HomeMy WebLinkAboutItem No. SA7CITY OF LAKE ELSINORE
REPORT TO THE CITY COUNCIL
AND THE REDEVELOPMENT"AGENCY
TO: MAYOR AND CITY COUNCIL AND
REDEVELOPMENT AGENCY CHAIR AND BOARD
FROM:
RON MOLENDYK,
CITY
MANAGER
AND EXECUTIVE DIRECTOR /RDA
DATE:
FEBRUARY 23,
1993
(Continued
to March 9, 1993)
SUBJECT: CITY CENTER DEVELOPMENT
BACKGROUND
Oak Grove Equities has, for some .time, been working toward
development of their property located.,at.Railroad Canyon Road and
Grape Street. They are now ready to proceed.with the development,
which is to include a Wal -mart Store.
DISCUSSION
Staff has been 'negotiating with Oak ,Grove Equities for several
months to conclude potential arrangements to obtain appropriate
tenants for such development. Tentative agreement (subject to City
Council /Redevelopment Agency approval-) has been reached with Oak
Grove Equities and Walmart.., Attached to this report are an Owner
Participation Agreement with Oak Grove Equities and a.Disposition
And Development Agreement with Wal -mart Stores. In summary, the
provisions are:
Oak Grove Equities
a) Oak Grove Equities will develop -the site, including all
required'off -site improvements, of a quality shopping
center. The cost of the improvements is estimated to be "-
$1,800,000.
b) The City /Redevelopment Agency will reimburse Oak Grove a
maximum of $1,800,000 for the off - sites, the public
transitional grading and development impact fees. Said
.reimbursement will carry an'tinterest rate of seven (7)
percent commencing at the first store opening. "If the
entire debt is not amortized at the end of twenty (20)
years,' -any remaining balance: will be cancelled.
C) The source of the reimbursement will be at the discretion
of the City /Redevelopment Agency. The financing method
is set forth below.
Wal -mart
a) Wal -mart will advance $2,900,000 to the Redevelopment
Agency, said amount being the purchase price of the Wa1-
mart parcel.
b) The Redevelopment Agency will acquire the parcel from
developer (Oak Grove) and 'immediately sell to Wal -mart
for-$700,000, the purchase price,..less a loan amount of
$2,200,000.
c) Wal -mart will construct its store on the acquired parcel.
d) Redevelopment Agency will give Walmart a note for
$2,200,000 with interest at seven (7) percent,, commencing
with the opening of their store. The source of repayment
will be at the discretion of the Redevelopment Agency,
however, the note will be collateralized by the sales tax
AGE1(: , ....��,..r_.
City Center Development -2- February 23, 1993
generated from the site. If the
amortized after twenty (20) years,
will be cancelled. The financing
below.
Financina Method
entire debt is not
any remaining balance
method is set forth
The source of the above described reimbursements to Oak Grove
Equities and Wal -Mart Stores will be at the sole discretion of the
City /Redevelopment Agency with only the Wal -Mart note being
collateralized by site specific sales tax. The application of the
tax revenues is as follows:
a. The first $200,000 of annual sales tax each year will be
retained by the City /Redevelopment Agency.
b. An amount equivalent to the second $200,000 of annual
sales tax revenues for the year.will be applied to debt
service of the $4,000,000 of debt described above.
C. An amount equivalent to fifty (50) percent of the annual
sales tax revenue above $400,000 for the year will be
applied to debt services.
d. This method will continue until the total debt is-
extinguished, or for twenty (20) years, which ever occurs
first. The City /Redevelopment Agency have the
option to pay off the remaining debt at any time.
FISCAL IMPACT
The fiscal impact will be positive. In addition to retaining all
of the incremental, property tax, business license and franchise
fees, 'the City /Redevelopment Agency will retain the first $200,000
(annually) of sales,tax. revenues generated by the project. An
amount equivalent of the second $200,000 of sales tax will be used
to apply to the notes. The equivalent of 50% of any sales tax
which is in excess of $400,000 will also be retained by the
City /Redevelopment Agency, with the balance applied to the notes.
Based on a financial impact report for the project prepared by the
Levander Company, after the project is completed, over the first
ten (10) years of operation, the development will produce estimated
revenues of $11,490,000 of which the City /Redevelopment, Agency will
retain an estimated $7,381,000 (see attached schedule).
It is recommended that the City Council and Redevelopment Agency
Board approve the project concept as presented and instruct staff
to take steps to finalize the necessary documents.
PREPARED BY:
APPROVED FOR
AGENDA LISTING
CtyCtrDv.112
Ron Molendy�, City Manager
and Executi a Director /RDA
AGENDA ITEM NO.—
PAGE
CITY CENTER / WALMART PROJECT
10 YEAR ANALYSIS
AGENDA ITEM N0..L7----,
r�
PA�?r- -3- 0F 12 -
TOTAL
DISTRIBUTION DEBT
REVENUE
CITY RDA DEVELOPER INTEREST
PRINCIPAL
BALANCE
YEAR 1
$734,000',$464,000
$270,000 $280,000
$(10,000)
$4,010,000
2
9691000
633,000, 336,600 280,700
55,300
3,954,700
3
1,003,000 .
