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Home My WebLink AboutRDA Packet 1995/06/06 Tuesday, June 6, 1995 Council Chambers 4:00 p.m. Public Services Building (immediately following the City Conncil meeting) Joint Regular Meeting of the Redevelooment Agencv/Citv Council of the Citv of Chula Vista, CALL TO ORDER 1. ROLL CALL: Members Alevy -' Moot -' Padilla -' Rindone -' and Chairman Horton - 2. APPROVAL OF MINUrES: May 16, 1995, May 23, 1995 and May 30, 1995 CONSENT CALENDAR (None Submitted) * * END OF CONSENT CALENDAR * * PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES The following items have been advertised and/or posted as pubüc hearings as required by law, If you wish to speak to any item, please fill out the "Request to Speak Fonn" available in the lobby and submit it to the Secretary of the Redevelopment Agency or the City Clerk prior to the meeting, (Complete the green fonn to speak in favor of the staff recommendl1Jion; complete the pink fonn to speak in opposition to the staff recommendl1Jion,) Comments are limited to five minutes per individual. 3. PUBLIC HEARING REQUEST FOR SPECIAL LAND USE PERMIT TO CONTINUE A STEEL FABRICATION BUSINESS AT 790 ENERGY WAY--The applicant constructed a building without building permits in order to expand the exisiing steel fabrication business. Applicant is required to legalize or remove the building. The Agency is requested to make the requisite findings and conditionally grant the Special Land Use Permit. Staff recommends approval of the resolution. (Community Development Director) RESOLUTION 1455 MAKING REQUISITE FINDINGS AND CONDmONALL Y GRANTING SPECIAL LAND USE PERMIT FOR A CONTINUATION OF A STEEL FABRICATION BUSINESS AT 790 ENERGY WAY (SUPO-94-oZ) 4. PUBLIC HEARING SALE OF AGENCY PROPERTY LOCATED AT 801 BROADWAY WITIßN TIlE SOUTHWEST REDEVELOPMENT PROJECT AREA TO JAMES COURTNEY WITHOUT PUBLIC BIDDING--In response to an Agency Request for Proposals, Mr. James Courtney's offer is deemed acceptable by staff. Staff recommends approval of the resolution. (Community Development Director) "1 declMe under penalty of perjury that r am C3NÐlS-:31IlQ .. emP/Oed by the City of Chula Vista in the uo 112H ^~!::J 1B pue ~U!Plms sa~!^Jas ~!11nd Cwrimu¡- t/ Development Department and that I poHed aLn 12 1'"2(;8 U:+D,!n] 0'"1) no GO!)O¡cfcpuaâv >!4~ tn,s il.'eT:'a!,';oéice on the Bulletin Board at the pa\sod I \e.J PU8 :¡uaw¡Jed: .] ,u".urloIO¡,ûij. 1\:¡,unw,~o::J Pu;)I,c ocr'! ceo BU¡dtn~~2t~~ 9tH U! 8lS!", BI' ,!.).o 1\11;) a'.i1I,qpa"oj.~a Dn.T:',~.::'?_:J5SIG:.;ED . -" "'"í+""+;':J",'J~.. '.. 8"~3DA "1 Agenda -2- June 6, 1995 RESOLUTION 1456 FINDING AND DETERMINING, PURSUANT TO HEALTH AND SAFETY CODE, THAT IT IS IN TIlE BEST INTEREST OF THE PUBLIC AND AGENCY FOR THE ELIMINATION OF BLIGHT THAT CERTAIN PROPERTY LOCATED AT 801 BROADWAY IN THE SOUTHWEST REDEVELOPMENT PROJECT AREA BE SOLD TO JAMES L. COURTNEY, ET AL, WITHOUT PUBLIC BIDDING, AND APPROVING A PURCHASE AND SALES AGREEMENT AND ,JOINT ESCROW INSTRUCTIONS WITH ,JAMES L. COURTNEY, ET AL, AND AUTHORIZING THE CHAIRMAN TO EXECUTE SAME ORAL COMMUNICATIONS This is an opportunity for the general public to address the Redevelopment Agency on any subject matter within the Agency's jurisdiction that is not an item on this agenda. (State law, however, generally prohibits the Redevelopment Agency 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 yellow" Request to Speak Under Oral Communications Fonn" available in the lobby and submit it to the Secretary to the Redevelopment Agency or City Clerk prior to the meeting. Those who wish to speak, please give your name WId address for record purposes and follow up action. Your time is limited to three minutes per speaker. ACTION ITEMS The items listed in this section of the agenda are expected to elicit substantial discussions and deliberations by the Agency, staff, or members of the general pubüc. The items will be considered individually by the Agency and staff recommendations may in certain cases be presented in the alJemative. Those who wish to speak, please fill out a "Request to Speak" fonn available in the lobby and submit it to the Secretary to the Redevelopment Agency or the City Clerk prior to the meeting. Public comments are limited to five minutes. 5.A. AGENCY RESOLUTION 1457 APPROVING AGREEMENT TO SETfLE, RELEASE AND REIMBURSE COSTS WITH CYPRESS CREEK COMPANY L.P, AND PROMISSORY NOTE REGARDING REDEVELOPMENT AGENCY FINANCIAL PARTICIPATION IN SITE ACQUISITION COSTS FOR TIlE PALOMAR TROLLEY CENTER DISPOSITION AND DEVELOPMENT AGREEMENT AND APPROVING COOPERATION AGREEMENT (pALOMAR TROLLEY CENTER) WITH CITY TO LOAN CITY FUNDS TO REDEVELOPMENT AGENCY TO PAY BACK LOAN TO REDEVELOPMENT AGENCY FROM CYPRESS CREEK COMPANY, " AND AUTHORIZING CHAIRMAN TO EXECUTE SAME--The Agency directed staff to negotiate specific participation by the Agency in Phase 2 site acquisition costs. Negotiations with the developer were successful, with the developer agreeing to a level of Agency participation consistent with the Agency's directed parameters. The formal agreement is before the Agency for consideration. Staff recommends approval of the resolutions. (Community Development Director) B. COUNCIL RESOLUTION 17919 APPROVING COOPERATION AGREEMENT (PALOMAR TROLLEY CENTER) WITH THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA TO PAY BACK LOAN TO REDEVELOPMENT AGENCY FROM CYPRESS CREEK COMPANY L.P., APPROPRIATING FUNDS THEREFOR, AND AUTHORIZING MAYOR TO EXECUTE SAME Agenda -3- June 6, 1995 6. REPORT REQUEST FROM AUTO PARK DEALERSillP FOR ADDITIONAL FINANCIAL ASSIST ANCE-- The Redevelopment Agency considered the request for additional financial assistance from the Auto Park Developers on February 14, 1995 and directed staff to obtain and analyze financial data on dealership operations. Additional information has been received and analyzed, and recommendations are offered for consideration. (Continued from the meeting of May 16, 1995) (Community Development Director) OTHER BUSINESS 7. DIRECTOR'S REPORT(S) 8. CHAIRMAN'S REPORT(S) 9. MEMBER COMMENTS ADJOURNMENT The meeting will adjourn to the Regular Redevelopment Agency Meeting on June 20, 1995 at 6:00 p.m., immediately following the City Council meeting, in the City Council Chambers. ...... COMPLIANCE WITH TIlE AMERICANS WITH DISABILmES ACT The City of Chula Vista, in complying with the Americans With Disabilities Act (ADA), request individuals who require special accommodations to access, attend, and/or participate in a City meeting, activity, or service request such accommodation at least forty-eight hours in advance for meetings and five days for scheduled services and activities. Please contact the Secretary to the Redevelopment Agency for specific information at 619.691.5047 or Telecommunications Devices for the Deaf (TDD) at 619.585.5647. California Relay Service is also available for the hearing impaired. [C:\ WP51 IAGENCY\AGENOAS\06-{)6-95 .AGO] , . Clh.ti gJ a;} E- !B tmk MINUTES OF A JOINT MEETING OF THE REDEVELOPMENT AGENCY/CITY COUNCIL OF THE CITY OF CHULA VISTA Tuesday, May 16, 1995 Council Chambers 10:40 p.m. Puhlic Services Building CALL TO ORDER 1. ROLL CALL: PRESENT: Agency/Council Memhers Alevy. Moot, Padilla, Rindone, and ChairiMayor Horton ALSO PRESENT: John D. Goss, Diféctor/City Manager; Bruce M. Boogaard, Agency/City Attorney; and Vicki C. Soderquist. Deputy City Clerk 2. APPROVAL OF MINUTES: May 2 and May 9, 1995 MSUC (RindoneiPadilla) to approve the minutes of May 2, 1995 and May 9, 1995 as presented. Chair/Mayor Horton abstained on the minutes of May 2, 1995. CONSENT CALENDAR 3. WRITTEN COMMUNICATIONS: None * *.END OF CONSENT CALENDAR"" PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES None suhmitted. ORAL COMMUNICATIONS None ACTION ITEMS 4. REPORT REQUEST FROM AUTO PARK DEALERSHIP FOR ADDITIONAL FINANCIAL ASSIST ANCE--The Redevelopment Agency considered the request Ii" additional financial assistance from the Auto Park Developers on Fehruary 14. 1995 and directed staff to ohtain and analyze financial data on dealership operations. The Auto Park developer has requested this item he continued to the Agency meeting of June 6, 1995. Staff concurs with the request. (Continued from the meeting 01 May 2. 1995) (Community Development Director) Chris Salomone, Director of Community Development, stated the applicant had requested that the item be continued for one week. MSUC (Horton/A levy) to continue the report to the IJ1eetin~ of June 6, 1995. 5. RESOLUTION 1453 RESOLUTION 17898 JOINT RESOLUTION OF TI-IE REDEVELOPMENT AGENCY AND CITY COUNCIL OF THE CITY OF CHULA VISTA INSTRUCTING STAFF (1) TO COMMENCE CEQA REVIEW FOR ACQUISITION OF 30.06 ACRES OF UNIMPROVED REAL PROPERTY LOCATED ON THE EAST SIDE OF MEDICAL CENTER DRIVE FOR THE PROPOSED DEVELOPMENT OF A c2-1 Minutes May 16, 1995 Page 2 VETERANS HOME; (2) TO FORMALIZE AN AGREEMENT WITH SWEETWATER UNION HIGH SCHOOL DISTRICT FOR SUCH ACQUISITION, SUBJECT TO CERT AIN TERMS AND CONDITIONS; (3) TO NEGOTIATE A FORMAL AGREEMENT WITH THE CALIFORNIA DEPARTMENT OF VETERANS AFFAIRS FOR SUCH DEVELOPMENT, SUBJECT TO CERTAIN TERMS AND CONDITIONS, AND (4) TO TAKE ALL OTHER NECESSARY AND APPROPRIATE ACTIONS TO FINALIZE SUCH MATTERS EXPEDITIOUSLY AND TO PRESENT SUCH MATTERS TO THE AGENCY/COUNCIL FOR FINAL APPROVAL--Staff recommends the Agency/Council commence CEQA review, approve the contract and appropriate the funds therefor and approve the terms to ac,!uire the property and authorize the Executive Director to take the necessary actions to complete the ac,!uisition. (Community Development Director) Agency/Council Member Rindone stated he would be abstaining from the item to avoid the appearance of a contlict of interest due to his employment by the Sweetwater Union High Scbool District. Chris Salomone, Director of Community Development, stated the School District had voted 4-1 to accept the agreement as proposed. If approved, staff would move as expeditiously as possible to ohtain site control. RESOLUTIONS 1453 AND 17898 OFFERED BY CHAIR/MAYOR HORTON, readin¡: of the text was waived, passed and approved 4-0-0-1 with Rindone uhstuinin¡:. OTHER BUSINESS 6. DIRECTOR'S REPORTIS) - None 7. CHAIRMAN'S REPORTfS) - None 8. MEMBER COMMENTS - None CLOSED SESSION 9. CONFERENCE WITH LEGAL COUNSEL REGARDING: 1. Property acquisition and disposition; instmctinns to negotiators pursuant to Government Code Section 54956.8 . 30.06 acres ofraw land on the east side of Medical Center Drive (Parcel #641-0 I 0-07); owners - Sweetwater Union High School District; and, Third Avenue and Alvarado Stfòet (Windmill Farm site) (Parcel #'s 568-420-14,15,31: 568-511-18, 19,20); owners - Chu!a Vista Re.development Agency 11. REPORT OF ACTIONS TAKEN IN CLOSED SESSION ADJOURNMENT ADJOURNMENT AT 10:45 P.M. to a Special Redevelopment Agency Meeting on May 23, 1995 at 6:00 p.m., immediately following the City Council meeting, in the City Council Chambers. Respectfully suhmitted, BEVERL Y A, AUTHELET, CMC/AAE, City Clerk by: ~ cJ.-~ MINUTES OF A SPECIAL MEETING OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA Tuesday, May 23, 1995 Council Chambers 9:38 p.m. Public Services Building CALL TO ORDER 1. ROLL CALL: PRESENT: Memhers Alevy, Moot, P¡¡dilla, Rindone, and Chair Horton ALSO PRESENT: John D. Goss, Director; Bruce M. Boogaard, Agency Attorney; and Vicki C. Soderquist, Deputy City Clerk 2. APPROVAL OF MINUTES: None suhmitted. BUSINESS 3. WRITTEN COMMUNICATIONS: None suhmitted. 4. REPORT RESULTS OF REQUEST FOR PROPOSALS (RFP) FOR THE SALE OF EL DORADO PLAZA BUILDING AT 315 FOURTH AVENUE UNDER THE OWNERSHIP OF THE REDEVELOPMENT AGENCY -- The Agency directed staff to issue an RFP for the sale of the EI Dorado Plaza Building. Three proposals were received hy staff ¡¡nd ¡¡re descrihed in the report. Staff recommends that the Agency reject all proposals received and direct staff to explore one of the alternatives discussed in the report. (Community Development Director) MSUC (Rindone/Padilla) to approve the staff recommendation. 5. RESOLUTION 1454 APPROPRIATING FUNDS, ACCEPTING BIDS, AND AWARDING CONTRACT FOR DEMOLITION AND SITE CLEARANCE OF EXISTING BUILDINGS AT THE FULLER FORD SITE AT 760 BROADWAY IN THE CITY OF CHULA VISTA, CALIFORNIA (RD-133)--The work includes removal of buildings and disposal of existing improvements, excavation, grading, and other miscellaneous work. The clearance of the site is heing done to facilitate the construction of the Bro¡¡dway Business Homes project. Staff recommends approval of the resolution. (Community Development Director/ Director of Puhlic Works) . Mike Vogt, 2320 Paseo, San Diego, CA, Commercial Real Estate Broker, representing Mr. Jim Courtney owner of Courtney Tire, stated they had cont¡¡cted staff several ye¡¡rs ¡¡go to let them know that they would be very interested in expanding Courtney Tire on the Fuller Ford site, They had heen informed they would be notified when the site became available. Approximately 7-8 months ago they ¡"und out that the property was under contract and they were quite disappointed. They had ¡"lIowed the progress of that transaction and having heard of the proposal to raise the boil dings they wanted to reiterate their interest in purch¡¡sing the huilding ¡"r $700,000 on an all cash basis, not contingent upon demolition of the huilding, not contingent upon financing, and only contingent upon standard site investigation and title issues. He requested Council consider the offer het"re approving the demolition of the existing improvements which from their perspective would diminish the value of the property. Member Moot questioned if the Citrons h¡¡d m¡¡de ¡¡ firm commitment in writing to purchase the property. J~3 Minutes May 23, 1995 Page 2 Fred Kassman, Redevelopment Coordinator, stated the Agency had a semi-exclusive negotiating agreement with the Citrons. Other than that he did not helieve there was anything in writing, The.y had spent considerahle sums of money to hire architects and engineers and the proposal was currently goiog through design review. They appeared very committed to the project. Member Moot questioned if they had actually offered to purchase the property, Mr. Kassman replied that there was an original offer to purchase the property which led to the semi-exclusive negotiating agreement. The original offer was for $5.00 sq. ti. or $550,000. Member Moot questioned if that offer had been accepted. Mr. Kassman replied that the Agency was not in the position to accept the offer. By entering into the negotiating agreement it gave the Citrons time to develop plans and t()f staff to review and ,'onsider the plans and present them to the Agency. He felt the plans would he presented to the Agency in about two months. Member Moot questioned if the price could be lower than the $550,000. Mr. Kassman replied that it was conceivable. The Citrons wanted to hold the prices of the units to an affordable range and if the cost of the project exceeded their current estimates it was conceivahle that they could request a lower price. They had not requested that to date. Chair Horton questioned if staff anticipated that the Citrons would request that the Agency reduce or waive certain fees. Mr. Kassman replied that he could not answer that question although it had heen discussed with staff. Member Alevy stated it was his understanding that the price was $550,000 and the Agency would pay for the demolition of the existing stmctures which was approximately $110,000. Mr. Kassman responded that was correct. Member Alevy questioned if there was any estimation what the tax base would he on the business homes versus the expansion of Courtney Tires. Mr. Kassman replied that would be hard to indicate because staff was uncertain how the 36 business homes would used. An automotive business would more than likely generate more sales tax revenues. Member Moot questioned if the property tax increment would be different. Mr. Kassman replied that he felt the property tax increment would be substantially different and favorable toward the business home project. That revenue would be generated directly to the Agency although there was a split with the County. 8 Craig Citron, 13978 Amber Sky Lane, San Diego, CA, stated he was unaware of any conversation regarding the reduction of the offer. He wanted to assure the Agençy that his parents were committed to moving forward with the project and were at the present time at a meeting regarding financing. Member Padilla felt the general policy direction of the Agency was clear regarding the business home project, i.e. to be creative and take some risks. The question was what degree of risk was prudent. He recommended that the item be continued for one week in order to ohtain more information from the Citrons. He telt questions needed c2-Lf Minutes May 23, 1995 Page 3 to be answered before negatively impacting the property. He also wanted to he carefol ahout sending a negative message or being inconsistent because how the Agency dealt with the Citrons would send a message to other developers. He also wanted staff to pursue the issues outlined hy the City Attorney in his memorandum. Chair Horton questiooed if staff had come to terms on the semi-oegotiating agreement. Mr. Kassman responded that staff was meé!ing with the Citrons, the project was going through design review, and staff felt they would be back before the Agency with a Disposition and Development Agreement and other discretionary approvals on July 11, 1995. Chair Horton stated if staff came forth with recommendations the Agency did not feel advantageous they would not be in a binding situation. Mr. Kassman stated that was correct, except if the huildings were demolished the site would be cleared. The demolition would take approximately six weeks. Chair Horton did not want to go forward with the demolition at the present time uotil there was a firm agreement on both sides as to what would and would not happen on the site, Mr. Kassman stated there was no commitment and would not be until the documents were brought back to the Agency. Member Rindone stated the Agency had made it clear to staff aod staff was trying to be responsive to move the project forward in a timely manner and there appeared to be a serious ljuestion regarding the appropriateness of the timing of the demolition in order to move the proJect (",vard. That tied into the memorandum from the City Attorney which gave the Agency a reason to ret1ect on their previous action. lt was clear that the Citrons were offering a whole new concept which required more risk on the part of the developer and the City. He hoped the Agency would not do anything to deter that direction which had clearly been given. He questioned how soon the semi-negotiating agreement could he completed. Mr. Kassman replied staff needed another two weeks in order to reach agreement on the major tenus. Member Rindone questioned if the item was delayed two weeks, until the maiO< terms were negotiated, if it would have any negative impact on moving the project ¡"rward. Mr. Kassman responded that under the present circumst,mces he felt that would be acceptable. Chair Horton stated there was no agre.ement so she did not feel that any process was heing slowed down. If the agreement, when brought ¡"rward, was not beneficial to the Agency or if the figures continued to go down she was not sure she would support the prqject. Mr. Goss stated the testimony received from the Citrons at a prior meeting was to have the demolition begin because they wanted to get model products on-line in August. He was uncertain how responsive the Citrons would be to a two week delay. He recommended that it be brought back in one week, MS (Padilla/Moot) to continue the item for two weeks. Member Moot stated he did not have a problem in setting a special meé!ing ¡"r 5/30/95 as the Council would be attending a budget worksession. He felt the Agency needed to be fiscally prudent. ~-5 Minutes May 23, 1995 Page 4 SUBSTITUTE MOTION: (Moot/Padilla) to call a special meetin~ of the Redevelopment A~ency for 5/30/95 to hear Resolution 1454 only. Approyed unanimously. ORAL COMMUNICATIONS None OTHER BUSINESS 6. DIRECTOR'S REPORTCS) - None 7. CHAIR'S REPORT<S) - None 8. MEMBER COMMENTS - None AOIOURNMENT ADJOURNMENT AT 10:01 P.M. to a Special Redevelopment Agenoy Meeting on May 30, 1995 at 6:00 p.m., immediately following the City Council meeting, in the City Council Chamhers, and thence to the Regular Redevelopment Agency Meeting on June 6, 1995 at 4:00 p.m., immediately t"lIowing the City Council meeting, in the City Council Chambers. Respectfully suhmitted, BEVERL Y A, AUTHELET, CMC/AAE, City Clerk '~'~~ hy: \5:::'. ~~'(u,i Vicki C. Soderquist, CMC, ty City Clerk c2-(o MINUTES OF AN ADJOURNED SPECIAL MEETING OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA Tuesday, May 30, 1995 Council Chambers 6:13 p.m. Public Services Building CALL TO ORDER 1. ROLL CALL: PRESENT: Members Alevy, Moot, Padilla, Rindone and Chair Horton ALSO PRESENT: John D. Goss, Director; Emce M. Boogaard, Agency Attomey; and Beverly A. Authdet, City Clerk BUSINESS 2. RESOLUTION 1454 APPROPRIATING FUNDS, ACCEPTING BIDS, AND A W ARDlNG CONTRACT FOR DEMOLITION AND SITE CLEARANCE OF EXISTING BUILDINGS AT THE FULLER FORD SITE AT 760 BROADWAY IN THE CITY OF CHULA VISTA, CALIFORNIA (RD-133) - The work includes removal of buildings and disposal of existing improvements, excavation, grading, and other miscellaneous work. The clearance of the site is being done to facilitate the construction of the Broadway Business Homes project. Stafl'requests continuation 01' the item to the A~ency meetin~ 01' 6/6/95. Continued from the meeting of May 23, 1995. (Community Development Director/Puhlic Works Director) MS (Horton/Padilla) to continue Resolution 1454 to the meetin~ of 6/6/95, Member Rindone stated since the last meeting he had heen contacted by the applicant expressing his concern with a weeks delay. He questioned how critical a one week continuation would he. Chris Salomone, Director of Community Development. stated two meetings had heen held with the applicant and progress had been made toward resolution of the issues, Staff felt they could return in two weeks with a complete report. Member Rindone stated the applicant expressed deep reservations for the one week delay and he was not sure it was in the best interest of the project to delay any tÜrther. Mr. Goss stated it was his understanding that a continuance had heen agreed to due to the need to look at some of the soils issues. There would he an eftÒrt to get the testing done in a two week period. Mr. Salomone stated the site issues the City Manager referred to was the need to deliver a clean site to the applicant and do some pre-testing of the environmental conditions of the site. The meeting on Friday centered around sharing the cost of the pre-testing and drilling to determine whether there was contamination that would ultimately prevent the prqject from going forward in a timely manner. Joseph Citron, 761 Golden Park, San Diego, CA, stated sixteen months ago they started to look for a site; fourteen months ago they were offered the property hy the Redevelopment Agency; and thirteen months ago they had made a proposal in writing. As of the present time they had not changed any of those elements. He understood at the last meeting that it was questioned if they were looking at lowering the price or looking to get out of some of the fees. That was not tme, they offered $550,000 for the property in writing thirteen months ago and they continued to offer that price. They had a considerahle investment in the project in ascertaining its liahilities, design, and ;---7 Minutes May 30, 1995 Page 2 satisfying the various departments with the City. There were some special things that needed to be done and the City and departments had been working with them at great length to resolve those issues and he felt they were not that far apart. At the present time they were up against some real deadline delays and the allocation of the property to the Mello Roos, which they had negotiated with the various school districts. There would be a different price if the project was not completed by June 30, 1995. The school board had informed him that they were ready to finalize their paperwork during that time if the Agency signed off which would keep the price lower for one year. The soil was a situation where any lender required a soil report. It was their position that unless the site was somehow an atomic testing site that no one knew about they did not think that there should be a problem there. He had volunteered to raise the price they would pay for the property by $20,000 hecause it was suggested that there could be $10,000 - $40,000 in clean-up costs on the land so he volunteered to pay the first $ I 0,000. They would be paying for the testing of the site and doing borings so they could get compaction tests at the same time. They were trying to go as far as they could toward resolving the issue in order to create the project. If the item was continued further they were going to have a real problem. They were committed to a business trip, out of the country, starting Sunday so they would not be ahle to attend the 6/6/95 meeting. He would appreciate whatever could be done to move forward with the project without further delays, Chair Horton questioned if there was financing for the project. Mr. Citron stated they did have lìnancing. Chair Horton questioned if there was something iu writing submitted to staff. Mr. Citron stated they did. Chair Horton asked Mr. Salomone if that was correct. Mr. Citron requested clarification as to whether the Chair had asked if it had beeo submitted to staff. He was not certain that it had been sent to staff. San Diego National Bank had agreed to do the construction financing, Pacific Trust had written Take-Out letters for their sales, and they had several other local banks that had also agreed, one of which wrote them a Take-Out letter. For a bank to make a fioal commitment they wanted a building permit and, of course, they were a long way away from a building permit. They had taken the risk of funding their architect an additional $60,000 to do construction drawings to go into the Building Dèpartment for the first huilding of six units that had been approved by the Agency several weeks ago. The bank would give the City a letter with "subject to's" which would be City action. Chair Horton stated that the Agency did not have anythiog conlinned in writing at the present time. Mr. Citron asked Mr. Salomone if he had talked to Roger Remnant at San Diego National Bank. Chris Salomone, Director of Community Development, stated he did not have a message from him and had not talked to him. Staff had talked to lenders in concert with, aod 00 behalf of, the Citrons and fouod interest from the lenders. Staff did not have conlìrmation but knew there Was significant interest in the project. Member Rindone questioned if there would be any advantage, instead of trailing the item to next Tuesday when Mr. Citron would be out of town, trailing it to Saturday as they already had a meeting scheduled. He questioned if that would be more conducive in trying to reach a resolution. Mr. Citron stated he would have to ask Mr. Salomone if they would be in a position to get everything dooe at an earlier time. Mr. Salomone replied that staff could accommodate the Agency's wishes. J ,--~ Minutes May 30, 1995 Page 3 Mr. Boogaard stated he wanted to address a couple of the risks staff was trying to mitigate by the procedure selected. The first duty of concern was whether or not the Agency had a duly to deliver a "clean" site no matter what. The question was if there was a walk away contamination point. Did the Agency want to reserve for the Council and the City the right to walk away from the deat if for reasons unheknownst to the Agency the soil was seriously contaminated. Unless the Agency wanted to insist on the right to walk away from the transaction, staff was recommending pre-demolition testing. Otherwise, if Ihere was a serious problem of contamination after the site was raised