HomeMy WebLinkAbout9/6/2000 - STAFF REPORTS (2) DATE: SEPTEMBER 6, 2000
TO: COMMUNITY REDEVELOPMENT AGENCY
FROM: REDEVELOPMENT DIRECTOR
APPROVAL OF AN EXCLUSIVE AGREEMENT TO NEGOTIATE WITH WESTAR
ASSOCIATES, INC. ON AN AGENCY-OWNED PARCEL AT THE CORNER OF GENE
AUTRY TRAIL AND RAMON ROAD
RECOMMENDATION:
It is recommended that the Agency approve the Exclusive Agreement to Negotiate
with Westar Associates, Inc. on Agency- and privately-owned parcels of+ 38 acres
at the corner of Gene Autry Trail and Ramon Road.
BACKGROUND:
In September, 1998 the Agency entered an Agreement with Westar Associates,
Inc. of Costa Mesa on the Agency-owned parcel at the corner of Gene Autry Trail
and Ramon Road, commonly known as the dumpsite parcel. Westar asked for an
option period that would allow it to control the property while it conducted
environmental assessments, negotiated with the adjacent property owner(s), and
designed and marketed the project to prospective tenants. Westar controlled the
site for a period of 12 months and were successful gaining tenant interest in the
site (it was where Lowe's first looked before landing across the street) but were
unsuccessful developing a workable remediation plan for the site.
In 1999 and 2000, Agency staff looked at the alternative—that the Agency first
remediate the site and then market it clean. Sections of Redevelopment Law
known as the Polanco Act give redevelopment agencies broad powers (even more
than cities or county agencies) to effect cleanup of contaminated land owned by
the Agency or a private owner. Staff's goal was to use the Agency's Polanco Act
powers and state and federal grant funds to remediate the site for sale to a
developer. The Agency has a pending Economic Development Initiative grant
application with the U.S. Department of Housing and Urban Development which, if
approved, could be used toward the remediation of the site.
The Lowe's Home Improvement Warehouse development, for better or worse, has
sped up the timetable for the development of the dumpsite. Westar has continued
to work with potential tenants of the site and are close to putting together leases
with major retailers for a development there. Staff has spoken with the real estate
representatives of at least one major retailer and they have indicated that they
definitely want to be in Palm Springs and this is by far their preferred location in
town. More importantly, Westar has joint-ventured with a firm specializing in the
development of contaminated land, which brings the technical expertise and
resources to the project which so far have been lacking. The addition of the
contaminated land developer has changed their proposal back to what was
originally agreed: that Westar take the site "as is" and bear the cost (and risk) of
the remediation.
Staff still needs to negotiate the Disposition and Development Agreement with
Westar, including such points as the potential condemnation or other
environmental action on the Epsteen parcel, the price of the site "as is," and a
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reasonable remediation allowance that ensures that, at the very least, the Agency
is not obligated to use any tax increment to actually clean up the site.
While the idea of the Agency remediating the site was appealing from the
perspective of potentially maximizing the potential sales revenue from the site, it
did bring with it the risk of(1) cost overruns and (2) not having a purchaser for the
site upon completion if the economy dipped during that time. Putting the project
back into private hands with the technical experience necessary to finish the job is
the preferred alternative.
Staff will still return to the Agency in October with a contract with a remediation
engineer, so that the Agency can design the partial clean closure for future grant
applications (i.e. through the California Integrated Waste Management Board).
The Agency's engineer and the developer's engineer will coordinate the actual
remediation project.
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APPROV� �_ /'
Executive Dire r
ATTACHMENTS:
1. Resolution
2. Exclusive Agreement to Negotiate
69404-z
EXCLUSIVE AGREEMENT TO NEGOTIATE
WITH WESTAR DEVELOPMENT COMPANY FOR THE
DEVELOPMENT OF A SHOPPING CENTER
THIS EXCLUSIVE AGREEMENT TO NEGOTIATE ("Agreement"), is made this
day of 12000, by and between the COMMUNITY REDEVELOPMENT
AGENCY OF THE CITY OF PALM SPRINGS ("AGENCY") and WESTAR DEVELOPMENT
COMPANY ("Developer").
RECITALS
The parties entered into this Agreement on the basis of the following facts,
understandings, and intentions:
A. The Agency is a public body, corporate and politic, exercising governmental
functions and powers and organized and existing under the Community Redevelopment Law
of the State of California (Health and Safety Code Sections 33000, et seq.).
