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HomeMy WebLinkAbout10/20/1983 - MINUTES 3,7 � MINUTES OF CITY OF PALM SPRINGS CITY COUNCIL AND COMMUNITY REDEVELOPMENT AGENCY JOINT PUBLIC HEARING OCTOBER 20, 1983 Adjourned Regular Meetings of the City Council and of the Community Redevelopment Agency of the City of Palm Springs, were called to order by Mayor/Chairman Bogert, in the Council Chamber, 3200 Tahquitz-McCallum Way, on Thursday, October 20, 1983, at 7:30 p.m. , pursuant to adjournments of October 19, 1983. AGENCY & COUNCIL ROLL CALL: Present: Council/Agency Members Foster, Maryanov, Smith & Mayor/Chairman Bogert Absent: Council/Agency Member Doyle The meeting was opened with the salute to the Flag and a moment of silence. r JOINT PUBLIC HEARING: 1 . DESERT FASHION PLAZA EXPANSION Mayor/Chairman stated that the purpose of the joint public hearing was to consider the proposed sale of land and development and expansion of the Desert Fashion Plaza as provided for in a proposed Participation Agreement between the Redevelopment Agency and North Plaza Associates and South Plaza Associates, continued from October 13, 1983; and that the Council will consider and act upon the Participation Agreement and related documents. Agency Legal Counsel placed into record, the following: PA1B4 a) Affidavit of publication of notice of public hearing (124) b) Record of correspondence with property owners c) Participation Agreement, with Changed pages d) Final EIR e) Report of the Agency f) Preliminary Planned Development District Drawings, Case 5.0275 PD 147, on file in the Department of Community Development. Redevelopment Director outlined general scope of the development, including hotel , expansion and remodeling of retail , restaurant, parking, sculpture garden, landscape, demolition, site work, street, sewer, storm drain & utility improvements or relocation, and other features. He stated " that vacation of Andreas Road and Belardo Road is the responsibility of the City; that to the extent there is work on the site for which the Agency is responsible, that work will be under one contract with participation in the cost by the Agency, and off-site work shall be the responsibility of the Agency or other entity charged with such responsibility, e.g. , utility relocation. At , this point, Agency Legal Counsel summarized the proposed participation agreement, and technical changes thereto since notice of the public hearing. See Exhibits I and II attached hereto. Council/CRA Minutes 10-20-83 Page 2 1 . DESERT FASHION PLAZA (Continued) Financial Information Contained in Report of the Agency. Redevelopment Director stated that the report of the pro- posed sale of real property by the Agency pursuant to a participation agreement with the North Plaza Associates and South Plaza Associates has been prepared in compliance with Section 33433 of the California Health & Safety Code. He stated that the proposed agreement requires the Agency to acquire the Sales Property from the present owners, relocate the residents and businesses thereon and sell the Sales Property to the Participant; than the agreement is conditioned upon the vacation and abandonment of portions of Andreas Road and Belardo Road by the City of Palm Springs ' which will become part of the property t.o be owned and developed by the Participant; and that the agreement requires the Agency to pay for the cost of certain improve- ments in the adjacent public rights-of-way, including the relocation of Belardo Road. He stated the purchase price of the Sales Property is the obligation and under- taking by the participant of the total costs of developing, operating and maintaining short-term parking on the site, at grade, and in below and above grade structures, and " the cost of developing, and maintaining a sculpture garden court facing the Desert Museum; the Sales Property will be transferred to the Participant in consideration for CONT'D ` these undertakings which otherwise would I'De the responsi- PA1B4 bility of the Agency in the development of the site; such (124) facilities and their values are as follows: a) 221 underground parking spaces on the south lot, $2,044,250; and b) Sculpture garden court and 60 parking spaces; $1 .3 ' million; for a total of $3,344,250; and that the consideration of the Agency, therefore, exceeds the appraised fair market value of the Sales Property. ` Redevelopment Director stated that the City Council has certified the Final EIR subject to mitigation measures ' as stated in the condition of approval of the Planned , Development District (147) , which measures are attached to the proposed resolutions before the Council and Agency; and that the EIR is available for purchase by the public at the cost of reproduction. Marshall Krupp, representing the developer, commended the staff for its part in working through the issues; and that the Corporation partners have reviewed the docu- ments and are prepared to execute them ilf approved this r date. Mayor/Chairman inquired if anyone wished to be heard. 