Loading...
HomeMy WebLinkAboutRDA Packet 2001/12/17 ~{f? -,,-- ----- - - ellY OF CHUlA VISTA TUESDAY, DECEMBER 17. 2001 6:00 P.M. (immediately following the City Council meeting) COUNCIL CHAMBERS PUBLIC SERVICES BUILDING ADJOURNED JOINT MEETING OF THE REDEVELOPMENT AGENCY I CITY COUNCIL OF THE CITY OF CHULA VISTA CALL TO ORDER ROLL CALL Agency/Council Members Davis, Padilla, Rindone, Salas; Chair/Mayor Horton CONSENT CALENDAR The staff recommendations regarding the following item(s) listed under the Consent Calendar will be enacted by the Agency by one motion without discussion unless an Agency member, a member of the public or City staff requests that the item be pulled for discussion. If you wish to speak on one of these items, please fill out a "Request to Speak Form" available in the lobby and submit it to the Secretary of the Redevelopment Agency or the City Clerk prior to the meeting. Items pulled from the Consent Calendar will be discussed after Action items. Items pulled by the public will be the first items of business. 1. APPROVAL OF MINUTES - Staff recommends that the Redevelopment Agency/City Council approve the minutes of December 4, 2001. 2. AGENCY RESOLUTION OF THE CITY OF CHULA VISTA DISCONTINUING REDEVELOPING AGENCY STIPEND PAY FOR CITY CLERK'S OFFICE EMPLOYEES EFFECTIVE 12/17/2001 AND PROVIDE RETROACTIVE PAY FOR ALL UNCOMPENSATED MEETINGS IN FY 2001/02 - In 1986, the Redevelopment Agency approved a $30 stipend per RDA meeting for management staff of the City Clerk's office. This was in response to the fact that the RDA meetings were moved from Thursday to Tuesday, and would take place immediately after the regular Council meeting was over. Previously, the Redevelopment Agency Secretary would take minutes at the RDA meeting. However, once the meeting was changed to Tuesday after the Council meeting, it was decided that instead of making the Agency secretary wait until the City Council meeting was over, the City Clerk would continue to take the minutes for the Redevelopment Agency. Over the last three years, the positions of City Clerk, Assistant City Clerk, and Deputy City Clerk have undergone salary and classification review and the requirement to attend RDA meetings was taken into consideration when setting current salary levels thus eliminating the necessity for the stipend. IHuman Resources Director] STAFF RECOMMENDATION: Agency adopt the resolution. ORAL COMMUNICATIONS This is an opportunity for the general public to address the Redevelopment Agency on any subject matter within the Agency's jurisdiction that is not an item on this agenda. (State law, however, generally prohibits the Redevelopment Agency from taking action on any issues not included on the posted agenda.) If you wish to address the Agency on such a subject, please complete the "Request to Speak Under Oral Communications Form" available in the lobby and submit it to the Secretary to the Redevelopment Agency or City Clerk prior to the meeting. Those who wish to speak, please give your name and address for record purposes and follow up action. ACTION ITEMS The items listed in this section of the agenda are expected to elicit substantial discussions and deliberations by the Council/Agency/Authority, staff, or members of the general public. The items will be considered individually by the Agency/Authority and staff recommendation may in certain cases be presented in the alternative. Those who wish to speak, please fill out a Request to Speak form available in the lobby and submit it to the Secretary to the Redevelopment Agency or City Clerk prior to the meeting. 3. AGENCY RESOLUTION OF THE CITY OF CHULA VISTA ADOPTING SECOND AMENDMENT OT THE GATEWAY CHULA VISTA PROJECT DISPOSITION AND DEVELOPMENT AGREEMENT (DDA); AUTHORIZING THE AGENCY TO ENTER INTO A THREE YEAR LEASE FOR 10,000 SQUARE FEET OF OFFICE SPACE; ACCEPTING $209,607.88 FOR SALE OF PHASE I AGENCY LAND PURSUANT TO THE AMENDED DDA; AND AMENDING THE CURRENT YEAR BUDGET FOR THE BAYFRONTITOWN CENTRE I PROJECT AREA BY APPROPRIATING $58,500 FROM SALE PROCEEDS FOR LEASE PAYMENT PURPOSES AND AMENDING THE SPENDING PLAN FOR BAYFRONT/TOWN CENTRE I FOR FISCAL YEAR 2003 TO PROVIDE $234,000 FROM REMAINING LAND SALE PROCEEDS AND FROM MERGED PROJECT AREA FUNDS - On 6/6/01, the Council/Agency approved a Disposition and Development Agreement (DDA) for the Gateway Chula Vista project for the development of a 347,000 square foot office and retail project at the northwest corner of Third Avenue and "H" Street in the Town Centre I Redevelopment Project Area. On 9/9/01, the Council/Agency approved a First Amendment providing for a "bridge loan" of $1.3 million which helped the project maintain a steady construction pace. With the adoption of the proposed Second Amendment to the DDA, this bridge loan will be converted back to a grant of funds and construction loan funding will be secured. The additional leased space secured by this Second Amendment will allow the construction loan to close with existing favorable terms. If the loan closes after January 1, 2002, new underwriting criteria would be applied that might not be as favorable. With the construction loan financing fully funded before the end of calendar year 2001, the Agency is Redevelopment Agency, December 17, 2001 Page 2 recommending that the DDA be amended to provide for a three year lease of 10,000 square feet of office space by the City of Chula Vista that is expected to be at no new cost to the City or Agency. The amendment will provide for: 1) priority re-Ieasing of the space to private parties as new leases come on line; and 2) will amend the current Agency participation so that the developer will directly pay the Agency properties in Phase I and initially forego reimbursements originally set for disbursement upon completion of all Phase I permits and off-site public improvements. These funds will be returned to the developer on a pro-rata basis once the City leased space is re-Ieased to private parties. [Community Development Director] 4/5THS VOTE REQUIRED STAFF RECOMMENDATION: Agency adopt the resolution. OTHER BUSINESS 4. DIRECTOR'S REPORT(S) 5. CHAIR/MAYOR REPORTlS) 6. AGENCY/COUNCIL COMMENTS ADJOURNMENT The meeting will adjourn to a closed session and thence to a regular meeting of the Redevelopment Agency on January 15, 2002 at 6:00 p.m., immediately following the City Council meeting in the City Council Chambers. CLOSED SESSION Unless Agency Counsel, the Executive Director, City Councilor the Redevelopment Agency states otherwise at this time. the Agency/Council will discuss and deliberate on the following item(s) of business which are permitted