4.5.5 of the Original Agreement, relating
to substantial recompaction, and treat same as if it did not there-
in exist, and that Agency's duty to acquire is not sheltered by
said condition.
c. Agency agrees to pay to Seller, as and for its contrib-
utory share of the cost of the Compaction Work, the sum of
$435,600.00 at the time such Comp9ption Work is completed to the
standards of the Specifications. .
d. The Agency's duty to pay $2,980,000 on December 15, 1990,
as contained in section 4.3.0.3 of the Original Agreement, shall be
extended to, and shall now become due on January 30, 1990.
e. Each party will amend escrow instructions and execute such
other documents as is necessary to accomplish the purposes of this
First Amendment.
f. Aqency. or its aqents. may eventually determine the
finished qrade in which the Subiect Property must be placed
immediately before the layinq of foundations for the eventual
improvements ("Finished Grade"). Upon the Aqency's determination
of Finished Grade. Aqency and Seller aqree to meet and confer and
neqotiate in qood faith with Seller to cause Seller. for a fair
shin4.wp
December 19, 1990
First Amendment to Shinohara Purchase Agreement
Page 2
..2 - .2...2.-
-:J ~! 6
price comparable to a price which could be commanded in the market
place for earth compaction work. to place the Sub;ect Property from
the Specification Grade condition to Finished Grade.
g. No other terms, conditions, privileges and benefits of the
Original Agreement are affected by the provisions of this First
Amendment.
(End of Page. Next Page is Signature Page.)
shin4.wp
December 19, 1990
First Amendment to Shinohara Purchase Agreement
Page 3
..2 -.2.3
J - ~/-;
Signature Page to
First Amendment to
Agreement for
Purchase of Shinohara Property
located at
4705 otay Valley Road
Now therefore, the parties hereto, having read and understood
the terms and conditions of this agreement, do hereby express their
consent to the terms hereof by setting their hand hereto on the
date set forth adjacent thereto.
Dated: December 19, 1990
Redevelopment Agency of the
city of Chula vista
by:
Gayle L. McCandliss
its chairman
Approved as to Content:
John Goss
its Executive Director
Approved as to Form:
Bruce M. Boogaard
city Attorney
..<;.'.
Dated: December 19, 1990
Jimmie Shinohara
Judi Shinohara
shin4.wp
December 19, 1990
First Amendment to Shinohara Purchase Agreement
Page 4
02..2'1
j ;/po
Exhibit List to
First Amendment to
Agreement for
Purchase of Shinohara Property
located at
4705 otay Valley Road
Exhibit A: Legal Description to Subject Property.
Exhibit B: Compaction and Finished Grade Specifications, showing
1988 Top of Bank Boundary.
shin4.wp
December 19, 1990
First Amendment to Shinohara Purchase Agreement
Page 5
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EXHIBIT C
RESOLUTION
1194
RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF
CHULA VISTA APPROVING A SECOND AMENDMENT TO THE
AGREEMENT FOR PURCHASE OF SHINOHARA PROPERTY LOCATED
AT 4705 OTAY VALLEY ROAD
THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA does
hereby find as follows:
WHEREAS, Jimmie Shinohara and Judi Shinohara (Seller) are the owners ofland
commonly known as 4705 Otay VaHey Road, in the City of Chula Vista within the Otay Valley
Road Redevelopment Project Area (Property); and
WHEREAS, the Redevelopment Agency and the Seller entered into an agreement
for the purchase and sale of the property, entitled Agreemenrfor Purchase of Shin ohara Property
Localed 01 4705 Owy Valley Road, dated September 10, 1990; and
WHEREAS, the original agreement was first amended by"a document entitled
.' FirSI Ametulmem to the Agreemem for Purchase of Shinohara Property Localedat 4705 Otay
Valley Road, dated December 18, 1990; said amendment to reqllire Seller to grade and compact
the property, and to further provide that the Agency pay to Seller the additional sum of $435,600
for the compaction and grading work; and
WHEREAS, additional issues have ar,i$en which have been discussed and agreed
upon by the Agency and the Seller including the Agency's desire to obtain, on demand and in
advance of the closing of the escrow, fee title to that portion of the property which is required
for the widening of Otay Valley Road, and also the Seller's desire to receive Agency's additional
compensation in the form of progress payments for the grading and compaction work as said
work progresses, and receive relief from having to provide a bond for provision of landscaping
improvements; and
WHEREAS, a Second Amendment to the Purchase Agreement entitled Second
Amendment 10 the Agreemel1l for Purchase of Shinohara Property Localed Of 4705 Olay Valley
Road has been prepared describing and resolving the additional issues to the satisfaction of the
Agency and the Sellers, said agreement attached hereto as though fully set forth herein.
NOW, THEREFORE, BE IT RESOLVED by the Redevelopment Agency of
the City of Chula Vista as follows:
L The Redevelopment Agency hereby approves the Second Amendment to
the Agreement for Purchase of Shinohara property located at 4705 Otay Valley Road, said
amendment attached hereto as though fully set forth herein.
rn;;c 1 of--b
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2. The Chairman of the Redevelopment Agency IS hereby authorized to
execute said amendment on behalf of the Redevelopment Agency.
Presented by
eL
by
Chris Salomone
ComrilUnity Development Director
Bruce M. Boogaard
Agency General Cou e
(C:\WP51 \AGENCY\AMEND-#1.R ESI
Page~f'-';l
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Second Amendment to
Agreement for
Purchase of Shinohara Property
located at
4705 Otay Valley Road
1. Parties.
This agreement made this ____ day of , 1991, is made
between the Redevelopment Agency of the city of Chula Vista, a
political subdivision of the State of California ("Agency") and
not the city of Chula Vista ("city"), which is not a party to
this agreement, and Jimmie Shinohara and Judi Shinohara
("Seller"), individuals, and is made with reference to the
following facts:
2. Recitals.
2.1. Seller ~s the owner of land commonly known as 4705
Otay Valley Road, in the city of Chula Vista, County of San Diego
("Property" or "Subject Property"); and
2.2. Agency and Seller entered into an agreement for the
purchase and sale of the Subject Property, entitled "Agreement
for Purchase of Shinohara Property located at 4705--0tay Valley
Road" dated for reference as of September 10, 1990 ("Original
Agreement"); and later amended on December 18, 1990 by a "First
Amendment" .
2.3. The Original Agreement was first amended by that
document entitled "First Amendment to Agreement for Purchase of
Shinohara Property located at 4705 Qtay Valley Road" ("First
Amendment") to require Seller to compact and grade the Subject
Property ("Compaction Work") as more specifically outlined
therein, which definition is incorporated herein by reference;
and to further provide for Agency to pay to Seller, as and for
its contributory share of the cost of the Compaction Work, an
additional sum of $435,600.00 ("Additional Compensation") at the
time such Compaction Work is completed to the standards of the
Specifications, free of all liens for the grading work of
improvement.
2.4.
discussed,
herein:
The following issues have arisen which have been
and agreed upon by the parties hereto as set forth
2.4.1. The City desires to obtain, on demand and in
advance of the closing of the escrow, fee title to that portion
of the Subject Property described as Parcels 1 (Right of Way), 2
shin7.wp
August 30, 1991
Second Amendment to Shinohara Purchase Agreement
Page 1
~
j 5E ..2-.2..~
(Slope Easement) and 3 (Temporary Construction Easement) of
Exhibit A, attached hereto and incorporated herein, as necessary
to permit construction of road widening improvements and use of
such improvements along the south side of the Otay Valley Road,
and to obtain same without further compensation beyond that
already released to Sellers;
2.4.2. The Sellers desire to receive city's Additional
Compensation in.progress payments as the Compaction Work
progresses.
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
(A) Oriqinal Aqreement in Effect.
Except as hereby amended, the "Original Agreement" and
"First Amendment" shall continue in full force and effect.
(B) Early Closure of Road Wideninq Area.
Seller agrees to forthwith upon demand by. City deliver
possession of, and to convey fee simple absolute title to City,
or city's designee, in the condition required by the Original
Agreement (e.g., substantially free of toxic or hazardous
materials and with all required permits), that portion of the
Subject Property described as Parcels 1, 2 and 3 of Exhibit A,
and such other part of the Subject Property as City shall
determine is necessary and appropriate to widen Otay Valley Road
("Road Widening Area") (expected area to be less than three (3)
acres) Once effected after demand and execution of grant deed by
Seller, the transfer of this Road Widening Area shall be deemed
complete and without regard to thegther conditions precedent in
the Original Agreement; In the event that the balance of the
Subiect Property should, for any reason whatsoever, not "close
escrow", the Road Wideninq Area shall be deemed sold to the
Aqency at the price received, if any, by the Aqency from the
City, or the Otay Valley Road Assessment District, if formed,
currently estimated to be $188,124.00, and the consideration
required to be returned to the city required by this aqreement
shall be adiusted to reflect this deemed sale.
(C) Proqress Payments of Additional Compensation.
Agency agrees to advance the Additional Compensation
otherwise required by the First Amendment to be paid at the
conclusion of the Compaction Work, by paying said Additional
Compensation to Seller, or at City's option, jointly to Seller
and the Contractor, (for its share of the cost of Compaction Work
to place the Property in conformance with the "Specification
shin7.wp
August 30, 1991
Second Amendment to Shinohara Purchase Agreement
Page 2
~
-J
"-;(,..2-30
to place the Property in conformance with the "Specification
Grade" and the compaction and other condition required by the
Firs~ Amendment), by paying same monthly at the time progress
billings are received from Cass Construction, Inc., contractor
for the Compaction Work ("Cass"), and in proportion to the City's
share of the total cost of the Compaction Work charged by Casso
Specifically, each monthly payment by Agency shall not
exceed 70.6% of 90% of that month's billing from Casso The
Agency's obligation to pay is for the direct and sole benefit of
Seller to compensate Seller for the Compaction Work done to the
standards of the Specifications and is not a direct obligation of
Agency to Cass nor is Cass a third party beneficiary of Agency-
Seller's Agreement, including this Second Amendment. Agency's
contributory share shall not be more than $435,600.00.
(D) Landscape Bonds.
(i) Slopes. Seller agrees to comply with all standard
conditions precedent to a grading permit including the
landscaping of all slopes according to the requirements of the
City typically imposed for such landscaping, and shall provide
such bonds to assure performance of this obligation. as City
typically requires as a condition to issuing the grading permit.
(ii) Completed Useable Land Area. Seller shall not be
required, as a condition precedent to obtaining grading permits,
to post any bond for landscaping the completed useable land area
("Flat Area") of the Subject Property, but agrees that, upon
demand by the City, prior to close of,. escrow on the Subject
Property, or after failure of the pro$pective sale of the Subject
Property to occur and continuing thereafter until the Subject
Property is completely improved for use, Seller shall, at
Seller's sole cost and expense, install and maintain such
landscaping in such Flat Area as City shall, from time to time,
require. City shall not unreasonably require the posting of a
bond for or the implementation of the landscaping of the Flat
Area. Upon failure to Seller to forthwith comply with the
provisions of the paragraph, City shall have the right to do so,
and upon doing so, the entire cost thereof shall be reimbursed to
City by Seller, together with interest thereon at the rate of 9%
per annum. If City is required to institute litigation or
otherwise retain legal counsel in order to recover its costs, the
prevailing party shall be entitled to attorney's fees. City may
offset any such costs against any other sums due Sellers under
the Original Agreement, as amended. Seller's obligations in this
paragraph are specifically secured by the Performance Trust Deed.