4 City Clerk stated that no written communications were ` received in favor of the project. Council/CRA Minutes 10-20-83 Page 3 1 . DESERT FASHION PLAZA (Continued) Redevelopment Director stated that a letter from Jeremy Crocker, protesting the closure of Andreas Road, was received and will be part of the record ; and that two written communications were received from the Desert Museum, ' one previously submitted indicating the Museum's opposition to the closing of Andreas Road, and the second a statement by the Museum Board' s President indicating that the Board has -not taken any formal action relative to the expansion, per se, however, following its review of the impact of the proposed expansion on the Museum, it may issue a state- ment. There were no further appearances, and Mayor/Chairman ` declared the hearing closed. Agency Legal Counsel reviewed proposed Agency/Council resolutions and nature of motions re Notice of Determination w- under CEQA for the participation agreement. h- Council Actions: Resolution 14762, was presented, entitled: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS APPROVING AND AUTHORIZING EXECUTION OF A PARTICIPATION AGREEMENT BETWEEN THE COMMUNITY REDEVELOPMENT AGENCY • OF THE CITY OF PALM SPRINGS AND NORTH PLAZA ASSOCIATES AND SOUTH PLAZA ASSOCIATES. ' It was moved by Maryanov, seconded by Smith, and unani- mously carried, Doyle absent, that Resolution 14762 be adopted. It was moved by Smith, seconded by Maryanov, and unani- CONT'D mously carried, Doyle absent, authorizing staff to file PA1B4 notice of determination under California Environmental (124) Quality Act for the Participation Agreement. h � CRA Actions: Resolution 165, entitled: RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS APPROVING AND AUTHORIZING EXECUTION OF A PARTICIPATION AGREEMENT BETWEEN THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS AND NORTH PLAZA ASSOCIATES AND SOUTH PLAZA ASSOCIATES. after which, it was moved by Smith, seconded by Maryanov, and unanimously carried, Doyle absent, that Resolution ' 165 be adopted. It was moved by Smith, seconded by Maryanov, and unanimously carried, Doyle absent, authorizing the staff to file notice of determination under California Environmental Quality Act for the Participation Agreement. ADJOURNMENT There being no further business at 8:40 p.m. , Mayor/Chairman declared the meeting adjourned. -� - C DITH SUMICH City Clerk CRA/Council Minutes 10-20-83 Page 4 CRA/COUNCIL MINUTES ' October 20, 1983 EXHIBIT I SUMMARY PROPOSED PARTICIPATION AGREEMENT I. PARTIES " 1. AGENCY: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS 2. PARTICIPANT: NORTH PLAZA ASSOCIATES AND SOUTH PLAZA ASSOCIATES, each a general partnership comprised of Arthur Gilbert, David Blum and Gerson Fox, w as general partners. 3. GUARANTOR: The Edward J. DeBartolo Corporation, of Youngstown, Ohio. The obligations of the guarantor are co-extensive with, and not greater than, and are subject to the same conditions and excuses of performance, as are the obligations of the Participant. The form of guaranty is attached to the Agreement as Attachment No. 7. II. SITE 1. The Site is comprised of property presently owned by the Participant, called the Participating Property, and property to be acquired by the Agency " and conveyed to the Participant, called the Sales Property. The Sales Property also included those portions of Andreas and Belardo Roads to be vacated + and abandoned for development of the Site. 2. The Site is to be developed by the Participant in accordance with the y Scope of Development, Attachment No. 4. a 3. The Agency is also responsible for certain off.-site work as set forth in the Scope of development. III. OBLIGATIONS AND RESPONSIBILITIES OF THE PARTICIPANT ' 1. To submit a good faith deposit of $150,000 in the form of a demand promissory note from the Edward J. DeBartolo Corporation. Under specified conditions of default the Agency may retain the deposit: as liquidated damages if (a) the Agency has filed actions in eminent domain, and (b) the event of CRA/Council Minutes October 20, 1983 Page 5 Exhibit T termination was not caused by a default on the part of the Agency. The deposit is returned to the Participant under all other events of default or termination and upon the transfer of title or possession to the Sales • Property. 