by law to be the subject of a closed session discussion, and which the Agency/Council is advised should be discussed in closed session to best protect the interests of the City. The Agency/Council is required by law to return to open session, issue any reports of final action taken in closed session, and the votes taken. However, due to the typical length of time taken up by closed sessions, the videotaping will be terminated at this point in order to save costs so that the Agency/Council's return from closed session, reports of final action taken, and adjournment will not be videotaped. Nevertheless, announcements of actions taken in Closed Session shall be made by Noon on Wednesday following the meeting at the City Clerk's office in accordance with the Ralph Brown Act (Gov!. Code ~ 54957.71 Redevelopment Agency, December 17, 2001 Page 3 7. CONFERENCE WITH REAL PROPERTY NEGOTIATOR Government Code Section 54956.8 Property: Assessor Parcel Nos. 568-270-03; 568-270-11 (approximately 2.85 acres located at the southeast corner of Fourth Avenue and F Street) Negotiating Parties: City Council/Redevelopment Agency (Sid Morris/ Chris Salomone) and Various Tenant Interests Pursuant to Under Negotiations: Lease terms 8. CONFERENCE WITH LEGAL COUNSEL REGARDING ANTICIPATED LITIGATION n Pursuant to Government Code Section 54956.9(b) One Case 9. CONFERENCE WITH REAL PROPERTY NEGOTIATOR Government Code Section 54956.8 Pursuant to Property: Agency-owned parcels at the northwest corner of Third Avenue and H Street Negotiating Parties: Redevelopment Agency (Chris Salomone) and Gateway Chula Vista, LLC (Jim Pieri) Under Negotiations: Terms of lease and DDA revisions 10. CONFERENCE WITH LEGAL COUNSEL REGARDING EXISTING LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(a) a. Tuchscher Development Enterprises, Inc. v. City of Chula Vista (Case No. GIC 758620) b. Agency vs. Shinohara [Case No. GIS 002460] **************** AMERICANS WITH DISABILITIES ACT The City of Chula Vista, in complying with the Americans with Disabilities Act (ADA), request individuals who require special accommodates to access, attend, and/or participate in a City meeting, activity, or service request such accommodation at least 48 hours in advance for meetings and five days for scheduled services and activities. Please contact the Secretary to the Redevelopment Agency for specific information at (619) 691-5047 or Telecommunications Devices for the Deaf (TOO) at (619) 585~5647. California Relay Service is also available for the hearing impaired. Redevelopment Agency, December 17, 2001 Page 4 MINUTES OF AN ADJOURNED REGULAR MEETING OF THE CITY COUNCIL AND A REGULAR MEETING OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA December 4, 2001 4:00 p.m. An Adjourned Regular Meeting of the City Council and a Regular Meeting of the Redevelopment Agency of the City of Chula Vista were called to order at 4:20 p.m. in the Council Chambers, located in the Public Services Building, 276 Fourth Avenue, Chula Vista, California. ROLLCALL: PRESENT: Agency/Councilmembers: Davis, Padilla, Rindone, Salas, and Chair/Mayor Horton ABSENT: Agency/Councilmembers: None ALSO PRESENT: Executive Director/City Manager Rowlands, Agency/City Attorney Kaheny, and City Clerk Bigelow CONSENT CALENDAR 1. APPROVAL OF MINUTES of November 20, 2001 Staff recommendation: The Redevelopment Agency/City Council approve the minutes. 2. AGENCY RESOLUTION NO. 1761, RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA APPROVING THE APPROPRIATION OF $266,324 FROM THE LOW AND MODERATE INCOME HOUSING FUND TO REIMBURSE PACIFIC BAY HOMES FOR PAYMENT OF DEVELOPMENT FEES ASSOCIATED WITH THE DEVELOPMENT AND CONSTRUCTION OF THE AFFORDABLE HOUSING UNITS WITHIN ROLLING HILLS RANCH On March 3, 1992, the City and Pacific Bay Homes entered into an agreement to provide low and moderate-income housing within Salt Creek 1. The agreement stipulated that a per-unit subsidy would be deposited into an interest-bearing account with the Redevelopment Agency for the development of a first-time homebuyer program; however, the funds were not needed for the program due to exceptional market conditions. The City and Pacific Bay Homes agreed that the per-unit subsidy funds would be utilized to offset development fees for a future project. On June 17, 1997, the City and Pacific Bay Homes executed an affordable housing agreement calling for Pacific Bay Homes to provide 131 units of affordable to low income households. As part of that agreement, Pacific Bay Homes proposed building a lI6-unit, low income, senior apartment complex in Rolling Hills Ranch to satisfy part of the affordable housing obligation. Pacific Bay Homes elected to pay development fees upfront and request reimbursement at a later date. (Community Development Director) Staff recommendation: Agency adopt the resolution. 1- I CONSENT CALENDAR (Continued) ACTION: ChairlMayor Horton moved to approve staff recommendations and offered Consent Calendar Items #1 and #2, headings read, texts waived. The motion carried 5-0. ORAL COMMUNICATIONS There were none. OTHER BUSINESS 3. DIRECTOR'S REPORTS There were none. 4. CHAIR/MA YOR REPORTS There were none 5. AGENCY/COUNCIL COMMENTS There were none. CLOSED SESSION 6. CONFERENCE WITH REAL PROPERTY NEGOTIATOR PURSUANT TO GOVERNMENT CODE SECTION 54956.8 Property: Assessor Parcel Nos. 568-270-03; 568-270-11 (approximately 2.85 acres located at the southeast corner of Fourth Avenue and F Street) City Council/Redevelopment Agency (Sid Morris / Chris Salomone) and Various Tenant Interests Lease terms Negotiating Parties: Under Negotiation: ACTION: Direction was given to Counsel. 7. CONFERENCE WITH LEGAL COUNSEL REGARDING ANTICIPATED LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(B) One case No action was taken on this item. Page 2 Council/RDA Minutes I-~ 12/04/01 CLOSED SESSION (Continued) 8. CONFERENCE WITH REAL PROPERTY NEGOTIATOR PURSUANT TO GOVERNMENT CODE SECTION 54956.8 Property: Assessor Parcel Nos. 568-270-2200; 760-106-9205 (31,673 sq. ft. at 320 Third Avenue) Negotiating Parties: Redevelopment Agency (Chris Salomone) and CinemaStar/Trigild (Bill Huffman), and/or Midland Loan Services/LaSalle Bank (Chris Cimino), and/or MTDS, Inc., dba Meridian Trust Deed Service (Diane Burnett) Under Negotiations: Price and terms for acquisition This item was not discussed. 