City shall have the authority to require, upon failure of the
sale/purchase escrow to close for any reason whatsoever, to
shin7.wp
August 30, 1991
Second Amendment to Shinohara Purchase Agreement
Page 3
~
~ Sf ..2-31
require, upon failure of the sale/purchase escrow to close for
any reason whatsoever, to require bonds from a sufficient and
competent surety, as City shall determine, to assure Seller's
duty to install and maintain landscaping as required by this
paragraph.
(El Obliqations Secured bv Performance Trust Deed.
All obligations of Seller as contained in this Second
Amendment shall be considered to be part and parcel of the entire
agreement which is the subject matter of the Performance Deed of
Trust dated September 14, 1990 and recorded with the County
Recorder September 18, 1990 as Document 90-510321, and therefore,
are secured thereby.
(End of Page.
Next Page 1S Signature Page.)
shin7.wp
August ]0, 1991
Second Amendment to Shinohara Purchase Agreement
Page 4
~
j SC:J ,,2-3:2..,
signature Page to
Second Amendment to
Agreement for
Purchase of Shinohara Property
Located at
4705 otay Valley Road
Now therefore, the parties hereto, having read and
understood the terms and conditions of this Second Amendment to
Agreement do hereby express their .consent to the terms hereof by
setting their hand hereto on the date set forth adjacent thereto.
Dated:
Redevelopment Agency of the
City of Chula vista
By
its Chairman
Approved as to Content
John Goss
its Executive Director
Approved a
/l
i~r~
/.
Bruce M. Boo
city Attorne
n
form
Dated:
Jimmie Shinohara
.Judi Shinohara
shin7.wp
August 30, 1991
Second Amendment to Shinohara Purchase Agreement
Page 5
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EXHIBIT "A"
SHINOHARA
THAT PORTION OF LOT 2 OF THE SOUTHWEST QUARTER OF THE NORTHWEST
QUARTER OF SECTION 19, TOWNSHIP 18 SOUTH, RANGE 1 WEST, SAN
BERNARDINO MERIDIAN, IN THE CITY OF CHULA VISTA, COUNTY OF SAN
DIEGO, STATE OF CALIFORNIA ACCORDING TO UNITED STATES GOVERNMENT
SURVEY APPROVED SEPTEMBER II, 1879, BEING DESCRIBED AS FOLLOWS:
PARCEL 1 (RIGHT-OF-WAY)
THE NORTHERLY 75.00 FEET OF SAID LOT 2 OF THE SOUTHWEST QUARTER OF
THE NORTHWEST QUARTER OF SECTION 19, EXCEPTING THEREFROM ANY RIGHTS
OF THE PUBLIC IN AND TO ANY PORTION OF THE HEREIN DESCRIBED
PROPERTY LYING WITHIN ROADS, STREETS OR HIGHWAYS, ALSO EXCEPTING
THEREFROM THE EAST 175.00 FEET.
SAID PARCEL CONTAINS 1.71 ACRES MORE OR LESS.
PARCEL 2 (SLOPE EASEMENT)
AN EASEMENT FOR SLOPE AND DRAINAGE PURPOSES OVER TIIAT PORTION OF
LOT 2 OF THE SOUTHWEST QUARTER OF THE NORTIIWEST QUARTER OF SECTION
19, TOW:-:SIIIP 18 SOuTlI, RANGE 1 WEST, SAN BERNARDINO MERIDIAN IN THE
CITY OF CHClA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO UNITED STATES GOVERNME:<T SURVEY APPROVED SEPTEMBER 1 I,
1879 BEING DESCRIBED AS FOLLOWS:
SAID EASEMENT BOUNDED ON TilE NORTII BY THE SOUTHERLY LINE OF PARCEL
I AS DESCRIBED ABOVE AND 0, TilE SOUTH BY THE FOLLOWING DESCRIBED
LI:<E:
BEGIN~nIG AT TilE NORTHWEST CORNER OF SAID LOT 2 OF THE SOUTHWEST
QUARTER OF THE NORTHWEST QUARTER; THENCE SOUTII 0'26 '17" WEST ALONG
THE WESTERLY LINE OF SAID LOT 2, 89.21 FEET TO TilE TRUE POINT OF
BEGINNING; THE,CE SOUTH 83'21'48" EAST 69.85 FEET;
THENCE SOUTH 89'13'56",\EAST 100.00 FEET;
THENCE NORTH 89'37'20"'EAST 100.03 FEET;
THESCE NORTH 89054'30" EAST 100.02 FEET;
THENCE SOUTH 86'56'28" EAST 100.06 FEET;
THENCE SOUTH 88'05'11" EAST 48.63 FEET;
TIIENCE SOUTH 49'05'15" EAST 17,82 FEET;
THENCE SOUTH 10'05'06" EAST SO.07 FEET'
THENCE NORTH 80'00'00" EAST 11.55 FEET;
THENCE NORTH 04'02'42" EAST 46.22 FEET;
THENCE NORTH 47'24 '08" EAST 19.43 FEET;
THENCE SOUTH 89'13'56" EAST 100.00 FEET;
THENCE SOUTH 89'48'19" EAST 100.01 FEET;
THENCE SOUTH 87'42'16" EAST 300.07 FEET;
THENCE NORTH 89'02'58" EAST 100.06 FEET;
THENCE SOUTH 89048"19" EAST 100.01 FEET;
TIIENCE SOUTH 88'56'45" EAST 82.43 FEET TO THE WESTERLY LINE OF THE
EASTERLY 175 FEET OF lOT 2 OF SAID SECTION 19 AND THE TE~4INUS OF
TH I S EASEMENT.
SAID PARCEL CONTAINS 0.66 ACRES MORE OR LESS.
PARCEL 3 (TEMPORARY CONSTRUCTION EASEMENT)
A TEMPORARY EASEMENT FOR CONSTRUCTION PURPOSES OVER A STRIP OF LAND
20 FEET IN WIDTH, LYING SOUTHERLY OF AND ADJACENT TO AND PARALLEL
WITH THE SOUTHERLY LINE OF PARCEL 2 DESCRIBED ABOVE.
THE TERM Ir\ATION DATE FOR THIS TEMPORARY CONSTRUCTION EASEMENT SHALL
BE 90 DAYS AFTER THE FILI1"G OF THE NOTICE OF COMPLETION OF
CONSTRUCTION.
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ATTACHED HERETO AND MADE A PART OF THIS LEGAL DESCRIPTION IS A PLAT
LABELED EXHIBIT "B"
THIS LEGAL DESCRIPTION AND PLAT WERE PREPARED BY ME OR UNDER MY
DIRECTION.
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EXHIBIT 0
RESOLUTION 1274
RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF
CHULA VISTA APPROVING THE THIRD AMENDMENT TO THE
AGREEMENT FOR PURCHASE OF SHINOHARA PROPERTY LOCATED
AT 4705 OTAY VALLEY ROAD
WHEREAS, Jimmie Shinohara and Judi Shinohara (Seller) are the owners of land
commonly known as 4705 Otay Valley Road, in the City of Chula Vista within the Otay VaHey
Road Redevelopment Project Area (property); and
WHEREAS, the Redevelopment Agency and the Seller entered into an agreement for
the purchase and sale of the property, entitled Agreement for Purchase of Shinohara Property
Loaued at 4705 Otay Valley Road, dated September 10, 1990; and
WHEREAS, the original agreement was first amended by a document entitled First
Amendment to the Agreement for Purchase of Shinohara Property Located at 4705 Otay Valley
Road, dated December 18, 1990; said amendment to require Seller to grade and compact the
property, and to further provide that the Agency pay to Seller the additional sum of $435,600
for the compaction and grading work; and
WHEREAS, the original Agreement was amended by a document entitled Second
Amendment to the Agreement for Purchase of Shinohara Property Located at 4705 Otay Valley
Road, dated September 3, 1991; said Amendment authorizing the Agency to make progress
payments for grading of the property and to obtain fee title to that portion of the property needed
for the widening of Otay Valley Road; and
WHEREAS, additional issues have arisen which have been discussed and agreed upon
by the Agency and the Seller including the Agency's desire to reduce the purchase price of the
property and the Seller's desire to eliminate some of the conditions of sale and to financially
limit their obligation to mitigate hazardous materials contamination of soil or groundwater; and
WHEREAS, a Third Amendment to the Purchase agreement entitled Third Amendment
to the Agreement for Purchase of Shinohara Property Located at 4705 Otay Valley Road, copy
of which is on file in the Office of the Secretary to the Redevelopment Agency and known as
document RACO-27-92, has been prepared describing and resolving the additional issueS to the
satisfaction of the Agency and Seller.
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TIlE REDEVELOPMENT AGENCY OF TIIE CITY OF CIruLA VISTA does
hereby resolve as follows:
1. The Redevelopment Agency hereby approves the Third Amendment to the
Agreement for Purchase of Shinohara property located at 4705 Otay Valley Road.
2. The Chairman of the Redevelopment Agency is hereby authorized to execute said
amendment on behalf of the Redevelopment Agency in the form of document RACO-27-92, as
such form may requiretechnica1 correction or additions as may be deemed necessary by Agency
General Counsel to effectuate the interest of the parties.
Presented by:
c!2~~~ry~
Community DevelopmJ;t Director
Approved as to form by:
h aJVL u ~ 1('f(J1-
Bruce M. Boog d
Agency General Counsel
ICIWP51IAGENCYIRESOS\3.AMEND.RESI
Page 2 of 2
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THIRD AMENDMENT TO AGREEMENT TO PURCHASE OF SHINOHARA PROPERTY
LOCATED AT 4705 OTAY VALLEY ROAD
1. PARTIES: This Third Amendment to Agreement To Purchase
of Shinohara Property Located at 4705 otay Valley Road ("Third
Amendment") is entered into as of , 1992 by and
between the Redevelopment Agency of the City of Chula Vista, a
political subdivision of the State of California, ("Agency") and
Jimmie Shinohara and Judi Shinohara ("Seller") and is made with
reference to the following facts:
2. RECITALS:
2.1 Seller is the owner of land commonly known as 4705
Otay Valley Road in the City of Chula Vista, County of San Diego,
("Property") and;
2.2 Agency and Seller have entered into an Agreement for
the purchase and sale of the Property titled "Agreement for
Purchase of Shinohara Property Located at 4705 Otay Valley Road"
dated for reference as of September 10, 1990 ("Original Agreement")
and later amended on December 18, 1990 by a First Amendment ("First
Amendment") and later amended on September 3, 1991 by Second
Amendment ("Second Amendment");
,
2.3 Since the date of execution of the Second Amendment
by the parties various issues have arisen with regard to the
Agency's acquisition of the Property including issues regarding
grading, the potential of disapproval of an assessment district for
improvements to Otay Valley Road, the Agency's negotiations with
the ultimate purchasers of the Property for use as an auto park,
and the purchase price for the Property. Because of these issues
the Agency and Seller mutually agreed to not start grading on the
Property until all issues were resolved;
2.4 Agency has also advised Seller that it no longer has
the funds available to pay $5,350,000 for the Property and has
requested Seller to make a charitable gift to the Agency of an
additional $700,000 by reducing the Purchase Price in such amount.