2. If necessary, prior to the time bonds are issued by the Agency, and after the Agency has first applied approximately $1 million of its • funds, to advance up to $2 million to the Agency for acquisition of r- properties or deposits of money into court for orders of immediate possession I eminent domain actions. The advance is to be repaid by the Agency pursuant to a promissory note to the Participant, bearing interest at 12 percent, from the sale of tax allocation bonds or, if bonds cannot be sold, from unpledged and unencumbered tax increments to the Agency from the project ' area, and the Agency agrees not to incur any other project financing, except for purposes of the Participation Agreement, until the promissory note is repaid. 3. To enable the Agency to issue its tax allocation bonds to finance the undertakings of the Agency under the Agreement (property acquisition, relocation, off-site improvements) , the Participant and the guarantor agree " to guarantee annual tax increments to the Agency from the sale of the Sales Property and the development of the Site (exclusive of tax increments from Saks Fifth Avenue or substitute department store, and tenant improvements on the Site) in the amount of $350,000 annually, commencing in the first full fiscal year following completion of the improvements to the Sales Property. The obligation is to make an in-lieu tax payment to the Agency if the tax " increments are short of that amount. The obligation is to be secured by a first and prior liens on the Sales Property in favor of the Agency and lasts until the tax increments exceed the required amount for two successive fiscal years . The liens are to be segregated, two-thirds of the amount to the hotel parcel and one-third to the balance of the Sales Property. CRA/Council Minutes '4 October 20, 1983 r Page 6 Exhibit I 4. In addition, the Participant agrees to contribute to excess costs of the Agency in the amount of 70% of such costs in excess of $7, 100,000 to $9,600,000 and 50% of such costs in excess of $9,600,000. This is to take the form of an additional guarantee of tax increments for additional bonds of the Agency, but not to exceed $600,000 annually, including the original tax increment guarantee and also including tax increments from the Saks Fifth Avenue or substitute department store and tenant improvements on the Site. If the Agency cannot issue additional tax increment bonds, the Participant is required to advance such contributions as a loan to the Agency, with repayment ` by a promissory note from the Agency in the same manner and subject to the same conditions as the Agency's promissory note for the original $2 million advance for property acquisition. This guarantee is also to be secured by r ' r the first and prior liens on the Sales Property. 5. The Participant is restricted in its ability to assign or transfer its r rights under the agreement or in the Site until issuance by the Agency of a Certificate of Completion for all the improvements to the Site. Exceptions ' r are: (a) to assignees if the Participant and the guarantor remain full liable; (b) to ventures with the Edward J . DeBartolo Corporation; (c) for purposes of financing; (d) to ground lease the hotel parcel and air rights lease the Saks parcel, which will then be treated as separate development parcels under the Agreement. 6. To submit evidence of financing. 7. To submit final planned district development plans to the City and plans for the Agency work to the Agency, for approval. 8. To take title or possession of the Sales Property when tendered by the - Agency, and to pay its allocated share of closing costs and premiums for title 4 insurance. 9. To commence and complete the development of the: Site, subject to rights '� CRA/Council Minutes October 20, 1983 ' Page 7 Exhibit I of the Agency to repurchase or re-enter and revest title in the Agency to +� the Sales Property if the improvements are not completed, 10. To use the Site in accordance with the Redevelopment Plan and y subject to the following covenants of use: (a) restricting the hotel parcel to hotel use for 20 years unless after the first 5 years it is demonstrated to the reasonable satisfaction of the Agency that hotel use is no longer economically feasible, in which case the +' parcel is restricted to residential use for the remainder of the 20 year period, unless expressly waived by the Agency; (b) restricting the shopping center portion of the Sales Property to ` shopping center use for 20 years unless expressly waived by the Agency; (c) non-discrimination. However, if the Agency is unable to issue its tax allocation bonds, and the Participant elects, in lieu of its right to terminate the Agreement, to fund all of the Agency's costs as an advance and loan to the Agency, the -, specific hotel and shopping center use restrictions are waived, and the Participant is also excused from its obligation to construct a visitor information kiosk on North Palm Canyon Drive. 