HomeMy WebLinkAbout12/14/2016 - STAFF REPORTS - 5.A. ALM Sp9
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g41F004 City Council Staff Report
DATE: December 14, 2016 NEW BUSINESS
SUBJECT: APPROVAL OF A PARTIAL RELEASE OF THE PERFORMANCE DEED
OF TRUST FOR BLOCK A-1, BLOCK B, AND BLOCK C OF THE
DOWNTOWN PALM SPRINGS PROJECT
FROM: David H. Ready, City Manager
BY: City Attorney
SUMMARY
This action recommends that the City Council authorize the City Manager to execute
three Substitution of Trustee and Deed of Partial Reconveyance documents to release
the Performance Deed of Trust on Block A-1 (new surface parking lot behind West
Elm), Block B (new commercial retail building under construction), and Block C (new
commercial retail building under construction).
RECOMMENDATION:
Authorize the City Manager to execute a Substitution of Trustee and Deed of Partial
Reconveyance by and between the City of Palm Springs (Beneficiary) and Palm
Springs Promenade, LLC, (Trustor) for Block A-1, Block B, and Block C; (A6144)
STAFF ANALYSIS:
On December 2, 2009, the City Council adopted Ordinance No. 1764, adopting the
Museum Market Plaza Specific Plan, Case No. 5.1204, (the "Specific Plan").
On September 7, 2011, the City Council adopted Resolution No. 23018, authorizing the
City and Palm Springs Promenade, LLC, (the "Developer') to enter into a Project
Financing Agreement ("PFA" — Agreement No. 6144) applicable to the financing,
development, redevelopment, creation and refurbishment of public and private
improvements within the Specific Plan area. The PFA included, among other things, a
Site Plan and Project Description depicting the proposed improvements, including new
public streets described as Main Street, Andreas Road, and the Belardo Road
extension. The currently approved configuration of the Specific Plan area is shown on
the following page.
ITEM NO. 5
City Council Staff Report
December 14, 2016 --Page 2
Release of Deed of Trust— Blocks A-1, B, C
Downtown Palm Springs Project
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02
City Council Staff Report
December 14, 2016 -- Page 3
Release of Deed of Trust—Blocks A-1, B, C
Downtown Palm Springs Project
Section 2(b)(10) of the PFA required that the Developer provide to the City a
Performance Trust Deed to encumber the Specific Plan area, which was recorded
concurrently with the close of escrow with the City's acquisition of the various parcels
from the Developer. The Performance Trust Deed was used to secure the Developer's
performance required under the PFA, with respect to completion of the Private
Improvements and Public Improvements identified in the PFA. The Performance Trust
Deed was recorded as Document No. 2012-0298857 on June 27, 2012, encumbering
the various parcels of land located within the Specific Plan area, with the City as
Beneficiary.
On September 17, 2014, the City Council approved Amendment 4 to the PFA; Section 8
of Amendment 4 related to the Performance Trust deed, and states:
As part of the PFA, Developer provided City with a Performance Trust Deed to
secure obligations of Developer under the PFA to complete Private
Improvements. The parties acknowledge that plans for development of the
Project have evolved and changed over time, and that such changes, while
significantly improving the overall Project, greatly increase Developer costs. Such
increased costs can only be funded by substantial construction loans, and such
loans can only be obtained if the City released the Performance Deed of Trust.
The City is strongly in support of such changes and has agreed, and hereby does
agree, to incrementally reconvey the Performance Trust Deed on a parcel by
parcel basis concurrently with the recordation of any loan to fund all Private
Improvements on each such parcel to be constructed within the DFP Area, so
long as 100% of the costs to complete such improvements are fully funded by the
construction loan and/or Developer funds as determined by the lender and
reviewed by the City Manager or the City Manager's designee at a location in the
Coachella Valley identified by the lender. In turn, Developer has agreed, and
hereby does agree, that expenditures from any such loan will require prior
approval of the IFC Agent, as contemplated by original requirements of the PFA.
