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HomeMy WebLinkAbout9/1/2004 - STAFF REPORTS (4) DATE: SEPTEMBER 1, 2004 TO: COMMUNITY REDEVELOPMENT AGENCY FROM: DIRECTOR OF COMMUNITY & ECONOMIC DEVELOPMENT APPROVAL OF MEMORANDUM OF UNDERSTANDING RELATING TO THE DEVELOPMENT OFA COMMERCIAL SHOPPING CENTER WITH H&H INVESTMENTS, LLC OF LAS VEGAS, NEVADA FOR A 4.96 ACRE PARCEL AT THE NORTHWEST CORNER OF SUNRISE WAY AND TAHQUITZ CANYON WAY, MERGED AREA#2 RECOMMENDATION: It is recommended that the Agency approve an Memorandum of Understanding with H & H Investments, LLC of Las Vegas, Nevada, Relating to the Development of a Commercial Shopping Center on a 4.96 acre parcel which the Agency acquired for the purpose of facilitating a land swap for a parcel on East Palm Canyon Drive. SUMMARY: This Agreement allows the Seller of a 4.96 (gross)acre parcel at the northwest corner of Sunrise Way and Tahquitz Canyon Way to the Agency (for the purpose of facilitating a land swap for a parcel on East Palm Canyon Drive)to continue to process the development plans for a commercial shopping center on the Site. The Agency has applied to the Bureau of Indian Affairs (BIA) for a Fee to Trust Transfer of the Site; simultaneously,the owner's representative of an 8+ acre parcel on East Palm Canyon Drive will apply to the BIA for a Trust to Fee Transfer to effectuate a swap of the two parcels. BACKGROUND: H&H INVESTMENTS, LLC, a Nevada limited liability corporation ("Developer")sold to the Agency certain real property consisting of approximately 4.96 gross acres,referred to as APN 508-070-042, located at the northwest corner of Sunrise Way and Tahquitz Canyon Way("Site"). The Agency's sole purpose in acquiring the Site from Developer is to exchange the Site for other real property which is necessary for a project being undertaken by the Agency. As part of this "Agency Project," Agency is negotiating an exchange of the Site for another parcel ("Exchange Parcel"). To allow Agency to undertake the contemplated Agency Project,the exchange is to be facilitated by the Bureau of Indian Affairs("BIA") as a Fee-to-Trust transfer of the Site and a Trust-to-Fee transfer of the Exchange Parcel. The failure of Agency to accomplish either of these two transfers will be fatal to the Agency Project. Accordingly, Developer has the obligation to repurchase the Site if the Agency is unable to acquire the additional parcel necessary for the Agency Project within eighteen (18) months of the close of escrow, without contingencies. Escrow closed on July 16, 2004. It was not the intent of the Agency when it acquired the parcel from the Developer to interfere with the development of the Site with a commercial shopping center. The Agency still desires that the Site be developed as a commercial shopping center in a manner which benefits the citizens of Palm Springs and visitors. The Developer plans to develop a new commercial shopping center with a grocery store anchor and is experienced in the development and marketing of commercial shopping centers. C ca�� The land exchange was facilitated to help VIP Motors expand. After considering several other locations in the vicinity, the parcel that works the best is the adjacent Indian-owned parcel to the west of BMW. In May, 2003 the Agency expressed its intent to facilitate a trade of the parcel for a fee simple piece elsewhere in the City. This is the best possible site for the BMW expansion, but in order to qualify for BMW's below-market financing the dealer would need to own the parcel fee simple, and not be in an Indian lease. The Agency then acquired the H & H parcel to trade. H & H was willing to accommodate the Agency's desire to acquire the parcel in order to swap,provided: (1) they still be able to develop a shopping center there, (2) they receive the appraised value, and (3)the Agency acquire it under threat of condemnation. This MOU allows the Developer to proceed with the shopping center plans and would lead to a lease by the Agency if(1)the exchange were not completed in 18 months, and (2)both parties agreed to not require the Developer to repurchase the parcel from the Agency. This MOU does not convey any interest in the real estate. 