HomeMy WebLinkAbout4/20/2011 - STAFF REPORTS - 1B L M S,.
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+*ORATko * CITY COUNCIUCOMMUNITY REDEVELOPMENT
c'41FO AGENCY STAFF REPORT
DATE: April 20, 2011 Public Hearing
SUBJECT: JOINT PUBLIC HEARING OF THE COMMUNITY REDEVELOPMENT
AGENCY AND THE CITY COUNCIL CONSIDERINGTHE APPROVAL OF
THE SECOND AMENDMENT TO A DISPOSITION AND DEVELOPMENT
AGREEMENT WITH ENDURE, LLC (FORMERLY GEIGER LLC) THAT
AUTHORIZES THE AGENCY TO PAY $1,400,000 TOWARDS THE
$13,000,000 IN COSTS FOR REMEDIATION AND MONITORING THE
SITE OF A 393,000 SQUARE FOOT RETAIL SHOPPING CENTER AT
THE NORTHEAST CORNER OF RAMON ROAD AND GENE AUTRY
TRAIL (HIGHWAY 111) IN THE CITY OF PALM SPRINGS, MERGED
REDEVELOPMENT PROJECT AREA NO. 1.
FROM: David H. Ready, Executive Director
BY: Community and Economic Development
SUMMARY
Approval of the proposed Second Amendment to the Disposition and Development
Agreement between the Community Redevelopment Agency and Endure, LLC (formerly
Geiger LLC), that authorizes the Agency to pay $1,400,000 in equal installments over
10 years, with no interest, towards the over $10,000,000 costs for remediation and
monitoring the site of a 393,000 square foot retail shopping center at the northeast
corner of Ramon Road and Gene Autry Trail.
RECOMMENDATION:
1. Open the joint public hearing and receive public testimony;
2. [Community Redevelopment Agency] Adopt Resolution No. "A
RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE
CITY OF PALM SPRINGS APPROVING THE SECOND AMENDMENT TO THE
DISPOSITION AND DEVELOPMENT AGREEMENT WITH ENDURE, LLC
(FORMERLY GEIGER LLC) FOR THE DEVELOPMENT OF THE SPRINGS
PROJECT;"
3. [City Council] Adopt Resolution No. "A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, CONCURRING
WITH THE COMMUNITY REDEVELOPMENT AGENCY REGARDING THE
ITE v, NO.�.._
City Council Staff Report
(April 20, 2011)-- Page 2
(Second Amendment to DDA)
APPROVAL OF AMENDMENT NO. 2 TO THE DISPOSITION AND
DEVELOPMENT AGREEMENT WITH ENDURE, LLC;"
4. [Community Redevelopment Agency] Authorize the Executive Director to execute
a budget transfer of$140,000 from unallocated capital outlay funds to an account
established for the purposes of executing this agreement.
STAFF ANALYSIS:
On November 16, 2005, the Agency entered into a DDA with Geiger, LLC (now Endure,
LLC) for the sale of Agency land and the development of entire site as a commercial
retail center currently referred to as "The Springs" at the northeast corner of Ramon
Road and Gene Autry Trail. Typically redevelopment agencies will acquire
contaminated parcels and remediate them at their own cost before securing a developer
for the site. Given the large amount of resources necessary to remediate the entire site,
plus the need to acquire and remediate an even larger adjacent parcel, the Agency's
remediation could only be undertaken by a private party as part of an overall
redevelopment of the site. At the time the DDA was entered into, the value of the
Agency's 14 acres was valued at $4,480,000 and the cost to Geiger, LLC to remediate
the property was estimated at $4,605,108; however, the total hard costs for the
remediation and continued monitoring of the entire site is in excess of$10,000,000.
In 2009, based on the effects of the recession, leasing at the center had stalled and the
Developer asked for financial assistance to help secure several large tenants in the
center, which would increase occupancy and therefore the capitalized value of the
project. Rather than contributing directly to the tenant improvements, the Agency
determined that it would be eligible to reimburse the Developer for the remediation cost
that the Developer had undertaken on the Agency's behalf. On February 18, 2009, the
First Amendment to the DDA was approved allowing the Agency to contribute towards
the total cost of remediation and monitoring. The Agency agreed to pay $277,000 a
year for five years for a total of$1,385,000.