On December 17, 2014, the City Council approved a purchase agreement to acquire
Block E from the Developer, and also authorized the partial release of the Performance
Deed of Trust for Block A (West Elm Building) and Block C-1 (Kimpton Hotel) on the
basis that the Developer was proceeding to secure loans for construction of these
buildings.
Concurrently with the City's acquisition of Block E (identified as Parcel 6 of the
underlying Parcel Map 36446), on December 30, 2014, the City executed and recorded
a partial release of the Performance Deed of Trust for Block E given the City's new
ownership of it. The partial reconveyance was recorded as Document No. 2015-
0000801 on January 2, 2015.
03
City Council Staff Report
December 14, 2016-- Page 4
Release of Deed of Trust— Blocks A-1, B, C
Downtown Palm Springs Project
Following the Developer's execution of a construction loan for the Kimpton Hotel on
Block C-1, on March 24, 2015, the City executed and recorded a partial release of the
Performance Deed of Trust for Block C-1 pursuant to Section 8 of Amendment 4 of the
PFA, and the City Council's authorization of such release on December 17, 2014. The
partial reconveyance was recorded as Document No. 2015-0144181 on April 9, 2015.
Following the Developer's execution of a construction loan for the West Elm Building on
Block A, on October 6, 2015, the City executed and recorded a partial release of the
Performance Deed of Trust for Block A pursuant to Section 8 of Amendment 4 of the
PFA, and the City Council's authorization of such release on December 17, 2014. The
partial reconveyance was recorded as Document No. 2015-0456333 on October 16,
2015.
The Developer has proceeded to obtain construction loans to complete the retail
buildings located on Block B and Block C, and pursuant to Section 8 of Amendment 4 of
the PFA, staff recommends that the City Council authorize the City Manager to execute
partial release of the Performance Deed of Trust for Blocks B and C.
Additionally, on March 2, 2016, the City Council approved an Amendment to the
Specific Plan, which changed the land use designation for Block A-1 from
commercial/residential uses to a permanent surface parking lot use. On the basis that
no building can be constructed on Block A-1 at this time given the current land use
specified in the Amended Specific Plan, and the Developer has completed construction
of the required surface parking lot facility, staff recommends that City Council authorize
the City Manager to execute partial release of the Performance Deed of Trust for Block
A-1.
It is important to note that the partial release of the Performance Deed of Trust for
Blocks A-1, B and C has no effect on the remainder of the Performance Deed of Trust
which continues to encumber Parcels D, F and G.
A copy of the Substitution of Trustee and Deed of Partial Reconveyance for Block A-1,
Block B, and Block C are attached as Attachment 1.
ENVIRONMENTAL IMPACT:
The requested City Council action is not a "Project" as defined by the California
Environmental Quality Act (CEQA). Pursuant to Section 15378(a), a "Project" means the
whole of an action, which has a potential for resulting in either a direct physical change
in the environment, or a reasonably foreseeable indirect physical change in the
environment. The requested action is to authorize execution of partial releases of the
Performance Deed of Trust, and is exempt from CEQA pursuant to Section 15378(b), in
that a "Project" does not include: (5) Organizational or administrative activities of
governments that will not result in direct or indirect physical changes in the environment.
04
City Council Staff Report
December 14, 2016-- Page 5
Release of Deed of Trust— Blocks A-1, B, C
Downtown Palm Springs Project
FISCAL IMPACT:
None.
SUBMITTED:
'd
Douglas Holland, Esq. Marcus L. Fuller, MPA, P.E., P.L.S.
City Attorney Assistant City Manager/City Engineer
David H. Ready, Esq., .D.
City Manager
Attachments:
Substitution of Trustee and Deed of Partial Reconveyance (3)
05
ATTACHMENT 1
• 06
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Palm Springs Promenade, LLC
555 S. Sunrise Way, Suite 200
Palm Springs, CA 92264
APN 513-560-042
SUBSTITUTION OF TRUSTEE AND DEED OF PARTIAL RECONVEYANCE
The undersigned, City of Palm Springs, a California charter city and municipal
corporation, as the owner and holder of the Note secured by that certain Deed of Trust
dated June 27, 2012, made by Palm Springs Promenade, LLC, a California limited
liability company, as Trustor to Fidelity National Title Company, a California corporation
as trustee for City of Palm Springs, a California charter city and municipal corporation,
as beneficiary, which Deed of Trust was recorded on 06/27/2012, as Instrument No.