and graded, the Agency would have the duty to deliver that site in clean condition or the Agency would lose the $250,000 of building value currently on the site. Staff proposed to test the site without demolition by doing 24 borings and soil sampling for approximately $13,000. He felt it would take 2-3 weeks. Joseph Monaco, Environmental Projects Manager, stated they did not have a time !fame but expected a bid from the contractor on Wednesday. That would include better inl,mnation on costs and timing. Mr. Boogaard stated there could be a situation where the Agency took down $250,000 in value with the demolition contract and then not be able to sell it to the Citrons. Staff wanted to be sure what was under the soil. Member Rindone stated he did not feel the issue raised was heing questioned by the Agency. However, in trying to see if it was a realistic project the Agency was trying to do everything expeditiously possible. Now he was hearing different information li)f consideration and he did not kel there would be resolution at either a Saturday or Tuesday meeting. He questioned what the purpose would be of delaying the item to Tuesday if they did not have the results of the soils tests. He did not understand staffs recommendation to continue the item to the meeting of 6/6/95 if they were not any better off then than they were now. Mr. Boogaard felt two weeks would be a more appropriate time frame. Mr. Citron questioned where the $250,000 value figure came from. Mr. Boogaard stated at the last meeting the Agency received indications of an oft", greater than $550,000, at about $250,000 higher. Mr. Citron stated according to what he saw it was about $150,000 higher. He klt they were being put in a very perilous position and he asked the Ageocy to consider the effect on people that wanted to do upscale business development in the City of Chula Vista if they find that they can work a year, invest almost $200,000, time and effort, take on obligations beyond that, and then find that they may he put into an auction where someone can come in with a contingent piece of paper. He also suggested that it was highly suspect being that !fom the very early months that they had heard they were interested in taking a small portion of the property to enlarge their tire store. They had made a bonalide offer and had been dealt with in good faith hy the Agency and the City and he certainly hoped that the good faith dealing continued. Mr. Boogaard stated there was no indication by the Ageocy that they were willing to accept the offer, it was a question of demolishing value that may be there if the Agency could not sell the property to the Citrons. It was at least a $250,000 different if the Agency did not have to demolish the building. Mr. Citron questioned if staff knew that the offer was all cash hecause there was not a lender that would not ask for a soil report. Chair Horton stated it was not a matter of taking olle otTer over another, it was a matter of heing concerned about not destroying the value of the property. Until the Agency had everything locked down in writing and everything agreed to so the Agency did not jeopardize their position. She felt that was very important. c2 ~1 Minutes May 30, 1995 Page 4 Mr. Citron stated it was important and understandable and he could not disagree with any of it. They had been trying for one year to reach this point and now were heing told the Agency needed more time. He questioned how long it took to buy a piece of property from the City of Chula Vista. It made it very difficult to do any business planning for development. Chair Horton stated she did not know what it was taking so long hut the issues were hrought to the Agency's attention by the Agency Attorney and she felt they needed to be addressed bet"re moving forward. It was not that the Agency did not want to help move the project along but they needed to be careful and protect themselves. Mr. Citron stated that was understandable and felt the Agency was doing the right thing. They were not intending to criticize staff or staff's activities, there had been support to help in a positive way at all time. Staff was subject to the dictate of the Agency and in all fairness, 70% - 80% of the make-up of the Agency had changed since they had started the project which make some difficulties. It was the course of husiness development in the future and Chula Vista could be in the ¡"refront. He was not suggesting that everyone jump in and do anything they could, but he was suggesting that perhaps they were looking at the "hole" rather than the "donut". Member Rindone suggested that instead of negotiating from the dais the Agency should get resolution on the soils which had to be addressed before there was movement. lt was un¡"rtunate that it had not already heen done. He questioned the earliest date the soils evaluation would be availahle, Mr. Salomone felt that when the bid was received on Wednesday staff would have a better idea of the costs and time frame which were the two critical issues. Staff assumed the costs would be aft"rdahle hut the time frame was the critical issue. Staff could return on either Saturday or Tuesday with that resolution of the site pre-testing issue. Member Rindone felt there had to be resolution of that issue. At the very least, to have a staff report at the Saturday meeting was not inappropriate and was not changing any direction of the Agency. That would also allow the applicant to respond at that time. Obviously it would not he resolved hy Saturday hut in hiÍrness to the applicant the Agency needed to do whatever was reasonable to not only protect the Agency's interests hut also to be businesslike. SUBSTITUTE MOTION: (RindoneiPadilJa) trail the item for a stall'I'epo!"t on Saturday, June 3, 1995. Mr. Boogaard stated staff had discussed with the Citrons that in addition to the soils testing there would be an enforceable Memorandum of Business Terms availahle for the Agency at the same time the results of the testing were presented. He felt that would eliminate the risk of not selling the property to the Citrons if after demolishing the building they could not proceed with the sale. Chair Horton questioned if that meant that all the terms of the sale had to he agreed upon when it was hrought hack to the Agency. She felt everything needed to be on the tahle and agreed upon hefore she would make a decision. Mr. Citron stated it was his understanding that he had a meeting scheduled with the City Attorney at 9:00 a.m. on Wednesday and their attomey would he at that meeting. He wanted to proceed on the assumption that the soil problem could be worked out and tie up the other loose ends so it would not have to wait until the soils testing was completed. They were happy to work on that in the interim period if the Agency felt that was appropriate. VOTE ON SUBSTITUTE MOTION: apprnved unanimously. ORAL COMMUNICATIONS None ;2 --ID Minutes May 30, 1995 Page 5 3. DIRECTOR'S REPORT(S) - None 4. CHAIR REPORTiS) - None 5. MEMBER COMMENTS - None ADJOURNMENT ADJOURNMENT AT 6:35 P.M. to a Special City Council Meeting on June 3, 1995 at 9:00 a.m., immediately following the City Council Meeting, in the City Council Conference Room. Respectfully suhmitted. BEVERL Y A. AUTHELET, CMC/AAE, City Clerk by: ~~, ~j .'. ~~,\( . Vicki C. Soùerquist, CMC, De Ity City Clerk J ~// This page blank! oZ -IJJ REDEVELOPMENT AGENCY AGENDA STATEMENT Item3 Meeting Date 06/06/95 ITEM TITLE: PUBLIC HEARING Request for Special Land Use Permit to Continue a Steel Fabrication Business at 790 Energy Way RESOLUTION!1S~aking Requisite Findings and Conditionally Granting Special Land Use Permit for a Continuation of a Steel Fabrication Business at 790 Energy Way (SUPO-94-02) SUSM'TTED SV, C=m"";" D'."opm,", D~ ¿.5 . REVIEWED BY: Executive Directo~ ~..-'7 (4/5ths Vote: Yes - No ~ BACKGROUND: Sometime prior to February 993, the applicant, Charles R. Temple, Jr. constructed a building at 790 Energy Way without building permits in order to expand the existing steel fabrication business (Exhibit A). Code Enforcement issued a Correction Notice on February 3, 1993 and Mr. Temple was instructed to contact the Planning Department and Community Development Department in order to legalize the building by going through the design review process and to obtain a special use permit, or to remove the building. On March 13, 1995, the applicant received conditional approval of a design review application from the Design Review Committee (DRC). The Special Land Use Permit was reviewed by the Project Area Committee on May 8, 1995. RECOMMENDATION: That the Agency make the requisite findings and conditionally grant a Special Land Use Permit (SUPO-94-02) to Charles R. Temple, Jr. for the continuation of a steel fabrication business at 790 Energy Way. BOARDS/COMMISSIONS RECOMMENDATION: The Design Review Committee (DRC) reviewed and conditionally approved the project at their March 13, 1995 meeting. The minutes and letter of approval from the DRC meeting are attached as Exhibit B. The Otay Valley Road Project Area Committee considered this project at their meeting of March 8. 1995. The PAC made the requisite findings and conditionally approved the Special Land Use Permit. The minutes of the PAC meeting are attached as Exhibit C. DISCUSSION: The applicant has operated a metal fabrication business at 790 Energy Way since 1978. Sometime prior to February 1993, the applicant added on to his existing metal building in order to expand his business (See Exhibit A). The building addition was not reviewed or approved by the City and was not in compliance with the design guidelines of the Redevelopment Plan. Discussions took place between planning staff and the applicant resulting in a compromise which will allow him to keep the building addition with minor design modifications. The applicant must also apply for a Special Land Use Permit for the building expansion. 3-1 Page 2, Item ~ Meeting Date 06/06/95 The proposed use is compatible with surrounding land uses which include auto dismantling operations to the south, north and west, and a food distribution business to the east. To date, there have been no complaints concerning the land use. Even though steel fabrication is a permitted use in the IP (General Industrial - Precise Plan) Zone pursuant to Title 19 of the Municipal Code, the Otay Valley Redevelopment Plan requires a special land use permit for all uses permitted in the IP Zone but not in the IL Zone. Therefore, the applicant was required to submit an application to the Redevelopment Agency for a Special Use Permit. The granting of a Special Land Use Permit requires the Agency to make certain findings below. A. The DroDosed Droiect would not constitute a substantial detriment to the Project Area or adjacent areas and land uses. As a continuation of an existing business which is compatible to surrounding land uses, the proposal does not constitute a detriment to the Project Area or adjacent land uses. B. The croDosed Droiect aenerallv cromotes the orderlv Dhvsical and economic develoDment of the Project Area. The expansion of a viable business promotes the economic development of the Project Area. C. The croiect is aenerallv consistent with the townscaoe-olannina and urban desian objectives of the Imolementation Plan/Desian Manual Addendum. and mav contribute to the amenitv of the Proiect Area. With the changes recommended by the DRC, the project will be consistent with the objectives of the Implementation Plan/Design Manual Addendum. The Environmental Review Coordinator has determined that the project is a Class 3(b) Categorical Exemption pursuant to § 1 5063 of the California Environmental Quality Act. FISCAL IMPACT: The value of the added improvements is estimated at $60,000-70,000 which will add $700 to the annual Otay Valley Road tax increment funds. This amount will increase by 2% each year. Attachments: Exhibit A: Project Location Map Exhibit B: Site Plan indicating Building Addition Exhibit C: Minutes, Design Review Committee, March 13, 1995 Exhibit D: Planning Department Letter to Charles Temple dated March 16, 1995 Exhibit E: Minutes, Otay Valley Road PAC, May 8, 1995 Exhibit F: Notice of Public Hearing ok:kossmon\r04s\ 7900 norgy . '04 " -;(; EXHIBIT A PROJECT LOCATION -- --- --- ,~- CHULA VISTA PLANNING DEPARTMENT C) APPLICANT: BRADFORD METALS PROJECT DESCRIPTION: SPECIAL USE PERMIT ADDRESS: 790ENERGYWAY Request enlargement of a metal fabrication SCALE: I FILE NUMBER: business (rear building illegally constructed- NORTH 1" = 400' SUPO - 94 - 01 this application to bring use into conformance) $-3 This page blank! .3-1- .f t' ! ,. , ~~ .: i' .,. ' -'<- ,.~ " -'" ., ~. ~~_.,,_.- ; ..----- ' " ì' \' ~¡ ; -.-...'4 '! Y'--~-'- .' ~j ,j tl) .. ~~.," ,,¡ . ' ~.~,W',"---,~['~,",:' --",..~~,..,.""..~,':"":.""".'."'.'f,' . \VIm . ., ,\.-' ¡ ,I, ' "," ,', '\J1) - ~ ~ .~ ' ' . " -" _.oJ..' I~-; .11 -\ 'I. , \ " ,<,,-. - ..-~ . ~! I ' .--- .of I u .. " ~ i I} \"" ' ' .,' , .(i'" ' . ¡ 1" ,! .'.'); " ' ¡¡I'U ~ ¡,i ' ':' " , .~, , " ¡.! '. L . .. ¡ 11 ,':¡'\ 'p:: I Ff ~ ì ,I . t ' it; . ' ...,'~ , ," ,.' ,I 01 I, ¡lU; II 'I t I~. \" t \ \" .z,.~ ¡ d I ,'~' 'I 'ò'! ,,'~- L~lH ~ " ~ - co ::c ~ ,I B . al I , ~ . Î ~ * .. , - ----'1 { , ~ ."," .,~. Fl. :ì. I -;.t '" .~i 'fc, :~ ,-"""""" -' -=i " ,. H J -5 '<',c" This page blank! 3-¿ EXHIBIT C [ MINUTES OF A REGULAR MEETING OF THE DESIGN REVIEW COMMITTEE Mondav March 13 1995 Conference Rooms 2 and 3 4:30 p.m. A. ROLL CALL MEMBERS PRESENT: Chair Spethman, Vice Chair Rodriguez, Member Way (Member Duncanson arrived at 4:55 from the Beautifications Award Committee meeting) MEMBERS ABSENT: Member Kelly, without notification STAFF PRESENT: Principal Planner Steve Griffin Associate Planner Luis Hernandez B. INTRODUCTORY REMARKS Chair Spethman made an opening statement explaining the design review process and the committee's responsibilities. He asked that all speakers sign in and identify themselves verbally for the tape when speaking. C. APPROVAL OF MINUTES MSUC (Spethman/Rodriguez) (3-0) to approve the minutes of the January 9, 1995 meeting, corrected on page four, paragraph one, to indicate that Planning staff included "those with both architectural education and experience, but not licensed architectural expertise" MSUC (Spethman/Rodriguez) (3-0) to approve the minutes of the February 13, 1995 meeting, corrected on page four, paragraph three, to add that member Rodriguez requested to see elevations indicating what was going to be built in the first phase. D. PRESENTATION OF PROJECTS .~.. ., 1. DRC-94-36 Bradford Metals 790 Energy Way Industrial Buildin~ Addition & Associated Site Improvements Staff Presentation Associate Planner Luis Hernandez presented the project, reminding members that this project had been previously considered by the Committee at its December 5, 1994 meeting. The project consists of the legalization of a building which was constructed without permits on a site with a previously constructed building. At the previous meeting, the Committee continued the item in order to allow the project designer time to reconsider the project design in order to tie the buildings together through more than painting treatments. Mr. Hernandez noted that the applicant has modified the proposal, which now includes substantial cosmetic modifications to both the original and new building. He added that substantial screening of the buildings will occur through the installation of both a screen wall and landscaping at the front of the site. Mr. Hernandez stated that staff's main concern related to the integration of stucco with a metal building, but noted that the applicant has made an effort to address the Committee's concerns. He 3-7 DESIGN REVIEW COMMITTEE -2- MARCH 13, 1995 stated that staff recommended that the Committee consider the proposed design solution and approve, deny, or continue the project as deemed appropriate, adding that if approval was granted, staff had included possible conditions of approval in the staff report, Applicant Discussion Project Designer Joshua Renner stated that he was in agreement with the conditions of approval provided by staff, Committee Discussion Member Duncanson asked about the rear access; Mr. Hernandez responded that staff had suggested providing access to the rear of the site from inside of the building, Chair Spethman asked about material samples, In response to further questions, property owner Charles Temple stated that the roof was corrugated metal, painted white, and in good condition. Chair Spethman expressed concern about painting over the baked on enamel finish; other members agreed that new paint over this would probably not wear welL Member Rodriguez suggested that the roof be left as is, He asked how the metal sides of the buildings would be tied in to the stuccoed front elevation; Mr. Renner responded that the edge could be trimmed out to provide a transition. Member Rodriguez stated that the pediments and dormer elements were an improvement. He asked if a door was planned to the rear of the property; Mr. Renner stated it was, Chair Spethman asked if the stucco would be papered and wired over the existing building; Mr. Renner stated that it would. In response to further questions from Spethman regarding the stucco appearance over the existing building, Mr. Renner stated that the stucco could be hand troweled if required but requested the option of spraying it, It was agreed that this would be left up to the applicant, Member Way questiol)ed the fairness of requiring that the applicant obtain a letter of access permission from the adjacent property owner prior to issuance of construction permits. Mr. Temple stated that he had obtained verbal permission, but added that he did not know where the owner is presently, Mr. Hernandez pointed out the problems that can arise from a design standpoint if the applicant is unable to obtain permission at a later date. He added that if this situation should arise, staff would ask the applicant to propose alternative solutions, Member Way asked if a variance was required for the setbacks; Mr. Hernandez noted that the precise plan findings would authorize the setbacks, MSUC (SpethmanIWay) (4-0) to approve DRC-94-36 subject to the conditions listed in the staff report with the following modifications: modify condition "f" as follows: "The site improvements and building modifications shall be completed within 6 months from the date of issuance of construction permits." Add condition "g" - Building roof shall not be painted, E. ADJOURNMENT The meeting was adjourned at 5:20 p,m. J--R ~~f?- EXHIBIT D -.- "- -..,¡¡: ~~~~ cm OF CHUlA VISTA PLANNING DEPARTMENT March 16, 1995 Charles Temple 790 Energy Way Chula Vista CA 91911 Subject: DRC-94-36 Dear Applicant: On March 13, 1995, the Design Review Committee considered your revised redevelopment proposal for the property located at 790 Energy Way within the Otay Valley Road Redevelopment Area. The Committee, after hearing staff's presentation and applicant's testimony, approved you project by unanimous vote subject to the following conditions: a. The structure shall comply with all the requirements of the Chula Vista Uniform Building Code to the satisfaction of the Director of Building and Housing. b. The structure and site improvements shall comply with all the requirements of the Chula Vista Uniform Fire Code to the satisfaction of the Fire Marshal. c. Landsc'7pe and irrigation plans, addressing parking screenJ.ng, shall be submitted to the Planning Department prior to or in conjunction with the building permit submittal package. .~., d. A letter from the easterly adjacent property owner authorizing access to that property for the purpose of finishing the wall as may be required by the Building and Housing Department shall be submitted to the Planning Department prior to issuance of construction permits. e, The trash enclosure design shall feature metal frame and face doors, and shall be stuccoed to match the building. f The site improvements and building modifications shall be completed within 6 months from date the building permit is issued. g. The roofs shall be cleaned thoroughly and allowed to retain the original color 3-? 276 FOURTH AVENUE, CHULA VISTA. CALIFORNIA 81810 . (619) 691-5101 @ --... You have the right to appeal this decision to the Redevelopment Agency. A completed appeal form, along with a deposit amount of $2,000 must be received by this office within 10 days of the date of this letter. Forms are available in the Planning Department. In the absence of said appeal, the decision of the Design Review Committee is final. Failure to use this permit within one year from the date of this letter shall cause the permit to become null and void unless a written request for an extension is received and granted prior to the expiration date. If you have any questions in regards to this matter, please call me at 691-5090, ~y~/ Lu's Hernan~ sign Review c~ordi~or / Associate Planner '-----.-- cc: Robin Franklin, 6658 San Miguel Road, Bonita CA 91909 Attn: Joshua Renner Fred Kassman, Community Development Department , --- ,3_/ð CITY OF CHULA VISTA EXHI BIT E Minutes OTAY VALLEY ROAD PROJECT AREA COMMITTEE Monday, May 8, 1995 Conference Rooms 2&3 9:00 a.m. Public Services Building 1. ROLL CALL PRESENT: Chairman Casillas, Palumbo, Nava. McMahon ABSENT: Member Hall ALSO: Redevelopment Coordinator Kassman; Assistant Planner Miller, Charles Temple (Bradford Metals); John McCormick, property owner 2. APPROVAL OF MINUTES from the meeting of April 10, 1995 MSC (Nava/McMahon) to approve the minutes as mailed (4-0-1; Hall absent). 3. PUBLIC HEARING: Application for Special Permit: 790 Energy Way (Bradford Metals). The applicant is requesting a Special Use Permit to legalize the existing steel fabrication business building. Chairman Casillas opened the public hearing and asked if there were any speakers for or against the proposed project. There were no speakers and the public meeting was closed. Staff indicated that the application for a special permit was to bring a building addition at Bradford Metals into conformance with City requirements. The building was added on to an existing building without any City permitting or approvals. The only conditions to the approval are to comply with the Design Review Committee's (DRC) conditions. Land use is not an issue. Staff is recommending approval of the special permit. Chairman Casillas asked what the DRC's requirements are? Staff responded that the applicant, Charles Temple will pay double fees. Otherwise. he will be required to bring the building into conformance with general standards. There is nothing extraordinary in the requirements. Member McMahon asked why the applicant needed a special permit? Mr. Miller responded that a Special Use Permit is required because the land use (steel fabrication) is allowed in an I Zone but not allowed in an I-L Zone. Under the requirements of the Otay Valley Road Implementation Plan/Design Guidelines, any use that is an allowed use in an I Zone but not permitted in an I-L Zone requires a special permit. There is no sunset however on the special permit for Mr. Temple as there were for the auto wreckers. Member Palumbo asked what would be happening with the auto dismantlers? Energy Way seems to be a perfect location for them. It seems as if they are being programmed out of the City entirely. MSC (McMahon/Palumbo) to make the requisite findings and approve the special permit as outlined in the staff report (4-0-1; Hall absent). Staff indicated that the request for a special permit would go before the Redevelopment Agency, probably at their meeting of June 6, 1995 for final approval. The recommendation of the PAC will be included in the staff report to the Redevelopment Agency. :3~// EXHIBIT F NOTICE OF PUBLIC HEARING BY THE REDEVELOPMENT AGENCY OF CHULA VISTA, CALIFORNIA NOTICE IS HEREBY GIVEN THAT A PUBLIC HEARING WILL BE HELD BY THE REDEVELOPMENT AGENCY of the City of Chula Vista, California, for the purpose of considering an application for a special use permit (SUPO-94-01). The application, submitted by Charles R. Temple, Jr., dba Bradford Metals, requests permission to continue use of a previously unauthorized building for structural and miscellaneous steel fabrication work at 790 Energy Way, Chula Vista. A plot plan and legal description is on file in the office of the Planning Department. Mr. Temple desires to obtain all necessary permits for the building in order to bring it into conformance with the Municipal Code. The Environmental Review Coordinator reviewed subject application and determined that it qualifies as a "General Rule" exemption because it is "a project that will have no potential for significant environmental impacts" pursuant to § 15061 (b)(3) of the California Environmental Quality Act, If you wish to challenge the Redevelopment Agency's action on this special use permit in court, you may be limited to raising only those issues you or someone else raised a the public hearing described in this notice, or in written correspondence delivered to the Redevelopment Agency at or prior to the public hearing. SAID PUBLIC HEARING WILL BE HELD BY THE REDEVELOPMENT AGENCY on Tuesday, June 6, 1995 at 4:00 p.m. following the City Council meeting, in City Council Chambers, Public Services Building, 276 Fourth Avenue, at which time any person desiring to be heard may appear. DATED: May 8, 1995 CASE #: SUPO-94-02 COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT (ADA) The City of Chula Vista, in complying with the American With Disabilities Act, request individuals to require special accommodation to access, attend and/or participate in a City meeting, activity or service request such accommodation at least forty-eight hours in advance for meetings and five days for scheduled services and activities. Please contact (Alice Kemp, Administrative Secretary for information or your request at (619) 691-5047 or Telecommunications Devices for the Deaf (TDD) (619) 976- 5357. California Relay Service is available for the hearing impaired. ok :kossmanlmiscl 790onorgy . not ~~~,~~~:;~~~:~: ~~~~~I~ ;;,~::r~~~~"t:;~\ ~. 'm ...3 ....!?---- Commun:tv De'.;e"'n,-','~t ton:]"",,- .~' "n' ..,t r . t d ""'" ... ',' ". ,.. ;>05 e this Agenc!Jí"'oticc' on t'w P;:;I','.';" ¡¡,.,;,,' ;';~'e' Pu;,'¡c S-"rViccs Bui!ding' o~t" ~¡ty ¡;'~i~ o~. I. DATE,.) Is" 16GNED .