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HomeMy WebLinkAboutRDA Packet 1995/05/02 Tuesday, May 2, 1995 Council Chambers 4:00 p.m. Public Services Building (unmedi.tcly following the City Council meeting) Joint Meetin~ of the Redevelonment A~encv/Citv Council of the City of Chula Vista CALL TO ORDER 1. ROLL CALL: Agency/Council Members Alevy -, Moot -, Padilla_, Rindone -, and ChainnanlMayor Horton - 2. APPROVAL OF MINUTES: April 18, 1995 CONSENT CALENDAR (Items 3 through 7) The staff recommendations regarding the following items listed under the Consent Calendar will be enacted by the Agency by one motion without discussion unless an Agency, a member of the public or City stqff requests that the item be pulledfordiscussíon. (fyou wish to speak on one of these items, pleasefiU out a "Request to Speak Form" avaiJoble in the lobby and submit it to the Secretary of the Redevelopment Agency or the City Clerk prior to the meeting. (Complete the green form to speak in favor of the stoff recommendation; complete the pink form to speak in opposition to the stqff recommendation.) Items pulled from the Consent Calendar will be discussed after Action Items. Items pulled by the public will be the first items of business. 3. WRITTEN COMMUNICATIONS: None. 4. AGENCY RESOLUTION 1449 APPROVING THE MORTGAGE CREDIT CERTIFICATE (MCC) PROGRAM AND ASSIGNING ITS ALLOCATION AND PROGRAM TO THE AGENCY FOR IMPLEMENTATION COUNCIL RESOLUTION 17884 APPROVING THE MORTGAGE CREDIT CERTIFICATE (MCC) PROGRAM AND ASSIGNING ITS ALLOCATION AND PROGRAM TO THE AGENCY FOR IMPLEMENTATION - The MCC waa authorized by Congress in the Tax Reform Act of 1984, aa alternative to mortgage revenue bond-backed financing aa a tool for providing home ownership aasistance to lower income households. Staff recommends that the Agency approve the resolution authorizing application for a $10 million allocation. (Community Development Director) 5. RESOLUTION 1450 ACCEPTING BIDS AND AWARDING CONTRACT FOR PAINTING AND STUCCO WORK ASSOCIATED WITH TOWN CENTRE PARKING STRUCTURE IN THE CITY OF CHULA VISTA - The project involves all work required aa described in the bid request. Staff recommends approving the "1 ' " C'f ""I! c" "'CC:LW' that I 3m ~~~,,~¡! 'r¡€'¡ei;'~:¿O~/~~:~r~I~~~;~;'t~¡'at! p"stad thiS l\,gcn",,¡,.j,nicc on th~:n Do:¡rd at the Public ~T\;;\CUi¡ding ¡' d ~): j.;"t\LheIlßv~~/1 .. DATE, . t.¡~"ED L/-ð... Agenda -2- May 2, 1995 resolution and awarding the contract to Merzi Painting and Construction, low bidder. (Community Development Director) 6. AGENCY RESOLUTION 1451 GRANTING EASEMENT TO THE CITY OF CHULA VISTA FOR STREETPURPOSES FOR THE CONSTRUCTION OF IMPROVEMENTS ALONG BROADWAY ADJACENT 801 BROADWAY (APN 623-ØSO-Ø6) COUNCIL RESOLUTION 17885 ACCEPTING EASEMENT FROM THE REDEVELOPMENT AGENCY FOR STREET PURPOSES FOR THE CONSTRUCTION OF IMPROVEMENTS ALONG BROADWAY ADJACENT TO 801 BROADWAY (APN 623-ØSO-O6) - The proposed improvements to be constructed in the Broadway Widening Project from I to L Streets include the installation of street and traffic improvements at the southeaat corner of Broadway and K Street. The existing right-<>f-way is insufficient to properly install the improvements. It i. necessary to acquire a portion of the property at 801 Broadway to facilitate the construction of the project. Staff recommends approval of the resolutions. 7. REPORT BROADWAY BUSINESS HOMES -Report on proposal to construct "business homes" on the former Fuller Ford site located at 760 Broadway, Chula Vista. The project includes 36 town homes with commercial (or professional) space on the ground floor. (Community Development Director) .. .. END OF CONSENT CALENDAR .. .. PUBLIC HEARINGS AND RELATED RESOLUTioNS AND ORDINANCES The following items have been advertised and/or posted as public hearings as required by low. If you wish to speak to any item, please fiU out the "Request to Speak Form" availoble in the lobby aad submit it to the Secretary of the Redevelopment Agency or the City Clerk prior to the meeting. (Complete the green form to speak infavorofthe stqffrecommendation; complete the pinkform to speak in opposition to the stoffrecommendation.) Comments are iúnited to five minutes per individual. ORAL COMMUNICATIONS This is an opportunity for the geneml public to address the Redevelopment Agency on any subject mntter within the Agency's juristliction that is !MIl an item on this agenda. (State low, however, generally prohibits the Redevelopment Agency from taking action on any issues not included on the posted agenda.) (¡you wish to address the Council on such a subject, please complete the yellow "Request to Speak Under Oml Communications Form" availoble 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 and address for record purposes and follow up action. Your time is limited to three minutes per speaker. Agenda -3- May 2, 1995 ACTION ITEMS The items listed in this section of the agenda are expected to elicit substontiol discussions and deliberations by the Agency, staff. or members of the general public. The items will be considered individually by the Agency and stoff recommendations may in certain cases be presented in the alternative. Those who wish to speak, please fiU out a "Request to Speak" form availoble 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. 8. AGENCY RESOLUTION 1452 AUTHORIZING THE EXECUTION OF A COOPERATION AGREEMENT BETWEEN THE CITY OF CHULA VISTA AND THE CHULA VISTA REDEVELOPMENT AGENCY PURSUANT TO THE TERMS AND CONDITIONS OF THE APPROVED DISPOSITION AND DEVELOPMENT AGREEMENT EXECUTED FOR THE APPROVED CHANNELSIDE SHOPPING CENTER PROJECT AT FIFTH AVENUE AND C STREET COUNCIL RESOLUTION 17886 AUTHORIZING THE EXECUTION OF A COOPERATION AGREEMENT BETWEEN THE CITY OF CHULA VISTA AND THE CHULA VISTA REDEVELOPMENT AGENCY PURSUANT TO THE TERMS AND CONDITIONS OF THE APPROVED DISPOSITION AND DEVELOPMENT AGREEMENT EXECUTED FOR THE APPROVED CHANNELSIDE SHOPPING CENTER PROJECT AT FIFfH AVENUE AND C STREET - The resolution authorizes the execution of a Cooperation Agreement between the Agency and the City for the pwposes of contractually obligating the City to pay to the Agency in any given year, the funds neceasary to make the negotiated subsidy payment to Wal-Mart. Staff' recommends approval of the resolutions. (Community Development Director) 9. REPORT REQUEST FROM AUTO PARK DEALERSIllP FOR ADDITIONAL FINANCIAL ASSISTANCE - The Redevelopment Agency considered the request for additional financial aasistance from the Auto Park Developers on February 14, 1995 and directed staff to obtain and analyze financial data on dealership operations. Additional information baa been received and analyzed, and recommendations are offered for consideration. (Community Development Director) ITEMS PULLED FROM THE CONSENT CALENDAR This is the time the Redevelopment Agency will discuss items which have been removed from the Consent Calendar. Agenda items pulled nt the request of the public will be considered prior to those pulled by Agency Members. Public comments are limited to five minutes per individual. OTHER BUSINESS 10. DIRECTOR'SlCITY MANAGER'S REPORTlS) 11. CHAIRMAN'S/MAYOR'S REPORT(s) Agenda -4- May 2, 1995 12. AGENCY/COUNCIL MEMBER COMMENTS ADJOURNMENT The meeting will adjourn to the Regular Redevelopment Agency Meeting on May 16, 1995 at 6:00 p.m., immediately following the City Council meeting, in the City Council Chambers. ...... COMPLIANCE WITH THE AMERICANS WITH DISABILITIES 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 leaat forty-eight hours in advance for meetings and five days for scheduled services and activities. Pleaae contact the Secretary to the Redevelopment Agency for specific information at 619.691.5047 or Telecommunications Devices for the Deaf (fDD) at 619.585.5647. California Relay Service is also available for the hearing impaired. [C:I WPS lIAGBNCY\AGENDASI02-Q5-95 .AGD] MINUTES OF A REGULAR MEETING OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA Tuesday, April 18, 1995 Council Chambers 7:40 p.m. Public Services Building CALL TO ORDER 1. ROLL CALL: PRESENT: Members Moot, Padilla. Rindone, and Chair Horton ALSO PRESENT: John D. Goss, Director; Bruce M. Boogaard, Agency Attorney; and Beverly A. Authe1et, City Clerk 2. APPROVAL OF MINUTES: Meeting of April 4, 1995 MSC (HortonlPadiIla) to approve the minutes of April 4, 1995 as presented. Approved 3-0-0-1 with Rindone abstaining. CONSENT CALENDAR (No items) 3. WRITTEN COMMUNICATIONS: None * * END OF CONSENT CALENDAR * * PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES 4. PUBLIC HEARING: TO CONSIDER A TEMPORARY LAND USE PERMIT FOR THE NEW LIFE CHRISTIAN FELLOWSHIP FOR THE PURPOSE OF RELIGIOUS WORSHIP AND INSTRUCTION AT 347-1/2 THIRD AVENUE RESOLUTION 1449 GRANTING A TEMPORARY LAND USE PERMIT TO THE NEW LIFE CHRISTIAN FELLOWSHIP FOR THE PURPOSE OF RELIGIOUS WORSHIP AND INSTRUCTION AT 347% THIRD A VENUE -- The New Life Christian Fellowship (NCF) is proposing to rent the second floor of the building located at 3471;' Third Avenue for the purpose of religious worship and instruction, The non-profit religious organization will be located within the Town Centre I Redevelopment Area for approximately one year. The proposed land use requires a Special Land Use Permit which must be reviewed and authorized by the Redevelopment Agency. Staff recommends approval of the temporary Special Land Use Permit subject to the conditions listed in the report. (Community Development Director) Miguel Tapia, Community Development Specialist 11, stated the request was for a land use permit to allow a church in the downtown area for a period of one year. Staff recommended approval of the permit upon conditions listed in the resolution. Staff also recommended that Condition D in the resolution dealing with the period of time be amended to remove the specific date and to add that the one year would start from the date the occupancy permit was issued. . Don Norman, 341 Third Avenue, Chula Vista, CA, owner of the Silver Dollar Cocktail Lounge, informed Council they had been in their location since 1931 and parking had always been a problem, They were currently surrounded by three churches that utilized all City parking on Sundays. He could not put a cocktail lounge within three blocks of a church, but the church could move in next door to a cocktail lounge and then turn around and complain about the cocktail lounge. He objected to the issuance of a land use permit. oJ-I Minutes April 18, 1995 Page 2 Chair Horton stated she was aware of the lack of parking in the area and requested that staff address the issue. Mr. Tapia stated staff had talked with the Southern Baptist Church and they indicated that they had their parking lot open and encouraged their congregation to use that parking lot. The church assured staff that their congregation would use the private parking lot. Any overflow would have to utilize the metered parking, Chair Horton questioned how many additional cars were anticipated if the land use permit were approved. Mr. Tapia replied that they had a congregation of 80 people so it was anticipated that 27 parking spaces would be required. The parking requirements in the Municipal Code, as per the square footage, was 25-27 parking spaces. . Eddie Chapman, 317 Third Avenue, Chula Vista, CA, owner of Docks Cocktail Lounge, stated he had been in that location for 20 years and he served on the Downtown Business Association and waa a strong supporter of the downtown area. He stated there was no parking and it was his understanding that the church would hold services or meetings on Wednesday, Friday, Saturday, and Sunday which was three of their best business days, A lot of people did not know about the public hearing and if they were given additional time he felt there would be more people in opposition, Mr. Tapia stated a notice was sent on 4/3/95 to the business owners and property owners indicating there would be a public hearing. The proposal was also presented to the Downtown Business Association one week ago. Chair Horton questioned if parking was addressed at that meeting. Mr. Tapia replied there was no discussion regarding parking, The DBA did not have raise any issues or concerns regarding the proposal. Mr. Chapman stated he had been informed that Jim Fergus and the Downtown Business Manger would be at the meeting to voice their opposition. Member Moot questioned whether the request had heen heard by the Planning Commission, Mr. Tapia responded that because the project was in the Town Centre 1 Redevelopment Project Area it was reviewed by the Town Centre Project Area Committee. Member Moot stated the Planning Commission normally addressed parking issues and the applicant was required to show that there was adequate parking available, Chair Horton stated she waa uncomfortable in voting on the item and questioned when the DBA would be meeting. Pam Bucan, Principal Community Development Specialist, stated the Board would be meeting on 5/2/95. . George Runyan, 6721 San Miguel Avenue, Lemon Grove, CA, Pastor of New Life Christian Fellowship, stated the parking waa public parking, therefore, first come/first serve so there was no way of determining how many parking spaces would be used on any particular date. They were not going to be meeting four days a week. The main service would be on Sunday morning from 10:00 a.m. - noon, The other days, Friday or Saturday, that they might use the facility would be approximately once a month for a special youth event (evenings). On Wednesday nights there would be a smaller gathering of people. With their proposed growth they felt 30-35 cars would be the maximum in the area. Chair Horton questioned if it was not an unusual site to locate in. Pastor Runyan replied that it was. There were many new churches emerging and facilities was a real issue. They understood the difficulty with the downtown area. They had looked around, but that facility seemed to suit their :l-~ Minutes April IS, 1995 Page 3 needs for a one year period of time. They had been sharing a facility with another church and had given them notice that they would be out of the facility by May, 1995, They were still in a search mode. Member Padilla stated he would prefer to see the Agency refer the request 10 seek better cooperation between the existing merchants, applicants, and staff to address the concerns, He wanted to promote what Pastor Runyan was trying to do but also had to be sensitive to concerns expressed by those in the area conducting business for some time. MS (PadillalHorton) to continue the item for 30 days. Member Rindone referred to the one year time period and questioned if staff was confident that it would be for one year only with no extensions. He did not feel it was the best or highest use of the property. Mr. Tapia stated there was a letter in the packet dated 4/10/95 from the applicant stating the church would abide by the date and the one year period, Member Rindone stated the substantial issue that had been raised was the parking issue and he felt that could be abated on Sundays with the parking garage if the church participants would utilize it and not the street parking. He did not see in the staff report an analysis of the parking issues, particularly in the evening, planned usage by the applicant other than Sundays, etc, Without that information he could not take a position on the request. He questioned whether the applicant would be agreeable 10 a provision that the applicant's participants would use Ihe parking garage. He felt that facility could accommodate the extra parking on Sundays, but staff may need to do a physical survey at that time. VOTE ON MOTION: approved unanimously. ORAL COMMUNICATIONS None ACTION ITEMS None submitted, ITEMS PULLED FROM THE CONSENT CALENDAR The minutes will reflect the published agenda order, OTHER BUSINESS 4. DIRECTOR'S REPORTlS) - None 5. CHAIRMAN'S REPORT(S) - None 6. MEMBER COMMENTS - None ~-3 Minutes April 18, 1995 Page 4 CLOSED SESSION Agency Attorney Boogaard stated the Closed Session item would he suspended and brought back as a public session item at the next Agency meeting. 7. CONFERENCE WITH LEGAL COUNSEL REGARDING: 1. Pending or Threatened Litigation pursuant to Government Code Section 54956.9(b) . Auto Park Developers vs. the City/Agency 8. REPORT OF ACTIONS TAKEN IN CLOSED SESSION ADJOURNMENT ADJOURNMENT AT 8:02 P.M, to the next Regular Meeting of the Redevelopment Agency on May 2, 1995 at 4:00 p.m., immediately following the City Council meeting, in the City Council Chambers. by: ~-~ COUNCIL/REDEVELOPMENT AGENCY AGENDA STATEMENT Item 4 Meeting Date 5/02/95 ITEM TITLE: CITY COUNCIL RESOLUTION n'Ss4 AGENCY RESOLUTION ,.." ~ q Joint Resolution of the City Council and the Redevelopment Agency of the City of Chula Vista, California: Approving the Mortgage Credit Certificate Program and Assigning its Allocation and Program to the Agency to Implement; Authorizing the Agency to Apply to the California Debt Limit Allocation Committee for an Allocation of Qualified Mortgage Bonds; Electing to Exchange Said Allocation for Mortgage Credit Certificates, Certifying the Availability of Funds for the Required Performance Deposit of $100,000; Approving the Standard Form Lender Participation Agreement, and Authorizing its Execution in Connection with Lenders Approved by the Executive Director. SUBMITTED BY: Community Devel~pmen~tor C-~ REVIEWED BY: City Manager JC:t 'êJ .-? ~ (4/5ths Vote: Yes_NoX) BACKGROUND: The Mortgage Credit Certificate Program (MCC Program) was authorized by Congress in the Tax Reform Act of 1984, as an alternative to mortgage revenue bond-backed financing as a tool for providing home ownership assistance to lower income households.- Applications for Mortgage Credit Certificates issuing authority are made by local agencies to the California Debt Limit Allocation Committee (CD LAC). In November 1994, the Council approved staff's recommendation to apply for an allocation of Mortgage Credit Certificates, and the City was awarded $5,800,000 from the State of California. To date, the City has received allocation amounting to over $24,000,000, including the allocation received in November, and has helped over 150 residents to purchase homes in the City of Chula Vista. Also, lender participation in the current program has increased by 30 percent. RECOMMENDATION: Staff recommends that the City Council adopt the Resolution, authorizing the following: (1) City Approve the Mortgage Credit Certificate Program; (2) City Assign its Allocation of $10,000,000 and the MCC Program to the Redevelopment Agency of the City of Chula Vista; (3) the Redevelopment Agency Accept the Assignment of the MCC Program; (4) the Redevelopment Agency to Apply to the California Debt Limit Allocation Committee for an Allocation of Qualified Mortgage Bonds; (5) the Redevelopment Agency Sets- Aside 10% of its Allocation for Low Income Households; (6) the Redevelopment Agency Certify the Availability of Funds for the Performance Deposit; (7) the Redevelopment Agency Certify the Agreement to Forfeit Deposit; and (8) the Redevelopment Agency Approve the Standard Lender Participation Agreement and Authorizes the Executive Director to Execute the Agreement. L/ ' I -, _. Page 2, Item ~ Meeting Date 5/02/95 BOARDS/COMMISSIONS RECOMMENDATION: The City's Housing Advisory Commission strongly supports the MCC Program. DISCUSSION: MCCs are an allocation of Private Activity Bonds which are converted to Mortgage Credit Certificates according to a federal conversion ratio required by the Tax Reform Act of 1986. The conversion ratio is 4 to 1. Therefore, in order to receive authority to issue $2,500,000 of Mortgage Credit Certificates, the City must apply for an allocation of $10,000,000 of private activity bonds. With the $2,500,000, the City could issue approximately 125 Mortgage Credit Certificates. A Mortgage Credit Certificate (MCC) is a document awarded to a home buyer, whose income is below 110% of the area median income or $52,210, which allows the buyer a credit each year on his/her federal income tax in an amount equal to 20 % of the mortgage interest paid for that year. The MCC reduces, through a direct credit, the borrowers Federal income tax liability, thus increasing the income available to qualify for a mortgage loan. A MCC can have the effect of allowing lower income buyers to qualify for higher loan amounts. As a result, the lower income buyers can afford to buy within the City of Chula Vista. The certificate is registered with the IRS; it is not transferable, and it is revoked if the certificate holder moves out of the qualifying home. In order to assist low-income families in the City of Chula Vista (those families earning 80% or less of area median income.) staff recommends that 10% of the allocation be set aside for low-income families. A concerted effort will be made to identify and link qualified buyers and housing stock to meet the goals of the low-income objective. Should it prove infeasible to reach this objective, the application includes an option to release these funds from the low income restriction by the following formula: One-half of unexpended set-aside funds released after twelve months, and the remainder at the end of eighteen months. Home buyers in Chula Vista, particularly those purchasing their first home, suffer from a large disparity between income and housing affordability. A MCC Program is an excellent way to bridge this existing gap. A MCC Program is considered preferable to a single family bond program in Chula Vista because it allows home buyers the flexibility to choose from both newly constructed homes and lower priced existing housing stock. The California Debt Limit Allocation Committee (CD LAC) in Sacramento, which distributes MCC funds to communities throughout the State is currently evaluating the effectiveness of the MCC program in conjunction with other programs competing for bond allocations such as the Single-family Mortgage Revenue Bonds issued by the California Housing Finance Agency (CHFA). if-.).. Page 3, Item ~ Meeting Date 5/02/95 An initial report from the CDLAC Committee suggested significant reductions in future MCC allocation in favor of increasing funding for the Single-family bond program. However, substantial opposition to this proposal has emerged from the public and private sector on the basis that the MCC program has worked well and has provided significant benefit to first-time homebuyers in urban regions like San Diego with high housing costs. A decision on the CDLAC recommendation is expected to be made on May 3, 1995. Since the MCC Program will be funded by Low and Moderate Income Housing Fund, through the use of HOME funds, the City Council must give authority to the Redevelopment Agency to implement and administer the MCC Program. The California Debt Limit Allocation Committee has stated that the MCC Program must first be approved by the City of Chula Vista City Council, and then the authority must be given to the Agency to implement the Program. Therefore, it is staff's recommendation that implementing authority be given to the City of Chula Vista Redevelopment Agency. FISCAL IMPACT: The California Debt Limit Allocation Committee requires an application fee of $2,200.00 (which is available in revenue account 993-3795) and a Performance Deposit of $100,000 (1 % of the requested allocation). The Performance Deposit is a requirement of California Government Code Section 8869. 84(e). The Performance Deposit requirement is satisfied by the Agency certifying the availability of $100,000 for this purpose. The Agency has identified the use of HOME funds as the source for the $100,000 Performance Deposit. The funds do not have to be transferred into the Low and Moderate Income Housing Fund unless an MCC cannot be issued within 120 days of receiving the allocation. Staff will meet this deadline since interest in the MCC program has increased to the point where an application to CDLAC is being submitted 5 months earlier than was anticipated. An MCC will be issued from the 1995 allocation on July 24, 1995 at which time the full amount of the Performance Deposit will be released by CDLAC since the MCC will have been issued within the 120 day deadline. q.3 ", ~ Pa;¡E; !Blank! 