212-0298857 of Official Records in the Office of the County Recorder of Riverside,
California, hereby substitutes itself, City of Palm Springs, a municipal corporation and
charter city, as Trustee in place of the current Trustee thereunder.
City of Palm Springs, a California charter city and municipal corporation, hereby accepts
said appointment as trustee and under the above Deed of Trust, and as successor
Trustee, and pursuant to the request of said owner and holder and in accordance with
the provisions of said Deed of Trust, DOES HEREBY PARTIALLY RECONVEY,
WITHOUT WARRANTY, TO THE PERSON OR PERSONS LEGALLY ENTITLED
THERETO, the estate as shown on Exhibit "A" attached hereto and made a part hereof,
now held by it under said Deed of Trust.
The remaining property described in said Deed of Trust shall continue to be held by said
Trustee under the terms thereof as provided in said Deed of Trust. This Partial
Reconveyance is made without affecting the personal liability of any person or any
entity for the payment of the indebtedness mentioned as secured thereby or the unpaid
portion thereof, nor shall it affect any rights or obligations of any of the parties of said
Deed of Trust as to the remaining property.
IN WITNESS WHEREOF, City of Palm Springs, a California charter city and municipal
corporation, as the owner and holder of the above described Note and beneficial
interest, and as Successor Trustee, has caused this instrument to be executed, as to
each respective interest.
[SIGNATURES ON NEXT PAGE]
07
City of Palm Springs, a California charter
city and municipal corporation
Dated:
David H. Ready, City Manager
Attest: Approved as to form:
James Thompson, City Clerk Douglas C. Holland, City Attorney
08
EXHIBIT "A"
Parcel 2 of Certificate of Compliance No. 15-02B recorded as Instrument No. 2015-
0171415 on April 28, 2015, as further described herein:
ALL THAT PORTION OF PARCEL 1 OF PARCEL MAP 36446,AS FILM IN PARCEL MAP
BOOK 238 AT PAGES 31 THROUGH 34 INCLUSIVE,RIVERSIDE COUNTY RECORDS,
DESCRIBED FOLLOWS;
COMMENCING AT THE NORTHEAST CORNER OF SAID PARCEL 1,THENCE SOUTH
89°-52%00"WEST ALONG THE NORTH LINE OF SAID PARCEL 1,A DISTANCE OF 59.07
FEET;
THENCE SOUTH 009-08'-W,EAST,A DISTANCE OF 0.50 FEET;
THENCE SOUTH 899-55'-24"WEST,A DISTANCE OF 44.63 FEET;
THENCE SOUTH 009-08'-00"EAST,A DISTANCE OF 1.47 FEET;
THENCE SOUTH 899-54'-13"WEST,A DISTANCE OF 33.33 FEET TO THE TRUE POINT
OFBEGINNIM,
THENCE SOUTH 009-08'-00"EAST,A DISTANCE OF 226.95 FEET TO THE SOUTHERLY
LINE OF SAID PARCEL I;
THE FOLLOWING SIX COURSES ARE ALONG THE SOUTHERLY,WESTERLY AND
NORTHERLY LINES OF SAID PARCEL 1;
THENCE SOUTH 89'-52'-00"WEST,A DISTANCE OF 161.55 FEET
THENCE NORTH 459-08%00"WEST,A DISTANCE OF 1131 FEET
THENCE NORTH 009-08'-00"WEST,A DISTANCE OF 182.94;
THENCE NORTH 179-56'-26"EAST,A DISTANCE OF 14.47 FEET;
THENCE NORTH 449-33%50"EAST, A DISTANCE OF 31.44 FEET;
THENCE NORTH 899-54'-13"EAST,A DISTANCE OF 142.95 FEET TO THE TRUE POINT
OF BEGINNING.
