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HomeMy WebLinkAboutRDA Packet 1994/01/28 Friday, .January 28, 1lJ94 4:00 p.m. [lmmec6ately following City Council WorksessioolMeeting.] Coundl Confen:nce Room City Hall Building .................................................................................................................................................................................................................................... . . . . . . . . . . . . i COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT i j The City of Chula Vista, in complying with the Americans with Disabilities Act (ADA), request j . individuals who may need special accommodation to access, attend, and/or participate in a City . meeting, activity, or service contact the Secretary to the Redevelopment Agency at (619) 691-5047 for specific information on existing resources/or programs that may be available for such accommodauon. Please call at least forty-eight hours in advance for meetings and five days in advance for scheduled services and activities. California Relay Service is available for the hearing impaired. .................................................................................................................................................................................................................................. CALL TO ORDER 1. ROLL CALL: Members Horton , Fox , Moore Rindone , and Chairman Nader 2. APPROVAL OF MINUTES: None. BUSINESS 3. WRITTEN COMMUNICATIONS: None Submitted. 4. REPORT TERMS OF THE CONSENT AND SUBORDINATION AGREEMENTS WITH THE FORD MOTOR CREDIT COMPANY AND GENERAL MOTORS ACCEPTANCE CORPORA TION--On 1/4/94 the Redevelopment Agency approved a Consent and Subordination Agreement to be entered between the Agency and Ford Motor Credit Company. Tbe FMCC Subordination Agreement is substantially similar to the Consent and Subordination Agreement previously entered into by the Agency and General Motors Acceptance Corporation in connection with their loan to Messrs. Ordway and Reneau. 1n negotiating the final terms of the FMCC Subordination Agreement, certain conditions affecting the Agency's right of reverter and requirement to subordinate to the CC&Rs have been altered at the request of Ford Motor Credit Company. Tbese changes are presented to the Agency for concurrence for inclusion both in the GMAC and FMCC Subordination Agreements. Staff recommends that the Agencv annrove the changes and authorize execution of the FMCC Subordination Agreement as modified and nrenaration and execution of an amendment to the GMAC Subordination Agreement incornorating such changes therein. (Community Development Director) AGENDA -2- JANUARY 28, 1994 PUBLIC HEARINGS Thefollowing items have been ofivertised and/or posted as public hearings as required by law. lfyou wish to speak to any item, please fill out the "Request to Speak Form" and submit it to the City Clerk or Secretary to the Redevelopment Agency prior to the meeting. (Complete the green form to speak in favor of the staff recommendation; complete the pinkform to speak in opposition to the staff recommendation.) Comments are limited to five minutes per individual. None Submitted. ORAL COMMUNICATIONS This is an opportunity for the general public to address the Redevelopment Agency on any subject matter within the Agency's jurisdiction that is not an item on this agenda. (State law, however, generally prohibits the Agency from deliberating or taking action on any issues not included on the posted agenda.) lfyou wish to ofidress the Agency on such a subject, please complete the yellow "Request to Speak Under Oral Communications Form" and submit it to the City Clerk or Secretary to the Redevelopment Agency 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. ACTION ITEMS The items listed in this section of the agenda are expected to elicit substantial discussions and deliberations by the Agency, staff, or members of the general public. The items will be considered individually by the Agency and staff recommendations may in certain cases be presented in the alternative. Those who wish to speak, please fill out a "Request to Speak Form" and submit it to the City Clerk or the Secrelary 10 the Redevelopment Agency prior to the meeting. Public comments are limited to five minutes. None Submitted. OTHER BUSINESS 5. DIRECTOR'S REPORT Schedule of Meetings. 