B. The Agency desires to effectuate the Redevelopment Plan for Redevelopment
Project Area No. 4, now a part of Merged Project Area#1, by providing for the development of
a regional retail shopping center within a portion of the approximately 38-acre vacant property
at the northeast corner of Gene Autry Trail and Ramon Road (the "Shopping Center").
C. The Developer is experienced in shopping center development and has dealt
with the major tenants who might occupy the Shopping Center. The term "Developer," as used
herein, includes the principals, partners, and joint venturers of Developer and all obligations of
Developer herein shall be the joint and several obligations of such principals, partners, and
joint venturers.
D. Due to various uncertainties, including market conditions and the availability of
tenants, the need to develop a land use plan with adequate environmental review, and
conditions of the site, including prior soil contamination issues creating significant remediation
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costs, the parties believe additional due diligence is necessary before a conclusive purchase
agreement can be concluded.
E. The Agency and Developer desire, for the period set forth herein, to negotiate
diligently and in good faith to prepare an agreement whereby the Developer would develop the
Shopping Center Site for a major regional power center.
NOW, THEREFORE, and in consideration of the mutual covenants hereinafter
contained, it is mutually agreed upon by the parties as follows:
SECTION 1. NATURE OF NEGOTIATIONS.
A. Good Faith. The Agency and the Developer agree that, for the period set forth
in Section 2 herein, they will negotiate diligently and in good faith to prepare and enter into an
agreement (the "DDA") consistent with the provisions of this section for the development of a
Shopping Center (the "Project") on the Site specified herein. The development will be subject
to all rules, regulations, standards, and criteria set forth in the Redevelopment Plan, the City's
General Plan, applicable specific plans and zoning regulations, and with this Agreement. The
DDA will generally be in the form negotiated by the Agency with other development entities.
B. Site. The Project shall be located upon the real property designated as the
"Shopping Center" or the "Site", as shown in the "Site Map," attached hereto as Exhibit "A" and
incorporated herein by this reference. The Site is divided into two ownerships, herein
designated as the "Agency Parcel" and the "Epsteen Parcel".
C. Nature of Shopping Center and Ownership. The Developer's interest shall be
fee. The Developer is responsible for financing and constructing all improvements upon the
Site. The Shopping Center shall be a "power center" with one or more major tenants
occupying 100,000 or more square feet, and ancillary retail tenants to include uses such as
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general merchandise, food, theaters, home improvement, clothing, electronics, sports,
restaurants, and similar uses.
D. Soils. During negotiations for the DDA, Agency shall apply for financial
assistance from the State or Federal government to assist with the remediation of the
contaminated portion of the site. The Agency and Developer, together with the County of
Riverside Department of Environmental Health, have determined that a "partial clean closure"
of the site may be the most practical approach, and that California Health & Safety Code
("H&SC') § 33459.1(a)(1) allows Redevelopment Agencies to "take any actions that the
agency determines are necessary and that are consistent with other state and federal laws to
remedy or remove a release of hazardous substances on, under, or from property with a
project area, whether the agency owns that property or not," thereby creating additional
authority for the Agency to clean the site. Agency may hire any consultants which Agency
deems necessary to study, analyze, and report on the Site and to develop a remediation plan.
The Agency shall not be obligated to clean up the property if it does not obtain additional
resources from the State or Federal government, nor shall Developer be obligated to acquire
any parcel that has not been remediated. However, based upon Developer's review of the Site
and the estimated cost of the remediation plan, the parties shall agree on a remediation
budget to be included in the DDA and to be offset against the purchase price.
E. Financial Provisions. Developer shall acquire a fee interest in the Site at a
price to be agreed upon by the parties with the actual net usable square footage determined
through survey, and with the offset for remediation as mutually agreed to by the parties.
1. Developer shall be responsible for funding the cost of any condemnation
action.
2. Developer shall be responsible for financing and constructing all
improvements.
Westagr.wpd September 6,2000 -3-
3. Developer shall pay for all necessary public improvements and pay all
City's fees for processing the Project, without assistance from the Agency.
4. Nothing in this agreement shall be construed to be contrary to the
provisions of Health & Safety Code Section 33426.5:
"Notwithstanding the provisions of Sections 33391, 33430, 33433, and 33445,
or any other provision of this part, an agency shall not provide any form of direct
assistance to:
(b) (1) A development that will be or is on a parcel of land of five acres or
more which has not previously been developed for urban use and that
will, when developed, generate sales or use tax pursuant to Part 1.5
(commencing with Section 7200) of Division 2 of the Revenue and
Taxation Code, unless the principal permitted use of the development is
office, hotel, manufacturing, or industrial, or unless, prior to the effective
date of the act that adds this section, the agency either owns the land or
has entered into an enforceable agreement, for the purchase of the land
or of an interest in the land, including, but not limited to, a lease or an
agreement containing covenants affecting real property, that requires the
land to be developed.