Seller is agreeable to this reduction and, Seller intends, and the
parties hereto agree, that this difference of $700,000 is and shall
constitute a charitable contribution to the Agency.
2.5 By execution of this Third Amendment the parties
desire to finally and completely resolve any and all outstanding
issues with regard to the Agency's acquisition of the Property on
the terms set forth herein.
NOW THEREFORE, the Parties hereto agree as follows:
1. Except as hereby amended, the Original Agreement, the
First Amendment and the Second Amendment shall continue in full
force and effect. All terms and words used in this Third Amendment
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shall have the same meaning and effect as used and defined in the
Original Agreement, the First Amendment and the Second
Amendment.
2. Paragraphs 2.2, 2.3, 3.1, 3.2 and 4.10 of the Original
Agreement are hereby deleted in their entirety.
3. sections 4.2 and 4.3 of the Original Agreement are hereby
amended in their entirety to read as follows:
"4.2 PRICE
4.2.1 Agency shall pay at the times and in the
amounts herein specified to Seller $4,650,000 for the
Property ("Purchase Price" or alternatively "Price").
4.3 The Purchase Price shall be paid in the following
amounts and the times designated.
4.3.1
January 30,
by Seller.
$3,730,000 which has been paid on or before
1991, receipt of which is hereby acknowledged
4.3.2 To the extent not earlier paid pursuant to
paragraphs 10 or 11 of the Third Amendment, the balance
of the Purchase Price in the amount of $920,000
("Balance"), without interest, shall be due .as of the
Closing Date (as defined below)."
4. section 4.5 of the Original Agreement is hereby amended
in its entirety to read as follows:
"4 . 5. Condi tions Precedent. The sole conditions
precedent to the Agency's obligation to close this
transaction for the purchase of the Property and escrow
are the following:
(a) Completion of the Grading Work by Seller as
described in section 9.1;
(b) Delivery of the Property by Seller in a
condition which is substantially free of toxic or
hazardous materials ("Satisfactory Toxic Condition").
Satisfactory Toxic Condition shall be evidenced by
Torstan Inc. 's ("Torstan") delivery of a statement to the
parties representing and warranting that, pursuant to the
"Testing Parameters" (as such term is defined below),:
(1) there were no Hazardous Substances found on the
Property during the grading process, or if there were,
that such Hazardous Substances were removed or otherwise
adequately remediated in accordance with all applicable
laws and regulations, and (2) there were no Hazardous
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Substances found in the fill, or if there were, that such
Hazardous Substances were removed or otherwise remediated
in accordance with all applicable laws and regulations.
Notwithstanding the above, if Torstan cannot deliver
the statement described above because all Hazardous
Substances were not removed from the Property or fill as
provided in subparagraphs (1) and (2) above, or
notwithstanding any representations and warranties of
Torstan, it is otherwise disclosed by data or physical
evidence that Hazardous Substances remain, the
Satisfactory Toxic Condition and the condition precedent
set forth in this subparagraph (b) will nevertheless be
deemed to be satisfied if (1) the existence thereof would
not materially and adversely impact upon Auto Developer's
(as such term is defined in Paragraph 15) ability to
finance, construct or operate the proposed auto park use
on the Property and would not materially and adversely
affect the value of the Property; or (2) the results of
Torstan's report and data therefrom (or otherwise)
rendered in the course of the Grading Work do not
otherwise disclose a material financial risk to Auto
Developers proceeding with the development of the auto
park on the Property. The burden of demonstrating that
the Satisfactory Toxic Condition has not been
accomplished shall rest with Agency. The. Executive
Director of the Agency shall have ten (10) working days
following the delivery to the Executive Director of
Agency of notice that the Grading Work and Remediation
Work, if any, is Substantially completed to demonstrate
with reasonable specificity by documentation and
evidence, in writing, that the Satisfactory Toxic
Condition has not been accbmplished, or Agency shall be.
deemed to have waived any right Agency may have to object
thereto and the condition set forth in this subparagraph
(b) shall be deemed satisfied. Such notice to Executive
Director shall indicate that failure of Agency to respond
in writing as provided above shall be deemed Agency's
waiver of Agency's right to object. In the event Auto
Developers fail to enter into an agreement with Agency or
terminate their agreement with Agency with regard to the
Property, the terms of this Paragraph with regard to the
Auto Developers shall mean and refer to Agency and the
reference to "auto park use" shall mean and refer to
other commercial or industrial use suitable for the
Property.
As used herein, the term "Testing Parameters" shall
mean those observation and testing procedures which are
or will be described in the Field Health and Safety Plan
prepared for the Grading Work by Torstan.
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(c) Agency obtaining a title insurance policy in
accordance with section 8.2 of this Third Amendment.
If the conditions set forth in this section 4.5 are not
satisfied, deemed satisfied or waived on or prior to the
Closing Date, as it may be extended, Agency shall have the
right upon thirty (30) days notice to terminate this Agreement
and the obligation to purchase the Property and give a notice
of rescission to Seller. If rescinded, Seller shall repay all
previously paid funds advanced by Agency by delivery of a note
secured by a trust deed dated and effective as of the date of
rescission by the Agency which shall bear and accrue interest
compounded monthly at the prime rate of the Bank of America in
Los Angeles Main Office Branch, from the date of such notice,
the principal and all accrued interest shall be due upon sale
but in no event later than six months after the date of note.
5. Paragraphs 3a., 3b., 3c., 3d., 3e., 3f. and 3g. of the
First Amendment are hereby deleted in their entirety.
6. Paragraph (C) and (D) of the Second Amendment are hereby
deleted in their entirety.
7. 7.1 within 10 days after the execution of this Third
Amendment, the parties shall deliver a copy of this signed Third
Amendment to spring Mountain Escrow Corporation who shall act as
escrow agent ("Escrow Agent"), with an address of 296.H Street,
Suite 201, Chula Vista, CA 92010. The parties agree that the
previous escrow instructions with Escrow Agent dated September 19,
1991 are hereby canceled and the parties agree to execute new
instructions as soon as reasonably possible in accordance with the
terms of this Third Amendment.
7.2 Unless the parties agree to an earlier closing, escrow
shall close, subject to the terms and conditions of this Agreement,
thirty five (35) days after completion of the Grading Work and
Remediation Work as evidenced by a Notice Of Completion being
recorded by Seller or at any time within such thirty five (35) day
period if Agency elects to close earlier upon five (5) days notice,
but in no event later than December 31, 1992 ("Closing Date"),
unless extended pursuant to Section 7.3. Seller shall record such
Notice of Completion following: (i) notice to Agency that the
Grading Work and Remediation Work is substantially completed; (ii)
after Seller receiving from Agency a punch list of any items
remaining to be completed to complete the Grading Work within ten
(10) days after delivery of such notice to Executive Director of
Agency and thereafter completing all necessary items on the punch
list to complete the Grading Work and Remediation Work; and (iii)
Seller's delivery to Executive Director of Agency evidencing and
documenting to the reasonable satisfaction of the Executive
Director that all costs and expenses for the Grading Work and
Remediation Work (as defined in Paragraph 10) have been paid.
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Seller shall deliver possession and vacate the Property immediately
upon close of escrow.
7.3 Seller or Agency may extend the close of escrow for up to
four thirty (30) day periods ("Extension Periods") beyond the
Closing Date for up to a maximum of 120 days in order to be assured
of completion of the Grading Work and/or Remediation Work.
Additionally, Agency may elect to extend the Closing Date for an
additional sixty (60) days if all necessary approvals by City
Council of the City of Chula vista have not been obtained for the
development of an Auto Park on the Property. Each option to extend
for each thirty day Extension Period or Agency's sixty (60) day
period shall be exercisable by either party by delivering written
notice to the other party and Escrow Agent of its election to
extend the close of escrow prior to the Closing Date or the then
applicable Extension Period. If extended pursuant to this
Paragraph 7.3, the term "Closing Date" shall mean such extended
date set for closing.
7.4 The Original Agreement, the First Amendment, the Second
Amendment and this Third Amendment shall serve as Escrow
Instructions to the Escrow Agent. The parties agree to execute such
additional supplemental Escrow Instructions not inconsistent with
the Agreement as Escrow Agent may reasonably require in order to
facilitate the consummation of the transactions contemplated in
this Agreement and otherwise to conform to the usual practice of
Escrow Agent, Provided such instructions do not conflict with the
provisions hereof.
8. 8.1
subject only
Exceptions")
Upon close of escrow, the Property shall be conveyed
to the following conditions of title: ("Permitted
(a) All printed exclusions contained in the Standard form
CLTA OWner's Policy of Title Insurance
(b) Non-delinquent City and County General and Special
Taxes and Assessments (except as noted in subparagraph
(f) below) for the fiscal year 1992-93.
(c) The lien of supplemental taxes assessed pursuant to
the California Revenue and Taxation Code Section 75, et
seq. arising from the transfer described herein.
(d) Items 3, 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15, 16,
17 and 19 as set forth in the Chicago Title Preliminary
Report No. 118837 dated May 14, 1992, as supplemented
("Title Report") attached hereto as Exhibit "3-A".
(e) Any encumbrance voluntarily imposed by Agency at
closing.
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(f) Any liens and encumbrances created as a result of
City of Chula vista's Otay Valley Road Assessment
District. There shall be no prorations through escrow or
otherwise for any such assessments. Agency or its
successor shall be solely responsible for all such
assessments.
8.2 As a condition to closing, Escrow Agent shall procure or
shall be satisfied that it can procure Chicago Title Company's CLTA
Owner Policy (the "Title Policy") with liability in the amount of
the Purchase Price insuring that the fee title of the Property
vests in Agency subject only to the Permitted Exceptions.
'Additionally, Escrow Agent shall procure, upon closing, Chicago
Title Company's endorsement 110.7 in the form of Exhibit 3-B
attached hereto and a mechanics lien endorsement. Seller shall pay
all costs and expenses of such title insurance. Seller
acknowledges that Agency shall not be required to pay any costs
incurred in connection with Seller's efforts to remove Item.No. 7
listed as an exception in the Title Report.
9. 9.1 On or before Closing Date, Seller shall grade the
Property and perform all work on the Property ("Grading Work") in
accordance with those grading plans prepared by Algert Engineering
("Grading Plans") and in accordance with the grading specifications
attached hereto as Exhibit "3-C". ("Grading Specifications").
Notwithstanding the Grading Plans or anything herein to the
contrary, Seller shall not be required to do any landscaping as
required by or described in the Grading Plans except for the
landscaping on the East, West and South slopes of the pad of usable
land on the Property ("Flat Area") which will be created following
the Grading Work, nor shall Seller be required to provide any
additional erosion control not specifically provided for in the
Grading Plans. Except as provided below, Seller shall perform all
Grading Work at its sole cost and expense. Seller has or will have
entered into a contract to have the Grading Work performed by
McDowell Construction ("Grading Contractor"). Seller shall cause
the Grading Work to commence.as soon as possible but in no event
later than September 15, 1992 and thereafter diligently prosecute
such work to completion.