6. CHAIRMAN'S REPORT 7. MEMBERS' COMMENTS * * * * * * * The meeting adjourned at: p.m. to a .Joint Meeting of the Redevelopment AgencylCity Council on Tuesday, February 1, 1994 at 4:00 p.m., immediately following the City Council meeting, Council Chambers, Public Services Building. IC:I WP5t IAGENCYIAGENDASIOl-28-94.AGD] MEMORANDUM January 27, 1994 TO: The Honorable Chairman and Agency Members John D. Goss, Executive Director~ ~. Chris Salomone, Community Development Director C- VIA: FROM: SUBJECT: Special Agency Meeting: Friday, January 28, 1994 The attached staff Report Terms of the Consent and Subordination Agreements with the Ford Motor Credit Company and General Motors Acceptance Corporation is placed on the Agenda for a Special Redevelopment Agency Meeting with the consent of the Mayor in order to meet a commitment made by the City Attorney, to the Attorney of Doug Fuller, that he would try to expedite Agency approval of the Agreement to avoid significant claimed financial losses to Mr. Fuller. [C:IWP51IAGENCYIMEMOSIINF094-1.MEM] ,I, This yage intentionally left blank. -.1 - REDEVELOPMENT AGENCY AGENDA STATEMENT Item Meeting Date 01/28/94 ITEM TITLE: REPORT Terms of the Consent and Subordination Agreements with the Ford Motor Credit Company and General Motors Acceptance Corporation Community Development Director C :;. &f!J1 Executive Director/City Manager.Ji bf ~ (4/5ths Vote: Yes No X) SUBMITTED BY: REVIEWED BY: BACKGROUND: On January 4, 1994 the Redevelopment Agency approved a Consent and Subordination Agreement (FMCC "Subordination Agreement") to be entered between the Agency and Ford Motor Credit Company ("Ford Credit")[see Attachment A]. The FMCC Subordination Agreement is substantially similar to the Consent and Subordination Agreement previously entered into by the Agency and General Motors Acceptance Corporation in connection with their loan to Ordway and Reneau (the "GMAC Subordination Agreement"). In negotiating the final terms of the FMCC Subordination Agreement, certain conditions affecting the Agency's right of reverter and requirement to subordinate to the CC&Rs have been altered at the request of Ford Motor Credit Company. These changes are presented to the Agency for concurrence for inclusion both in the GMAC and FMCC Subordination Agreements. RECOMMENDATION: That the Redevelopment Agency approve the changes and authorize execution of the FMCC Subordination Agreement as modified and preparation and execution of an amendment to the GMAC Subordination Agreement incorporating such changes therein. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. DISCUSSION: The FMCC Subordination Agreement, as previously approved by the Agency, reflects the intent of the original Disposition and Development Agreement (DDA) , in that: (i) it provides assurances to Ford Credit that, should the Agency exercise its reverter following a developer default, the Agency will take title subject to the Ford Credit loan, and (ii) it provides assurances to the Agency that, should Ford Credit foreclose under its loan following a developer default, Ford Credit will take title subject to the Agency's reverter. As required by the terms of the DDA, Conditions, Covenants & Restrictions ("CC&Rs ") for the Auto Park are being drafted. The CC&Rs will provide guidelines, as between the various owners of property in the Park, as to what purposes property may be put to (i.e., only auto dealerships), etc. Originally, it had been intended that the CC&Rs be recorded prior to any loans being made to the dealers so that the CC&Rs would be superior to those loans (requiring foreclosing lenders to take title subject to the CC&Rs, a desirable result for us). However, this did not occur and the dealers now need to have their lenders subordinate to the CC&Rs upon the recordation thereof. ~3- Page 2, Item Meeting Date 01128/94 After the terms of the FMCC Subordination Agreement had been negotiated, in connection with its review of the proposed CC&Rs, Ford Credit requested a clarification to the FMCC Subordination Agreement to the effect that, should the Agency exercise the reverter, the Agency would be required to take title subject to the CC&Rs. The intent of Ford Credit in making this request is to protect their investment in the Auto Park by not permitting non-auto dealership uses which may negatively impact auto sales. However, this would place the Agency in a position of re-acquiring property within the Auto Park which may no longer be suited for an auto dealership but which, by virtue of the CC&Rs, would be restricted to solely auto dealership purposes. It is the position of the Agency staff that this is not the result contemplated by the DDA. However, in order to expedite the closing of the Ford Credit loan and Ford Credit's and GMAC's subordination to the CC&Rs, a proposed compromise has been reached. That compromise is as follows: 1. Should the Agency find itself in the position of wanting to exercise the reverter, the Agency will give notice to Auto Park lenders and owners of its desire to do so. 2. In the event that the average sales tax received by the City from the Auto Park is then at or above a certain agreed minimum level (commencing at $750,000/year and thereafter escalating each year according to an established formula), the lenders and owners will have three years in which to present a qualified dealer to the Agency to acquire and operate a dealership on the defaulting site. Failure of the lenders or owners to present such a dealer within that timeframe entitles the Agency to exercise the reverter and take the defaulting property free of the restrictions in the CC&Rs, thus permitting the Agency to place any type of use thereon as it desires. 