'I-If AGENCY RESOLUTION NO. Jl{L/q CITY COUNCIL RESOLUTION NO 11 ~g1 Joint Resolution of the City Council and the Redevelopment Agency of the City of Chula Vista, California: Approving the Mortgage Credit Certificate Program and Assign its Allocation and Program to the Agency to Implement; Authorizing the Agency to Apply to the California Debt Limit Allocation Committee for an Allocation of Qualified Mortgage Bonds; Electing to Exchange Said Allocation for Mortgage Credit Certificates, Certifying the Availability of Funds for the Required Performance Deposit of $100,000; Approving the Standard Form Lender Participation Agreement, and Authorizing its Execution in Connection with Lenders Approved by the Executive Director WHEREAS, the Health and Safety Code of the State of California, commencing at Section 50171, (" the Act") authorizes cities or their redevelopment agencies to issue mortgage credit certificates pursuant to a duly adopted and qualifying mortgage credit certificate program ("MCC Program"); and, WHEREAS, federal law limits the amount of mortgage credit certificates that may be issued in any calendar year by entities within a state and authorizes the legislature of such state to provide the method of allocation within the state; and, WHEREAS, Chapter 3.5 of Part I Division 31 of the Health and Safety Code, commencing at Section 50171, governs the allocation among governmental units in the state having the authority to issue mortgage credit certificates; and, WHEREAS, Section 50191 of the Act requires a local agency to file an application with the California Debt Limit Allocation Committee' ("Committee") prior to the issuance of mortgage credit certificates; and, WHEREAS, the Committee has, under the authority of Health and Safety Code Section 50191, required a deposit of up to 1 percent of the portion of the allocation requested. 1 The enacting legislation describes a committee entitled "Mortgage Bond and Tax Credit Allocatiòn Committee". To the extent that this is the State committee authorized to implement Chapter 3.5 of Division 31 of the Health and Safety Code Section, to wit: the Qualified Mortgage Bond and Mortgage Credit Certificate Program for the State, the use of the word "Committee" shall be intended as a reference to this State Committee. L/--~ NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA DOES HEREBY FIND, DETERMINE, ORDER, AND RESOLVE AS FOLLOWS: Section 1. City Approval of MCC Program City Council hereby approves the City of Chula Vista Mortgage Credit Certificate Program in the form of the document entitled "MCC Operating Manual", dated July 1991, a copy of which is on file in the Office of the City Clerk registered therein as Document No. CO91-l27 ("MCC Program"). Section 2. Assignment of Allocation and MCC Program Pursuant to the authority of Health and Safety Code Section 50193, or such other provision of law which permits same, the City Council hereby assigns all of its allocation of qualified mortgage bonds under Chapter 3.5 of Division 31 of the Health and Safety Code to the Redevelopment Agency of the City of Chula Vista, and delegates the authority and responsibility to implement and administer the MCC Program to the Agency. Section 3. Acceptance of Assignment by Agency The Agency Board accepts the assignment of the City's allocation of qualified mortgage bonds, and accepts the authority and duty to implement and administer the MCC Program. Agency further agrees to issue MCCs to qualifying homeowners of property located within the territory of the City, provided however, that if, after a reasonable attempt and for reasons beyond the control of the Agency, the Agency is unable to issue all of the assigned certificates to homeowners of property located within the territory of the City, any remaining certificates may be issued to qualifying homeowners of property located within the county of San Diego.2 Section 4. Agency's Application for Allocation The Agency Board approves the application for an allocation of qualified mortgage bonds in the amount of $10,000,000, a copy of which is on file with the City Clerk registered therein as Document No. CO 91-127, to Committee, and authorizes the Executive Director to execute said application, and deliver notice of same to the Committee. Section 5. Agency Sets Aside 10 % of Allocation for Lower Income Households The Agency agrees to set aside 10% of the allocation received from the State of California for low income households (Those households earning 80 % or less of area median income). If the set-aside is unused, this set-aside may be released by the following formula: One-half of the unexpected set-aside funds released after twelve months, and the remainder at the end of eighteen months. 'f-þ Section 6. Authority to Convert to Mortgage Credit Certificate Pursuant to the authority of Section 59197.2, the Agency Board hereby elects to exchange ail of its authority to issue qualified mortgage bonds for authority to issue mortgage credit certificates ("MCC's"). The Executive Director shall notify the Committee of its election, and explain to the Committee the mechanism established in its program that will assure that the dollar amount of the mortgage credit certificate authority will not be exceeded. 2 Section 7. Availability of Funds for Deposit The Agency hereby certifies the availability of $100,000 for a deposit as required by the Committee under the authority of Section 50191, Health and Safety Code. Section 8. Authority to Certify Funds and Agreement to Forfeiture Rule The City Manager, or his designee, the Finance Director, or other written designee, is hereby authorized to certify the amount of $100,000, and maintain certification in accordance with the current rules and regulations of the Committee, and to certify such fact to the Committee, including: the oromise to Dav same over to the Committee upon a event of forfeiture. Section 9. Approval of Standard Form Lender Participation Agreement The Agency does hereby approve the standard form Lender Participation Agreement in substantially the form as is on file in the Office of the City Clerk, registered there as Document No. CO 91-127, and authorizes the Executive Director to solicit qualified lenders willing to agree to the terms and conditions contained in same, and willing to comply with the MCC Program, and authorizes the Executive Director to execute same with such lenders as meet with the approval of the Executive Director. The Agency General Counsel is authorized to make minor modifications in the standard form as meet with his approval, not involving a substantially greater risk for the Agency. Section 10. This resolution shall take and be in full force and effect immediately upon the passage and adoption hereof. Section 11. Minutes The City Clerk and Secretary to the Agency shall certify to the passage and adoption of this Resolution; shall enter the same in the book of original Resolutions of said City and the Agency; and shall make a minute of the passage and adoption hereof in minutes of the meeting at which the same is passed and adopted. Presented by: @~-~~ Chris Salomone, Executive Secretary and Community Development Director 2 Health and Safety Code Section 50197.2 tJ-? ", C1I'zú PafJ"; 23fank! If-<;r / REDEVELOPMENT AGENCY AGENDA STATEMENT Item 5 Meeting Date 5/2/95 ITEM TITLE: Resolution / 'fb7) Accepting Bids and Awarding Contract for "Painting and Stucco Work Associated With Town Centre Parking Structure in the City of Chula Vista" SUBMITTED BY: Director of Public Works f( t. Vi,."" or Comm~;ty Dw~oo'e ,. REVIEWED BY: lliœorti., Di"""'..j:;¡ ~ . ~,1 (4/Stb. V.to, Y~JI.XJ At 2:00 pm on February 22, 1995 in Conference Room 2 & 3 in the Public Service Building, the Director of Public Works received bids for "Painting and Stucco Work Associated with Town Centre Parking Structure in the City of Chula Vista," The project involves all work required for removal and disposal of portions of existing exterior masonry walls and existing masonry veneer; smoothing exterior existing masonry and concrete wall surfaces where veneer has been removed both under the work of this contract and previous work by others; applying metallaft and stucco to existing exterior masonry walls with metal control joints, and painting existing exposed metal, exterior masonry and concrete walls and incidental related work as shown on the plans and described in the specifications, RECOMMENDATION: That Redevelopment Agency approve the resolution accepting bids and awarding contract to Merzi Painting and Construction in the amount of $39,000. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable, DISCUSSION: Funds for this painting and stucco work were appropriated by the Redevelopment Agency on November 16, 1993 by Agency Resolution #1368 (Exhibit A). The project will correct current deficiencies in the parking structure and prevent further deterioration. The stucco and paint work will enhance the appearance of the structure and will make it look compatible with the surrounding buildings, Bids for this project were received from five contractors as follows: Merzi Painting & Construction - Oceanside $39,000 Hellenic Construction Co. - San Diego $47,500 c.D,M. - EL Cajon $49,777 RM, Hasson, Inc, - San Diego $56,900 Champion Construction Co, - San Diego $101,000 The low bid by Merzi Painting & Construction - Oceanside, is below the Engineer's estimate of $50,000 by $11,000 or 22%, Staff received an excellent bid for the proposed work. Staff $"-/ Page 2, Item~ Meeting Date 5/2/95 has reviewed the low bidder's qualifications and references to do the work and found them to be satisfactory, DISCLOSURE STATEMENT Attached is a copy of the contractor's disclosure statement (Exhibit B), ENVIRONMENTAL STATUS The City's Environmental Review Coordinator has reviewed the work involved in this project and determined the project was a class I exemption from California Environmental Quality Act requirements (Minor Alterations to Existing Structures), PREVAILING WAGE STATEMENT The source of funding for this project is Redevelopment Funds. The prevailing wage scales are those determined by the Director of Industrial Relations, State of California, and were determined to be applicable to the work to be done, No special minority or women owned business requirements were necessary as part of the bid documents, Disadvantage businesses were encouraged to bid through the sending of the "Notice to Contractors" to various minority trade publications, FINANCIAL STATEMENT FUNDS REQUIRED FOR CONSTRUCTION A Contract Amount $39,000 B. Staff (Design and Inspection) $7,260 C. Contingencies $3,900 TOTAL $50,160 FUNDS AVAILABLE FOR CONSTRUCTION A Parking Structure Repairs - Town Centre Parking facilities (RD118) $51,728,68 FISCAL IMPACT: After construction, only, routine city maintenance will be required, Attachments: Attachment A - Agency Resolution #1368 and associated agenda statement Attachment B - Contractors Disclosure Statement (M,IHOMEIENGINEERIAGENDA ISTUCCQ,SI.H) 5-,1. EXJ-JIBJ/ A ., " CITY COUNCILIREDEVELOPMENT AGENCY AGENDA STATEMENT Item ~b Meeting Date 11/16/93 ITEM TITLE: COUNCIU AGENCY REPORT: ALTERNATIVE DESIGNS TO REPLACE BRICK VENEER ON TOWN CENTRE r PARKING STRUcrURE ", ¿¡ AGENCY: RESOLUTION /5 REAPPROPRIA TING $66,440 PROM CIP ACCOUNTS 995-9950-RD21O AND 995-9950-CFOl TO CIP ACCOUNT 995-9950-RDl18 (pARKING STRUcrURE REPAIR) SUBMITTED BY: Community Development Director C~ 5 I REVIEWED BY: City Manager.Jr;¡ ~ dJv --:J (4/Sths Vote: Yes..x.. No--> BACKGROUND: In March of 1993 , the Redevelopment Agency appropriated funds to demolish the failing brick veneer on the Town Centre I parking Structure. That project was satisfactorily completed and the City's consulting engineer (Travis, Verdugo, Curry and Associates) provided to staff four alternative designs to replace the veneer as a design feature. The Design Review Committee reviewed the four design alternatives and the Environmental Review Coordinator determined that the project was a Class 1 exemption from CEQA requirements. The following report discusses the design alternatives and associated cost estimates. Graphics of each alternative will be available for viewing at the Council/Agency meeting. RECOMMENDATION: That the City Council/Redevelopment Agency accept the staff report and recommendations: Accepting Design Alternative B, stucco and paint, in accordance with the Design Î\ Review Committee's recommendation; and, 1,- 2. Directing staff to obtain a sign design for the parking structure. ~ and adopt a resolution: Reappropriating $66,440 from CIP accounts 995-9950-RD21O and 995-9950- r~~' CPO! into CIP account RD118 (parking Structure Repair). \ 5-3- ~ ~<>--. Item - Page ~ Meeting Date: 11116/93 BOARDS/COMMISSIONS RECOMMENDATION: On August 23, 1993, the Design Review Committee considered four design cDncepts for the Town Centre I Parking Structure. The Committee voted 3-0 to recommend that the Redevelopment Agency accept Alternative B, stucco and paint, with the condition that a sign package and the colors of the stuCC() and paint be coordinated and presented to the Design Review Committee for recommendation. Draft minutes attached. \;; DISCUSSION: Alternative Desi!!ns Travis, Verdugo, Curry, and Associates was asked to analyze design alternatives to replace the brick veneer as a building design feature. Staff directed the consultant to I) evaluate the physical replacement of the veneer as originally designed and 2) "do the least amount of work" to the building as two of the alternatives. The following are the four alternatives reviewed with cost estimates and discussion. Alternative A - Cost estimate $95,400 Replacement in kind of the masonry veneer: Work required would include the following: I. Cutting and removing the 4" block "wings" projecting from the concrete masonry unit (CMU) (concrete block) walls in front of spandrel panel to column connections. 2. Removal and replacement of any loose or unsatisfactory masonry located on the 4 curved or 2 straight CMU wall panels. This would include forming adequate movement joints. 3. Preparation of concrete and masonry surfaces to receive veneer. This would include a pressure wash or sand blast to remove any loose material and mechanical removal of any large mortar fins left from the original veneer. 4. Application of brick veneer to the building surfaces. This must be performed with proper consideration given to expansion joints and transitions which occur at spandrel panels, columns, the elevator shaft etc. This would occur at all locations where the veneer was located previously. 5. Repair of stair tower handrails left loose by the removal of the original brick veneer. The main advantage of Alternative A is that it will return the structure to as near to its original look as possible. Disadvantages to this alternative are that it is by far the most expensive, costing two to three times as much as the other schemes. In addition, due to weathering of the existing facade bricks, the replacement veneer may fiot fully match those facade brick zones. Also, transitions which occur at spandrel panels and columns will require special detailing to allow for movement and some areas may be difficult to install in the field due to materials or elements which are in place (i.e. stairway stringers and landings). 5"',/- ~~ t\r..~ Item - Page ---L Meeting Date: 11/16/93 Alternative B - Cost Estimate $45,600 (Recommended) Replacement of brick veneer with stucco and paint in all locations. Work required would include the following: I. Items I, 2, 3 and 5 from Alternative A above. "., 2. Painting of appropriate surfaces (suggest concrete walls and interior CMU areas). 3. Attachment of wire lath and stucco screens to both masonry and concrete walls where stucco is to be applied. 4. Application of the stucco to the surface with consideration and detailing given to expansion joints, transitions, etc. 5. As an option, at additional cost, brick veneer may be replaced at some locations to form highlight bands to match existing veneer bands. Also, interior concrete and CMU surfaces may be just rubbed down or left as is for a cost savings with à minimum aesthetic impact. Some of the advantages to Alternative B are that it can look very neat and clean with the color and texture available with a stucco surface. The stucco proposed on the exterior CMU surfaces will serve to hide imperfections in the block work (i.e. the cap blocks at the curved CMU walls) which, for structural reasons, do not need to be repaired. Stucco screens and expansion joints can provide for clean transitions and allow for required movement joints. Paint is employed at concrete walls which should clean up more easily to provide a smooth even surface, and at interior areas of CMU which are more hidden from view. Alternative C - Cost estimate $27,700 Replacement of brick veneer with a combination of painted and rubbed down surfaces. Work required would include the following: I. Items i, 2, and 5 from Alternative A. 2. Item 3 from Alternative A at areas to be painted. Application of paint where appropriate (suggest exterior of all CMU walls and interior of CMU walls at stairwells). 3. Rub down of wall surfaces where applicable (suggest exterior of concrete walls, and concrete wall at stairwell and elevator area). Rub down will include treatment to remove uneven concrete remnants that are stuck to the surface of walls. 4. AI; an option, climbing type vegetation may be planted to cover exterior wail surfaces where desired. . 5,Ç- _,0.'_. q"~ Item - Page ~ Meeting Date: 11/16/93, The main advantage of Alternative C is it's relatively low cost while still providing some opportunity for aesthetic improvement with the use of color. Disadvantages associated with this scheme are that imperfections in the existing masonry walls will most likely be visible through the paint surface. This may cause the surface to appear repaired or unfinished rather than clean and finished. Additionally, although the concrete may smooth out more readily; the surface treatment may not totally even out color variations. ~. Alternative D - Cost estimate $25,300 Rub down of wall surfaces and planting of vegetation to coverlbeautify where desired. Work required would include: 1. Items I, 2 and 5 from Alternative A. 2. Rubbing down of wall surfaces to attain a more even texture and color (suggest at exterior wall surfaces and at stairwells and elevator openings). 3. Planting of climbing type vegetation where desired (suggest at exterior of masonry walls). The main advantage of Alternative D is that it is the lowest cost scheme of the four. The main disadvantages of Alternative D are that any repairs in the masonry may not exactly match the . existing adjacent surface and the removal of mortar fins may damage the face of the units resulting in an uneven finished surface. As with Alternative C, some color variations may also exist on the rubbed down concrete surfaces. Please note that, it planting of vegetation is employed to augment the appearance, it may take several years to effectively augment the wall surfaces. Summary of Desi!!n Alternatives Of the four alternatives presented above, Alternative B appears to be the most appropriate solution. This scheme can provide a fmished, clean look to the parking Structure which relates favorably to the buildings around it at a cost which is reasonable. This solution also takes advantage of the fact that not all areas of the Structure are higWy visible and therefore do not require a heavy expensive surface treatment like stucco or veneer. In addition, paint and stucco can offer a wide variety of color schemes from which to choose. Although Alternatives C and D have a lower associated cost, mortar fins, pock marks and masonry repairs would all be visible to some extent. This would, to some degree, leave the parking structure with an incomplete or repaired look. Additional Reoair Work There are several repair items that the Public Works Department has identified as necessary for proper building maintenance, and that Public Works recommends be undertaken at this time. -ç¿, ~6-'\ Item - Page í Meeting Date: 11/16/93 Painting: Sand and prime all exposed metal and paint. $20,000 Repair Concrete Parkin!! Area: Where wire mesh has penetrated wncrete cover with an Epoxy coating. $ 7,000 Li!!htin!!: Repair existing lighting and exit fixtures. $ 500 ReDair Hand Rails: $ 2,500 Total $30.000 The cost estimate for this work is 30,000. If this work is bid in conjunction with the building design work, it is anticipated that the cost for the proposed repairs would be much lower. Staff recommends that this additional work be bid as an optional item and funds would be requested at the time the Agency approves the construction contract. If the bid is not significantly lower as a part of the design work, then staff would submit the work as a 94-95 Capital Improvement Program project. SÏ!m Desil!n The original identification sign for the parking structure was unavoidably damaged when it was removed during the veneer demolition, therefore a new sign will need to be constructed. It is recommended that the Agency take this opportunity to investigate a more visible identification graphic. If staff's recommendation is accepted, staff will solicit design services and will provide to the Design Review Committee and Agency, a design for a new identification sign along with the final color pallet for Alternative B for final approval. Construction Drawinl!:s Travis, Verdugo, Curry, and Associates as structural engineers were involved with the demolition of the project's brick veneer and they developed the four replacement design alternatives. Based on this previous work and their knowledge of the parking structure, it can be determined that Travis, Verdugo, Curry and Associates has a special expertise concerning the parking structure and potential repair. Staff requested that Travis, Verdugo, Curry, and Assocìates submit a proposal for development of construction drawings to implement alternative B attached as - Exhibit A. A satisfactory proposal was submitted with a cost element of $9,800. The City's purchasing procedure allows -s-? ------- ~ð-"ø Item - Page ~ Meeting Date: 11/16/93 sale source contracting 'when for services for $10,000 or less, the contract shall be awarded on the basis of demonstrated competence and qualifications at fair and reasonable fees. . If the Agency accepts staff's recommendations, the Agency will be reappropriating funds from two old crp accounts to the current crp account for the repair of the Town Centre parking structure. An itemized budget for the work discussed in this report follows. .., FISCAL IMPACT: If staff's recommendations are adopted, the following budget is anticipated: qeconstruction Work $ 45.600 ~ tgn Design/Construction 5,000 Construction Drawings 9,800 IO % Contingency 6.040 Total Estimated Budget $66440 It is recommended that funds from two CIP projects which have funds available be transferred to RO218, Parking Structure Repairs. RO 210, Parking Structure Signs will be completed at a major cost savings and a balance of at least $54,000. CFOI is a Redevelopment Agency Capital Improvement Program contingency account which can be used at the discretion of the Agency for crp related projects. RO 210 Downtown Parking Structure Signs 54,000 CFOI Contingencies 12.440 Total Available for Reappropriation $66.440 If the additional optional bid item for additional repairs is reasonably less than estimated, it will be submitted to the Agency for approval with the award of contract for design work. If the optional bid item is higher than anticipated, it is planned to submit it as a FY 94-95 erp project. (Pam/pkgaI13) S-ý- DRAF;J MINUTES OF A REGULAR MEETING OF THE DESIGN REVIEW COMMITTEE Monday. Au!!ust 23. 1993 Conference Rooms 2 and 3 4:30 p.m. A.. ROLL CALL "'.' Vice Chair Spethman, Members Flach and Rodriguez MEMBERS PRESENT: MEMBERS ABSENT: Chair Gilman, Member Way (Both Excused) STAFF PRESENT: Principal Planner Steve Griffin Senior Planner Patrick Crowley Associate Planner Luis Hernandez Principal Community Development Specialist Pam Buchan B. INTRODUCTORY REMARKS Acting 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 July 26, 1993 meeting as presented. D. PRESENTATION OF PROJECTS Town Centre I 1. Review Chula Vista Community Development Dept. Town Centre Parking Structure at Park Plaza at the Village Exterior Desi!!n Alternatives Staff Presentation Senior Planner Pat Crowley explained that the committee was being asked to review ' design alternatives for the parking structure located at Park Plaza at the Village, near the comer of Third Avenue and of" Street. Modifications are necessitated by construction defects involving the decorative tiles on the structure; the existing veneers have already 5"-7 DESIGN REVIEW COMMTITEE -2- AUGUST 23. 