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HomeMy WebLinkAbout2009/08/11 Item 17CITY COUNCIL & REDEVELOPMENT AGENCY AGENDA STATEMENT °""__' ~ ' ~ttli ' } ~ ~"~CHULAVISiA AUGUST 11, 2009, Item ~ ITEM TITLE: RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA ADOPTING THE EIGHTH AMENDMENT TO THE GATEWAY CHULA VISTA DISPOSITION AND DEVELOPMENT AGREEMENT (DDA) SUBMITTED BY: DEPUTY CITY MANAGh'Ir/DEVELOPMENT SERVICES DIRECTOR REVIEWED BY: CITY MANAGER 4/STHS VOTE: YES ~ NO ^X EXECUTIVE SUMMARY: The Gateway Chula Vista Disposition and Development Agreement (DDA). was approved June 6, 2000, for the development and operation of a phased First Class, First Quality mixed-use commerciaUoffice project with restaurant and retail components and common azeas. The first and second phases have been realized, however, due to mazket conditions they have been unable to attract and maintain the necessary tenant base. The Eighth Amendment to the DDA provides for changes to encourage and entice lease-up of currently vacant space in Gateway phases I and II by: • Removing the First Class First Quality sit down restaurant • Allowing educational and training uses The Eighth Amendment will also incorporate a formula (Attachment A) for calculating any financial GAP that may exist for the construction of Phase III. ENVIRONMENTAL REVIEW: The Environmental Review Coordinator has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) and has determined that the project was covered in previously adopted Mitigated Negative Declazation (MND), IS 99-24. The Environmental Review Coordinator has determined that only minor technical changes or additions to this document aze necessary and that none of the conditions described in Section 15162 of the State CEQA Guidelines calling for the prepazation of a subsequent document has occurred; therefore, the Environmental Review Coordinator has prepazed an Addendum to Final Mitigated Negative Declazation, IS-99-24. RECOMMENDATION: That the Redevelopment Agency approve the Eighth Amendment to the Gateway Chula Vista Disposition and Development Agreement. 17-1 BOARDS/COMMISSION RECOMMENDATION On July 23, 2009, the Chula Vista Redevelopment Corporation recommended that the Redevelopment Agency adopt the Resolution approving the Eighth Amendment to the Gateway Chula Vista Disposition and Development Agreement. The Gateway Chula Vista DDA and Specific Plan require the construction of a First Class First Quality sit down restaurant to be constructed as part of Phase I or IL Due to mazket conditions and the existing demographics, the Developer has been unable to identify any interested restaurants that meet the criteria for the type and quality currently required. To facilitate the leasing of this space to other qualified tenants, it is recommended that this requirement be removed from both the DDA and the Specific Plan. The Gateway DDA and Specific Plan do not currently allow educational and training facilities. Mazket conditions and the significant decline in the development industry have severely impacted the Developer's ability to maintain tenants in the existing phases. Phases and I and II have leases for approximately sixty-three percent (63%) of the total leaseable space, however, the actual occupancy is somewhere between fifty percent (50%) to fifty-eight percent (58%). The Developer has identified a medical trade institution interested in relocating their existing educational facilities to Gateway. This tenant would occupy a significant amount of space, at approximately 40,000 squaze feet. To facilitate increased lease-up and occupancy, it is recommended that the prohibition of educational and training school be removed from the DDA and Specific Plan. The approval of the DDA Seventh Amendment on June 16, 2009, resulted in the removal of the existing fmancial provisions. To further discussions regarding the development of Phase III, a formula has been crafted to calculate any financial GAP that may exist. This is Attachment A of the Eighth Amendment. It is anticipated that if fmancial assistance is requested by the Developer that any Agency assistance