HomeMy WebLinkAbout7/23/2003 - STAFF REPORTS (5) DATE: July 23, 2003
TO: CITY COUNCIL
FROM: CITY ATTORNEY
APPROVE THAT CERTAIN "AGREEMENT REGARDING MOBILE HOME PARK
CONVERSION" WITH EL DORADO PALM SPRINGS, LTD., AND AUTHORIZE THE
MAYOR TO EXECUTE THE SAME ON BEHALF OF THE CITY OF PALM SPRINGS
RECOMMENDATION:
The City Attorney, consistent with the direction given by the City Council, has completed
negotiations with the owner of the El Dorado Mobile Country Club to provide financial
assistance for lower and moderate income residents in an effort to facilitate conversion
of this mobile home park from a land-lord tenant form of ownership to resident
ownership. These negotiations are consistent with the teaching of the Court of Appeal,
in the El Dorado Palm Springs, Ltd. V. City of Palm Springs, 96 Cal.App.4th 1153 (2002)
decision. According, it is recommended that the City Council:
Approve the "AGREEMENT REGARDING MOBILE HOME PARK
CONVERSION" with El Dorado Palm Springs, Ltd., a California limited
partnership and proprietor of the El Dorado Mobile Country Club, and
authorize the Mayor to execute this agreement on behalf of the City of
Palm Springs.
SUMMARY:
Government Code §§ 66427.4 and 66427.5 provide mechanisms by which rental mobile
home parks may be converted from a landlord-tenant form of ownership to resident
ownership. Though not envisioned within this State statutory scheme, case law now
allows an owner of a rental mobile home park to make application to convert the mobile
home park from a landlord-tenant form of ownership to a resident form of ownership.
Within the City of Palm Springs, El Dorado Palm Springs, Ltd., has undertaken such a
park-owner initiated conversion. That conversion sparked significant disputes between
the mobile home park owner, the resident homeowners' association, and the City of
Palm Springs, resulting in litigation by and between these parties. In a published
appellate decision, entitled El Dorado Palm Springs, Ltd. v. City of Palm Springs, 96
Cal.App.4th 1153 (2002), the Court of Appeals for the Fourth Appellate District, Division
2, held that the City could not impose additional regulatory requirements on this
conversion not embodied in state law.
Following the decision of the Court of Appeals in El Dorado, the State legislature passed
into law Assembly Bill No. 930, which amends Government Code § 66427.5 to add
subsection (d) thereto. The stated purpose of the legislature in adopting Assembly Bill
930 was to "address the conversion of a mobile home park to resident ownership that is
not a bona fide resident conversion . . . ." The legislature went on to find and determine
that" in enacting this act [Assembly Bill No. 930,] it was the intent of the Legislature [to
ensure that conversions pursuant to Section 66427.5 of the Government Code] are bona
423766v.1 t �!�
fide resident conversions." This change in state law, though helpful on a going-forward
basis, will not be applicable to the pending El Dorado Mobile Country Club conversion.
BACKGROUND:
Since the decision by the Court of Appeal, in El Dorado, the owner of this mobile home
park has proceeded to implement its proposed conversion to resident ownership. The
City Council authorized this office to negotiate terms and incentives with the park owner
to facilitate a bona fide conversion of this mobile home park to resident ownership.
Those negotiations have been difficult, and have resulted in terms and conditions not
wholly satisfying to this office or the City Council.
However, El Dorado Palm Springs, Ltd. has expressed a willingness to provide certain
financial assistance for up to 100 lower income residents to purchase their mobile home
lots in the form of a $5,000.00 per purchase credit or down payment assistance. The
park owner has agreed to a $500,000.00 fund to assist purchasers who qualify as lower
income residents under state law.
For its part, the City Council has expressed a willingness to provide certain financial
assistance for up to 100 moderate income residents to purchase their mobile home lots
in the form of a $5,000.00 per purchaser so-called "silent second" mortgage. The City
Council has agreed to a matching $500,000.00 fund to assist purchasers who quality as
moderate income residents under state law.
Under the terms of the attached agreement, the current park owner, any successor or
assign, and the City will create a $1,000,000.00 fund to assist up to 200 park residents,
within the two defined income categories noted in this report, to purchase their mobile
home lots, under certain terms and conditions and on a first-come, first-assisted basis.