ù-- /éé",cÎ) -" RESOLUTION /155 RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA MAKING CERTAIN FINDINGS AND APPROVING SPECIAL PERMIT TO CHARLES R. TEMPLE, JR., TO CONTINUE A STEEL FABRICATION BUSINESS AT 790 ENERGY WAY, CHUlA VISTA, CALIFORNIA; PARCel BEING LOCATED WITHIN THE OTAY VALLEY ROAD PROJECT AREA WHEREAS, the property which is the subject matter of this Special Permit is commonly known as 790 Energy Way, Chula Vista, California, and, as to 790 energy Way, is legally described as that certain property known as Assessor Parcel Number 644-181-30; and WHEREAS, Mr. Charles R. Temple (" Applicant"), owner of the business located on the parcel, known as Bradford Metals, has requested a Special Permit to continue to operate a metal fabrication business at 790 Energy Way; and WHEREAS, a Special Permit is required for the uses being requested by the above referenced applicant under the Otay valley Road Redevelopment Plan; and WHEREAS, the Otay Valley Road Project Area Committee noticed and held a public hearing on May 8, 1995 to consider the use of the following above referenced land uses and made the recommendation to the Agency for approval of a Special Permit to Charles R. Temple; and, WHEREAS, the Agency noticed and held a public hearin9 on Tuesday, June 6, 1995, and that all protests, if any, to the approval of a Special Permit in the manner herein contemplated, were made and received at said public hearing, and no convincing objections to the proposed transaction were found to exist; and WHEREAS, the Environmental Review Coordinator has reviewed the proposal and determined a Class 1 exemption from environmental review because of the continuation of same land uses. NOW THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA does hereby find, order, determine and resolve as follows: Section 1. The Agency hereby makes the followin9 findings under the Otay Valley Road Redevelopment Project Area Implementation Plan/Design Manual Addendum: A. The proposed projects would not constitute a substantial detriment to the Project Area or adjacent areas. B. The proposed projects would promote the orderly physical and economic development of the Project Area. C. The proposed projects would be consistent with the townscape-planning and urban-design objectives of the Implementation PlanlDesign Manual Addendum, and would contribute to the amenities of the Project Area. ~-/3 Resolution XXXX Section 1. The Agency grants Charles R. Temple, Jr., dba Bradford Metals, a Special land Use Permit for the continuation of steel fabrication and related business activities at 790 Energy Way subject to the following conditions: a. The structure shall comply with all the requirements of the Chula Vista Uniform Building Code to the satisfaction of the Director of Building and Housing. b. The structure and site improvements shall comply with all the requirements of the Chula Vista Uniform Fire Code to the satisfaction of the Fire Marshal. c. Landscape and irrigation plans, addressing parking screening, shall be submitted to the Planning Department prior to or in conjunction with the building permit submittal package. d. A letter from the easterly adjacent property owner authorizing access to that property for the purpose of finishing the wall as may be required by the Building and Housing Department shall be submitted to the Planning Department prior to issuance of construction permits. e. The trash enclosure design shall feature metal frame and face doors, and shall be stuccoed to match the building. f. The site improvements and building modifications shall be completed within 6 months from date the building permit is issued. g. The roofs shall be cleaned thoroughly and allowed to retain the original color. Section 3. Any failure by a permittee under any other Special Permit on adjacent property to fulfill any condition or to proceed thereunder, or otherwise violate same, shall not affect the validity of this Final Special Permit. Section 4. The adoption of this resolution shall constitute the final issuance of a special permit, and Agency hereby waives, to the extent it may be lawful to do so, any right to reconsider this decision within ten days after adoption of this resolution. PRESENTED BY: APPROVED AS TO FORM BY: ~5~ ------ Chris Salomone Bruce M. Boogaard Community Development Director Agency Counsel IBBIC:IWP51 IAGENCYIRESOSI 790ENERG.RESI 3-/4 REDEVELOPMENT AGENCY AGENDA STATEMENT Item~ Meeting Date 6/06/95 ITEM TiTlE: PUBLIC HEARING Sale of Agency Property Located at 801 Broadway within the Southwest Redevelopment Project Area to James Courtney without Public Bidding RESOLUTION 1~5~ Finding and Determining, Pursuant to Health and Safety Code, that it is in the Best Interest of the Public and Agency for the Elimination of Blight that Certain Property Located at 801 Broadway in the Southwest Redevelopment Project Area be Sold to James L. Courtney, et ai, without Public Bidding, and Approving a Purchase and Sales Agreement and Joint Escrow Instructions with James L. Courtney, et ai, and Authorizing the Chairman to Execute Same SUBMITTED BY: Community Development Director C . <; . REVIEWED BY: Executive DirectorJ!Xf ~~ (4/5ths Vote: Yes - No _XJ BACKGROUND: In November 1994, the Redevelopment Agency issued a Request For Proposals (RFP) for the sale of the Agency property (formerly South Bay Chevrolet) located at 801 Broadway Avenue. On February 21, 1995, the Agency accepted a report from staff on the results of the RFP. Two proposals were received, but the offers were considered too low (one of the proposals requested a land donation from the Agency, while the other proposal offered $900,000 for the property). Since the proposals were found to be unacceptable, the Agency directed staff to continue to investigate alternatives for the sale this property. Subsequently, staff received two additional proposals for the purchase of the property which are discussed in this report. The proposal submitted by Mr. James Courtney is recommended to the Agency for approval. A Purchase Agreement between the Agency and Mr. Courtney is presented to the Agency for review and approval (copy attached). RECOMMENDATION: That the Redevelopment Agency hold the public hearing, hear testimony, and adopt the resolution approving the Purchase and Sales Agreement and associated documents with James l. Courtney for Agency property at 801 Broadway. BOARDS/COMMISSIONS RECOMMENDATION: N/A DISCUSSION: The Propertv The Agency acquired the South Bay Chevrolet property located at 801 Broadway within the Southwest Redevelopment Project Area (see attached locator map). as part of the property exchange for the Auto Park project in 1993. The site is comprised of 3.97 acres of land and 30,800 square feet of building. The price paid by the Agency was $3.4 million. Since that time, the market for commercial properties has declined considerably throughout the region. Consequently, the current value of the property is lower as evidenced by the proposals received. '-i-I Page 2, Item ~ Meeting Date 06/06/95 The New Offers Subsequent to the Agency meeting of Feb. 21, staff continued to seek offers for the purchase of the property from commercial real estate brokers. Two additional offers to purchase the property were received. The first was received from Mr. James Courtney. A preliminary offer from Mr. Courtney was made in early 1994 for the Fuller Ford property at 760 Broadway. This offer was not accepted because that property was being considered for the Business Home Project. Another offer was received from Mr. Courtney to purchase the South Bay Chevrolet property in January of 1995 (see copy of letter/offer attached). This offer was received after the RFP deadline, but before the Agency received the report with the results of the RFP. After the February 21, 1995 meeting, staff negotiated a purchase price with Mr. Courtney. On March 30, 1995, a Conceptual Statement of Business Terms was signed by Mr. Courtney and the Community Development Director outlining the basic terms for the purchase of the South Bay Chevrolet site (see copy of Statement attached). The offer from Mr. Lynch was received on April 12, 1995 (see copy of offer attached). Mr. Lynch proposes to purchase the property to establish a super automobile service center. This offer was received as a back-up offer in the event that negotiations with Mr. Courtney did not follow through. The two offers are as follows (see attachment A & B for more detailed information on proposals): Bidder's Name Bid Offered Terms Conditions Mr. James Courtney $1,350,000 Cash to Agency 1 20 days contingency period: Agency to pay 3.5% commission Mr. William Lynch $1,400,000 Cash to Agency 90 days contingency period; Agency to pay 5% commission Staff's Recommendation As shown in the table above, Mr. Lynch's offer is higher than Mr. Courtney's. Taking in consideration the sales commission rates required by each of the agents, the actual difference in the offers is $27,250. This would lower the net revenues to the Agency as follows: Mr. Courtney's offer would provide $1,302,750, while Mr. Lynch's offer would provide $1,330,000. These amounts will further be reduced by closing costs estimated at $10,000 to $15,000. Although Mr. Courtney's offers is lower than Mr. Lynch's offer, staff recommends that the Agency approve his offer for several reasons. First, the offer from Mr. Courtney was made earlier and submitted months before Mr. Lynch's. Mr. Courtney's interest in expanding his business in the area dates back to his offer for the Ford Dealership site at 760 Broadway in early 1994. Community Development staff and Mr. Courtney had been negotiating in good faith prior to receipt of Mr. Lynch's offer and, as previously indicated, staff entered into an agreement with Mr. Courtney on March 30, 1995. Mr. Lynch's offer was received subsequently. Since a Conceptual Statement of Business Terms had been accomplished with Mr. Courtney, entering into negotiations with Mr. Lynch would not have been appropriate. After all the t/-2-- Page 3, Item ~ Meeting Date 06/06/95 negotiations conducted with Mr. Courtney, which resulted in his offer of $1,350,000 (from an initial offer of $1,125,000). it would have been impractical and financially detrimental to break negotiations with Mr. Courtney to start negotiations with Mr. Lynch. Additionally, negotiations with Mr. Lynch did not guarantee a final deal. Also, entering into negotiations with Mr. Lynch would have required additional time. This would have delayed the time for Agency's receipt of funds from the sale and it would have required more staff time spent on negotiations. In the end, the difference between Mr. Courtney's offer and Mr. Lynch's offer could have been negligible. Redevelooment Law Reauirements California Redevelopment Law establishes certain procedural requirements for the dispositions of Agency property. Health and Safety Code Section 33431 requires that a public hearing be held by the Agency for any sale without competitive bidding and that notice of said hearing be published in a local paper two weeks prior to the Agency holding the hearing. As indicated above, the bids that were received through the RFP process were not considered satisfactory and were rejected by the Agency. The offers received subsequently from Mr. Courtney and Mr. Lynch were not part of the competitive bidding process. In compliance with the law, the public hearing has been set for tonight and notice of the public hearing were published in the Star News editions of Wednesday, May 23, 1995 and Wednesday, May 31, 1995. Redevelopment Law also requires that the sale of Agency property assist in the elimination of blight. The development of the Auto Park On Otay Valley Road caused the relocation of South Bay Chevrolet, leaving the 801 Broadway site vacant. This created a major void in commercial activity, affecting the adjacent businesses. The sale of the property to Mr. Courtney will remove this blight by putting the property back in use, bringing new commerce to the area. Mr. Courtney plans to establish a super automobile service center at the site. This will re-attract customers and will generate significant commercial activity in this area. This will help to expose and promote the businesses in the vicinity and will generate additional sales tax revenue to the Redevelopment Agency. FISCAL IMPACT: Sale of the South Bay Chevrolet site to Mr. Courtney will generate funds in the amount of $1,350,000 minus $47,250 in commission for Mr. Courtney's agent and approximately $10,000 to $15,000 in escrow closing costs. Additionally, sale tax revenues will be generated once the new business is in operation. Additionally, the sale will generate annual property tax increment revenues of 1 % of the sale price of the property. The re-use of the property for commercial purposes by Mr. Courtney will generate additional sales tax revenues. Attachments: Exhibit 1: Plat Map Attachment 1: International Real Estate - Offer Letter dated January 12, 1995 Attachment 2: City of Chula Vista - Letter dated March 30, 1995 Attachment 3: Voit Commercial Brokerage - Proposal to Purchase Letter dated April 1O, 1995 Attachment 4: The William D. Lynch Foundation for Children - William D. Lynch Info and Financial Statement Attachment 5: Notice of Public Hearing . Attachment 6: Purchase and Sale Agreement and Joint Escrow Instructions - Draft May 16, 1995 IBBIC:IWP51 \AGENCY\RA4S\CHEV5ALE.RA41 ~-3 This page blank! ~-i . ¡~1iiJì" ~ EXHIBIT 1 , .1/ "i ,.. ,""OM"^' " ' . '1 1 :I'~ " I.. . '" ~ :; i m ¡~ , ~ ) ~ l> :~ , ~ . , ~ /~. )~ ! :~ r IE ~ J ~ @ ~fÛJ\ ~ :'I Ô Eiw 0> C ~ (J1 ~ ) " ( ..; : rD-' : ,., ~ 2.,0 /00 "" @u:) LoJ . ~ r .~ l °, IG!\° ::: CEDAR \Q!J t (/ ",,1 i \Q)/ \ @~ ! , ., PMZ 1/!5 r :' J@ t ~ - G) '. ~/;.""'" 0'" ~ ( ~f5\ .< (f) I "'~\:V ': -; ~ ß, ~::o I ~~ ~. TJ ,@ ~"'» "TJ ~ ~ '~/2.>2' -; H~ ~~~.' ",. . o>\V " ,,- l' '" l' 'çs : -~,. ';~;:.~ 8. ( Plat Map) AVE. ~ Lj-5 This page blank! f~¿ = ~ Inter~~~~~ c~~~ ,~state ATTACHMENT 1 January 12, 1995 Chris Salomone Community Development Director CITY OF CHULA VISTA 276 Fourth Ave. Chula Vista, CA 91910 RE: A.P.N.'s 572-270-51; 572-270-54; 572-270-60 (Former South Bay Chevrolet dealership) Dear Mr. Salomone: On behalf of James L. Courtney (Buyer), 1 am submitting this letter which shall constitute an Offer to Purchase for the property described above from the City of Chula Vista (Seller) on the terms and conditions set forth below: 1) The Property: Seller hereby agrees to sell to Buyer, and Buyer hereby agrees to purchase from Seller, that certain real property located at 801 Broadway consisting of approximately 3.97 acres of commercially zoned land and existing buildings. 2) Purchase Price: The purchase for the property shall be the sum of $1,125,000 payable at the close of escrow. 3) Terms: Cash to new loan. Buyer shall secure financing during contingency period. 4) Buyer's Deposit: Upon opening of escrow, Buyer shall deposit with escrow holder, Spring Mountain Escrow, Ten Thousand and 00/100 DOLLARS ($10,000.00). If Seller fails to perform under the terms and conditions of the Purchase Agreement, or if Buyer elects not to proceed with this transaction during the agreed Contingency Period, then the entire deposit is to be refunded to the Buyer without offset. 5) Increase of Buyer's Deposit: In the event Buyer has waived all contingencies and has approved to his satisfaction all pertinent documents/data on the property, Buyer shall increase the deposit from $10,000 to $50,000. All deposits and interest thereon shall be applied toward the purchase price. 6) Contingency Period: The Buyer's obligation to purchase is expressly conditional upon Buyer's satisfaction and/or approval of each of the following within 90 days of opening of escrow: A. Approval of a preliminary title report and copies of all exceptions of record within thirty (30) days of receipt. 1-7 0 Industrial! Commercial Properties - Sales & Leasing / Property Management 0 2320 Paseo de las Americas, # 200, Otay Mesa, CA 92173, (619) 661-6681, FAX (619) 661-6685 Chris Salomone January 12, 1995 Page 2 B. Buyer's acceptance of the property based upon a walk-through inspection with Buyer's general contractor, to be conducted within thirty (30) days of opening of escrow. C. Buyer shall obtain loan approval and unconditional commitment to fund a loan for the amount, rate and terms acceptable to Buyer. D. Seller shall provide, within ten (10) days of opening of escrow, the following to the Buyer for Buyer's review during contingency period: 1. A preliminary title report on the Property. 2. Copies of all plans and specifications of the buildings. 3. Copies of all current effective leases, rental agreements Or other agreements, if any, relating to the property which are to remain in effect after Buyer takes title to the property. 4. Copies of property survey(s). 5. Representations and warranties which shall survive the close of escrow in a form reasonably satisfactory to counsel for Buyer. 6. A Phase One & Two environmental assessment report. 7. Environmental: Copies of any existing reports relating to this property. 7) Escrow: The sale shall be consummated through Spring Mountain Escrow, 880 Canarios Ct., #220, Chula Vista, CA 91910; Attn: Shirley Riley-Brooks. The closing date of the escrow shall be one hundred twenty (120) days from the date of opening of escrow. 8) Title and Title Insurance: At the close of escrow, Seller shall deliver to Buyer, by Grant Deed, a fee simple interest in the Property free and clear of all title exceptions, except those previously approved by Buyer in writing. Also at close of escrow, Buyer shall acquire, at Seller's expense, a Standard AL T A Owner's Policy of Title Insurance issued by Old Republic Title Co., subject only to the title exceptions previously approved by Buyer, on Old Republic Title Company's standard form with liability not less than the purchase price. 9) Fees, Costs and Prorations: A. Buyer's Closing Costs: Buyer shall pay one-half of all escrow fees, usual Buyer's document drafting and recording charges. q-f Chris Salomone January 12, 1995 Page 3 B. Seller's Closing Costs: Seller shall pay all costs and expenses of clearing title, all documentary transfer taxes, the cost ofa policy of title insurance, one-half the escrow fees, sales commission, and the usual Seller's documents drafting and recording charges. C. Property taxes and assessments shall be prorated at the close of escrow. 10) Sales Commission: Seller shall pay to International Real Estate, a sales commission of 3.5% of the Purchase Price at the close of escrow. 11) Opening of Escrow: Within ten (10) days of mutual acceptance of this letter, escrow shall be opened and escrow instructions executed by both parties. 12) Time is of the Ess~nce: This Offer to Purchase shall be deemed revoked unless accepted before 5:00 p.m. on January 18, 1995, and such acceptance communicated to the undersigned Buyer. Respectfully Submitted, ~~:¡; Michael A. Yogt BUYE~/~ SELLER: DATE: /- /;;2 -9ù DATE: ~- ~ This page blank! ~ q_/D . ~{f?- -:;~~--; ATTACHMENT 2 CllY OF CHUlA VISTA COMMUNITY DEVELOPMENT DEPARTMENT March 30, 1995 Jim Courtney Courtney Tire 726 Broadway Chula Vista, CA 91910 Dear Mr. Courtney; As a formal follow up to your meeting Wednesday with my staff, the purpose of this letter is to set forth the basic terms upon which you, as "Buyer", are offering to acquire from the Redevelopment Agency of the City of Chula Vista ("Agency") certain real property comprised of an approximately 3.97 acre parcel improved with approximately 30,798 square feet of buildings located at 801 Broadway, Chula Vista ("Property"). The purchase terms set forth herein are intended to encompass (a) the terms of your original offer set forth in Michael Vogt's letter to me dated January 12, 1995, (b) our subsequent discussions, and (c) some additional terms and clarifications recommended by our City Attorney's office. 1. Purchase Price. The purchase price for the Property shall be One Million Three Hundred Fifty Thousand Dollars ($1,350.000). The purchase price shall be paid all in cash. 2. Escrow: Good Faith DeDosit. Upon Agency approval of a finalized purchase agreement, the parties shall open escrow with Spring Mountain Escrow. Buyer shall then immediat~ly deposit Ten Thousand Dollars ($10,000) into escrow as a good faith deposit. This amount shall be fully refunded to Buyer if Buyer elects not to proceed to acquire the Property as permitted during the contingency period (defined below), or if Agency defaults in its obligations under the purchase agreement this amount shall be fully refunded to Buyer. If Buyer elects to proceed to acquire the Property after satisfaction or waiver of all contingency period approvals, Buyer shall immediately increase Buyer's good faith deposit to Fifty Thousand Dollars ($50,000). If Buyer proceeds to acquire the Property, Buyer's good faith deposit, plus any interest earned thereon, shall be applied towards the purchase price. If Buyer defaults under the purchase agreement and fails to acquire the Property, Buyer's good faith deposit may be retained by the Agency as liquidated damages. 3. Continqency Period. Commencing with the opening of escrow, there shall be a 120 day contingency period during which Buyer shall be given the opportunity to (a) inspect the physicaJ. condition of the Property, (b) evaluate the condition of Agency's title to the Property, (c) to obtain the permits necessary to renovate and operate the Property for Buyer's intended use, (d) and to obtain an unconditional loan commitment, on reasonable terms 1-1/ 276 FOURTH AVE/CHULA VISTA, CALIFORNIA 91910/(619) 691-5047 approved by Buyer, to finance Buyer's payment, of the purchase price. During this contingency period, Agency shall provide Buyer and its representatives reasonable access to the Property in order to conduct appropriate inspections thereof; provided, however, Buyer shall indemnify and hold Agency harmless from and against any and all liabilities arising from such access. Agency shall provide, within ten (10) days of opening of escrow, the following to the Buyer for Buyer's review during the contingency period. a. A preliminary title report on the Property. b. Copies of all existing plans and specifications of the building within Agency's possession or of which Agency is aware and are reasonably available to the Agency. c. Copies of all current effective leases, rental agreements or other arrangements, if any, relating to the property which are to remain in effect after Buyer takes title to the property. d. Copies of any existing property survey(s) within Agency's possession or of which Agency is aware and are reasonably available to the Agency. e. A Phase One environmental assessment report. f. Copies of any existing reports relating to the environmental condition of this Property within Agency's possession or of which Agency is aware and are reasonably available to the Agency. If property is contaminated or potentially contaminated, Agency and the Buyer each has right to walk away. Buyer shall be required to approve or disapprove the condition of title to the Property within 30 days of its receipt of the preliminary title report. During the contingency period, Buyer agrees to diligently pursue any and all discretionary permits and approvals required for Buyer's intended use of the Property. If Buyer disapproves the condition of the Property or fails to obtain the necessary permits after Buyer's good faith efforts to do so prior to the expiration of the contingency period, Buyer shall have the right to terminate the escrow and to receive a full refund of Buyer's deposit, less one half any escrow cancellation fees charged by the escrow agent. 4. As is Purchase. Buyer shall be acquiring the Property in an "as is" condition. Agency is making no representations or warranties as to the physical condition of the Property or its suitability for Buyer's intended use. 5. Schedule for Close of Escrow. If Buyer elects to proceed with the purchase of the Property during or prior to the expiration of 1-/)-- CITY OF CHULA VISTA the contingency period, escrow shall be scheduled to close within 60 days after such election. 6., Transfer of Title. At the ,close of escrow, Seller shall deliver to Buyer, by Grant Deed, a fee simple interest in the property subject to the non-discrimination covenants required by California Health and Safety code sections 33435 and 33436. Also at close of escrow, Buyer shall acquire, at Agency's expense, a Standard ALTA Owner's Policy of Title Insurance issued by the Old Republic Title Co. subject only the title exceptions previously approved by the Buyer and the required non discrimination covenants, on Old Republic Title Company's standard form with liability not less than the purchase price. 7. Closinq Costs. Upon close of escrow, the Agency shall be responsible for the payment of all escrow fees and recording costs, any documentary transfer tax, the cost of a standard ALTA Owner's title policy issued by Old Republic Title Co., and the brokerage conunission of Forty Seven Thousand Two Hundred Fifty Dollars ($47,500) due and payable to Michael A. Vogt of International Real Estate. If the terms of this letter are acceptable to you, your execution and delivery of this letter to me shall constitute your irrevocable offer to the Agency to buy the Property on such terms. Your offer shall remain in effect for a period of 60 days. During this 60-day period Agency staff shall present your offer to the Agency for its consideration in closed session. If the Agency so directs, Agency staff will then proceed to draft and negotiate with you a formal purchase agreement which shall include all the proposed terms of conditions for your acquisition of the Property. This finalized purchase agreement shall then be presented to the Agency at a noticed public hearing for its consideration. Please note that no offer or aqreement shall become a bindinq obliqation on the Aqency until aDD roved by the Aqency in its sole discretion after a noticed Dublic hearinq. Thank you for your interest in this Property. If you have any questions about the terms of this letter or the approval process set forth hearing, please do not hesitate to call me or of this office. Sincerely; " CJ-, ~ -- Chrls Salomone Conununity Development Director Accepted: ~~ . ' m C=reney - cc: John D. Goss, City Manager 1-/3 Sid Morris, Assistant City Manager Mike Vogt, International Real Estate M, \ahared\atto=ey\chevy. aal CITY OF CHULA VISTA This page blank! 4-1+ + ATTACHMENT 3 .( !" Voil t. ilL", 'lJql"'Ii~~""¡'.<" Commercial Brokerage April 10, 1995 D."";;~;;?"'"O'7i One of The Volt Companies Fred Kassman, Redevelopment Coordinator Community Development Department 276 Fourth Avenue 660 Bay Boulev.,d Chula Vista, CA 91910 Suite 210 Chula Vista, California PROPOSAL TO PURCHASE, 3.973 ACRE SITE, 91910 RE: Tel (619) 498-4560 801 BROADWAY, CHULA VISTA, CA Fax (619) 498-4567 Dear Mr. Kassman: On behalf of my client, William D, Lynch, or assignee, I am pleased to present this proposal to purchase the above referenced property on the following terms and conditions: 1. PURCHASE PRICE: $1,400,000.00, Cash. 2. INITIAL DEPOSIT: $10,000.00 upon opening of escrow, applicable to the purchase price. 3. SECOND DEPOSIT: Additional $10,000.00 also applicable to the purchase price shall be placed into escrow upon written release of all contingencies ninty (90) days after opening of escrow. At this time the total deposits of $20,000.00 shall become non- refundable, released to Seller, and constitute liquidated damages should Buyer fail to close escrow, " 4. FEASIBILITY STUDY/CONTINGENCY PERIOD: Purchaser shall have ninty (90) days from opening of escrow to study the feasibility of this purchase, including, but not limited to the investigation of use, zoning, financing, preliminary title report and hazardous materials, Should purchaser find this property suitable for its purposes, Purchaser shall indicate so in writing on or before the ninty (90) days after opening of escrow, 1_/5 wpdeta\tc\601 BROAD.PTP 01'"" !h,,",h"", '""'h"m "','",', 9 Fred Kassman April 10, 1995 Page 2 5. ENVIRONMENTAL ASSESSMENT REPORT: Seller, at Seller's expense, to provide an environmental assessment report within thirty (30) days of opening date of escrow including any findings regarding asbestos or any other hazardous materials effecting subject property. In the event the subject property is found to contain any hazardous material, Seller, at Seller's expense, shall be responsible for any such hazardous cleanup. 6. CLOSE OF ESCROW: On or before thirty (30) days after release of Buyer's contingencies. Approval of the above conditions and contingencies are solely at the discretion of Buyer and shall be approved by written notice no later than the time limits stated in each paragraph. If any items subject to approval by Buyer are not approved, this Contract may, at the option of the Buyer, be deemed terminated without liability to the Buyer, and funds will be retumed to the respective parties who deposited same. 7. PROJECT DESCRIPTION: Buyer would redevelop the property, potentially using some or all of the existing structures, to create a first class Auto Center. The Auto Center would be leased to various automotive related retail, repair, and service-oriented tenants. Buyer's most recent Chula Vista project was the purchase and rehab of the former Holiday Honda property at 360-366 Broadway. 8. BROKERAGE: Buyer is represented by Voit Commercial Brokerage. Seller represents itself. Seller agrees to pay a five percent (5%) sales commission to Broker upon close of escrow. 