will be negotiated prior to December 31, 2012, and the commencement of the Phase III construction. DECISION MAKER CONFLICTS: Staff has reviewed the property holdings of the Corporation directors and has found no property holdings within 500 feet of the boundaries of the property which is the subject of this action. FISCAL IMPACT Current Fiscal Impact The original DDA contemplated a Class "A" restaurant which is not financially feasible due to local demographics and therefore the sales tax revenue estimated to come from a class "A" restaurant will not be realized. However, the action will not preclude other restaurant facilities from occupying a space in the Gateway office complex which could generate sales tax revenue. Ongoing Fiscal Impact There are no identified future expenditures associated with approval of the item. ATTACHMENTS 1. Eighth Amendment to the Gateway Disposition and Development Agreement Prepared by: Diem Do, Senior Project Coordinator, Development Services 17-2 EIGHTH AMENDMENT TO DISPOSITION AND DEVELOPMENT AGREEMENT (Gateway Phase III Restaurant and Educational Component and Financing Gap Fonnula Amendment) This EIGHTH AMENDMENT TO DISPOSITION AND DEVELOPMENT AGREEMENT ("Eighth Amendment") is entered into as of August 11, 2009, ("Effective Date" or "Date of Eighth Amendment") by and between the REDEVELOPMENT AGENCY OF THE CfTY OF CHULA VISTA, a public body corporate and politic ("Agency/') and GATEWAY CHULA VISTA, LLC, a California Limited Liability Company ("Developer"). A. The Agency and the Developer are parties to that certain Disposition and Development Agreement ("DDA") dated June 6, 2000, as amended by that certain First Amendment to DDA ("First Amendment") dated September 25, 2001, as Further amended by that certain Second Amendment to DDA ("Second Amendment") dated December 17, 2001, as administratively amended by that certain Third Amendment to DDA ("Third Amendment") dated April 1, 2002, by that certain Fourth Amendment to the DDA ("Fourth Amendment") dated April 1, 2003, by that certain Fifth Amendment to the DDA ("Fifth Amendment") dated November 18, 2003, by that certain Sixth Amendment to the DDA ("Sixth Amendment") dated February 17, 2004, and by that certain Seventh Amendment to the DDA ("Seventh Amendment") dated July 1, 2009. The DDA, First Amendment, Second Amendment, Third Amendment, Fourth Amendment, Fifth Amendment, Sixth Amendment and the Seventh Amendment are collectively referred to herein as the DDA. B. The DDA relates to the development and operation of a phased First Class First Quality mixed-use commercial/office project with restaurant and retail components and common areas of up to 375,163 square feet, including afive-tier 1229 space parking structure that spans all Phases of the Project; specifically the retail component will include up to 51,905 square feet with restaurants, financial institutions and other retail uses. Phase I .includes 102,329 square feet in a five story office tower at the easterly portion of the Site, Phase II includes 132,334 square feet in a six story office tower, and Phase III will include 140,500 square feet in a six story office tower at the westerly portion ("Project"). C. Capitalized terms used in this Eighth Amendment are defined and set Forth in the DDA, unless separately defined in this Eighth Amendment, inclusive of the Attachments thereto. D. The DDA and Gateway Specific Pldn ("Specific Plan") define the requirement of the construction of a six thousand (6,000) gross leaseable square foot First Class and First Quality sit down full service restaurant. Due to unfavorable economic conditions the Developer has been unable to meet this requirement and has requested that the requirement be removed. Gateway China Vista Page 1 Eighth Amendment to Disposition and Developm~ctt A~reement E. Agenry is willing to remove the First Class First Quality restaurant requirement subject to the terms and conditions set Forth herein. F. The Developer has identified a medical trade institution that desires to locate in the Phase I building and will occupy 40,000 square feet on two Floors. The DDA and the