In return for this agreement, there will be a cessation, and eventual dismissal, of all
pending litigation between all parties over park conversion, claimed un-paid rents, and
claimed capital improvement cost pass-through, as is more fully described in the
agreement.
//) — �.,_
David J. Ales
City Attorney
APPROVED:
City Manager
ATTACHMENT:
1. Agreement Regarding Mobile Home Park Conversion
#23766v 1
AGREEMENT REGARDING MOBILE HOME PARK CONVERSION
This AGREEMENT REGARDING MOBILE HOME PARK CONVERSION (the
"Agreement") is made and entered into effective July 23 2003 (the "Effective Date"), by and
between EL DORADO PALM SPRINGS, LTD., a California limited partnership ("Owner"),
and the CITY OF PALM SPRINGS, a charter city & municipal corporation ("City"). As more
fully defined in Section 1.2, Owner and the City are each sometimes referred to herein as a
"Party" and together the "Parties".
ARTICLE I.
RECITALS; PURPOSE OF AGREEMENT; PARTIES
1.1 Background Regarding Agreement.
(a) Owner is the owner of the El Dorado Mobile Country Club, a mobile
home park, located at 6000 Palm Canyon Drive in the City.
(b) Pursuant to Section 66427.5 of the California Government Code, Owner
has initiated the conversion of two parcels of real property in the City (IGiown as El Dorado
Mobile County Chub [the "Property"]), into 377 condominium parcels and certain common
areas (the "Conversion").
(c) On August 2, 2000, the City Council of City approved Owner's Tentative
Tract Map No., TTM 28087, for the Property(the "Application").
(d) On June 4, 2003, the City Council of City approved Owner's Final Map
No. 28087 for the Property(the "Final Map").
(e) Prior to approval of the Final Map, the Parties had executed that certain
"Outline of Settlement Understanding Concerning El Dorado Mobile Home Park" (the
"Outline").
(f) This Agreement is intended by the Parties to implement the intent of the
Outline.
1.2 Parties to the Agreement.
(a) Cam. The City is a charter city and municipal corporation of the State of
California. The term "City" as used in this Agreement shall mean the City and each assignee or
successor to the City's rights, powers and responsibilities.
(b) Owner. The teen "Owner" as used in this Agreement shall mean El
Dorado Palm Springs, Ltd., a California limited partnership, or, following a transfer of all of
Owner's Remaining Interests (as defined below), any assignee of or successor to Owner's rights,
powers, and responsibilities under this Agreement. Owner shall have the right, in its sole and
absolute discretion but following notice to the City, to assign its rights and obligations to any
affiliate of Owner (being any entity controlling, controlled by, or under common control with
[RHCzap/Redlined 12 Wyndei Agreement7_9_03/071003/3400010]
Owner, whether now existing or in the future formed), provided that such assignee also receives
all of Owner's then-Remaining Interests. For purposes of the foregoing, "Remaining Interests"
means as of any time all common areas of the Property, all mobile home parks or spaces (the
"Units") which at such time are owned by Owner (whether or not such Units are then in escrow
for purchase), and all improvements owned by Owner on any of the foregoing, together with all
of Owner's rights and obligations under any and all services contracts, leases and other
agreements material to the ownership, operation and leasing of the foregoing, including this
Agreement. "Remaining Interests" does not include any other real or personal property,
contingent obligations, rights, privileges or obligations of Owner, each of which may be retained
by Owner or transferred to any other entity without restriction and without affecting the
assignment of the Remaining Interests and Owner's rights and obligations hereunder.
(c) Third-Party Beneficiaries. This Agreement is solely between the Parties
hereto for the benefit of the Parties hereto and their permitted successors and assigns. There are
no third-party beneficiaries, express or implied, to this Agreement. Nothing in this Agreement
relieves or discharges the obligation or liability of any third person(s) to any Party to this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration the adequacy of which is hereby acknowledged, Owner and City hereby
agree as follows:
ARTICLE II.