3. In the event that the average sales tax received by the City from the Auto Park is then less than the agreed minimum level (or thereafter drops below that level) the period of time in which the lenders and owners will have to present such qualified dealer is reduced to one year. The agreed minimum level of sales taxes is an amount which the Agency staff, employing reasonable projections, has calculated would equal anticipated sales tax revenues from three dealerships remaining in operation during the early years of the Auto Park. FISCAL IMPACT: The direct impact to the Agency as a result of this change will be the loss of sales tax which might otherwise be generated from the defaulting parcel from non-auto dealership uses during the one to three year period that the Agency is required to wait for a qualified dealer to be presented. However, any loss to the Agency should be minimal since high sales tax-generating retail reuse would be limited by the size of the individual parcel. For example, an 80,000 square foot K-Mart, which could be accommodated on the largest site (9.8 acres) would provide approximately $200,000 in sales tax revenue yearly--the approximate amount that a medium-size dealership would provide. Attachment [C:\WP51 \AGENCY\RA4S\FMCC-2.RA4] -'-1- JOINT REDEVELOPMENT AGENCY/CITY COUNCIL AGENDA STATEMENT Item 'I Meeting Date 01104/94 ITEM TITLE: [a] Agency RESOLUTION 1384 Approving the Consent and Subordination Agreement, and Assignment of Rights Under the Disposition and Development Agreement to the Ford Motor Credit Company, and authorizing the Executive Director to Execute Said Documents [b] Council RESOLUTION 17345 Approving an Assignment of Proceeds of the Acquisition/Financing Agreement for Infrastructure Improvements for the. Chula Vista Auto Center with the Ford Motor Credit Company, and Authorizing the City Manager to Execute Said Document SUBMITTED BY: Community Development DirectoJl /.f REVIEWED BY: Executive Director/City Manager 1(; k d (4/5ths Vote: Yes _ No..K.> BACKGROUND: The Redevelopment Agency entered into a Disposition and Development Agreement (DDA) with the developets of the Chula Vista Auto Center in September 1992. The DDA allows for the formation of an assessment district to fund internal infrastructure improvements including roads, sewers, street lighting, etc. which will be conveyed to the City once completed. The City Council entered into an Acquisition/Financing Agreement for the assessment district on August 24, 1993. Subsequent to these actions the Redevelopment Agency and .the City entered into a Consent and Subordination Agreement, Assignment of Rights under the DDA, and Assignment of Proceeds of Acquisition/Financing Agreement with GMAC in conjunction with financing the South Bay Chevrolet auto dealership within the Auto Center site. At this time, Mr. Fuller, developer of Fuller Ford and Fuller Honda, is asking for the execution of similar documents in onier to secure financing from the Ford Motor Credit Company (FMCC) for the new Fuller Ford dealership. All three documents are in all material respects virtually identical to the documents prepared in connection with Mr. Ordway's GMAC financing last September. These documents have been reviewed and approved by Agency Special Counsel, and are recommended for approval by the Redevelopment Agency/City Council. RECOMMENDATION: That the Redevelopment Agency and the City Council adopt the appropriate resolutions and authorize execution of the three agreements cited above. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. ~ --5- Page 2, Item ~ Meeting Date 01/04/94 DISCUSSION: The authority under the Disposition and Development Agreement (DDA) allows for the execution of the Consent and Subordination Agreement, and Assignment of Rights Agreement by the Executive Director without further Agency action. However, it is the intent of staff to . apprise the Agency of the proposed financing and related risks, and receive specific authority to execute these documents. The third agreement, Assignment of Proceeds of the Acquisition/Financing Agreement, needs to be executed by the City Manager since it related to the formation of an Infrastructure . Assessment District. Agency Special Counsel advises that, since the Assignment of Proceeds entered into in connection with GMAC financing was expressly authorized by the City Council,. the comparable