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Home My WebLink About1992/08/25 Item 21 MEMORANDUM August 21, 1992 TO: The Honorable Mayor and City Council FROM: Councilman David Malcolm SUBJECT: Bonita Golf Lodge Joelen Enterprises currently has an Exclusive Negotiating Agreement (ENA) with the City to build a golf resort hotel adjacent to the Bonita Golf Course. On June 2, 1992, Council extended the ENA period through November 1992, partially to allow for further evaluation of the need for an ElR. Staff has since determined that an EIR is reQuired. An expedited schedule has been prepared concluding with a joint Planning Commission and Council meeting in December 1992. In light of the increased costs of an EIR, as well as the business risks relating to carrying a project (originally approved in concept in April 1991) over to a potentially new set of decision- makers lacking the historical continuity, Joelen Enterprises has requested some assurances from the City prior to incurring major additional financial obligations. Joelen's request requires a policy decision by the Council which I am recommending be addressed at the August 25 Council meeting. Specifically, I am recommending that Council approve Joelen's request via the adoption of a second amendment to the ENA. The amendment provides for reimbursement of costs incurred by the develooer in the event that the EIR. or the proiect itself. is not aooroved by the City. or similarly. in the event that the proiect is precluded by a change of land use. Costs eligible for reimbursement shall not exceed $114.220 (based uJlOn the following: ElR contract costs of $66.220: related staff processin!!: fees of $8.000: and. estimated architectural and engineering costs of $40.000). This recommendation is based upon the following factors: I. The proposed project is estimated to generate approximately $1 million annually in Transient Occupancy Taxes, lease payments, share of operating revenues and property taxes - a factor of vital significance to the City in light of current budget realities. (This economic benefit compares favorably to an annual income of less than $20,000 from the other proposed projects, with the park proposal actually costing the City for operation and maintenance). 2. The project was selected by Council as the preferred land use to optimize the value of this City-owned property. The current recession imposes harsh short-term realities in terms of market conditions and financing options which argue for a proactive position on the City's part to help ensure that a desirable economic development project move forward. '2Jb - } The Honorable Mayor and City Council August 21, 1992 Page Two 3. The City of Chula Vista should be prepared to enter into creative partnerships which aggressively promote entrepreneurial activity when determined to be in the City's best interest. 4. Precedent for a similar arrangement exists in the case of the Palomar Trolley Center project wherein the City has contributed $250,000 for the EIR and related costs prior to project approval. Staff have been involved in discussions with the developer and are aware of their request. An ENA amendment has been prepared for adoption per my request and will be available on August 25. While this recommendation would provide the types of assurances needed by Joelen Enterprises to move forward in negotiations with their investors and to proceed to take the project through the City's review process, it is not intended to waive any rights on the City's behalf to ensure that all land use, environmental, regulatory, and design standards are met, nor to preclude the City from stipulating lease terms that are clearly in the City's best interest. DM/CLD/ak Attachment: June 2, 1992 Agenda Statement N.r S'A "#lEI) [A:\MALRECS.MEM] 1/5 - Dye 2J h ~:L COUNCIL AGENDA STATEMENT Item 7 Meeting Date 06/02/92 ITEM TITLE: Resolution / ~~ -y,5' Approving and authorizing execution of the attached first amendment to the Exclusive Negotiation Agreement with Joelen Enterprises for the negotiation of a Disposition and Development Agreement for a proposed golf resort hotel SUBMITI'ED BY: Community Development Director ( ?1, REVIEWED BY: City ManageZ9 (4/5ths Vote: Yes No..xJ BACKGROUND: In June 1990, the City issued a Request for Proposals (RFP) for development of City-owned property adjacent to the Chula Vista Municipal Golf Course in the 4400 block of Bonita Road. Six proposals were received with two subsequently withdrawn. On April 23, 1991, Council directed staff to prepare an Exclusive Negotiation Agreement (ENA) with Joelen Enterprises for development of a golf resort hotel. Council also requested Joelen Enterprises to prepare a market feasibility study to submit with the proposed ENA. The original deadline of 120 days for these two items was extended by Council to November 1991. On November 26, 1991, a Preliminary Market Feasibility Study was accepted by Council and an ENA was approved. The ENA was for a period of 120 days (through April 8, 1992) with the City Manager authorized to extend by 60 days. If a longer extension were found to be necessary, staff was directed to return to Council within 60 days of the ENA'S expiration. RECOMMENDATION: Staffis recommending that Council approve the resolution extending the ENA with Joe1en Enterprises for a period of 180 days. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. DISCUSSION: Proiect Status The tasks required to be completed by Joelen Enterprises under the existing ENA and their status are delineated below: '}, I b -<..:3 ~. -, Due Date Page 2, Item 7 Meeting Date 06/02/92 ~ 11/26/91 Submitted (attached) 3/9/92 Submitted (attached) 3/9/92 Submitted 4/8/92 Outstanding 4/8/92 Submitted (attached) 1. Preliminary market study 2. Memorandum of Understanding with American Golf Corp. 3. Preliminary Site Plan 4. Project Feasibility Study/Pro Forma 5. Initial Study Application & Deposit The one outstanding task is the comprehensive feasibility/pro forma analysis. However, it is proposed that the deadline for this task be revised and designated in the extended ENA period pending further environmental studies and project refinement. The project's Initial Study application has been reviewed by pertinent City departments. Various issues have been raised that will require specific studies, including traffic, flooding and noise. Staff is currently evaluating the need for an EIR to be conducted. The project's Pro Forma analysis will need to incorporate both the costs of the studies ultimately required and the costs of the resulting mitigations. However, Joelen Enterprises will be required to provide a Preliminary Income and Expenses Pro Forma analysis (the market study was Phase I) by August 1992, and the final comprehensive feasibility analysis upon completion of all environmental studies. Extended ENA It is important to note that Joelen Enterprises has authorized the City to proceed with hiring a consultant to conduct the required traffic study which will address ingress and egress issues including the impact upon the Otay Road and Bonita Road intersection, as well as parking issues relating to the hotel, golf course, and joggers. Additionally, Joelen has executed a contract with Rick Engineering to conduct the topographical survey to identify flood elevations. These two studies are key to determining environmental mitigations and related costs, and therefore project feasibility . FISCAL IMPACT: Approval of the extended ENA will have no direct fiscal impact on the City other than the continued cost of staff time to administer the ENA and negotiate related agreements (lease, Disposition and Development Agreement, etc.). Previous analysis estimates that the project ultimately will generate approximately $1,000,000 per year in Transit Occupancy Taxes, lease payments, percentage operating revenues, and property taxes. [C:IWPSllCOtlNCll.1l 13SIJOELEN-2.1 13] ;Llh J4 .?~ ~- FIRST AMENDMENT TO THE EXCLUSIVE NEGOTIATION AGREEMENT BETWEEN THE CITY OF CHULA VISTA AND JOELEN ENTERPRISES FOR NEGOTIATION TOWARDS A DISPOSmON AND DEVELOPMENT AGREEMENT FOR A PROPOSED GOLF RESORT HOTEL This agreement hereby extends the Exclusive Negotiation Agreement (ENA) between the City of Chula Vista and Joelen Enterprises dated November 26, 1991, for an additional 180 days from Council approval by resolution of the amendment. During the term of the extended 180 day ENA, the following tasks shall be negotiated and completed by Joe1en Enterprises within the timeframes specified: Task Due Date 1. Topographic Survey July 10, 1991 3. Air and Noise Studies July 10, 1991 August 31, 1991 2. Traffic Study 4. Master Plan for Golf Course and Hotel, Including Identification of Golf Course Improvements August 31, 1991 5. Preliminary Income and Expense Pro Forma August 31, 1991 6. Drainage Study September 30, 1990 September 30, 1990 7. Identification of Historical Artifacts Space 8. Revised Site Plan, showing architectural design, traffic circulation, on- and off-site improvements, parking and jogging trails October 30, 1991 9. Agreement between American Golf Corp. and Joelen Enterprises including policy regarding available golf times October 30, 1991 10. Lease Agreement between City and Joelen Enterprises November 30, 1991 11. Financing Income and Expense Pro Forma November 30, 1991 12. Project Development Schedule and Identification of Financing Source November 30, 1991 ;lib-S ~ rIHY-~~-~~ IHU ~O;~~ r-all:;ll.Qo HAY-28-92 THU 14:21 COl1l1UN ITI DEVELOPMENT FAX NO. 6194765310 P.03 The tilnem..m.es speclfl.ed reptesclIt reasonable e.snm.v, of feasible completion dates, but may be xev1sed upcnl City staff authorlmtian to reflect ch:u1sing needs. Except as specifical1y amended. aU ~ tc:rnU and conditions ,hall rerna1n the sarno and In full force and effect. In witness whereof, Ageooy and JoeIen Enterprises have ~tcd this Amendment to 1M 0ritWl Apement tb1I2nd dq of JUIlll 1992. THE crrY OF CHULA VJS1'A Dam: Tin1 Nader, Mayor Attest: Beverly Aulhe1et, City CleI:k Approved u to ronn: BtuCe M. Boogaard City Attorney 10ELEN liNI'J!lU>RISBS Date: fJPJt 5J.~_ frj]/ ~-;g;: jjJ,~ (Cr\WJ$I~-<<'CI'IJ 2 21 fa -C:, '7" JI