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HomeMy WebLinkAbout12/15/1999 - STAFF REPORTS (2) DATE: DECEMBER 15, 1999 TO: COMMUNITY REDEVELOPMENT AGENCY FROM: DIRECTOR OF MANAGEMENT&BUDGET APPROVAL OF AN ESCROW ASSIGNMENT AGREEMENT WITH LUNDIN DEVELOPMENT COMPANY RELATING TO AGENCY PURCHASE OF A PARCEL AT THE NORTHWEST CORNER OF SUNRISE WAY AND RAMON ROAD RECOMMENDATION: It is recommended that the Agency approve the Escrow Assignment Agreement with Lundin Development Company for the acquisition of a 13,000 s.f.parcel,known as the Shell Station,at the comer of Sunrise Way and Ramon Road. BACKGROUND: In April,Lundin Development Company("Lundin")requested Agency assistance in the redevelopment of the shopping center at the northwest corner of Sunrise Way and Ramon Road. They have an agreement with Ralphs Grocery Company,the major tenant in the center,to acquire the center and the adjacent parcels to the west and build a new center that can accommodate a new 58,000 s.f Ralphs Grocery as well as other retail shops. The Agency approved an Exclusive Agreement to Negotiate with Lundin on June 16, 1999 for the entire site, including the existing shopping center,the Desert Water Agency parcel,the Riverside County Flood Control parcel,the adjacent 5-acre parcel, and the Shell service station. In September the Shell station closed and Shell,through its real estate subsidiary Equiva Services,LLC(acting for Equilon Enterprises LLC, the owner of the property)put the station up for sale. Agency staff urged Lundin to acquire the property, even though a final DDA has not been negotiated,because Equiva has a need to complete the sale by December 31, and there was another buyer overbidding on the property. Were the other buyer to acquire the Shell property,the entire project would be jeopardized, or the Agency probably would then have been asked to consider condemnation on the Shell station. While the Agency desires to acquire this parcel at this time,but does not have the $400,000 in cash on hand,Lundin will lend the funds to the Agency for the purchase through a non-recourse note secured by the property. Lundin has opened escrow for this acquisition which now is being transferred to the Agency via this Agreement. This agreement was originally on the Agency agenda on November 17, 1999,but was pulled because of concerns regarding the completeness of the environmental studies commissioned by both Lundin and Equilon, and language in Equilon's standard Purchase and Sale Agreement that assigned environmental liability based on its study's conclusions. Agency Counsel has been negotiating these issues with Equilon and now has determined that entering the escrow,through the assignment from Lundin, is still prudent,because the escrow can be reassigned back to Lundin prior to closing if the agreement poses an unacceptable liability to the Agency. C,�w-,6 C'F The subject Agreement is the first of a number of documents which will be brought to the Agency to consummate the purchase transaction, including the close of escrow documents with Equilon and the note with Lunding for the sale proceeds. If the project does not move forward,the Agency can choose to either pay off the note and retain the property or allow it to go back to Lundin. This project, though extremely complex because of the number and type of land owners involved, has made substantial progress because of the commitment, experience, and resources of the developers. The center is due for an overhaul, and the development of the new center shall take three parcels that are not currently on the tax rolls at all and make them tax roducing. JOIFq S.7��YMOND '%' 6 ', kali� L Diryctor oFManagemeM Budget u P. 15priffil'Sfi, APPROVED 10MVZ4- Executive Director ATTACHMENTS: 1. Resolution 2. Assignment Agreement-to be provided RESOLUTION NO. OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING AN ASSIGNMENTAGREEMENT WITH LUNDIN DEVELOPMENT COMPANY OF HUNTINGTON BEACH, CALIFORNIA FOR THE ACQUISITION OF A PARCEL 1N THE BARISTO-FARRELL REDEVELOPMENT PROJECT AREA(AREA#8) WHEREAS the Community Redevelopment Agency is responsible for eliminating blight within the Baristo-Farrell Redevelopment Project Area; and WHEREAS a deteriorated neighborhood shopping center,with a low level of maintenance and high vacancy rate, is located in the project area; and WHEREAS the Agency has entered into an Exclusive Agreement to Negotiate with Lundin Development Company of Huntington Beach("Lundin")on four parcels adjacent to the shopping center while they negotiate to assemble the project parcels; and WHEREAS one of the adjacent parcels, the Shell station, is available for sale and Lundin needs the Agency to purchase the property for the project;and WHEREAS the Agency desires to purchase the property for the project but does not have the available cash for the project; and WHEREAS Lundin has agreed to lend the funds to the Agency for this purchase, using a non-recourse note secured by the property;and WHEREAS the escrow opened by Lundin for this acquisition is being assigned to the Agency by the subject Assignment Agreement. NOW THEREFORE BE IT RESOLVED by the Community Redevelopment Agency of the City of Palm Springs, that the Assignment Agreement between the Agency and Lundin Development Company, in a form approved by the Agency Counsel, is hereby approved. ADOPTED this day of 19_. AYES: NOES: ABSENT: ATTEST: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA By Assistant Secretary Executive Director REVIEWED&APPROVED AS TO FORM K ,+'