1993 been removed. Mr. Crowley stated that four solutions have been offered by a consultant retained by the City, and the committee's input is being requested prior to a final decision by the Redevelopment Agency. Mr. John Price of Travis, Verdugo, Curry & Associates, the project consultants, reviewed the problems with the parking Structure along with the four solutions presented and their respective costs. -- Committee Ouestions/Discussion Member Flach questioned proposed signage; Principal Community Development Specialist Pam Buchan stated that an illuminated sign was being considered. Member Rodriguez stated that Alternative B would not need to be rubbed down, which would be more cost effective, adding that he favored this alternative. Acting Chair Spethman stated that he liked the idea of the stucco and paint offered in Alternative B. He asked if signage would be reviewed by the committee; Ms. Buchan stated that it could come back to the committee at their request. MSUC (Speth man/Flach) (3-0) to recommend approval of Alternative B; modified to recommend that the removal of the remaining brick mortar not be done in order to save costs, and with color choices and signage to come back to the committee for review. - City-Wide Projects 2. DRC-94-o2 Sweet Soecialties Inc. Northwest comer of Otay Valley Road and Maxwell Road Warehouse/Distribution Center Staff Presentation Senior Planner Crowley reviewed the proposal, which consists of the development of a one-story, 19,790 sq.ft. tilt-up concrete structure to be utilized as a distribution center. He stated that the proposed building will be. compatible with adjacent property buildings; parking and loading areas are located at the rear of the site, and the two building frontages will be heavily landscaped. Mr. Crowley stated that proposed encroachment into the required 40 foot setback on Otay Valley Road requires specific approval by the committee, explaining staff's rationale for supporting approval. He further explained changes in mitigations in the Negative Declaration to the committee. Applicant Ken Smith of Lockwood, Jones, and Beals Engineering and Architecture stated that the recommendations listed in the staff report were acceptable. 5'/0 . : : RESOLUTION /5fo8 RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CffilLA VISTA REAPPROPRIATING $66,440 FROM Cn> ACCOUNTS 995-9950-RD210 AND 995-9950-CFOl TO CIP ACCOUNT 995-9950-RDI18 (PARKING STRUCTURE REPAffi) WHEREAŠ/the Redevelopment Agency desires to replace the demolished brick veneer exterior finish of the Town Centre I Parking Structure with an appropriate alternative design feature; and, WHEREAS, the Redevelopment Agency retained the firm of Travis, Verdugo, Curry and Associates to provide alternative designs to replace the veneer as a design feature; and, WHEREAS, the Redevelopment Agency reviewed four design alternatives and associated cost estimates provided by Travis, Verdugo, Curry and Associates. NOW THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF CffilLA VISTA does hereby find, order, detennine and resolve: That $66,440 be reappropriated from CIP accounts 995-9950-RD21O and 995- 9950-CFOI to CIP account 995-9950-RDI18, Parking Structure Repairs. ì ! Presented by: Appröv}d as to, form '1: 'r Gc~ø Li ( / (. . Il ~ii~Y:<, Chris Salomone, Executive Secretary and Bruce M. Boogaard U Community Development Director Agency General Couns I (Pam/pkgreso) .5, //- Clhü þa;¡ E; blank! 6"' I,}. J',; E"XH/t3/T B , THE CITY OF CHULA VISTA DISCWSURE STATEMENT You are required 10 file a Statement of Disclosure of cenain nwnership or financial interests, payments. or campaign contributions. ' , . on all matters which will require discretionary action on the part of dIe City Council. Planning Commission, and all other official hodies. The following infonnation must be disclosed: I, List the names of all persons having a tinancial inlerest in the property which is Ihe suhject of the application or thc Conllac,. e.g,. owner. applicant, Cont...clor. subcontractor, material supplier. NI[¡'nI\ìC1r\ \J\-Pfzi - Û~r1e( / / / / / 2. If any person" identified pursuant to (I) above is a corporation or partnership, list the names of all individuals owning more than 10% of úte shares in the corporation or owning any partnership interest in the partnership, ~/ Þ-- / / / / / I 3. If any person" identified pursuant to (I) above is non-profit organization or a trust, list úte names of any person serving as director of úte non-profit organization or aa trustee or beneficiary or trustor of úte trust. ~/À / , / / / / 4. Have you had more than $250 worth of business t...nsacted wiút ~ember of úte City staff, Boards, Commissions, Committees, and Council wiútin the past twelve mondl'! Yes - ~f yes, please indicate person(s): S. Please identify each and every person, including any agents, employees, consultants, or independent Contractors who you have aasigned to represent you before úte City in this matter. ~hMO~ MN-rj / J1\iilide l¡<¡ 1"'-1 I I 6. ' ggregate, contribuled more than $1,000 to a Council member in the current f yes. state which Council members!s): Date,J2-- fb crY '-- pplicant - M c1 h rY1 oucLJApI z .J Print or type name of Contractor/Applicant " fØ!!!l is dl!jined as: "Any individual, firm, co-partnership, joint venture, association, social club, fraternal organiZlltion, corporation, estote. trust. receiver, syndicate. this and any other county, city or country, city municipality, district, or other political subdivision, or any other group or combination acting as a unit, , 13 £"' /3 ", CJI!zti YJa;¡£ !Blank! 5'1'1 RESOLUTION NO.~ RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA ACCEPTING BID AND AWARDING CONTRACT FOR "PAINTING AND STUCCO WORK ASSOCIATED WITH TOWN CENTRE PARKING STRUCTURE IN THE CITY OF CHULA VISTA" WHEREAS, at 2:00 pm on February 22, 1995 in Conference Room 2 & 3 in the Public Service Building, the Director of Public Works received the following five bids for "Painting and stucco Work Associated with Town Centre Parking Structure in the City of Chula vista": Merzi Painting & Construction - Oceanside $39,000 Hellenic Construction Co. - San Diego $47,500 C.D.M. - EL cajon $49,777 R.M. Hasson, Inc. - San Diego $56,900 Champion Construction Co. - San Diego $101,000 WHEREAS, the low bid by Merzi Painting & Construction- Oceanside, is below the Engineer's estimate of $50,000 by $11,000 or 22%; and WHEREAS, staff has reviewed the low bidder's qualifications and references to do the work and found them to be satisfactory; and WHEREAS, the City's Environmental Review Coordinator has reviewed the work involved in this project and determined the project was a Class I exemption from California Environmental Quality Act requirements (Minor Alterations to Existing structures); and WHEREAS, the source of funding for this project is Redevelopment Funds and the prevailing wage scales are those determined by the Director of Industrial Relations, State of California, and were determined to be applicable to the work to be done; and WHEREAS, no special minority or women owned business requirements were necessary as part of the bid documents and disadvantage businesses were encouraged to bid through the sending of the "Notice to Contractors" to various minority trade publications. 1 ~ - IJ NOW, THEREFORE, BE IT RESOLVED the Redevelopment Agency of the City of Chula Vista does hereby, find, determine, order and resolve as follows: section 1. That the Redevelopment Agency concurs in the determination that the project is a Class I exemption from the California Environment Quality Act requirements (Minor Alternations to Exisiting Structures). section 2. That the Redevelopment Agency does hereby accept the bid of Merzi Painting & Construction as responsive. section 3. That Redevelopment Agency finds that the prevailing wage scales determined by the Director of Industrial Relations were found to be applicable to the work to be done. section 4. The Redevelopment Agency awards the contract for "Painting and stucco Work Associated with Town Centre parking Structure in the City of Chula vista" to Merzi Painting & Construction in the amount of $39,000, the lowest responsible bidder which submitted a responsive bid to the approved specifications. Section 5. The Chairman of the Redevelopment Agency of the City of Chula Vista is hereby authorized and directed to execute said contract for and on behalf of the Agen Presented by ~ed as t '~by Bruce M~Oog ar ~nc' John P. Lippitt, Director of Public Works Attorney C:\r5\5tucco.TCP 0 2 S"~/¡' JOINT AGENCY/COUNCIL AGENDA STATEMENT Item~ Meeting Date 5/2/95 ITEM TITLE: AGENCY: Resolution /'15/ Granting easement for street purposes for the Construction of Improvements along Broadway adjacent to 801 Broadway (APN 623-050-06) COUNCIL: Resolution 11t'~ Accepting easement for street purposes for the construction of Improvements along Broadway adjacent to 801 Broadway (APN 623-050-06) SUBMITTED BY: Director of Public Works ~ ~ ~. Director of Community ~lopment ' REVIEWED BY: City Manager JCt ~ /.. ~,) (4/5ths Vote: Yes_NoX) The proposed improvements to be constructed in the Broadway Widening Project from "I" Street to "L" Street include the installation of street and traffic improvements at the southeast comer of Broadway and "K" Street adjacent to 801 Broadway, The existing right-of-way is insufficient to properly install the improvements, Thus, it is necessary to acquire a portion of the property at 801 Broadway, currently owned by the Redevelopment Agency, to facilitate the construction of the project RECOMMENDATION: It is recommended that: a) The Agency grant portion of its property at 80 I Broadway described in the attached legal description and easement plat to the City for the installation of necessary improvements at that location, and that; b) Council accept said easement for street purposes from the Agency for the construction of improvements along Broadway adjacent to 801 Broadway. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable, DISCUSSION: On June 7, 1994 by Resolution 17517, council awarded the contract for the widening of Broadway from "I" Street to "L" Street. Part of the improvements proposed on this project included the installation of curb, gutter, sidewalk and traffic signal modification adjacent to 801 Broadway, This property which was previously owned by Southbay Chevrolet, was acquired by the Redevelopment Agency later in 1994, b-( Page 2, Item- Meeting Date 5/2/95 To construct the street improvements (curb return) at the southeast corner of Broadway and "K" Street, it is necessary to acquire a portion of the property at 801 Broadway, The portion of the lot required is 50,03 sq, ft. in area and is shown in the attached easement plat (Attachment A), Although this property is currently owned by the Redevelopment Agency, there are plans already underway for the sale of the lot to a prospective buyer. The buyer of the site is aware of this issue and contemplated its impact when an offer to purchase was made to the Agency, The overall size of the lot is 107,300 sq, ft., thus, the acquisition of this portion of the property is of small significance, and would not affect the overall value of the property and its marketability, Engineering and Community Development staff having jointly reviewed the design plans, have determined that the improvements would not negatively impact the property. We, therefore, recommend that the Agency grant the required easement for street purpose to the City and that Council accept same, ENVIRONMENTAL STATUS: This project has been previously reviewed and a negative declaration pursuant to CEQA requirements was filed on April 2, 1993 with the County Clerk's office (IS-93-13) thus no further review is necessary, FISCAL IMPACT: Funds for the construction of this project are budgeted in CIP Project STl30, Attachment A: Legal Description and Easement Plat (F ,\horn, \onginc"lagonda Ihmadw.y. A C) ~,;¿ Recording requested by and pleaae return to: City Clerk City of Chula Vista P.O. Box 1087 Chula Vista, CA 91912 This instrument benefits Oty, only. No fee required . (This space for Recorder's use, only) . APN(s) 572-270-51 C.V. File No. ST-130-4 EASEMENT FOR STREET PURPOSES FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, Print Name(s) A PUBLIC BODY, CORPORATE AND POLITIC (in the case of multiple owners, collectively "Grantor") hereby grant(s), convey and dedicate to the CITY OF CHULA VISTA, ("City") the right of way and incidents thereto for a public street upon, over and across that certain real property in the City of Chu1a Vista, County of San Diego, State of California, more particularly descnDed as follows: An Easement for Street and Public Utility Purposes described in a Legal Description designated as Exhibit "A" attached hereto, and by reference made a part hereof; All as more particularly shown on Map designated as Exhibit "B" attached hereto, and by reference made a part hereof. The Grantor hereby further grants to the City the privilege and right to extend drainage structures and excavation and embankment slopes beyond the limits of the herein described right of way where required for the construction and maintenance of said public street. RESERVING unto Grantor of the above described parcel of land, his successors or assigns, the right to eliminate such slopes and/or drainage structures or portions thereof, when, in the opinion of the City Director of Public Works, the necessity therefor is removed by substituting other protection, support and/or drainage facility, provided such substitution is first approved in writing by said Director. Grantor hereby further grants to City all trees, growths (growing or that may hereafter grow), and road-building materials within said right of way, including the right to take water, together with the right to use the same in such a manner and at such locations aa the City may deem proper, needfu1 or necessary, in the construction, reconstruction, improvement or maintenance of said public street. ,...3 Grantor, for himself, his successors and assigns, hereby waives any claim for any and all damages to Grantor's remaining property contiguous to the right of way hereby conveyed by reason of the location, construction, landscaping or maintenance of said public street. Signed this day of ,19- Grantor(s)' signature(s): (Notary AcI<nowledgmcolrcquir<d for each oignatory.) This is to certify that the interest in rrol properfy conveyed herein to the Oty of Chulo Vista, a govemmmtal agency, is hereby accepted by the undersigned, Oty Clerk, on behalf of the Chulo Vista Oty Council pursuant to authority cmiferred by Resolution No. 15645 of said Council adopted on June 5, 1990, and the grantee(s) consent(s) to the recordation thereof by its duly authorized officer. BEVERLY A. AUTHELET, CITY CLERK By: Date: , . 'I EXHIBIT "A" LEGAL DESCRIPTION VESTING: THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, A PUBLIC BODY, CORPORATE AND POLITIC APN: 572-270-51 That portion of the Westerly 370 feet of Lot 1, Quarter Section 146 of Rancho De La Nacion; in the City of Chula Vista, County of San Diego, State of California, according to Map thereof No. 505, filed in the Office of the County Recorder of said San Diego County; on March 13, 1888; conveyed to The Redevelopment Agency of The City Chula Vista, a Public Body, Corporate and Politic by Grant Deed recorded on August 18, 1993 as Recorder's Doc. No. 1993-0539627 of the official Records of said San Diego County, and more particularly described as follows: Beginning at a point which is 40.00 feet Southerly measured at right angles from the Northerly line of Northwest Quarter of said Quarter Section 146 and 40,00 feet Easterly measured at right angles from the Westerly line of Northwest Quarter of said Quarter Section 146; thence along a line parallel to and 40.00 feet Southerly of the Northerly line of said Northwest Quarter of said Quarter Section 146, North 71°38' 20" East (per Map No. 3340, recorded December 21, 1955, as File No, 166111) a distance of 10.00 feet; thence along a line South 26° 34' 45" West a distance of 14.13 feet; thence along a line parallel to and 60.00 feet Westerly of the Westerly line of Northwest Quarter of said Quarter Section 146, North 18°28'50" West (per said Map No. 3340) a distance of 10.00 feet to the Point of Beginning. Containing 50.02 square feet, or 0.001148 acres more or less. F :\HOME\l!NGINEEIl \DESIGN\U!GALI1.A C ,-~ -., ~ , 9I'm SPa;}E; !Blank! c,-, ..- ~~ C/) IllEIU~ BROAD\.IAY .. SEE SHEET 2 ~ FOR DETAIL .. ~ ~~ ASSESSORS PARCEL NUMBER >- 4: ~ ~ ~ ~:> ~ 572-270-51 1IJ 1IJ 1IJ 1IJ 4: 1IJ 1IJ 1IJ 1IJ 1IJ Ct: 1IJ Ct: Ct: Ct: Ct: Ct: Ct: ~~~ ~1IJ~ '" '" '" '" ¡;;; '" PARCEL ADDRESS 801 IRDADWAY CHULA VIST~ CA. 91910 - - - :-' >- :> ~ 1IJ '" ..J 4: % EXHIBIT ..vB.v TITLE' CITY [f CHllA VISTA RIGHT-(f-IJAY ACQlJISIT~ SlllTl£AST ImlR If IelAlNAY , ~ . S1m (P~7 I~ 4'::' -k-! J!'1rðlfZó'1 PIR IIAP ~ NO~ST CORNER 01 - <t qUARTlR SlrnON'46 I POINT 01 BlGlNNINC "K" NORTllflST CORNER ST. 1JJ't, ~ N'lrM'2ó'1 '0.00' -J--- Of 1JJ't, I - - - - ~ SN84'4S'J '4.'8' ~I ... 1&- !s~ I PORTION I ~~ "'~ Ilrë ~- I LOT 1 I ~ H'" ~ PORTION ... ~ c.!; :.: ~ QSEC. 146 I ~ APN 572-270-51 CQ ~- I ¡¡!¡ I I ~~ c:1 I --~ I... 4(J' I ~ TITLE' CITY [f anA VISTA RIGHT -[)f -VA Y ACQUISITI~ SllJߣAST IIRI(R IF IIWVAY ~ 'K ' STm ~-~ RESOLUTION NO.~/ RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA GRANTING EASEMENT FOR STREET PURPOSES FOR THE CONSTRUCTION OF IMPROVEMENTS ALONG BROADWAY ADJACENT TO 801 BROADWAY (APN 623-050-06) WHEREAS, the proposed improvements to be constructed in the Broadway Widening Project from "I" Street to "L" Street include the installation of street and traffic improvements at the southeast corner of Broadway and "K" Street adjacent to 801 Broadway; and WHEREAS, the existing right-of-way is insufficient to properly install the improvements, thus, it is necessary to acquire a portion of the property at 801 Broadway, currently owned by the Redevelopment Agency, to facilitate the construction of the project. NOW, THEREFORE, BE IT RESOLVED the Redevelopment Agency of the City of Chula vista does hereby grant a portion of its property at 801 Broadway, more particularly described in Exhibits "A" and "B", to the City of Chula vista for the installation of necessary improvements at that location. Presented by ~1" Chris Salomone, Director of Bruce M. Bo Community Development Attorney G:\r5\broadway.801 6-9 -. -. ~ , ~ PllijE: !Blank! (p ~ ¡o RESOLUTION NO. 11J?8~ RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING EASEMENT FOR STREET PURPOSES FOR THE CONSTRUCTION OF IMPROVEMENTS ALONG BROADWAY ADJACENT TO 801 BROADWAY (APN 623-050-06) WHEREAS, the proposed improvements to be constructed in the Broadway Widening Project from "I" Street to "L" Street include the installation of street and traffic improvements at the southeast corner of Broadway and "K" street adjacent to 801 Broadway; and WHEREAS, the existing right-of-way is insufficient to properly install the improvements, thus, it is necessary to acquire a portion of the property at 801 Broadway, currently owned by the Redevelopment Agency, to facilitate the construction of the project. NOW, THEREFORE, BE IT RESOLVED the City Council of the city of Chula vista does hereby accept the easement for street purposes for the construction of improvements along Broadway adjacent to 801 Broadway (APN 623-050-06), more particularly described in Exhibits "A" and "B". Presented by Chris Salomone, Director of city Community Development '-II ", Clh.t.s Pa;¡£ !Blank! ,-/;)- REDEVELOPMENT AGENCY AGENDA STATEMENT Item ~ Meeting Date 5/2/95 ITEM TITLE: Report: Broadway Business Homes SUBMITTED BY: Community Development Director cS, Planning Director Public Works Director REVIEWED BY: City Manageg (4/5ths Vote: Yes - No_I BACKGROUND: Staff has been reviewing a proposal to construct "business homes" on the former Fuller Ford site located at 760 Broadway which is owned by the Redevelopment Agency. The project, proposed by Joelen Enterprises, includes 36 town homes with commercial (or professional) space on the ground floor. A locator map, site plan and elevations are attached. Conceptually, the project is very exciting and addresses a niche housing market where, ideally, a small business owner could live and work. Mixed-use is a very old village concept that is generally promoted yet presents challenges to conventional finance institutions and planning practices that tend to segregate uses. However, in reviewing the proposal, several issues have become apparent which staff would like to present to the Agency before the final product is produced. Unfortunately, outside of major urban areas, there are not many similar developments to study in order to see how these issues may be addressed. RECOMMENDATION: That Council accept the report. BOARDS/COMMISSIONS RECOMMENDATION: The process for review of the Broadway Business Home project will require submission of plans to the Design Review Committee, Planning Commission and Redevelopment Agency for discretionary approvals. City staff must make recommendations on the project to these groups. DISCUSSION: The issues which are of major concern to staff include setting precedents which have City staffing and budgetary implications, public access and liability, and unique open space and parking proposals. These issues are discussed under six categorical headings below including City Maintenance Responsibilities, Tentative Map, Project Staging, Site Planning Issues, Land Price, and Schools. 1-1 Page 2, Item - Meeting Date 05/02/95 CitY Maintenance ResDonsibilities The Developers contend that the success of the project requires that the City undertake the ownership and maintenance of common areas including the loop road, commercial parking, common area landscaping, pedestrian walks and lighting. The City would assess homeowners to recover costs associated with this responsibility. According to the Developers, this will eliminate the necessity of forming and maintaining a homeowners association for a relatively small number of units (thereby improving marketability of the units), and reduce the Developer's construction defect lawsuit exposure which has been synonymous with homeowner associations throughout the State. Although, the project features attached units, they are structurally independent to be sold as "fee simple" ownership and to avoid collective structural defect claims.' City staff has discussed the feasibility of accepting ownership and maintenance responsibilities for the common areas described above, and has raised the following issues: 1. In developments such as this where architectural continuity is important to preserve ambiance, strong CC&R's and an enforcement mechanism such as a homeowners' association is necessary in order to ensure the continued maintenance and enforcement of appearance standards. Without such mechanism, enforcement responsibilities may fall upon the City staff. For example, when residents have a complaint about the upkeep of the property or occupancy and use of a unit, they may have to call the City in the absence of a homeowners' association or management company employed by the homeowners' association. 2. The City may have to create a "one of a kind" assessment district to establish ownership and maintenance for the common areas. There are some existing analogies, however. Under the Parking District Law of 1951, the City created a Parking District to serve the downtown retail area. The City owns and maintains public parking areas which are metered and create revenue. Under the Landscaping and Lighting Act of 1972, the City also owns and maintains open space (typically slopes, canyons and parkways) which does not directly service residential or commercial areas and does not include parking. Finally, the City administers the Town Centre landscape and street lighting district which is funded through a special assessment on Third Avenue properties. The City Attorney is currently evaluating the existing parking and open space district mechanisms to determine if they are legally and practically suitable to 1Recently approved housing developments show a trend to separate building units to avoid structural defect lawsuits. However, in all instances locally, the common areas are maintained by a homeowners' association. 