OWNER COVENANTS
2.1 Lower Income Resident Purchase Price Assistance.
Owner covenants, for itself and any successor(s) or assignee(s), that the purchase
price for each Unit on the Property shall be that price set forth in the PGP Valuation, Inc.
appraisal, dated November 26, 2002, and thereafter through the date which is one hundred eighty
(180) days following delivery of the Final Public Report to each resident of the Property (the
"Appraised Purchase Price") who is a resident of the Property as of the date of delivery of the
Final Public Report. Owner further covenants, for itself and any successor(s) or assignee(s), that
it will provide a Lower Income Resident purchase price assistance fund in an amount not less
than Five Hundred Thousand Dollars ($500,000.00). Owner further covenants, for itself and any
successor(s) or assignee(s), that it will afford a Lower Income Resident purchase price assistance
(either in the form of down payment assistance or purchase price credit) in the amount of Five
Thousand Dollars ($5,000.00) for the first 100 Units that are purchased by a Lower Income
Resident (as that tenm is defined in Section 50079.5 of the Health and Safety Code) who execute
a written agreement to purchase the same on or before November 1, 2003; provided, however,
that the escrow opened in comiection with each agreement to purchase a mobile home pad or
space by a qualifying Lower Income Resident shall close not later than March 1, 2004, unless the
same is waived by Owner, in its sole and absolute discretion.
( h q-
2.2 Market Rate Rent.
Owner covenants, for itself and any successor(s) or assignee(s), that the rent for
tenants who are afforded rental protection pursuant to the City approved Tenant Impact Report
for unsold Units shall be calculated pursuant to Govennnent Code Section 66427.5, from and
after the date of conversion, to a maximum of$610.00 per month until Owner is allowed, by law,
to charge a greater amount. Notwithstanding the foregoing, if any party other than Owner (or
any entity controlled by, controlling, or under common control with Owner) commences
litigation regarding the proper amount(s) of market rent, then (a) nothing in the foregoing shall
preclude Owner from raising any defense or intervention or presenting any evidence, (b) nothing
in the foregoing shall preclude Owner from seeking higher market rents in response to such
litigation, and (c) if the court rules that a higher market rent is reasonable, then Owner shall be
entitled to charge such higher rents.
2.3 Litigation.
So long as there are no uncured breaches of this Agreement, then promptly after
the Effective Date, Owner will use its best efforts to stay its hardship rent control litigation,
consolidated case no. INC-023305 (consolidated with INC-025129) (the "Rent Case"), for a
period continuing through the first anniversary of the Effective Date of this Agreement. So long
as City has complied with its obligations herein, then on the first anniversary of the Effective
Date of this Agreement, Owner will dismiss or caused to be dismissed the Rent Case, provided
that nothing in the foregoing shall waive or release (or be deemed to waive or release) any other
claim or cause of action which may be available to the Parties herein.
ARTICLE III.
CITY COVENANTS
3.1 Moderate Income Resident Purchase Price Assistance.
(a) City Covenants, for itself and any successor(s) or assignee(s), that it will
provide a Moderate hicome Resident purchase price assistance fiord in an amount not less than
Five Hundred Thousand Dollars ($500,000.00). City further covenants, for its self and any
successor(s) or assignee(s), that it will afford a Moderate hicome Resident Purchase Price
Assistance (in the form of a so-called "silent second") in the amount of Five Thousand Dollars
($5,000.00) for the first 100 mobile home pads or spaces that are purchased by a Moderate
hicome Resident (as defined in Section 50093 of the Health and Safety Code).
3.2 Regulatory Forbearance.
City further covenants that it will not enact an ordinance or adopt any regulation
that would impose any new restriction(s) or any new requirement(s) on this Conversion, or the
Owner's actions to implement the same (including, without limitation, the sale of mobile home
pads or spaces, the renting of the park to non-purchasing residents and others, and the rental
amounts with respect thereto), or to regulate any other matter which is the subject of this
Agreement, including, without limitation, the requirements to obtain any additional permit(s) or
certificate(s) or file any additional notice(s) not required by federal, state or local law as of the
June 1, 2003. This forbearance shall not apply to City's adoption of ordinances or regulations of
general application within City, or to the enforcement of existing City codes, standards,
requirements, rules, or ordinances in effect as of the Effective Date.
3.3 Litigation Forbearance.
City further covenants that it will not file any complaint or initiate or participate
as a party in any administrative or legal action against Owner, the Property, the Site or otherwise
pertaining to the Conversion, the Final Map, the matters described in Section 2.2, or any other
proceeding contesting the Conversion of the Property to resident condominium ownership or the
application of State Map Rents as defined in California Govenmient Code Section 66427.5 and
the City-approved Tenant Impact Report, provided, however, that nothing in the foregoing shall
prevent or be deemed to prevent City from responding to any subpoena or deposition, or request
for records and other public documents pursuant to the California Public Record Acts, or other
lawful process of any court or tribunal; and provided, fin-ther, that nothing in the foregoing shall
waive or be deemed to waive the City's ability to enforce against Owner, or the Property, any
law of general applicability existing as of the Effective Date.