9. CONFERENCE WITH LEGAL COUNSEL REGARDING EXISTING LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(A) Tuchscher Development Enterprises, Inc. v. City ofChula Vista (case no. GIC 758620) This item was not discussed. ADJOURNMENT At 6:00 p.m., Chair/Mayor Horton adjourned the meeting to an Adjourned Regular Meeting of the Redevelopment Agency on December 11, 2001, at 6:00 p.m., immediately following the City Council meeting in the City Council Chambers. ~~<?J.!' J Susan Bigelow, CMC/AAE, City Clerk Page 3 CouncilJRDA Minutes 1-.3 12/04/01 REDEVELOPMENT AGENCY AGENDA STATEMENT ITEM TITLE: DISCONTINUE REDEVELOPMENT AGENCY STIPEND PAY FOR CITY CLERKS' OFFICE EMPLOYEES EFFECTIVE 12/17/2001 AND PROVIDE RETROACTIVE PAY FOR ALL UNCOMPENSATED MEETINGS IN FY 2001/02. SUBMITTED ~ BY: DIRECTOR OF HUMAN RESOURCES' /' REVIEWED BY: CITY MANAGER A/ 4/5THS VOTE: YES D NO o RECOMMENDATION Discontinue RDA stipend and provide retroactive payment to management staff in the City Clerks office for the period March 2001 to December 2001. BOARDS/COMMISSIONS RECOMMENDATION N/A DISCUSSION In 1986, the Redevelopment Agency approved a $30 stipend per RDA meeting for management staff of the City Clerk's Office. This was in response to the fact that the RDA meetings were moved from Thursday to Tuesday, and would take place immediately after the regular Council meeting was over. Previously, the Redevelopment Agency Secretary would take minutes at the RDA meeting. However, once the meeting was changed to Tuesday after the Council meeting, it was decided that instead of making the Agency secretary wait until the regular Council meeting was over, the City Clerk would continue to take the minutes for the Redevelopment Agency. Over the last three years, the positions of City Clerk, Assistant City Clerk and Deputy City Clerk have undergone salary and classification review and the requirement to attend RDA meetings was taken into consideration when setting current salary levels thus eliminating the necessity for the stipend. d- ( PAGE 2, ITEM NO.: MEETING DATE: 12/17/2001 FISCAL IMPACT The cost of $1,680 to provide retroactive RDA Meeting stipend pay to managers will come from existing RDA funds. ATTACHMENTS N/A H:\HOME\COMMDEV\MASTERS\AGENCY AGENDA STATEMENT.doc .;2-;1. RESOLUTION NO. RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA DISCONTINUING REDEVELOPMENT AGENCY STIPEND PAY FOR CITY CLERKS' OFFICE EMPLOYEES EFFECTIVE 12/17/01 AND PROVIDING RETROACTIVE PAY FOR ALL UNCOMPENSATED MEETINGS IN FY 2001/02 WHEREAS, in 1986, the Redevelopment Agency approved a $30 stipend per RDA meeting for management staff of the City Clerk's office; and WHEREAS, this stipend was provided because RDA meetings were moved from Thursday to Tuesday. and would take place immediately after the regular Council meeting was over; and WHEREAS, previously the Redevelopment Agency Secretary would take minutes at the RDA meeting, however, once the meeting was changed to Tuesday after the Council meeting, it was decided the City Clerk would take the minutes for the Redevelopment Agency; and WHEREAS, City Clerk management staff positions have recently undergone classification and compensation review; and WHEREAS, compensation levels were set taking into consideration the additional duties required to support the Redevelopment Agency. NOW, THEREFORE, BE IT RESOLVED the Redevelopment Agency of the City of Chula Vista does discontinue the $30 Redevelopment Agency stipend pay for City Clerks' office employees effective 12/17/01 and provide retroactive pay to City Clerk management staff who served at Redevelopment Agency meetings since March 2001. PRESENTED BY APPROVED AS TO FORM BY Candy Emerson Director of Human Resources J:\commdev\resos\RDA stipend d-3 REDEVELOPMENT AGENCY AGENDA STATEMENT ITEM TITLE: RESOLUTION ADOPTING SECOND AMENDMENT TO THE GATEWAY CHULA VISTA PROJECT DISPOSITION AND DEVELOPMENT AGREEMENT (DDA); AUTHORIZING THE AGENCY TO ENTER INTO A THREE YEAR LEASE FOR 10,000 SQUARE FEET OF OFFICE SPACE; ACCEPTING $209,607.88 FOR SALE OF PHASE I AGENCY LAND PURSUANT TO THE AMENDED DDA; AND AMENDING THE CURRENT YEAR BUDGET FOR THE BAYFRONT/TOWN CENTRE I PROJECT AREA BY APPROPRIATING 558,500 FROM SALE PROCEEDS FOR LEASE PAYMENT PURPOSES AND AMENDING THE SPENDING PLAN FOR BAYFRONT/TOWN CENTRE I FOR FISCAL YEAR 2003 TO PROVIDE $234,000 FROM REMAINING LAND SALE PROCEEDS AND FROM MERGED PROJECT AREA FUNDS SUBMlnED BY: COMMUNITY DEVELOPM~.T DIRECTOR L..s\\---\m lS REVIEWED BY: EXECUTIVE DIRECTOR ,;fu ITEM NO.: MEETING DATE: .3 12/17/01 4/5THS VOTE: YES 0 NOD BACKGROUND The Cify and Redevelopment Agency approved fhe original Disposifion and Development Agreement (DDA) for the Gateway Chula Vista project on June 6, 2000 and a subsequent Firsf Amendment on September 9, 2001 for the development of a 347,000 square foot office and retail project at the northwest corner of Third Avenue and "H" Street in the Town Centre I Redevelopment Project Area. The First Amendment provided for a "bridge loan" of $1.3 million which helped the proiect maintain a steady construction pace. With the adoption of this Second Amendment to the DDA, this bridge loan will be converted back to a grant of funds and construction loan funding will be secured. The additional leased space secured by this Second Amendmenf will allow the construction loan to close with existing favorable terms. If the loan closes after January 1, 2002, new underwriting criteria would be applied that might not be as favorable. With the construction loan financing fully funded before the end of calendar year 2001, the Agency is recommending that the DDA be amended to provide for a three year lease of 10,000 square feet of office space by the Cify of Chula Vista that is expected to be at no new cost to the Cify or Agency. The amendment will provide for 1) priorify re-Ieasing of the Agency space to private parties as new leases come on line and, 2) will amend the current Agency participation so that the developer will directly pay the Agency for properties in Phase I and initially forego reimbursements originally set for disbursement upon completion of all Phase I permits and off-site public improvements. These funds will be returned to the developer out of Agency lease payments and on a pro-rata basis when the Agency leased space is re-Ieased to private parties. .,3-f PAGE 2, ITEM NO.: MEETING DATE: 12/17/01 RECOMMENDATION Approve the Resolufion adopting fhe Second Amendment to fhe Gatewoy Chula Visto Project Disposition and Development Agreement (DDA), authorizing the City to enter into a three year lease for 10,000 square feet of office spoce; accepting $209,607.88 for sale of Phose I Agency land pursuant to the amended DDA; and amending the currenf year budget for the Bayfront/T own Centre I Proiect Area by appropriating $58,500 from sale proceeds for lease payment purposes and amending the spending plan for Bayfront/T own Centre 