Seller shall not be required, as a condition precedent to
obtaining grading permits, to post any bond for landscaping the
Flat Area or to otherwise landscape the Flat Area, except as
provided below. Notwithstanding the above, if escrow fails to
close for the Property and continuing thereafter until the Property
is completely improved for use, Seller shall, at Seller's sole cost
and expense, install and maintain such landscaping in such Flat
Area as City shall, from time to time, require in accordance with
its existing ordinances. Upon failure of Seller to forthwith
comply with the. provisions of the paragraph, City shall have the
right to do so, and upon doing so, the entire cost thereof shall be
reimbursed to city by Seller, together with interest thereon at the
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rate of 9% per annum. If city is required to institute litigation
or otherwise retain legal counsel in order to recover its costs,
the prevailing party shall be entitled to attorney's fees. City
may offset any such costs against any other sums due Sellers under
the Original Agreement, as amended. Seller's obligations in this
paragraph are specifically secured by the Performance Trust Deed.
9.2 Agency shall have the right of on-site work inspection by
a designee of .its choice for the purpose of assuring that the
Grading Work. and Remediation Work is performed to the
specifications and plans required. Notwithstanding the terms of
Paragraph 4.12 of the Original Agreement, Agency shall not conduct
any future tests or surveys or examination of the Property without
Seller's written consent, which shall not be unreasonably withheld.
10. 10.1 Agency agrees to pay to Seller for its share of the
cost of the Grading Work the sum of $435,600.00 ("Agency's Grading
Costs") by paying Agency's Grading Costs to Seller, or at Agency's
option, to Escrow Agent who shall provide for release of funds to
pay the Grading Contractor. The parties shall "execute all
necessary escrow instructions to accomplish such release of funds
providing for terms reasonably acceptable to the Agency. Such
amount shall be paid monthly at the time progress billings are
received from Grading Contractor and in proportion to what Agency's
Grading Costs bear to the total cost of the Grading Work charged by
the Grading Contractor. .
10.2 Additionally, Agency shall advance against the
remaining Balance of the Purchase Price due Seller an additional
amount equal to the difference between Agency's Grading Costs and
the total cost charged by Grading Contractor for the Grading Work,
not exceeding the Balance due on the" Purchase Price. Such amount
shall be paid by Agency by paying either to Seller directly or to
the Escrow Agent in accordance with the escrow established pursuant
to section 10.1 at such time that progress billings are received
from the Grading Contractor.
11. 11.1 On or prior to the commencement of the Grading Work
Seller shall retain Torstan to perform an environmental review and
analysis of the soil on the Property during the Grading Work in
accordance with the Testing Parameters. Torstan shall be hired by
Seller for such work, however, any and all reports furnished or
provided by Torstan shall be made available to the Agency and
Agency shall reimburse Seller $5,000 for the cost of Torstan's on-
site work within thirty (30) days after Seller's submittal of an
invoice of Torstan for such work.
11.2 In the event that during the Grading Work Torstan
provides a report which indicates that there are environmental or
hazardous substances associated with the soil or groundwater on the
Property or Agency otherwise meets its burden to establishing the
existence of such substances, Seller shall be required to perform
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removal or remediation work ("Remediation Work") in accordance with
the following conditions and terms:
(a) In the event that Torstan, together with the Seller,
determine that the cost of Remediation Work would exceed
.$1,000,000 then Seller shall have the right, but not the
obligation, in its sole discretion, to terminate this
Agreement by giving written Notice to Agency and in such
case Agency may elect to give a notice of rescission to
Seller and in such event Seller shall repay Agency all
sums previously advanced in accordance with the terms of
the last paragraph of Paragraph 4.5 and in such event
Seller shall have no obligation to complete the Grading
Work. Notwithstanding the above, within ten (10) days
after Agency's receipt of written notice of Seller to
terminate, Agency may notify Seller in writing that (i)
it will pay all costs of Remediation Work in excess of
$1,000,000, and in such event, this Agreement and escrow
shall not terminate and Seller shall commence the
Remediation Work with all due diligence as soon as
feasible and Agency shall pay to Seller all costs in
excess of $1,000,000 immediately upon receipt of billings
from Seller; or (ii) it will waive any and all
requirement of Seller to perform any Remediation Work in
excess of $1,000,000, that it agrees to close escrow and
waive satisfaction of the condition ~set forth in
Paragraph 4.5(b) after Seller performs such Remediation
Work up to $1,000,000 and that upon closing it shall
deliver to Seller a release, in a form reasonably
satisfactory to Seller's legal counsel, which releases
Seller from any and all liability or responsibility from
Agency and its successors with respect to any hazardous
substances associated with':the soil or groundwater on the
Property other than that which Seller has removed in the
course of Remediation Work.
(b) In the event that Remediation Work is estimated to
cost less than $1,000,000, then Seller shall perform any
and all Remediation Work with all due diligence. Agency
shall advance to Seller against the balance of the
Purchase Price due any amounts required for such
Remediation Work up to the amount of the Balance due.
Such funds shall be advanced in accordance with the
escrow established pursuant to section 10.1 at the time
billings are received by Seller and delivered to Agency.
(c) Notwithstanding anything herein to the contrary, in
the event that groundwater contamination is discovered
during the course of the Grading Work on the Property and
if past or present activities on the Property are not a
source of contamination to the groundwater, Seller shall
have no obligation to perform groundwater remediation and
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complete the Grading Work and shall have the option to
terminate this Agreement. In such event, Agency may
elect to give a notice of rescission to Seller and in
such event Seller shall repay Agency all monies
previously advanced in accordance with the terms of
Section 4.5. Agency and Seller have agreed to the terms
of this paragraph in recognition of previous commitments
of the California Regional Water Quality Control Board _
San Diego Region with regard to groundwater contamination
as stated in letters dated November 18, 1991 and April 8,
1992. Seller shall have the burden in establishing to
Agency that past or present activities on the Property
were not a source of groundwater contamination.
(d) Notwithstanding the above, the above provisions of
subparagraphs (a) and (b) of this paragraph shall not
apply to the non-usable portion of the Property which is
being deeded to the City by gift in accordance with
Paragraph 13 of this Third Amendment. In the event any
hazardous substances are discovered on the non-usable
portion of the Property after commencement of the Grading
Work, the Agency shall have the option, on behalf of City
or itself, to either (i) elect not to accept the gift of
such non-usable land from the Seller and in such event,
Seller shall retain such non-usable - land and be
responsible for any and all Remediation Work or removal
of hazardous substances as may be required by any
governmental agency, law or ordinance; or (ii) enter into
an arrangement to allow such non-usable land to be
conveyed to a third party, provided such arrangement
preserves Seller's charitable deduction and is reasonably
satisfactory to Seller. Agency shall not perform any
further testing or othervork on the nonusable portion
during escrow without the Seller's written consent, which
shall not be unreasonably withheld.
12. Agency shall cooperate with Seller and cause city to
cooperate with Seller at no cost to Agency, and execute any and all
further documents to evidence Seller's charitable gifts to Agency
and City as described in Paragraph 2.4 above and in Paragraph 13
below in order to allow Seller to claim any and all income tax
deductions as a result of such gift.
13. The parties acknowledge that on or about September 18,
1990, the Seller delivered a Deed of Gift to the city of Chula
Vista ("City") pursuant to the Original Agreement in order to gift
to the City that portion of the Property considered unusable for
pUrposes of development of an auto park. The parties agreed that
the unusable portion of the Property consists of acres
and that in accordance with the original Agreement the unusable
portion has a value $.80 per square foot for a total value of
$ , which the Agency acknowledges is a charitable gift to
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the city.
14. Agency acknowledges that at such time that Seller
commences the Grading Work and/or Remediation Work, Seller will
have incurred substantial obligations with respect to the Property.
Agency also acknowledges that Seller is not able to Commence
Grading Work or Remediation Work for the Property without
disconnecting all utilities and removing the present. residential
structure existing on the Property and that Seller has had to
relocate to another residence. Agency also acknowledges that
Seller would not have incurred any costs' for Grading Work or
Remediation Work were it not for relying on Agency's obligations
and covenants as set forth in this Agreement and that in the event
Agency fails to complete the purchase of the Property and such
failure constitutes a breach of this Agreement by Agency of the
above-described 'actions, Seller may incur damages as a result of
the above-described facts and reliance on Agency's obligations and
covenants. The parties agree that the acknowledgement of the facts
set forth above shall not be deemed to be an admission by Agency to
any actual damages of Seller.
15. Agency and Seller acknowledge that in connection with the
Agency's acquisition of the Property from Seller, Agency shall also
be acquiring certain real property located on Broadway Avenue in
the City of Chula vista as more particularly described in Exhibit
3-D attached hereto ("Broadway Property") from DGF'.Family Limited
Partnership, David D. Ordway, Christina L. Ordway, Travis A. Reneau
and Margaret L. Reneau who intend to develop an auto park on the
Property ("Auto Developers"). Agency represents and warrants to
Seller that Agency shall payor otherwise deliver to the Auto
Developers an agreed upon equivalent of $6,300,000 for the Broadway
Property and following Agency's acquisition of the Property, Agency
intends . to remarket and sell the"... Broadway Property to other
persons. Seller acknowledges that Agency may remarket and sell the
Broadway Property at any time for a price and on terms and
conditions that it may determine in its sole discretion and that it
has the sole discretion to elect to not sell the Broadway Property
as well.
In the event Agency sells the Broadway Property to a third
party, for a period of five (5) years from the date after the date
of closing the sale of the Property to Agency, all Net Proceeds
from any sale of the Broadway Property shall be divided between
Agency and Seller in accordance with the following priority:
(a) To Agency
$6,300,000
(b) To Agency - An amount equal to 3% of $6.3 million
dollars for each year after the date of Agency's acquisition
of the Broadway Property until the date of Agency's resale.
For any period of time which a full year has not occurred,
said 3% amount shall be prorated based upon a 365 day year.
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(c) The next $700,000 to Seller.
(d) The balance to Agency.
Net Proceeds shall mean an amount equal to gross sales price
of the Broadway Property less the actual costs incurred by Agency,
if any, to construct improvements on the Broadway Property, title
insurance, escrow fees, brokerage commissions and other normal and
customary costs of Agency of selling the Broadway Property. Agency
shall keep Seller advised at all times of Agency's non-privileged
actions with regard to the Broadway Property and within thirty (30)
days after receipt or production of any proposal, offer or
agreement with regard to the sale of the Broadway Property which is
not privileged shall deliver a copy of same to Seller, which Seller
shall keep confidential and not disclose to any third parties
except Seller's advisors and counsel. with respect to any
privileged or confidential matters with regard to the Broadway
Property, Agency shall nevertheless advise Seller in writing as to
the existence of any proposals, offers or agreement received or
produced with regard to a potential sale of the Property without
disclosing the specific terms, provided, however, Seller shall
receive ten (10) days notice, together with copies of all
documents, agreements and/or offers, of any public hearings with
regard to any privileged or confidential matters affecting the
Broa~way Property.