Specific Plan currently list educational and training schools as a prohibited use. G. Agenry is willing to remove educational and training schools as a prohibited use subject to the terms and conditions set forth herein. H. The Developer has submitted an application requesting an amendment to Gateway Specific Plan Section 2.5, Item G and Table 2 to effectuate the removal of the prohibition of educational or training facilities. I. The Seventh Amendment to the DDA approved a Phase III construction commencement date of no later than December 31, 2012, and a construction completion date of December 31, 2014, and required the renegotiation of the amount and timing of Agenry Participation and one or more terms and provisions of the DDA. J. Agency and Developer acknowledge that there may be a financial GAP in the development of Gateway Phase III and, notwithstanding section 801 of the DDA, agree to negotiate in good faith in identifying the amount of the GAP that the Agenry may consider funding and the timing of any Agency Participation, pursuant to Section 800 of the DDA. K. Pursuant to Section 1315 of the DDA, this Eighth Amendment requires approval by the Agenry Board. NOW, THEREFORE, in consideration of the foregoing recitals, which are a substantive part of the Eighth Amendment, the covenants and consideration contained and exchanged herein, Agency and Developer agrees as follows: 1. DDA Section 1001 2_(al Commercial Retail Space Bank and Restaurant is hereby amended and restated to remove the requirement that no less than 6,000 square feet of the gross leaseable building area in the Phase I improvements or the Phase II Improvements in the Project shall be for the. use, occupanry, and operation of a First Class, First Quality Restaurant. 2. DDA Section 101 Definitions is hereby amended and restated to remove the definition of "Restaurant" on page 23. Gateway China Vista Page 2 Eighth Amendment to Disposition and Developrcle~t,$greement DDA Section 1001 2~f1 Ivii]__Prohibited u~e~ in Offir~,/Profe«ion Space is hereby amended and restated to remove the prohibition of educational or training facilities and Section 1001.2 (f) is hereby renumbered accordingly . 4. The Developer hereby agrees on the formula for calculating the Financing -- -Gap Analysis for Phase III Building (Attachment A). Developer shall complete and submit the Financing Gap Analysis spreadsheets (Attachment A) to the Agency. for review and consideration by June 30, 2012. Developer and Agenry hereby agree that any financial GAP assistance will be negotiated and finalized between Agenry and Developer prior to December 31, 2012. 5. Other Provisions. F~ccept as expressly provided herein, all other terms and conditions of the DDA shall remain in Full force and effect. [Signature Block For Eighth Amendment begins on Need Page] Gateway Chula Visfa Page 3 Eighth Amendment to Disposition and Developrr~t ~greement Signature Page to Eighth Amendment ib Gateway Disposition and Development Agreement IN WITNESS WHEREOF, the Redevelopment Agency of the City of Chula Vista, as Agency, and Gateway Chula Vista LLC, as Developer, have signed this Eighth Amendment to the Gateway Disposition and Development Agreement as of the Effective Date. REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, a public body corporate and politic. By: Cheryl Cox, Chair GATEWAY CHULA VISTA, LLC, a California Limited Liability Company. By: Coast Paci$c Properties, LLC, a California Limited Liability Company Its: Co-Managing Member By: James V. Pieri, Managing Member By: Chula Vista Asset Management, LLC, a California Limited Liability Company. Its: Co-Managing Member By: D. Gregory Scott, Chairman Manager ATTEST: By: Agency Secretary Approved as to form: Approved as to form: By: By: Agenry General Counsel Counsel to Developer Gateway China Vista Page 4 Eighth Amendment to Disposition and Developm~r~,4®reement i liic77G~ia C2~ r.n2!;/S!5 - ~F Sc !!!i~.uivlii~ Gat_way Chula Vise=_ vice Buiidino Ci~/ c~ Chula ~Jis`,~- 17-7 P ROJEC? DESC?uPTiON - F~ASc Ilf CHUL4 VSSTA GA i cMAY .. Sita Araa It. Gass 3uiidre A.