1 for fiscal year 2003 to provide $234,000 from remaining land sale proceeds and from Merged Project Area Funds. BOARDS/COMMISSIONS RECOMMENDATION Nof applicable. DISCUSSION A proposed City lease of 10,000 square feet of office space in Phase I of the Gafeway Chula Vista Project has been proposed that will guarantee completion of this phase by ensuring funding of fhe GMAC construction loan. The Agency team has insisted that the lease be sfructured so as to minimize the risk of additional Agency funds for the Project. In order to proceed, the existing DDA needs to be amended to provide for a shift in remaining Agency participation as more fully described below. Basic Lease Premises: The City team has required that fhe proposed lease be structured to provide for the lowest possible lease rate and term that will still allow for full funding of fhe GMAC construction loan. The lease will also provide an opportunity for the Agency to conduct due diligence with respect fo the final design and materials for Phase I, the latest partnership and ownership information, and the currenf status of lease-up. The lease proposal will also require priority for a pending lease of 25,000 square feet to a County government entity. Finally, the lease will provide for conversion of the City's $1.3 million "bridge loan" (adopted as part of fhe First DDA Amendment) back to direct participafion as originally anticipoted in fhe DDA. Lease Terms: 1. The proposed lease is for 10,000 square feet at a monthly renfal rate of $1.95 plus utilities. 2. The term of the lease is for up to three years with maximum exposure to the Agency of $702,000. ($600,607.88 of this exposure is covered by the "hold back" of Agency participation, leaving a potential gap after month 30 of up to $102,000 that may need to be covered with other Agency resources. The Amendment proposes that this potential ,,3-;;2.., PAGE 3, ITEM NO.: MEETING DATE: 12/17/01 gap would be covered by an additional "hold back" of funds from the Second Installment Payment, expected to be disbursed during Phase 11.) 3. The lease will commence when Phase I is complefed and the first office tenant takes occupancy (estimated to be April 2002). 4. Agency's lease obligation will be reduced as new leases are signed. Second Amendment to the DDA: The following are the specific changes to the Disposition and Development Agreement necessary to process the City lease pursuant to the terms and conditions specified by the Agency: 1. The lease only becomes effective upon the "closing" and full funding of the GMAC construction loan for Phase I. 2. Agency "hold back" of funds earmarked for Agency participation in the project, including $209,607.88 in Agency land sale proceeds, $91,000 in Phase I permit fee reimbursements, and $300,000 in off-site improvemenf reimbursements. These funds total $600,688.88 in aggregate. To the extenf the funds are not utilized for lease payments, they will be reimbursed to the Developer on a pro-rata basis as the Phase continues to lease-up. 3. Reconveyance of the Agency "bridge loan" of $1.3 million to grant funds as originally agreed upon in the DDA. 4. Continuation of the DPR Construction Guarantee, which replaced the original requirement for a performance bond. 5. Partial paymenf by the developer of outside attorney's fees for the First and Second DDA Amendments, of $15,000. 6. Developer will make an offer to the County for lease space in Phase I up to 25,000 square feet at $1.95 per foot. This offer will remain in effect for six (6) months. With these provisions in effect, staff feel confident that the proposed lease will result in the full funding of the project construction loan, completion of construction on time and as scheduled, retention of the project's high architectural quality, and conversion of the Agency's "bridge loan" to direct participation. This action also sends a clear signal fa fhe development community that the City is serious abouf redevelopment of it's inner core and is prepared fa take fhe steps necessary to provide the flexibility developers need in the current economic afmosphere. FISCAL IMPACT There are no direct fiscal impacts from the approval of this action. Agency participation will be "held back" as follows: $209,607.88 for Agency land in Phase I, $91,000 in Phase I permit fee reimbursements; and $300,000 in off-site public improvement reimbursements. Funds from the Agency land sale will be utilized fa cover lease expenses. If those funds are fully expended, other funds earmarked for permit fee reimbursements and off-site public improvement reimbursements will be utilized. Funds not drawn down will be refurned fa the developer once the City leased space is re-Ieased on a pro-rata basis, pursuant to the formula established in the DDA ..3-3 PAGE 4, ITEM NO.: MEETING DATE: 12/17/01 Amendment. If the full lease term is exercised by the City, up to $102,000 will not be covered by Phase I participation. Therefore, Phase II participation of up to this amount will be set aside in a similar manner and drawn down in the same way. There is some minor exposure to the Agency should Phase II not be constructed, as this $102,000 would need fo be absorbed by the Agency from other funding sources. ATTACHMENTS Second Amendment to Disposition and Development Agreement (in DRAFT form) Proposed City Lease J:\COMMDEV\STAFF.REp\ 12-18-0 1 \gateway2 .doc .3 - <I- RESOLUTION NO. RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA ADOPTING SECOND AMENDMENT TO THE GATEWAY CHULA VISTA PROJECT DISPOSITION AND DEVELOPMENT AGREEMENT (DDA); AUTHORIZING THE AGENCY TO ENTER INTO A THREE YEAR LEASE FOR 10,000 SQUARE FEET OF OFFICE SPACE; ACCEPTING $209,607.88 FOR SALE OF PHASE 1 AGENCY LAND PURSUANT TO THE AMENDED DDA; AND AMENDING THE CURRENT YEAR BUDGET FOR THE BAYFRONT/TOWN CENTRE I PROJECT AREA BY APPROPRIATING $58,500 FROM SALE PROCEEDS FOR LEASE PAYMENT PURPOSES AND AMENDING THE SPENDING PLAN FOR BAYFRONT/TOWN CENTRE I FOR FISCAL YEAR 2003 TO PROVIDE $234,000 FROM REMAINING LAND SALE PROCEEDS AND FROM MERGED PROJECT AREA FUNDS WHEREAS, the Agency and the Developer are parties to that certain Disposition and Development Agreement dated June 6, 2000 ("DDA"), as amended by that certain First Amendment to Disposition and Development Agreement dated September 25, 2001 ("First Amendment", collective the original DDA and the First Amendment are herein referred to as the "DDA".); and WHEREAS, the DDA relates to redevelopment, development, and operation of a phased First Class, First Quality 344,000 square feet mixed-use commercial/office project with restaurant and retail components and common