16. Each controversy, dispute or claim between the parties
arising out of or relating to this Agreement, which controversy,
dispute or claim is not settled in writing within thirty (30) days
after the "Claim Date" (as hereinafter defined), will be settled by
a referenced proceeding in San Diego County, California in
accordance with the provisions of ,Section 638 et sea. of the
California' Code of civil Procedure~\ or their successor sections
("CCP"), which shall constitute the exclusive remedy for the
settlement of any controversy, dispute or claim concerning this
Agreement, including whether such controversy, dispute or claim is
subject to the reference proceeding and the parties waive their
rights to initiate any legal proceedings against each other in any
court or jurisdiction other than the Superior Court of San Diego
County (the "Court"). The referee ("Referee") shall be a retired
Judge of the Court selected by mutual agreement of the parties, and
if they cannot so agree'within forty-five (45) days after the Claim
Date, the Referee shall be promptly selected by the Presiding Judge
of the San Diego County Superior Court (or his representative).
The date on which the Referee is selected is herein called the
"Selection Date." The Referee shall be appointed to sit as a
temporary judge, with all of the powers of a temporary judge, as
authorized by law, and upon selection should take and subscribe to
the oath of office as provided for in Rule 244 of the California
Rules of Court (or any subsequently enacted Rule). The Referee
shall set the matter for hearing within sixty (60) days after the
Selection Date, and try any and all issues of law or fact and
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report a statement of decision upon them, if possible, within
ninety (90) days of the Selection Date. Any decision rendered by
the reference will be final, binding and conclusive and judgement
shall be entered pursuant to CCP 644 in any court in the State of
California having jurisdiction. Either party may apply for a
reference at any time after thirty (30) days following the date
(the "Claim Date") one party notifies the other party of a
controversy, dispute or claim; by filing a petition for a hearing
and/or trial. All discovery permitted by this Agreement (as more
particularly provided below), shall be completed no later than
fifteen (15) days before the first hearing date established by the
Referee. The Referee may extend such period in the event of a
party I s refusal to provide requested discovery for any reason
whatsoever, including, without limitation, legal objections raised
to such discovery or unavailability of a witness due to absence or
illness. No party shall be entitled to "priority" in conducting
discovery. Depositions of a party or its affiliates may be taken
by the other party upon seven (7) days written notice, and, request
for production or inspection of documents on a party or its
affiliates shall be responded to within ten (10) days after
service. All disputes relating to discovery which cannot be
resolved by the parties shall be submitted to the Referee whose
decision shall be final and binding upon the parties.
Except as expressly set forth in this Agreement, the Referee
shall determine the manner in which the reference" proceeding is
conducted including the time and place of all hearings, the order
or presentation of evidence, and all other questions that arise
with respect to the course of the reference proceeding. All
proceedings and hearings conducted before the Referee, except for
trial, shall be conducted without a court reporter, except that
when any party so requests, a court reporter will be used at any
hearing conducted before the Referee. The party making such a
request shall have the obligation to arrange for and pay for the
court reporter. The costs of the court reporter" at the trial shall
be borne equally by the parties.
The Referee shall be required to determine all issues in
accordance with existing case law and the statutory laws of the
State of California. The rules of evidence applicable to
proceedings at law in the State of California will be applicable to
the reference proceeding. The Referee shall be empowered to enter
equitable as well as legal relief, to provide all temporary and/or
provisional remedies and to enter equitable orders that will be
binding upon the parties. The Referee shall issue a single
judgment at the close of the reference proceeding which shall
dispose of all of the claims of the parties that are the subject of
the reference. The parties hereto expressly reserve the right to
findings of fact, conclusions of law, and a written statement of
decision.
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ARBITRATION OF DISPUTES
IN THE EVENT THAT THE ENABLING LEGISLATION WHICH PROVIDES FOR
APPOINTMENT OF A REFEREE IS REPEALED (AND NO SUCCESSOR STATUTE IS
ENACTED), ANY DISPUTE BETWEEN THE PARTIES THAT WOULD OTHERWISE BE
DETERMINED BY THE REFERENCED PROCEDURE HEREIN DESCRIBED WILL BE
RESOLVED AND DETERMINED BY ARBITRATION. THE ARBITRATION WILL BE
CONDUCTED BY A RETIRED JUDGE OF THE COURT, IN ACCORDANCE WITH THE
CALIFORNIA ARBITRATION ACT, SECTIONS 1280 AND 1294.2 OF THE CCP AS
AMENDED FROM TIME TO TIME; PROVIDED, HOWEVER, THAT NOTWITHSTANDING
ANY PROVISION TO THE CONTRARY REGARDING DISCOVERY SET FORTH IN THE
CALIFORNIA ARBITRATION ACT, THE RIGHTS AND LIMITATIONS WITH RESPECT
TO DISCOVERY AS SET FORTH HEREINABOVE SHALL APPLY TO ANY SUCH
ARBITRATION PROCEEDING.
"NOTICE: BY INITIALLING IN THE SPACE BELOW YOU ARE AGREEING
TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE
'ARBITRATION OF DISPUTES' PROVISION DECIDED BY NEUTRAL ARBITRATION
AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU
MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY
TRIAL. BY INITIALLING IN THE SPACE BELOW YOU ARE GIVING UP YOUR
JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE
SPECIFICALLY INCLUDED IN THE 'ARBITRATION OF DISPUTES' PROVISION.
IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS
PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER T}IE AUTHORITY OF
THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS
ARBITRATION PROVISION IS VOLUNTARY." "WE HAVE READ AND UNDERSTAND
THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT bF THE
MATTERS INCLUDED IN THE 'ARBITRATION OF DISPUTES' PROVISION TO
NEUTRAL ARBITRATION."
17. The parties acknowledge that the Road Widening Area as
described in section (B) of the Second Amendment has been conveyed
by execution and delivery of an easement deed to the city by Seller
and as of the date of this Third Amendment Agency has not paid to
Seller any consideration as provided in Section (B) to Seller.
18. Minor technical changes, corrections and clarifications
or agreements implementing the provisions of this Agreement which
do not substantively change the terms of this Agreement may be made
by writing executed by Seller and the Executive Director, or
designee, upon approval of Agency's general counsel.
19. In any dispute between the parties, whether or not
resulting in litigation or arbitration, the prevailing party shall
be entitled to recover from the other party all reasonable fees,
costs, including, without limitation, reasonable attorneys' fees.
The prevailing party shall be determined by the presiding
arbitrator or judge in any such litigation or arbitration.
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20. Neither this Third Amendment nor the original Agreement,
First Amendment or Second Amendment shall be altered or modified,
except by a writing signed by both Seller and Agency.
21. No other person or entity shall be a third party
beneficiary to the terms or benefits of this Agreement, except
city, who the parties acknowledge has no obligations hereunder.
notices to Agency by Seller shall
to the Executive Director of Agency.
NOW THEREFORE, the parties hereto , having read and understood
the terms and conditions of this Third Amendment to Agreement do
hereby express their consent to the terms hereof by setting their
hand hereto on the date set forth adjacent thereto.
22. Any and all
addressed and delivered
be
Dated:
Redevelopment Agency of the
City of Chula Vista
By:
vice Chairman
Approved as to Content
John Goss
Its Executive Director
Approved as to Form
Bruce Boogaard
City Attorney
Dated:
Jimmie Shinohara
Judi Shinohara
c:\wp\mlsc\4275.new
Septe<tber 4, 1992
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JOINT REDEVELOPMENT AGENCY/CITY COUNCIL
AGENDA STATEMENT
Item 3
Meeting Date 04/01193
ITEM TITLE:
AGENCY: RESOLUTION 1314 Approving the Cooperation Agreement
between the Redevelopment Agency and the City of Chula Vista for the
provision of financial assistance pursuant to the terms and conditions of
that certain Disposition and Development Agreement by and among the
Redevelopment Agency of the City of Chula Vista, and the DGF Family
Limited Partnership, David D. Ordway, Christina L. Ordway, Travis A.
Reneau, and Margaret L. Reneau, approved on September 15, 1992 for
the development of an Auto Sales Park within the Otay Valley Road
Redevelopment Project Area
COUNCIL: RESOLUTION 17054 Approving the Cooperation Agreement
between the Redevelopment Agency and the City of Chula Vista for the
provision of financial assistance pursuant to the terms and conditions of
that certain Disposition and Development Agreement by and among the
Redevelopment Agency of the City of Chula Vista, and the DGF Family
Limited Partnership, David D. Ordway, Christina L. Ordway, Travis A.
Reneau, and Margaret L. Reneau, approved on September 15, 1992 for
the development of an Auto Sales Park within the Otay Valley Road
Redevelopment Project Area
SUBMITTED BY: Community Development Di~ector (. S.
REVIEWED BY: Executive Director Jq ~-~.'!~
o (4/5ths Vote: Yes No X)
BACKGROUND:
The Agency approved a Disposition and Development Agreement (DDA) with the Auto Sales
Park developers on September 15, 1992 for redevelopment of the Shinohara site. The DDA
contained obligations to make certain incentive and post-incentive payments to assist in the
establishment of the Auto Sales Park. These payments will require financial assistance from the
City which is formalized by the Cooperation Agreement (copy of which is attached) for
consideration by the Agency and City Council.
RECOMMENDATION: That the Redevelopment Agency and City Council approve the
resolutions.
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Page 2, Item ..3
Meeting Date 04/01/93
BOARDS/COMMISSIONS RECOMMENDATION: Not applicable.
DISCUSSION:
The Disposition and Development Agreement (DDA) between the Redevelopment Agency and
the Auto Sales Park developers approved on September 15, 1992 includes the provision for
financial assistance as described below:
[1] Incentive Pavments
The Auto Sales Park developers agreed to pay $4.50/square foot for the development
parcel (Shinohara site). The Agency's acquisition price, for the purpose of computing
incentive payments, is $6.79/square foot. The difference, or $2.29/square foot (a total
of $1,758,635 for the entire 17.63 site), will be repaid to the Auto Sales Park developers
vis-a-vis or through incentive payments totaling 75 percent of the net sales tax revenues
(above a base of $550,000 per year which increases 6 percent per year) for the first six
years of operation of the Auto Sales Park. If the total amount of the loan is repaid
sooner, then the incentive period will end and the post-incentive payments will begin.
In any event, the incentives will not extend beyond six years from the date of opening
of the first dealership.
[2] Post-Incentive Pavments
Through years 7 through 15 (a total of nine years) the Auto Sales Park developers will
receive 371h percent of the net sales tax revenues accruing from the site. If the incentive
period ends earlier than six years, the post-incentive payments period will then begin and
continue for a period no longer than nine years.
The percentages paid back to the Auto Sales Park developers assume the presence of four
dealerships within the first phase of the Auto Sales Park. The Auto Sales Park
developers represent three dealerships. If a fourth dealership is not secured the rebates,
in accordance with the DDA, are reduced to 50 percent during the incentive period and
remain at 371h percent during the post-incentive period.