CONTAINING 38,077 SQ.FP./0.87 AC.MORE OR LESS
09
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Palm Springs Promenade, LLC
555 S. Sunrise Way, Suite 200
Palm Springs, CA 92264
APN 513-560-043
SUBSTITUTION OF TRUSTEE AND DEED OF PARTIAL RECONVEYANCE
The undersigned, City of Palm Springs, a California charter city and municipal
corporation, as the owner and holder of the Note secured by that certain Deed of Trust
dated June 27, 2012, made by Palm Springs Promenade, LLC, a California limited
liability company, as Trustor to Fidelity National Title Company, a California corporation
as trustee for City of Palm Springs, a California charter city and municipal corporation,
as beneficiary, which Deed of Trust was recorded on 06/27/2012, as Instrument No.
212-0298857 of Official Records in the Office of the County Recorder of Riverside,
California, hereby substitutes itself, City of Palm Springs, a municipal corporation and
charter city, as Trustee in place of the current Trustee thereunder.
City of Palm Springs, a California charter city and municipal corporation, hereby accepts
said appointment as trustee and under the above Deed of Trust, and as successor
Trustee, and pursuant to the request of said owner and holder and in accordance with
the provisions of said Deed of Trust, DOES HEREBY PARTIALLY RECONVEY,
WITHOUT WARRANTY, TO THE PERSON OR PERSONS LEGALLY ENTITLED
THERETO, the estate as shown on Exhibit "A" attached hereto and made a part hereof,
now held by it under said Deed of Trust.
The remaining property described in said Deed of Trust shall continue to be held by said
Trustee under the terms thereof as provided in said Deed of Trust. This Partial
Reconveyance is made without affecting the personal liability of any person or any
entity for the payment of the indebtedness mentioned as secured thereby or the unpaid
portion thereof, nor shall it affect any rights or obligations of any of the parties of said
Deed of Trust as to the remaining property.
IN WITNESS WHEREOF, City of Palm Springs, a California charter city and municipal
corporation, as the owner and holder of the above described Note and beneficial
interest, and as Successor Trustee, has caused this instrument to be executed, as to
each respective interest.
[SIGNATURES ON NEXT PAGE]
10
City of Palm Springs, a California charter
city and municipal corporation
Dated:
David H. Ready, City Manager
Attest: Approved as to form:
James Thompson, City Clerk Douglas C. Holland, City Attorney
11
EXHIBIT "A"
Parcel 2 of Parcel Map No. 36446 filed in the office of the County Recorder, County of
Riverside, State of California, on December 15, 2014 in Book 238 of Parcel Maps at
pages 31 through 34.
12
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Palm Springs Promenade, LLC
555 S. Sunrise Way, Suite 200
Palm Springs, CA 92264
APN 513-560-075, 513-560-076, 513-560-077
SUBSTITUTION OF TRUSTEE AND DEED OF PARTIAL RECONVEYANCE
The undersigned, City of Palm Springs, a California charter city and municipal
corporation, as the owner and holder of the Note secured by that certain Deed of Trust
dated June 27, 2012, made by Palm Springs Promenade, LLC, a California limited
liability company, as Trustor to Fidelity National Title Company, a California corporation
as trustee for City of Palm Springs, a California charter city and municipal corporation,
as beneficiary, which Deed of Trust was recorded on 06/27/2012, as Instrument No.
212-0298857 of Official Records in the Office of the County Recorder of Riverside,
California, hereby substitutes itself, City of Palm Springs, a municipal corporation and
charter city, as Trustee in place of the current Trustee thereunder.
City of Palm Springs, a California charter city and municipal corporation, hereby accepts
said appointment as trustee and under the above Deed of Trust, and as successor
Trustee, and pursuant to the request of said owner and holder and in accordance with
the provisions of said Deed of Trust, DOES HEREBY PARTIALLY RECONVEY,
WITHOUT WARRANTY, TO THE PERSON OR PERSONS LEGALLY ENTITLED
THERETO, the estate as shown on Exhibit "A" attached hereto and made a part hereof,
now held by it under said Deed of Trust.