areas, including a five-tier 1300 space parking structure that spans all Phases of the Project; specifically the retail component will include up to 81,000 square feet with a restaurant, deli, coffee shop, financial institution, and other retail uses, Phase I will include 102,237 square feet in a five story office tower at the easterly portion of the Site, Phase II will include 125,000 square feet in a six story office tower, and Phase III will include 117,000 square feet in a six story office tower at the westerly portion ("project"); and WHEREAS, capitalized terms used in this Second Amendment are defined and set forth in the DDA and the First Amendment, unless separately defined in this Second Amendment, inclusive of the Attachments thereto and hereto; and WHEREAS, the financial assistance to be provided by the Agency to Developer pursuant to the DDA includes the Agency Participation to be paid in up to five (5) separate installment payments with specific Conditions Precedent thereto, as set forth therein; and WHEREAS, pursuant to the First Amendment the Agency provided a Bridge Loan and disbursed the First Installment Advance of $1,300,000 toward payment of the First Installment Payment of Agency Participation ("First Installment"). The Bridge Loan is for a term of the first to occur of (i) June 15. 2002 or (ii) the date Developer achieves Construction Loan Full Funding Status; and WHEREAS, the balance of the First Installment includes (i) $209,607.88 as repayment for the fair market value of the Phase I Agency Parcels included in the Phase I development, (ii) plus reimbursement for the costs of the Public Improvements pursuant to the terms of the Reimbursement Agreement in an amount not to exceed $300,000.00, (iii) plus reimbursement for fifty percent (50%) of the Phase I Permit Fees, not to exceed and estimated at $91,000 (collectively, "Balance"), the total of which is to be paid after the Conditions Precedent to the First Installment Payment are satisfied; and WHEREAS, Developer represents it is ready to close the GMAC Construction Loan of $13.75 million for Phase I of the Project and the proceeds thereof are sufficient to continue and complete construction of the Phase I Improvements; and WHEREAS, by this Second Amendment Developer desires to hold back the Balance of the First Installment funding described above in Recital F in consideration for the Agency Lease (defined ...3-:;- herein) and payment of rent thereunder, as hereinafter more fully described, in order for the Developer to achieve Construction Loan Full Funding Status; and WHEREAS, the Agency desires to accommodate Developer's request by this Second Amendment and to enter into a lease for 10,000 square feet of office space in Phase I of the Project, substantially in the form of the "Agency Lease" attached hereto as Attachment No. 2 and fully incorporated herein by this reference, subject to the terms and conditions herein set forth and specifically to the Conditions Precedent to Agency Lease, as hereinafter defined and set forth. thereby amending and modifying the timing of and Conditions Precedent to the First Installment Payment of Agency Participation under the DDA; and WHEREAS, the County of San Diego ("County") has evidenced a desire to negotiate the terms of a lease with Developer for approximately 25,000 square feet of Phase I office space for use by the District Attorney's offices in south San Diego County. In furtherance thereof, Developer provided to Agency a written letter of intent to lease Phase I office space to the County dated December 7,2001, a true copy of which is attached hereto as Attachment NO.3 and fully incorporated herein by this reference ("County Office Lease Letter"); and WHEREAS, the Community Redevelopment Law, Health and Safety Code Section 33000, et seq., in particular Section 33220, promotes cooperation between redevelopment agencies and other public entities, such as and including the County, in the planning. undertaking, construction, or operation of redevelopment projects located upon the terms as such public entity determines. Section 33220 further provides the County may acquire interests in land in a project area from the Agency for redevelopment in accordance with the Redevelopment Plan, and in connection therewith, such public entity is authorized to become obligated to comply with Section 33437, which sets forth the obligations the Agency must impose upon such public entity as a lessee of property acquired in a redevelopment project; and WHEREAS, the Agency Lease proposed and to be entered into pursuant to this Second Amendment will further and facilitate achieving the County's objective to lease office space in Phase I for use by the District Attorney's office; and WHEREAS, the Agency Lease will become effective and a performance obligation of the Agency only upon (and the date of) satisfaction by Developer of certain Agency Lease Conditions Precedent, as defined and described hereinafter, including without limitation the closing of the Phase I Conveyance Escrow and Developer achieving Construction Loan Full Funding Status ("Lease Effective Date"). WHEREAS, as the Developer continues its leasing activities for the Phase I Improvements, pro rata portions of the Agency Lease will be released and terminated pursuant to a partial lease termination document on a form approved by Agency ("Partial Lease Termination"). Upon execution of each Partial Lease Termination, using the applicable form thereof, the Agency shall have no continuing or further obligations under the Agency Lease with respect to the terminated and released portion of the Premises upon the date of execution of the Partial Lease Termination Agreement; and WHEREAS, the Agency will be authorized by Developer pursuant to this Second Amendment to hold back ("Hold Back") the Balance of the First Installment Payment of Agency Participation (i.e., the amounts described above in Recital F.) The Agency's Hold Back of such sums shall be reduced dollar for dollar through the Agency's payment of Rent under the Agency Lease and Developer drawn downs triggered by additional leases of Phase I the City and Redevelopment Agency approved the original Disposition and Development Agreement (DDA) for the Gateway Chula Vista project on June 6, 2000 and a subsequent First Amendment on September 9, 2001 for the development of a 347,000 square foot office and retail project at the northwest corner of Third Avenue and "H" Street in the Town Centre I Redevelopment Project Area. NOW, THEREFORE, BE IT RESOLVED that the Redevelopment Agency of the City of Chula Vista does hereby approve the Second