7-.)- Page 3, Item - Meeting Date 05/02/95 undertake the ownership and maintenance of the common areas. Regardless, with Charter City powers, the City Attorney is confident that some legal mechanism could be crafted. The question then becomes desirability from a policy standpoint. 3. The Citrons are considering constructing the access loop road to City alley standards (concrete). Under such circumstances, the city would be willing to accept the loop road as a public right-of-way and provide maintenance. Although this could double the cost to construct the loop road, the added cost per unit wouldn't be significant but the long term maintenance costs would be considerably lower. Notwithstanding acceptance on the part of the City, this action would not resolve issues noted above including public access, liability and security. 4. There are several concerns related to assessment district costs: 1) under current law, homeowners have the right to protest and/or deny maintenance cost increases. The City may have to absorb cost increases or mitigate this concern by establishing a fund reserve or some other mechanism to accommodate expenses or cause the district to terminate if assessments don't increase to meet legitimate expenses; 2) because of the size of the development, the maintenance cost per unit is expected to be relatively high and it may be difficult to "fold" this district in with others to economize. Ways to mitigate these concerns would need to be worked out with the developer. 5. If the City owns the common areas, the homeowners may not be able to restrict access and use by the general public. For example, the Developers have indicated their desire to install gates on the loop road and access alleys for security purposes. If security gates are used, they could be closed at night for security. Parking and open space areas could be made available to the general public during normal business hours. The City closes public parks at night as specifically authorized by ordinance. The City also closes access to the Nature Center at night for security under administrative direction. All facilities are accessible during daylight hours. 6. Since all common areas will be City-owned, vehicular and pedestrian accidents as well as any property damage may result in claims against the City. The City is currently self insured up to $250,000 and insured up to $2 million under a pool with other cities. Public ownership of common area will increase the City's financial risk and may set a precedent for other housing proposals to request similar consideration. 1-3 -, Page 4, Item - Meeting Date 05/02/95 Tentative MaD The project entails a residential subdivision comprising approximately 36 units. There will be common areas including access alleys, open space and public parking areas which will either be retained in common ownership (as in a condominium) or conveyed to the City. The latter is preferred by the Developer, but presents complications for the City which have been discussed in the previous sections. The Developers have requested that the Agency convey the property as individual lots with metes and bounds descriptions without going through the tentative map process. This will save the Developers processing time and $8-$10,000 in fees. The normal subdivision map process may take from 12 to 18 months. The process is governed by State Law (the Subdivision Map Act). State law does provide for exemptions from the process for public agencies, under certain circumstances. The City Attorney is currently discussing with the Developer's legal counsel the possible approaches which could apply this exemption to the project or which could otherwise expedite the mapping process. This would not exempt the development from the CEQA or other land use approval process. Staff believes that a Parcel Map would be a cleaner process, and would provide monumented lot corners for a more precise legal lot definition. 1-1-/ Page 5, Item - Meeting Date 05/02/95 Project Staaina Plan The Developer's staging plan includes the construction of two model units and the staged development of the project as dictated by sales (similar to typical residential subdivision staging). Model Units The Developer proposes to construct two model units in the southeast corner of the site in order to market the project. The units would be built this summer before the zoning change and use permits are approved, and concurrent with the demolition of existing auto dealership buildings. The Developer understands that they will have to accept the financial risk of removing the structures in the event their marketing efforts fall short, the project is modified or the zone change is denied because of protest, etc. If this occurs after the demolition of existing auto dealership structures, the Agency will have spent approximately $100,000 for demolition work and lost the possibility of marketing the site with existing buildings in place for possible auto sales and service reuse. It is concluded, however, that this would not be a great risk. because if the Business Home project did not proceed, the most likely reuse of the property would not be auto sales and service reuse. Staged Development The staging plan will likely include the development of separable segments of the project in two stages. If marketing efforts fall short and only half of the project is constructed, the Agency will be left with approximately one undeveloped acre not sold to the developer. The site will be bordered by the business homes to the south and a tire store to the north. Completion of less than the total number of units may or may not achieve the critical mass necessary to provide the .sense of community" necessary for success of this project. Site Plannina and Land Use Issues Planning Department staff have identified a number of code requirement deficiencies and site design issues. While the Developer and his architect have been most cooperative, these are unique issues for a unique project and are being offered for your information and consideration. -- f-~ Page 6, Item - Meeting Date 05/02/95 1. Assuming that the underlying zone is changed from CT to CC, the building front setback is 25 feet. The development proposal shows 10 and 4 foot setbacks. However, taking in consideration the average setback along Broadway, the reduction in front building setbacks could be justified. 2. The parking required for this project (based on 20,800 sq. ft. of retail commercial) is 104 spaces for the commercial floor space and 72 spaces for the 36 residential units. The development proposal provides 84 spaces for the commercial uses and 72 spaces (including 44 tandem spaces) for the residential. However, if restrictions requiring that the units be occupied and the business operated by the property owners are applied, fewer parking spaces than required for the commercial shops and tandem parking for the residential units may be acceptable. There is also some on-street parking along Broadway, but availability for overflow demand is not assured. If occupancy restriction is not desired, closer compliance with City parking requirements should be required. 3. The zoning ordinance requires 400-580 sq. ft. of open space (400 for 2- bedroom and 580 for 3 bedroom) per unit, or a total of 20,880 for the project. The recently adopted Design Manual requires that open space be provided in a combination of private and common usable open space. The project features lawn areas along the loop road and some private balconies, but, the project's common usable open space is limited to approximately 10,000 sq. ft. The open space deficiency, when measured by the Zoning Ordinance, is approximately 10,880 sq. ft. However, this is a unique project and the target market does not necessarily reflect typical suburban values. For example, the developer has indicated that initial response to the project suggests that typical buyers will be older couples without children who will be running their own businesses. There are no parks or playgrounds in the immediate area. Occupancy controls could somewhat mitigate staff's concern by making it difficult to lease the residential and/or commercial units separately which could result in increased parking and open space demand. 1-,~ Page 7,ltem- Meeting Date 05/02/95 land Cost Subsidv2 The Agency paid $1.8 million for the portion of the Fuller Ford site proposed for the business home project and will spend an additional $100,000 to demolish existing structures. The Developer has offered to pay approximately $5 per square foot, or $523,000 for the property. Any unanticipated increase in planning, permitting or development costs, or reduction in number of units could result in an increase in sales price per unit or reduction in land acquisition payment. ~ The business homes project will require a zone change from Thoroughfare Commercial (TC) to Central Business District Commercial (CC). The latter allows mixed use projects as a conditional use. The zone change and, arguably, the conditional use permit, allows the school districts to assess the project beyond standard fees currently set at $1.75 per square foot for residential structures and $ .35 per square foot for commercial structures. The Developers will have to negotiate with the school districts to satisfy their requirements for mitigation. 2A full financial analysis of the subsidy for this project has not been done as yet, but must be completed before the Agency can finally approve this project pursuant to the Community Redevelopment law. 7-7 Page 8, Item - Meeting Date 05/02/95 Summary and Conclusions: As a general conclusion, staff finds the proposal exciting in concept and design. The project presents possibilities for satisfying a growing niche housing market demand. The issues identified above appear to be generated more by the site than the project. For example, if this project was surrounded by public streets, in the vicinity of parks, open space and near public parking, most of the issues concerning parking and open space would be eliminated. The development of this project on the Fuller Ford site would be a positive change in historic land use patterns along Broadway and may encourage further redevelopment efforts in the area. Currently, this area is predominantly an auto orientated commercial district with few amenities to support residential land uses. The proposed project is urban and unique in character, and does not provide all of the amenities normally associated with suburban residential development. A "stand alone" project as proposed requires constant attention and control to ensure maintenance continuity of use. If the City assumes a portion of this responsibility, it should be clearly defined. The Developer contends that the units cannot be marketed as condominiums. FISCAL IMPACT: The Agency paid $1.8 million for this portion of the Fuller Ford site proposed for the business homes project. The developers are proposing to pay the Agency approximately $500,000 ($5.00/square foot) for this 2.4 acre site. In addition, a demolition contract for the Ford dealership structures is currently being advertised. The demolition cost is estimated at $100,000. Assuming the proposed project is built out and 36 business homes are sold, the Agency will receive approximately half of the $ 72,000 in property taxes accruing from the project pursuant to the tax sharing agreement for the Southwest Redevelopment Project Area. In addition, some of the businesses will generate sales tax revenues, although the amount is difficult to estimate at this time. [SS/disk#3/b :\bwayhome.rep] 1-f APR-2B-91 TUE 17: 11 ~t:~ILr.~ "l1rL.t1I' "., u.. ... --- -- I ;, . \ :' " ; :: LAW OFFI=- :hI I': i; =:.=- SCI.TU:R C'-loAN WILKINS & MCMAI10N - .::=--' ¡i I -..-- ..._--,," ...--'I! ' ~=- 8100..".PHONTTØWER5 ~"':-"- ':¡ ; =~ .:--"- - 780 . snoUT ..... -.::=..' ¡ 1 I =::.::=... _.........,CIM.IF_M.....elOl ~= ¡ ,¡ ~~ ~_I.I )88W003 ~~ \ I: =.":.."1:". nutCO"'~I8I"WIOO .. :'1:'- : :i =--.~ - ..:::..: ,. -...- ..---- æ- ~ ,! -.- -..-. , -"'- ..- ..~' -~- --- - ' ,I =t=:. _c._- ~"::- J ,¡ -..- ..- ,', ..- T. - .. ' ¡ I =~=- LIt "";:':-"1\ r --._- A¡n"il a8, '9'5 "'-' --- "-1" -...- " j i; Il~ ~\ ! Ii i ! ;¡ ï Mr. John GoB. I: City MaAager i '; C1ty of Chula Vista [ '! 276 4th Avenue !i " ChuJ.a nata, CA 91910 l ~: 0: Broadway vUlage Business BoII&eS i: !: Our File lifo: 9484.46565 f ;~ ,. .: »ear John: i' !: At; the zoequest of JOB.,! iLnd Lenore Citron, enclosed is lett to t:;¡ City Attoxney Bruce Buqart concerning the above aattor. !: ~I t ! ttindly :evi." th., same, and please include this letter in the ¡: '; COuncil package for Monday. If you have any questions, p],eue :: 1: lIIe a ca the above n~. \. :: :: I .; f, ; \ . .. f\ t ;~ :' " . .1 ~ . I . :, I " I . ': 8,\NØ\&65\c0n'88\l8e9oa-OZ'I ~; :; ;' .: i¡ : ~ !¡ t ~\ ~ ¡; I'; !\ . .. ~ ;, :, \ i. ~. ': LAW O~~'CE. ! ¡i -..-- SELTZER CAPLAN WILKINS & McMAHON 0._' ,¡ æF~- .----..... .. :E-: i¡ --.- IlIOOO...,PMOICT- ....... i =.~.:::=--- ?SO.IITIOCCT .:,;."=_! r =::~ ""'OIE<lO,CM.'PO.NIA"'OI ~:::.= I ¡; =""-."='::"" ----_ct8"'- ¡;¡¡¡o~-::- : :~ =::.~'=- TC..-_'__'OO æ..,:":,,, : :: -..- - ...._,.,', -. ..- .........' I -~- .........-....- a:A- ,; ;, -...- .....-. . -....... -- ""5:1 ., -...- -'c.-- ..-- '. " =::::--.- -...- ~.t,.......... ~! ~~ ~~~~'!!I -..- ...... ' ': 'S5- April 28, 199:5 ::~; ;\ Bruce Bugart, Esq. I! :' City AttorJl,8Y'. O£f:i.O8 fi .: C:i. ty of Chula V:i.8t:a ~! :: 276 4th Avenue . :: <:hula Vista, CA 91910 . :¡ D; Broadway V:i.1I.age Business HOllIes ~ :¡ Our File No: 9484.46565 Ii .¡ Ðeazo kuce: ¡: :; This letter is written as a foJ.low up to our eulier III ting' li:J wbarein we cü8cuaaed the structure ot the proposea Broadway Vi age ~:! BWiJinesa Homes l'roject ("Proiect") being developed by aD t:i.1:7 ~ ¡ ])einq formed by Lenore and Josef Citron ("Develo'Øer"). BNed upon t ': our d:l.scua.iona, legal 1:8seuch and subsequent <ii.cuasions with ",: Chicago Title :Insurance company ("~"), we suggest, on f of i.:, Developer, that the Project be struotv.rK as follows: I ¡: '; 1. Certificate of CO1IID1.1anee. Developer shall cause the .~ect ,: i: real. property to be surveyed so that 37 separate lots are }': iaentified. The mete. and bounds c1eøcdpUons Eo. these lots ball ¡: ': be attached to a cert:i.ficat:. of Compliance ("Certificate"), ch f i' will be recorded by the City of Chula Vista ("~n). ,'.I!he ~.: recordation of the Certificate shall operat:. 1n the place and tead Ii:; of a subdivision or parcel map fo. the Project and shall crea e 37 ;, ': separate, legal, insurable lota. ; .: ;, .: 2. Conveyanoes. once the Certificate is so recOrded aceo ding Ì'.; to the procedure(s) N detailed. in the letter dated Feb~ 13, t, i 1995 from Chris Salomone to the Developer and the Devel r'a' I response dated February 20, 1995, the Cit:r shall convey the 8 ,ect ~:i real. Fopert.r to Developer. Ðeveloper sbal.l thereafter 1mprov and ~;. convey :Lndividual lots to Business HollIe })u¥er8. t :' 3. Lot 37: Maintenance District. The certificate shall ev:i. ~ :; the c:reat:ion of Lot 37 which shall include the road and p ~ :1 lot ueas ("~"). Once improved, Lot 37 shall be con to ¡!.: a Maintenance :Di.trict createa by the City. Thereafter 'taJ.l ~:i.' maintenance COlltll tor Lot 37 Shall be included in each 1:85i4 t'. ~;¡ ì- :¡ f' :: Ii i¡ ~ !: APR-26-91 TUE 17: 16 SELTZER CflPLAN I'M tlU, DltJ DO~ ""..u ' , -" -, i ,; " t, !, . , S£L.TZER ~""""N WIL.KINS & McMAHON ~ ¡¡ i ; :BrUce augart, Esq. : Ii ( !, APril 28. 1995 :' .ag8 2 : :; ¡ II property tax Þi~~. . The Developer 81:rongly WlIDtS to avoi ,¡I , !: foxmat.ion of any k1Dd of Mllocicr.tign for this purpose. I:: ; 1\ 4. unit Conficmration. Each lot aha1J. have aituabd the ; II \ integrated s~ct:ure wMch inc~uc1e. CCIIIIIIIOrÇial .pace on the ! floor and residential epace on the upper floors ("~"). multiple Units appear to be contained in the 8aJIIe buil4i.Ð9" 1\ ! unit shal.~ I>e constructed on its own separate foundation ; sidewalls of the ._e .hall be on the lot lines, with app~ I I, party-w~l agreements. ' ," 5. Publie ReÐOrt. Bec;ause each Business HollIe »uyer ahal be !!; conveyed lIeparate fee title to a unit, DO AssooiaUon wi be ;!: , " formed and the project is situated in the City, DO lIubai vi ion I ¡; public report shall be required. Developer inten4s to f\Ü.ly c . plY with aU. requir_enta for disclosure to !Nyer..' ; !: IS. rnteettated OSI!!. Developer intencla to require that the ~: commercial portions of Units be utilized only ~y rea14ents of the ~ ~\ same Unit, and vice versa. To ~orce this requirement, Ðevel' lIugge8ts the following: , I a.. Business licenses only be issued to resideats; ¡ r ;; ,I 1>. A r:!.qht of reversion to the Citrl en4 ¡:;¡ c. An cr.ssignment of rents to enforce compliance in favo of t:: >' :' the City. ~ \; We ask that the City take affirmative action on behalf of DeVelr8r ;';: to al.low the project to be structured as set forth bm:ein. ,: :; ;. ;, We have di8c:us.e4 this concept 1D deta:!.l with C'l' who advis.8j \18 :::: that the same is acceptable and fully insurab1e; - have requC8;ed, ~~; and expect to soon receive, a letter rrom CT confirming lIuch f ct. ",' v- ~. I :. ' . . . '. " .' B . tzer ¡, :¡ LAN W1:L1I:INS .. J8cIWiON ~ Ii of...á;\'gna! COl:pOrat1on ~ r ' ¡: 'j .-/ ' ¡ ¡! B'l'S:cak ",\'\-~1\oonoo.\-_0tI ¡ ¡; ,01 i !j t j; \: ;; REDEVELOPMENT AGENCY/CITY COUNCIL AGENDA STATEMENT Item y - Meeting Date 05/02/95 ITEM TITLE: Joint Resolution 11/53- and 118811 Authorizing the Execution of a Cooperation Agreement Between the City of Chula Vista and the Chula Vista Redevelopment Agency Pursuant to the Terms and Conditions Set Forth in the Approved Disposition and Development Agreement Executed for the Channelside Shopping Center Project at Fifth Avenue and C Street SUBMITTED BY: Commvo"Y O,",'opm,", 2M" (. <; . REVIEWED BY: Executive Director~ ~.' ' I --? (4/5ths Vote: Yes- No_I BACKGROUND: On August 23, 1994, the Redevelopment Agency of the City of Chula Vista adopted Resolution 1416 which authorized the execution of a Disposition and Development Agreement (DDA) by an among the Redevelopment Agency, Wal- Mart Stores, Inc., ("Wal-Mart") and Chula Vista Town Centre Associates ("Seller"). One of the provisions in the approved DDA obligates the Agency to exercise its' best efforts to enter into a Sales Tax Cooperation Agreement with the City in order to ensure the repayment of the negotiated subsidy. Recently, Wal-Mart purchased their parcel from the Seller and are now in the process of receiving all of their building permits for construction. Inasmuch as the development is now imminent, Agency staff is bringing this item forward for consideration pursuant to the obligations under the DDA (attached), RECOMMENDATION: That the Agency/Council approve the resolution which authorizes the execution of a Cooperation Agreement between the Agency and the City for the purposes of contractually obligating the City to pay to the Agency in any given year, the funds necessary to make the negotiated subsidy payment to Wal-Mart. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. DISCUSSION: Pursuant to the DDA, Wal-Mart is loaning $1,915,000 to the Agency for the purposes of providing certain public improvements necessary to facilitate the development of the project. As was described in greater detail when the DDA was approved in August 1994, the obligation for the City/Agency to repay the "loan" is completely contingent upon the store being opened, operated and generating sales tax revenue for the City's General Fund. As provided, Wal-Mart fronts the cost of the public ~.I Page 2, Item L- Meeting Date 05/02/95 improvements and the City and/or Agency repays Wal-Mart the amount of the loan, plus 4% interest, over a maximum period of fifteen (15) years. The annual payment amount is to be based upon a percentage of the retail sales tax generated by the Wal- Mart store and actually received by the City's General Fund. In the event that the loan is not paid after 15 years, any remaining unpaid principal is waived by Wal-Mart. The following deal statements are provided for clarity: 1. Loan amount is $1,915,000 at 4% interest which expires at the end of 15 years. 2. Annual loan repayment schedule is measured by the percentage of sales tax revenue generated by the Wal-Mart store only, in any given year, as follows: a. 20% in Year 1 b. 30% in Year 2 c. 35% in Year 3 d. 45% in Year 4 e. 50% in Years 5 though 15 (or when loan is repaid, whichever is earlier) 3. Installments are due on a quarterly basis within 30 days after receipt of quarterly sales tax reports from the State of California. 4. The first installment is due within 30 days after receipt of the first quarterly statement indicating sales tax revenue being generated by the Wal-Mart store. As Council is aware, the Redevelopment Agency's tax increment revenue generated within the Town Centre II Project Area is currently pledged first toward the repayment of the Town Centre II Certificates of Participation in any given year in which the Agency has "surplus revenue" from the project area. Additionally, as the Council is also aware, the tax increment revenue in Town Centre II is currently not sufficient for payment of the existing Certificates of Participation (i.e., which is why the City was obligated under that note) and therefore, it is necessary for the City to make the payments available to the Agency. Therefore, Wal-Mart rightfully requested that the City and Agency enter into a Cooperation Agreement whereby the City is contractually obligated to make the appropriate payments since the Agency does not have "surplus revenues" in the project area from which to pay the obligation. Although there are no assurances for ultimate repayment, any amount paid by the City for the Agency under this obligation will be booked as loans to the Agency which can be claimed as a necessary debt to be repaid pursuant to Section 33670 of the Health and Safety Code. FISCAL IMPACT: The execution of this Cooperation Agreement does not have a fiscal impact other than to complete an obligation of the previously approved DDA for the project. All of the terms and conditions for the project are defined within the DDA, and this Sales Tax Cooperation Agreement does not change any of those previously approved terms. This agreement merely fulfills an obligation and demonstrates to f--"'" -- Page 3, Item ~ Meeting Date 05/02/95 Wal-Mart of the City's intent to honor the obligation which does not become due and payable in annual installments until such time as the project is built and is generating sales tax revenue for the City's General Fund. Provided below are sales tax revenue and debt retirement projections as provided in the original DDA staff report. These tables assume that only the "Wal-Mart" store is built and generating sales tax revenue to the City. As of the writing of this report, it appears imminent that a "Best" store will be the second major tenant (50,000 sq. ft. general merchandise store) and will produce a significant amount of additional revenues for the General Fund not expressly contemplated in the previous staff report or the tables below. Without any retailers other than Wal-Mart in the project, the tables below project that the $1.9 million loan will be repaid within 12 years and that over a 15 year period, the City will receive net sales tax revenues after loan repayment obligations and the "transfer" effect (ie., siphoning from other existing sales tax generators within the City limits) of $4.9 million. Additionally, the Agency projects to receive approximately $90,000 annually in tax increment revenuè. PROJESTED FISCAL IMPACT WAL-HART STORE WAL-MART NET SUBSIDY NET TAX TOTAL SALES TAX PROJECTED WAL-MART t PMT TO SALES TAX INCREMENT REVENUE YR PROJECTION TRANSFERS SALES TAX SBARE WAL-MART TO CITY REVENUE TO CITY 1 $'00,375' $240,315 $160,000 20.00t $BO,015 $19,925 $90,000 $169,925 2 $'24,056 $lBO,266 $243,190 30.00t $121,211 $116,513 $90,000 $206,513 3 $"9,14B $120,311 $326,631 )S.OOt $151,202 $111,629 $90,000 $261,629 , $415,741 $60,002 $415, '" ".000 $214,066 $201,659 $90,000 $291,659 5 $"O,OU $0 $'90,OU 50,000 $245,022 $245,022 $90,000 $335,022 6 $500,140 $0 $500,140 50.000 $252,310 $252,310 $90,000 $3",310 7 $519,894 $0 $519,694 50.000 $259,>41 $259,941 $>0,000 $"9,941 6 $535,514 $0 $535,514 50.000 $261,151 $261,151 $>0,000 $357,751 9 $551,551 $0 $551,551 50.00t $215,11> $275,119 $>0,000 $365,119 10 $566,OB2 $0 $56S,062 50.00t $26' ,041 $26',041 $>0,000 $314,041 11 $562,26' $0 $562,26' 50.00t $291,142 $291,1" $90,000 $3S1,142 12 $596,641 $0 $596,641 50.00t $46,111 $550,610 $>0,000 $640,610 13 $611,762 $0 $611,162 50.00t $0 $611,162 $90,000 $101,762 14 $621,056 $0 $621,056 50.000 $0 $621,056 $90,000 $111,056 15 ,$6",133 $0 $6",133 50.000 $0 $6",133 $>0,000 $132,733 TOTALS $2,500,606 $',618,064 $1,350,000 $6,228,064 SOBSIDY REPAYllE8T 8CaBDULE BASED OB ABOVE RBVEBUE PROJECTIONS nT. PRfBcrPAL nT1!REST PRfBCIPAL TOTAL YR RAT1! BALAIiCE PAYNEWT PAYllEWT PAY"""T 1 '.0" $1,U5,000 $16r600 $3,415 $80,015 2 '.OOt $1,>11,525 $16,461 $50,756 $127,211 3 '.000 $1,860,1" $14,431 $82,771 $151,202 0 o.oot $1,711,998 $11,120 $142,966 $214,086 5 o.OOt $1,635,032 $65,'01 $11>,620 $245,022 6 '.OOt $1,"5,412 $5B,216 $194,154 $252,310 1 '.oot $l,261,25B $50,450 $20>,491 $25>,941 6 '.000 $1,051,162 $42,010 $225,661 $267,151 9 0.000 $626,015 $33,043 $242 ,136 $215,119 10 '.oot $563,339 $23,33' $260,101 $26',OU 11 0.000 $322,632 $12,>05 $218,237 $291,142 12 0.000 $",395 $1,176 $",395 $46,111 13 o.OOt $0 $0 $0 $0 14 0.000 $0 $0 $0 $0 15 "OOt $0 $0 $0 $0 TOTALS $565,606 $1,>15,000 $2,500,808 c:\wp51\haynes\,epo'ts\wa'coop, 11 ¡.J ", Clh.