9. NON-BINDING: The purpose of this proposal is to outline general certain terms as the basis on which a proposed purchase contract agreement between Seller and Buyer may be prepared. Neither Buyer nor Seller intends to be bound by this proposal, and either party may cancel this proposal at any time prior to execution of purchase contract agreement. If a purchase contract agreement between Seller and Buyer is ultimately entered into, Seller and Buyer intend the purchase contract agreement to be the entire agreement between them, and the terms of this proposal shall not be used to construe or interpret any such document. 1- /10 wpdata\tC\801 BROAD.PTP VOlT CHULA VISTA TEL:1-619-498-4567 Apr 10,95 13:41 No.003 P,07 + Fred Kassman April 10, 1995 Page 3 If this proposal meets your approval as the basis upon whIch to prepare a draft purchase contract agreement, then please Blgn the proposal and return a copy to me, Seller and Buyer acknowledge that Volt Commercial Brokerage and Its brokers, agents, employees and representaUves make no representation or warranty that either Buyer's or Seller's signing this proposal or continuIng negoUatlon of 8 proposed purchase (whether or not negotlaUons ..... based on this proposal) will ensure or ....ult In a Sale for the PremlS98 being executed and completed. Mr. Kassman, I have enclosed herewith a personal resume for Mr. Lynch and a financIal statement. Please let me know If you have any questions concerning this proposal, or require any additional Information. I look forward to hearing from you, Respectfully, VOlT COMMERCIAL BROKERAGE T¿~ C~ VIce President 1995. SELLER: By: 118: SELLER, BY ITS SIGNATURE ABOVE, HEREBY ACKNOWLEDGES RECEIPT OF A COpy OF THIS PROPOSAL. wpd"'IIo\BO 1 Bl<OAD.PTP 1-/7 . This page blank! if-If THE WILLIAM D. LYNCH ATTACHMENT 4 FOUNDATION FOR CHILDREN SCOTT B.RIMELSTEIN EXECtrnVE DIRECTOR William D. Lynch Founder William D. Lynch Foundation for Children Date of Birth - September 8, 1942 Education - B.B.A. - State University of Iowa Residence - 16 years Rancho Santa Fe, California Married - Two Sons, Two Grandchildren Occupation: Businessman - Owns and operates, Beauty Boutique, Inc. (Cosmetology Schools), Dining Yachts, Apartment Units, Commercial Real Estate, MLV, Inc. ( Laundromats), Iowa Farms and several other holdings and ventures. Current Organizations and Affiliations: Board of Directors City Club of San Diego, Board of Directors Reading Recovery Council of North America, S.D.S.U. Presidents Council, C.A.R.E.S. Executive Board, Lincoln Club of San Diego County, Fairbanks Country Club, Rancho Santa Fe Country Club, KPBS Producers Club. Recent Awards and Recognitions: International Reading Association and Greater San Diego Reading Association's Celebrate Literacy Award; SANDAPP-Collaborative Spirits Award; Children's Hospital and San Diego County Office of Education - Champion for Children Award; Sand Diego County SER/Jobs for Progress and the Amigos de Ser Advisory Group Award; Soviet-American Forum for Life with Human Rights; University of Iowa College of Business Administration Special Support Award; poway Unified School District - Reading Recovery Award; San Diego County Sheriff's Certificate of Appreciation. Attached: Brief description of Lynch Foundation's major programs. 4-11 "'n ~n... o.n- ." wr~r 0 n-, ~- r. OMO- -0-0. --- ___0' '_--.n_--_- WILLIAM D.LYNCH, Rancho Santa Fe, California. President of the WILLIAM D. LYNCH FOUNDATION FOR CHILDREN. The Foundation underwrites research and funding for children's causes in San Diego County. Current projects include: 1) San Dieqo Coalition for School Aqe Mothers The Foundation provides a building, van and technical/staff support. 2) Even Start - The Lynch Foundation is the recipient of matching funds for the largest Even Start Program in the State of California - a 4 year $1.5 million project. 3) Readinq Recoverv Fund - The Foundation has pledged $50,000.00 per year for 10 years to supporting San Diego County Office of Education, and the 43 Districts of San Diego County in an attempt to fully implement Reading Recovery in San Diego County. Mr. Lynch is a businessman. His holdings include Commercial Dining Yachts, Cosmotology Schools, Coin Laundries, Apartment Houses, Commerical Real Estate and Iowa Farms. ;/r}ß 3,101,017 $ .5.996,651 Market. Value Debt . 150,000 0 $ 25,000 0 150,000 0 50,000 0 . 140,000 0 .50,000 0 70,000 0 Equitv 0 $ 60,000 597,124 252,876 1,812,308 412,692 2,409,432 $ $ 7,357,219 This page blank! q-'J-~ ATTACHMENT 5 NOTICE OF PUBLIC HEARING NOTICE IS HEREBY GIVEN that, pursuant to California Redevelopment Law Health and Safety Code Section 33431, the Redevelopment Agency of the City of Chula Vista, California will hold a public hearing to consider the sale of Redevelopment Agency property located at 801 Broadway Avenue in the City of Chula Vista. SAID PUBLIC HEARING WILL BE HELD BY THE REDEVELOPMENT AGENCY ON TUESDAY, JUNE 6, 1995 AT 4:00 P.M., following the City Council meeting in the Council Chambers, Public Services Building, City Hall, 276 Fourth Avenue, Chula Vista, at which time any interested person may appear. Copies of the related documents are on me in the office ef the. Director of Community Development. You may present any information on this matter at the public hearing or in written correspondence delivered to the Community Development Department, 276 Fourth Avenue, Chula Vista at or prior to the public hearing. Any petitions to be submitted to the Agency must be received by the Community Development Department office no later than 5:00 p.m. one (1) day prior- to the hearing date. If you wish to challenge the Agency's action on this property sale in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the Agency at or prior to the public hearing. If you have any questions or need additional information, please call Miguel Z. Tapia in the Community Development Department at 691-529l. - " ~~ ~ Chris Salomone Community Development Director Date: Mav 19. 1995 1-.13 This page blank! 1..J-1 1~ PROOF OF PUBLICATION This space is for the County Clerk's Filing Stamp (2015.5 C.C.P.) STATE OF CALIFORNIA, County of San Diego: CV 06132 ProDf of Publication of: I am a citizen of the United States and a " resident of the County aforesaid; I am over ~~~~~~~------------ the age of eighteen years, and not a party to or interested in the above-entitled matter. I am the principal clerk of the printer of the STAR-NEWS, CHULA VISTA, a newspaper ----- -01' ------ of general circulation, published pU8UC IIE~ - . HEREBY - TWICE-WEEKLY in the City of Chula Vista, .... .... ..r::=. 10 ""'1- 01. R =..... Low and the South Bay Judicial District, County Ho..hond ,-- :.~n:,~ of San Diego, and which newspaper has ChUI8 . ""'- will been adjudged a newspaper of general =. ~=-- ":r==--':::: circulation by the Superior Court of the =d an,"r'-~':; County of San Diego, State of California, A- .......Cftr 8ICIIuIiI _L under the date of April 23, 1951, Case BAlD PU8uc HEARING ::-~yftc::~ ~ Number 164327; that the notice, of which ON TUESDAY. JUNE ..,... the annexed is a printed copy ( set in type AT .,00 P.M. -'!II .... ~-::=.mg =..= not smaller than nonpareil), has been - -.... èRÿ -. published in each regular and entire issue 278 _h A--. ChuIO -" ""'... _...,..... of said newspaper and not in any - ec::::. ":r.:';..o.. -.- supplement thereof on the following dates, ",-""""",,-01 "'DI_oICommunI\'Do- to-wit: Y~y'-' .., Infar- mallon.. ",,"""'111.,... b"_or"-- 5/24, 5/31 ~ _rod .. ... I ~1~Jr'~:'~ uIo \lIIIO II or prior 0..110 i p-=~. to ........... all in the year 1995 .. ... !ri. muol .. roœ"'" ,by Ih. ~' 0.- ,- - r.,~":",.;=::'~'~ I certify ( or declare) under penalty of æ: ..':., co::;r ~ -., """",you may" ..roIIIngoilly_l. perjury that the foregoing is true and -- you or ......... olIO rollOd.....pub"'_do- correct. _tnlhl.-,orln- ...~- ......._otorprlor..'" -_. n~ .:::; ,::::-J.:. Dated at CHULA VISTA \~=Z.T"""1n ... Co -- 00_'" ~~ Community 00Y0I0PII*>~ California, this ---JL day of -¡,jay- ,1995 00....511"'" 11/2.,31115' CYOO13' s¡g"at"'~ 4Æe <1A ;&jC~ PRI CIPAL CLERK I J~ PROOF OF PUBLICATION This space is for the County Clerk's Filing Stamp (2015,S C.C.P.) STATE OF CALIFORNIA, County of San Diego: cv 06132 Proof of Publication of: I am a citizen of the United States and a ' resident of the County aforesaid; I am over ~~~~~~~------------ the age of eighteen years, and not a party to or interested in the above-entitled matter. I am the principal clerk of the printer of the STAR-NEWS, CHULA VISTA, a newspaper ------------------- of 8eneral circulation, published NOTICE OF pueLIC MEI!TJNQ TWI E-WEEKL Y in the City of Chula Vista, NOTICE . HEM.V GIYEN .Ilol tho ..r::r- 10 eo.- and the South Bay Judicial District, County 010 R o~nt I.Ow Hoohh ond eo. - of San Diego, and which newspaper has =.-', ":. ~':""~':' CIIula ~ CoII- - been adjudged a newspaper of general =0'::--"==1.'::'; circulation by the Superior Court of the :::"'ad ~,"T"-¡w:; County of San Diego, State of California, ~=- In tho CIty of CIIuIó under the date of April 23, 1951, Case nllfD.Tw 'fv~ Number 164327; that the notice, of which REDEYELOPIIENT _v the annexed is a printed copy ( set in type 0II1UE8OAV, -- ~:,- ~,.:.::..~~:::: not smaller than nonpareil), has been -~......... published in each regular and entire issue =-="h A"';"~C::= Ylolo,ot_-o",por- of said newspaper and not in any -eo'::o":l'".:'¡.,.... -- supplement thereof on the following dates, __..IIIo,"IIIo_of Il1o ~ of COmmunIty 0. to-wit: volapmont ..:::. ~ :r... ";:: blle_.."_- 5/24, 5/31 ~_"IIIo ~~~ uIo Vllta 01 or priof .. 1110 publiC_. all in the year 1995 ""'"c' bo ",blnl'" ..... muo'bo- by "'0 0,"= 00. -- 0- ~~,,:,,:oo~:'(1d I certify ( or declare) under penalty of ä . -- ... - :=.. ~ tdi P"t I perjury that the foregoing is true and "" . railing only":,.. IUOO you Of - OlIO correct. rol"'.""__In* _rn__,or"- tancort_-- ....A_OIorpriof"" p""'-. Dated at CHULA VISTA ~-==~ I ~a:~i= .c.~'~ "5281. " ,.' "C1W_.... California, this ---3-1- day of --!4a-y- ,1995 """""",,,,~.:..2:; 0...0 51- CYCOI.. 5124,31115 s¡goalu~& ß ~-3. -'? PRINCIPAL CLER~ ATTACHMENT 6 PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS SELLER: Redevelopment Agency of the City of Chula Vista BUYER: James L. Courtney ESCROW NO: Draft: May 16, 1995 M, \shared\attorney\sale. amd ~ 1-;{§ This page blank! 1- í.-Io TABLE OF CONTENTS Paqe ARTICLE 1 - AGREEMENT OF PURCHASE AND SALE 1.1 Description of Property 1 1.2 Offer to purchase 1 1.3 Purchase and Sale 1 1.4 Purchase and Sale 1 1.5 Deposit 2 (a) Delivery to Escrow 2 (b) LIQUIDATED DAMAGES 2 ARTICLE 2 - PURCHASE PRICE 3 2.1 Purchase Price 3 ARTICLE 3 - ESCROW 4 3.1 Escrow Agent. 4 3.2 Escrow Instructions 4 3.3 Opening of Escrow 4 3.4 Close of Escrow 4 3.5 Deliveries to Escrow 5 3.6 Completion of Documents 5 3.7 Prorations, Escrow Fees and Costs 5 (a) Prorations 5 (b) Seller's Payments 5 (c) Buyer's Payments 5 (d) Default 6 3.8 Existing Encumbrances 6 3.9 Distribution of Funds and Documents 6 (a) Payment of Encumbrances 6 (b) Recordation of Documents 6 (c) Non-Recorded Documents 6 (d) Distribution of Funds 6 ARTICLE 4 - TITLE MATTERS 7 4.1 Preliminary Title Report 7 (a) Delivery to Buyer 7 (b) Time to Object 7 (c) No Approval 7 (d) Time to Eliminate Exceptions 7 (e) Right to Cancel or Perform 7 4.2 Title Insurance 7 4.3 Grant Deed 8 ARTICLE 5 - CONDITIONS TO CLOSE OF ESCROW 8 5.1 Contingency Period 8 5.2 Conditions to Close of Escrow 8 (a) Title Matters 8 (b) Seller's Deliveries 9 (c) Buyer's Approval 9 ..:;: {-:2-7 (d) Seller's Representations 9 5.3 Seller's Representations 9 5.4 Satisfaction, Waiver of Conditions 10 5.5 Failure of Conditions 10 ARTICLE 6 - REPRESENTATIONS AND WARRANTIES 10 6.1 Buyer's Representations and Warranties 10 (a) Authority 10 (b) Indemnity 10 6.2 Seller's Representations and Warranties 11 (a) Authority 11 (b) Non-Foreign Affidavit 11 6.3 Real Estate Commissions. 11 6.4 Survival of Warranties 11 ARTICLE 7 - ADDITIONAL OBLIGATIONS 11 7.1 Access to Property 12 7.2 Governmental Permits and Processing 12 7.3 Damage or Destruction 12 7.4 Condemnation 12 7.5 Possession 13 7.6 Indemnification 13 7.7 Default by Seller 13 ARTICLE 8 - GENERAL PROVISIONS 14 8.1 Assignment 14 8.2 Attorneys' Fees 14 8.3 Computation of Time periods 14 8.4 Counterparts 14 8.5 Entire Agreement 14 8.6 Exhibits 15 8.7 Further Assurances 15 8.8 Gender, Number 15 8.9 Governing Law 15 8.10 Headings 15 8.11 Modification, Waiver 15 8.12 Notice 15 8.13 Severability 16 8.14 Successors 16 8.15 Time 16 ~ 1-:J-? PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS This PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS ("Agreement"), is entered into effective as of June 6, 1995, by and between the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public agency corporate and politic, ("Seller"), and JAMES L. COURTNEY, an individual ("Buyer"). NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer agree as follows: ARTICLE 1 AGREEMENT OF PURCHASE AND SALE 1.1 Description of Propertv. Seller owns certain real property ("Property") located in the City of Chula Vista, County of San Diego, California, comprised of an approximately 3.97 acre parcel improved with approximately 30,798 square feet of buildings, more particularly described on Exhibit "An attached hereto. 1.2 Offer to Purchase. Buyer's execution of this Agreement constitutes an offer to purchase the Property on the terms and conditions stated herein, provided Seller accepts Buyer's offer by approving this Agreement on June 6, 1995 by formal Resolution, after a public hearing, and delivering an executed copy of this Agreement to Buyer before 5:00 P.M. on June 12, 1995. 1.3 Purchase and Sale. Seller's execution of this Agreement within the time period specified in Section 1.2 shall create a binding agreement between the parties hereto, effective on the date of Seller's execution, whereby Seller agrees to sell the Property to Buyer and Buyer agrees to purchase the Property from Seller, on the terms and conditions stated herein. 1.4 Deposit. (a) Good Faith Deposit. Upon Seller's approval of this Agreement, Buyer shall immediately deposit Ten Thousand Dollars ($10,000) into Escrow as a good faith deposit. If Buyer elects to proceed to acquire the Property after satisfaction or waiver of all contingency period approvals, Buyer shall immediately increase Buyer's good faith deposit to a total of Fifty Thousand Dollars ($50,000). Such amounts shall collectively be referred to hereinafter as the "Deposit". If Buyer proceeds to acquire A-'" ¥~~1 the Property, Buyer's Deposit, plus any interest earned thereon, shall be applied towards the Purchase Price at Close of Escrow. Buyer's Deposit payments shall be in the form of a cashier's or certified check drawn on a California bank account payable to Escrow Agent. Buyer's failure to make the Deposit payments when required shall be a material default hereunder, and Seller shall have the right to terminate this Agreement. Escrow Agent shall invest the Deposit amounts in a federally-insured, interest-bearing account approved by Buyer, and all interest earned thereon shall be credited to Buyer. The Deposit shall be returned to Buyer if Buyer elects to terminate this Agreement and the Escrow for nonsatisfaction of any condition pursuant to Section 5.4 or if Seller defaults hereunder. (b) LIOUIDATED DAMAGES. IF BUYER FAILS TO COMPLETE THE PURCHASE OF THE PROPERTY AND SUCH FAILURE CONSTITUTES A DEFAULT HEREUNDER, AND IS NOT THE RESULT OF NONSATISFACTION OF CONDITIONS OR A DEFAULT BY SELLER, THE PARTIES ACKNOWLEDGE AND AGREE THAT (1) SELLER'S DAMAGES WILL BE EXTREMELY DIFFICULT AND IMPRACTICAL TO ASCERTAIN, AND (2) THE $50,000 DEPOSIT REPRESENTS A REASONABLE ESTIMATE OF SUCH DAMAGES, CONSIDERING ALL THE CIRCUMSTANCES EXISTING ON THE DATE OF EXECUTION OF THIS AGREEMENT. THEREFORE, THE PARTIES ACKNOWLEDGE AND AGREE THAT IN THE EVENT OF SUCH FAILURE TO PERFORM BY BUYER, SELLER SHALL HAVE THE RIGHT TO RETAIN THE FULL AMOUNT OF THE DEPOSIT AS LIQUIDATED DAMAGES PURSUANT TO CALIFORNIA CIVIL CODE SECTION 1671. SUCH LIQUIDATED DAMAGES SHALL CONSTITUTE SELLER'S SOLE AND EXCLUSIVE REMEDY AGAINST BUYER, ALL OTHER REMEDIES BEING HEREBY EXPRESSLY WAIVED BY SELLER. SELLER WAIVES ALL RIGHTS SELLER MAY OTHERWISE HAVE PURSUANT TO CALIFORNIA CIVIL CODE SECTION 3389 TO SPECIFICALLY ENFORCE THIS AGREEMENT. BY SIGNING THEIR INITIAlS BELOW, EACH PARTY CONFIRMS ITS CONSENT TO AND AGREEMENT WITH THE PROVISIONS OF THIS PARAGRAPH: Seller's Initials Buyer's Initials ~ 4- 3ð:J ARTICLE 2 PURCHASE PRICE 2.1 Purchase Price. The total Purchase Price which Buyer agrees to pay and Seller agrees to accept for the Property is the sum of ONE MILLION THREE HUNDRED FIFTY THOUSAND DOLLARS ($1,350,000), payable through Escrow as follows: (a) The Deposit of $50,000 shall be delivered to Escrow Agent, as provided in Section 1.4; (b) The sum of $1,300,000 shall be delivered to Escrow Agent in cash, in the form of a cashier's or certified check or wired funds prior to the Close of Escrow; ARTICLE 3 ESCROW 3.1 Escrow Aqent. Spring Mountain Escrow Company [ATTN: Escrow Officer], 296 H Street, Suite 201, Chula Vista, Ca. 91910, ("Escrow Agent") is designated, authorized and instructed to act as Escrow Agent pursuant to the terms of this Agreement. Escrow Agent shall acknowledge the Opening of Escrow and its agreement to act as the escrow agent hereunder by: (a) executing the Consent of Escrow Agent attached hereto; and (b) promptly delivering a copy of the executed Consent to Seller and Buyer. 3.2 Escrow Instructions. This Agreement shall constitute initial escrow instructions to Escrow Agent. Escrow Agent's general conditions are attached hereto as Exhibit "B" and made a part hereof, to the extent they are consistent with the provisions of this Agreement. The parties shall execute any additional escrow instructions reasonably required by Escrow Agent to consummate the transaction provided for herein; provided, however, such additional escrow instructions shall not modify the provisions of this Agreement, unless such instructions (a) state the modification in full, and (b) are signed by both parties. 3.3 Ooeninq of Escrow. Within three (3) business days after execution by both parties, Seller shall deliver a fully executed copy of this Agreement and Buyer shall deliver the Deposit to Escrow Agent. Opening of Escrow shall be the date Escrow Agent executes the Consent described in Section 3.1. J--' t(-3f 3.4 Close of Escrow. "Close of Escrow" or "Closing" means the date Escrow Agent records the Grant Deed in favor of Buyer and delivers the Purchase Price to Seller. Escrow shall close on August 30, 1995 (nClosing Date"); provided that, if all conditions are satisfied and all funds and documents required hereunder are deposited in Escrow at an earlier date, Escrow Agent shall close the Escrow on such earlier date. Buyer acknowledges that a timely closing on or before the specified closing date is a material term of this agreement, and the Closing Date may not be extended except by a written escrow instruction signed by Buyer and Seller. If the Escrow does not close on or before the Closing Date for any reason other than a default by Seller, and if the Closing Date has not been extended by written instructions signed by Buyer and Seller, then Buyer shall be in material default hereunder and Seller shall have the unilateral right to terminate this Agreement and the Escrow by delivering written notice to Escrow Agent with a copy to the other party), in which event Seller shall have no further obligation hereunder. 3.5 Deliveries to Escrow. Prior to the Closing Date specified in Section 3.4, each party shall timely deliver to Escrow all funds and documents required of such party in order to complete the Closing under the terms of this Agreement, including, but not limited to, prorated amounts and other payments required under Section 3.7. 3.6 Completion of Documents. Escrow Agent is authorized: to insert the Closing Date and otherwise complete the documents deposited in Escrow, where appropriate and consistent with this Agreement. 3.7 Prorations. Escrow Fees and Costs. (a) Prorations. The following items shall be prorated in Escrow, as of the date of Close of Escrow: real estate taxes, based on the most recent information available in the office of the taxing entity. All prorations shall be made on the basis of a 30-day month and a 360-day year, unless the parties otherwise agree in writing. If Buyer receives, after the Closing, any supplemental bill for real estate taxes or assessments which relates, in whole or in part, to the period prior to the Closing, such supplemental bill shall be allocated between Seller and Buyer as of the Closing Date, and Seller shall pay the amount due to Buyer within thirty (30) days after Seller's receipt of a statement and request for payment. (b) Seller's Payments. Seller will pay: (1) the County Documentary Transfer Tax, in the amount Escrow Agent ~ ~-3Þ determines to be required by law; (2) the cost of the Title Policy described in Section 4.2; (3) Escrow Agent's escrow fee (or Escrow cancellation charges, if any); and (4) all other customary Seller and Buyer Escrow charges and expenses, except for Buyer's payments provided in Section 3.7(c), below. (c) Buver's Payments. Buyer will pay: (a) any and all non-customary Escrow charges; (b) any and all charges relating to Buyer's financing of the purchase; and (c) one-half of any Escrow cancellation charges charged by Escrow in the event Escrow is terminated for any reason other than Seller's default hereunder. (d) Default. Notwithstanding the foregoing, in the event of a default by Buyer or Seller hereunder, all cancellation and other escrow charges shall be paid by the defaulting party. 3.8 Existinq Encumbrances. Escrow Agent is authorized to secure beneficiary demands and requests for reconveyance for those monetary liens which are not Permitted Exceptions pursuant to Section 4.2 and the Property shall be reconveyed from each of the foregoing at Close of Escrow. 3.9 Distribution of Funds and Documents. At the Close of Escrow, Escrow Agent shall do each of the following: (a) Pavment of Encumbrances. Pay the amount of those monetary liens which are not Permitted Exceptions to the obligees thereof, in accordance with the demands approved by Seller, utilizing funds to which Seller shall be entitled upon Close of Escrow and funds (if any) deposited in Escrow by Seller. (b) Recordation of Documents. Submit to the County Recorder of San Diego County the Grant Deed for the Property and each other document to be recorded under the terms of this Agreement or by general usage, and, after recordation, cause the County Recorder to mail the Grant Deed to Buyer and each other such document to the grantee, beneficiary or person acquiring rights thereunder or for whose benefit said document was recorded. (c) Non-Recorded Documents. Deliver by United States mail (or hold for personal pickup, if requested): (1) the Title Policy to Buyer; each other non-recorded document received hereunder to the payee or person acquiring rights thereunder or for whose benefit said document was acquired. (d) Distribution of Funds. Deliver by United States mail (or comply with other unilateral instructions given by the applicable party): (1) to Seller, or order, the cash portion of the Purchase Price, adjusted for prorations, charges and other credits and debits provided for herein; and (2) to Buyer, or order, any excess funds delivered to Escrow Agent by Buyer. ...a-- /f -33 ARTICLE 4 TITLE MATTERS 4.1 Preliminarv Title Report. (a) Delivery to Buver. As soon as possible after Opening of Escrow, Escrow Agent shall provide to Buyer, at Seller's expense, a preliminary title report ("PR") issued by Old Republic Title Co. ("Title Insurer") reflecting the status of title to the Property. The PR will be deemed received by Buyer on the date of personal delivery or three (3) days after mailing by Escrow Agent. (b) Time to Ob-iect. Buyer shall have fifteen (15) days after the date of receipt of the PR to notify Escrow Agent (with a copy to Seller), in writing, of its objection to the legal description and any matters indicated as exceptions in the PRo Buyer shall not object unreasonably. (c) No Ob-iection. If Buyer's written approval is not received by Escrow Agent within said IS-day period, Buyer shall be deemed to have approved the FR. (d) Time to Eliminate Exceptions. If Buyer objects to one or more exceptions indicated in the PR, Seller may cure such objection by delivering to Escrow Agent (with a copy to Buyer), within ten (10) days after Seller's receipt of Buyer's objection, Seller's written agreement to eliminate such exception(s) by the Closing Date. (e) Riqht to Cancel or Perform. If Seller does not agree to cure each exception to which Buyer has objected, Buyer shall elect one of the following, by delivering written notice to Escrow Agent (with a copy to Seller) within five (5) days after receipt of notice of Seller's election or expiration of the la-day period described in (d) above (whichever occurs first): (1) to waive its objections, take title subject to such exceptions, and proceed with Close of Escrow; or (2) to terminate this Agreement and the Escrow, in which event neither party shall have any further obligation hereunder and Buyer shall be entitled to recover its Deposit. 4.2 Title Insurance. As of Close of Escrow, Title Insurer shall issue, or be committed to issue, at Seller's sole cost, a standard form ALTA Owner's Title Insurance Policy ("Title Policy") insuring Buyer's title to the Property in the amount of the Purchase Price, subject only to the following permitted exceptions (nPermitted Exceptions"): (a) current, non-delinquent real estate taxes and assessments; (b) the lien of supplemental 8"'" 1- 3 tf taxes, if any, assessed pursuant to Chapter 3.5 of the California Revenue and Taxation Code; (c) the matters set forth in the PR and approved by Buyer pursuant to Section 4.1(c) or (e); (d) any other matters approved in writing by Buyer; (e) the non- discrimination covenants requird by California Health and Safety Code Sections 33435 and 33436; and (f) matters excepted or excluded from coverage by the printed terms of the Title Policy's standard form. 4.3 Grant Deed. Prior to Close of Escrow, Seller shall deposit in Escrow a Grant Deed, duly executed and acknowledged in recordable form, conveying the Property to Buyer subject only to the Permitted Exceptions. ARTICLE 5 CONDITIONS TO CLOSE OF ESCROW 5.1 Continqencv Period. As used herein, the "Contingency Period" means a period beginning on the day following Seller's approval of this Agreement by formal Resolution and ending on August 6, 1995; provided, however, if Seller fails to deliver the items described in Section 5.2(a) within the la-day period described therein, the Contingency Period shall be extended on a per diem basis, for each day of delay until all of the items are delivered to Buyer. 5.2 Buver's Conditions to Close of Escrow. Close of Escrow shall be subject to satisfaction of each of the following conditions precedent, which are for the benefit of Buyer, prior to expiration of the Contingency Period: (a) Title Matters. Buyer's approval of the PR, or Seller's election to cure each exception disapproved by Buyer, or Buyer's waiver of any remaining disapproved exception(s) , pursuant to Section 4.1. (b) Seller's Deliveries. Seller's delivery to Buyer, within ten (10) business days after Opening of Escrow, of complete copies of the following items relating to the Property: (1) Copies of all existing plans and specifications of the building within Seller's possession or of which Seller is aware and are reasonably available to the Seller. (2) Copies of all current effective leases, rental agreements or other arrangements, if any, relating to the property which are to remain in effect after Buyer takes title to the property. ~ 1f~3r; (3) Copies of any existing property survey(s) within Seller's possession or of which Seller is aware and are reasonably available to the Seller. (4) A Phase One environmental assessment report prepared by Kleinfelder, Inc. dated October 26, 1992. (5) Copies of any existing reports relating to the environmental condition of this Property within possession or of which Seller is aware and are reasonably available to the Seller. (c) Buver's Approval. Buyer's approval, in Buyer's reasonable discretion, prior to expiration of the Contingency Period, of the physical and environmental conditions of the Property, the items delivered by Seller pursuant to Section 5.2(b), the availability of financing on reasonable terms satisfactory to Buyer, and the feasibility of acquisition, development, improvement, operation, maintenance and use of the Property for Buyer's intended purposes. In order to conduct its feasibility review, Buyer shall have the right, after Opening of Escrow, to enter the Property, pursuant to Section 7.1. 