agreement with FMCC should similarly be authorized by the City Council. Consent and Subordination Al!'reement The Consent and Subordination Agreement to be authorized by the Agency was contemplated in the DDA. This Agreement Constitutes the Agency's approval of the FMCC loan as "acceptable mortgage financing" and sets forth the relationship between the Agency and FMCe with respect to the reverter and other issues covered in the DDA. While the DDA provides tha~ only financing which is permitted to be assumed shall constItute "acceptable mortgage financing", FMCC will allow assumption of the FMCC loan (in the event of Mr. Fuller's default) only by ap.proved Ford dealers [see Section 5(b) of proposed Agreement]. The risk for the Agency is that, in the event that the Agency wishes to exercise its reverter rights, it will be required to either payoff the FMCC loan or fintl a Ford' d~ership willing to assume the DDA. development obligations. This obviously restricts the Agency's flexibility in redeveloping the . Auto Center site with the FMCC financing already in place. In addition, the developers and successor owners of the Auto Center site are required by the. terms of the DDA to hold the Agency harmless with respect to any liabilities which the Agency may be exposed to in connection with the redevelopment of the site. FMCC will not agree to hold the Agency harmless with respect to events occurring or claims made prior to their I ownership of the site. The intenrof the DDA hold harmless provision .~as to place a cap on I unknown liability to the Agency which may arise as a result of its involvement with the project. The assumption restrictioosand hold harmless limits repternt the only two risks to the Agency under this Agreement. These are generally the same tYPel(of risks which were reviewed and approved by the Agency with respect to the GMAC Agreement for development of the Chevrolet dealership (although the hold harmless limitation under the FMCC agreement is a bit broader). In addition to the material changes to the provisions of the DDA described above, this Agreement also sets forth a couple of non-material clarifications to the DDA, including the clarification that transferees receiving the site from FMCC in connection with foreclosure type remedies will, provided they meet the "developer" criteria set forth in the DDA, be entitled to assume the remaining DDA rights and obligations, and the clarification that the determination that such criteria have been met will not be unreasonably withheld. ~ -to - Assilmment of Ril!hts Item .; - 01/04/94 The requested Assignment of Rights under the DDA is also to be authorized by the Agency. . This Agreement was also contemplated in the DDA and assigns to FMCC all the rights afforded to Mr. Fuller under the DDA as additional security including the present right to ierewe Fuller's "incentive" payments as the same become due under the DDA. There are no risks to 'the Agency under this Agreement. Assilmment of Proceeds , The Assignment of Proceeds of Acquisition/Financing Agreement is to be authorized by the City Council. This Agreement is contemplated by the Acquisition/Financing Agreement entered into on August 24, 1993 which provides for the establishment of an assessment district for the purchase of infrastructure improvements within the Auto Center site including roads, sidewalks, landscaping, street lighting, sewers, etc. There are no risks to the City Council under this Agreement. All three documents are in material respects virtually identical to the same documents prepared in connection with Mr. Ordway's GMAC financing approved last September and are recommended for approval by the Agency and City Council at this time. FISCAL IMPACT: The potential impact to the Agency/City Council includes the following: [1] In the event of Mr. Fuller's default under his obligations under the DDA, assumption of the FMCC financing will be limited to a Ford dealer willing to assume the DDA development obligations thereby restricting the Agency's flexibility in continuing the redevelopment of the Auto Center site and the receipt of tax increments and sales tax revenues therefrom. [2] FMCC as a successor/owner of a portion of the Auto Center site will not agree to hold the Agency harmless with respect to events occurring or claims made prior to their ownership of the site. This leaves the Agency somewhat vulnerable to events occurring or claims made before FMCC's tenure. Although the risk of this occurring is not considered to be great, it is conceivable that there may some day be financial consequences. The extent of such consequences cannot be determined at this time. [C,IWP51IAGENCYIRA4SIFMCC.RA4] jf.