Earlier this year the Developer made an additional request for remediation
reimbursement, in the amount of $1,400,000 to provide additional assistance to the
Developer in securing attractive leasing opportunities for the Palm Springs market. The
proposed Second Amendment to the DDA would provide for additional Agency payment
towards the total cost of remediation and monitoring. The Agency would pay $140,000
per year for ten years for a total of $1,400,000. The proposed payment schedule to
Endure LLC would be payments of $140,000 from 2011 through 2020 and in addition,
the Agency would make payments of $277,000 in March 2012 and March 2013 as per
the First Amendment to the DDA. Under this formula, the value of the land plus the
overall Agency payment towards the remediation and monitoring of the site would be
approximately 56% of the total cost of remediation of the former Agency-owned parcel.
City Council Staff Report
(April 20, 2011)-- Page 3
(Second Amendment to DDA)
The payments provided are deemed a payment towards the total remediation and
monitoring costs incurred by the Developer on the Site. The funds shall be used at the
discretion of the Developer for any purpose on the project, but shall not be construed as
inducing the relocation of any tenant from any existing shopping center in Palm Springs.
Two additional provisions are contained in the DDA Amendment: the payments are not
considered an asset of the Developer and would stop upon any sale or involuntary
conversion of the project; and, the Agreement contains a provision that payments under
the Second Amendment shall be terminated if the Ross Dress for Less Store ("Ross")
located at 233 South Farrell Drive, #A vacates the premises prior to the expiration of
their five year lease extension, entered into in 2011. This latter provision would not be
effective if:
(a) If Ross vacates the 233 South Farrell Drive site but within 180 days of closing opens
a new retail apparel store in the space; or
(b) If the lease is terminated at the request or election of the property owner or lender of
the 233 South Farrell Drive site for the purpose of releasing the property to another
tenant, assembling the space with other adjacent space, or preparing the shopping
center or a section of the shopping center for demolition or redevelopment, or other
purpose.
FISCAL IMPACT:
This expense is being paid for from Unscheduled Capital Projects in Merged Project
Area No. 1.
Diana Shay, Redbivelopment Coordinator Tom Wilson, ssistant City Manager
J n a,yymon ..,
irector David H. Ready, Cit . ger`
C rrunity and Economic Development
Attachments:
Second Amendment to Disposition and Development Agreement
3
AMENDMENT NO. 2 TO
DISPOSITION AND DEVELOPMENT AGREEMENT
Endure Investments, LLC
The Springs Shopping Center
This Amendment is entered into this day of April 2011, by and between
the Community Redevelopment Agency of the City of Palm Springs, a California
community redevelopment agency ("Agency"), and Endure Investments, LLC
(formerly Geiger, LLC), a Nevada Limited Liability Company ("Developer"), with
reference to the following facts:
A. On November 16, 2005, Agency and Developer entered into a Disposition
and Development Agreement (the "DDA") with regard to the development
of 393,000 square foot retail shopping center ("Project") on an
approximately 37 acre site (the "Site"), commonly referred to as "The
Springs Shopping Center."
B. Under the provisions of the DDA, the Agency agreed to sell 14 acres of
the Site to the Developer at no cost to the Developer in recognition of the
Developer's substantial costs in the remediation of the Site. Pursuant to
the Summary Report issued in 2005 at the time the DDA was approved,
the Developer incurred $4,605,108 in pro-rated remediation costs, which
exceeded the fair market value of the land of $4,480,000. The parties
have subsequently acknowledged that the total remediation costs for the
Site, including on-going monitoring expenses, are in excess of
$13,000,000. The parties agree that the Site would not have been
marketable or usable for any economic purpose if the Site had not been
remediated and that the Agency should pay a portion of the remediation
and monitoring costs which were necessarily incurred to make the Site
usable.
C. On February 18, 2009, Agency and Developer entered into Amendment
No. 1 to the DDA adding a section to the DDA for Agency payment toward
remediation and monitoring costs. The parties agreed that the sum of
$1,385,000, payable in five equal installments, without interest, would be a
fair and equitable payment towards the remediation and monitoring costs
of the Site.
D. The parties agree that an additional Agency contribution towards
remediation of the site to be paid in ten equal annual installments of
$140,000, without interest, for a total additional Agency contribution of
$1,400,000 towards remediation and monitoring costs of the Site is a fair
and equitable payment towards the remediation and monitoring costs of
the Site.
E. The development of the Project and the payment of Agency funds towards
the remediation and monitoring of the Site, including Agency owned land,
as provided for in the First Amendment to the DDA and in this Second
4
Amendment is in the vital and best interest of the City and the welfare of
its residents and is in accordance with the public purposes and provisions
of applicable state and local laws.
