HomeMy WebLinkAbout5/23/2007 - STAFF REPORTS - RA.2. 4pALM$'6
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Commmunity Redevelopment Agency Staff
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DATE: MAY 23, 2007 CONSENT CALENDAR
SUBJECT: APPROVAL OF CONSENT TO ASSIGNMENT OF EXCLUSIVE
AGREEMENT TO NEGOTIATE AND ESTOPPEL AND RECOGNITION
AGREEMENT WITH NEXUS DEVELOPMENT CORPORATION-
CENTRAL DIVISION IN FAVOR OF LEHMAN BROTHERS HOLDINGS
INC., A DELAWARE CORPORATION FOR A 5.7 ACRE AGENCY-
OWNED PARCEL AT THE SOUTHEAST CORNER OF ANDREAS
ROAD AND CALLS EL SEGUNDO FOR THE PURPOSE OF
DEVELOPING A HARD ROCK HOTEL, MERGED REDEVELOPMENT
PROJECT AREA#2
FROM: David H. Ready, Executive Director
BY: Community & Economic Development Department
SUMMARY:
The Agency currently has an Exclusive Agreement to Negotiate with Nexus
Development Corporation-Central Division, a California Corporation, for the 5.7 acre
parcel at Calle El Segundo and Andreas Road for the purpose of developing a Hard
Rock Hotel. The Agency awarded the ENA at the October 5, 2005 meeting and
approved an extension in September, 2006. Since that time the Developer has
proceeded with the design and development of the project, as well acquiring the two
adjacent parcels to try to assemble the site.
The Developer has obtained a Mezzanine Loan from the Lender, Lehman Brothers, of
$8,000,000 for pre-development costs. The terms of the Mezzanine Loan require that
the Lender be admitted to the partnership in order to have recourse rights through
partnership participation. The Developer will create a single purpose limited liability
corporation to develop the property, which will include rights assigned to the Lender.
The Developer owns one hundred percent (100%) of the membership interests in the
LLC, referred to as the Project Owner in the documents, and is assigning its rights,
privileges, powers and interests in, to and under the ENA to Lender pursuant to an
Assignment of Agreement.
ITEM NO. PW�
The Developer has asked the Agency to approve the Consent to Assignment to be able
to assign their rights to the Lender.
It is not unusual for a development firm to create an LLC for the purpose of developing
and financing its project, and admit other parties to the LLC, such as other equity
partners. The ENA contemplates such a mechanism.
This pre-development loan will allow the project to move forward through the
development process; once the project is at the entitlement stage the Lender (either
this lender or another) and the Project Owner will structure their construction financing.
RECOMMENDATION:
COMMUNITY REDEVELOPMENT AGENCY RECOMMENDATION:
1. Adopt Resolution No. , "A RESOLUTION OF THE COMMUNITY
REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS,
CALIFORNIA, APPROVING CONSENT TO ASSIGNMENT OF EXCLUSIVE
AGREEMENT TO NEGOTIATE AND ESTOPPEL AND RECOGNITION
AGREEMENT WITH NEXUS DEVELOPMENT CORPORATION-CENTRAL
DIVISION IN FAVOR OF LEHMAN BROTHERS HOLDINGS INC., A
DELAWARE CORPORATION FOR A 5.7 ACRE AGENCY-OWNED PARCEL
AT THE SOUTHEAST CORNER OF ANDREAS ROAD AND CALLE EL
SEGUNDO FOR THE PURPOSE OF DEVELOPING A HARD ROCK HOTEL,
MERGED REDEVELOPMENT PROJECT AREA #2"
2. AUTHORIZE THE EXECUTIVE DIRECTOR TO EXECUTE THE AMENDMENT
IN A FORM ACCEPTABLE TO THE AGENCY
ohn S Ray o d, Director of Tom Wils fl
o unity & onomic Development Assistant'City Manager
DAVID H. READY
Executive Director
Attachments:
1. CRA Resolution
2. Consent to Assignment of Exclusive Agreement to Negotiate —to be provided
L)'D
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RESOLUTION NO.
A RESOLUTION OF THE COMMUNITY
REDEVELOPMENT AGENCY OF THE CITY OF PALM
SPRINGS, CALIFORNIA, APPROVING CONSENT TO
ASSIGNMENT OF EXCLUSIVE AGREEMENT TO
NEGOTIATE AND ESTOPPEL AND RECOGNITION
AGREEMENT WITH NEXUS DEVELOPMENT
CORPORATION-CENTRAL. DIVISION IN FAVOR OF
LEHMAN BROTHERS HOLDINGS INC., A DELAWARE
CORPORATION FOR A 5.7 ACRE AGENCY-OWNED
PARCEL AT THE SOUTHEAST CORNER OF
ANDREAS ROAD AND CALLE EL SEGUNDO FOR THE
PURPOSE OF DEVELOPING A HARD ROCK HOTEL,
MERGED REDEVELOPMENT PROJECT AREA #2
NOW THEREFORE BE IT RESOLVED by the Community Redevelopment Agency of
the City of Palm Springs, as follows:
SECTION 1. This Consent to Assignment of Exclusive Agreement to Negotiate and
Estoppel and Recognition Agreement with Nexus Development
Corporation-Central Division in Favor of Lehman Brothers Holdings Inc., a
Delaware Corporation, is hereby approved.
SECTION 2. The Executive Director, or his designee, is hereby authorized to execute
on behalf of the Agency the Consent to Assigment, in a form approved by
Agency Counsel.
ADOPTED this day of , 2007.
AYES:
NOES:
ABSENT:
ATTEST: COMMUNITY REDEVELOPMENT AGENCY
OF THE CITY OF PALM SPRINGS,
CALIFORNIA
By
Assistant Secretary Chairman
REVIEWED & APPROVED AS TO FORM