ú YJa.g£ !Blank! ~ - 'f COOPERATION AGREEMENT (W AL-MART 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 Town Centre II 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 August 23, 1994 by Agency Resolution No. 1416 entered into a Disposition and Development Agreement (the "DDA") by and among Agency, Wal-Mart Stores, Inc. ("Redeveloper"), and Chula Vista Town Center Associates, LP, ("Seller"), pertaining to the redevelopment of a portion of the Project Area, G, The DDA contemplates that Agency will deliver to Redeveloper a Promissory Note ("Promissory Note"), in the original principal amount of $1,915,000, evidencing the obligation of Agency to repay a loan from Redeveloper to Agency pursuant to the DDA. Provided that Redeveloper performs the conditions for repayment set forth in the Promissory Note, Agency shall be obligated to make certain payments (individually an "Agency 042595 I C31253-013 I 26109.4 Chula V¡,WWa'-MMt 1 Coopemtion Agn,....ent ~~{ -, Payment" and collectively the "Agency Payments") to Redeveloper. The DDA also contemplates that Agency and City will enter into a Cooperation Agreement to provide for the Provision by City to Agency of sufficient funds to make any Agency Payment which Agency is otherwise unable to make. 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: 1. In consideration of Agency's promise to repay funds to City in accordance with the following tenus and conditions, upon the request of Agency (from time to time and at any time as Agency may require such amounts) City agrees to deliver to Agency within thirty (30) days of Agency's written request an amount equal to that portion of any Agency Payment which Agency is unable or otherwise fails to pay to Redeveloper, not to exceed one hundred percent (100%) of the required Agency Payment. 2. Agency shall repay and reimburse City subject to the following tenus: (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. (c) Agency's obligation to repay City is subordinate to Agency's pledge to repay any bonds or other indebtedness to third parties and Agency's payments to City shall be subject to the availability of "Surplus Revenues", For purposes of this Agreement" Surplus Revenues" shall mean, at any given moment in time and from time to time, revenues received by Agency attributable to the Project Area in excess of those funds (i) pledged to repay principal and interest on any bonds or other fonn 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) reasonably necessary to pay reasonable administrative costs of the Agency, and (v) 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 042595/ C31253-O13 / 261O9A Chula V"talWal-Mart 2 Cooperntion Agreement ~...b or from other sources; provided, however, that Agency shall have the sole and exclusive right to: (i) pledge any such sources of funds to the repayment of other indebtedness heretofore or hereafter incurred by Agency in carrying out the Project, and (ii) continue to incur other obligations in connection with the Project Area. In the event of any such obligation or pledge, Agency's obligations hereunder shall be subordinate to such other obligation or the indebtedness which is secured by such pledge. (0 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. 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. 6, Redeveloper shall be an express third party beneficiary of this Agreement. This Agreement shall not be amended, altered, terminated or otherwise revised (collectively a "Revision") in any manner which modifies or deletes the obligation of City to provide the Agency with funds necessary to make one or more Agency Payment(s) to Redeveloper, except with the prior written consent of Redeveloper. Any Revision which modifies or deletes the City's obligation to provide the Agency with funds necessary to make one or more Agency Payment(s) to Redeveloper shall be void if such Revision is made without Redeveloper's prior written consent. Upon a breach (including any anticipatory breach) by City of its obligations under this Agreement, which breach results in the failure of the Agency to make a required Agency Payment to Redeveloper, the Redeveloper may by written notice to Agency terminate the DDA, or exercise any other remedy available at law or equity, and Redeveloper shall not have any further obligation to Agency not yet accrued as of the date of City's breach, provided, however, that Redeveloper shall have no right to seek or receive a direct payment of funds from City. 042595/ C31253-O13 /26109.4 Chol. Vista/WID-Man 3 Coop".tion Agœemen' 8'-7 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: Chainnan, Shirley Horton APPROVED AS TO FORM: Bruce M. Boogaard, Agency Counsel Marcia Scully, Agency Special Counsel CITY OF CHULA VISTA Dated: By: Mayor, Shirley Horton APPROVED AS TO FORM: Bruce M. Boogaard, City Attorney ATTEST: Beverly Authelet, City Clerk o=-¡¡ 042595 / C31253-D13 / 26109,4 Chula VislalWa'.Mart 4 Cooperarion Agreement PROMISSORY NOTE W AL-MART PROJECT $ Chula Vista, California -' 1994 RECITALS A. On -' 199_, the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA ("Agency"), WAL-MART STORES, INC., a Delaware corporation ("Redeveloper"), and , a California limited partnership comprised of ("Seller"), entered into a 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. The Agency and the Redeveloper have executed and delivered this Promissory Note pursuant to the Agreement. Tenus not defined herein shall have the meaning ascribed in the Agreement. NOW, THEREFORE, the Agency and the Redeveloper agree as follows: 1. FOR VALUE RECEIVED, and subject to the tenus and conditions of the Agreement, the Agency promises to pay to the order of the Redeveloper, at 702 S.W. 8th Street, BentonvilJe, Arkansas 72716, Attn: President and Attn: Property Manager or at such other address as the Redeveloper may from time to time designate, the principal sum of One Million Nine Hundred Fifteen Thousand Dollars ($1,915,000.00) in accordance with the following: 2. Interest Rate. Interest on the unpaid principal balance owed hereunder shall accrue at the rate of four percent (4%) simple interest per annum, commencing on the date the Store on the Wal-Mart Parcel opens for business, and continuing thereafter until the principal and interest are paid in full or the Agency's obligation is forgiven and discharged a~ set forth in paragraph 4 below or is otherwise properly tenuinated. 3. Installment Pavment. The obligation of the Agency to make payments to the Redeveloper pursuant to this Promissory Note is expressly contingent upon the construction, opening to the general public for retail sales and continued operation as a retail outlet of a Wal- Mart store (the "Store") on the Wal-Mart Parcel. Subject to the opening for business and continued operation of the Store on the Wal-Mart Parcel, the Agency shall make installment payments of principal and interest to the Redeveloper at the times and subject to the other tenus and conditions herein set forth. 3.1. Installment payments of principal and interest will be payable quarterly during the tenu of this Promissory Note, in arrears and without offset or demand: (i) commencing 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 quarter in which the Store opens for business (the "First Payment Date") and (ii) continuing 30 days after the date (Exhibit "7") 1 r;-e¡ that the Agency receives the Detailed Report for each subsequent quarter through including the 59th calendar quarter after the First Payment Date until the earlier of (a) the Payment Date on which all principal and interest have been paid to the Redeveloper; or (b) the quarter during which the Store permanently ceases to operate as a Wal-Mart retail outlet (individually a "Payment Date" and collectively the "Payment Dates"). For purposes of this Promissory Note the Store shall be deemed to have peremanently ceased operation at any time that the Store is closed for ninety (90) days or more unless the store is closed for remodeling or repair, which remodeling or repair is commenced within the ninety (90) day period and diligently completed. Any temporary closure of the Store (less than ninety (90) days or for the purposes of remodeling or repair as described herein) shall not result in an extension of the overall term of this Promissory Note. 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 a specified portion of the "Sales and Use. Tax Revenues" generated by the operation of the Wal-Mart Store on the Wàl-Matt Parcel as set forth below. 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 Wal-Mart Parcel 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. 3.3. The Redeveloper's Payment shall be calculated as follows: A. The payment to Redeveloper in the First Payment Year (to be paid quarterly) shall be an amount equal to the lesser of the amount necessary to pay principal and interest in full or twenty percent (20%) of the Sales and Use Tax Revenues. B. The payment to Redeveloper in the Second Payment Year (to be paid quarterly) shall be an amount equal to the lesser of the amount necessary to pay principal and interest in full or thirty percent (30%) of the Sales and Use Tax Revenues in the Second Payment Year. C. The payment to Redeveloper in the Third Payment Year (to be paid quarterly) shall be an amount equal to the lesser of the amount necessary to pay principal and interest in full or thirty-five percent (35%) of the Sales and Use Tax Revenues in the Third Payment Year. D. The payment to Redeveloper in the Fourth Payment Year (to be paid quarterly) shall be an amount equal to the lesser of the amount necessary to pay principal and interest in full or forty-five percent (45 %) of the Sales and Use Tax Revenues in the Fourth Payment Year. E. The payment to Redeveloper in the Fifth through the Fifteenth Payment Years (to be paid quarterly) shall be an amount equal to the lesser of the amount necessary to pay principal and interest in full or fifty percent (50%) of the Sales and Use Tax Revenues in the applicable Payment Year. (Exhibit "7") 2 ~,'O 3.4. As used in this Note, Sales and Use Tax Revenues based on sales at or from the Site will be deemed to include omy 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 detennining 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 Wal- Mart Parcel. 3.5. If the Sales Tax Law is modified after the date of this Promissory Note in a manner which results in the City receiving an increased or a decreased amount of Sales and Use Tax Revenues from the Wal-Mart Parcel, the amount of the Redeveloper's Payment shall be calculated on the modified level of Sales and Use Tax Revenues. If the Sales Tax Law is repealed after the date of this Promissory Note the Agency's obligation pursuant to this Promissory Note shall be deemed to be forgiven and discharged, and no liability of the Agency for the'ilonpayment of such principal and interest shall result in any manner whatsoever. Provided, however, that if concurrent with the repeal of the Sales Tax Law or within the same legislative year as the repeal of the Sales Tax Law, additional legislation provides for the replacement of all or a portion of the Sales and Use Tax Revenues, the Agency's obligation to make Redeveloper Payments shall be deemed to be modified and will thereafter be based on the alternative fonn of tax or revenue (the "Alternative Revenue") which the City receives with regard to the applicable quarter in total or partial replacement of Sales and Use Tax Revenue. In addition, in the event of such repeal and replacement of Sales and Use Tax Revenues, the Redeveloper and the Agency will fully cooperate with one another in amending the Agreement and this Promissory Note as is necessary or appropriate to facilitate repayment of this Promissory Note in a manner consistent with the amount and nature of the Alternative Revenue and the intent of the parties in entering into the Agreement and this Promissory Note. The parties acknowledge that their intent includes: A. The timely and full payment of the principal and interest of this Promissory Note. B. The Redeveloper's Payment shall not exceed an amount which is equal to fifty percent (50%) of the Sales and Use Tax Revenues received by the City in each fiscal year as a result of the operation of the Store. C. The Agency's obligation to repay the Redeveloper shall not extend beyond fifteen (15) years after the date the Store is opened for business and tenninates upon the pennanent closure or transfer of the Store, provided that the Agency shall make the payment to the Redeveloper for the last calendar quarter prior to such tennination. 3.6. All such payments shall reduce the accrued interest first and then the unpaid principal until the principal and interest due hereunder is paid in full, or the Agency's obligation is forgiven and discharged as set forth in Paragraph 4 below or is otherwise properly tenninated. (Exhibit "7") 3 g." -- - 4. Forgiveness and Discharge of Balance of Obligation. In the event that the payment of the Redeveloper's Payments in the amounts set forth above is insufficient to fully satisfy and discharge the amount of principal and interest on this Promissory Note by the Final Payment Date, any and all principal and interest on this Promissory Note remaining unpaid after such Final Payment shall be forgiven and discharged, and no liability of the Agency for the nonpayment of such principal shall result in any manner whatsoever. The Final Payment Date shall be the Payment Date for the calendar quarter which is first to occur of: (i) the 59th calendar quarter after the First Payment Date; (ii) the quarter for which all outstanding principal and accrued interest are paid in full; or (iii) the Payment Date in the first quarter in which the Store permanently ceases to operate as a Wal-Mart retail outlet. 5. PreDavment. The Agency shall have the right at any time to prepay all or any portion of the unpaid principal balance owing under this Promissory Note. 6. General Provisions. All sums payable hereunder shall be due and payable in lawful money of the United States of Arnèrica. ';In the event any installment due hereunder is not paid by the Agency within fifteen (15) days after it is due, such installment shall bear interest from and after such date at the It:sser of the rate of eleven percent (11 %) per annum or the maximum legal rate, but not less than the rate first set forth above, until paid. If any action is instituted to enforce this Promissory Note, the losing party in any such action promises to pay reasonable attorney's fees and costs and expenses. 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. In the event of a successful legal challenge to the Disposition and Development Agreement referred to above or to the City/ Agency Cooperation Agreement, this Promissory Note or any other document implementing the Disposition and Development Agreement, the Disposition and Development Agreement shall terminate and neither party shall have any further obligation under the Disposition and Development Agreement, City/Agency Cooperation Agreement, this Promissory Note or any other document implementing the Disposition and Development Agreement. - [SIGNATURES FOLLOW] (Exhibit "7") 4 a-/~ _. _.. REDEVELOPMENT DISPOSITION AND DEVELOPMENT AGREEMENT (W AL-MART PROJECT) AMONG THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA "Agency" , W AL-MART STORES, INC. "Redeveloper" , and CHULA VISTA TOWN CENTER ASSOCIATES, L.P. "Seller" August 1994 ~'J3 0805941 C31253-Q131 22219.4 This page intentionally left blank. [1-- ('I TABLE OF CONTENTS PAGE 1. TERMS OF AGREEMENT ............................. 3 1.1. PurposeofThisAgreement......................... 3 1.2. RedevelopmentPlan ............................. 3 1.3. The Redevelopment Project Area ..................... 3 104. The Site .................................... 3 1.5. TheWal-MattParcel............................. 3 1.6. Patties to This Agreement ......................... 4 1.6.I.TheAgency.............................. 4 1.6.2.TheRedeveloper........................... 4 1.6.3.TheSeller. ............................... 4 2. CONDITIONS TO EFFECTIVENESS. . . . . . . . . . . . . . . . . . . . . .. 4 2.1. Contingency of Obligations.... "'" ............. ... 4 2.2. Required Entitlements ..,......................... 5 2.3. City and Agency Retain Discretionary Approval Rights. . . . . . .. 5 3. PURCHASE AND DISPOSITION OF THE SITE. . . . . . . . . . . . . .. 6 3.1. Acquisition and Sale of Site ........................ 6 3.2. Covenants Agreement; Option Agreement. . . . . . . . . . . . . . .. 6 3.3. Agency Land Write-Down ......................... 7 3.5. No Representations or Warranties by Agency. . . . . . . . . . . . " 8 4. REDEVELOPMENTOFTHEWAL-MARTPARCEL............ 8 4.1. Scope of Development............................ 8 4.2. Cost of Construction ............................. 8 4.3. Antidiscrimination During Construction ................. 8 404. EstoppeICertificate.............................. 9 5. USE AND MAINTENANCE RESTRICTIONS. . . . . . . . . . . . . . . .. 9 5.1. Uses....................................... 9 5.2. Obligation to Refrain from Discrimination. . . . . . . . . . . . . . .. 9 5.3. Form of Nondiscrimination and Nonsegregation Clause. . . . . . .. 9 5.3.1. In deeds ................................ 9 5.3.2.Inleases.,.............................. 9 5.3.3. In contracts ..............................10 504. Effect and Duration of Covenants. . . . . . . . . . . . . . . . . . . . . 10 5.5. No Implied Covenant to Operate ..................... 10 5.5.1. Failure of Redeveloper to Construct and Open the Store ontheWal-ManParcel........,..............l1 5.5.2. Option to Purchase ......................... 12 5.5.3.SoleRemedy.,...........................12 5.504. Survival of Obligations .,........,............12 '?-tr 080594/ C31253-D13/22219.4 i 6. DEFAULTS, REMEDIES AND TERMINATION. . . . . . . . . . . . . . ..12 6.1. LegalActions .................................12 6.1.1. Institution of Legal Actions ,...................12 6.1.2. Applicable Law ........................... 13 6.1.3. Righls and Remedies Are Cumulative. . . . . . . . . . . . .. 13 6.2. Special Remedies and Righls of Termination """"""" 13 6.2.1. Remedies Prior to Close of Escrow. . . . . . . . . . . . . . .. 13 6.2.2. Remedies After the Close of Escrow. . . . . . . . . . . . . .. 14 7. GENERAL PROVISIONS ..............................14 7.1. Notices, Demands and Communications Between the Parties .... 14 7.2. Inspection of Books and Records ..................... 14 7.3. ReaiEstateCommissions ..........................15 7.4. Computation of Time ............................ 15 7.5. Independence of Parties ...........................15 7.6. TexttoControl................................15 7.7. Interpretation ................................. 15 7.8. Nonliability of Officials, Employees and Contractors """", 15 8. SPECIALPROVISIONS.,.........,...................16 8.1. Amendment of Redevelopment Plan. . . . . . . . . . . . . . . . . . . . 16 8.2. Entire Agreement, Waivers and Amendments. . . . . . . . . . . . " 16 8.3. Recordation .................................. 16 8.4. LegaiChallenge................................16 8.5. NoThirdPartyBeneficiary.........................l1 8.6. Assignment...................................l1 8.1. Time for Acceptance of Agreement by Agency. . . . . . . . . . . .. 17 <¡-- -/tJp 0805941 C31253-û13 1 22219.4 ii TABLE OF EXHmITS EXHIBIT 1 - Legal Description of Site EXHIBIT 2 - Map of Site EXHIBIT 3 - Legal Description of the Wal-Mart Parcel EXHmIT 4 - Purchase Agreement EXHIBIT 5 - Grant Deed EXHIBIT 6 - Memorandum of Redevelopment Disposition and Development Agreement and Covenants Agreement EXHIBIT 7 - Promissory Note EXHIBIT 8 - Option Agreement i"-/7 080594 I C31253.{)13 I 22219.4 iii This page intentionally left blank. ~-I'j' REDEVELOPMENT DISPOSmON AND DEVELOPMENT AGREEMENT (Wal-Mart Project) THIS AGREEMENT is entered into as of the - day of , 1994, by and among the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body corporate and politic ("Agency"), WAL-MART STORES, INC., a Delaware corporation ("Redeveloper"), and CHULA VISTA TOWN CENTER ASSOCIATES, LP., a California limited partnership ("Seller"). RECITALS A. The City Council of the City of Chula Vista ("City") has established the Agency and has approved and adopted a Redevelopment Plan (the "Redevelopment Plan") for a redevelopment project known as the Town Centre II Redevelopment Project ("Project Area") by its adoption of Ordinance No. - on May 7, 1987, pursuant to the provisions of Sections 33000, et seq., of the California Health & Safety Code ("California Community Redevelopment Law"). B. The Agency is undertaking a program, in the interest of the health, safety, and general welfare of the people of the City pursuant to its authority under the California Community Redevelopment Law for the redevelopment, replanning and redesign of blighted areas within the Project Area which are characterized by stagnant, improperly utilized and unproductive land which requires redevelopment. C. The Agency is desirous of carrying out the Redevelopment Plan for the Project Area by providing for the development of certain real property within the Project Area ("Site"). The Site is comprised of approximately 32 gross acres of currently vacant land located within the Project Area and within the City, a portion of which has been previously developed. The Site is currently owned by third parties. The Site is legally described for purposes of identification only in the "Legal Description of the Site" attached hereto and incorporated herein by this reference as Exhibit "1". The Site is graphically depicted on the "Map of the Site" attached hereto and incorporated herein by this reference as Exhibit "2". D. In furtherance of the Agency's program to provide for the development of the Site the Agency entered into a Semi-Exclusive Negotiating and Covenants Agreement ("Semi- Exclusive") pertaining to the Site by and among the Agency, National Avenue Associates, a California general partnership ("NAA") and Gatlin Development Co., Inc., a California corporation ("Gatlin"). Gatlin and NAA are collectively referred to as the "Developer" in the Semi-Exclusive and herein. The Semi-Exclusive became effective as of December 7, 1993 and required the Developer to (1) use its good faith efforts to acquire the Site; (2) diligently process all required pennits and entitlements necessary to develop the Site with 192,000 square feet of high volume retail uses (hereinafter referred to as the "Project"); (3) upon receipt of the necessary entitlements to develop the Site as the Project; and (4) upon f,/'1 080594 I C31253-O13 / 22219.4 1 obtaining ownership of the Site to impose covenants thereon to use the Site for retail purposes for a minimum of twenty (20) years. E. Subsequent to the date of the Semi-Exclusive Gatlin has caused to be fonned Chula Vista Town Center Associates, LP., A California limited partnership ("Town Center Associates"), the entity referred herein as Seller. F. NAA has entered into purchase agreements ("Third Party Purchase Agreements") with the third party owners of the Site to acquire the Site and has commenced review of the required entitlements in furtherance of the Project and as required by the Semi-Exclusive. NAA has assigned its rights in the Third Party Purchase Agreements to the Seller by Assignments dated . Seller intends to assign its rights and obligations under this Agreement, the Third Party Purchase Agreements and the Purchase Agreement (as defmed in Section 3.1 below) to a partnership (the "Partnership") to be fonned by Seller and NAA or an afftliate thereof, of which partnership Seller shall be the general partner. The Partnership shall also enter into an agreement (the "Development Agreement") with Wal- Mart regarding development of the Site, including the Wal-Mart Parcel. G. A portion of the Site is subject to a ground lease ("Site Ground Lease") between the third party owner and a third parry lessee ("Lessee"). NAA, a partner of the Seller, is the sublessee in a Sublease ("Site Sublease") between the Lessee and NAA. The Site Sublease provides NAA with the option to buyout the Site ,Ground Lease ("Lease-Purchase Option"). H. It is the intention of the parties that the Site will be divided into three (3) primary parcels: 1. The Wal-Mart Parcel comprised of approximately 13.5 acres. The Wal-Mart Parcel is described for identification only in the Legal Description of the Wal-Mart Parcel attached hereto and incorporated herein by this reference as Exhibit" 3" and is graphically shown on the Map of the Site (Exhibit 2). 