ARTICLE IV.
PRESERVATION OF RIGHTS AND OBLIGATIONS
4.1 Improvements.
Nothing in this Agreement alters, or shall be construed to alter, Owner's rights or
obligations with respect to the maintenance or alteration of improvements located on the
Property. Such rights and obligations shall be determined solely by reference to federal, state,
and local laws applicable to the Property and any enforceable agreements to which Owner is a
party or which otherwise bind the Property and not by reference to this Agreement.
4.2 Personal Property.
Nothing in this Agreement alters, or shall be construed to alter, Owner's rights
with respect to any personal property owned or leased by it, whether or not located at the
Property, and Owner may dispose of, return, sell, exchange, lend or replace any item of such
personal property in Owner's sole and absolute discretion.
ARTICLE V.
BREACH OF AGREEMENT
5.1 Breach Subject to Cure.
It shall be a breach of this Agreement if any Party takes any action which violates,
or otherwise fails to implement, a provision of this Agreement applicable to such Party, and such
action is not rescinded or otherwise cured within ten (10) days of written notice from the non-
breaching Party.
5.2 Remedies.
Upon the expiration of a cure period tinder Section 5.1, the non-breaching party
shall have all remedies available to it at law or equity, including the right to seek monetary
damages, specific performance or other equitable relief. In addition to the foregoing remedies
and damages, and not as a limitation, the non-breaching party may at its election (in its sole
discretion) (a) suspend the performance of its covenants under Article H or Article I1I, as the
case may be, without liability to the breaching Party, or (b) continue to perform such covenants
and thereby continue to bind the breaching Party to the performance of all of the breaching
Party's covenants. The Parties agree that Owner's monetary darnages in the event of a breach by
City will include, but not be limited to, the aggregate of all discounts granted under Section 2.1
and any increase in rent to which Owner would have been entitled under Section 2.2.
ARTICLE VI.
MISCELLANEOUS
6.1 Binding Effect.
This Agreement applies to, encumbers, and binds Owner and City and each of
their successors and assigns.
6.2 Governing Law; Choice of Fonim; Service of Process.
(a) This Agreement shall be construed in accordance with and be governed by
the laws of the State of California.
(b) Service of process on City shall be made by personal service upon the City
Cleric of City, or in such manner as may be provided by law. Service of process on Owner shall
be made by personal service upon an officer of Owner or in such manner as may be provided by
law, whether made within or without the State.
6.3 Fees and Other Expenses.
Except as otherwise provided herein, each of the Parties hereto shall pay its own
fees and expenses, including attorneys' fees and costs, in connection with negotiation and
preparation of this Agreement.
6.4 Conflict of Interest.
No appointed or elected official or employee of the City shall have any personal
interest, direct or indirect, in this Agreement nor shall airy official or employee participate in any
decision relating to the Agreement which affects his interests or the interests of any corporation,
partnership, or association in which he is directly or indirectly interested.
6.5 Notices.
All notices, demands, consents, requests and other communications required or
permitted to be given Linder this Agreement shall be in writing and shall be deemed conclusively
to have been duly given (a) when hand delivered to the other Party; (b) three (3) Business Days
after such notice has been sent by United States mail via certified mail, return receipt requested,
postage prepaid, and addressed to the other Party as set forth below; (c) the next Business Day
after such notice has been deposited with a national overnight delivery service reasonably
approved by the Parties (Federal Express, United Parcel Service and U.S. Postal Service are
deemed approved by the Parties), postage prepaid, addressed to the Party to whom notice is
being sent as set forth below with next-business-day delivery guaranteed, provided that the
sending Parry receives a confirmation of delivery from the delivery service provider; or (d) when
received by the recipient Party when sent by facsimile transmission or email at the number or
email address set forth below (provided, however, that notices given by facsimile or email shall
not be effective unless either (i) a duplicate copy of such notice is promptly sent by any method
permitted under this Section 6.5 other than by facsimile or email; or (ii) the receiving Party
delivers a written confirmation of receipt for such notice either by facsimile, email or any other
method permitted under this Section. Any notice given by facsimile or email shall be deemed
received on the next Business Day if such notice is received after 4:00 p.m. (recipient's time) or
on a Business Day. Unless otherwise provided in writing, all notices hereunder shall be
addressed as follows:
If to Owner:
ELDORADO PALM SPRINGS, LTD.