'IN . RAY O D irecto of Co ity& Economic Development APPROVED Executive Director ATTACHMENTS: 1. Resolution 2. Memorandum of Understanding CrG__1 � � MEMORANDUM OF UNDERSTANDING WITH H&H INVESTMENTS, LLC RELATING TO THE DEVELOPMENT OF A COMMERCIAL SHOPPING CENTER THIS MEMORANDUM OF UNDERSTANDING ("MOU") is made this _day of 2004, by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic ("Agency") and H&H INVESTMENTS; LLC, a Nevada limited liability corporation ("Developer"). RECITALS The parties enter into this MOU on the basis of the following facts, understandings, and intentions: A. Pursuant to a Purchase Agreement dated July _, 2004, the Agency acquired that certain real property consisting of approximately 4.96 gross acres, referred to as APN 508- 070-042, located at the northwest corner of Sunrise Way and Tahquitz Canyon Way in the City of Palm Springs, County of Riverside, State of California, more particularly described on Exhibit "A" attached hereto ("Site"), from Developer. B. The Agency's sole purpose in acquiring the Site from Developer is to exchange the Site for other real property which is necessary for a project being undertaken by the Agency. As part of this "Agency Project," Agency is negotiating an exchange of the Site for another parcel ("Exchange Parcel"). To allow Agency to undertake the contemplated Agency Project, the exchange is to be facilitated by the Bureau of Indian Affairs ("BIA") as a Fee-to-Trust transfer of the Site and a Trust-to-Fee transfer of the Exchange Parcel. The failure of Agency to accomplish either of these two transfers will be fatal to the Agency Project. Accordingly, Developer has the obligation to repurchase the Site if the Agency is unable to acquire the additional parcel necessary for the Agency Project within eighteen (18) months of the close of escrow, without contingencies. Escrow closed on July 16, 2004. C. The Agency desires that the Site be developed as a commercial shopping center in a manner which benefits the City of Palm Springs ("City"), its citizens and visitors. D. The Developer desires to develop a new commercial shopping center with a grocery store anchor within the City ("Developer's Project"). Developer is actively investigating several potential locations for the construction of Developer's Project. E. The Developer is experienced in the development and marketing of commercial shopping centers. The term "Developer," as used herein, includes the principals, partners, and joint venturers of Developer. All obligations of Developer as set forth herein shall be the joint and several obligations of such principals, partners, and joint venturers. F. The Developer is currently in the process of designing the Developer's Project and obtaining the necessary entitlements for the Developer's Project. However, Developer has not yet determined the exact location of the Developer's Project. Developer is considering the Site as a possible location for the Developer's Project. G. The Agency and Developer desire herein to memorialize the agreement of the parties to review and consider the feasibility of negotiating a long term "Lease" of the Site for the i nnzmronaasi m construction of Developer's Project, which Lease will only be necessary in the event that the exchange does not occur and both parties agree that Developer shall not exercise its repurchase obligation set forth in the Purchase Agreement referenced in Recital A, above. H. Developer acknowledges, that, pursuant to Health & Safety Code § 33431, a public hearing would be required before the Agency could enter into a Lease of the Site. NOW, THEREFORE, and in consideration of the mutual covenants contained herein, parties mutually agree to the following: SECTION 1. NATURE OF NEGOTIATIONS. A. Good Faith. The Agency and Developer agree that, for the period set forth in Section 2 herein, the parties will, diligently and in good faith, the feasibility of a Lease for the development of the Developer's Project on the Site. The development would be subject to all rules, regulations, standards, and criteria set forth in the City's General Plan, applicable specific plans and zoning regulations, and this MOU. The Lease would generally be in the form negotiated by the Agency with other development entities. B. Nature of the Developer's Project. The Developer's Project shall include the construction of Vons-anchored shopping center with a prototype for the Vons store that is larger and more upscale than the Vons store which is presently located within the Palm Springs Mall. A "Concept Plan" is attached as Exhibit "B" and incorporated herein by this reference. The design of the Developer's Project shall be consistent with the City's design guidelines. Developer shall also obtain architectural review for the Developer's Project from the City's Design Review Board and Planning Commission. The Developer is solely responsible for obtaining all approvals and entitlements for the Developer's Project, arranging the financing for the Developer's Project, and constructing all improvements upon the Site. C. Environmental Review. Should the parties proceed to negotiate the Lease, Developer shall have the sole responsibility to pursue and obtain any necessary environmental