~ -7- This Jage intentionally left blank. -8-- RESOLUTION 1384 , RESOLUTION OF THE REDEVELOPMENT AGENCY OF TIlE CITY OF CHULA VISTA APPROVING THE CONSENT AND SUBORDINATION AGREEMENT, AND ASSIGNMENT OF RIGHTS UNDER THE DISPOSmON AND DEVELOPMENT AGREEMENT TO THE FORD MOTOR CREDIT COMPANY, AND AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE SAID DOCUMENTS - WHEREAS, the Agency entered into a Disposition and Development Agreement (the "DDA") with the developers of the Chula Vista Auto Center (the "Developers") on September 15, 1992 for the purpose of developing an auto sales park within the Otay Valley Road Redevelopment Project Area, within the City of Chula Vista; and WHEREAS, said DDA contemplated and authorized the execution of documents including the Consent and Subordination Agreement and Assignment of Rights under DDA which would be necessary in order to provide financing for the development of auto dealerships within said Auto Center; and WHEREAS, the Ford Motor Credit Company ("FMCC") has presented to the Agency a Consent and Subordination Agreement, and Assignment of Rights Agreement under the DDA related to the provision of financing for development of a new Fuller Ford dealership within the Chula Vista Auto Center; and WHEREAS, said Agreements have been reviewed and recommended for approval by Agency Special Counsel and the City Attorney. NOW THEREFORE, THE REDEVELOPMENT Agency OF THE CITY OF CHULA VISTA does hereby find, order, detennine and resolve as follows; 1. The Consent and Subordination Agreement by and between the Redevelopment Agency of the City of Chula Vista and Ford Motor Credit Company, said Agreement being on file in the Office of the Secretary to the Redevelopment Agency and known as document RACO-QI-94, is hereby approved and the Executive Director is authorized to execute same in the form on file, together with such technical clarifications or corrections thereto as may be determined by Counsel to be necessary to reflect the intent of the parties thereto. 2. The Assignment of Rights Under the Disposition and Development Agreement with the Ford Motor Credit Company, said Agreement being on file in the Office of the Secretary to the Redevelopment Agency and known as document RACO-02-94 is hereby approved and the Executive Director is authorized to execute same in the form on file, together with such technical clarifications or corrections thereto as may be determined by Counsel to be necessary to reflect the intent of the parties thereto. PRESENTED BY; APPROVED AS TO FORM BY: ~tA' ~ ~ Chris S omone, Executive Secretary and Community Development Director [C,IWP51IAgencyIRESOSIFMCC-A.RES) Bruce M. Boogaard Agency General Coun J'r~~ - f- i RESOLUTION 17345 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AN ASSIGNMENT OF PROCEEDS OF THE ACQUISITION/FINANCING AGREEMENT FOR INFRASTRUCTURE IMPROVEMENTS FOR THE CHULA VISTA AUTO CENTER WITH THE FORD MOTOR CREDIT COMPANY, AND AUTHORIZING THECITY MANAGER TO EXECUTE SAID DOCUMENT . - WHEREAS, the City Council of the City of Chula Vista (the "Council") approved an Acquisition/Financing Agreement (the "Agreement") for the development of infrastructure improvements within the site of the proposed Chula Vista Auto Center on August 24, 1993 for the purpose of assisting in the development of the Chula Vista Auto Center as authorized in the Disposition and Development Agreement (the "DDA") between the Redevelopment Agency and the Auto Center developers dated September 15, 1992; and WHEREAS, said Agreement allows for the establishment of an assessment district to provide financing for the acquisition of public improvements under the 1911-13 Act, said improvements to be constructed by the Developers of the Chula Vista Auto Center; and WHEREAS, the Ford Motor Credit Company (the "FMCC") has presented to the City Council with an Agreement for the assignment of proceeds under the Acquisition/Financing Agreement which would require that the proceeds for the payment for public improvements be directed to FMCC; and WHEREAS, said Agreement was contemplated under the terms and conditions of the Acquisition/Financing Agreement, and reviewed and approved by Agency Special Counsel and the City Attorney. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA does hereby find, order, detennine and resolve that the Assignment of Proceeds of Acquisition/Financing Agreement, said document being on file in the Office of the City Clerk and the Office of the Secretary to the Redevelopment Agency and known as document RACO- 03-94, is hereby approved and the City Manager is hereby authorized to execute same in the form on file, together with such technical clarifications or corrections thereto as may be determined by Counsel to be necessary to reflect the intent of the parties thereto. PRESENTED BY: APPROVED AS TO FORM BY: Chris s~t;n~ ~ ~ Community Development Director Bruce M. Boogaard City Attorney [C,I WP51 ICOUNCILIRESOSIFMCC-B.RES) /10 - ~~