653,500 349,500- 276,829
72,671
3,882,029
4
1,037,000
673,500 363,500 271,742
-91,758
13,790,271
5
1,183,000
762,500 420,500" 265,319
155,181-
3,635,090
6
1,224,000
786,500 437,500 254,456
183,084
3,452,046.
7
1,267,000
812,000 455,000 241,643
213,357
-.3,238,689
8
1,311,000
838,000 473,000 226,708
246,292
2,992i397
9
1,357;000
865,000' '492,000 209,468
282,532
2,709,865
10
1,405,000
893,000 512,000 189,691
322,309,
2,287,556
TOTAL
$11,490,000
$7,'361,000 $4.109-000
NOTES:
(1)
Total, revenue includes property tax
(incremental)
sales tax,
business
license'and franchise fees - All site specific.
(2)
Distribution to "developer"'covers1both Wal-mart
and Oak Grove
Equities
on the, basis of the first
$200,000 of sales tax to
City/RbA,
the equivalent 'of the next
$200,000
of sales tax to
developer and fifty (50) percent of excess over $400,000 annually.
(3)
Debt based on a 20 year amortization at seven (7)
percent.
AGENDA ITEM N0..L7----,
r�
PA�?r- -3- 0F 12 -
RESOLUTION NO. 93 -4
RESOLUTION R.D.A. 93 -1
JOINT RESOLUTION OF THE LAKE ELSINORE CITY COUNCIL AND THE
LAKE ELSINORE REDEVELOPMENT AGENCY ( "RDA ") AUTHORIZING THE
EXECUTION OF THE REDEVELOPMENT DISPOSITION AND DEVELOPMENT
AGREEMENT ( "DDA ") BY AND BETWEEN THE RDA AND WAL-MART
STORES, INC.( "WAL -MART ") AND THE LAKE ELSINORE REDEVELOPMENT
PROJECT WAL =MART SHOPPING CENTER OWNER PARTICIPATION
AGREEMENT ( "OPA ") BY AND BETWEEN THE RDA AND OAK GROVE
EQUITIES (OAK GROVE ").
BE IT RESOLVED, FOUND AND DETERMINED BY THE CITY COUNCIL AND
THE RDA AS FOLLOWS:
1. The DDA and the OPA were considered by the City Council
and the RDA at a properly noticed joint public hearing on
February 2,-1993. At the hearing, the City Council and the RDA
staff recommended approval of the DDA and the OPA.
2. The adoption of the DDA and the OPA is deemed to be in
the interest of the orderly redevelopment of the City of Lake
Elsinore and is consistent with the goals, objectives and
policies of the existing General Plan for the City of Lake
Elsinore ( "General Plan "), the Elsinore City Center Specific Plan
( "Specific Plan ") and the Redevelopment Plan.for the Rancho
Laguna Development Project No. II ( "Redevelopment Plan ").
3. The City Council and the RDA can approve the DDA and
the OPA, as they are within the scope of the project covered by
the Program EIR prepared for the Specific Plan which EIR was
certified in September, 1992. Given this, no new CEQA document
is required. Pursuant to 14 CCR Section 15162, no new effects
could occur and no new mitigation measures would be required for
the DDA and the OPA. A checklist has been prepared pursuant to
14 CCR Section 15168 and is attached hereto.
4. The City of Lake Elsinore incorporates, in their
entirety, the feasible mitigation measures developed in the
September, 1992 Program EIR as requirements for the DDA and the
OPA.
5. The DDA and OPA will promote the welfare and public
interest of the City of Lake Elsinore.
6. The DDA and the OPA will govern the development of the
projects which are specifically described in the DDA and OPA,
PAGE TWO
RESOLUTION NO. 93 -4
RESOLUTION NO. R.D.A. 93-1
copies of which are attached hereto and incorporated herein by
reference. The DDA and the OPA shall be effective immediately
upon execution of this Resolution.
7. Under the terms of the DDA, the RDA shall sell certain
real property described in the DDA ( "Property ") to Wal -Mart for
a purchase price which is less than the current market value for
the Property at its highest use under the Redevelopment Plan.
The lesser consideration accepted by the RDA for the Property is
necessary to effectuate the purposes of the Redevelopment Plan.
8. The DDA and the OPA are hereby approved by the City
Council and the RDA Board and the Mayor of the City of Lake
Elsinore is hereby authorized and directed to execute the DDA and
the OPA,on behalf of the RDA.
THE FOREGOING RESOLUTION IS HEREBY APPROVED UPON THE
FOLLOWING VOTE THIS DAY OF FEBRUARY, 1993:
AYES' COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
ABSTAIN: COUNCILMEMBERS:
AYES: BOARDMEMBERS:
NOES: BOARDMEMBERS:
ABSENT: BOARDMEMBERS:
ABSTAIN: BOARDMEMBERS:
GARY M. WASHBURN, MAYOR
CITY OF LAKE ELSINORE
JIM WINKLER, CHAIRMAN
REDEVELOPMENT AGENCY
AGENDA ITEw" !vG._
PAGE C O �_ _•
PAGE THREE
RESOLUTION NO. 93 -4
RESOLUTION NO. R.D.A. 93 -1
ATTEST:
VICKI KASAD, CITY CLERK
APPROVED AS TO FORM AND LEGAL CONTENT:
JOHN HARPER, ESQ.
CITY ATTORNEY
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