2. The Seller's Parcel comprised of approximately 17 acres. The Seller's Parcel is graphically shown on the Map of the Site (Exhibit 2). 3. The Lessor's Parcel comprised of approximately 1.5 acres. The Lessor's Parcel is graphically shown on the Map of the Site (Exhibit 2). 1. Seller, Agency and Redeveloper have entered into negotiations regarding construction of the Project consisting of a minimum 120,000 square foot Wal-Mart store and all ancillary improvements relating to the Store including but not limited to required parking and landscaping ("Store") and approximately 70,000 square feet of additional retail ("Seller Improvements"). The Agency has detennined that the provision of fmancial assistance to Redeveloper, on the tenns and conditions provided herein, will make feasible the development of the Store on the Wal-Mart Parcel by the Redeveloper in accordance with the purposes set forth in the Semi-Exclusive and that such development will stimulate development of the remainder of the Site and is in the best interests of the taxpayers and ~,;¿O 080594 I C3 [253-D[3 I 222[9.4 2 residents of the City and will otherwise promote the public health, safety, and general welfare of City residents and is in accordance with federal, state and local laws and regulations. OPERATIVE PROVISIONS NOW TIlEREFORE, in consideration of the foregoing Recitals, which Recitals are incorporated herein by reference, and covenants of the patties contained herein, Agency and Redeveloper and Seller hereby agree as follows: 1. TERMS OF AGREEMENT. 1.1. Puroose of This A!!reement. The purpose of this Agreement is to implement the Redevelopment Plan and comply with the obligations of the Semi-Exclusive by providing for the disposition of the Site and the development of the Wal-Man Parcel with the Store by the Redeveloper. The patties hereby expressly agree and acknowledge that a substantial portion of the consideration for the Agency's panicipation in this project is the development of the Store. Due to the quality of Wal-Man as a national retailer and the projected fInancial benefits to the City and Agency deriving from the operation of a Wal- Man retail outlet, the Redeveloper's rights and obligations pursuant to this Agreement shall not be assignable. The Agency's obligations hereunder are expressly contingent as set forth in more detail below upon the construction and operation of a full service, fully inventoried and fully staffed Wal-Man retail facility. 1.2. Redevelooment Plan. This Agreement is subject to the provisions of the Redevelopment Plan. The Redevelopment Plan, as it now exists and as it may be subsequently amended pursuanl to Section 8.1 hereof, is incorporated herein and made a pan hereof by reference. 1.3. The Redevelooment Project Area. The Project Area is located in a portion of the City, and the Project Area's boundaries are specifically described in the Redevelopment Plan. 1.4. The Site. The Site consists of certain real property located within the Project Area as shown on the Map of the Site (Exhibit 2), and more particularly described in the Legal Description of the Site (Exhibit 1). The Site is comprised of portions of two (2) legal parcels which are currently owned by Metropolitan Shopping Square, Ltd., a California limited partnership, Charles C. Kerch, Nancy W. Kerch, Gayle Jean Stephenson, Trustee for Jill Stephenson, and Gayle Jean Stephenson, Trustee for William Stephenson (collective "Metropolitan") and Dixieline Lumber Company, Inc., a Delaware corporation ("Dixieline"), respectively. Metropolitan and Dixieline may be collectively referred to herein as "Owner". 1.5. The Wal-Man Parcel. The Wal-Mart Parcel consists of a portion of the Site which will be conveyed to Wal-Mart pursuant to this Agreement. The Wal-Mart 'i-~tI 080594 / C31253-()13 / 22219,4 3 Parcel is shown on the Map of the Site (Exhibit 2) and is legally described in the Legal Description of the Wal-Mart Parcel (Exhibit 3). 1.6. Parties to This Agreement. 1.6.1. The Al!encv. The Agency is a public body, corporate and politic, exercising governmental functions and powers, and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California. The offices of the Agency are located at 276 Fourth Avenue, Chula Vista, California 91910. "Agency", as used in this Agreement, includes the Redevelopment Agency of the City of Chula Vista and any assignee of or successor to its rights, powers and responsibilities. 1.6.2. The Redeveloper. The Redeveloper is Wal-Man Stores, Inc., a Delaware corporation. The principal office of the Redeveloper for purposes of this Agreement is 702 S.W. 8th Street, Bentonville, Arkansas 72716, Attention: President and Attention: Property Manager. 1.6.3. The Seller. The Seller is Chula Vista town Center Associates, LP., a California limited partnership, comprised of NAA and Town Center Associates. The principal offices of Seller are located at c/o Gatlin Development Co., Inc., 12625 High Bluff Drive, Suite 304, San Diego, CA 92310. Seller, at its sole election, may assign its rights and obligations under this Agreement, the Third Patty Purchase Agreements and the Purchase Agreement (as dermed in Section 3.1 below) to the Partnership. 2. CONDmONS TO EFFECTIVENESS. 2.1. Continl!encv of Oblil!ations. The Agency and the Redeveloper acknowledge and agree that the ultimate development of the Site will be governed by and/or subject to certain governmental approvals ("Entitlements"), including Entitlements which must be obtained from the City and other public agencies. The parties hereto expressly acknowledge and agree that the Agency cannot grant any such entitlement or cause any other governmental agency, including the City, to grant any such Entitlements. Accordingly, the patties hereto expressly agree that, notwithstanding approval of this Agreement, the obligations of each patty hereto shall be contingent upon the receipt of all Entitlements required for the development of the Site in the manner set forth in this Agreement and the obligations of each patty hereto shall only arise upon the receipt of all such Entitlements. The Seller and the Redeveloper hereby release the City and the Agency from any liability based upon the Seller's or the Redeveloper's failure to obtain any such Entitlement and expressly agree that in no event shall any exercise of the City's or Agency's discretion to approve, condition or disapprove any Entitlement or other discretionary item which is a condition to the obligations of the parties of this Agreement be deemed to be a default or an act of bad faith by the City or the Agency. rr-.;).~ 080594 / C31253-!J13/ ill19.4 4 2.2. ReQuired Entitlements. The obligation to initiate and process the required Entitlements shall be Seller's. The obligations of each patty hereto shall not arise until Seller or Redeveloper shall have applied for and City or other applicable public entity shall have approved all required entitlements (hereinafter the "Entitlements") required for the construction of the Store and the Improvements. The Entitlements include but may not be limited to the following: A. An amendment of the Chula Vista General Plan changing the land use designation for the Site from "Limited Industrial" (I-L) to "Retail Commercial"; B. An amendment of the Chula Vista zoning designation for the Site from I-L to "Central-Commercial-Precise Plan" (C-C-P); C. An amendment of the Chula Vista Local Coastal Program to change the zoning designation for a portion of the Site referred to as the "Inland Parcel" from "Industrial-General" to "Commercial-Retail"; D. Certification of an environmental impact report reviewing all of lhe required entitlements and other discretionary actions necessary to authorize construction of the proposed Project on the Site; E. Approval of a Precise Plan for the construction of the proposed Improvements; and F. Approval of a ParceUTract Map for the Site. In the event that all of the Entitlements are not approved within 240 days of the effective date of this Agreement, or in the event that the City, the Agency, the Coastal Commission or any other entity shall deny any of the requested discretionary approvals or disapprove any required Entitlement or other agreement necessary for construction of the Store or the Seller Improvements, this Agreement shall be of no force and effect and none of the parties shall have any further obligations to any of the other parties pursuant to this Agreement. 2.3. CitY and Alrencv Retain Discretionarv Aooroval Rilrhts. The Parties understand and acknowledge that the City and Agency reserve the right to exercise their discretion as to all matters which they are, by law, entitled or required to exercise their discretion. It is not the intent (nor shall it be deemed) that, by the Agency's execution or City's approval of this Agreement, the City or the Agency are granting approval of the Project contemplated in this Agreement or any of the Entitlements. Further, in no event shall the Agency or the City be under any obligation to approve such development or any of the Entitlements by virtue of having entered into or approved this Agreement, it being understood that such development and each of the Entitlements as to which the Agency or the ~-~ 080594 I C31253-!J13 I 22219.4 5 City has any approving authority shall be laken up and considered as matters to be separately deliberated upon at such time in the future as they may be so taken up and considered. 3. PURCHASE AND DISPOSITION OF THE SITE. 3.1. Acauisition and Sale of Site. Pursuant to that certain Purchase Agreement and Escrow Instructions dated December 15, 1993, as amended (collectively the "Metropolitan Agreement"), by and between NAA and Metropolitan, and that certain Purchase Agreement and Escrow Instructions dated December 15, 1993, as amended (collectively the "Dixieline Agreement") by and between NAA and Dixieline, NAA has the right to purchase the Site from the third party Owners. Pursuant to an Assignment dated -' 1994, NAA has assigned to the Seller, its rights under the Dixieline Agreement and the Metropolitan Agreement, with respect to the Wal-Man Parcel. The Seller and the Agency have entered or will enter into a Purchase Agreement (the "Purchase Agreement") for the purchase by the Agency of the Wal-Man Parcel in the form of Exhibit" 4 ", attached hereto and incorporated herein by this reference. Subject to the terms, conditions and provisions of this Agreement, and provided that all conditions to the obligations of the patties hereto have been complied with and the Seller has acquired fee simple title to the Site, including exercise of the Lease- Purchase Option, the Agency, on or before June 30, 1995 shall use its best efforts to acquire fee title to the Wal-Man Parcel from the Seller pursuant to the Purchase Agreement for the purchase price (the "Purchase Price") set forth in the Purchase Agreement; provided, however, that (i) prior to the close of escrow conveying the Wal-Man Parcel, the parties hereto shall have recorded the covenants required by this Agreement, (ii) Agency shall assign to the Redeveloper, at or before the close of escrow, its rights under the Purchase Agreement; (iii) that Agency shall exercise its rights under the Purchase Agreement, prior to such assignment, only as directed or agreed to by the Redeveloper; and (iv) the Wal-Man Parcel shall be conveyed to the Redeveloper generally in the form provided in the grant deed (the "Grant Deed"), attached hereto as Exhibit "5" and incorporated herein by this reference. The Redeveloper shall pay the Agency for the Deposit (as derIDed in the Purchase Agreement), the Purchase Price, the cost of the surveys, and any other costs and expenses required to be paid by the Buyer (as derIDed in the Purchase Agreement) pursuant to the Purchase Agreement. Wherever this Agreement provides for any document or instrument to be delivered through escrow, such document or instrument shall be delivered through the escrow established pursuant to the Purchase Agreement. Notwithstanding provisions of this Section 3.1, the Agency's obligation to acquire fee title to the Wal-Man Parcel shall be subject to the provision of all required funds by Wal-Man. In no event shall the Agency be required to deposit Agency funds into the escrow and Agency shall not be deemed to be in default of this Agreement or the Purchase Agreement if escrow fails to close because Wal- Man has not deposited the required funds into escrow. 3.2. Covenants Agreement: ODtion Agreement. At the close of escrow, the Redeveloper and the Agency shall execute, acknowledge and deliver, through escrow: (i) a Memorandum of Redevelopment Disposition and Development Agreement and Covenants Agreement, a copy of which is attached hereto as Exhibit "6" and incorporated herein by , f- #-~ 080594/ C31253-<J13/ 22219.4 6 reference ("Covenants Agreement"), and (ii) an "Option Agreement" (as such tenn is derIDed in Section 5.5.2, below), which Covenants Agreement and Option Agreement shall be filed for record in the Office of the County Recorder of San Diego County, California, immediately following the Grant Deed and prior to all other documents affecting the Wal- Man Parcel. 3.3. Agencv Land Write-Down. Pursuant to the Purchase Agreement the Purchase Price to the Agency for the Wal-Mart Parcel is approximately $5,265,097.00, computed at Nine Dollars ($9.00) per square foot and assuming that the Wal-Mart Parcel contains 13.43 acres. If the survey taken pursuant to the Purchase Agreement reveals that the actual area is more or less than the approximation shown above, the Purchase Price shall be adjusted accordingly. The Redeveloper has represented to the Agency that if the Wal- Mart Parcel is acquired at the Agency's Purchase Price, completion of the Store including all required public improvements, is not fmancially feasible. Therefore, in order to facilitate the redevelopment of the Wal-Man Parcel and subject to all of the terms and conditions set forth herein, the Agency agrees to sell the Wal-Man Parcel to the Redeveloper for Three Million three Hundred Fifty Thousand Ninety-Seven Dollars ($3,350,097.00) ("Redeveloper Purchase Price"). The Redeveloper shall pay all funds necessary to close escrow on the Wal-Man Parcel and the Agency shall repay to the Redeveloper One Million Nine Hundred and Fifteen Thousand Dollars ($1,915,000.00) ("Redeveloper Loan") in accordance with the tenns and conditions set forth in the Promissory Note attached hereto and incorporated herein by this reference as Exhibit No. "7". Interest shall accrue on the unpaid principal balance of the Redeveloper Loan, as provided in the Promissory Note. The Agency shall make payments to the Redeveloper in periodic installments and the payments shall be applied in the manner described in the Promissory Note. The Promissory Note shall be held in escrow until the Store opens to the public for retail sales and shall be delivered to the Redeveloper within 5 business days after that date. The Agency's payments on the Promissory Note shall be payable from any source of funds legally available to the Agency. 3.4. Citv/Agencv Coooeration A!ITeement. The Agency shall use its best efforts to cause City to enter into a cooperation agreement ("City/Agency Cooperation Agreement") with the Agency, which City/Agency Cooperation Agreement shall be acceptable in fonn and content to the Redeveloper provided that it contains the general provisions set forth in this paragraph. The City/Agency Cooperation Agreement shall provide that in the event the Agency for any reason fails or is unable to make a payment due to the Redeveloper pursuant to the Promissory Note (Exhibit 7) City shall provide Agency with sufficient funds to make such payment. Any such payment by City shall be contingent upon the perfonnance required of Redeveloper pursuant to the Promissory Note .and shall be made from any funds legally available to City. The City/Agency Cooperation Agreement shall provide that it shall not be amended, altered, tenninated or otherwise revised in any manner without the prior written consent of the Redeveloper, and that the ¡>~). s- 080594 I C31253-û13 I 22219,4 7 -- Redeveloper shall be a third party beneficiary under the City/Agency Cooperation Agreement. Upon any such amendment, alteration, tennination, or other revision (collectively "revision") without the Redeveloper's consent, or upon the breach by the City of its obligations under the City/Agency Cooperation Agreement, the Redeveloper may by written notice to the Agency tenninate this Agreement, or exercise any other remedy available at law or equity, and the Redeveloper shall not have any funher obligation to the Agency not yet accrued as of the date of the City's breach or of such revision. If, within sixty (60) days after the Effective Date of this Agreement, the Agency and the City have not entered into such a City/Agency Cooperation Agreement, the Redeveloper may at any time thereafter, by written notice to Agency, tenninate this Agreement. 3.5. No ReDresentations or Warranties bv A!!:encv. The Agency makes no representations or warranties regarding the condition of the Wal-Mart Parcel or its suitability for construction of the Store. The Redeveloper hereby expressly acknowledges that it has satisfied itself from its own due diligence as to the suitability of the Site and in particular, the Wal-Mart Parcel. The Seller and the Redeveloper hereby agree to protect, defend, indemnify and hold harmless the Agency, it agents, representatives and employees from any claims made by Seller, its affiliates, or third parties due to the existence of any hazardous substances on, in or under the Wal-Mart Parcel or emanating therefrom. Notwithstanding the foregoing: (a) all representations and warranties of the Seller contained in the Purchase Agreement shall inure to the benefit of Redeveloper, (b) the Agency hereby assigns to the Redeveloper all of its rights under such representations and warranties of the Seller subject to the right of the Agency to rely upon such representations and warranties in the event of any legal action pertaining to the Wal-Mart Parcel naming Agency as defendant; and (c) the Seller hereby consents to such assigmnent. 4. REDEVELOPMENT OF THE WAL-MART PARCEL. 4.1. Score of Development. The Wal-Mart Parcel shall be redeveloped in accordance with a minimum 120,000 square-foot Wal-Mart retail store, sufficient parking spaces to comply with the requirements of the Entitlements and all landscaping and other public and private improvements as required by the Entitlements, provided, however, that Wal-Mart shall have no obligation to perform any such construction pursuant to this Agreement. 4.2. Cost of Construction. As between the Agency and the Redeveloper, the cost of any development of the Wal-Mart Parcel and any construction of onsite or offsite improvements necessary to the completion of the Store on the Wal-Mart Parcel shall be borne exclusively by the Redeveloper. 4.3. Antidiscrimination Durin!!: Construction. The Redeveloper for itself and its successors and assigns agrees that in the construction of any improvements on the Wal-Mart Parcel, the Redeveloper will not discriminate against any employee or applicant for employment because of sex, marital status, race, color, religion, creed, national origin, or ancestry, and that the Redeveloper will comply with all applicable local, state and federal fair employment laws and regulations. ?-z/p 080594/ C31253-!J13/ 22219.4 8 4.4. EstoDDel Certificate. At the request of the Redeveloper, the Agency shall. within ten (10) days, certify in writing that, to the best of its knowledge, (a) this Agreement is in full force and effect and subject to the contingencies set forth herein is !! binding obligation of the cenifving Darty and (b) this Agreement has not been amended or modified, except as is expressly provided in such estoppel certificate. 5. USE AND MAINTENANCE RESTRICTIONS. 5.1. Uses. The Redeveloper covenants and agrees that during any construction and thereafter for a minimum of twenty (20) years after the Effective Date of this Agreement. the Redeveloper and Redeveloper's successors and assigns shall devote the Wal-Mart Parcel only to the retail uses authorized by the Entitlements. 5.2. Oblie:ation to Refrain from Discrimination. The Redeveloper covenants and agrees for itself and its successors and assigns, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Wal-Man Parcel. 5.3. Fonn of Nondiscrimination and Nonsee:ree:ation Clause. The Redeveloper shall refrain from restricting the rental, sale or lease of the Wal-Man Parcel on the basis of race, color, creed, religion, sex, marital status, ancestry or national origin of any person. To that end, all such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: 5.3.1. In deeds: "The grantee herein covenants by and for himself, his or her heirs, executors, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee, or any persons claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." 5.3.2. In leases: "The lessee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or eIJjoyment of the land herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or pennit any such practice or practices of p- :2.1 080594 I C31253.{)13 I 22219,4 9 discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the land herein leased." 5.3.3. In contracts: "There shall be no discrimination against or segregation of any persons or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin in the sale, lease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee himself or herself, or any person claiming under or through him or her, establish or pennit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land. " The foregoing covenants shall run with the land and shall remain in effect in perpetuity. 5.4. Effect and Duration of Covenants. Except in those instances when a longer period is required by this Agreement, the covenants contained in this Agreement and the Covenants Agreement for the Wal-Mart Parcel shall remain in effect until the expiration date of the Redevelopment Plan or any extension thereof. The covenants against discrimination shall remain in effect in perpetuity. The covenants established in this Agreement and the Covenants Agreement shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency and the City and their respective successors and assigns and any successor in interest to the Wal-Mart Parcel or any part thereof. The Agency and the City are deemed the beneficiaries of the tenus and provisions of this Agreement and of the covenants running with the land for and in their own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. This Agreement and the covenants shall run in favor of the Agency without regard to whether the Agency has been, remains or is an owner of any land in the Project Area. The Agency shall have the right, if the Agreement or covenants are breached, to exercise all rights and remedies and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants may be entitled. Notwithstanding any provision hereof to the contrary, after any conveyance of the Wal-Mart Parcel or any legally subdivided parcel thereof by the Redeveloper, the Redeveloper shall not be liable for the perfonnance of the foregoing covenants. 