(2) For the purposes of this subdivision, a parcel shall include land on an
adjacent or nearby parcel on which a use exists that is necessary for the
legal development of the parcel.
(e) This section shall not be construed to apply to agency assistance in
the construction of public improvements that serve all or a portion of a
project area and that are not required to be constructed as a condition of
approval of a development described in subdivision (a), (b), or (c), or to
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prohibit assistance in the construction of public improvements that are
being constructed for a development that is not described in subdivision
(a), (b), or(c)."
F. Schedule. The goal will be to develop the Shopping Center for opening by
June, 2002. The DDA shall contain a Schedule of Performance. Due to the need to possibly
acquire the Epsteen Parcel through condemnation or environmental enforcement action under
§33459, title to the Epsteen Parcel may be delivered in a later phase.
G. Use, Transfer, and Maintenance Restrictions. The DDA will generally be
subject to restrictions on use and transfer during construction and for a specified period
thereafter (i) to assure that the use will be consistent with and promote the Redevelopment
Plan, (ii) to protect the character of the Project and to provide an adequate long-term financial
return, (iii) to prevent speculation, and (iv) to assure that any transferee has the resources,
capability, and experience to successfully operate the Shopping Center. In addition,
restrictions shall be recorded to assure proper maintenance of landscaping and improvements.
H. Property Acquisition. To the extent provided by law, the DDA will contain
provisions that the Agency will consider the use of its power of eminent domain for site
assemblage should voluntary negotiations be unsuccessful.
I. Exclusivity. The Agency agrees for the period set forth in Section 2 that it will
not negotiate with or enter into any agreement with any other entity for development of the
Site, and the Developer agrees not to negotiate with any other person or entity regarding
development, expansion, or redevelopment of a large-scale power center exceeding fifteen
(15) acres within a ten (10)-mile radius of the Site without the approval of Agency.
Westagrmpd September 6,2000 -5-
SECTION 2. PERIOD OF NEGOTIATIONS.
A. Period of Exclusive Negotiation. The period of negotiation shall be six
(6) months from the date this Agreement is signed by the Agency, except as provided herein.
By mutual consent based on progress made toward developing the center, the Agreement may
be extended an additional six (6) months past the expiration period.
B. Early Termination. Within one hundred eighty (180) days from the date
hereof, the parties shall meet and review the status of performance
under this Agreement (herein 'Review Meeting"). Within such period,
Developer should have done the following:
A. Prepared a preliminary site plan.
B. Prepared a preliminary financial proforma.
C. Have developed a tenant interest list specifying tenants contacted and
those from whom commitments have been or will be obtained. To the extent Developer wants
such information to remain confidential, they shall be supplied to the Agency only if
confidentiality can be maintained.
Within the same 180 day period, the Agency will have:
A. Applied for financial assistance from the Department of Housing & Urban
Development and the California Integrated Waste Management Board.
B. Hired an environmental consultant to fully characterize the waste on
Agency parcels, as well as develop the partial clean closure plan.
C. Begun the process of requiring the owner of the Epsteen parcel to clean
up its site.
D. Prepared a preliminary soils remediation plan.
If the parties determine that the Project is not economically feasible, or if
Agency finds Developer's progress with respect to the foregoing unsatisfactory, then Agency
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If the parties determine that the Project is not economically feasible, or if
Agency finds Developer's progress with respect to the foregoing unsatisfactory, then Agency
may terminate this Agreement, retaining the Good Faith Deposit as specified in Section 5. If
the Developer finds the Agency's progress unsatisfactory with respect to the foregoing, it may
terminate this agreement and have returned to it the unexpended portion of the Good Faith
Deposit.
C. Extension of Time. This Agreement shall terminate after the expiration
of the period set in Subsection A unless extended as follows:
A. For sixty (60) days, if an agreement has been prepared by the Agency
and executed by the Developer and has been submitted to the Agency
but has not yet been approved by the Agency Board; or
B. For thirty (30) days if the major business terms have been agreed to and
the Executive Director determines that further negotiations are likely to
result in a written agreement; or
C. By mutual agreement of the parties.
D. Agency Approval. Developer understands and acknowledges that if
negotiations culminate in an agreement, such agreement shall be effective only
after and if the agreement has been considered and approved by the Agency
Board after public hearing thereon as required by law.
SECTION 3. DEVELOPER'S RESPONSIBILITIES.
During the period of negotiation, Developer will prepare such studies, reports, and
analysis as shall be necessary to permit Developer to determine the feasibility of the Project.