Amendment to the Gateway Chula Vista Project Disposition and 2 3-(", Development Agreement (DDA), in substantially the form presented with such minor modifications as may be required or approved by the City Attorney. BE IT FURTHER RESOLVED that the Redevelopment Agency is hereby authorized to enter into a three year lease for 10,000 square feet of office space in Phase I of the Project on the terms presented in a final form approved by the City Attorney. BE iT FURTHER RESOLVED that the Redevelopment Agency does hereby accept $209,607.88 for sale of Phase 1 Agency Land pursuant to the Amended DDA BE IT FURTHER RESOLVED that the current year budget is hereby amended for the Bayfront/Town Centre 1 Project Area by appropriating $58,500 from Sale Proceeds for lease payment purposes and amending the Spending Plan for BayfronUTown Centre 1 for fiscal year 2003 to provide $234,000 from remaining land sale proceeds and from merged project area funds. BE IT FURTHER RESOLVED the Chairman is authorized to execute the Second Amendment to DDA and the Lease, and such other documents consistent with the terms thereof and approved by the City Attorney that are necessary to implement the terms thereof and the closing of the GMAC construction loan for Phase I of the Project. PRESENTED BY APPROVED AS TO FORM BY eL~ Chris Salomone Community Development Director J:\commdev\resos\Gateway DDA 2nd Amendment 3 .,3-7 [Signature block continued from previous page.] GATEWAY CHULA VISTA, LLC, a California limited liability company By: Coast Pacific Properties, LLC Its: Co-Managing Member James V. Pieri, Chairman Manager "DEVELOPER" APPROVED AS TO FORM: Counsel to the Developer ..3 - 'g [DRAFT 12/12/01 - csb] SECOND AMENDMENT TO DISPOSITION AND DEVELOPMENT AGREEMENT (Phase I of Gateway Project for Lease of Office Space) This SECOND AMENDMENT TO DISPOSITION AND DEVELOPMENT AGREEMENT ("Second Amendment") is entered into as of December 17, 200 I ("Date of Second Amendment") by and between the REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body corporate and politic ("Agency") and GA TEW A Y CHULA VISTA, LLC, a California limited liability company ("Developer"). A. The Agency and the Developer are parties to that certain Disposition and Development Agreement dated June 6, 2000 ("DDA"), as amended by that certain First Amendment to Disposition and Development Agreement dated September 25, 200 I ("First Amendment", collective the original DDA and the First Amendment are herein referred to as the "DDA".) B. The DDA relates to redevelopment, development, and operation of a phased First Class, First Quality 344,000 square feet mixed-use commercial/office project with restaurant and retail components and common areas, including a five-tier 1300 space parking structure that spans all Phases of the Project; specifically the retail component will include up to 81,000 square feet with a restaurant, deli, coffee shop, financial institution, and other retail uses, Phase I will include 102,237 square feet in a five story office tower at the easterly portion of the Site, Phase II will include 125,000 square feet in a six story office tower, and Phase III will include 117,000 square feet in a six story office tower at the westerly portion ("Project"). C. Capitalized terms used in this Second Amendment are defined and set forth in the DDA and the First Amendment, unless separately defined in this Second Amendment, inclusive of the Attachments thereto and hereto. D. The financial assistance to be provided by the Agency to Developer pursuant to the DDA includes the Agency Participation to be paid in up to five (5) separate installment payments with specific Conditions Precedent thereto, as set forth therein. E. Pursuant to the First Amendment the Agency provided a Bridge Loan and disbursed the First Installment Advance of $1 ,300,000 toward payment of the First Installment Payment of Agency Participation ("First Installment"). The Bridge Loan is for a term of the first to occur of (i) June 15,2002 or (ii) the date Developer achieves Construction Loan Full Funding Status. F. The balance of the First Installment includes (i) $209,607.88 as repayment for the fair market value of the Phase I Agency Parcels included in the Phase I development, (ii) plus reimbursement for the costs of the Public Improvements pursuant to the terms of the Reimbursement Agreement in an amount not to exceed $300,000.00, (iii) plus reimbursement for fifty percent (50%) of the Phase I Permit Fees, not to exceed and estimated at $91,000 (collectively, "Balance"), the total of which is to be paid after the Conditions Precedent to the First Installment Payment are satisfied. ATTACHMENT NO.3 Page 1 of 1 DOCSOC\865426v 3\242] 2.0002 3 -9 G. Developer represents it is ready to close the GMAC Construction Loan of$13.75 million for Phase I of the Project and the proceeds thereof are sufficient to continue and complete construction of the Phase I Improvements. H. By this Second Amendment Developer desires to hold back the Balance of the First Installment funding described above in Recital F in consideration for the Agency Lease (defined herein) and payment of rent thereunder, as hereinafter more fully described, in order for the Developer to achieve Construction Loan Full Funding Status. I. The Agency desires to accommodate Developer's request by this Second Amendment and to enter into a lease for 10,000 square feet of office space in Phase I of the Project, substantially in the form of the "Agency Lease" attached hereto as Attachment No.2 and fully incorporated herein by this reference, subject to the terms and conditions herein set forth and specifically to the Conditions Precedent to Agency Lease, as hereinafter detined and set forth, thereby amending and modifying the timing of and Conditions Precedent to the First Installment Payment of Agency Participation under the DDA. J. The County of San Diego ("County") has evidenced a desire to negotiate the terms of a lease with Developer for approximately 25,000 square feet of Phase I office space for use by the District Attorney's offices in south San Diego County. In furtherance thereof, Developer provided to Agency a written letter of intent to lease Phase I office space to the County dated December 7, 200 I, a true copy of which is attached hereto as Attachment NO.3 and fully incorporated herein by this reference ("County Office Lease Letter"). K. The Community Redevelopment Law, Health and Safety Code Section 33000, et seq., in particular Section 33220, promotes cooperation between redevelopment agencies and other public entities, such as and including the County, in