5.5. No Implied Covenant to Operate. Subject to the provisions of Section 5.5.1 below, it is expressly agreed by the parties hereto, for their own benefit and that of their successors-in-interest, that nothing contained in this Agreement shall be construed to contain a covenant, either expressed or implied, to either construct the Store or any other improvements on the Wal-Mart Parcel, to commence the operation of a business on the Wal- Mart Parcel, or to thereafter continuously operate a business upon the Wal-Mart Parcel. The Agency recognizes and agrees thåt the Redeveloper may, at the Redeveloper's sole and ¡.~ 2, ~ 080594 I C31253-<J13 I 22219.4 10 absOlute discretion and at any time during the term of this Agreement, cease the operation of any business on the Site. 5.5.1. Failure of RedeveloDer to Construct and ODen the Store on the Wal-Man Parcel. The parties expressly acknowledge and agree as follows: A. The Redeveloper is not contractually obligated to construct or open the Store. B. The Agency, the Redeveloper and the Seller have entered into this Agreement with the current intent that Redeveloper will construct the Store, notwithstanding that the Redeveloper is not contractually obligated to construct or open the Store. C. The Agency's purpose in entering into this Agreement is to facilitate the redevelopment of the Site and in particular to provide for the construction of the Store on the Wal-Mart Parcel; it is not to assist in land assembly for purposes of resale or speculation. D. In the event that the Redeveloper fails to construct and open the Store on the Wal-Man Parcel on or before the second anniversary of the effective date of this Agreement, this Agreement shall terminate at 5:00 p.m. on the second anniversary of the effective date of this Agreement. E. In the event this Agreement terminates as a result of the Redeveloper's failure to construct and open the store on the Wal-Man Parcel on or before the second anniversary of the effective date of this Agreement, the Redeveloper hereby expressly agrees as follows: (i) The Agency shall have no obligation to the Redeveloper pursuant to the Promissory Note and the original Promissory Note shall be delivered to the Agency by escrow within three (3) business days of termination of this Agreement. (ii) The Redeveloper shall pay to the Agency $50,000 within ten (10) business days of such termination as reimbursement for the Agency's out of pocket costs incurred in the negotiation and implementation of this Agreement; in the event the Redeveloper fails to pay the Agency within the time set forth herein, the $50,000 shall accrue interest at 10% (ten percent) and the Agency shall be entitled to reimbursement of all out of pocket costs, including but not limited to legal fees, expended to obtain payment of the $50,000; (iii) The Redeveloper shall not construct any improvements other than the Store on the Wal-Man Parcel until expiration of the Agency's option (as defined in Section 5.5.2 below) without the express written approval of the Agency in Agency's sole discretion; ~-2-9 080594/ C31253-oi3 / 22219.4 11 -, (iv) The Redeveloper shall not sell or lease the Wal- Mart Parcel (except pursuant to a sale-leaseback transaction) to any third party until expiration of the Agency's option (as defined in Section 5.5.2 below). Any attempt to sell or lease the Wal-Man Parcel (except pursuant to a sale-leaseback transaction) during this period shall be void and the Redeveloper shall be fully responsible for any damages incurred by third parties attempting to acquire title to or possession of the Wal-Mart Parcel contrary to the provisions of this Agreement and the Grant Deed. (v) The act or failure of any third party, including but not limited to the fulfillment of Seller's obligations to Redeveloper to provide for preparation of the Wal-Man Parcel and installation of public improvements evidenced outside of this Agreement, shall not relieve Redeveloper of its obligations to Agency in the event Redeveloper fails to open the completed store on or before on or before the second anniversary of the effective date of this Agreement. 5.5.2. Ootion to Purchase. Provided the Redeveloper purchases the Wal-Man Parcel as provided herein, the Agency may purchase the Wal-Man Parcel from Redeveloper at the price and upon the tenns described in the Option Agreement ("Option Agreement") attached hereto in the fonn of Exhibit "8" in the event that (I) this Agreement tenninates as a result of the Redeveloper's failure to construct and open the Store on the Wal-Man Parcel on or before the second anniversary of the effective date of this Agreement, or (2) at any time before the Redeveloper opens the Store on the Wal-mart Parcel, the Redeveloper gives written notice to the Agency that it does not intend to open the Store on the Wal-Mart Parcel on or before the second anniversary of the effective date of this Agreement. 5.5.3. Sole Remedv. The Agency and the Redeveloper acknowledge and agree that exercise of the Option by the Agency (together with the payment to the Agency required by Section 5.5.1 above) is the Agency's sole and exclusive remedy in the event this Agreement terminates as a result of the Redeveloper's failure to construct and open the Store on the Wal-Man Parcel on or before the second anniversary of the effective date of this Agreement. 5.5.4. Survival of Oblil!ations. The rights and obligations of the Agency and the Redeveloper pursuant to this Section 5.5 shall survive the termination of this Agreement by the Agency pursuant to Section 5.5.1 above. 6. DEFAULTS. REMEDIES AND TERMINATION. 6.1. Lel!al Actions. 6.1.1. Institution of Lel!al Actions. All legal or equitable actions brought under or with respect to this Agreement must be instituted, at the election of the Redeveloper, in the Superior Court of the County of San Diego, State of California, in any other appropriate court in that County, or in the Federal District Court in the Southern District of California. The prevailing patty in any such legal action may recover its actual g. -a(~ 0805941 C31253-(}13 1 22219,4 12 attorney's fees, expert witness fees, costs of taking depositions and discovery, and all other costs reasonably incurred in such litigation. 6.1.2. Applicable Law. The laws of the State of Califonùa shall govern the interpretation and enforcement of this Agreement. 6.1.3. Rights and Remedies Are Cumulative. Except as otherwise expressly provided for in this Agreement, the rights and remedies of the parties shall be limited to the remedies set forth in this Section 6. Except as otherwise expressly provided for in this Agreement, neither the Agency nor the Redeveloper shall have the right to tenninate this Agreement. 6.2. Special Remedies and Rights of Tennination. The following are special optional remedies and rights of tennination of the parties. 6.2.1. Remedies Prior to Close of Escrow. A. The Redeveloper or the Agency may tenninate this Agreement if the Seller fails to take all steps necessary to convey fee simple title to the Wal- Mart Parcel to the Agency or the Redeveloper subject oilly to those encumbrances set forth in this Agreement and such additional encumbrances as may be approved in writing by the Redeveloper. The Redeveloper and the Agency may pursue a claim for equitable relief (including without limitation specific perfonnance) oilly against the Seller if the Seller fails to perfonn any tenn or provision of this Agreement in the manner required by this Agreement. B. The Agency at its option may tenninate this Agreement if the Redeveloper does not advance all funds and deposits required by this Agreement on or before the date set for Closing (as the same may be extended) and such breach is not cured within fifteen (15) days after the date of written demand therefor by the Agency. In the event of such tennination pursuant to this Section, neither the Agency nor the Redeveloper shall have any further rights against or liability to the other under this Agreement, and the Agency shall have no obligation to make payments under the Note. C. If any condition of the close of escrow or the perfonnance under this Agreement for the benefit of either the Agency or the Redeveloper, fails to occur (except where such failure results from the willful act or omission of the party benefitted by such condition), then the party for whose benefit such condition exists may tenninate this Agreement. In the event of any tennination pursuant to this Section, neither the Agency nor the Redeveloper shall have any further rights against or liability to the other, under this Agreement or under the Note. ç-3/ 080594 I C31253-O13 I 22219.4 13 6.2.2. Remedies After the Close of Escrow. A. The Redeveloper at ilS option may pursue the remedy of specific perfonnance against the Agency, pursue a claim for damages against the Agency or tenninate this Agreement or pursue any other remedy at law or equity if the Agency defaullS and fails to perfonn any tenn or provision of this Agreement in the manner required by this Agreement, and within the time established therefor in this Agreement, and any such failure is not cured with fifteen (15) days after written demand by the Redeveloper. B. Although the failure of the Redeveloper to construct and open the store on or before the second anniversary of this Agreement shall not be deemed a default of this Agreement, the Agency shall be entitled to the righlS and paymenlS set forth in Section 5.5.1 and 5.5.2 above. Failure of the Redeveloper to comply with the requiremenlS of Section 5.5.1 and 5.5.2 above, shall constitute a default of this Agreement and the Agency shall be entitled to pursue the remedy of specific performance against the Redeveloper, pursue a claim for damages or any other remedy at law or in equity if such default is not cured within fifteen (15) days after written demand by the Agency, or, if such default cannot reasonably be cured within 15 days after written demand, then the Agency shall be entitled to pursue a claim for damages or any other remedy at law or in equity if the Redeveloper fails to commence cure within 15 days after written demand by the Agency and thereafter to diligently prosecute such cure to completion. 7. GENERAL PROVISIONS. 7.1. Notices. Demands and Communications Between the Parties. Formal notices, demands and communications among the Agency, the Seller and the Redeveloper shall be sufficiently given if personally delivered by hand and a receipt therefor is obtained or is refused to be given or if dispatched by registered or certified mail, postage prepaid, return receipt requested, or by way of a nationally recognized overnight mail delivery service (such as United Parcel Service or Federal Express), to the principal offices of the Agency, the Seller and the Redeveloper as set forth in Section 1.6 above. Such written notices, demands and communications may be sent in the same manner to such other addresses as either party may from time to time designate by mail. Such notices, demands and communications shall be deemed given on receipt or rejection. 7.2. Insœction of Books and Records. Until the earlier of (a) payment in full to the Redeveloper of the paymenlS which the Agency is obligated to pay to the Redeveloper under the Promissory Note or (b) tennination of the Agency's obligation to pay any remaining paymenlS to the Redeveloper under the Promissory Note, in the event of a dispute between the Agency and the Redeveloper regarding the amount of any payment due under the Promissory Note, the Redeveloper shall have the right at all reasonable times to inspect and copy the books and records of the Agency with respect to the Sales Tax Revenue as is reasonably necessary for the Redeveloper to enforce ilS righlS under this Agreement. In the event of such dispute and in order to assist Agency in the calculation and verification of amounlS due to Redeveloper, Agency shall have the right at all reasonable times to inspect and copy the records of the Redeveloper relative to the Sales Tax Revenue generated by the 080594/ C31253-!J13/ 22210,4 j-,3:J- / 14 Store, including but not limited to records of gross sales and documentation pròvided by Redeveloper to the Franchise Tax Board. The right of Redeveloper and Agency to inspect each other's records is limited to those inspections necessary to resolve a dispute. 7.3. Real Estate Commissions. The Agency and the Redeveloper each represent to the other that it has engaged no broker, agent, or fmder in connection with this transaction. The Agency and the Redeveloper shall each indemnify the other for any claims for real estate commissions, brokers' fees or fmders' fees which are alleged to be due as a result of the acts of the indemnifying party. 7.4. Computation of Time. Unless otherwise required by a specific provision of this Agreement, time hereunder is to be computed by excluding the first day and including the last day. 7.5. IndeDendence of Panies. The terms and provisions of this Agreement shall not cause the parties hereto to be construed in any manner whatsoever as partners, joint ventures or agents of each other in the performance of their respective duties and obligations under this Agreement, or subject either party to this Agreement to any obligation, loans, charge or expense of the other party unless the party to be held responsible has independently contracted with the claimant so as to make it directly responsible for the performance and/or payment, as appropriate, of the peninent obligation, loss, charge or expense. 7.6. Text to Control. The table of contents and headings in this Agreement are included solely for convenience, and if there shall be any conflict between such table or headings and the text of this Agreement, the text shall control. 7.7. Intemretation. Should any provision of this Agreement require interpretation, it is agreed that the person or persons interpreting or construing the same shall not apply a presumption that the terms of this Agreement shall be more strictly construed against one party by reason of the rule of construction that a document is to be construed more strictly against the party thereto who itself or through its agent or counsel prepared the same or caused the same to be prepared; it being agreed that the agents and counsel of all parties hereto have participated equally in the negotiation and preparation of this Agreement. The language in all pans of this Agreement shall be in all cases construed simply, fairly, equitably and reasonably, according to its plain meaning and not strictly for or against any of the parties thereto. 7.8. Nonliabilitv of Officials. EmDlovees and Contractors. No member, official, employee, agent or contractor of the Agency shall be personally liable to the Redeveloper in the event of any default or breach by the Agency or for any amount which may become due to the Redeveloper or on any obligations under the terms of this Agreement, and no officer, employee, agent or contractor of the Redeveloper shall be personally liable to the Agency in the event of any default or breach by the Redeveloper or for any amount which may become due to the Agency or on any obligations under the terms of this Agreement. f-3J 080594/ C31253-!JI3/ 22219.4 15 8. SPECIAL PROVISIONS. 8.1. Amendment of Redevelopment Plan. The Agency agrees that no additional amendment which changes the uses or development pennitted on the Wal-Mart Parcel or changes the restrictions or controls that apply to the Wal-Mart Parcel or otherwise affects the Wal-Mart Parcel in a manner which would preclude or inhibit the development or continued operation of the Store shall be made or become effective without the prior written consent of the Redeveloper. Amendments to the Redevelopment Plan applying to other property in the Project Area or modifying general provisions of the Redevelopment Plan such as but not limited to the duration of the Plan or the tax increment limits, shall not require the consent of the Redeveloper. 8.2. Entire Ae:reement. Waivers and Amendments. This Agreement is executed in 3 duplicate originals, each of which is deemed to be an original. This Agreement, the Grant Deed, the Purchase Agreement and the Note when taken together integrate all of the tenus and conditions mentioned herein or incidental hereto, and supersede all negotiations or previous agreements, including the Semi-Exclusive between the parties and their related entities, including Gatlin and NAA, with respect to all or any part of the subject matter hereof. All waivers of the provisions of this Agreement shall be in writing and signed by the appropriate authorities of the Agency and the Redeveloper, and all amendments hereto must be in writing and signed by the appropriate authorities of the Agency and the Redeveloper. The Executive Director of the Agency is authorized to approve and execute amendments to this Agreement which are not of a material nature, including, but not limited to, the granting of extensions of time to the Redeveloper not exceeding a cumulative total of 180 days. 8.3. Recordation. Although this Agreement shall not be recorded, the Agency and the Redeveloper shall make, execute and record at the close of escrow, in the land records in the Office of the County Recorder for San Diego County, the Covenants Agreement. 8.4. Lee:al Challene:e. In the event that any coun action or other legal proceeding is brought by any person not a party to this Agreement to challenge this Agreement, the granting of any Entitlement or the fulfillment of any condition to the obligations of the parties hereto, and without regard to whether or not the Redeveloper or the Seller is a party to said action or proceeding, the Redeveloper shall have the right to tenninate this Agreement upon thirty (30) days notice in writing to the other parties given at any time during the pendency of such action or proceeding prior to the conveyance of the Wal-Mart Parcel to the Redeveloper. If this Agreement is not tenninated, the Redeveloper and the Seller jointly and severally, shall indemnify the Agency and the City for all expenses including attorneys' fees, to defend the City or the Agency from any claim, action or proceeding Cj-3f./ 080594/ C31253-Q13/ 22219.4 16 -, against the City, the Agency or their agents officers, or employees to attack, set aside, void or annul the approval of this Agreement or the approval of any Entitlement or condition to the obligations of the parties hereto. The City and the Agency shall promptly notify the Redeveloper and the Seller of any such claim, action or proceeding. For purposes of this Section 8.4, the Redeveloper and the Seller acknowledge that the term "attorney's fees" includes the cost incurred by the City or Agency in the defense of any claim, action or proceeding by the City Attorney or his staff. 8.5. No Third Partv Beneficiary. The terms and provisions herein contained shall be only .for the benefit of the parties hereto and such terms and provisions shall not inure to the benefit of any other party whosoever, it being the intention of the parties hereto that no one shall be deemed to be a third party beneficiary of this Agreement. 8.6. AssilmIIlent. The parties hereto expressly agree and acknowledge that, except as expressly set forth herein, this Agreement and the more specifically the rights conferred to Wal-Mart by this Agreement are not assignable. 8.7. Time for Acceptance of Agreement bv Agencv. This Agreement, when executed by the Redeveloper and the Seller and delivered to the Agency, must be authorized, executed and delivered by the Agency no later than , 1994 or this Agreement shall be voidable at the election of the Redeveloper and/or the Seller. The effective date of this Agreement shall be the date when this Agreement has been signed by the Agency. AGENCY: REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA Dated: -' 1994 By: Its: ATIEST: Secretary APPROVED AS TO FORM AND SUBSTANCE: General Counsel to the Redevelopment Agency of the City of Chula Vista By: 6' .3 S'" 080594 / C31253-<J13/22219.4 17 Special Counsel to the Redevelopment Agency of the City of Chula Vista By: (ADDITIONAL SIGNATURES FOLLOW) !f~ 3~ 080594 I C31253-ú13 I 22219.' 18 REDEVELOPER: WAL-MART STORES, INC., a Delaware corporation Dated: ,1994 By: Its: SELLER: , a California limited pannership Dated: ,1994 CHULA VISTA TOWN CENTER ASSOCIATES, L.P., a California limited pannership By: Its General Partner Dated: ,1994 By: Its General Fanner 5'-37 0805941 C31253-ú131 22219.4 19 -- ", ~ PClfJE; !Blank! f'3? JOINT CITY COUNCIL RESOLUTION # /7/36 / ~.,¿. AND REDEVELOPMENT AGENCY RESOLUTION # JOINT RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AND THE CHULA VISTA REDEVELOPMENT AGENCY AUTHORIZING THE EXECUTION OF A COOPERATION AGREEMENT BETWEEN THE CITY OF CHULA VISTA AND THE REDEVelOPMENT AGENCY PURSUANT TO THE TERMS AND CONDITIONS SET FORTH IN THE APPROVED DISPOSITION AND DEVELOPMENT AGREEMENT EXECUTED FOR THE CHANNElSIDE SHOPPING CENTER PROJECT AT FIFTH AVENUE AND C STREET WHEREAS, the Chula Vista Redevelopment Agency ("Agency") adopted Resolution No. 1416 which authorized the execution of a Disposition and Development Agreement ("DDA") by and among the Agency, Wal-Mart Stores, Inc. ("Redeveloper"), and Chula Vista Town Centre Associates which contemplated the Redeveloper providing a loan to the Agency for the construction of certain public improvements; and WHEREAS, the loan contemplated in the DDA is contingent on the Redeveloper receiving all planning, zoning, and environmental entitlements and building permits, constructing, opening and operating a "Wal-Mart" store; and WHEREAS, it is anticipated that the Redevelopment Agency may not receive enough "surplus" tax increment revenue in any given year from which to make the annual loan payments to the Redeveloper pursuant to the terms of the Note; and WHEREAS, in light of this fact the Redeveloper negotiated a provision in the DDA (Section 3.4) whereby the City and the Agency staff would present to the City Council and Agency Board a Cooperation Agreement whereby the City would agree to advance monies to the Agency in the event the Agency was unable to make the required payments to Redeveloper under the Note; and WHEREAS, in accordance with Section 3.4 of the DDA and for its own accounting purposes, the City and Agency desire an agreement to provide for the internal advancement by the City to the Agency on an annual basis, the necessary funds which may be required to pay to the Redeveloper pursuant to the terms of the Note. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA AND THE CHULA VISTA REDEVELOPMENT AGENCY do hereby find, order, determine, resolve and authorize the execution of a Cooperation Agreement between the City of Chula Vista and the Chula Vista Redevelopment Agency in the form presented, with such minor modifications as may be approved or required by the City Attorney, pursuant to the terms and conditions set forth in the Disposition and Development Agreement adopted by Agency Resolution 1416 on August 23, 1994. Such agreement shall be kept on file in the City Clerk's office as Contract No._. PRESENTED BY: APPROVED AS TO FORM BY: ~t. : '8 ~~./ Chris 10m one Community Development Director/ Agency Secretary ';-'37 .., C7I'zti Pa;}'õ; !Blank! s- ~ LfO REDEVELOPMENT AGENCY AGENDA STATEMENT ItemL Meeting Date ~ 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 -1U 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 with 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, beginning July 1, 1996. In addition, the Chevrolet dealers expressed their desire to have the Agency acquire parcel #1 from them due to their inability to market the parcel. The Redevelopment Agency considered the request from the Auto Park Developers on February 14, 1995 (see Exhibit A) 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 #1 (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. 