5.3 Satisfaction. Waiver of Conditions. Buyer's approval, wherever required to satisfy a condition, shall be evidenced by written notice delivered to Escrow Agent (with a copy to Seller). If Buyer's written approval is not received by Escrow Agent within the specified time limit, the matter shall be deemed approved. 5.4 Seller's Conditions to Close of Escrow. (a) Buyer's deposit of the entire Purchase Price plus any of Buyer's closing costs required hereunder; (b) Seller's election to proceed with the transaction, in its sole discretion, in response to Buyer's notification to Seller of the existence of any hazardous materials on the Property as provided in Section 7.4 hereof. 5.5 Failure of Conditions. If any of the foregoing conditions is neither satisfied nor waived by the benefitted party within the specified time limit, such party may unilaterally terminate this Agreement and the Escrow by giving written notice of termination to Escrow Agent (with a copy to the other party). In the event of such termination, Buyer's Deposit shall be immediately returned, and neither party shall have any further obligation hereunder; provided. 5.6 Diliqence; Cooperation. Each party agrees to exercise due diligence in satisfying each and every condition to Close of Escrow for which such party is responsible. Each party agrees to ~ 1-3¿ cooperate with the other party in satisfying those conditions to Close of Escrow for which such other party is primarily responsible. ARTICLE 6 REPRESENTATIONS AND WARRANTIES 6.1 Buver's Representations and Warranties. Buyer agrees, represents and warrants, as of the date of execution of this Agreement and as of Close of Escrow, as follows: (a) Authoritv. Buyer has full legal right, power and authority to execute and fully perform its obligations under this Agreement, without the need for any further action; and the persons executing this Agreement and other documents required hereunder on behalf of Buyer are the duly designated agents of Buyer and are authorized to do so. (b) Indemnitv. Buyer shall indemnify, hold harmless and defend Seller and the Property from and against any and all liens, claims, liability, loss, damages, costs, expenses, suits or judgments for labor performed or materials furnished to or for Buyer, or for injuries to person or property damage, arising out of any accident or occurrence in any way connected with entry upon, testing or inspection of the Property by Buyer or its agents pursuant to Section 7.1 of this Agreement. (c) Investiqation of Propertv. Buyer will make an independent investigation, to the extent Buyer deems necessary or appropriate, concerning the physical condition (including the existence of hazardous materials), value, development, use, marketability, feasibility and suitability of the Property, including (but not limited to) land use, zoning and other governmental restrictions and requirements. Buyer is acquiring the Property "AS IS," in its present state and condition solely in reliance upon Buyer's own investigation, and no representations or warranties of any kind, express or implied, have been made by Seller or its representatives, except as specifically set forth in Section 6.2. Buyer unconditionally releases Seller from and against any and all liability to Buyer, both known and unknown, present and future, for any and all damages, losses, claims and costs (including attorneys fees), arising from the physical condition of the Property (including, without limitation, the existence of hazardous materials), or the Property's non-suitability for Buyer's intended use. Buyer waives the provisions of California Civil Code Section 1542 which provides: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release which if known by him must have materially affected his settlement with the debtor." ~ tf-37 6.2 Seller's Representations and Warranties. Seller agrees, represents and warrants, as of the date of execution of this Agreement and as of Close of Escrow, as follows: (a) Authoritv. Seller is a municipal corporation duly formed, existing and in good standing under the laws of the State of California; Seller is the owner of the Property and has full legal right, power and authority to execute and fully perform its obligations under this Agreement and to convey the Property to Buyer pursuant to its governing instruments, without the need for any further action; and the persons executing this Agreement and other documents required hereunder on behalf of Seller are the duly designated agents of Seller and are authorized to do so. (b) Non-Foreiqn Affidavit. Seller represents and warrants to Buyer that it is not a foreign person and is a United States person as defined in Section 7701 (1) (30) of the Internal Revenue Code, as amended ("Code"). 6.3 Real Estate Commissions. Subject to and upon Close of Escrow, Seller shall pay a real estate commission of $47,500 to Michael A. Vogt of International Real Estate. Escrow Agent is directed to pay said commission upon Close of Escrow out of funds deposited in Escrow and credited to Seller. Each party represents and warrants to the other party that no other brokers or finders have been employed or are entitled to a commission or compensation in connection with this transaction. Each party agrees to indemnify, protect, hold harmless and defend the other party from and against any obligation or liability to pay any such commission or compensation arising from the act or agreement of the indemnifying party. 6.4 Survival of Warranties. The representations and warranties given by Buyer and Seller in this Article 6, and all obligations to be performed under the terms of this Agreement after Close of Escrow, shall survive the Close of Escrow and delivery of the Grant Deed to Buyer. 6.5 As is Purchase. Buyer shall be acquiring the Property in an "AS IS" condition. Seller is making no representations or warranties as to the physical condition of the Property or its suitability for Buyer's intended use. ARTICLE 7 ADDITIONAL OBLIGATIONS 7.1 Access to Propertv. Between the date of Opening of Escrow and the Close or earlier termination of Escrow, Seller ~ Jf-3í' shall allow Buyer and its agents reasonable access to the Property, upon reasonable notice to Seller, for the purpose of inspecting, surveying and testing the same. 7.2 Governmental Permits and Processinq. During the Escrow period, Buyer shall have the right to file applications for and to process, at Buyer's expense, applications for governmental permits and approvals for zoning, land use, subdivision, improvement, development and construction relating to the Property and Buyer's intended use. Buyer agrees to diligently pursue any and all such necessary approvals in order to permit the Close to occur on or before Augusut 30, 1995. Seller shall execute any applications or other documents referenced by applicable governmental authorities to authorize Buyer to process such permits and approvals, and shall cooperate reasonably with Buyer in connection therewith. Notwithstanding the foregoing, Seller and the City of Chula Vista shall reserve unfettered discretion to approve or disapprove Buyer's applications for discretionary approvals in accordance with applicable law. No such permit or approval shall be effective until after the Closing Date. 7.3 Condemnation or Damaqe. If, prior to Close of Escrow, an action is commenced for the condemnation of the Property or any material portion thereof or interest therein, or the Property is materially damaged by fire, earthquake or other cause, so as, in either event, to render the Property unsuitable for Buyer's use, then Buyer shall have the right to terminate this Agreement by delivering written notice to Seller (with a copy to Escrow Agent) within ten (10) days after Buyer receives notice of the condemnation or damage. If Buyer terminates this Agreement within such 10-day period, then the Escrow shall be cancelled, neither Buyer nor Seller shall have any further obligation under this Agreement, and Buyer's Deposit shall be returned. If Buyer fails to deliver written notice of termination within said 10-day period, Buyer shall be deemed to have waived and Buyer shall proceed to consummate the purchase pursuant to this Agreement. Buyer shall have no other remedies against Seller as a result of such condemnation or destruction of the Property except as set forth in this Section. Buyer shall have no other remedies against Seller as a result of such condemnation or damage except as set forth in this Section. 7.4 Possession. Possession of the Property shall be delivered by Seller to Buyer on the Closing Date after recordation of the Grant Deed. All risk of loss and damage to the Property from whatever source shall be the sole responsibility of Buyer after Close of Escrow. ~ ij-3? 7.5 Termination Riqhts if Hazardous Materials Discovered If the Phase I Environmental Assessment provided by Seller to Buyer or Buyer's independent investigations indicate that the Property is significantly contaminated with hazardous materials which may require mandated clean-up pursuant to CERCLA or other applicable laws, then either party shall have the right, but not the obligation, to terminate this Agreement, without cost or further obligation except for Escrow cancellation fees, by delivering written notice of such termination to Escrow and the other party. Buyer agrees to notify Seller in writing of any such indications discovered by Buyer or Buyer's agents during Buyer's inspection of the Property. ARTICLE 8 GENERAL PROVISIONS 8.1 Assiqnment. Buyer may not assign this Agreement or any of its rights hereunder without the prior written consent of the Seller, which consent shall not be unreasonably withheld. Any permitted assignee shall be bound by all acts and approvals of Buyer prior to the effective date of the assignment and shall assume in writing all obligations of Buyer under this Agreement or any additional escrow instructions executed pursuant hereto. Any purported assignment which has not been consented to by Seller as provided hereunder shall be null and void. 8.2 Attornevs' Fees. If either party commences legal proceedings for any relief against the other party arising out of this Agreement, the losing party shall pay the prevailing party's legal costs and expenses, including, but not limited to, reasonable attorneys' fees and costs as determined by the court. The prevailing party shall be that party receiving substantially the relief sought in the proceeding, whether brought to final judgment or not. 8.3 Computation of Time Periods. All periods of time referred to in this Agreement shall include all Saturdays, Sundays and state or national holidays, unless the period of time specifies business days, provided that if the date or last date to perform any act or give any notice or approval shall fall on a Saturday, Sunday or state or national holiday, such act or notice may be timely performed or given on the next succeeding day which is not a Saturday, Sunday or state or national holiday. 8.4 Counterparts. This Agreement or any escrow instructions pursuant to this Agreement may be executed in multiple copies, each of which shall be deemed an original, but all of which shall constitute one Agreement after each party has signed such a counterpart. ~ ~-~ 8.5 Entire Aqreement. This Agreement, together with all exhibits attached hereto and other agreements expressly referred to herein, constitutes the entire agreement between the parties with respect to the purchase and sale of the Property. All prior or contemporaneous agreements, understandings, representations, warranties and statements, oral or written, are superseded. 8.6 Exhibits. All exhibits referred to herein are attached hereto and incorporated herein by reference. 8.7 Further Assurances. The parties agree to perform such further acts and to execute and deliver such additional documents and instruments as may be reasonably required in order to carry out the provisions of this Agreement and the intentions of the parties. 8.8 Gender. Number. As used herein, the singular shall include the plural and the masculine shall include the feminine, wherever the context so requires. 8.9 Governinq Law. This Agreement shall be governed, interpreted, construed and enforced in accordance with the laws of the State of California. 8.10 Headinqs. The captions and paragraph headings used in this Agreement are inserted for convenience of reference only and are not intended to define, limit or affect the construction or interpretation of any term or provision hereof. 8.11 Modification. Waiver. No modification, waiver, amendment or discharge of this Agreement shall be valid unless the same is in writing and signed by both Buyer and Seller. The escrow instructions shall be considered a part of this Agreement, and no provision in said escrow instructions shall supersede or contradict the provisions of this Agreement, unless the parties agree in writing to such change. 8.12 Notice. Notice to either party shall be in writing and either personally delivered or sent by certified mail, postage prepaid, return receipt requested, addressed to the party to be notified at the address specified herein. Any such notice shall be deemed received on the date of personal delivery to the party (or such party's authorized representative) or three (3) business days after deposit in the U.S. Mail, as the case may be. Seller's Address for Notice: Buver's Address for Notice: 276 Fourth Avenue Courtnev Tire Service Chula Vista. Ca. 91910 726 Broadwav Attn: Communitv Development Chula Vista. Ca. 91919 Director Attn: James L. Courtnev ~ 1- - tf( Either party may change its address for notice by delivering written notice to the other party as provided herein. 8.13 Severabilitv. If any term, provision, covenant or condition of this Agreement is held to be invalid, void or otherwise unenforceable, to any extent, by any court of competent jurisdiction, the remainder of this Agreement shall not be affected thereby, and each term, provision, covenant or condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 8.14 Successors. All terms of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective heirs, legal representatives, successors, and assigns. 8.15 Time. Time is of the essence of each provision of this Agreement, including without limitation all time deadlines for satisfying conditions and Close of Escrow. [Remainder of This Page Intentionally Left Blank] ~ t.[- ifY IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first written above. SELLER: REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public agency corporate and politic By: Shirley Horton, Chairman ATTEST Secretary APPROVED AS TO FORM BY Bruce M. Boogaard Agency Attorney BUYER: JAMES L. COURTNEY, an individual ~ 'f -- «3 CONSENT OF ESCROW AGENT SELLER: REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA BUYER: JAMES L. COURTNEY ESCROW NO.: The undersigned (" Escrow Agent") hereby: (1) acknowledges delivery of a Purchase and Sale Agreement and Joint Escrow Instructions ("Agreement") dated June 6, 1995 between the Seller and Buyer identified above, and delivery of the initial $10,000 Deposit described in Section 1.5 of the Agreement; and (2) agrees to act as the Escrow Agent in accordance with the provisions of the Agreement. This Consent is executed on , 1995 which shall constitute the "Opening of Escrown pursuant to Section 3.3 of the Agreement. ESCROW AGENT: Spring Mountain Escrow By: Escrow Officer ~ '-1- tf'f ACKNOWLEDGMENT OF BROKER The undersigned ("Broker") acknowledges that it has read and reviewed the foregoing Purchase and Sale Agreement and Escrow Instructions (" Agreement") dated June 6, 1995, by and between the Redevelopment Agency of the City of Chula Vista (as "Seller") , and James L. Courtney (as nBuyer"). Broker acknowledges and agrees that payment of the real estate commission of $47,500 to Broker in accordance with Section 6.3 of the Agreement shall discharge in full all rights of Broker to receive a commission or other compensation in connection with the transaction described therein. Dated: 1995 BROKER: International Real Estate, Michael A. Vogt By: Title: ~ 'f-lf5 t LIST OF EXHIBITS A Legal Description of Property B General Escrow Conditions ~ tf- 1ft:. EXHIBIT "A" LEGAL DESCRIPTION OF PROPERTY [To be provided] J¡.-3:- tf- i 1 EXHIBIT "B" GENERAL ESCROW INSTRUCTIONS [TO be provided] ~ M, Ihomelattorneylsale. amd tf- 'ff RESOLUTION 1456 RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA FINDING AND DETERMINING, PURSUANT TO HEALTH AND SAFETY CODE, THAT IT IS IN THE BEST INTEREST OF THE PUBLIC AND AGENCY FOR THE ELIMINATION OF BLIGHT THAT CERTAIN PROPERTY LOCATED AT 801 BROADWAY IN THE SOUTHWEST REDEVELOPMENT PROJECT AREA BE SOLD TO JAMES L. COURTNEY, ET AL, WITHOUT PUBLIC BIDDING, AND APPROVING A PURCHASE AND SALES AGREEMENT AND JOINT ESCROW INSTRUCTIONS WITH JAMES L. COURTNEY, ET AL, AND AUTHORIZING THE CHAIRMAN TO EXECUTE SAME WHEREAS, the Redevelopment Agency of the City of Chula Vista owns certain real property at 801 Broadway in Chula Vista, California; and WHEREAS, the Redevelopment Agency wishes to sell said property to Mr. James Courtney, et ai, without competitive bidding; and WHEREAS, Mr. Courtney, et ai, wish to purchase said property from the Agency; and WHEREAS, a Purchase and Sales Agreement and Joint Escrow Instructions between the Redevelopment Agency and James L. Courtney, et ai, is being approved; and WHEREAS, Community Redevelopment Law requires that a public hearing be held by the Agency for the sale of Agency property without competitive bidding and requires that notice of said public hearing be given by publication in a local newspaper for not less than once a week for two weeks prior to the hearing; and WHEREAS, Agency held the public hearing on June 6, 1995 and notice of public hearing was published in the Chula Vista Star News on Wednesday, May 24, 1995 and Wednesday, May 31, 1995; and WHEREAS, Community Redevelopment Law requires that the sale of Agency property assist in the elimination of blight; and WHEREAS, the sale will put the property to re-use improving the property and bring additional commercial activity to the area, thus removing the existing blighting conditions. NOW THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA does hereby find that the sale of Agency property at 801 Broadway will remove a blight by putting the property back in use, improving the property, and creating commercial activity in the area. BE IT FURTHER RESOLVED that the Agency further finds that it is in the best interest of the Public and Agency to sell the property located at 801 Broadway without competitive bidding in order to put the property to its highest and best use, to bring additional commercial activity to the area, and ensure the elimination of blight at said site. J/~19 BE IT FURTHER RESOLVED that the Chairman of the Agency is hereby authorized and directed to execute the Purchase and Sales Agreement and Joint Escrow Instructions with Mr. James L. Courtney, et al for the sale of Agency property at 801 Broadway in Chula Vista. PRESENTED BY: APPROVED AS TO FORM BY: Chris ~, E~ry and Bruce M. Boogaard Community Development Director Agency General Counsel IBBIC:I WP51 lAG ENCYIRESOSICHEVSALE. RES I IMTIOISK #XICHEVSALE.RESI þ/-Sô JOINT CITY COUNCIL/REDEVELOPMENT AGENCY AGENDA STATEMENT Item ~b Meeting Date 06/06/95 ITEM TITLE: Resolution [Aqencvl It! 57 Approving Agreement to Settle, Release and Reimburse Costs with Cypress Creek Company L. P. and Promissory Note Regarding Redevelopment Agency Financial Participation in Site Acquisition Costs for the Palomar Trolley Center Pursuant to the Amended Palomar Trolley Center Disposition and Development Agreement and Approving Cooperation Agreement (Palomar Trolley Center) with City to Loan City funds to Redevelopment Agency to Pay Back Loan to Redevelopment Agency from Cypress Creek Company, L.P., and Authorizing Chairman to Execute Same Resolution [Council I )1419 Approving Cooperation Agreement (Palomar Trolley Center) with Redevelopment Agency to Use City Funds to Assist Redevelopment Agency to Pay Back Loan to Redevelopment Agency from Cypress Creek Company, L.P., Appropriating Funds Therefor, and Authorizing Mayor to Execute Same SUBMITTED BY: Commooi" D,.,'o,m,"' D1tív ( S . REVIEWED BY: Executive Directo~ ~ --":;J (4/5ths Vote: Yes..x. No_) BACKGROUND: The Amended Palomar Trolley Center Disposition and Development Agreement (DDA) was executed by the Agency on July 27, 1993. It calls for the development of a commercial retail center of approximately 190,000 square feet on Palomar Street between Industrial Boulevard and Broadway, to be built in two phases. Phase I has been completed and occupied, with the exception of the free-standing pads. Phase II is scheduled for completion and occupancy by Spring 1996. The DDA provides for the Agency to participate in project site acquisition costs to the degree that those costs exceed certain designated levels and provides for either the developer or the Agency to terminate the DDA if those costs exceed even higher designated levels ("walkaway threshold"). The site acquisition costs have been incurred and have exceeded the walkaway threshold for Phase II of the project, triggering a formal consideration by the Agency of terminating the DDA. Prior to DDA termination, the Agency gave direction to staff to negotiate specific participation by the Agency in Phase II site acquisition costs. Negotiations with the developer were successful, with the developer agreeing to a level of Agency participation consistent with the Agency's directed parameters. These successful negotiations were reported to the Agency in executive session, and the Agency expressed the intent that staff return to the Agency with a formal agreement memorializing the negotiated terms. The recommended documents memorialize the successful negotiation. Additionally, a Cooperation Agreement between the City and the Agency has been prepared to govern the loan of City funds to the Agency to repay the loan from the developer to the Agency for the Agency's share of the acquisition costs. RECOMMENDATION: That the Agency adopt the resolution approving Agreement to Settle, Release and Reimburse Costs and Promissory Note for the Palomar Trolley Center with 5-/ Page 2, Item 56.-\ to Meeting Date 06/06/95 Cypress Creek Company L. P., approving Cooperation Agreement (Palomar Trolley Center) between the Redevelopment Agency and the City, and authorizing the Chairman to execute same. That the Council adopt the resolution approving Cooperation Agreement (Palomar Trolley Center) between the Redevelopment Agency and the City, appropriating funds therefor, and authorizing Mayor to execute same. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable DISCUSSION: This report will discuss the following: the DDA provisions for site acquisition costs; the Phase I site acquisition costs, the sharing of which is a function of the DDA and requires no Agency approval; the Phase II site acquisition costs and the negotiated settlement of Phase II costs over the "walk-away" threshold; the conditions of the proposed agreement with the developer; and, the Cooperation Agreement between the City and the Agency regarding repayment of the obligation to the developer. DDA Provisions for Site Acauisition Costs The DDA provides for the Agency to participate in project site acquisition costs to the degree that those costs exceed certain designated levels. The developer is required to pay the total land acquisition costs initially, with the Agency share converted to a "loan" which is subsequently annually reimbursed to the developer over time at a rate of 30% of the annual sales tax generation from the project until the Agency debt is retired. The developer receives 7% interest on the unpaid balance. If the aggregate site acquisition costs for either phase exceed designated thresholds, either party has the right to elect to terminate the DDA after conferring with the other party ("walkaway provision"). Phase I Site Acauisition Costs Phase I site acquisition costs did exceed the level beyond which the Agency was required to participate, so the Agency has a share of the costs. However the costs did not exceed the "walkaway provision" threshold. The total aggregate site acquisition cost for Phase I was $1,150,300.45, or $9.33 per square foot. The developer pays the first $8.50 per square foot, or $1,047,829.00. That leaves a balance to split equally between the developer and the Agency of $102,471.45. The Agency's half of that balance is $51,235.73: Total land Area 123,274 s.f. Total Acquisition Cost $1,150,300.45 Developer Cost @ $8.50 per s. f. $1,047,829.00 Remaining Balance to Share $102,471.45 Agency's Share (@ .50) $51,236.00 5~?