the planning, undertaking, construction, or operation of redevelopment projects located upon the terms as such public entity determines. Section 33220 further provides the County may acquire interests in land in a project area from the Agency for redevelopment in accordance with the Redevelopment Plan, and in connection therewith, such public entity is authorized to become obligated to comply with Section 33437, which sets forth the obligations the Agency must impose upon such public entity as a lessee of property acquired in a redevelopment project. L. The Agency Lease proposed and to be entered into pursuant to this Second Amendment will further and facilitate achieving the County's objective to lease office space in Phase I for use by the District Attorney's office. M. The Agency Lease will become effective and a performance obligation of the Agency only upon (and the date of) satisfaction by Developer of certain Agency Lease Conditions Precedent, as defined and described hereinafter, including without limitation the closing of the Phase I Conveyance Escrow and Developer achieving Construction Loan Full Funding Status ("Lease Effective Date"). N. As the Developer continues its leasing activities for the Phase I Improvements, pro rata portions of the Agency Lease will be released and terminated pursuant to a partial lease termination document on a form approved by Agency ("Partial Lease Termination"). Upon execution of each Partial Lease Termination, using the applicable form thereof, the Agency shall have no continuing or further obligations under the Agency Lease with respect to the terminated and ...1-10 released portion of the Premises upon the date of execution of the Partial Lease Termination Agreement. O. The Agency will be authorized by Developer pursuant to this Second Amendment to hold back ("Hold Back") the Balance of the First Installment Payment of Agency Participation (i.e., the amounts described above in Recital F.) The Agency's Hold Back of such sums shall be reduced dollar for dollar through the Agency's payment of Rent under the Agency Lease and Developer drawn downs triggered by additional leases of Phase I as provided in Section 3, below. NOW THEREFORE, in consideration of the foregoing recitals, which are a substantive part of this Second Amendment, the covenants and consideration contained and exchanged herein, Agency and Developer agree as follows: Section 1. AGENCY LEASE OF PHASE I OFFICE SPACE. Subject to the terms and conditions herein, the Agency agrees to lease 10,000 square feet of office space in Phase I of the Project ("Premises") pursuant to the terms and conditions of the Agency Lease to be executed by Developer, as landlord, and Agency, as Tenant, substantially in the form of Attachment No.2. The Agency Lease terms include, without limitation: (i) the specific location of the office space ("Premises"); (ii) tenant improvement allowance of$25,000; (iii) rent, which shall not exceed $1.95 per square foot "gross" rent, plus utilities (i.e., Developer, as landlord, pays all costs associated with the lease, including without limitation, insurance, common area costs, maintenance, repairs, etc.), which rent equates approximately to a monthly rental payment of$19,500 for a total obligation under the Agency Lease of $702,000 ("Rent"); (iv) a term not to exceed thirty-six (36) months ('Term") with such Term commencing on the later of the date the City issues the final certificate of occupancy for the Phase I Improvements and a tenant actually occupies a portion of Phase I ("Lease Commencement Date"). (a) Lease Effective Date. The Agency Lease shall become effective and be a contractual obligation of the Agency only and upon the date upon which Developer achieves the following "Agency Lease Conditions Precedent" set forth in subsections (i) through (x), inclusive: (i) Agency staff has completed the due diligence review of the status of construction of the Phase I Improvements, including Developer consent and access to all relevant records, plans and specifications, and other documents relating to construction and development of the Phase I Improvements, as already constructed and completed and to be constructed and completed. (ii) Developer shall obtain a written consent or acknowledgement from GMAC, in a form reasonably satisfactory to Agency legal counsel, that the Agency Lease will cause the Developer to close and immediately thereafter achieve Construction Loan Full Funding Status. Said acknowledgement shall be submitted by Developer in connection with and prior to the closing of the Phase I Conveyance Escrow. (iii) The GMAC Building Loan Documents include guaranty obligations of the Members of the Developer entity comparable to the Capital Call Guaranty entered into in connection with the First Amendment. So long as of the date of the closing of the GMAC Construction Loan one or more guaranty agreement( s) comparable to the Capital Call Guaranty are in effect between GMAC and the Members of the Developer entity, then the Capital Call Guaranty may be cancelled and terminated. ..3-(( (iv) The DPR Performance Guaranty shall be in full force and effect, with no default or notice of default pending. Agency and Developer agree that unless the GMAC Building Loan Documents require Developer to obtain and maintain a performance bond for the construction of the Phase I Improvements, then the DPR Performance Guaranty shall be a continuing obligation of the Developer. In this regard for purposes of this Second Amendment, Developer further covenants to the Agency to fully perform under the construction contract for the Phase I Improvements, as referenced in the DPR Performance Guaranty, and to cure and commence to cure any default thereunder for the term thereof. (v) Pursuant to the requirements of the GMAC Building Loan Documents DPR shall have provided to the Developer a written agreement or other binding commitment to continue and complete construction of the Phase I Improvements for a guaranteed maximum price. Said maximum price, which not to exceed amount shall be sufficient to fully complete construction of the Phase I Improvements. (vi) The GMAC Construction Loan shall have closed and the proceeds thereof shall be sufficient to continue and complete construction of the Phase I Improvements. (vii) The Lease Effective Date occurs, i.e., the Phase I Conveyance Escrow closes and Developer has achieved Construction Loan Full Funding Status. (viii) Within 10 days after the Phase I Conveyance Escrow closing, Developer shall pay to the Agency $15,000 to partially reimburse the Agency for legal fees incurred in connection