During the period of negotiation, and as requested by the Agency, the Developer shall submit
to the Agency the following:
Westagrmpd September 6,2000 -7- A 9
A. Full disclosure of Developer's principals, partners, joint venturers,
negotiators, consultants, professional employees, or other associates of the
Developer who are participants or principals of the Project, and all other relevant
information concerning the above.
B. Statement of financial condition in sufficient detail to demonstrate
Developer's financial capabilities, those of its principals, partners, joint
venturers, and those of its prospective developers to satisfy the commitments
necessitated by the Project. To the extent Developer wants such financial
statements to remain confidential, they shall be supplied to the Agency only if
the confidentiality of the statements can be maintained.
C. All information necessary for the design of the Project to meet the
Developer's reasonable requirements. In addition, Developer shall take all
actions necessary to obtain construction and permanent financing.
D. All information necessary to show tenant availability and interest, the
nature of the proposed tenants, and the financial strength and resources of the
tenants. To the extent Developer wants such information to remain confidential,
they shall be supplied to the Agency only if confidentiality can be maintained.
E. All information necessary to complete Midterm Review under Section 2.
The Developer shall negotiate exclusively with the Agency's negotiating team and with
no other persons unless expressly authorized to do so by the Agency's negotiating team.
During the period of negotiations, no statements will be made by the Developer to the media
without the approval of the Agency's negotiating team. No prepared statements shall be
released to the media without the mutual consent of the respective negotiating teams.
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SECTION 4. AGENCY'S RESPONSIBILITIES.
A. Agency Assistance. The Agency shall cooperate fully in
providing Developer with appropriate information and assistance.
B. Preparation of Agreement. If agreement is reached on the
business terms for inclusion in the agreement, the Agency shall prepare
such agreement for consideration by the Developer.
C. Environmental Quality Act. The Agency will assist Developer in
preparing an environmental impact report or such environmental
documentation as may be necessary for the Project.
D. Zoning. The Agency will undertake all acts necessary to rezone
such portions of the property as may be necessary to permit the
Shopping Center on the Site.
SECTION 5. GOOD FAITH DEPOSIT.
Concurrently with the execution of this Agreement, Developer shall submit to the
Agency a good faith deposit in the sum of Fifteen Thousand Dollars ($15,000.00) in the form
of a cash deposit, cashier's check,irrevocable letter of credit, or other form of security
acceptable to the Agency to insure that the Developer will proceed diligently and in good faith
to negotiate and perform all of the Developer's obligations under this Agreement. If the
deposit is in cash or a certified cashier's check, it shall be deposited in an interest-bearing
account in a bank or trust company selected by the Agency. Interest, if any, shall be added to
the deposit and held as additional security for the Developer's obligations hereunder. Upon
termination of this Agreement, the balance shall be returned to the Developer provided that the
Developer has negotiated diligently and in good faith and carried out its obligations hereunder.
If Developer has failed to do so, in as much as the actual damages which would result from a
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breach by Developer of its obligations under this Agreement are uncertain and would be
impractical or extremely difficult to determine, Agency shall be entitled to retain the entire
amount of said deposit, as liquidated and agreed damages. It is further understood that the
DDA may require an increase in the good faith upon execution of the DDA. Notwithstanding
the foregoing, the first Five Thousand Dollars ($5,000.00) shall be non-refundable. In the
event, after Midterm Review in Section 2, it is determined to proceed and prepare a DDA, then,
thereafter, the additional Ten Thousand Dollars ($10,000.00) shall also not be refundable (but
shall be refundable if the Agency terminates at Review Meeting for any reason).
SECTION 6. MISCELLANEOUS.
A. No Commissions. The Agency shall not be liable for any real
estate commission or any broker's fees which may arise herefrom. The
Agency represents that it has engaged no broker, agent, or finder in
connection with this transaction, and the Developer agrees to hold the
Agency harmless from any claim by any broker, agent, or finder retained
by the Developer.
B. Ownership of Documents. If the negotiations contemplated by
this Agreement do not result in the execution of an agreement,
Developer shall transfer to Agency copies of any reports, studies,
analysis, site plan layouts, engineering studies, memorandums, or
similar documents regarding the proposed development and prepared
during the period of negotiations (except tenant information and
proformas), which copies shall become the property of Agency. Such
transfer shall be made without any representation or warranty by the
Developer as to the accuracy or sufficiency of the contents of such
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documents and shall be made subject to the rights of the preparers of
such documents including, without limitation, the copyright (if any)
associated with such documents.