- Page 3, Item 5 Ø" I h Meeting Date 06/06/95 Phase II Site Acauisition Costs The total aggregate site acquisition cost for Phase II was $2,896,928.00, or $25.98 per square foot. The developer pays the first $10.00 per square foot, or $1,115,130.00. The Agency pays the next $2.00 per square foot, or $223,026.00. The developer and the Agency split the remainder between $12.00 and $20.00 per square foot, which is $892,104.00, or $446,052.00 each. After $20.00 per square foot, either party could have walked away or negotiated an amount beyond $20.00 per square foot that the Agency would be willing to split equally. The developer asked the Agency to participate equally in the aggregate acquisition costs between $20.00 and $25.98 per square foot. The Agency directed staff to negotiate with the developer at a level of $21.00 per square foot or less, and staff and the developer agreed to the Agency participating to the level of $21.00 per square foot. The Agency was advised of the proposed agreement in executive session at the meeting of March 14, 1995. The Agency's share of the $1.00 per square foot cost over $20.00 per square foot is $55,757.00. Therefore, the total Agency cost for Phase II site acquisition is $724,835.00 Total Land Area 111,513 s.f. Total Acquisition Cost $2,856,928.00 Developer's Cost $2,172,273.74 $0 to $10.00 per s.f. $1,115,130.00 $12.00 to $20.00 per s.f. @ .50 $446,052.00 $20.00 to $21.00 per s.f. @ .50 $55,757.00 $21.00 to $25.98 per s.f. $555,334.74 Agency Cost $724,835.00 $10.00 to $12.00 per s. f. $223,026.00 $12.00 to $20.00 per s. f. @ .50 $446,052.00 $20.00 to $21.00 per s. f. @ .50 $55,757.00 Aareement to Settle. Release and Reimburse and Promissory Note The Agreement to Settle, Release, and Reimburse (Attachment 1) establishes that any dispute over property acquisition cost sharing pursuant to Section 8.4 of the DDA has been totally and finally resolved through compromise of the parties. The agreement establishes the Agency's share of the project site acquisition costs and the method for repayment of those costs to the developer. The repayment obligation of the Agency is memorialized by a promissory note. The significant conditions of the agreement are as follows: 8 The Agency's share of Phase I acquisition costs is recognized to be $51,236.00 8 The Agency's share of Phase II acquisition costs is $724,835.00 8 The Agency's total share is $776,071.00 5-3 Page 4, Item ~ Meeting Date 06/06/95 . Both parties acknowledge that the Agreement resolves any present or future claims against each other regarding the DDA section that deals with the sharing of costs (Section 8.4) . Developer agrees to pay MTDB for costs associated with the widening of the Trolley crossing, pursuant to an existing MOU between the Agency and MTDB, and in accordance with the DDA, and to indemnify the Agency regarding any responsibility for such costs . Developer reaffirms its commitment, previously given and communicated to the Agency, to assisting the Trolley Terrace Day Care Center Project through soliciting a scholarship fund and facilitating discussions with the General Contractor for the Palomar Trolley Center, Collins General Contractors, to construct the day care center at no profit The Promissory Note (Attachment 2) establishes the total amount to be paid by the Agency and the interest rate of 7% previously established in the DDA. Interest accrual commenced on the Agency debt for Phase I on September 15, 1994, the date that the preponderance of the tenants in Phase I had commenced operations. Interest accrual on the Agency debt for Phase II will commence on the date that the preponderance of the tenants in Phase II commence operations. Payments will be made quarterly. CooDeration Aareement The basic premise of the Palomar Trolley Center "deal" was that the City/Agency would invest future sales tax revenues in the project to make the project happen to create a much more significant increment in sales tax available to the City. The project is a classic example of sales tax rebate deals as they have been done over the last several years in California. The project was not feasible without City/Agency financial assistance; the Agency did not have revenues available from the Southwest Redevelopment Project Area sufficient to provide the necessary financial assistance to the project, nor would it have in the future from the property tax increment resulting from the project; and, the City could "loan" a percentage of the future sales tax revenue from the project (30% over an estimated seven years)to the Agency to provide the project with the necessary financial assistance and still be greatly benefitted by substantial sales tax increment that would be supplied by the project (70% for an estimated seven years and 100% thereafter). The Cooperation Agreement (Attachment 3) memorializes the arrangement for the City General Fund sales tax revenues to be used to repay the developer for the Agency's site acquisition obligation. It provides for the City to make quarterly payments to the Agency of the amount owed to the Developer and to book those payments as a loan to the Agency, to be paid back in future years as the Agency has the financial capacity to do so. Repayment from the Agency to the City would only occur at the point that the Agency had surplus revenues to make such payments. The loan from the City to the Agency will carry an interest rate equal to the City's average portfolio yield. The repayment obligation to the City will constitute Agency indebtedness under California Redevelopment Law, thereby allowing the Agency to collect tax increment. FISCAL IMPACT: The recommended action will create a total expenditure from the City General Fund of $776,071.00 in principal and an estimated $293,123 in interest, which S-f Page 5, Item ~ Meeting Date 06/06/95 should be paid off in eight years, based on the current sales estimates. That amount will be an indebtedness from the Agency to the City for an indefinite period of time. The agreement and promissory note will require the City to make a retroactive payment on the loan portion applicable to Phase I of approximately $54,000.00 in FY 1994-95, which will payoff the Agency debt of principal and interest for Phase I. The Council resolution appropriates $54,000 for that purpose from unappropriated general fund revenues. A total payment of approximately $30,000.00 will be due at the end of FY 1995-96, to begin paying on the debt for Phase II, which should be occupied in February 1996, activating the debt obligation at that point. The resultant shopping center project is projected to create approximately $4.05 million in combined net tax revenue to the City and the Agency over a period of ten years. Attachments: Attachment 1: Implementation and Settlement Agreement Attachment 2: Promissory Note Attachment 3: Cooperation Agreement [BBlC:\ WPSI IAGENCY\RA4SIPTCTHREE.RA41 [DGlDlSK 7\WPWIN\A:PTCTIlREE.DUP] 5-5 This page blank! S -Co ATTACHMENT 1 IMPLEMENTATION AND SETTLEMENT AGREEMENT [PALOMAR TROLLEY CENTER] This Implementation and Settlement Agreement [Palomar Trolley Center] is entered into and effective as of June -, 1995, by and among the Redevelopment Agency of the City of Chula Vista ("Agency"), a public agency, and Cypress Creek Co., loP. ("Cypress") a Delaware limited partnership pursuant to the following: RECITALS A. On April 13, 1993 Agency approved an Amended Disposition and Development Agreement for Palomar Trolley Center ("Amended DDA") with Cypress for the construction and operation of a high volume commercial retail center generally located south of Palomar and west of Broadway in the City of Chula Vista ("Center"). The Amended DDA creates specific obligations and responsibilities between the parties relating to funding and reimbursement for the acquisition of real property necessary for the construction of Center. Capitalized terms not defined herein shall have the meanings ascribed thereto in the Amended DDA. B. A dispute has arisen between the parties concerning the interpretation and application of Section 8.4 of the Amended DDA. Specifically, the parties disagree about the Agency's obligation, if any, to reimburse Cypress for the Phase II Site Acquisition Cost. C. The parties now wish: (1) forever to compromise, settle and resolve their differences arising from the interpretation of Section 8.4 of the Amended DDA; (2) to provide a procedure for implementing the reimbursement from Agency to Cypress of the Phase I Site Acquisition Cost and Phase II Site Acquisition Cost, in accordance with Sections 8.1, 8.2 and 8.4 of Amended DDA; and (3) to provide for the clarification and implementation of the parties remaining obligations under the Amended DDA. THE PARTIES AGREE: 1. The Recitals are true, correct and incorporated herein. 2. The parties represent and, warrant that to the best of their knowledge they are not currently in default under the Amended DDA. Except as expressly provided herein, the Amended DDA, and the parties respective obligations thereunder, shall remain in full force and effect. In the event of any conflict between the terms and conditions of this Agreement and the Amended DDA, the terms and conditions of this Agreement shall govern. 3. Cypress represents and warrants that it has incurred at least $1,099,065.00 of Phase I Site Acquisition Cost and at least $2,973,466.56 of Phase II Site Acquisition Cost. Cypress represents that Exhibit A is an accurate representation of the specific costs it has incurred for "Phase I Site Acquisition Cost as defined in Section 8.2 of the Amended DDA and for "Phase II Site Acquisition Cost" as defined in Section 8.4 of the Amended DDA. In reliance on such representations, Agency agrees with Cypress that the Agency's share of the Phase I Site Acquisition Cost to be reimbursed to Cypress pursuant to Section 8.1 of the Amended DDA shall be $51,236.00, and the Agency's share of the Phase II Site Acquisition Cost to be reimbursed to Cypress pursuant to Section 8.1 shall be $724,835.00. / '7 5- Agency reimbursement to Cypress for "Phase I Site Acquisition Cost" is based on the reimbursement formula in Section 8.2 of the Amended DDA, applied as follows: "Phase I Site Acquisition Cost" $1,150,300.45 Developer Cost $1,047,829.00 [first $8.50 per square foot times 123,274 square feet] Remaining Balance to Share $102,471.45 [$1,150,300.45 minus $1, 047,829.00] Agency Reimbursement Obligation [$102,471.45 times .50] $51,236.00 Agency reimbursement to Cypress for "Phase II Site Acquisition Cost" is based on the reimbursement formula in Section 8.4 of the Amended DDA, applied as follows: "Phase II Site Acquisition Cost" $2,856,928.00 Developer Cost $2,172,273.74 [based on 111,513 square feet times: first $1O.00persquarefoot($1, 115, 130.00);.50times cost per square foot between$12.00 and $20.00 ($446,052.00); .50 times cost per square foot between $20.00 and $21.00 ($55.757.00); 1.00 times cost per square foot between $21.00 and $25.98 ($555,334.74)] Agency Reimbursement Obligation $724,835.00 [based on 111,513 square feet times: 1.00 times cost per square foot between $10.00 and $12.00 ($223,026.00); .50 times cost per square foot between $12.00 and $21.00 ($501,809.00). Accordingly, the Agency's reimbursement obligation is $776,011.00 ("Reimbursement"). 4. Agency's Reimbursement obligation, as defined by the Amended DDA and this Agreement, is hereby memorialized in a Promissory Note attached hereto as Exhibit B. 5. Agency and Cypress, on behalf of themselves and their successors or assigns, hereby fully and forever waive, release and settle all arguments, claims, demands, actions, causes of action and rights of any kind, whether presently known or not, which the Agency or Cypress may have against the other arising out of or related in any way to Section 8.4 of the Amended DDA, other than those created by this Agreement. 6. As to the specific release set forth herein, the parties each hereby waive all rights under California Civil Code Section 1542, which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." ~ s-f The parties each acknowledge that they have discussed with their respective legal counsel the significance and effect of waiving Civil Code Section 1542, and warrant that this waiver is informed, knowing and voluntary. 7. The undersigned, and each of them, acknowledge and represent that no promise or inducement not expressed in this Agreement has been made in connection with this Agreement. This Agreement and the Amended DDA, subject to the interpretations and implementations thereof by this Agreement, contains the entire Agreement and understanding between the parties as to the subject matter of this Agreement. 8. One purpose of this Agreement is to compromise, resolve and release any and all present and future claims of any kind, whether presently known or unknown, which the parties may have against each other arising out of Section 8.4 of the Amended DDA. This Agreement shall be construed liberally to accomplish that intent and purpose. No provision of this Agreement shall be interpreted against any party because that party, or their legal representative, drafted that provision. 9. Pursuant to Section 6.7 (a) of the Amended DDA and Section 4 of the Memorandum of Understanding between the Metropolitan Transit Development Board and the San Diego & Arizona Eastern Railway Company and the City of Chula Vista Redevelopment Agency Related to the Widening of Palomar Street and the Traffic Signal Relocation from the Entrance of the MTDB Palomar Street LRT Station, dated January 18,1994 (to which Cypress did agree and attest), Cypress agrees to reimburse the Metropolitan Transit Development Board for the cost of widening the Light Rail Transit (LRT) crossing on Palomar Street, which was required to accommodate the widening of Palomar Street to mitigate traffic impacts from the Palomar Trolley Center and to provide the Agency with proof of that reimbursement to the reasonable satisfaction of the Agency prior to the execution of this Agreement. Cypress agrees to indemnify Agency against any claims Metropolitan Transit Development Board might make against the City of Chula Vista or Agency for the subject costs. 10. The parties recognize the contributions made to date by Cypress to the effort to develop the Trolley Terrace Day Care Center Project, contributions which include incurring costs for a Phase I Environmental Site Assessment and the legal costs associated with the preparation of a site option agreement to secure the site of the proposed day care center. Cypress's efforts have been the result of a recognition of the benefit of the day care center to the community and to the Palomar Trolley Center. Cypress agrees to continue to use its good faith best efforts to further contributions to the day care effort as follows: a. Cypress will solicit contributions from the major tenants of the Palomar Trolley Center to a scholarship fund for the day care center clients, with a goal of raising a minimum of $50,000. Cypress's efforts will be coordinated with the Agency and the day care provider, when the day care provider has been identified. b. Pursuant to Cypress's representations to Agency that the General Contractor for the Palomar Trolley Center, Collins General Contractors (Collins), has volunteered to build the day care facility without taking a profit, Cypress agrees to facilitate discussions with Collins to effectuate Collins' participation on that basis in the construction of the day care center. ~ 5~1 11. The prevailing party in any action, including but not limited to arbitration and an action for declaratory relief, brought to enforce the provisions of this Agreement shall be entitled to reasonable attorney's fees and costs incurred in such action. 12. Any individual signing this Agreement on behalf of any corporation, association or entity, warrants and represents that he or she has the authority to do so. 13. The parties expressly warrant and represent that this Agreement and the release of claims contain herein, has been freely entered, and that no coercion, threat, reprisal or pressure, either express or implied, has induced either party to enter into this Agreement. 14. The parties shall cooperate in the performance of their respective obligations described herein and in the Amended DDA. Furthermore, the parties shall act in good faith and shall take no action which prevents the other party from performing its obligations. CYPRESS CREEK CO., loP., a Delaware limited partnership BY: SUNBEL T MANAGEMENT COMPANY, a Florida corporation, its Managing Agent by: REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public agency by: Shirley Horton, Chairman APPROVED AS TO FORM: ATTEST: Agency Attorney Agency Executive Secretary ak:salomone\trolley.DDAy -ß S -/0 JUN-El1-'95 14:47 !D: SUNBEL T IJELR'Ay FL TEL NO: 4Er7-265-13Ø8 11629 PEI5 11. The prevailing party In any action. Including but not limited to arbitrwon $l\d 80 actIon for declaratory rellaf. brought to 8O10r(:e the provlslona of this Auraement &hIII1 be entitled to reasonable ettorney's fees and costs Incurred In auch eotlon. 12. Any Individual signing this Agreement on behalf of sny corporation. association or entity. warr8l1ts and represents that hi or she has tha authority to do so. 13, Tha parties expressly warrant and rapresent that this Agreement and the releue of claims contain herein. hall been fre8ly 8I1tared. and that no coercion, thraat. repdslll or pressure. either exprells or Implied. has Induced eithar party to ente, into this Agreemant. 14. The parties shall cooperate In the performance of thai, respective obligations described herein end In the Amanded DOA. Furthermore, the parlles shell act in good faith . and 811111 taka no actIon which II'8\Ients the other party from performlnllits oblillationa. CYPRESS CREEK CO.. L.P" a Delaware limited partnership BY: SUNBELT MANAGEMENT COMPANY. a florida corporation. Its Managi Agent REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA. I public agency by: Shirley Horton, Chairman APPROVED AS TO FORM: ATTEST: Agency Attorney Agency ExacutivI Secretary .,aaI""""",\troll.v.DDAy ~ S ~/( . EXHmIT "A" PALOMAR TROLLEY CENTER PHASE I ACQUISITIONS Parcel OwnerlUser Area Cost Parcel #4 E. Mora 7,405 Sq. Ft. $ 60,321.54 Parcel #5 Hernandez 6,970 Sq. Ft. $ 130,465.72 Parcel #6 N. Mora 9,583 Sq. Ft. $ 120,507.59 Parcels #7 Henderson 26,136 Sq. Ft. $ 140,577.59 Parcel #8 Green 6,098 Sq. Ft. $ 51,480.74 Parcel #9 Uribe 21,344 Sq. Ft. $ 154,045.57 Parcel #10 Jehovah's Witmesses 45,738 Sq. Ft. $ 432,008.00 Cost of Legal and Appraisal $ 60,894 Total 123,274 Sq. Ft. $1,150,300.45 PALOMAR TROLLEY CENTER PHASE n ACQUISITIONS Parcel OwnerlUser Area Cost Parcel #11 Iwashita 8,712 Sq. Ft. $ 74,428.00 Parcel #12 JACL #1 32,670 Sq. Ft. $ 595,000.00 Parcel #13 JACL #2 22,651 Sq. Ft. $1,360,000.00 Parcels #14 Williams 47,480 Sq. Ft. $ 750,000.00 Cost of Legal and Appraisal $ 117,500.00 Total 111,513 Sq. Ft. $2,896,928.00 .5~!)-- EXHIBIT "B" PROMISSORY NOTE PALOMAR TROLLEY CENTER Chula Vista, California $776,071 June -, 1995 RECITALS A. On April 13, 1994, the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA ("Agency") and CYPRUS CREEK CO., L.P. ("Cypress"), a Delaware limited partnership, entered into that certain Amended Palomar Trolley Disposition and Development Agreement ("Agreement") , relating to the redevelopment of certain real property located in the City of Chula Vista. A true and correct copy of the Agreement is on file in the City Clerk's Office located at 276 Fourth Avenue, Chula Vista, California 91910. B. On May -' 1995, Agency and Redeveloper entered into that certain Implementation and Settlement Agreement [Palomar Trolley Center] (" Implementation Agreement") pursuant to which, among other things, the parties implemented and settled disputes with respect to Section 8.1 and 8.4 of the Agreement. C. The Agency and the Redeveloper have executed and delivered this Promissory Note pursuant to Section 8.1 of the Agreement and the Implementation Agreement. Capitalized terms not defined herein shall have the meanings ascribed thereto in the Agreement. NOW, THEREFORE, the Agency and the Redeveloper agree as follows: 1. FOR VALUE RECEIVED, and subject to the terms and conditions of the Agreement and Implementation Agreement, the Agency promises to pay to Redeveloper at , Attn: . or at such other address as the Redeveloper may from time to time designate, the principal sum of Seven Hundred Seventy Six Thousand Seventy One Dollars ($776,071) in accordance with the terms and conditions set forth herein: . 2. Interest Rate. Interest on the unpaid principal balance owed hereunder shall accrue at the rate of seven percent (n) simple interest per annum, commencing on (a) September 15, 1994 with respect to $51,236 of the principal balance of this Note (constituting the portion of the Phase I Acquisition Cost owed by the Agency to the Developer pursuant to the Implementation Agreement), such date constitution the date that Phase I of the Project commenced operations; and (b) the date that 75% of the retail sales square footage in the stores comprising Phase II of the Project commence operations with respect to $724,835 of the principal balance of this Note (constituting the portion of the Phase II Acquisition Cost owed by the Agency to the Developer pursuant to the Implementation Agreement); and continuing 5~(3 thereafter until the principal and interest are Paid in full or the Agency's obligation is forgiven, discharged or is otherwise legally terminated. 3. Installment PaYment. 3.1. Installment payments of principal and interest will be payable during the term of this Promissory Note, in arrears and without offset or demand, on the following dates (each a "Payment Date"): (i) the initial payment shall be due and payable within 30 days after the date that City or the Agency receives a detailed report ("Detailed Report") from the State Board of Equalization itemizing the sources of the State Board of Equalization reconciliation payment ("Reconciliation Payment") for the first [calendar/fiscal] year, or portion thereof) in which the Project generates "Sales Tax Revenues" (as defined hereinbelow); and (ii) all subsequent payments shall be due and payable within 30 days after the date that the Agency receives the Detailed Report for each subsequent [calendar/fiscal] quarter until the unpaid principal balance, plus any and all accrued interest thereon, is paid in full. 3.2. On each Payment Date, the Agency shall pay to the Redeveloper the "Redeveloper's Payment" as hereinafter defined. The Redeveloper's Payment shall be an amount equal to thirty percent (30%) of the "Sales and Use Tax Revenues" generated by the Project at the Site as set forth below. 3.3. Sales and Use Tax Revenues means those funds received by the City of Chula Vista (the "City") as unrestricted general fund revenues pursuant to the imposition of the Bradley- Burns Uniform Local Sales and Use Tax Law (the "Sales Tax Law"), commencing with Section 7200 of the Revenue and Tax Code of the State of California as amended, arising from sales at or from the Site which are subject to such Sales and Use Tax Law. Any funds received by the City from impositions pursuant to the Sales Tax Law which are subject to use restrictions imposed by the State shall not be included in the definition of Sales and Use Tax Revenues in any Payment Year. . 3.4. For purposes of this Note, Sales and Use Tax Revenues based on sales at or from the Site will be deemed to include only sales which occur on the Site and sales which occur elsewhere, if they are initiated on the Site and if the situs of the sale is within the Agency's corporate limits. The parties agree for purposes of determining the amount of the Redeveloper's Payment that the Agency will not be obligated to consider Sales and Use Tax Revenues from any source other than Sales and Use Tax Revenues which are based on sales at or from the Site. 3.5. Each Redeveloper's Payment shall reduce the accrued interest first and then the unpaid principal until the principal /Í S-/Y and interest due hereunder is paid in full. Should interest not be paid when due, it shall thereafter bear like interest a,s the principal, but such unpaid interest so compounded shall not exceed an amount equal to simple interest on the unpaid principal at the maximum rate permitted by law. 4. Prepavrnent. The Agency shall have the right, at any time, without penalty, to prepay all or any portion of the unpaid principal balance owing under this Note. 5. Attornevs Fees. If any action is instituted to enforce this Promissory Note, the losing party in any such action promises to pay reasonable attorneys fees, costs and expenses. 6. Governinq Law. This Promissory Note has been executed in the State of California and shall be construed and interpreted according to the laws of the State of California. REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA Dated: , 1995 By: Shirley Horton, Chair ATTEST: Secretary Approved as to form and substance: Agency Attorney By: CYPRUS CREEK CO. L.P., a Delaware limited partnerhsip Dated; , 1995 By: ~-15 --,. ,JUH-Ø1-'95 14:49 I D: su-IBEL T DELRAY FL TEL NO: 407-265-1308 11629 PØ8 4. Preoavment The Agency ahall haye the X'ight, at any time, without pena:¡'ty. to prepay all or any portion ot the unpaid principal balance owing under this Note. S. Attorneys Fees, If any action is instituted to enforce thia Promissory Note, the losing party in any auch action promiaes to pay reasonable attQrneys feea, costa and expenses. 6, Governina Law. This Promiaaory Note has been executed in the State of California and shall be construed and interpreted according to the laws of the State ot california. REDBVELOPMENT AGENCY OF THE CITY OF CHULA VISTA Dated: I J.995 By: Shirley Horton, Chair ATTEST: Secretary Approved as to form and substance: Agency Attorney By: Cyl(if CREEK CO. L.P., a Delaware limited partnerhsip pated¡ , J.995 ",\'I1N'.d\pol......pn ¡; ;Y 5 -I¿ " [Print Name and Title] ": Ishsred\palour.pn ~ S ~ /7 This page blank! S-- /'/ ATTACHMENT 2 PROMISSORY NOTE PALOMAR TROLLEY CENTER Chula Vista, California $776,071 June -, 1995 RECITALS A. On April 13, 1994, the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA ("Agency") and CYPRUS CREEK CO., L.P. ("Cypress"), a Delaware limited partnership, entered into that certain Amended Palomar Trolley Disposition and Development Agreement ("Agreement") , relating to the redevelopment of certain real property located in the City of Chula Vista. A true and correct copy of the Agreement is on file in the City Clerk's Office located at 276 Fourth Avenue, Chula Vista, California 91910. B. On May -' 1995, Agency and Redeveloper entered into that certain Implementation and Settlement Agreement [Palomar Trolley Center] (" Implementation Agreement") pursuant to which, among other things, the parties implemented and settled disputes with respect to Section 8.1 and 8.4 of the Agreement. C. The Agency and the Redeveloper have executed and delivered this Promissory Note pursuant to Section 8.1 of the Agreement and the Implementation Agreement. Capitalized terms not defined herein shall have the meanings ascribed thereto in the Agreement. NOW, THEREFORE, the Agency and the Redeveloper agree as follows: 1. FOR VALUE RECEIVED, and subject to the terms and conditions of the Agreement and Implementation Agreement, the Agency promises to pay to Redeveloper at ---, Attn: . or at such other address as the Redeveloper may from time to time designate, the principal sum of Seven Hundred Seventy Six Thousand Seventy One Dollars ($776,071) in accordance with the terms and conditions set forth herein: 2. Interest Rate. Interest on the unpaid principal balance owed hereunder shall accrue at the rate of seven percent (7%) simple interest per annum, commencing on (a) September 15, 1994 with respect to $51,236 of the principal balance of this Note (constituting the portion of the Phase I Acquisition Cost owed by the Agency to the Developer pursuant to the Implementation Agreement), such date constitution the date that Phase I of the Project commenced operations; and (b) the date that 75% of the retail sales square footage in the stores comprising Phase II of the Project commence operations with respect to $724,835 of the principal balance of this Note (constituting the portion of the Phase II Acquisition Cost owed by the Agency to the Developer pursuant to the Implementation Agreement); and continuing oS-If thereafter until the principal and interest are paid in full or the Agency's obligation is forgiven, discharged or is otherwise legally terminated. 3. Installment Payment. 3.1. Installment payments of principal and interest will be payable during the term of this Promissory Note, in arrears and without offset or demand, on the following dates (each a "Payment Date"), (i) the initial payment shall be due and payable within 30 days after the date that City or the Agency receives a detailed report ("Detailed Report") from the State Board of Equalization itemizing the sources of the State Board of Equalization reconciliation payment (nReconciliation Payment") for the first [calendar/fiscal] year, or portion thereof) in which the Project generates "Sales Tax Revenues" (as defined hereinbelow); and (ii) all subsequent payments shall be due and payable within 30 days after the date that the Agency receives the Detailed Report for each subsequent [calendar/fiscal] quarter until the unpaid principal balance, plus any and all accrued interest thereon, is paid in full. 3.2. On each Payment Date, the Agency shall pay to the Redeveloper the "Redeveloper's Payment" as hereinafter defined. The Redeveloper's Payment shall be an amount equal to thirty percent (30%) of the "Sales and Use Tax Revenues" generated by the Project at the Site as set forth below. 3.3. Sales and Use Tax Revenues means those funds received by the City of Chula Vista (the "City") as unrestricted general fund revenues pursuant to the imposition of the Bradley- Burns Uniform Local Sales and Use Tax Law (the "Sales Tax Law"), commencing with Section 7200 of the Revenue and Tax Code of the State of California as amended, arising from sales at or from the Site which are subject to such Sales and Use Tax Law. Any funds received by the City from impositions pursuant to the Sales Tax Law which are subject to use restrictions imposed by the State shall not be included in the definition of Sales and Use Tax Revenues in any Payment Year. 3.4. For purposes of this Note, Sales and Use Tax Revenues based on sales at or from the Site will be deemed to include only sales which occur on the Site and sales which occur elsewhere, if they are initiated on the Site and if the situs of the sale is within the Agency's corporate limits. The parties agree for purposes of determining the amount of the Redeveloper's Payment that the Agency will not be obligated to consider Sales and Use Tax Revenues from any source other than Sales and Use Tax Revenues which are based on sales at or from the Site. 3.5. Each Redeveloper's Payment shall reduce the accrued interest first and then the unpaid principal until the principal ? 