=_e (G?A} O~~.c~ -ar:zcia -email ~ormcr ~: ae iGi31 Gc~ III. O R5~7Ci]C^ I J75 i\:, P~.~ V. 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SP GoA ~fe~+Qy Financing Gap Analysis-Phase III building ]-~ 3 Page l RESOLUTION NO. RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA ADOPTING THE EIGHTH AMENDMENT TO THE GATEWAY CHULA VISTA DISPOSITION AND DEVELOPMENT AGREEMENT (DDA) WHEREAS, the Agency and the Developer aze parties to that certain Disposition and Development Agreement ("DDA") dated June 6, 2000, as amended by that certain First Amendment to DDA ("First Amendment") dated September 25, 2001, as further amended by that certain Second Amendment to DDA ("Second Amendment") dated December 17, 2001, as administratively amended by that certain Third Amendment to DDA ("Third Amendment") dated April 1, 2002, by that certain Fourth Amendment to the DDA ("Fourth Amendment") dated April 1, 2003, by that certain Fifth Amendment to the DDA ("Fifth Amendment") dated November 18, 2003, by that certain Sixth Amendment to the DDA ("Sixth Amendment") dated February 17, 2004, and by that certain Seventh Amendment to the DDA ("Seventh Amendment") dated July 1, 2009. The DDA, First Amendment, Second Amendment, Third Amendment, Fourth Amendment, Fifth Amendment, Sixth Amendment and the Seventh Amendment are collectively referred to herein as the DDA; and WHEREAS, the DDA relates to the development and operation of a phased First Class First Quality mixed-use commercial/office project with restaurant and retail components and common azeas of up to 385,089 squaze foot, including afive-tier 1300 space pazking structure that spans all Phases of the Project; specifically the retail component will include up to 81,000 squaze feet with restaurants, financial institutions and other retail uses. Phase I includes 102,329 square feet in a five story office tower at the easterly portion of the Site, Phase II includes 132,334 square feet in a six story office tower, and Phase III will include 150,426 square feet in a six story office tower at the westerly portion ("Project"); and WHEREAS, The DDA and Gateway Specific Plan ("Specific Plan") define the requirement of the construction of a six thousand (6,000) gross leaseable squaze foot First Class and First Quality sit down full service restaurant. Due to unfavorable economic conditions the Developer has been unable to meet this requirement and has requested that the requirement be removed; and WHEREAS, Agency is willing to remove the First Class First Quality restaurant requirement subject to the terms and conditions set forth in the Eighth Amendment to the DDA; and WHEREAS, the Developer has identified a medical trade institution that desires to locate in the Phase I building and will occupy 42,000 square feet on two floors. The DDA and the Specific Plan currently list educational and training schools as a prohibited use; and WHEREAS, Agency is willing to remove educational and training schools as a prohibited use subject to the terms and conditions set forth in the Eighth Amendment to the DDA; and 17-14 WHEREAS, the Developer has submitted an application requesting an amendment to the Gateway Specific Plan Section 2.5, Item G and Table 2 to effectuate the removal of the prohibition of educational or training facilities; and WHEREAS, Agency and Developer acknowledge that there may be a fmancial GAP in the development of Gateway Phase III and, notwithstanding section 801 of the DDA, agree to negotiate in good faith in identifying the amount of the GAP that the Agency may consider funding and the timing of any Agency Participation, pursuant to Section 800 of the DDA; and WHEREAS, any financial GAP assistance will be negotiated between Agency and Developer prior to December 31, 2012, and the development of Phase III; and WHEREAS, The Environmental Review Coordinator has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) and has determined that the project was covered in previously adopted Mitigated Negative Declaration (MND), IS 99-24. The Environmental Review Coordinator has determined that only minor technical changes or additions to this document are necessary and