The remaining property described in said Deed of Trust shall continue to be held by said
Trustee under the terms thereof as provided in said Deed of Trust. This Partial
Reconveyance is made without affecting the personal liability of any person or any
entity for the payment of the indebtedness mentioned as secured thereby or the unpaid
portion thereof, nor shall it affect any rights or obligations of any of the parties of said
Deed of Trust as to the remaining property.
IN WITNESS WHEREOF, City of Palm Springs, a California charter city and municipal
corporation, as the owner and holder of the above described Note and beneficial
interest, and as Successor Trustee, has caused this instrument to be executed, as to
each respective interest.
[SIGNATURES ON NEXT PAGE]
1. 3
City of Palm Springs, a California charter
city and municipal corporation
Dated:
David H. Ready, City Manager
Attest: Approved as to form:
James Thompson, City Clerk Douglas C. Holland, City Attorney
14
EXHIBIT "A"
Parcel A of Parcel Merger No. 16-04 recorded as Instrument No. 2016-0464206 on
October 21, 2016, as further described herein:
PARCEL"A"
ALL THOSE PORTIONS OF PARCEL B AND C OF LOT LINE ADJUSTMENT 14-04,
RECORDED AS INSTRUMENT NO. 2015-0000900,RIVERSIDE COUNTY RECORDS,
DESCRIBED AS FOLLOWS;
BEGINNING AT THE NORTHWEST CORNER OF SAID PARCEL C OF SAID LOT LINE
ADJUSTMENT 14-04,THENCE SOUTH 009-08'-00"EAST,ALONG THE WEST LINE OF
SAID PARCEL C,A DISTANCE OF 160.33 FEET;
THE FOLLOWING FOUR COURSES ARE ALONG THE WESTERLY LINES OF SAID
PARCEL B;
THENCE SOUTH 309-08%00"EAST,A DISTANCE OF 30.75 FEET;
THENCE SOUTH 000-08'-007 EAST,A DISTANCE OF 29.46 FEET;
THENCE SOUTH 600-08'-00"EAST, A DISTANCE OF 42.80 FEET;
TI IENCE SOUTH 000-08%00"EAST,A DISTANCE OF 129.68 FEET TO THE SOUTH LINE
OF SAID PARCEL B.
THE FOLLOWING ELEVEN COURSES ARE ALONG THE SOUTHERLY,EASTERLY
AND NORTHERLY LINES OF SAID PARCEL B,ALSO BEING THE NORTHERLY RIGHT
OF WAY LINE OF TAHQUITZ CANYON WAY AND THE WESTERLY RIGHT OF WAY
OF PALM CANYON DR.AND THE SOUTHERLY RIGHT OF WAY LINE OF MAIN
STREET;
THENCE NORTH 890-50'-25"EAST,A DISTANCE OF 9.11 FEET
THENCE NORTH 779-50--1 l"EAST,A DISTANCE OF 57.70 FEET
THENCE NORTH 890-50'-25'EAST,A DISTANCE OF 52.37 FEET TO A POINT ON A
TANGENT CURVE CONCAVE NORTHWESTERLY AND HAVING A RADIUS OF 25.00
FEET, A LINE RADIAL TO SAID CURVE AT SAID POINT BEARS NORTH 000-09'-35"
WEST;
THENCE NORTHEASTERLY ALONG THE ARC OF SAID CURVE AN ARC DISTANCE
OF 39.26 FEET THROUGH A CENTRAL ANGLE OF 890-58'-25",A LINE RADIAL TO
SAID CURVE AT SAID POINT BEARS SOUTH 890-52'•00"WEST;
THENCE NORTH 000-08'-W'WEST,A DISTANCE OF 152.31 FEET;
THENCE NORTH I I0-1 T-39"EAST,A DISTANCE OF 70.66 FEET;
THENCE NORTH 000-08'-OD"WEST,A DISTANCE OF 37.23 FEET;
THENCE NORTH 449-52'-00"EAST,A DISTANCE OF 4.24 FEET;
Page I of 2
t5
EXHIBIT "A"
(Continued)
THENCE NORTH 00°-08'-00"WEST,A DISTANCE OF 57A5 FEET;
THENCE NORTH 45°-08'-00"WEST,A DISTANCE OF 15.56 FEET;
THENCE SOUTH 890-52'-00" WEST,A DISTANCE OF 200.34 FEET TO THE TRUE
POINT OF BEGINNING.