5 - :;lD and interest due hereunder is paid in full. Should interest not be paid when due, it shall thereafter bear like interest as the principal, but such unpaid interest so compounded shall not exceed an amount equal to simple interest on the unpaid principal at the maximum rate permitted by law. 4. Prepayment. The Agency shall have the right, at any time, without penalty, to prepay all or any portion of the unpaid principal balance owing under this Note. 5. Attorneys Fees. If any action is instituted to enforce this Promissory Note, the losing party in any such action promises to pay reasonable attorneys fees, costs and expenses. 6. Governinq Law. This Promissory Note has been executed in the State of California and shall be construed and interpreted according to the laws of the State of California. REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA Dated: , 1995 By: Shirley Horton, Chair ATTEST: Secretary Approved as to form and substance: Agency Attorney By: CYPRUS CREEK CO. L.P., a Delaware limited partnerhsip Dated; , 1995 By: 7 S~~I [Print Name and Title] M: \ shared\ palooar. pn / S-)}- ATTACHMENT 3 COOPERATION AGREEMENT (PALOMAR TROllEY CENTER PROJECT) THIS AGREEMENT is entered into this - day of , 1995 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 and amended a Redevelopment Plan (the "Redevelopment Plan") for the Southwest Redevelopment Project (the "Project Area") located 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 may not have the necessary funds to pay for all of its activities and undertakings within the Project Area. E. City and Agency desire a system to provide for the advancement by City to Agency of funds which may be required for implementation of the Redevelopment Plan as such funds may be needed by Agency. F. Agency has on July 27, 1993, by Agency Resolution No. 1345 entered into an Amended Disposition and Development Agreement (the "DDA") between Agency, and Cypress Creek Company loP. ("Developer") and 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 DDA the Developer is loaning $776,071.00 to Agency which amount is obligated to repay to Developer pursuant to Section 8 ("Agency's Obligation to Reimburse Developer") of the DDA. Agency shall be obligated to make quarterly payments ("Agency Payment") to Developer until the $776,071.00, plus interest is repaid in full. AGREEMENTS NOW THEREFORE, in consideration of the above recitals and for good and valuable consideration the receipt and sufficiency of which the parties hereby acknowledge, the City and Agency hereby agree as follows: ð-~ .23 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) City agrees to deliver to Agency within thirty (30) days of Agency's written request an amount equal that portion of the Agency Payment which Agency is unable or otherwise fails to pay to Developer not to exceed one hundred percent 1100 %) of the required Agency Payment. 2. Agency shall repay and reimburse City subject to the following terms: (a) Agency agrees to pay city interest on the amount City advances to Agency 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. Ic) 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 repày 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 current (within one (1) year) obligations of the Agency undertaken in connection with the Project Area, (ii) required by the community redevelopment law to be deposited into the Low and Moderate Income Housing Fund, (iii) required to be paid to other taxing agencies, (iv) reasonable administrative costs of the Agency, and, payment of prior debts to City as evidenced by prior cooperation agreements or other agreements between City and Agency. (d) Payments by Agency to City shall be applied first to accrued interest. (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 privilege, Agency's obligations hereunder shall be subordinate to such other obligation or the indebtedness which is secured by such pledge. (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 and other project areas within City, 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. S~.2- c¡ 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. seq. of the Community Redevelopment Law. 5. City acknowledges that due to the limitations required by the Community Redevelopment Law limiting the duration of the Redevelopment Plan and duration of time in which the Agency may receive tax increments, it is possible that the authority of the Agency to receive tax increments from the Project Area may terminate prior to repayment to City in full of the advances made pursuant to this Agreement. 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 Shirley Horton APPROVED AS TO FORM: Bruce M. Boogaard, Agency Counsel CITY OF CHULA VISTA DATE: By: Mayor Shirley Horton APPROVED AS TO FORM: Bruce M. Boogaard, City Attorney ATTEST: Beverly Authelet, City Clerk M:Isharedlcommdevltrolley.agm 5-25 This page blank! S ~ J..G . It/51 RESOLUTION xxxxx RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING COOPERATION AGREEMENT (PALOMAR TROLLEY CENTER) WITH THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA TO PAY BACK LOAN TO REDEVELOPMENT AGENCY FROM CYPRESS CREEK COMPANY loP" APPROPRIATING FUNDS THEREFOR, AND AUTHORIZING MAYOR TO EXECUTE SAME WHEREAS, the City is authorized to provide assistance to the Redevelopment Agency ("Agency") to redevelop the Southwest Redevelopment Project Area ("Project Area"); and, WHEREAS, the Agency may not have sufficient funds to pay for all of its activities and undertakings in the Project Area; and, WHEREAS, the Agency has entered into the Amended Palomar Trolley Center Disposition and Development Agreement with Cypress Creek Company L.P. (" Cypress ") which involves financial participation by the Agency in the Palomar Trolley Center retail commercial project in the Project Area, that financial participation being in the form of a loan from Cypress to the Agency; and, WHEREAS, to the degree that the Agency has insufficient funds from the Project Area to make loan payments to Cypress, the Agency wishes to borrow funds from the City to make those loan payments; and, WHEREAS, the City wishes to assist the Agency in making those loan payments as necessary by loaning the required funds to the Agency subject to specific repayment obligations; and, WHEREAS, the Implementation Agreement (Palomar Trolley Center). copy of which is on file in the Office of the City Clerk known as (also copy of which is on file in the Office of the Secretary to the Redevelopment Agency known as RACO-95-08) has been prepared which provides for the City to loan funds to the Agency as necessary to satisfy its debt obligation to Cypress. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA does hereby find, order, determine and resolve that the Implementation Agreement (Palomar Trolley Center) is approved and the Mayor is authorized to execute same. BE IT FURTHER RESOLVED that $54,000.00 is appropriated from the unappropriated fund balance of the General Fund to Debt Service Fund #309 and appropriated from Debt Service Fund #309 for the purpose of funding the 1994-95 debt service payments to Cypress by the City on behalf of the Agency. PRESENTED BY: APPROVED AS TO FORM BY: ~ S~ Chris Salomone Bruce M. Boogaard Community Development Director City Attorney [BBlC.\WP51\COUNCIL\RESOS\PTCSLMT.RES] s~;J-7 This page blank! S,- ;¿¡ /1 r J ~ RESOLUTION xxxx RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA APPROVING AGREEMENT TO SETTLE, RELEASE AND REIMBURSE COSTS WITH CYPRESS CREEK COMPANY loP. AND PROMISSORY NOTE REGARDING REDEVELOPMENT AGENCY FINANCIAL PARTICIPATION IN SITE ACQUISITION COSTS FOR THE PALOMAR TROLLEY CENTER DISPOSITION AND DEVELOPMENT AGREEMENT AND APPROVING COOPERATION AGREEMENT (PALOMAR TROLLEY CENTER) WITH CITY TO LOAN CITY FUNDS TO REDEVELOPMENT AGENCY TO PAY BACK LOAN TO REDEVELOPMENT AGENCY FROM CYPRESS CREEK COMPANY, AND AUTHORIZING CHAIRMAN TO EXECUTE SAME WHEREAS, the Amended Palomar Trolley Center Disposition and Development Agreement (DDA) between the Redevelopment Agency ("Agency") and Cypress Creek Company L.P. ("Cypress") was executed by the Agency on July 27,1993; and, WHEREAS, the DDA provides for the Agency to share in certain property acquisition costs for the Palomar Trolley Center that exceed stipulated thresholds and provides for either party to the DDA to terminate the DDA if property acquisition costs exceed other certain thresholds; and, WHEREAS, the Palomar Trolley Center Phase I property acquisition costs exceeded the threshold requiring the Agency to share in costs, but did not exceed the threshold creating the right for either party to the DDA to terminate the DDA; and, WHEREAS, the Palomar Trolley Center Phase II property acquisition costs exceeded the threshold requiring the Agency to share in costs and exceeded the threshold creating the right for either party to the DDA to terminate the DDA; and, WHEREAS, the Agency and Cypress have been in dispute regarding the extent of the Agency's obligation, if any, to reimburse Cypress for the Phase II site acquisition costs; and, WHEREAS, the Agency and Cypress desire to finally resolve and settle said dispute, to provide for implementation procedures to reimburse Cypress for the Agency's agreed-upon share of Phase II site acquisition costs, and to provide for the clarification and implementation of the remaining obligations of the parties under the DDA; and, WHEREAS. an Implementation and Settlement Agreement, copy of which is on file in the Office of the Secretary to the Redevelopment Agency known as RACO-95-06, and a Promissory Note, copy of which is on file in the Office to the Secretary to the Redevelopment Agency known as RACO-95-07, between the Agency and Cypress have been created which memorialize the desired settlement, implementation, and clarification. 5~:J ~ NOW THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA does hereby find, order, determine and resolve that the Implementation and Settlement Agreement (Palomar Trolley Center) and the Promissory Note (Palomar Trolley Center) are approved and the Chairman is authorized to execute same. PRESENTED BY: APPROVED AS TO FORM BY: & ~ Chris Salomone Bruce M. Boogaard Community Development Director Agency Counsel IBBIC:IWP51 IAGENCYIRE50SIPTCSTLM2.RESI S,,3Ò REDEVELOPMENT AGENCY AGENDA STATEMENT ~ ~ Item ~~ ' Meeting Date ~ Á. " ~ ,,6"W ITEM TITLE: REPORT Request from Auto Park Developers for Additional Financial Assistance SUBMITTED BY: Community Development Director REVIEWED BY: Executive Director (4/5ths Vote: Yes - No --Xl BACKGROUND: On January 17, 1995, the Council approved a conditional payout of $1.3 million to the Auto Park Developers for construction of public streets within the Auto Park under. Assessment District 92-2. On January 19, 1995, staff met with the Auto Park Developers, Messrs. Ordway and Fuller, and their attorney to discuss financial problems associated wit."t a lower assessment district payout than anticipated. As a result of that meeting, the developers made specific requests for financial assistance which were reviewed by staff. Their requests included the following: - Increase the Maximum Agency Repayment Obligation in the Disposition and Development Agreement (DDA) by $783,230; Decrease the Base Sales Tax that the City would receive from $550,000 to $340,000; - Decrease the Annual Escalator Factor from 6% to 2% and postpone its application one year, begimlng July 1, 1996. . -. In addition, the Chevrolet dealers'ëxpreSHcÍ th8lr desire to have the Agency acquire pereal 11 from them due to thalr InabtTIty to market the parcel. The Redevelopment Agency considered the request from the Auto Park Developers on February 14, 1995 (see Exhibit AI and directed staff to obtain and analyze financial data on dealership operations. Additional information has been received and analyzed, and the following recommendations are offered for consideration. RECOMMENDATION: 1. That the Agency not take any actions to acquire Parcel 11 (vacant land parcel). ",. ., 2. That the Agency not consider a reduction in the maximum Agency Repayment Obligation of $1.9 million as stated the Disposition and Development Agreement. 3. That the Agency not consider lowering the Sales Tax Base from $550,000 as stated in the Disposition and Development Agreement. . " . 4. That the Agency direct staff to draft an amendment to the Disposition and Development Agreement for further review which will allow an annual review of the escalation factor, taking into account current cost of living factors. 5. That the Agency reduce the current escalator of 6% to 3%. based on current cost of living data. ~~ -4-l .- - 1 - - Page 2.ltem£' , Meeting Date: 5ffl27!J5 5-1(& / 'j BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. DISCUSSION: In mid January. staff met with the Auto Park Developers. Messrs. Ordway. Reneau and Fuller. and their attorney to discuss their request for additional financial assistance from the Agency due to a shortfall in anticipated reimbursements for public improvements constructed under Assessment District 92-2. The Auto Park Developers specifically requested the following amendments to the terms of the Disposition and Development Agreement: - Increase the Maximum Agency Repayment Obligation by $783.230; - Decrease the Base Sales Tax that the City would receive from $550.000 to $340.000; - Decrease the Annual Escalator Factor from 6% to 2% and postpone its application one year. beginning July " 1996. The Developers were requested to submit financial information on current operations of the Auto Park in support of their request. Information pertaining to South Bay Chevrolet including financial reports on operations and copies of loan agreements was received on March 20. 1995 and has been reviewed by staff. No information was received from Ford. Also received was a letter from Mr. John Abbene. attorney for the Auto Park developers. requesting that the Agency purchase parcel 11 (vecant land parcel west of Fuller FordJHonda) from South Bay Chevrolet in order to expedite the sale and continued operation of the dealership located on parcel 3. The letter from Mr. Abbene is attached as Exhibit B. Based upon this request and review of the financial information. staff has the following comments and recommendations. A glossary further explaining the DDA terms used below is attached as Exhibit C. 1. Aaency Purchase of Parcel #1 South Bay Chevrolet purchased Parcel ", comprising approximately 2.5 acres ttvough the ". Agency for approximately $750,000 in August 1993. The site is difficult to sell and develop '" at this time because of its limited size and presence of stockpiled, contaminated soil on the adjoining parcel to the rear of parcel #1. Staff is currently working with the former land owner to remove the stockpile. When that occurs, the rear 1.5 acres can be combined with the front 2.5 acres to provide a more appropriate site for a new auto dealership. South Bay Chevrolet is required to purchase the parcel if and when it is cleaned up at a price equal to the price per square foot price paid for Parcel #1. South Bay Chevrolet was aware of the conditions on the adjoining parcel at the time of purchase of Parcel #1. Assuming it would be possible to sell the parcel in a shorter time frame, South Bay borrowed $1,045,000 from GMAC on this property based upon a rather optimistic appraisal of its value once improvements (roads, sidewalks, sewer, etc.) were installed. This loan is cross collateralized with a $3.9 million loan from GMAC on Parcel #3 for construction of the dealership. The loan is due to be paid off in May of this year, thereby providing an impediment to transfer of this parcel along with sale of the dealership. South Bay has ,- .i'-..1.} , 4- Page 3. Item..r ' Meeting Dáte: ~ ~/t /ph') requested that the Agency repurchase this parcel. for at least the amount of the loan. Based upon the lack of response from the target market, the property appears to be over- encumbered. The problems impeding sale and development of this parcel stem from the discovery of contaminated soils and the need to stockpile them until an economical removal plan is authorized by the regulatory agencies. The decision to financially encumber Parcel #1 was unfortunate. South Bay Chevrolet does not have the funds to retire this debt in May. Assuming the Agency had the will to acquire the site. funds are not currently available. The Agency is. in fact. planning to divest itself of property in order to retire its own debt. Consideration of acquisition of parcel #1 is not be recommended by staff. < 2. Increase the Maximum AGency Reoavment Obfiaatlon The Auto Park Developers were anticipating 'approximately $1 Million more than they will receive in reimbursements for construction of public improvements through Assessment District 92-2. The shortfall is apparently due to miscommunications between the developers and their consultants concerning limitations of the Assessment District. In an effort to make up this shortfall which includes a $730.000 right-of-way acquisition charge. the Developers have requested that the Maximum Agency Repayment Obligation stipulated in the DDA under Incentive Payments (see attached description) be increased by $730.000 to reimburse the Developers for the land cost attributed to public rights-of-way. This would increase the Agency's Maximum Repeyment Obligation during the first six years of operation of the Auto Park from $1 ~9 mDlion to approximately $2.630.000. It should be I)oted that any amount not repaId during the first six years Is forgiven. ' Even though it is unlikely. given current sales volumes. that the Auto Dealers will generate enough sales tax revenue to be repaid the $1 .9 Million within six years, it is not recommended that the Maximum Repayment Obligation be increased. The Agency has already provided substantial subsidy for this project through the purchase of the Broadway deaJership properties and the loan the Shinoharas to relocate the contaminated soils. Further subsidy based upon the lack of vigilance by the Developers and their consultant during the development process is not justified. In addition. once the Maximum Repayment Obligation is satisfied. or six years elapses (whichever occurs first). the Developers continue to share in ", the Post incentive payments for a period of nine years. .. 3. Decrease In Base Sales Tax from $550.000 to $340.000 The Sales Tax Base - sales tax revenues besed upon 1988 auto sales from the Ford and Chevrolet dealerships which would accrue to the City before incentive or post incentive payments to the Developers are computed - were set at $550.000 per year under the assumption that auto sales would increase from late 1980's levels.. However, the evidence submitted by South Bay Chevrolet indicates that auto sales in 1994 were considerably lower. and off to an even slower start in 1995. Although Fuller Ford did not submit sales information. the owner of the dealership. Doug Fuller. verified in a telephone conversation with staff, that 1994 Ford sales were down as well. If further action on this item is desired by the Agency. staff will validate sales figures. 6- -:¡t -3- .',4 Page 4. '~i þ r-- Meeting Date: ¡b C{\ A reduction in the base would have a direct financial impact upon the City since the City receives 100% of the base before the sharing formula with the dealers goes into effect, Based upon the potential impact to General Fund revenues. reduction in the Base Sales Tax limit is !1Q1 recommended. 4. Decrease the Annual Escalator from 6% to 2% As indicated above. the base sales tax. $550.000 in year one, is to increase by 6% per year for 15 years covered by the Incentive and Post Incentive payments. The developers have requested that the increase be reduced to 2% based upon the lower CPI for the past few years. The 6% annual increase was predicated upon inflation rates in the late 1980's when the terms of the DDA Were developed. The CPI for the past two years has averaged closer < to 3%. Reduction of the escalator to 3% would result in a loss of approximately $12,375 to the City in the second year if the Auto Park generates at least $550.000 in sales tax revenue from July 1. 1995 - June 30. 1996. If the escalator remains at 3% for the next four years. when compared to the current 6% escalator. the loss will increase slightly each year. Based upon lower inflation rates, a reduction in the escalator is justified, at least through the incentive payment period. A reduction from the current 6% is recommended for consideration on a year by year basis. In order to accomplish this. the DDA will have to be amended. If this report is approved, staff will return to the Agency with a revised DDA for approval. FISCAL IMPACT: The Sales Tax Base Increases each year by the escalator amount. Sales tax revenues received over the base plus escalator 8reshared bètiNøèn the Agency (25 %) and the Auto Park Developers (76%) through thé IricentïVø period (years 1-6)~ As the escalator decreases balow 6%, the amount subject to the sharing formula increases. Since the Agency receives only 25% under the sharing formula. 75% of the difference between the original escalator (6%) and the reduced escalator will be a wlossw in terms of anticipated revenues. For example. if the escalator is reduced to 3% at the end of the first year of operation. the base in the second year will be $566.500 ($550.000 base plus 3%). The Agency anticipated the base plus 6%. or $583.000. The difference. $16.500 will now be subject to the sharing formula with the Agency receiving 25%, or $4.125, and the Developers receiving 75%. or $12,375. This last figure ($12,375) represents the -lost- revenues to the Agency. ,.,. .- During the post-incentive period (years 7-15), the sharing formula changes with the Agency receiving 62-1/2% and the Developer 37-112%. The lost revenues during the post-incentive period would thus be equal to 37-112% of the difference between the base at the time plus the escalator and what the base would have been if the escalator had been a consistent 6% from year 1. [FKldiskA/8utop8rk.813] ~-; ~ ~-4 EXHIBIT A REDEVELOPMENT AGENCY AGENDA STATEMENT Item -L Meeting Date 02/14/95 ITEM TITLE: Report Request from Auto Park Dealers for Additional Financial Assistance SUBMITTED BY, Comnwnùy _t o~s . REVIEWED BY: Executive Djrecto~ :D......4 (4/Sths Vote: Yes - No...xJ "" BACKGROUND: On TuesdaY. lanWlI)' 17, 1 , the Council approved a conditional payout . of $1.3 million to the Auto Park Developers for construcIion of public streets within the Auto Park under As-.nœt District 92-2. On Thursday, lanWlI)' 19, 1995, staff met with the Auto Park Developers, Messrs. OIdway and Fuller, and their attorney to discuss 1iDancjaJ. problems associated with a lower assessment district payout than antiåpated. As a result of that meeting, the developers have made specific requests for financial assistance (see attachment A) which have been reviewed by staff. RECOMMENDATION: That the Council review the letters submitted by the Auto Park developers' attorney, 10hn Abbenc, requesting specific financial assistance and continue discussion of this item one week to aI1ow SIaff time to obtain and analyze ~1"""ip financial Mt,,1met1ts to provjdc a cost benefit analysis regantiøg financial"ssi$lMœ BOARDS/COMMissIoNS RECOMMENDATION: Not applicåb.Je. DISCUSSION: At the meeting of January 17, 1995 with staff, the developers explained that they were anticipating approximately $1 million more than they will receive from the City under ¡\s,,",sment District 92-2 for construction of on-site streets and a sewer pump ~on. This will leave them short in meeting their other 1inanåal ob]Ìgations. The sbo.rtfåIl was apparently due to miscoJllmlmicatioDs between tho dcvctopea and their consuUants." Although thc total bond ", issue was for $1.9' miDion, the" dcvctopea had not been infonhed by their COJISUltI that '" approximaJdy $400,000 of the A~ District proceèds \WZC being used to pay off their obligations under the Otay VaUey Road M-omeqt District to avoid double II-ent disIrlct liens against their property. An additional $200,000 waS åpplied towards bond issuance costs. lThe Developers' consultants worked with staff to develop the pro forma for the a~,,",smen.t district, the acquisition agreement and all other related documents and was aware and advised by staff of all of the constraints including the requirement to payoff the lien for Assessment District 90-2 (Otay Valley Road) so that there would not be two assessment district liens against the Property, and also the City's limit on issuing bonds for assessment district (no more than 33 % of the valuation of the property to be assessed). t:- ~-.:£ ¡ ---0- -,--~- -¡ - Meeting Date 02/14/95. The developers were also not infonned that the City is limited in the amount of bonds that can be issued under an assessment district to 33 % of the appraised value of the property to be assessed, regardless of the total cost of improvements. In this case, the City's bonding limit was $1.9 million, although total costs including a $730,000 right-()f-way acquisition charge, totalled $2.5 million. In establishing the assessment district, City staff worked closely with the developers' consultants and fully disclosed all these issues and constraints. In an effort to malœ up for the shortfuIl of funds, the developers have requested assistance in securing a loan and reconsideration of specific terms of the Disposition and Development Agreement which included a yearly payback to the developers over the first fifteen yeàrs of operation of the Auto Park based upon sales tax reven~es generated by the dealerships (further explained below). They have presented a specific proposal to staff for review in a letter dated January 30. 1995 attached hereto. However. there were no documents verifying cuo:ent financial conditions submitted as support for their request. Under a separate letter also dated January 30 (see attachment A). the Agency is requested to repurchase parcel #1 from South Bay Chevrolet. The Agency had purchased the site from Shinbhara and conveyed it to Soutþ. Bay chevrolet in August 1993. 1biS parcel originally comprised 4 acres. After deletion of the rear portion of the lot totalling 1.1 acres due to the need to stockpile contaminated soils relocated from the other parcels and loss of .4 acres for right-of way, the lot was reduced to approximately 2.5 acres. Mr. Ordway c1àims that he can not sell the property now because of the reduced size and the presence of the contaminated soils on the rea( parcel. The spec:üic requests for assiJIanœ ~ the foJIøwÍng: - AssisIanc:c in securiøg a $1.1 million loan. - - Amendment of the DDA to incœase the maximum payback amount through incentive payments. decœase the annual escalator and postpone the effective date of the escalator by one year. - Agency repurchase of parcel #1. A1tIiough the Auto Park Devdopeø arc claiming financial haIdship. staff has not mccived adequate dnm......."'fÏon to IUÞmnfÏ..,.. the amouot of haIdship or justify the Jevd of ~itiona1 :;; partiåpatiœ œqucsted. Additionany, staff DCCds to œvicw loan doc:umœts per1aining to an of the puœJs, crideaœ of otbec encumbranœs and opcœIÏDg ~ts in(;""til\g cash flow. - 'Ibis information lias bcc:n ICquested from the OWIKU. - .. It Is therefore recommended that this Item be continued for two weeks In order that the developers can provide the Information requested and staff has the opportunity to adequately review "this materiaL FISCAL IMPACT: The Developers have requested assistance in securing a loan with the amount of $1.1 million, amendment to financial terms of the DDA and Agency repurchase of Parcel #1. ~- ?'