that none of the conditions described in Section 15162 of the State CEQA Guidelines calling for the prepazation of a subsequent document has occurred; therefore, the Environmental Review Coordinator has prepared an Addendum to Final Mitigated Negative Declazation, IS-99-24. NOW, THEREFORE, BE IT RESOLVED the Redevelopment Agency of the City of Chula Vista does hereby approve the Eighth Amendment to the Gateway Chula Vista Disposition and Development Agreement in the form presented. BE IT FURTHER RESOLVED, the Chairperson is authorized and directed to execute fmal forms of the Eighth Amendment, and Agency staff is authorized and directed to take all reasonable actions necessary to implement the same. Presented by: Approved as to form by: Gary Halbert // Bart C. Deputy City Manager/Development Services Manager ~~tGeneral 17-15 THE ATTACHED AGREEMENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALLY SIGNED UPON APPROVAL BY THE CITY COUNCIL Dated: EIGHT AMENDMENT TO DISPOSITION AND DEVELOPMENT AGREEMENT FOR GATEWAY PHASE III RESTALJRANT AND EDUCATION COMPONENT AND FINANCING GAP FORMULA AMENDMENT BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF CIIUI,A VISTA AND GATEWAY CHULA VISTA, LLC 17-16 EIGHTH AMENDMENT TO DISPOSITION AND DEVELOPMENT AGREEMENT (Gateway Phase III Restaurant and Educational Component and Financing Gap Formula Amendment) This EIGHTH AMENDMENT TO DISPOSITION AND DEVELOPMENT AGREEMENT ("Eighth Amendment") is entered into as of August 11, 2009, ("Effective Date" or "Date of Eighth Amendment") by and between the REDEVELOPMENT AGENCY OF THE CETY OF CHULA VISTA, a public body corporate and politic ("Agency') and GATEWAY CHULA VISTA, LLC, a California Limited Liability Company ("Deve{oper"). A. The Agency and the Developer are parties to that certain Disposition and Development Agreement ("DDA") dated June 6, 2000, as amended by that certain First Amendment to DDA ("First Amendment") dated September 25, 2001, as further amended by that certain Second Amendment to DDA ("Second Amendment") dated December 17, 2001, as administratively amended by that certain Third Amendment to DDA ("Third Amendment'') dated April 1, 2002, by that certain Fourth Amendment to the DDA ("Fourth Amendment'") dated April 1, 2003, by that certain Fifth Amendment to the DDA ("Fifth Amendment'") dated November i 8, 2003, by that certain Sixth Amendment to the DDA ("Sixth Amendment") dated February 17, 2004, and by that certain Seventh Amendment to the DDA ("Seventh Amendment") dated July 1, 2009. The DDA, First Amendment, Second Amendment, Third Amendment, Fourth Amendment, Fifth Amendment, Sixth Amendment and the Seventh Amendment are col{ectively referredro herein as the DDA. B. The DDA re{ates to the development and operation of a phased First C{ass First Quality mixed use commercial/office project with restaurant and retail components and common areas of up to 375,163 square feet, including alive-tier 1229 spoce parking structure that spans all Phases of the Project; specifically the retail component will include up to 51,905 square feet with restaurants, financial institutions and other retail uses. Phase I includes 102,329 square Feet in a Five story office tower at the easter{y portion of the Site, Phase II includes 132,334 square feet in a six story office tower, and Phase III will include 140,500 square feet in a six story office tower at the westerly portion ("Project'). C. Capitalized terms used in this Eighth Amendment are defined and set Forth in the DDA, unless separately defined in this Eighth Amendment, inclusive of the Attachments thereto. D. The DDA and Gateway Specific P{an ("Specific Plan") define the requirement of the construction of a six thousand (6,000) gross leaseable square foot First Class and First Quality sit down full service restaurant. Due to unfavorable economic conditions the Developer has been unable to meet this requirement and has requested that the requirement be removed. Gateway Chuia Vista Page 1 Eighth Amendment to Disposition and Development Agreement 17-17 E. Agency is willing to remove the First C{ass First Qua{ity restaurant requirement