NOW, THEREFORE, the parties hereto agree as follows:
1. Section 2.2 of the DDA is amended to read:
2.2 Ownership Transfer or Assignment.
2.2.1 Restrictions on Rights and Powers under Agreement. For
the reasons set forth in Section 2.1, the Developer acknowledges and agrees
that no voluntary or involuntary successor in interest of the Developer shall
acquire any rights or powers under this Agreement except as set forth in this
Section 2.2. Notwithstanding any other provision of this Agreement, an
ermitted or non-permitted transfer made by the Developer subsequent to an
Amendment to the Agreement shall relieve the Agency from any obligation to
make any paVment to Developer under Amendment No. 2 to the Agreement.
2. Section 2.4 of the DDA is amended to read:
2.4 Assignment by Operation of Law. Neither this Agreement
nor any Amendments or any interest therein shall be assignable by operation of
law (including the transfer of this Agreement, as amended, by testacy or
intestacy). Any involuntary assignment shall constitute a Material Default by the
Developer. In such event, this Agreement shall not be treated as an asset of the
Developer. The following is a nonexclusive list of acts which shall be considered
an involuntary assignment:
(a) If the Developer is or becomes bankrupt or insolvent or if any
involuntary proceeding is brought against the Developer (unless, in the case of a
petition filed against the Developer, the same is dismissed within ninety (90)
days), or the Developer makes an assignment for the benefit of creditors, or
institutes a proceeding under or otherwise seeks the protection of federal or
State bankruptcy or insolvency laws, including the filing of a petition for voluntary
bankruptcy or instituting a proceeding for reorganization or arrangement;
(b) If a writ of attachment or execution is levied on this
Agreement or on the Developer Parcel, or on any portion thereof, where such
writ is not discharged within ninety (90) days; or
(c) If, in any proceeding or action in which the Developer is a
party, a receiver is appointed with authority to take possession of the Developer
Parcel, or any portion thereof, where possession is not restored to the Developer
within ninety (90) days.
p
3. Section 4.3 to the DDA is further amended to read:
4.3 Agency Payment Toward Remediation and Monitoring Costs.
a. Initial Agency Payment (DDA Amendment No. 1). Agency shall pay to
Developer the sum of $1,385,000 in five equal annual installments, without
interest. The first annual payment will be made on or after March 1, 2009, at the
direction of the Executive Director, and on each subsequent March 1 each year
thereafter until the full amount has been paid to the Developer. The payments
provided under this Section shall be deemed a payment towards the total
remediation and monitoring costs incurred by the Developer on the Site and
those costs were and are necessary to ensure that the Site was and is
marketable and usable.
b. Additional Agency Payment (DDA Amendment No. 2). Agency shall pay
to Developer the sum of $1,400,000 in ten equal annual installments, without
interest. The first annual payment will be made on or after July 1, 2011, at the
direction of the Executive Director, and on each subsequent July 1 each year
thereafter until the full amount has been paid to the Developer. The payments
provided under this Section shall be deemed a payment towards the total
remediation and monitoring costs incurred by the Developer on the Site and
those costs were and are necessary to ensure that the Site was and is
marketable and usable.
4. Section 13 shall read as follows:
13. Nonpayment for Relocating Tenants
Notwithstanding any of the provisions contained in Section 4.3 above, the
purpose of the payments made by the Agency to the Developer under the
Agreement as amended shall be for the purpose of reimbursing the Developer for
a portion of the cost of remediating the contamination of the Agency's parcel on
the project site. The funds shall be used at the discretion of the Developer for
any lawful purpose on the project, but shall not be construed as inducing the
relocation of any tenant from any existing shopping center in Palm Springs. As
such, payments under Section 4.3 (b) above shall be terminated if the Ross
Dress for Less Store ("Ross") located at 233 South Farrell Drive, #A vacates the
premises prior to the expiration of their five year lease extension, entered into in
2011. The exceptions to this provision are:
(a) If Ross vacates the store but within 180 days of closing it opens
a new retail apparel store in the space; or
(b) If the lease is terminated at the election of the Landlord,
property owner, or lender for the purpose of releasing the
property to another tenant, assembling the space with other
adjacent space, preparing the shopping center or a section of
the shopping center for demolition or redevelopment, or other
purpose.
5. Except as expressly amended herein, the DDA shall remain in full
force and effect.
IN WITNESS WHEREOF, Agency and Developer have signed this Amendment
on the respective dates set forth below.