Property tax increments accruing to the Agency will not provide the necessary funds to cover
the incentive and post-incentive payments. In order for the Agency to guarantee these payments,
a Cooperation Agreement between the City and Agency is necessary whereby the City agrees
to provide the additional funds needed to cover these payments. The funds contributed by the
City will be a percentage of the sales tax revenues accruing from the project. The City will
always be taking in more funds in sales tax revenues than it will be providing to the Agency
since the City is guaranteed the first $550,000 (guaranteed base) and will retain 25 percent of
3 --2
Page 3, Item 3
Meeting Date 04/01193
the amount over the base for the first six years and 62th percent for the next nine years. The
City will receive all sales tax revenues after Year 15.
The Agency shall repay and reimburse the City for any funds advanced at an interest rate equal
to the City Treasurer's average portfolio yield, calculated monthly. Interest shall accrue on the
amounts paid by the City from the date of each payment by the City.
FISCAL IMPACT: The economic impact of the post project has been estimated in terms of
tax benefits to the City, incentive payments to the Auto Sales Park developers, and added
employment opportunities. This information summarized below:
Revenue Generated
Over 14 Years
Developer/Dealers
(in $ millions)
Citv/Aoencv
(in $ millions)
Property Tax
Sales Tax Base
Sales Tax Increment
(Incentive Payments in excess of Sales Tax Base)
Sales Tax Increment
(Post-Incentive Payments in excess of Sales Tax Base)
$ 1.1
11.5
$ 1.8
.6
2.55
4.25
Total Revenues: 14 Years
$ 4.41
$17.45
The Ford, Honda, and Chevrolet dealerships currently employ approximately 200 persons, the
additional dealership will provide 60 to 80 new positions depending on the size of the dealership.
(C:I WP51 lAG ENCYlRA4SICO-OP _RA41
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The Cooperation Agreement is being sent forward without
the concurrence of Agency's General Counsel. Agency's
General Counsel will review prior to the meeting.
COOPERA nON AGREEMENT
THIS AGREEMENT is entered into this day of March, 1993, by
and between the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a
public body corporate and politic (the "Agency"), and the CITY OF CHULA VISTA, a
municipal corporation (the "City").
Recitals
A. Agency is a duly constituted redevelopment agency under the laws of
the State of California and pursuant to such laws has duly adopted the Otay Valley Road
Redevelopment Project (the "Project Area") within the City.
B. The Redevelopment Plan for the Project Area provides for tax
increment financing in accordance with the provisions of Chapter 6, Part 1 of Division 24
of the Health and Safety Code of the State of California and Section 16 of Article XVI of
the Constitution of the State of California.
C. City is authorized to provide assistance to Agency in redevelopment
of the Project Area. In the event City advances funds to or on behalf of Agency, Agency
may enter into a contract with City under which it agrees to reimburse City for all or part
of such funds by payment of periodic payments over a period of years.
D. Agency does not have the necessary funds to pay for all of its
activities and undertakings within the Project Ar~.
E. City and Agency desire to provide for the advancement by City to
Agency of additional funds required for implementation of the redevelopment plan as such
funds are required by Agency.
F. Agency has entered into that certain Disposition and Development
Agreement (the "DDA") by and between Agency and the DGF Family Limited
Partnership, David D. Ordway, Christina L. Ordway, Travis A. Reneau and Margaret L.
Reneau (collectively, the "Redeveloper") pertaining to the redevelopment of a portion of
the Project Area. Capitalized terms not otherwise defined herein shall have the same
meanings as set forth in the DDA.
G. Pursuant to the terms of the DDA, Agency is obligated to make
certain Incentive Payments to the Redeveloper and certain Post-Incentive Payments to the
Major Brand Auto Dealerships (collectively, the "Required Payments").
PagB 1 Bf J
COOPERATION AGREEMENT
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Ag:reements
AGENCY AND CITY HEREBY AGREE AS FOLLOWS:
1. In consideration of Agency's promise to repay funds to City in
accordance with the following terms and conditions, upon the request of Agency (from
time to time and at anytime as Agency may require such amounts pursuant to the terms of
the DDA) City agrees to deliver to Agency an amount equal to the then applicable
Required Payment. Upon receipt thereof, Agency shall make the Required Payment to the
appropriate party(ies) as set forth in the DDA.
2. Agency shall repay and reimburse City subject to the following
terms:
(a) Agency agrees to pay City interest at a rate equal to the City
Treasurer's average portfolio yield, calculated monthly.
(b) Interest shall accrue on the amounts paid by City from the
date of each payment by City pursuant to this Agreement.
(c) Agency's obligation to repay City is subordinate to Agency's
pledge to repay any bonds or other indebtedness to third parties and Agency's
payments to City shall be subject to the availability of "Surplus Revenues". For
purposes of this Agreement "Surplus Revenues" shall mean, at any given moment
in time and from time to time, revenues received by Agency attributable to the
Project Area in excess of those funds (i) pledged to repay principal and interest on
any bonds or other form of indebtedness issued in connection with the Project Area
or otherwise required by the Agency to satisfy then existing obligations of the
Agency undertaken in connection with the Project Area, (ii) required by the
community redevelopment law to be dep0sited into the Low and Moderate Income
Housing Fund, (iii) required to be paid to other taxing agencies, and (iv)
. reasonable administrative costs of Agency.
interest.
(d) Payments by Agency to City shall be applied first to accrued
(e) Agency agrees to pay and reimburse City for all amounts due
to City pursuant to this Agreement including interest from and to the extent that
Surplus Revenues are available to Agency for such purpose pursuant to
Section 33670 of the Health and Safety Code or from other sources; provided,
however, that Agency shall have the sole and exclusive right to: (i) pledge any
such sources of funds to the repayment of other indebtedness heretofore or
hereafter incurred by Agency in carrying out the Project, and (ii) continue to incur
other obligations in connection with the Project Area. In the event of any such
obligation or pledge, Agency's obligations hereunder shall be subordinate to such
other obligation or the indebtedness which is secured by such pledge.
P':lga :1 Bf J.
COOPERATION AGREEMENT
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(f) Agency's payments to City shall be made within thirty (30)
days of Agency's receipt of Surplus Revenues as defined above and shall be in the
full amount of such Surplus Revenues.
3. Although City and Agency recognize that reimbursement of City
may take several years and that reimbursement may be made on an irregular basis over a
period of time due to the necessity to use tax increment funds and other Agency revenues
to repay other obligations and to complete other projects within the Project Area, it is the
express intent of the parties that City shall be entitled to reimbursement of all amounts due
to City pursuant to this Agreement and the interest thereon, consistent with Agency's
financial ability, in order to make City whole as soon as practically possible.
4. Agency and City agree that the amounts due to City pursuant to this
Agreement and the accrued interest thereon shall be an indebtedness of Agency for
purposes of Section 33670 et. ~. of the Community Redevelopment Law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
REDEVELOPMENT AGENCY OF THE CITY OF
CHULA VISTA
Date:
By:
Chairman, Tim Nader
APPROVED AS TO FORM
Bruce M. Boogaard, City Attorney
CITY OF CHULA VISTA
Date:
By:
Mayor, Tim Nader
APPROVED AS TO FORM
Marcia Scully, Agency Special Counsel
COOPERATION AGREEMENT
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RESOLUTION 1314
RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA
VISTA APPROVING THE COOPERATION AGREEMENT BETWEEN THE
REDEVELOPMENT AGENCY AND THE CITY OF CHULA VISTA FOR THE
PROVISION OF FINANCIAL ASSISTANCE PURSUANT TO THE TERMS AND
CONDITIONS OF THAT CERTAIN DISPOSITION AND DEVELOPMENT
AGREEMENT BY AN AMONG THE REDEVELOPMENT AGENCY OF THE
CITY OF CHULA VISTA AND THE DGF FAMILY LIMITED PARTNERSHIP,
DAVID D. ORDWAY, CHRISTINA L. ORDWAY, TRAVIS A. RENEAU, AND
MARGARET L. RENEAU, APPROVED ON SEPTEMBER 15, 1992 FOR THE
DEVELOPMENT AN AUTO SALES PARK WITHIN THE OTAY VALLEY ROAD
REDEVELOPMENT PROJECT AREA
WHEREAS, the Redevelopment Agency has entered into that certain Disposition and
Development Agreement ("DDA") by and between the Agency and the DGF Family Limited
Partnership, David D. Ordway, Christina L. Ordway, Travis A. Reneau, and Margaret L.
Reneau ("AUTO SALES PARK DEVELOPERS") pertain to the redevelopment of a portion of
the Otay Valley Road Redevelopment Project Area; and
WHEREAS, said Agreement called for certain financial assistance to be provided by
the Redevelopment Agency to assist in the development of the proposed Auto Sales Park
including the payment of incentive and post-incentive payments to the Auto Sales Park
Developers pursuant to certain terms and conditions in Section 401 of the DDA; and
WHEREAS, in order to make the subject incentive and post-incentive payments, it will
be necessary for the Redevelopment Agency to borrow funds from the City of Chula Vista; and
WHEREAS, a Cooperation Agreement has been prepared detailing the terms and
conditions of the loan from the City of Chula Vista to the Redevelopment Agency for the
purpose of making incentive and post-incentive payments to the Auto Sales Park Developers,
said Agreement is on file in the Office of the Secretary to the Redevelopment Agency and known
as document RACO-07-93.
NOW, THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF
CHULA VISTA does hereby fmd, order, determine, and resolve: that the Cooperation
Agreement between the Redevelopment Agency and the City of Chula Vista, on file in the Office
of the Secretary to the Redevelopment Agency and known as document RACO-07-93, is hereby
approved.
3"9
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RESOLUTION 1314
Page 2
BE IT FURTHER RESOLVED that the Chairman is authorized to sign the
Cooperation Agreement on behalf of the Redevelopment Agency.
Submitted by
Approved by
~~
Chris Salomone, Executive Secretary
and Community Development Director
Bruce M. Boogaard
Agency General Counsel
This resolution is being sent fonvard
without the concurrence of Agency's
General Counsel. Agency's General
Counsel will review prior to the meeting.
[C:IWP51IAGENCYIRESOSICO-OP1.RES]
3 -/0
,
RESOLUTION 17054
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA
APPROVING THE COOPERATION AGREEMENT BETWEEN THE
REDEVELOPMENT AGENCY AND THE CITY OF CHULA VISTA FOR THE
PROVISION OF FINANCIAL ASSISTANCE PURSUANT TO THE TERMS AND
CONDITIONS OF THAT CERTAIN DISPOSmON AND DEVELOPMENT
AGREEMENT BY AN AMONG THE REDEVELOPMENT AGENCY OF THE
CITY OF CHULA VISTA AND THE DGF FAMILY LIMITED PARTNERSHIP,
DAVID D. ORDWAY, CHRISTINA L. ORDWAY, TRAVIS A. RENEAU, AND
MARGARET L. RENEAU, APPROVED ON SEPTEMBER 15, 1992 FOR THE
DEVELOPMENT AN AUTO SALES PARK WITHIN THE OTA Y V ALLEY ROAD
REDEVELOPMENT PROJECT AREA
WHEREAS, the Redevelopment Agency has entered into that certain Disposition and
Development Agreement ("DDA") by and between the Agency and the DGF Family Limited
Partnership, David D. Ordway, Christina L. Ordway, Travis A. Reneau, and Margaret L.