subject to the terms and conditions set forth herein. F. The Developer has identified a medical trade institution that desires to {ocate in the Phase I building and will occupy 40,000 square feet on two floors. The DDA and the Specific P{an current{y list educations! and training schools as a prohibited use. G. Agency is wilting to remove educational and training schools as a prohibited use subject to the terms and conditions set forth herein. H. The Developer has submitted an application requesting an amendment to Gateway Specific P{an Section 2.5, Item G and Table 2 to effectuate the remova! of the prohibition of educations{ or training facilities. I. The Seventh Amendment to the DDA approved a Phase III construction commencement date of no later tnan December 31, 2012, and a construction completion date of December 31, 2014, and required the renegotiation of the amount and timing of Agency Participation and one or more terms and provisions of the DDA. J. Agency and Developer acknowledge that there may be a financial GAP in the development of Gateway Phase Ili and, notwithstanding section 801 of the DDA, agree to neaotiare in good faith in identifying the amount of the GAP that the Agency may consider funding and the timing of any Agency Participation, pursuant to Section 800 of the DDA. K. Pursuant to Section 1315 of the DDA, this Eighth Amendment requires approval by the Agency Board. NOW, THEREFORE, in consideration of the foregoing recitals, which are a substantive part of the Eighth Amendment, the covenants and consideration contained and exchanged herein, Agency and Developer agrees as fol{ows: 1 . L)DA Section 100~(a)~omm r~iahtai> <Sooce Bay, and Restaurant is hereby amended and restated to remove the requirement that no less than 6,000 square feet of the -gross leaseable building area in the Phase I improvements or the Phase II Improvements in the Project shall be for the use, occupancy, and operation of a First Class, First Quality Restaurant. 2. DDA Section 101 Definitions is hereby amended and restated to remove the definition of "Restaurant" on page 23. Gateway China Visfa Page 2 EightF Amendment to Disposition and Development Agreement 17-18 3. D1~A Section 1001 2~(Fl (vii) Prohibited Uses in O1»~F/ProfPSSio>~oace is hereby amended and restated to remove the prohibition of educational or training facilities and Section 1001.2 (f) is hereby renumbered occordingly . 4. The Developer hereby agrees on the formu{a for ca{cu{sting the Financing Gap Analysis for Phase III Bui{ding (Attachment A). Developer shall complete and submit the Financing Gap Analysis spreadsheets (Attachment A) to the Agency for review and consideration by June 30, 2012. Deve{oper and Agency hereby agree that any financial GAP assistance will be negotiated and finalized between Agency and Developer prior to December 31, 2012. ~. Other Provisions. Except as expressly provided herein, alt other terms and conditions of the DDA shall remain in full force and effect. (Signature Block for Eighth Amendment begins on Need Page] Gateway China Vista Page 3 Eighth Amendment to Disposition and Deve~opmenr Agreement 17-19 Signature Page to Eighth Amendment to Gateway [3ispQSifion and Deve{opment Agreement IN WETNESS WHEREOF, the Redevelopment Agency of the City of Chula Vista, as Agenry, and Gateway Chu{a Vista LLC, as Developer, have signed this Eighth Amendment to the Gateway Disposition and Deve{opment Agreement as of the Effective Date. REDEVEE_OPbJtENT AGENCY OF THE CETY OF CHULA VISTA, a public body corporate and polric. By: Cheryl Cox, Chair GATEWAY CHULA VISTA, LLC, a California Limited Liability Company. By: Coast Faciric Properties, LLC, a California Limited Liability Company Its: Co-Managing Member By: James V. Fieri, Managing Member By: Chu{a Vista Asset Manogement, LLC, a California Limited Liability Company. lis: Co-Managing Member By: D. Gregory Scott, Chairman Manager ATTEST: By: Agency Secretary Approved as to form: By: Agency General Counsel Approved as io Form: By: Counsel to Developer Gateway China Vista Page 4 Eighth Amendment to Disposition and Development Agreement 17-20