-t. Page - 3, Item ~ Meeting Date 02/14/95 Loan Assistance Assuming the Agency assisted the Developers in approaching lenders but did not directly loan, consign, or in any other way guarantee the loan, there would be no direct financial impact to the Agency. Amendment of the DDA Amendment of the terms of the DDA to increase the maximum repayment under Section 401 (vi) will only impact the Agency if the Auto Park is more successful than originally projected. The developers have requested that the maximum loan repayment be Ïl).creased by $738,230 in . oIder to reimburse the developers for the land right-of-way costs not forthcoming under the as-"1ent district reimbursements. Based upon initial revenue projections for the Auto Park which included three large dea1ersbips (Ford, Chevrolet and Toyota, which was negotiating to puæbasc Pazœ1 #1 at that time; and one smaIl dealership) with annual sales increases of 6%, it was possible for the developers to reœi.ve adequate incentive payments to cover the entire loan amount plus interest through year six. There are currently two major (Ford and Chevrolet) and two smaller (Honda and Kia) dealerships in operation. Current sales volumes and the delay in opening a fifth dealership on Parcel #1 make it highly unlikely that the level of sales tax revenues necessary to generate incentive payments to return an additional $738,230 will be forthcoming during the fim six years. In the event that the Auto Park does extremely well and exceeds ~m"ted sales tax revenues duriøg this period, the Agency, throug11 its 25% share, would also be œœiviøg IDO1e reVenues than anficipaœci duñug the fiat six yeaø. As iDdicated above, the base sales tax, $550,000 in year one, is to increase by 6% per year for 15 years coveæd by the incentive and post incentive payments. The developers have req~ that the increase be reduced to 2 % based upon the lower inflation late in the past few years. The 6% annual increase was predicated upon inflation lares in the late 1980's when the terms of the DDA were developed. Inflati~ for the past two years has averaged closer to 3%. Reduction of the escalator to 2 % would result in a loss of $16,500 to the City in the first year if the Auto Park generates at least $550,000 in sales tax revenue from July I, 1995 -June 30, 1996. This figure will increase slightly each year for the next five years. :: The base sales tax was also predjcated on actual auto sales in -the late 1980's which have not been replicated since. The developers have; consequently, requested a reduction in the base to - - $340,000 which is commeø"""ate with recœt sales Jevels. Such a reduction would have a direct financial impact upon the city since the City reœi.ves 100% of the base befoze the sharing formUla with the dealers goes into effect. lithe base were reduced to $340,000, the City's loss in the fim year would be 75% of sales tax revenues over $340,000, up to $550,000. Ii sales tax revenues reach $550,000, the City Would lose $157,500. The sales tax base increases every year by the escalator amount (currently 6%). The developers have also requested that the escalator not be applied to the base Sales tax until July I, 1996. In accordance with the DDA, the esCalator is scheduled to go into effect on July I, 1995. . ~- ~7 , ""1;<: '+, uem-L- . - Meeting Date 02/14/95 - The Ímancial impact to the City of postponement of the effective date of the escalator would be relatively minor, totalling $33,000 in year one if the base remains at $550,00ö. The loss would reduce to $2,000:t per year thereafter. Agency Repurchase of Parcel #1 In addition to the Chevrolet dealership (lot #3), Mr. Ordway owns lot 111 which comprises 2.4 acres. This parcel originally comprised 4 acres. However, Shinohara retained 1.1 acres to stoc1cpile contaminated soils. Ordway purchased 2.9 acres through the Agency. The site was reduced by 4 acres due to construction of the westerly cul.de-sac of Auto Park Drive. Mr. Ordway claims he cannot sell the property now because of its reduced size and proximity to contaminated soils. He has proposed that the Agency repUIChase the parcel at a value inflated to account for Janel development costs. In addition, Mr. OnIway is required to purchase the 1.5 " acres once the contaminated soils am Iemoved (which could occur later this year). The Agency wouJd presumably have to aSsume this obligation as welL This would require a cash payment of approximately $1 million (per OnIway's request) which would be tied up until the land was sold by the Agency. It may be possible to recoup these funds when mar1œt conditions improve and the contaminated soils are Iemoved from the adjoining parcel. .c.urop.<k\x1nhe1p.ra4 . 0 '.0'0 .- ., ,,- . ,-f , - NUGENT & NEWNHAM THOH"'. " HuGENT A '-."'OH'" C",,",,~"OH n.'HEN L, ..COWNHA" ATTO....CYS AT LAW LA JOLLA OFFICe J""HUA W«HHAH 1000 «<OH. ¿v, HUe. QuoTe ..00 .,. ..O"CCT "R"", ,v,.. >0' CHERTL L. HVH". OAV,O H. NUC,"T SAN ""COO. C.U.IPO1lNU, G'",al-"""" ~ JOLLA. CAL<rO."'A ooon JANn 0, H'LL'. "L<'HONC ,..., -....., ..,CHAEL N. "CH TeL.'H.... ...., nc-.." '.CO""L' .",.,......,.. 'AT.'C' H, CHIT" 'AC"HOL. '.0.' "'.001" JO.H J. ....H. HeRCOCTH G. ALCOCR ....... W. "."'H. January 30,1995 C'HO" Co LYNN ... ~"TH.TN ..ew....... Bv Fax and Kail . - . - , . . _. .- .-. ". ., '---"_n' sid w. HQ~ ~"3 ~--==.T 1. :-:.':\~"'" f'P(: =~ C "0,- . :-?":r ,~ '-~, City Manager city of Chula V1cta. 276 Fourth Avenue Chula Vista, CA 91910 ,,7"".;':'.:::.'..- ~:~u:: ':,'~e:. Ch\11a Vista Auto'"Par¥ '".-. ... ( '... .,: 'J?ear~.Horris: . ~.~..,."~~-:.; .. .:':: 'J, ..' ,; : M d1scus~ .in ~t1JW'on J~19, 1995,. "the'. ~ ~:.t:he C21Q1a c.aato.~. '~~ Rèneau' jùd Doa9. ~, ~'.v8nen1' ~ ~ the - ~ . " ~t:ec! ~) ~ ~ cU,Iiia: v11:h ~. ~ ~ . bOnd~. ~ ~ ~or ~'DþJt:r1ct: Bo. 512-2. !'he boDd prciceeds t;o "be disbursed tò the deve1ópèrs are almost ~ot ~"5 ~ ~t Whf:Ch' va.s ori9iriallr contemplate4. '. We understand. that the ðJ1OW1t o~ 1:h9 bonc;Is ~ld was 11m1t~d by '1:he value of the property that foås tbe As~Qssmerit D~trict, ',bUt also realize that t:.be valuatiQn i9'hOred anr value for improvœaents to 1:he property which are significant. . . :. It .V4S o~ic¡iœUy ..ÇODtemplca~ .~t t:be bond proceeds would reÚlbUJ:8e tbo deVe~ for 1:he ~ of ~ tbo ~ ,.." '1IeIit:s, paioft:' ~ '1Lin on the. Aui:o p~ ~ for As:Jessaen1:. .' Di8t:rJ.C1: Ho. 90-2, ~ i;he ~ fOl: J.ncidenta1 co." ~ Ctïv~ d,èVe1øpei:'f1 $738,230 f9r acqu1s1t1on ~ the r19hts-of- - .- war t:raDst~ t:o tile C1ty. ~ ~ ccmst:ruction costs aDd. '~derita1. ~~ iDc!urred J:iy 'the ~l vas app¡:ox1- 211a~y $1,S*O¡OOO,idd1e 1:he IUIIOW11: ~ bOnd proøe~œJ.ng disötrsed ~ on1r $1~36"8,OO!). '-'Þe' QaBt:;j:o ~ ~cated above does not 1nclüc1e the cost for the otar Rio Water Line. '1'bus, the botKI P%O.ceeð,s. viJ.l. ri91: eÝ'~ '1'ë~ 1:h~ ~velopèrs for their out-o~- ; þOCket COS~ ~,.in c:cm8~~ the 11IIprov8lllents. . .. .. .,,-,. .', .! ,. In ad<U.~!oIi, the.delay, lrithè widening Q~ ot:ay Valley Road has s7~ificantJ.r impacted the business, of the dealers. in. 1:he Auto r;- ... -, - .., -,-_. ." '-. !l-f ... -. ',' ..... ... " - - sid w, Morr~s city Manager City of Chula Vista l¡ J<:lnu<:lry 30, 1995 Page 2 Park. Other 1:act:ors, such as the devaluation of the peso, have adversely a1:1:ected the' business at the de<:llere at a time when overhead costs have increased dramatically. ,As ctiscussØ!I at our meeting, the . developers are hereby respe~ly re~e~!-ng ,assistance 1:ro1II the City of Cbula Vista and! or the ROdeve1opment Agency 1,n making' up the' shortfall in the Þond prooeøch: and dirGetly compensating the developers 1:or the rights-of-way.' -", ,. - .", ." - .,0, -- .: --... ,.:. ""g;-"F-""'" ~~T" '~A"--~ r::F". "<"' .' ~,-' -N'"" ,.. _.'" Firs~;, fh~ - ~eveîop;rs request the ass1stan~'ot -t:hê" city anà/or Redevelopment Agency in securing loana in the total amount of $1,100,000 to reilDbure8 the developers for cons:truction costs and mscellaneou3 eXpenses not being reimbursed by the bond proceeds; to reiinburse the . developers "for costs incurrGd in :1::obs:tru:cting'the ob.y Rio Water Line, and tQ Jaake up the 6hortfall ~~..bon~:~s tor the right-ot-way acquisition costs. ~ ' , :.:~ .I seê:cm4, t:Iie-d.ëve1opeas ~t:hat: 1(11. City end ~ve1opaent: . ~ oor-fder """'1Dc¡ ~ t:icin eh\t ~ ~ (~") ~ t:"tia Autp ~ 1» ~ 1:118 83IOQDt 01: mc8Dt.!;ve . ~. ~ ~ ~,t1ie ~ as, a JIea1UI ~ ~y pa~ eo,.. ~~ 'the ~'or the :.arid oonsJ.&t:J.nc¡ of the ~ru1:rqc:t.1u:G ~ (ra~ i:ban a .ore borrowing ror the .~t. ot,'.~ch -lan!S),. , ',t'lie bo~~ .fOr,.the cOst o~ t:h~ .land referre4 -to ,above' vUl"proviê1e' 'the' ,deyeJ.opÐrs with short-term ~p!1::\!l' neeðs Wb~le chang'es.. in:-1:he 'incentive payments will assist the developers in repayihg 1:I1e loan. " ,- - .':. ';,;;;;~:".;:~,:',',' '., ,':. A ~,ClJllei1dm~t tó' the. ~,~.~ ~s t~~~: ' '.. ..' ,. " ", . . . '-. 0..,.. ' .., .0 \'. ; "'1. !l.'!UatKqþmå ~- Rope~ .()b1!gaUon ..in' ",. ,~ : Sec:t:1OÍ1, 401.~. (vi) 8hOa1d ~'inc:recuse4' by' 'i:he .> c:ont:emp1ated dgh1:-ot-way aCQ1Ü81t:1on cost or $738,230., "";":'.- ...,...",.::'.., '. ':..:-:.:' .: "." 2..: fte.Base Sales !rax..aaóunt..sbould,be dec:reased. ' .. , " 1:o':,$340~OOQ~' JIÒr. ~Oourat:elr,~~l.œ t.hQ' ,sa1es taxes, , ';'. .paid:by, the ,~~ '.1D .t:hè; ¡Ja.st::. -' fte' average Combined '. '. ~le .a;L~~ of Fp.u.~ ltoz:d" ánØ . SOU~ Bay aJ.evrolet tor ,': 1.991 ~ 1992 (the "2' years ~preÇed1ng the Closing on the " '~ 1an<! purc:háce) 'waa aþpr~tøly $33,300,000." . ,: 3. '. fte .6t:øscala'tor.:;on :t:he':Base.SálesTax amount. should be decrèali~ 'frO1ll :6\"~'tc:i-2t.'and ,the first yearot' , i~c:rease', should he the '. Agency, Fiscal, Y~r, begin,ning ;. July,I, ,1996.: ... : ':': ' , ,', ", ~ 1'1--10 " - ,.' -"'-..:.',' '.'.~--,- , ... .... ._,. , " "., " --- . --- ~ -~, -'" =>J u." sid W. Morris City Manager City of Chula Vista January 30, ~99S Page 3 We greatly appreciate your pas:t assistance and will~911ess to discuss these lllatters. 'If you wish to dis:cuss these matters before taki.ng them to the city Coun.cil, please call me. As we discussed, we would appreciåte your taking these issues to tha City Council meeting on February 7, 1995. Thank you for your Cooperation. S1ncere1y, -, - ... . '. ........ .~-~. "'_.'/7/';-':. "0< -::~!r::-".?"o "-""T ~ ~'?'."~", 'I. "(g~' ~ .~:~'. -;;:"-77-""'" :~.;:~ . . Jobn{l Abbene JJA/nf ~Q~ ¡-Chris .Salomone (Via Fax) - Douglas Fuller .¡;. .David O1;dway .. _: ¡ Trav.f,s Reneau .. . , .1::--~....~l:'.' '..- :..' , -. _. ";'.':' c'.. . .. . - 0 '0" ' - ..'. ,< .:.- , . :- ,.:. ::'.' " . . -_.. - . .-'. - '-. . ., . . I. . . '. '. .'., . . C - 51'-1/ - . This page intentionally left blank. "-- ~/7 . - . . OL"'~ I'<UCCI"<I .. .~'n'r'- =>tX1 ..-.o:vOOo JHN "",."" Lt:""" NUGENT & NEWNHAH" ~HO"" P. HUOCHT ~ '.owcn'OHA<. eo-...,..",o.. "Teo.cH L. HeW"N'" "'TTO~"CY" AT LAW LA JOLLA O""CO: JOCHUA WC'HH". e..e... L. .U"'" '0'0 aceo.o AveNue, CU'" ..00 .n ..-oc.eCT aTRCCT, CUOTe >OC ;:;;~~ 0;,', ':.~~L-:"T 5"'" DtltOO, C4UP'Om.U. "010""°44 LAT~~~~;~::;:~:::::~" H'CH.n H. ,,'H TO"'HOhC Co,., ........ ,"CO,..,.. 'olal ...~... P",",,:. H. '..ITH '..Cs.....e C...,--c JoHH J. """"HC He..CoOT.. .. A.eOCH ::::~"c. .....:::.'.." January 30, 1995 H, ""T".T" r<cw.."..... BY Fax and Mail ., sil1 W: Morris' .... -....... -- ',....'...- "--~... City Mane.-gerl;:""':¡ '::~'T 't '.:::""~-":"o APr ~.- " ., ," ."", -,....., .. .~" city of Chule. Vista '. ., 276 Fourth Avenue Chula Vista, CA 91910 Re: Chula Vista AUto :Park""" :Pãro~li ",:... . . 'c.." .. .. ,. :':iDttucJtt.~ Horrå:"':: .,. "'..".." "c",,"',r..,::.:., . .r'. : ~ ':' öD ~.... .~ DØe~~_.~avla'lteDeau,..~ i,t:' sÖat:h... ' .. :-œ~'aDd~~'IIIId~ Of'~c:Im1a VUQ Aut:o P82:1: as . '::.. ~~ow: ~ oii~ U¡'ß95-. we nqu~ i:bëit.:tå ; ..a'Ad/m: ~ ~~t. ~1st:aiace ~t2I reçect t:o ~ 1 1', ø~ ,1:he Åuto ~ark, ~ ~ ~ ~ 1'0\1 biow, 'the .~H Or P«U:Oe1 , 1 < ~ 1d,gDf.flqan1:1.~ ~èed When co~ted 60i1. was ~0UDd 1:hroùgh,?ut ~e -tire Au1;Q Pårk and ~ored On e. Holding sit:e carved out .of t:iie origInal P&rC1él 1. !!he 8taall'.'sb~ of Parcel 1 -end .the ra11:~ of _Hr. SJúD~a..to reàodlate tb~ HqJ,.d!ng site or even .d~te1y stóre the oolltaldnat:ed.80il has Þade it: bDpossible for .~ oWn~to' seU PUoo1 1. !!bey hay. "Jiad several potential 'þU,y~ b11t:. all have indicated .1:bat, the parce1. is DOt large enauCJh tt;!r. a ~ ~eoIersh1p. . .. '.. !1'he oo.t of "PUX'd1.lUSing åDd hol41ng 'Þarce1 1 together with 'the ~t1call" ~ ~eå4 .in oPerat:~ South Bay Chevrolet, . .~ ' ~tenØ ~. '.ab.11.tty of Hêssr8. ~Y. and Reneau to, 'ootit:im1e to. opera~ tIIe.dftl~.:. U¡~.ero .in ilmaediat:e'Deed of. .L- your ~1naiïcW, a$s1St:al1oe 'or they, -.y'be toróed 1:0 close South Bay 7} c:::he-vrolet:. We' ~eat:'I:Ii«t: .the City exad/or Redevelopment: Agency purchase l!arPe1:"lr1:;ÔJlL c~, cQ!:tt-a_.,as.~~oon lis pbsaible for their óut~f-Poclœ.t: çost .in ~ aJ,\d maintaining the parcel. %n 'a~d1t:,ion."as:part' of 'the'~e t:rans~ction, we must address the obligation of !;(eM~. OrdWay, ahd Reneau' to Purchase the Holding Sit:ewhen.Qn~ i:f.1:be oontaminated¡óll~1s relllov~.. ' . . , -.. ,~ .. ' . . .. ,.' .' .. ~ ~ ., -~-13 ! "-'-;" . ' -.: .'- '----,. " -. -- -- " . 0- -. - sid W. Mõrriii city Manager city of Chula Viiita January 30, ~995 Page 2 Th~' owners seek reimbursement of the following costs; Original Land Cost $ 876,511.00 Share or Infrð.structure Coat Not Reimbursed by Bond. J;>roCêeds 26,681.00 Penúts 5,104.00 Property ~axes - F~st Inst:a11J¡ent 1994-95 19,660.00 -". .' - . e --First Installment. Supple1llental._. .. -- --_.. :. "';r-s-";S ~::~ ~ØI!!.':1-9f)~4 õT: , '-0' . ~,2,48.øo e.. '" Both rnstallments tor 1993-94 3,668.00 . - . rnterest Expense :1.03,672.00 Miscellð.neous Yees and Expeniies 10.000.00 .( ...;' TO'l'AL $1.048.544.00 ~'." L : L'~ . ~ . ; . . ....it ~ oar be11et t:hat: :the d~ ~ Parcø1c.2. &114.. 3 as -.u as' ðJ. coœ \.4 iìct1òn" öf the . J:Oa4s eÞ4" ~~ . ~ , ~ þÅ'V8. ~ tr:ae value ~ þ~ 11:0~ 8quuG tøot:ì. ~lY after .'. the ,¡ .Bo1,ðJ.rig... 81i:e .18: ~ . aDd 'bÖIIbinGd'vJ.1:h ~ 1.: ft1s vill eDabl. the Cit.y òr Redevelopaem: .Af~c:y:~ ~~ ~.~ ~e c:OBt. Uñro~a1:ely, l(essrs. ordway and Reneau are unable to hold this "parcel When it is n~ gønerating'any income aM cannot be sold untU'theHOlding site is rem.ed1ated. . . ~.- ; J : As we discuSsed, ~e ~d appreciate your t:aJdng this matter . ~ the c~ Council ..t:.þ1g 01\ p~. 7, 1995. ':rf you wish to d1.Øcu,s8' .ia~ bet~ .t:ak.in!J,:!t: to the CU:y COuna.f.l, pleaSe ., can lie.. !bank you tor: your oooperat:1on~ . . " ~. ..: ., " .:.."..{ c . ,Sincerely, /. :. I ~ rÞrß~ . -. :r:rA/~ :rOM. Abbene COI atric Salomono (Via Fax) ~- . -- -. David Ordway ;.; .. - . «. ... ': Travis Reneau '" ..,:.....f - . .. ': '.'-" ,. ":"" '" - :. If-I'I) --- .~'.. I . '-.. --,. ---, . - , . ",' ... .- EXHIBIT B NUGENT & NEWNHAM THOMAS P. NUGENT A PAO'<SS'ONAL COAPOAAT'ON LA JOLLA OFFICE STEPHEN L. NEWNHAM ATTORNEYS AT LAW 675 PAOSPECT STAEET. SUOTE 305 "OSHUA WEON.MAN CHEATL L. AUFFoEA '0'0 SECONO AVENUE. SUOTE 2200 LA "OLLA. CAUFOANOA 02037 OAVOO M. NUGENT TELEPHONE 0.001 <SO-3e20 "AMES O. M'LLEA SAN mEGO, CALIFORNrA 92101-39..... MOCHAEL H. "SH TELEPHONE 'eoOI 230-0323 ESCONDIDO OFFIcE PATAOCK M. SMOTH FACSlMoLE CO"" 23e-o<os "OHH ". AUENE "00 SOUTH ESCONOOOO eOULEVAAO MEAED"H G. ALCOCK ESCONDOOO, CAL"OAN'A 0202$ STEVEN W. HASKINS March 17, 1995 TELEPMONE '8'01 """"'0' 'OMON C- LYNN M. KATHAYN NEWNHAM BV Messenqer ~ < Fred Kassman EAR j995 Department of Community Development c","}L:;¡;::::J"'nI' City of Chula Vista 263 Fig Avenue Chula Vil'ta, CA 91910 Re: Chula Vista Auto Park - South Bay Chevrolet Dear Fred: Pursuant to the letter of February 13, 1995 from Glenn Googins, we mclose the folløwing information with respect to South Bay Chevrolet and the loans &gainstParcels 1 and 3 of the Chula Vista Auto Park.. First, enclosed are financial statements for South Bay Chevrolet "- for the 12-month period ending December 31,1994 and for the month of January 1995. As indicated on these financial statements, South Bay Chevrolet incurred a $137,000 net loss in 1994 which includes a $288,000 net loss for the month of December 1994. They also incurred a $187,000 net loss for the month of January 1995" Also enclosed are copie$ of the Promissory Notes reflecting any loans made by General Motors Acceptance Corporation for the construction of the infrastructure improvements and the new dealership. One Note is for $~~921,895 and the other Note is for $1,045,000. Both of these Notes are secured by deeds' of trust coverj,ng both'Parcels 1 and 3 in the Auto Park. -- With respect to the cash proceeds received by Messrs. Ordway and Reneau at the time the Auto Park property was purchased, Mr. Reneau indicated that of the $175,000 that he received, $142,500 was paid to his sister for her interest in the property at 821 Broadway and tha. balance was put back into the dealership. Of the ~ rece~ved by Mr. Ordway, he indicated that $160,000 was contributed to the dealership and the balance was used for personal reasons. We request that this letter and the enclosed financial statements kept confidential. ¿,- -- f-fS'"" .' Fred Kassman Department of Community Development City of Chula Vista' March 17, 1995 Page 2 We will forward the financial information on Fuller Ford as soon as it is available. However, with this information, the city and/or Redevelopment Agency can move forward on the request regarding Parcell. If you need any additional information, please contact me immediately. Sincerely, . , rbb" no JJA/nf cc: Travis Reneau David Ordway I .- , .- ." - -- ¿-- «"-/~, EXHIBILC < DEFINITION OF TERMS { ". .- (g- ~-/7 - . This page intentionally left blank. .' ,." .. , - ~ ft- If --- - 1 401. Aqencv Incentive and Post-Incentive Pavmen~s. 2 a. Definitions. As used in this Section 401 the following definitions shall apply: ' 3 (i) *Aqencv Fiscal Yea~* shall mean the year 4 beginning July 1 and terminating June 30. 5 (ii) *Applicable Percentaqe. shall mean: (w) during any period of time that less than two Major 6 Brand ~uto Dealerships are operating on the Site, zero percent (ot), (x) during any period of time that two 1 Major Brand Auto Dealerships are operating ~n the Site, twentY-five percent (25t), (y) during any period of time 8 that three Major Brand Auto Dealerships are operating on the Site, fifty percent (SOt), and (z) durinq any period 9 of time that four or more Major Brand Auto Dealerships 10 are operating on the Site, seventy-five percent (1St). I (iii) Haase Sales Tax. shall mean, for any 11 given period of computation, the amount of $550,000.00, as such amount shall be increased by six percent (6t), 12 on a cumulative basis, at the end of each Agency Fiscal Year. The amount of $550,000.00'represents one percent 13 (n) of $55,000,000.00. "I" , ' ',,':;;-fL;,.:' " -".. ">':;, - i"',;'",,, (1v): -:rnceMive"PaV1ll..~t"COlll1llencem~nt:; Date- C ,':'fdð-:¡:9:! :;~~!.i~~ ~.:¡..~aS;1t:bet.~il1ty Segreqation' Date- , ,,(as.~suchtermlis de~ined'in.Section lOSd., above)., . pmided" such date ocCurs within the time contemplated 16 therefore in the Schedule of Performance. 11 (v) *Incentive PavmentEXDiration Date. shall mean the earlier to occur of (x) the sixth anniversary 18 of the Incentive Payment Commencement Date, or (y) the date upon which the Maximum Agency Repayment Obligation 19 has been satisfied in ful~. 20 (vi) .Maximum Aqencv R~Davment Obliqation. shall mean an amount equal to the lesser of: (x) the 21 difference between the Acquisition Price and $3,161,504.00, and (y) such portion of the amount 22 described in clause (x) which has been paid by Agency to Redeveloper "in the form of Incentive Payments as of the 23 Incentive Payment Expiration Date. Portions of the Maximum Agency Repayment Obligation remaining 24 outstanding, from time to time, and at any time, shall 251 accrue interest at a fluctuating rate per annum equal to the floating commercial loan rate announced from time to time by Bank of America as its .prime rate. plus two 26 percent (2%). 21 (vii) .Sales Tax Received bv Citv. shall mean, I for any given period of computation, that portion of the ! 28 California sales tax (currently one percent (1%», ~ - I J\AO23301T.NAP II"- t{ 1 which, following payment to the state Board of Equalization by businesses operated upon the Site 2 pursuant to the provisions of this Agreement, was received by the City for use as unrestricted, general 3 fund revenues. Notwithstanding the generality of the foregoing, Sales Tax Received by City shall not include 4 any portion of California sales tax collected from the Site and paid to the City for special purposes, such as 5 transportation purposes. 6 b. Incentive PaYments. 7 (i) Upon the expiration of the 180th day following the close of the first full Agency Fiscal Year 8 after the Incentive Payment Commencement Date, and occurring thereafter on an annual basis until and 0 9 including the Incentive Payment Expiration Date, provided that in each such year the Sales Tax Received 10 by City for such period of computation exceeds the Base Sales Tax for the same period, Agency shall pay to the 11 owners of fee title to the Site, in the aggregate, the Maximum Agency Repayment Obligation in the form of the 12 "Incentive Payments". Such payments shall be calculated I and paid to such owners individually, as described in 13 clause (ii) ,below. ," ' ." :, " :" ), (,,; 14 (11) Therncentive Payment to any given Site ';o¿ IS ," '"iC' parcel.~~~tor-?any given period"ot COIIIpUtation'sha11 Ji';:,:,)",;';;;'â"-bê.n~læat;edtbyÈ!D1lltiplY~'t.J1e~diUerence tb ,,' . "'J:;";' " <, , (hereiDatter,the,'.-site<parc:el',Tax'EXcesS") between: ex) 16 the portion ot the Sales Tax 'Received by city which is attributable to the applicable, owner's site Parcel 17 during the given period of computation less (y) one- quarter (1/4) of the Base Sales Tax for the given period 18 of computation, by the Applicable Percentage(s). In the event any Site Parcel is further subdivided, Agency 19 shall have no obligation to make any Incentive 'Payment applicable thereto until such time as it has received 20 assurances with respect thereto in the nature of the assurance described in Section 401c., below, executed by ,0 21 all owners. 22 Notwithstanding the foregoing, in the event that, using the method of calculating the Site Parcel 23 Tax Excess described above, for any given Site Parcel one-quarter (1/4) of the Base Sales Tax is greater than 24 the Sales Tax Received by City with respect to said Site Parcel, the Site Parcels for which such is not the case 25 26 27 28 ,- J\AO2330lT . NAP - G-;«() , 1 shall each have their respective Site Parcel Tax Excess reduced by an equal portion of such excess. By way of 2 example only, assuming that for year "x" the Sales Tax Received by City is $1,000,000, the Bases Sales Tax is 3 $600,000, and there was one dealership operating on each of the Site Parcels during the entirety of year "x" 4 (Site Parcels 1, 2, 3 and 4 being responsible for, respectively, $350,000.00, $350,000.00, $225,000.00 and I 5 $75,000.00 of the total $1,000,000 Sales Tax Received by City), the owners of Site Parcels 1, 2 and 3 will 6 receive 75% of, respectively, $175,000.00, $175,000.00 and $50,000.00, and the owner of Site Parcel 4 shall 7 receive $0.00. 8 c. Post-Incentive PaYments. Upon the first . anniversary of the Incentive Payment Expiration Date and 9 occurring thereafter on an annual basis until the ninth anniversary of the Incentive Payment Expiration Date, 10 provided that in each such year the Sales Tax Received by City for such period of computation exceeds the Base Sales 11 Tax for the same period, Agency shall make payments (the "Post-Incentive Payments") to each Major Brand Auto 12 Dealership operating within the applicable computation period equal to the product of thirty-seven :and one-half percent ,,1,3 , (37%%). of the Site Parcel Tax Excess:attributable to the Site .'0 ",""i.. ParceJ. upon which such dealership. is 'located (which ,'"i.c!4 .jT¡¡:¡"¡.LCa1culil.tion ,of Site ,Parce~;,~ax Excess"shaJ.J. be subjèct to the :~ : 'r<' ,';' n¡¡,C- :same';adjust:ments)Ulare-A~ibedfin:'alause (ii) ~ above). 'f 15 T:,,~:",:'TJ1Eï'!foreqoihé¡ 'described' aJ.location,assumes that each M~ ,0 Parcel' shaJ.l have no - more, than one dealership operating 16 thereupon. To the extent that there may be more than one such dealership operating Upon a Site Parcel, Agency shall 17 have no obligation to make the applicable Post-Incentive Payment until such time as the dealerships operating upon 18 such Site Parcel deliver a written instruction to the Executive Director (in form and content acceptable to Agency 19 general counsel and executed by all such dealerships) specifying the manner of apportionment and holding the Agency 20 harmless in connection with payment in accordance therewith. .> 21 d. Nature of Incentive PaYments and Post-Incentive PaYments. Notwithstanding anything to the 22 contrary in this Section 401, it is understood and agreed that although the method of calculation of the Incentiv.e' 23 Payments and the Post-Incentive Payments is based upon sales tax received by city, in no event shall such method of 24 25 26 27 28 J\AO2330lT . NAP ~"':' ~-,( I - 1 calculation constitute a commitment by City or Agency of sales tax proceeds. The parties acknowledge that'Agency'S 2 obligation to make Incentive Payments and Post-Incentive Payments, based Upon the calculations described above, is a 3 separate obligation of Agency of which Agency shall be obligated to arrange for a source or sources of repayment 4 and in no event shall constitute an obligation of the CitÝ. Additionally, Agency's obligations to pay the Incentive 5 Payments and the Post-Incentive Payments shall be an indebtedness of the Agency for the purposes of 6 Sections 33670, ~~. of the Community Redevelopment Law. 7 e. Miscellaneous. 8 (i) Accounting. Agency shall have the rtght 9 I to receive from Redeveloper, and Redeveloper shall deliver to Agency within thirty (30) days following 10 I Agency's request therefore, an accounting and status report concerning and setting forth the present status and amounts of retail sales proceeds applicable to the 11 Site for the particular Agency Fiscal Years in question, including, without limitation, sales tax records 12 submitted to the State Board of Equalization. 13 (ii) Calculation of California Sales Ta](. As -j provided 'above, the definition of Base:Sales 'l'axis 14 :-;ccalculated:on the assWllpt:1,on tha1;;.!>~e :Californá' sales ; -'-tax '1:0~b8 - retumed_~ '~e .C!ty,,(~Jõ¡..~¡;¡as unrestricted "IS -:¡generalt:rwtð: reven,u,es:$ball.rema1í\".~ne-.,.parcent '(It). .° ',., However;' : in ~the' event 'such percentage, ot' Calitorñia 16 sales tax is modified in subsequent years, the parties shall cooperate to reformulate the definition of Base 1.7 Sales Tax to take into consideration such modified percentage. Further, in the event such percentage is 18 increased, the calculation of Sales Tax Received by City shall be limited to the originally contemplated one 19 percent (It) amount, while in the event such percentage is decreased, the calculation of Sales Tax Received by 20 City shall be based upon such actual decreased percentage. ". 21 ., (iii) Failure to Ocerate. Notwithsta~ding any 22 provision in this Section 401 to the contrary, it is understood and agreed that in the event that either: 23 (x) the Incentive Payment Commencement Date fails to I occur within the time frame set forth in the Schedule of 24 Performance, or (y) such dates having occurred within the time frame described in the Schedule of Performance, 25 thereafter, ~or any continuous period of thirty (30) days or longer (or within any given one-year period in 26 the event of any noncontinuous aggregated period of ninety (90) days) there fails to be operating upon the 27 Site at least two Major Brand Auto Dealerships, Agency shall cease to have any further obligations to make 28 J\AO23301T.NAP "'- ", -;lP- i 1 Ince~t~ve paymen~s ~r P~st-Incentive Payments under the prov1s10ns of th1s Sect1on 401. 2 ADDITIONAL TERMS GMAC - General Motors Acceptance Corporation: 1 enders for auto purchase loans, dealer operation loans and mortgage lenders. DDA - Disposition and Development Agreement. .. . . ,':JF .' 6- J1:.X3 -' . . This page intentionally left blank. .' ,., " . ' C; -.,.,.~ ~