approvals for the Developer's Project. D. Albertsons' Covenant. Developer acknowledges that the Site is currently encumbered by a covenant which was created in the grant deed which conveyed the Site from American Stores Properties, LLC (Albertsons) to Developer. A copy of the grant deed from Albertsons is attached hereto and incorporated herein as Exhibit"C." E. Financial Provisions. Should the parties proceed to negotiate the Lease, after the appropriate public hearing, the Lease would provide Developer with a long-term interest the Site at a fair rental value established by the BIA which is based upon an appraised value of the Site as $2,164,000. In the Lease, the parties would delineate the escalation provisions and capitalization rates. Developer shall have the sole obligation to finance the construction of the Developer's Project. F. Schedule. Developer's goal is to develop the Developer's Project for opening by Quarter of 200_, with an understanding that the opening of the Developer's Project may be phased with the grocery store included in the first phase, Should the parties proceed to negotiate the Lease, the Lease shall contain a Schedule of Performance. C 2 i nnvni�mui ni G. Use and Transfer Restrictions. Should the parties proceed to negotiate the Lease, the Lease will generally be subject to restrictions on use and transfer during construction and for a specified period thereafter through recorded restrictions (i) to assure that the use will be consistent with and promote the Developer's Project, (ii) to prevent speculation, (iii) to assure that any transferee has the resources, capability and experience to successfully develop the Developer's Project and, (iv) to assure long-term maintenance of the Developer's Project in an attractive condition. SECTION 2. PERIOD OF NEGOTIATIONS A. Period of Negotiation. The Agency and Developer agree that the negotiation period shall remain open though January 16, 2006. The Agency agrees that, for such period, the Agency will not enter into any agreement with any other entity for the development of the Site. B. Early Termination. If the Agency is successful with the Fee-to-Trust transfer of the Site and the Trust-to-Fee transfer of the Exchange Parcel, the Agency may terminate this Agreement by serving written notice of its election to terminate to the Developer. The notice shall be effective within two days of Developer's receipt of the notice. C. Agency Approval. Developer understands and acknowledges that if negotiations culminate in a Lease, such Lease shall be effective only after and if the Developer's Project and Lease have been considered and approved by the Planning Commission and Agency's 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 Agency and Developer to determine the feasibility of the Developer's Project. During the period of negotiation, and as requested by the Agency, the Developer shall submit to the Agency the following: A. All information necessary for the design of the Developer's Project to meet the Agency's reasonable requirements. This information shall be sufficient to allow Agency to evaluate site configuration, architectural design and similar issues. B. A financial proforma for the Project. 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 or Agency 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. SECTION 4. AGENCY'S RESPONSIBILITIES. A. Agency Assistance. The Agency shall cooperate fully in providing Developer with appropriate information and assistance. B. Preparation of Lease. If an agreement is reached on the use of the Site for Developer's Project, the Agency shall prepare such Lease for consideration by the Developer. 3 �'a ' - innvnwnacai Al Agency's expenses incurred in connection with the preparation of the Lease shall be reimbursed by Developer. C. Environmental Quality Act. The Agency will assist Developer in preparing a Negative Declaration or an EIR and any such additional environmental documentation that may be necessary for the Developer's Project. SECTION 5. LEASE DEPOSIT. If the negotiations contemplated by this MOU result in the preparation of a Lease, the Lease will require that Developer submit to the City a deposit in the form of a cash deposit, cashier's check, irrevocable letter of credit, or other form of security acceptable to the City to insure that the Developer will proceed diligently and in good faith to perform all of the Developer's obligations under the Lease ("Deposit"). The amount and terms of the Deposit shall be outlined in the Lease. SECTION 6. MISCELLANEOUS. A. Brokerage Commissions. The Agency shall not be liable for any real estate commission or any broker's fees which may arise in relation to the Developer's Project. 