CONTAINING 63,987 SQ.FT.I 1.47 AC. MORE OR LESS
Page 2 of 2
16
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__
December 12, 2016
David H. Ready, City Manager
Doug Holland, City Attorney
City of Palm Springs
3200 E. Tahquitz Canyon Way
Palm Springs, California 92262
Subject: Block B and Block C Release of Performance Trust Deed
Dear David and Doug:
The Fourth Amendment to the Project Financing Agreement provides that the City will incrementally
reconvey the Performance Trust Deed on a parcel by parcel basis concurrently with the recording of any
loan to fund all Private Improvements on such parcel, so long as 100% of the costs to complete such
improvements arc fully funded by the construction loan and/or Developer funds as determined by the lender
and reviewed by the City Manager or the City Manager's designee. I have been designated by the City
Manager to review the documentation contemplated by this provision for the Block B parcel and the Block
C parcel.
For my review, the Developer provided me with the following documents
• Operating Agreement for Block B parcel development between Palm Springs Promenade LLC and
DTPS B-2, LLC dated May 1.5, 2016
• Grant Deed transferring Block B from Palm Springs Promenade LLC to DTPS B-2, LLC dated
July 19,2016
• Operating Agreement for Block C parcel development between Palm Springs Promenade LLC and
DTPS C-15, LLC dated May 15, 2016
• Grant Deed transferring Block C from Palm Springs Promenade LLC to DTPS C-15, LLC dated
March 16, 2016
• Construction Contract between Asaro Builders (Asaro), DTPS B-2, LLC and DTPS C-15, LLC
dated September 20, 2016
• Overall Project Budget and Equity Proof Schedule prepared by Developer
• Building Permit 2016-2414 for Block B dated December 6,2016
• Building Permit 2015-4041 for Block Cl- Original version dated October 13, 2016, unsigned
revision in November 2016 updated for name of owner(DTPS C-15, LLC) and contactor (Asaro
Builders)
• Block B and Block C Building Budgets (prepared by Asaro) with progress payments dated
December 2,2016
The City Tower,333 City Boulevard West,Suite 1215,Orange,California 92868
Tel: 714.939.1464
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December 12,2016
Page 2
• Draft Building Loan Agreement/Disbursement Schedule between Midfirst Bank (Lender), DTPS
B-2, LLC and DTPS C-15,LLC
• Executed Loan Commitment from Midfirst Bank
I have assumed the genuineness of each document provided. I have also assumed no material changes will
be made to the final versions documents subsequent to my review and that the representation of the
Developer that construction contract and overall project budget documents provided for my review will
comprise Exhibit B to the Loan Agreement when executed. I have also assumed that the Lender will be
responsible for determining compliance with the Conditions Precedent To Recordation contained in the
Loan Agreement and that the Loan Agreement and Loan will not be made until those conditions have been
met, including confirmation of the Borrower's Equity as defined in the Loan Agreement,to the satisfaction
of the Lender.
Conclusion
Based on my review of the documents provided, and assuming good faith disclosure by the Developer of
any material changes to the documents before the Loan Agreement is executed, I conclude that 100% of
the costs to complete the project improvements for the Block B Building and Block C Building are fully
Funded by the construction loan and/or Developer funds as determined by the Lender, in accordance with
the requirement of the Project Financing Agreement. I also assume that the City's performance deed of
trust on the land described in the grant deeds only will be released simultaneously with the recordation of
the Loan Agreement, which is subject to "Article 4 —Conditions Precedent To Recordation" of the draft
Loan Agreement.
Very truly yours,
Suzanne Harrell
Managing Director