Reneau ("AUTO SALES PARK DEVELOPERS") pertain to the redevelopment of a portion of
the Otay Valley Road Redevelopment Project Area; and
WHEREAS, said Agreement called for certain financial assistance to be provided by
the Redevelopment Agency to assist in the development of the proposed Auto Sales Park
including the payment of incentive and post-incentive payments to the Auto Sales Park
Developers pursuant to certain terms and conditions in Section 401 of the DDA; and
WHEREAS, in order to make the subject incentive and post-incentive payments, it will
be necessary for the Redevelopment Agency to borrow funds from the City of Chula Vista; and
WHEREAS, a Cooperation Agreement has been prepared detailing the terms and
conditions of the loan from the City of Chula Vista to the Redevelopment Agency for the
purpose of making incentive and post-incentive payments to the Auto Sales Park Developers,
said Agreement being on file in the Office of the Secretary to the Redevelopment Agency and
known as document RACO-07-93.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA
does hereby find, order, determine, and resolve: that the Cooperation Agreement between the
Redevelopment Agency and the City of Chula Vista, on file in the Office of the Secretary to the
Redevelopment Agency and known as document RACO-07-93, is hereby approved.
:1-1/
,
BE IT FURTHER RESOLVED that the Mayor is authorized to sign the Cooperation
Agreement on behalf of the City of Chula Vista.
Submitted by
Approved by
e~ ~-"
Chris Salomone
Community Development Director
Bruce M. Boogaard
City Attorney
This resolution is sent forward without the
concurrence of Agency's General Counsel.
Agency's General Counsel will review prior
to the meeting.
[C:I WP51 ICOUNCILIRESOSICO-OP2.RES]
3-/2..,
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REDEVELOPMENT AGENCY AGENDA STATEMENT
Item ~
Meeting Date 04/01/93
ITEM TITLE:
REPORT
MIDBA YFRONT DEVELOPMENT AGREEMENT
PROCEEDINGS UPDATE
SUBMITIED BY:
Community Development Director {_7 .
. Director of Finance
Executive Director J Ct ~ ~
(4/Sths Vote: Yes
No X)
REVIEWED BY:
BACKGROUND:
On October 27, 1992 the City Council approved and adopted the Chula Vista Local Coastal
Program Resubmittal (LCP No.8) based upon the Bayfront Planning Subcommittee's Alternative
Plan and corresponding General Plan Amendment. On January 15, 1993 the California Costal
Commission adopted LCP No.8 with modifications. On October 17, 1992 the City Council
directed staff to undertake Development Agreement negotiations. The Redevelopment Agency
held a worksession/meeting on March 4, 1993 and reviewed the status of the Midbayfront
project as well as eight issues in connection with the Development Agreement (see Exhibit" 1 ").
The Agency gave direction to staff and requested a worksession/meeting be held on April 1,
1993 for further analysis of these issues.
RECOMMENDATION: That the Redevelopment Agency further refine direction to staff for
continuing Development Agreement negotiations in the following manner:
[1] Staff is recommending no direct rebate of City/ Agency revenue to the Developer.
[2] Developer be required per Council policy to provide Cultural Arts Center. If it
is concluded that this action would be infeasible, then staff would recommend that
"seed" money be used in order to establish a Foundation that would have the
responsibility of obtaining the financial commitments to make the Cultural Arts
Center an eventual reality. Staff would suggest that initially the Port District,
developers, corporations, and other Southbay cities be approached for
involvement in a broad effort of support for a Center.
BOARDS/COMMISSIONS RECOMMENDATION: Not applicable.
DISCUSSION:
At the March 4, 1993, Agency workshop on the Bayfront Development Project, staff was
requested to provide additional information and analyses regarding the Developer's proposal for
sharing in the City/ Agency's revenues from the Project (Section I), options for financing the
Cultural Arts Center (Section II), details of other projects the City/ Agency has participated in
financially (see Attachment "C"), as well as reasonable alternatives to the Developer's proposal.
If .,/
Page 2, Item L
Meeting Date 04/01193
,
SECTION I.
ADDITIONAL INFORMATION AND ANALYSES REGARDING THE
DEVELOPER'S PROPOSAL FOR SHARING IN THE CITY/AGENCY'S
REVENUES FROM THE PROJECT
1. Bavfront Proiect Financinl!
During the review and processing of the Developer's Project through the City Council, the
results of the financial review indicated that the Project was "marginally feasible" as proposed.
As part of the approval of the Project in January 1992, Council added on the requirement of a
Cultural Arts Center to be placed within the Project. The cost of such a facility has been
estimated to be between $38 million to $46 million, depending on the number of seats and uses
provided.
The City Council also required that the Developer dedicate the land (including parking) for the
Cultural Arts Center, present to the Council for approval a feasible financing plan that permits
the design and construction of a multi-functional facility with a minimum goal of a 2,000 seat
capacity, and make a substantial (unspecified) contribution toward the construction of the Center.
The Developer contends that adding the extraordinary costs of the Cultural Arts Center to his
Project renders the Project "economically infeasible", a contention that is supported by the
economic and financial consultants that have been involved in the review of this Project.
2. Deve!oDer's ProDosal
The Developer is proposing to "share", in perpetuity, in the revenue that is generated to the
City/ Agency by virtue of development of his Project in the Bayfront. The Developer proposes
to make no contribution toward the construction of the Cultural Arts Center.
The revenues proposed by the Developer for rebating are the Agency property tax increment and
City sales taxes and transient occupancy taxes. The Developer's proposed share of the
City/ Agency revenue is as follows:
City/Agency
Share
Developer
Share
City/Agency Revenue up to $3 million
Above $3 million up to $4.6 million
Any Revenue above $4.6 million
66.7%
57.5%
40.0%
33.3%
42.5%
60.0%
Schedule A (see Attachment "A") is staff's analysis of the fiscal impact of the Developer's
proposal. It indicates the Net Annual Revenue Available to the City/ Agency from property tax
increment, sales taxes and transient occupancy taxes, and allocates that revenue in accordance
with the Developer's proposal. The results, over a 25- year period, are that the Developer
receives $50 million and the City/Agency receives $66.8 million.
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Page 3, Item
Meeting Date 04/01193
L/-
Schedule A was prepared for basic information purposes in order to demonstrate how the
Developer's proposal works and the magnitude of the fiscal impact of the revenue sharing. Staff
feels that Schedule A is not a realistic revenue rebate plan from the Cityl Agency standpoint
because it does not reflect other key variables and considerations.
3. Kev Variables
Given the risks and uncertainty involved in the development of the Bayfront Project and the
major uncertainty regarding the future of local government financing, staff does not feel that the
Developer's revenue rebate proposal, as presented in Schedule A, is workable for the
City/Agency.
The State of California's ongoing budget problems are having a major impact on City and
Redevelopment Agency financing. During the past three years the State has passed legislation
requiring the City to pay booking fees ($270,000 cost per year), property tax administration fees
($120,000 cost per year), eliminated cigarette tax revenue to the City ($228,000 per year),
reduced fines & forfeiture revenue to the City ($300,000 per year), and this fiscal year imposed
a transfer of property tax revenue (in the amount of $1,034,000) to schools. These items add
up to a total loss of resources to the City in the amount of $1,952,000.
In addition to the above impacts on the City, the State has reduced the supplemental subvention
revenue to the Redevelopment Agency ($600,000 per year), is requiring the Agency to pay
property tax administration fees ($60,000 per year) and this fiscal year imposed a transfer of
Agency property tax increment revenue (in the amount of $652,000) to schools, for a total loss
of resources to the Agency in the amount of $1,312,000.
For next fiscal year 1993-94, the Governor's proposed budget includes additional transfers of
local government property tax revenues to schools that would impact the City of Chula Vista by
an estimated $1.5 million and the Redevelopment Agency by $1 million.
State action impacting the Redevelopment Agency, the issuance of long-term debt in 1986 in
anticipation of the Bayfront development, and the reduction in annual property tax increment
caused by Rohr moving equipment to other localities, has resulted in the BayfrontProject
experiencing an annual operating deficit approximating $2,000,000.
Making a realistic projection of future Cityl Agency revenues generated from the Project that
may be available for allocation between the Cityl Agency and the Developer is very difficult
considering the uncertainties mentioned above and because there is not a track record on which
to base projections, as there would be with someone like a Price Club. However, Schedule B
(see Attachment UBU) attempts to indicate the impact on revenue available by taking into account
the Governor's proposed transfer of property tax increment and the ongoing operating deficit of
the Bayfront Project. When these two variables are built into the Schedule, there is not a net
cumulative positive revenue flow available to the Cityl Agency for consideration of rebate to the
Developer until the 15th year.
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Page 4, Item ~
Meeting Date 04/01/93
RECOMMENDATION: Given the negative impact of the State on City and Agency finances,
the general uncertainty regarding the future of local government financing, the uncertainty in
receiving the projected revenue stream from the Project, and the existing operating deficit of the
Bayfront Project, staff is recOlnmendinl! no direct rebate of Citv/ Al!encv revenue to the
Developer.
4. Alternatives to DeveloDer's ProDosal
Staff believes that there are other ways of assisting the Developer, directly and indirectly, that
will provide and create opportunities for successful development of the Bayfront Project area.
Our l!oal is to assist the DeveloDer to be successful without exacerbatinl! the uncertain
future financinl! Droblems facinl! the City and Al!encv.
Below are some of the ideas that can have a positive impact on the Developer:
A. Provide Assessment District Financing for the Construction of Public Infrastructure
Improvements -- · The Developer's consultant, Price Waterhouse, estimates that this
would save the Developer $500,000 per year in interest payments or $12,500,000 over a
25 year period. · The Developer has indicated that, rather than utilize Assessment District
financing, he will provide all funding needed up-front for construction of the public
improvements and infrastructure. While this is his choice to make, it should be explained
that not using Assessment District financing does not mean there is a lesser risk or any
benefit to the City. Assessment Districts are a vehicle for the City to pass through tax-
exempt interest rates for financing public improvements. The land is security for the
financing and the City is not at risk.
B. Expedite Processing of the Project through the City/Agency --. Since time is money, an
aggressive Project processing schedule will benefit the Developer.
C. Consideration of Waivine: the Fine Arts Fee
If, on the other hand, Council feels there is an advantage to the Developer's proposal for a direct
rebate of City/Agency revenue, then staff suggests several points that should be negotiated:
[1] The definition of "net revenues" to be distributed:
How are the Agency Bayfront Project operating deficit and the transfer of property
tax increment to schools to be accounted for in regard to net revenues?
[2] Should there be a rebate only after a certain "minimum" level of net revenues is
realized?
[3] The rebate should be for a maximum number of years, not "in perpetuity".
'-1-1
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Page 5, Item -..!i.-
Meeting Date 04/01193
[4] The percentage split should be something lower than that proposed by the Developer.