C. Purpose of Contract. It is expressly understood and agreed by
the parties hereto that this is an Agreement regarding the conduct of
contract negotiations only and does not convey any interest in the
property whatsoever. It is further agreed and understood that this
Agreement does not imply any obligation on the part of the Agency to
enter into any agreement that may result in negotiations contemplated
herein.
D. Amendment. This Agreement may only be amended by a
document in writing signed by the parties hereto.
E. Time for Acceptance. This Agreement, when executed by the
Developer and delivered to the Agency, shall constitute a binding offer
which cannot be withdrawn prior to July 30, 2000, so that the Agreement
may be presented to the Agency Board. Notwithstanding any other
provision herein to the contrary, Agency shall not be obligated hereunder
unless and until the Agency Board authorizes the Chairperson to
execute this Agreement.
F. Corporate Authority. The persons executing this Agreement on
behalf of the parties hereto warrant that (1) such party is duly organized
and existing, (ii) they are duly authorized to execute and deliver this
Agreement on behalf of said party, (iii) by so executing this Agreement,
such party is formally bound to the provisions of this Agreement, and (iv)
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the entering into this Agreement does not violate any provision of any
other Agreement to which said party is bound.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day first
above written.
"AGENCY"
COMMUNITY REDEVELOPMENT AGENCY OF
THE CITY OF PALM SPRINGS, a public body,
corporate and politic
Chairman
ATTEST:
Agency Secretary
APPROVED AS TO FORM:
Agency Counsel
[SIGNATURES CONTINUED ON NEXT PAGE]
Wesfagr.wpd September 6,2000 -12-
"DEVELOPER"
WESTAR ASSOCIATES, INC.
(Check One: _individual, _partnership, _corporation)
[NOTARIZED]
Signature
Print Name:
Print Title:
[NOTARIZED]
Signature
Print Name:
Print Title:
Mailing Address:
(Corporations require two signatures; one from each of the following: (A) Chairman of Board,
President, any Vice President; AND (B) Secretary, Assistant Secretary, Treasurer, Assistant
Treasurer, or Chief Financial Officer.)
[END OF SIGNATURES / NOTARY JURAT(S) FOLLOW]
Westagr.wpd September 6,2000 -13- COW
4000,ir
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
ON before me, Notary Public,
personally appeared
personally known to me(or proved to me on the basis of satisfactory evidence)to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal. [SEAL]
Signature
STATE OF CALIFORNIA )
) sS.
COUNTY OF )
ON before me, Notary Public,
personally appeared
personally known to me(or proved to me on the basis of satisfactory evidence)to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal. [SEAL]
Signature
Westagr.wpd September 6,2000 -14-
RESOLUTION NO.
OF THE COMMUNITY REDEVELOPMENT AGENCY
OF THE CITY OF PALM SPRINGS, CALIFORNIA,
APPROVING AN EXCLUSIVE AGREEMENT TO
NEGOTIATE WITH WESTAR ASSOCIATES, INC. OF
COSTA MESA, CALIFORNIA FOR THE PURCHASE
AND DEVELOPMENT OF A REDEVELOPMENT-
AGENCY-OWNED PARCEL AND A PRIVATELY
OWNED PARCEL IN MERGED PROJECT AREA #1
( FORMERLY THE RAMON - BOGIE
REDEVELOPMENT PROJECT AREA)
WHEREAS the Community Redevelopment Agency does own a parcel of land of
approximately 14 acres in Merged Project Area#1, formerly known as the Ramon-Bogie
Project Area; and
WHEREAS the Agency desires to sell the parcel to a developer that can return the land
to productive use and facilitate additional development in the area around the site,
including the generation of sales tax for the City of Palm Springs, and
WHEREAS Westar Associates, Inc. of Costa Mesa, having previously entered an
Agreement with the Agency while they determine the feasibility of developing the site,
including market acceptance by potential tenants, has determined that the development
of the site is practical; and
WHEREAS Westar Associates, Inc. has requested the Agency to enter into a new
Exclusive Agreement to Negotiate for a period of six months on the parcel while they
begin the process of site planning and while the remediation design is done.
NOW THEREFORE BE IT RESOLVED by the Community Redevelopment Agency of
the City of Palm Springs, that the Exclusive Agreement to Negotiate between the
Agency and Westar Associates, Inc. is hereby approved.
ADOPTED this day of 2000.
AYES:
NOES:
ABSENT:
ATTEST: COMMUNITY REDEVELOPMENT AGENCY
OF THE CITY OF PALM SPRINGS, CALIFORNIA
By
Assistant Secretary Executive Director
REVIEWED & APPROVED AS TO FORM
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