11. The Participant's performance under the Agreement is generally conditioned upon: V- (a) issuance by the Agency of tax allocation bonds to -repay advances and fund Agency costs, subject to the guarantee of tax increments by the Participant as required under the Agreement; (b) the availability of tax-exempt financing, at the Participant's cost of issuance and amortization, for the parking improvements and the sculpture garden court; ' (c) action by the City to vacate and abandon portions of Andreas and Belardo Roads; (d) approval by the City of final planned development district drawings and r related documents; CRA/Council Minutes I� October 20, 1983 Page 8 Exhibit I (e) The adoption by the Agency of a resolution of necessity to acquire properties by eminent domain, if necessary; (f) obtaining of financing; (g) obtaining a commitment for a Saks Fifth Avenue or similar high quality department store. IV. OBLIGATIONS AND RESPONSIBILITIES OF THE AGENCY (1) To use its best efforts to issue tax allocation bonds, subject to ^r the guarantee by the Participant of tax increments as required under the Agreement. ` (2) To use its best efforts to make available to the Participant tax exempt financing, at the Participant 's costs of issuance and amortization, for the parking improvements and the sculpture garden court. (3) To acquire the Sales Property and, if it elects to do so, proceed with eminent domain, subject to the receipt of advances from the Participant and guarantees of tax increments, as required under the Agreement. (4) To tender title or conveyance to the Sales Property by the time , required in the Agreement. (5) To pay for the cost of certain off-site improvements as set forth in t the Scope of Development (Attachment No. 4) . V. EVENTS OF TERMINATION (DEFAULTS AND FAILURES OF CONDITION) 1. Agency does not adopt a Resolution of Necessity by November 2, 1983. ' 1 2. City does not act to vacate portions of Andreas and Belardo Roads by November 2, 1983, with the actual vacation to occur at, or shortly after, escrow. 3. City does not approve final planned development district plans. 4. The Agency is unable to issue its tax allocation bonds. 5. The Agency is unable to provide tax-exempt financing to the Participant for the parking and sculpture garden court. 6. The Participant assigns in violation of the Agreement. -' CRA/Council Minutes October 20, 1983 Page 9 Exhibit I 7. The Participant fails to make a required advance of funds to the Agency. 1 S. The Participant fails to guarantee tax increments or share in Agency excess costs as required by the Agreement. 9. The Participant fails to submit plans to the City or Agency. 10. The Participant is unable to obtain financing or fails to submit evidence of financing. 11. The Participant is unable to obtain a high quality department store commitment. 12. The Participant is unable to obtain a hotel commitment. 13. The Agency is unable to acquire title or possession to convey the r Sales Property to the Participant in the time required by the Agreement. 14. The Participant does not accept title or possession to the Sales ' Property when tendered by the Agency. If there is a termination for a default by the Participant or inability of the Participant to obtain financing, the high quality department store commitment, or the hotel commitment, the Agency may retain the $150,000 as liquidated damages by making demand on the DeBartolo Corporation note, provided (1) the Agency has filed eminent domain actions, and (2) the default or failure by one Participant was not caused by a default on the part of the Agency. i The Participant may, at its election, delay the Agency's filing of eminent domain actions for up to 60 days provided the date for close of escrow is also extended for the same period of time. N CRA/Council Minutes 10-20-83 Page 10 CRA/COUNCIL MINUTES October 1983 EXHIBIT II SUMMARY OF REVISED PAGES The record contains some last minute revisions which correct, clarify and make technical modifications, but do not change the substance, business terms or structure. I will briefly describe what these are: 1. Maps and legal descriptions have