[5] Should there be a rebate if the Developer is achieving a rate of return on the Project
in excess of his target 13 % '!
To assist the Council in deciding whether or not some type of rebate should be offered,
it would be worthwhile to compare to other projects that the City has done. In most of
these cases, the City has assisted projects in order to prevent a negative consequence to
the City. For example, the Agency's assistance on the original Homart deal for the Chula
Vista Shopping Center was to prevent blight at the Center that it was feared could spill
over into the adjoining residential neighborhoods. The Auto Sales Park project was, in
part, to avoid the auto dealers taking their sales tax outside the City limits. The Rancho
del Rey Power Center, in part, provides the City a competitive force along the I-80S
corridor, especially with a WalMart and Sam's Club projected to locate at Palm/I-80S.
In Section III, below, the formula used by the City in encouraging these projects is related,
as well as economic benefit to the City/ Agency from these projects. There is also
comparison of the potential benefit for the Bayfront on these projects. (See
Attachment "C" for further analysis.)
Staff is not recommending a rebate of revenue to the Developer but will negotiate this
issue if desired by the Council.
SECTION II.
OPTIONS FOR FINANCING THE CULTURAL ARTS CENTER
1. Financinl! of Cultural Arts Center
This is the most difficult issue to resolve in the Bayfront Project because there are simply no
clear-cut ways to finance a $38 million to $46 million facility that will also be burdened with
a $500,000 to $1,000,000 annual operating deficit after it is constructed. Traditional sources
of funding for this type of project are not available at this time because of the recession.
Corporate donations and grants have significantly decreased and Agency/City funding of the
entire cost is not a practical alternative.
The Developer's position is that he is willing to donate the land for the Center but that his
Project is economically unable to commit funds toward the construction. On the other hand, it
is extremely unlikely that the revenue flowing to the City/Agency from the development of the
Project will be sufficient to provide total financing for the construction of the Center, especially
given the other priorities for the use if the revenue identified by Council such as public safety,
child care, and jobs training and retention.
Issuing long-term debt in order to fully finance the construction of a $40 million Center would
result in annual debt service of approximately $4.3 million over a 25-year period (a total outlay
of $107 million).
t/-5
Page 6, Item 0/
Meeting Date 04/01193
,
However, staff has come up with several ideas that, if used in combination, may provide some
direction as to how to proceed to make the Cultural Arts Center a reality. Some of the
suggestions are:
[1] If the rate of return to the Developer from the development of his Project exceeds
, a certain target percent, say 13 %, then a share of the excess profits could be
contributed to the Cultural Arts Center.
[2] A portion of the City/Agency revenue from the Project could be set aside for the
Center.
[3] The Port District should be requested to contribute to the financing of the Center.
[4] Other major developers or corporations could be requested to contribute to the
Center's financing.
[5] Other Southbay cities could be solicited for contributions, emphasizing the regional
aspect of the Center.
[6] Construction of the Center could be placed on the ballot as a General Obligation
Bond Issue.
[7] A "start-up" fund for construction of the Center could be established using the
Developer's Fine Arts fee requirement in the amount of $2.5 million and the
Agency's matching share of $2.5 million. This "seed" money would be used to
pursue different avenues to obtain financing for the construction of the facility.
RECOMMENDATION: Developer be required per Council policy to provide Cultural Arts
Center. If it is concluded that this action would be infeasible, then staff would recommend that
"seed" money be used in order to establish a Foundation that would have the responsibility of
obtaining the financial commitments to make the Cultural Arts Center an eventual reality. Staff
would suggest that initially the Port District, developers, corporations, and other Southbay cities
be approached for involvement in a broad effort of support for a Center.
In addition, as the Foundation is doing its work, perhaps another facility such as an amphitheater
or multi-use skating rink could serve the purpose of a Center on an interim basis.
[C:IWP51IAGENCYIRA4SICOMPARE1.TXT]
J./ 'b
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EXHIBIT "1"
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ATTACHMENT "A" - Page 1
EXPLANATION OF SCHEDULES A AND B
SCHEDULE A - This is an analysis of the Developer's proposal. It
adds together the Agency annual property tax increment generated
from the Project (line 1) and the projected revenue that would be
generated to the City in the form of sales taxes and transient
occupancy taxes (line 2). This total of Net Annual Revenue
Available is then allocated in accordance with the Developer's
proposal.
Net Property Tax Increment Available to RDA is net of 20%
low/moderate requirement and net of 30% pass through to
other taxing agencies
Net Annual Revenue to City is net of estimated cost to
provide City services to Project area
SCHEDULE B This schedule indicates the impact on revenue
available when the Bayfront operating deficit and the Governor's
proposed transfer of 27% of property tax increment to schools are
netted out prior to rebate allocation.
Net Property Tax Increment Available to RDA is net of
20% low/moderate requirement, net of 30% pass to other
taxing agencies, net of $2,000,000 annual operating
deficit of Bayfront Project, and net of 27% transfer of
property tax increment to schools
Net Annual Revenue to City is same as Schedule A
There is no rebate to Developer until the Cumulative Net
Annual Revenue Available' (line 4) is positive, which
occurs in year 15.
CULTURAL ARTS CENTER
For information, if long term debt were to be issued in order to
fully finance the Center, with an annual debt service cost of
approximately $4.3 million, Schedule B indicates this level of
annual revenue for the City/Agency will not be reached at any time
during the initial 25 years under the Developers rebate proposal.
However, if there is not a rebate, and all the city/Agency revenue
is dedicated to the Center, then a $4 million level of net annual
revenue (line 3) is reached in year 19.
If other financing sources are obtained, the amount of debt to be
issued would be reduced.
4--1
ATTACHMENT "A" - Page 2
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A TTACHJ\1ENT "C"
Page 1
DETAILS OF OTHER PROJECTS THE CITY/AGENCY
HAS PARTICIPATED IN FINANCIALLY
HOMART - PHASE 1
Total project cost was originally estimated by Homart at $42 million. Based upon project sales
and rents, Homart computed their Internal Rate of Return (IRR). In order for them to make
their required 13 percent IRR, their investment could not exceed $35 million. Based upon this,
they requested a $7.1 million contribution by the Agency/City predicated upon the tax
increments and sales tax revenues generated by the project. The City issued Certificates of
Participation and pledged both property tax and sales tax incremental revenues towards
repayment. Homart provided a seven-year sales tax guarantee to protect the City against any
shortfalls in sales tax revenue.
Arguments for the Agency/City to provide $7 million included:
· Prevent further decline of the Center which had been sliding in sales and
deteriorating in appearance, and the negative impact (blight) that that would have
upon surrounding commercial uses and residential neighborhoods.
· Upside "profit" in sales tax revenues to the General Fund over those needed for debt
service.
· Consolidation of the Sears/Broadway Center and addition of 141,000 square foot of
new retail space.
HOMART - PHASE 2
Homart proposed to add a Mervyn's and lO-plex theater to the Center to make the Center more
productive. The Disposition and Development Agreement (DDA) for Phase 1 required "best
efforts" to secure a fourth major department store. The additional uses necessitate a parking
structure to meet Homart and City requirements for parking (a "shared parking" formula is
used). The total project was estimated to cost $22 million. Homart requested that the
Agency/City pay for the parking structure ($5 million) based upon estimated incremental
property and sales tax revenues from the project. Following negotiations, the Agency approved
a $2.6 million contribution towards the construction of the parking structure. This will be
provided through the issuance of Certificates of Participation which will be repaid by property
tax and sales tax increments. Additional tax revenues should far exceed debt service
requirements. A sales tax guarantee for Phase 2 is also provided.
Arguments for the Agency/City participation include the following:
· Long-term increase in sales tax revenue.
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ATTACHMENT "C"
Page 2
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· The addition of Mervyn's makes the Center more viable, will increase overall sales,
and fulfills the DDA requirement to bring in a fourth major department store.
· The additional of 10-plex theater will provide a complementary use for the Center
and help Food Court sales.
· The project subsidy is justified by the anticipated tax revenues, cost of the parking
structure, donation of pad to Mervyn's, and additional improvements to the Center
that will not directly produce revenue.
AUTO SALES PARK
Assistance to the Auto Sales Park is primarily in the form of a land write-down. The Auto Sales
Park developers are paying $4.50/square foot for the development site. The Agency is paying
$6.78/square foot, thereby subsidizing $2.28/square foot. Total subsidy is approximately
$1,750,955. The subsidy will be paid out of future sales tax revenues accruing from the site,
above a guaranteed base ($550,000 the first year, increasing by 6 percent every year thereafter).
These payments, known as incentive payments, will be paid for no more than six years. They
will be followed by a nine year period of "post incentive" payments whereby the Auto Sales
Park developers will receive 33112 of sales tax revenues above the base.
Additional "subsidy" will be in the form of the purchase price attributed to the Broadway auto
dealers sites (Fuller Ford and South Bay Chevrolet) as part of the land trade transaction whereby
the Agency "swaps" the Shinohara parcel for the Broadway auto dealers sites. The value
attributed to the Broadway sites is approximately $6.3 million. It is doubtful that resale of these
parcels will produce close to that amount.
The existing Ford and Chevrolet dealerships have been under considerable pressure from their
companies (as well as market forces) to upgrade and modernize their facilities. In Ford's case,
this requires relocation to a new site. Chevrolet would then also have to relocate or be a free-
standing dealership (a market disadvantage). Assistance, in the form of the Auto Sales Park,
is necessary to prevent these dealerships from leaving the City, improve their competitiveness,
and establish a long-term major source of sales tax revenue for the City.
RANCHO DEL REV POWER CENTER
Home Depot
Home Depot agreed to open a minimum 100,000 square foot store, covenant to operate the store
for at least 10 years, and proactively try to hire and train Chula Vista residents. In exchange,
they receive vested Land Use, Traffic Signal, and TDIF fee deferral for five years, and
exemption from future TDIF fees.
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ATTACHMENT "C"
Page 3
K-Mart
K-Mart agrees to open a minimum 100,000 square foot store within 18 months and covenants
to operate the store for 10 years. They will also seek to hire and train Chula Vista residents.
K-Mart will continue to operate their existing facility on Third Avenue for a stipulated number
of years.
K-Mart receives vesting of land uses, exemption from Traffic Signal and TDIF fees for five
years. They will also be exempted from future TDIF fees.
Price Club
Price Club will open the new"H" Street store within 18 months and operate it for a minimum
of 10 years. Price Club will upgrade their Broadway store and continue to operate it for 8 years
provided that yearly sales do not fall below $60 million.
Price Club will advance $1.892 million to the City for construction of public improvements.
Developer (McMillin) will reduce land cost to Price Club for the amount of the loan plus an
additional $700,000 (minimum) to cover assessment district liens. The City will reimburse Price
Club the amount advanced for public improvements over a 10 year period, including interest.
The City will also provide an additional $835,000 to assist Price Club in constructing off-site
public improvements.
Assistance to these three retailers is predicated upon preventing sales tax "leakage" outside the
City along the 1-805 corridor, establishing longcterm exceptional sales tax revenues, and
employment opportunities for local residents.
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