9-( Page 2, Item 2- Meeting Date: 5/02/95 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 1, 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 #1 (vacant land parcel west of Fuller Ford/Honda) 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. Aaencv Purchase of Parcel #1 South Bay Chevrolet purchased Parcel #1, comprising approximately 2.5 acres through 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 ?f~'" Page 3, Item i Meeting Date: 5/02/95 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 Aaency Reoayment Obliaation 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 Repayment Obligation during the first six years of operation of the Auto Park from $1.9 million to approximately $2.630.000. It should be noted 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 dealership 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 based 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. 1'-3 Page 4'~ Meeting Date: 2 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 Ð.Q1 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 are shared between the Agency (25%) and the Auto Park Developers (75%) through the incentive period (years 1-6). As the escalator decreases below 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 "loss" 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 37-1/2%. The lost revenues during the post-incentive period would thus be equal to 37-1/2% of the difference between the base at the time pius the escalator and what the base would have been if the escalator had been a consistent 6% from year 1. IFK/diskA/sutopsrk.a13] 1-1 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 SUBMITrED BY, Com_ty 1kwI- ~ S ' REVIEWED BY: Executive Directo~ ~ --4 (4/5ths Vote: Yes - No-XJ .. BACKGROUND: On Tuesday, January 17, 1 , the Council approved a conditional payout of $1.3 million to the Auto Park Developers for construction of public streels within the Auto Park under Assessment District 92-2. On Thursday, January 19, 1995, staff met with the Auto Park Developers, Messrs. Ordway and Fuller, and their attorney to discuss financial problems associated with a lower assessment district payout than anticipated. As a result of that meeting, the developers have made specific requesls 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, John Abbene, requesting specific financial assistance and continue discussion of this item one week: to allow staff time to obtain and analyze dealership financial documenls to provide a cost benefit analysis regarding financial assistance. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. 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 Assessment District 92-2 for construction of on-site streels and a sewer pump station. This will leave them short in meeting their other financial obligations. The shortfall was apparently due to miscommunications between the developers and their consultanls. Although the total bond issue was for $1.9 million, the developers had not been infonned by their consult! that approximately $400,000 of the Assessment District proceeds were being used to payoff their obligations under the Otay Valley Road Assessment District to avoid double assessment district liens against their property. An additional $200,000 was applied towards bond issuance cosls. ¡The Developers' consultanls worked with staff to develop the pro fonna for the assessment district, the acquisition agreement and all other related documenls 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). . 7'-r I Page 2, IteDJ. ~-, I Meeting Date 02/14/95- / The developers were also not informed 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 make up for the shortfall 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 years of operation of the Auto Park based upon sales tax revenues 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 current 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 Shinohara and conveyed it to South Bay chevrolet in August 1993. This 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-{)f way, the lot was reduced to approximately 2.5 acres. Mr. Ordway claims that he can not sell the property now because of the reduced size and the presence of the contaminated soils on the rear parcel. The specific requests for assistance include the fonowing: - Assistance in securing a $1.1 million loan. - Amendment of the DDA to increase the maximum payback amount through incentive payments, decrease the annual escalator and postpone the effective date of the escalator by one year. - Agency repurchase of parcel #1. Although the Auto Park Developers are claiming financial hardship, staff has not received adequate documentation to substantiate the amount of hardship or justify the level of additional participation requested. Additionally, staff needs to review loan documents pertaining to all of the parcels, evidence of other encumbrances and operating statements indicating cash flow. This information has been requested from the owners. It is therefore recommended that this item be continued Cor two weeks in order that the developers can provide the information requested and starr 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. 9-6 , 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 increased by $738,230 in order to reimburse the developers for the land right-of-way cosls not forthcoming under the assessment district reimbursemenls. Based upon initial revenue projections for the Auto Park which included three large dealerships (Ford, Chevrolet and Toyota, which was negotiating to purchase Parcel #1 at that time, and one small dealership) with annual sales increases of 6%, it was possible for the developers to receive adequate incentive paymenls 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 paymenls to return an additional $738,230 will be forthcoming during the first six years. In the event that the Auto Park does extremely well and exceeds estimated sales tax revenues during this period, the Agency, through ils 25% share, would also be receiving more revenues than anticipated during the first six years. 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 paymenls. The developers have requested that the increase be reduced to 2 % based upon the lower inflation rate in 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. Inflation 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 1, 1995 - June 30, 1996. This figure will increase slightly each year for the next five years. The base sales tax was also predicated 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 commensurate with recent sales levels. Such a reduction 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. If the base were reduced to $340,000, the City's loss in the first year would be 75% of sales tax revenues over $340,000, up to $550,000. If 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 1, 1996. In accordance with the DDA, the escalator is scheduled to go into effect on July 1, 1995. 9-7 Page 4, Item ~ '. Meeting Date 02/14/95' The financial 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 $550,000. The loss would reduce to $2,OOO:t per year thereafter. Agency Repurchase of Parcel #1 In addition to the Chevrolet dealership (lot #3), Mr. Ordway owns lot #1 which comprises 2.4 acres. This parcel originally comprised 4 acres. However, Shinohara retained 1.1 acres to stockpile 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 repurchase the parcel at a value inflated to account for land development costs. In addition, Mr. Ordway is required to purchase the 1.5 acres once the contaminated soils are removed (which could occur later this year). The Agency would presumably have to assume this obligation as well. This would require a cash payment of approximately $1 million (per Ordway's request) which would be tied up until the land was sold by the Agency. It may be possible to recoup these funds when market conditions improve and the contaminated soils are removed from the adjoining parcel. ak:autoparlclxtraheJp .04 , f-f! .. " NUGENT 8< NE~ THO.O' ,. HUH'T A 'H",cO"OHOL COR...~"ON SUP,," L. N<WN'AM ATTORNEYS AT LAW LA ~OLLA OFF'CC JOSHUA "'ON"AN '0'0 ..ecN. AV"Uc, SUOTe noo ... P.OSPECT STHUT, SU'TE >OS CHEH'L L. HUP".H OAV'O .. 'UOO'T SAN DI'<OO. C.A.L1VORNU, """Ot-""44 ~ JOLLO. CA"'OHN,A ooon "LEP'ONE ,..., .....".., JAH" 0, .<LLOH TELe,"o" ,.,., no-,," p.ca'H"E 's,., ......... H'CHO" H. ".N ""HIC' M, SHOTH 'ACOO.'LE '0'" ...-0<" JOHH~. A..'" HEReO'TH G. ALCOC' 'nYOH W. HO."H' January 30, :1.995 .'140' C. LTHN M. 'OTHHTN '.W'.ON Bv Fax and Mail -- - - .... '.. ,0 ,.00 ~"~H Sid w. Hor;r1:s --cs ~~-'-::::.T 1. ~~A'\--:""I APC ,,'" 0: ~,' . :-OO":F ,-,- ".. City Manager City of Chula Vista 276 Fourth Avenue Chula Vista, CA 9:1.910 '? ,;.:> . _.. , . . ~:~ ":;':, ~e: Chub. Vista Auto"Park ',.-.' < Dear ;Hr. Morris: "" .. .'... .., . - . ,; : :AS ctiscussed in our m~~tiJiq 'on January 19. 1995. the' deve1opers or the Chula .V~- Auto Park (David ordway, Travis Reneau .aM Doug Fuller, as' qeneraJ. 'partn~r of the DGF Family . L1mited partner¡mip) are exU8I\ely dissatisfied with the amount of bOnd proc~eds bèinq 41sbursed for .Assessment District No. 92-2. '1'he bOM proceeds to be disbursed tò the c1evelopèrs are almost 50t leas than t:þat wJiiCh' va,s oric;¡irially contemplated. ,We un<1erstanc1 that the amount of 1:h. bOnc;1s ..old was 11111toed by the value of the propert:y th~t forms the AssQsuent District, -bUt also realize 1:hat the va.luation ignored any value for Ùlprovements to the property which are significant. , :. It vas oric¡lnally. contemplawdtho.t the bOnd proceeds would reimburse the ð.eVelo~r8 for the costa of co~ctin9' the improve- ments, po.yoff the lien on the Auto Park parcels for Assessaent District Bo. 90-2, reÙlbl.D;.e the developers for incidental costs e,nll paIr:'e developer. $738,230 for acquisi~ion of the r1ghts-of- way be . transter:z;ed to the city. '1'he t»tal construction costs and . incidental ~es incurred by the developers was approxi- Jlately $1.5)0 i 000 while the amount of bOnd proceeds being disbursed is only $1~36'8,OOO. ~e cost:j:o developers indicated abOve does not inclUde the cost for the otay Rio Water Line. Thus, the bond procee(l,s will not evøn réiDlburse the develoPers for their out-of- pocket COS~ in~d. in constru~g the improvements. , -, - ..' '. In addition, the delay, in the widening of otay Valley Road has si~ificantly impacted the busines~ òf the dealers in ,the Auto ... -. -.-. _00_-... ""'. 9-1 ... 00.' -. 619238Ø465 Nl.JGCNI to NCWNHHM APC 568 PÐ3/Ð6 JRN 3Ø.! 9S ],~:26 sid W. Morris city Manager City of Chula Vista t¡ J~nuary 30, 1995 Page 2 Park. other factors, such as the devaluation of the peso, have adversely affected the business of the dealers at a tiJll8 when overhead costs have incre~sed dramatically. As discussed at our meeting, the" developers are hereby respectfully requesting assistance from the City of Chula vist~ and/or the :Redevelopment Agency in making up the' shortfall in the bond proceeds and diroctly compensating the developers .for the "-,' rights-of-way. "" " - , '." ,< ".-. " -.,., .0,. '-':¡~'::-"~"3 \~:?",T 1. ""'".'.'-'~'1 :1C" "r: ': -.'" -~"'.".., ""'" l"irøt,. the 4evelopers request the assistancê Of' 'thë' city' and/or Redevelopment Agency in securing loans in the total amount ot $1,100,000 to reimburse the developers for construction costs and miscellaneous expenses not being reimbursed by the bond proceeds, to reiinburse the developers for costs incurred in :t::oñstru:ctingthe ot~y Rio Water Line, and to make up the shortfall ~n~~,bondproceeds for the ri9ht-of-w~y acquisition costs. :', ~ .: second, the developers request th~t the City and Redevelopment ~cy consider lUiiend1ng the Disposition ahçl DevelcpaentAgreeaent C"DDA") éoverinq the Auto Pàrk to increase the amount of incentive payjRents po1;.entially payable to ,the developers as a :means ot act~ly paying' thO!Jl ~or the cO,stet the ¡and aonsi&tinc¡ of the ~ras1:rqoture imProvG:lents (rather than a .ere borrowing for the cO.-t of' '$Uch "la11!1). , ;. The borroWing .for . the cOst o~ th~ "land referred -to aboVe will', provide tbedeyelopQrs with short-term è:apit;al' neeð8 Wb$.le chanqes. in:-'t.he "incentive paymants will assist the d~veJ.o~~ in rep~yihg the; ,~,~an. ;,~ ' '- A ~OI5ed _endm~t to the:.,D~,w as ,fOllOWS: ,; .. ,1. Ttle,1{axþtu1a Ac¡engy, Repayaent Obligation ..in' ,~ : Section, "()1a~. (vi) Gould be !l\Q;'eo,øed by "the ,conteJnpJ.ated dqht-o~-Way:~cqui..i~io~ ~st ot $73~,230. ' ',' 2,.: '.rbe ,Base sales Tax, uòunt . should. Þe decreased " 1:o'$340~OOO ~ more acaurately.:,~neot tbesales taxes. ", paid:by. the Ø-~8 'in thè: past.. '.rbe' averaqe Combined ta~bl. sales of Fuller Pord. ån<l South Bay Chevrolet tor 1991 and 1992 (thè2 years "preQeding" the closing on 'the land purcháse)walil .ppro~tely $33,300,000.' 3.' '.rbe .6t Ðscalator,:on 'the":,Base.Sales Tax amount , should be decrease<1frO1ll ,6~;tQ"'2tand .the first yearoi increase should be the Agency Fiscal Year, beginning July 1, 1996., ' . r-(() . .-- - ..' ,--'. ...-.- ' ... .... -.-. . . , " -- , -~, ~ "~, ~ ~~ u."" Sid W. Morris City Manager City of Chula Vista January 3D, 1995 Page 3 We greatly appreciate your pagt assistance and willingness to discuss these matters. rf you wish to dÜ:cuss these matters before taking them to the city Council, please call me. As we discussed, we would appreciate your taking these issues to the City Council meeting on February 7, 1995. Thank you for your cooperation. Sincerely, .-- . - -'~-n; ",.:,,~ . :~t ~, ;;: - ",,:~, "'" '" , John Abbene JJA/nf "cc:;-': ¡- Chris 'Salomone (Via Fax) - D.ouglas Fuller " David Ordway, Travis Reneau , " 0, ,:.1. , . --., ";. ,._cl" , - - --.. .. ',' ;.0" ' " . -- ,. - .. o. ". . . - . - .,0 .. ,- " ,. - '. 9-f/ r -/Q.. 0.""-><>"""'" NUC>CNI .. "<""""""'1.......... """ """"/"'0 JHN.>t:J.= H:dj . ' NUGENT & NEWNHAM "~O~AO p, ~UG<NT A ..O._.O""'C CO'_A"'ON oa'HC" C, "<WNNAH "TTO"Ney" AT I.A... IA .JOCIA O.FlC~ JOCHU" We'NH"" 0000 '<eOHO AveHue, euon .,00 .,. ,.-oc.eCT STAeu, 5U<Te >OS CHCOYC L -U..O<O """'0 .., NU.,"T S-,"N Dt1llGO. CAtlPOm<tA Qg'01-""44 ""' .ec,,",. CAC"OAN'A .:OST JAH.. 0, H,...A T"DOHON' 10101 -""'S., H'CHAU N, ..OH nc..HO'< 'SIO' U""" "'CS'H'L< 'SIOj ......... ~AT~OCK M. ONITH ...eSlN'C. to'.' uo-<>A6$ JOHN oJ. A.UN< H'M<.n~ G. "CCGCK snV<N w. HA""" January 30, 1995 .o~o. Co LYN~ t<. ""TH-YN "<""'HAH Bv Fax and Mail - sld Wo' Morris' '." "' ,' _.. -"-' city ManIf<;ter-¡;~,T!5 '":'?'T 3. ',-::;"'--""'1 APf' ",'- ': ., '<1'\':-7' -" City of Chula Vista - . , 276 Fourth Avenue Chula Vista, CA 91910 .' .' , " . --" - , Re: Chula vista Auto -Par~c'~ -Paroè~ 1 ",: ", :':¡DEÍarIMr. Morris: '," 0:. ",f, .. , :;. '~'~ On behalf of Da:ve' òrdwayilrid Travis' Renesu, owners of South :; 'Bay Chev;rolGt andParcèls ~. and '1 'of thèf Chula Vista Auto Park, as ., , d.i.scu,ssed in our ~.et1ng on ,Janúary ~9;' ;;995', we request the city's . and/or ~~~v.lop¡llQnt Ai;1et:1CY's assistance w~th respect to Paroel 1 ,', ot ~e Auto ~ark, the vacant lÇlt,. he YCNkriOW, the .ize of Parcel 1 '~s 'significantly redUCed When' contaminated sou. _8 tound thrOUghout t:he entire Au1;o Park and stored on a Holding site carved out of the original Parcell. !t'be limallsize ot pucel 1 ,an4the failure of .Mr. Shin~t:ato reiaødiate th~ Holding- site or even adequately store the oo,n1:aI11nated soil bas 1IIade it impossible tor the OWDI;Œ'S to' sell paroal 1. '!'bay hayehad several potential bUyers bttt dl have indicated that tha parcel is not :Large enough t~r a ~ de~ll;Œ'ship. .. The cost of pJrChasing' t.nd holdil19Puce1 1 together with t:he dr~ticalll" increased oveå1ead in oPerati~ SOUth Bay Cbevrolet, b.aye 'thr4!elte~c1 the abiU,ty of Hessrs. ox:dway. and RenAu to 'continue to. operate the. dealership. 'l'bey are in immediate need of, your financial, apiStance 'or theY,laaY be forCed. to close South Bay * CheVrolet. We reqqest th$,tthe City and/or Redevelòp¡IIent Ac¡enoy purchase lIarçel,"l f~ "the, own~s.as,&oon às pOssible for their òu1;..of-P<JCke.t cost in purchasing and maintaining the parcel. In addition, as ~ part of the pu~chase transaction, we must address the obligation of!(essrs. Ordway and Reneau to purchase the Holding SIte When an~ if, the contàlllina.tad sòi1-1s, removed. ' . : j 9-r3 ! "-'- .. .- ,-- .----- - - -- -- -- - - .. ..-. . . Sid W. Körris city Manager City of Chu1a Vista January 30,1995 Page 2 The'owners seek reimbursement of the following costs: original Land Cost $ 876,511.00 Share o~ Infrastructure Coat Not Reimbursed by Bond Proceeds 26,681.00 Pend ts 5,104.00 Property TaXes - First Installment 1994-95 19,660.00 -.. - ..First Installment Supplemental._. -:.j';2:48~OÓ' r, . ,1:--,,- . ~.5 ,.'.T~~' (r.()I!!':1-9¡9~4 ~r' - -. .. Both Installments for 1993-94 '-j,668.00 .. Interest Expense 103,672.00 Miscellaneous Fees and Expenses 10.000.00 .< '0',' TO'!' AL $1.048.544.00 ',," i l..; .." rt .ls our belief that the development of Paroels 2 and 3 as well as the constrUction of the roads and other infrastructure iJÌtprovements havelncreaSe~ the value of P~ll to $11 per square toot;'-. particùlarly after..the'.Boldbic¡.,.Site .is .remed1ated . aM CCiDbinedwith Parael 1.' i'h1s will etJable the city or Redevelopment .Agency ;to Ii~e th!,n. recover the cOst. Unfortunately, Messrs. OrdWay and Reneau are unable to hold this parcel. When it is not g"eDeratinc¡ any income aM cannot be sold until' the Holdinq site is remediated. .. ,... .' : As we discussed, we would appreciate your taking this JIJðtter to the .City Council meetinc¡ on February.7, 1995. If you wish to di..cuss this issue before' taking it to the City Council, please call me. Tbank you for your cooperation. . ,,: . r ( . Sincerely, t. :. , rfrrß~ John. Abbene JJA/nf ccr :Chris Salomone (Via Fax) ..- Davi<l or<lway ;,; . ~,. . Travis Reneau .. ',.,!'. --.-- .--. .. ..-' ~ -~f:., .- . . ... EXHIBIT B NUGENT & NEWNHAM THO HAS p, NUGENT A PRO'ESS'ONAC CORPORATeON LA JOLLA OFFICE STEPHEN L NEWNHAH ATTORNEYS AT LAW JOSHUA WEONHAN a,. PROSPECT STREET, SU'TE 305 CHERYL L, RU,"<ER 'O'O SECONO AVENUE, sum 2200 CA JOLLA, CAU'ORN<A 92°" OAV,o H. HUGENT TEeEPHOHE ,e'9' 'S9-3e.. JAHES 0, HICLER SAN DIEGO. CALIFORNIA 9210t-3944 H'CHAn H, FOSH TnEPHoNE ,e,., 23e-'323 ESCONDIDO OFFICE PATR'CK H. SH'TH FAC5<H'LE le,g, 23e-04eS JOHN J, ABBENE ".. SOUTH ESCONOIOO BOULEVARO HEREOITH G, ALCOCK ESCOHO,OO, CAL"ORNOA 92025 STEVEN W. HASKINS March 17, 1995 TELEPHOHE ,..., 7'3~'0' 5<HON C. CTHH H, KATHRYN NEWHHAH Bv Messenqer 4?- Fred Kassman JiMi 1995 , "'.: Department of community Development ' Ceo: city of Chula Vista 263 Fig Avenue Chula VÜ;ta, CA 91910 Re: Chula vista Auto Park - South Bav Chevrolet Dear Fred: Pursuant to the letter of February 13, 1995 from Glenn Googins, we enclose the following information with respect to South Bay Chevrolet and the loans ágainst Parcels 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 copies 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 $3,921,895 and the other Note is for $1,045,000. Both of these Notes are secured by deeds of trust covering 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=d;ay and.-t.he- balance was put back into the dealership. Of the on ece1ved 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 be kept confidential. ¿¡-IS / 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, JJA/nf þbbono cc: Travis Reneau David Ordway 1-/6 EXHIBIT C DEFINITION OF TERMS t.t? 1 401. Aaencv Incentive and Post-Incentive PaYments. 2 a. Definitions. As used in this Section 401, the following definitions shall apply: 3 (i) "Aaencv Fiscal Year" shall mean the year 4 beginning July 1 and terminating June 30. 5 (il) "Applicable Percentaae" shall mean: (w) during any period of time that less than two Major 6 Brand Auto Dealerships are operating on the Site, zero percent (0%), (x) during any period of time that two 7 Major Brand Auto Dealerships are operating on the Site, twentY-five percent (25%), (y) during any period of time 8 that three Major Brand Auto Dealerships are operating on the Site, fifty percent (50%), and (z) during any period 9 of time that four or more Major Brand Auto Dealerships are operating on the Site, seventy-five percent (75%). 10 (iil) "Base Sales TaK" shall mean, for any 11 given period of computation, the amount of $550,000.00, as such amount shall be increased by six percent (6%), 12 on a cumulative basis, at the end of each Agency Fiscal Year. The amount of $550,000.00 represents one percent 13 (U) of $55,000,000.00. 14 (iv) "Incentive PaYment Commencement Date" shall be the same as the "Liability Segregation Date" 15 (as such term is defined in Section 105d., above), provided such date occurs within the time contemplated 16 therefore in the Schedule of Performance, 17 (v) "Incentive PaYment Expiration 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 full.. 20 (vi) "Maximum Aaencv Rèpavment Obligation" shall mean an amount equal to the lesser of: (x) the 21 difference between the Acquisition Price and $3,767,504.00, 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 accrue interest at a fluctuating rate per annum equal to 251 the floating commercial loan rate announced from time to time by Bank of America as its "prime rate" R1Y2 two 26 percent (2%). 27 (vii) "Sales Tax Received bY City" shall mean, I for any giyen period of computation, that portion of the ! 28 California sales tax (curr~ntly one percent (1%), I J\AD233Dl T. NAP f-/F 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 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 and paid to such owners individually, as described in 13 clause (ii), below. 14 (ii) The Incentive Payment to any given Site Parcel owner for any given period of computation shall 15 be calculated by multiplying the difference . (hereinafter, the "site Parcel Tax Excess") between: (x) 16 the portion of 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 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 1-/7 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 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 13 (37!¡%) of the site Parcel Tax Excess attributable to the site Parcel upon which such dealership is located (which 14 calculation of Site Parcel Tax Excess shall be subject to the same adjustments as are described in clause (ii), above). 15 The foregoing described allocation assumes that each Site Parcel shall 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 irt 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 Incentive 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\AD233Dl! . NAP 9-d-() . _.'u -' - 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 City. 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, gt~. of the Community Redevelopment Law. 7 e. Miscellaneous. 8 (i) Accountina. Agency shall have the right 91 to receive from Redevelo~er, and Redeveloper shall deliver to Agency within thirty (30) days fo~lowing 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 (11) Calculation of California Sales Tax. As provided above, the definition of Base Sales Tax is 14 calculated on the assumption that the California sales tax to be returned to the City for use as unrestricted, 15 general fund revenues shall remain one percent (1\). However, in the event such percentage of California 16 sales tax is modified in subsequent years, the parties shall cooperate to reformulate the definiti~n of Base 17 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 (1%) 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 Operate. Notwithsta~ding any 22 provision in this Section 401 to the contrary, it is understood ãnd agreed that in the event that either: , 23 (x) the Incentive Payment Commencement Date fails to occur within the time frame set forth in the Schedule of 24 Performance, or (y) such dates having occurred within the time frame dsscribed in the Schedule of Performance, 25 thereafter, .for 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.SAP -1~/ 1 Incentive Payments or Post-Incentive Payments under the provisions of this Section 401. 2 ADDITIONAL TERMS GMAC - General Motors Acceptance Corporation: lenders for auto purchase loans, dealer operation loans and mortgage lenders. DDA - Disposition and Development Agreement. 1/.4 .- _. ,,_.