been clarified. ,- 2. The obligations of the participant and guarantor with respect to the tax increment guarantee - the in lieu tax payments - secured by liens on the property, have been clarified. They are personal recourse obligations until the earlier of (i) the obligations are extinguished by the tax incre- ments achieving the stated level for two successive fiscal years, or (ii) 3 full fiscal years after completion of development. i 3. The form of guaranty, and the content of the guaranty, has been revised to reflect in clearer terms that the obligations of the guarantor are co-extensive with, but no greater than, the obligations of the participant. ' 4. Exercise of Agency rights of repurchase or reverter for a failure to complete construction have been clarified: the Agency's rights will be subject to the rights of any space tenants to which the Agency has expressly granted non-disturbance, in addition to the other rights of lenders, REA parties, and Saks and the hotel, previously contained. _y 5. Other technical corrections have been made. ' I have a few concluding remarks about the nature of, and necessity for, this type of agreement involving significant cooperation and inter-dependence .� between the public and private sectors. Almost without exception, new and expanded retailing in California's downtowns in the last two decades has been the result of active participation by cities and their redevelopment agencies through the redevelopment process. ' This precess has resulted in completed or proposed: major new full regional CRA/Council Minutes October 1983 Page 11 Exhibit II downtown shopping centers in such cities as Santa Rosa, Sacramento, Santa Monica, Sunnyvale, Pasadena, Glendale and Hawthorne; major mixed-use projects involving significant new retailing in such cities as San Jose, San Francisco, San Diego, Los Angeles, Sacramento; new single department free standing department stores in such smaller cities as Napa, Santa Barbara and Walnut Creek. The reason for this necessary public private partnership is that, t' without redevelopment, and in a strictly private market situation, new J* downtown retailing cannot be economically justified and existing retailing faces the prospect of continuing decline from suburban shopping centers on cheap land and with ample, inexpensive parking. A degree of public assistance in a major degree is called for because of downtown and property r ownership characteristics. ' Sites in downtowns for substantially new retailing cannot be assembled without the public use of eminent domain. Sites, even if they could be privately assembled, are too costly for retailing use. . Parking for retailing is costly - it must be structured - and generally non-revenue producing. . Streets, public rights of way must be realigned in many instances, and parcels and blocks consolidated. Tenants cannot pay the high rents which would be required if all of these costs had to be borne solely by the private sector. So, in providing this form of public assistance, cities and their redevelopment agencies are not providing subsidies to private developers; they are creating in their downtowns, competitive economic opportunities that would not otherwise be possible. Even with public assistance - and it is in some cities equal to or in excess of the private investment - a downtown retailing project for a private developer is more costly, consumes greater time, involves more uncertainties, and has more risk than a suburban retailing development opportunity. CRA/Council Minutes I4 October 1983 0 Page 12 Exhibit II Admittedly, also, there are costs, uncertainties and risks on the part of the Agency. But, it is important to note that the Agency operates financially independent of the City. The Agency does not, and cannot, create a general obligation on the part of the City, or a debt, or liability against the City. On the other hand, the benefits flow to the City, as they can contemplate they should: increased sales taxes, transient occupancy taxes, business license fees, employment, tourism, etc. And an important and critical long range benefit - preserving the downtown retail core as a vital part of the downtown fabric. a The prestigious Urban Land Institute calls this public-private cooperation "co-development", and credits it with renewing and restoring downtowns across the country. Y This Participation Agreement, with the active involvement of one of the ' nations 's largest and most successful shopping center developers - the Edward J. DeBartolo Corporation - is in the mainstream of that co-development process. r - - - - - - - - - - - - 4 1