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 MOU do not result in the execution of a Lease or in a successful exchange of property with the BIA, Developer shall transfer to Agency copies of any reports, studies, analysis, site plan layouts, engineering studies, memorandums, or similar documents regarding the Site which were prepared during the period of negotiations, which documents 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 documents and shall be made subject to the rights of the preparers of such documents including, without limitation, the copyrights (if any) associated with such documents. C. Purpose of MOU. It is expressly understood and agreed by the parties that this is an agreement regarding the conduct of contract negotiations only and does not convey any interest in the Site whatsoever. It is further agreed and understood that this MOU does not imply any obligation on the part of the Agency or Developer to enter into any agreement that may result from negotiations contemplated herein. D. Corporate Authority. The persons executing this MOU on behalf of the parties hereto warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this MOU on behalf of said party, (iii) by so executing this MOU, such party is formally bound to the provisions of this MOU, and (iv) entering into this MOU does not violate any provision of any other agreement to which said party is bound. E. Amendment. This MOU may only be amended by a document in writing signed by the parties. IN WITNESS WHEREOF, the parties have executed this MOU as of the day first above written. _ c�. �. 4 inm/n»naagt m "Developer" H&H INVESTMENTS, LLC, a Nevada limited liability corporation Hank Gordon, Manager Mailing Address: H&H Investments, LLC C/o Laurich Properties, Inc. 1770 N. Buffalo Drive, Suite 101 Las Vegas, NV 89128 "Agency" ATTEST: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic By: Agency Secretary Executive Director APPROVED AS TO FORM ALESHIRE & WYNDER, LLP David J. Aleshire, Esq. Agency Counsel Mailing Address: Community Redevelopment Agency of the City of Palm Springs 3200 Tahquitz Canyon Way Palm Springs, CA 92263 Attn: Director of Community & Economic Development (ALL SIGNATURES MUST BE NOTARIZED.) 5 inmmionzzai m RESOLUTION NO. /c,2 OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS,CALIFORNIA,APPROVING AN MEMORANDUM OF UNDERSTANDING RELATING TO THE DEVELOPMENT OF A COMMERCIAL SHOPPING CENTER WITH H & H INVESTMENTS, OF LAS VEGAS, NEVADA FOR A 4.96 ACRE PARCEL AT THE NORTHWEST CORNER OF SUNRISE WAY AND TAHQUITZ CANYON WAY, MERGED AREA#2 WHEREAS,the Community Redevelopment Agency of the City of Palm Springs, California ("Agency")is constituted under the Community Redevelopment Law(California Health and Safety Code Section 33000 et. seq.) to carry out the purpose as the redevelopment in the City of Palm Springs ("the City"); and WHEREAS, Section 33430 of the Community Redevelopment Law allows that an agency may, "for purposes of redevelopment, sell, lease, for a period not to exceed 99 years, exchange, subdivide, transfer, assign, pledge, encumber by mortgage, deed of trust, or otherwise, or otherwise dispose of any real or personal property or any interest in property;" and WHEREAS, H&H INVESTMENTS,LLC,a Nevada limited liability corporation("Developer") sold to the Agency certain real property consisting of approximately 4.96 gross acres, referred to as APN 508-070-042, located at the northwest corner of Sunrise Way and Tahquitz Canyon Way ("Site") on July 16, 2004; and WHEREAS, Developer was willing to accommodate the Agency's desire to acquire the parcel in order to swap, provided: (1)they still be able to develop a shopping center there, (2) they receive the appraised value, and (3) the Agency acquire it under threat of condemnation; and WHEREAS, Section 33432 of the Community Redevelopment Law requires that any such lease shall be conditioned on the redevelopment and use of the property in conformity with the redevelopment plan; and NOW,THEREFORE, BE IT RESOLVED by the Community Redevelopment Agency of the City of Palm Springs as follows: SECTION 1. The Memorandum of Understanding with H & H Investments, LLC of Las Vegas, Nevada, Relating to the Development of a Commercial Shopping Center,for a 4.96 acre parcel for at Tahquitz Canyon Way and Sunrise Way is hereby approved and incorporated herein by this reference. SECTION 2. The Chairman of the Agency, and/or his designee, is authorized to execute all necessary documents, in a form approved by the Agency Counsel. ADOPTED this day of 2004. AYES: NOES: ABSENT: ATTEST: COMMUNITY REDEVELOPMENT AGENCY CITY OF PALM SPRINGS, CALIFORNIA By Assistant Secretary Chairman REVIEWED & APPROVED Cl C40 p