"Agency"
Dated: Community Redevelopment Agency of
the City of Palm Springs, a California
community redevelopment agency
By:
David Ready, Executive Director
APPROVED AS TO FORM: ATTEST:
By: By:
Douglas Holland James Thompson
Agency Counsel Agency Secretary
"Developer"
Endure Investments, LLC
Dated: By
Its
7
COMMUNITY REDEVELOPMENT AGENCY
CITY OF PALM SPRINGS
PUBLIC HEARING NOTIFICATION
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City Council
Meeting Date: April 20, 2011
Subject: Amendment 2 to Agreement A0503c— Endure Investment
AFFIDAVIT OF PUBLICATION
I, Kathie Hart, Chief Deputy City Clerk, of the City of Palm Springs, California, do hereby
certify that a copy of the attached Notice of Public Hearing was published in the Desert Sun
on April 2 and April 9„ 2011.
I declare under penalty of perjury that the foregoing is true and correct.
PA2A'a
Kathie Hart, CMC
Chief Deputy City Clerk
AFFIDAVIT OF POSTING
I, Kathie Hart, Chief Deputy City Clerk, of the City of Palm Springs, California, do hereby
certify that a copy of the attached Notice of Public Hearing was posted at City Hall, 3200 E.
Tahquitz Canyon Drive, on the exterior legal notice posting board and in the Office of the
City Clerk on March 31, 2011.
declare under penalty of perjury that the foregoing is true and correct.
Kathie Hart, CMC
Chief Deputy City Clerk
The Desert sun Certificate of Publication
750 N Gene Autry Trail
Palm Springs,CA 92262
760-778-4578/Fax 760-778-4731
State Of California as:
County of Riverside
Advertiser:
CITY OF PALM SPRINGS/LEGALS
PO BOX 2743
PALM SPRINGS CA 922632
2000255916
No9117
NOTICE OF JO PUBLIC HEARING
CRY COIN4d1.' DCOMMDNITy
ERr
am over the age of 18 years old, a citizen of the United AGENCY
pTYpppSPRINGS
Slates and not a party to, or have interest in this matter. I AMENDMENT No. TO THE DISPOSITION
hereby certify that the attached advertisement appeared CUR It)E�VEELS PME AGREEMENT WITH EN-
in said newspaper (set in type not smaller than non panel)
in each and entire issue of said newspaper and not in any NOTICl-IS H Y GIVEN t st the City
supplement thereof on the following dates,to wit: Co ('�) and ?he ^eydRed�apment
Calirom'a�. u� a P&.0
P n WnemlBeaay 20 2011 Camel
Newspaper: .The Desert Sun CW1��,mp6e�t Y 52�0 E.Yanqui2 Carryon
Si tgs, 92262.
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I acknowledge that I am a principal clerk of the printer of (tormentor he,
thCel01 Ofo Palm.Springs by letter
The Desert Sun, printed and published weekly in the City
of Palm Springs, County of Riverside, State of California James Tho on City Clerk
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The Desert Sun
E.Tah Ili Sun was adjudicated a newspaper of general _ Palm spit ,CAe2262
circulation on March 24, 1988 by the Superior Court of the Any challenge of the
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NOTICE OF JOINT PUBLIC HEARING
CITY COUNCIL AND COMMUNITY REDEVELOPMENT AGENCY
CITY OF PALM SPRINGS
AMENDMENT NO. 2 TO THE DISPOSITION AND DEVELOPMENT AGREEMENT
WITH ENDURE INVESTMENTS, LLC
NOTICE IS HEREBY GIVEN that the City Council ("City") and Community
Redevelopment Agency ("Agency") of the City of Palm Springs, California, will hold a
Joint Public Hearing at 6:00 p.m. Wednesday April 20, 2011, in the Council Chamber at
City Hall, 3200 E. Tahquitz Canyon Way, Palm Springs, CA 92262.
The purpose of this hearing is to consider the approval of Amendment No. 2 to
Agreement No. A0503, a Disposition and Development Agreement ("DDA") with Endure
Investments LLC.
The Agency proposes to amend the existing DDA with Endure Investments, LLC, to
provide for the reimbursement of certain costs for the landfill remediation and operation
of the landfill monitoring system.
Response to this notice may be made verbally at the Public Hearing and/or in writing
before the hearing. Written comments can be made to the City/Agency of the City of
Palm Springs by letter (for mail or hand delivery) to:
James Thompson, City Clerk
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
Any challenge of the proposed project in court may be limited to raising only those
issues raised at the public hearing described in this notice, or in written correspondence
delivered to the City Clerk at, or prior, to the public hearing. (Government Code Section
65009(b)(2)).
An opportunity will be given at said hearing for all interested persons to be heard.
Questions regarding this case may be directed to John S. Raymond, Director of
Community & Economic Development (760) 323-8228.
Si necesita ayuda con esta carta, porfavor Ilame a la Ciudad de Palm Springs y puede
hablar con Nadine Fieger telefono (760) 323-8245.
ames Thompson
City Clerk/Assisfant Sescretary