with the First Amendment and this Second Amendment. (ix) Developer shall not be in default under the DDA, as amended, including but without limitation, compliance with applicable times for performance as set forth in the Schedule of Performance, and all representations and warranties of the Developer contained herein shall be true and correct in all material respects, and all applicable Conditions Precedent as set forth in the DDA, as amended by the First Amendment and this Second Amendment, shall have been satisfied. Developer represents and warrants that it is not aware of any default (by actual or constructive notice), nor is there any default pending, under (a) the DDA, as amended, (b) the GMAC documents, (c) the Developer entity operating agreement, as amended, or (d) any other agreement to which the Developer is a party and which relates to Phase I of the Project. Section 2. RE-LEASE AND RELEASE OF PREMISES. Concurrent with the Developer reaching agreement with a prospective tenant for Phase I space, the Developer may elect to allow such tenant to lease all or a portion of the Premises and as such occurs pro rata portions of the Agency Lease shall be released and terminated between Agency and Developer. Section 3. DEVELOPER HOLDBACK OF BALANCE OF FIRST INSTALLMENT PAYMENT OF AGENCY PARTICIPATION CREATES A "LEASE GUARANTEE" FUND. In consideration of the Agency Lease, Developer authorizes the Agency to Hold Back the Balance of the First Installment Payment of Agency Participation. The Agency "hold-back" of the Balance, which would otherwise be reimbursable Phase I costs, shall be reduced dollar for dollar through the Agency's payment of Rent under the Agency Lease. As and in the event sufficient square footage of Phase I space is newly leased and released as provided above in Section 2 above, such that the Agency's remaining Rent obligation under the Agency Lease is equal to or less than the original 3-(d.- Agency Hold-Back amount (not reduced by payments of rent under the Agency Lease) ("Break-Even Square Footage Release"), Developer shall be entitled to additional draw-downs against the Agency Hold-Back equivalent to the proportionate reduction in the Agency's remaining Lease obligation caused by the release of space in excess of the Break-Even Square Footage Release. For example, assume three months after the Lease Commencement Date Developer signs a lease for 4000 square feet of Phase I office space. The Agency's Rent obligation under the Agency Lease would be reduced to 6000 square feet (10,000 less 4000 = 6000 sq. ft.) with a monthly Rent payment of$II,700. Developer shall be paid $156,007.88 out ofa total Agency Hold-Back of $600,607.88 ($600,607.88 less the Agency's previously paid out Rent of $58,500, less the remaining Rent obligation under the Agency Lease of $386,000). To the extent the Agency is required to make Rent payment under the Agency Lease in excess of the original Agency Hold-Back amounts, Developer knowingly and expressly agrees such excess payments may be offset by Agency, as elected by Agency in its sole and absolute discretion, against any other amounts owed by Agency to Developer under the DDA, including any amounts due from the Second Installment Payment of Agency Participation or any subsequent installment payment of Agency Participation with respect to Phase II of the Project. Section 4. POTENTIAL COUNTY LEASE OF PHASE I SPACE. Within thirty (30) days of the Lease Effective Date, Developer shall commence discussions with the County District Attorney's office, or other Agency approved tenant, on substantially the same terms set forth in the County Office Lease Letter. Such offer shall remain in effect for six (6) months after its effective date without revocation. The offer may contain reasonable provisions approved by the Agency to allow for Developer reduction or relocation of the designated space if necessary to accommodate other tenants in Phase I. It is an affirmative obligation and covenant of the Developer under this Second Amendment to cooperate and negotiate in good faith with the County representative toward a lease of space in Phase I. Agency agrees to cooperate with and facilitate such negotiations as reasonably necessary; provided however, Agency shall not incur or be responsible for any third party expenses in connection therewith. Section 5. SATISFACTION OF BRIDGE LOAN. The closing of the Construction Loan and achievement of Construction Loan Full Funding Status through the Agency Lease shall cause the full satisfaction of the Agency Bridge Loan and Agency shall cause cancellation of the Promissory Note, the full reconveyance of the Agency Deed of Trust, and cancellation of the Capital Call Guaranty (so long as Agency Lease Condition Precedent l.(a)(iii) above is satisfied). Section 6. DPR PERFORMANCE GUARANTY IN EFFECT. The DPR Performance Guaranty (including Assignment of Construction Agreements and Assignment of Architectural Agreements and Plans and Specifications entered into concurrent therewith) shall remain in full force and effect during the term of the Construction Loan and Construction Contract between Developer and DPRlGeneral Contractor. Section 7. EXECUTION IN COUNTERPARTS. This Second Amendment and each ofthe attachments may be executed in any number of counterparts, each of which, when executed and $- /3 delivered, will be deemed to be an original and all of which, taken together, will be deemed to be one and the same instrument. Section 8. NO OTHER CHANGES. Except as expressly provided to the contrary in this Second Amendment and the Agency Lease, the terms of the DDA, including as amended by the First Amendment, shall remain in full force and effect as written. All terms used herein and not defined herein or in the Agency Lease, but defined in the DDA as amended, shall have the meaning given to such terms in the DDA, as amended. To the extent there is an inconsistency between the DDA and the Agency Lease, the terms of the DDA shall prevail. [Signature block for Second Amendment begins on next page] .3-ttf IN WITNESS WHEREOF, the Redevelopment Agency of the City ofChula Vista, as Agency, and Gateway Chula Vista, LLC, as Developer, have signed this Second Amendment to Disposition and Development Agreement as of the Date of Second Amendment. REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body corporate and politic By: Chairman or Authorized Designee "AGENCY" ATTEST: Agency Secretary APPROVED AS TO FORM: Stradling Yocca Carlson & Rauth Agency Special Counsel APPROVED AS TO FORM: City Attorney and Agency General Counsel [Signature block continued on next page.] ,3-IS