10100 Santa Monica Boulevard, Suite 2030
Los Angeles, California 90067
Attention: James F. Goldstein
Facsimile: 310-556-0106
With a copy to:
Gilchrist & Rutter Professional Corporation
1299 Ocean Avenue, Suite 900
Santa Monica, California 90401
Attention: Richard H. Close, Esq.
Facsimile: 310-394-4700
If to the City:
City of Palm Springs
3200 East Tahquitz Carryon Way
Palm Springs, California 92262
Attention: City Clerk
With a copy to:
Aleshire &Wynder, LLP
Tower 17,
18881 Von Kalman Avenue
Suite 400
Irvine, California 92612
Attention: William W. Wynder, Esq.
Facsimile: (949) 223-1180
6.6 Amendments.
This Agreement may not be changed orally, but only by an amendment in writing
signed by both Owner and the City.
6.7 No Prior Agreements.
This Agreement supersedes and replaces any and all prior agreements, proposed
agreements, negotiations and communications, oral or written, and contains the entire agreement
between the Parties as to the specific subject matter hereof and any and all prior agreements,
understandings or representations are hereby terminated and canceled in their entirety. Each
Party hereby acknowledges that no other Party hereto, nor its agents or attorneys, have made any
promises, representations or warranties whatsoever, expressed or implied, not contained herein,
to induce such Party to execute this Agreement, and each Party acknowledges that it has not
executed this Agreement in reliance on any such promise, representation or warranty not
contained herein.
6.8 Effectiveness.
The Effective Date of this Agreement shall be the date when this Agreement has
been executed Owner and approved by City's City Council. The Parties acknowledge and agree
that the Effective Date set forth in the preamble of this Agreement may be filled in by hand by
either Party upon satisfaction of the conditions required in this section.
6.9 Countep2arts.
This Agreement may be executed in two or more separate counterparts, each
completely executed set of which, when so executed, shall be deemed to be an original. Such
counterparts shall, together, constitute and shall be one and the same instrument. The Parties
agree to recognize execution of this Agreement by facsimile signatures; provided, however, that
such execution by facsimile shall not be effective unless a manually executed copy of the
signature page is promptly sent by United States, postage prepaid, and such manually signed
page is actually received by the other Party within ten (10) days of its execution.
6.10 Termination.
This Agreement shall tenninate and be of no further force and effect on the tenth
(IOth) anniversary of the Effective Date.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first set forth above.
"OWNER"
El Dorado Palm Springs, Ltd.
a California limited partnership
By: Goldstein Properties, Inc.
A California Corporation
its sole General Partner
Dated: By:
James F. Goldstein
Its: President
"CITY"
CITY OF PALM SPRINGS,
a municipal corporation of the State of California
Dated: By:
Name: William G. Kleindienst
Its: Mayor
ATTEST:
By:
City Cleric
Approval As To Form:
Aleshire &Wynder, LLP
By:
City Attorney
MINUTE ORDER NO.
APPROVING AN AGREEMENT REGARDING MOBILE
HOME PARKCONVERSION BYAND BETWEEN THE
CITY OF PALM SPRINGS, A MUNICIPAL
CORPORATION,AND EL DORADO PALM SPRINGS,
LTD., A CALIFORNIA LIMITED PARTNERSHIP, FOR
THE CONVERSION OF MOBILE HOME PARK
SPACES AT THE EL DORADO MOBILE COUNTRY
CLUB AT 6000 EAST PALM CANYON DRIVE
I HEREBY CERTIFYthat this Minute Order approving an Agreement Regarding Mobile
Home Park Conversion by and between the City of Palm Springs, a municipal
corporation, and El Dorado Palm Springs, Ltd., a California Limited Partnership,for the
conversion of mobile home park spaces at the El Dorado Mobile Country Club at 6000 East
Palm Canyon Drive, was adopted by the City Council of the City of Palm Springs, California,
in a meeting thereof held on the 23rd day of July, 2003.
PATRICIA A. SANDERS
City Clerk
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