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HomeMy WebLinkAboutID# 15-866 Resolution No. 2015-006 Third Amendment (2016) to Stadium Interim Management AgreementREPORT TO OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE TO: VICE CHAIR KELLEY AND MEMBERS OF THE OVERSIGHT BOARD FROM: BARBARA LEIBOLD, SUCCESSOR AGENCY COUNSEL DATE: DECEMBER 15, 2015 SUBJECT: Reconsideration of the Third Amendment (2016) To Stadium Interim Management Agreement Recommendation It is recommended that the Oversight Board approve and adopt: Resolution No. OB- 2015 -0 A RESOLUTION OF THE OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE FINDING THE THIRD AMENDMENT (2016) TO THE STADIUM INTERIM MANAGEMENT AGREEMENT IN THE BEST INTERESTS OF THE TAXING ENTITIES AND CONFIRMING APPROVAL OF THE THIRD AMENDMENT (2016) Background In 2001 and 2002, the Redevelopment Agency entered into certain agreements involving the operation and maintenance of the Lake Elsinore Diamond Stadium, including a License Agreement, a Stadium Field And Maintenance Agreement, and a Concession License Agreement (collectively, the "Stadium Operations Contracts "). Pursuant to the Stadium Operations Contracts, the Storm licensed and maintained the Stadium for baseball games and other Storm events. An affiliate of the Storm, Golden State Concessions and Catering, Inc. ( "Golden State "), operated the concessions at the Stadium. Under the Stadium Operations Contracts, the Agency's management, operation and maintenance costs were significant and the Stadium operated at a loss. In 2005, the Agency commenced negotiations with Diamond Stadium Group (DSG) to undertake all of the Stadium operations, maintenance and management responsibilities. Storm LP, Golden State and DSG share common controlling ownership. Negotiations between the Agency and DSG resulted in June 2007 amendments to the Stadium Operations Contracts and a new Stadium License, Lease and Management Agreement (the "2007 Management Agreement "). DSG fulfilled all aspects of the 2007 Management Agreement which reduced the Agency's Stadium - related costs. However, DSG reported annual losses under the 2007 Management Agreement and in June 2011 chose to exercise its right to terminate the Reconsideration of Third Amendment To Stadium Interim Management Agreement December 15, 2015 Page 2 2007 Management Agreement effective December 31, 2012. Upon termination of the 2007 Management Agreement, the rights and responsibilities for Stadium management, operations and maintenance were again divided in accordance with the Stadium Operations Contracts; however, at that time, the Successor Agency did not have the resources to satisfactorily perform its obligations. On December 11, 2012, the Successor Agency approved the Stadium Interim Management Agreement ( "Interim Agreement ") to provide for the efficient and cost effective management, maintenance and operation of the Stadium by the Storm through 2013. A First Amendment to the Interim Agreement was approved in September 2013. A Second Amendment to the Interim Agreement was approved in September 2014. The State Department of Finance has approved the allocation of Real Property Tax Trust Funds for Stadium obligations in accordance with the Successor Agency Recognized Obligations Payment Schedules (ROPS). The Interim Agreement and the First and Second Amendments have been successfully implemented to provide for efficient and cost effective management, maintenance and operation of the Diamond Stadium. However, the Second Amendment expires on December 31, 2015 at which time the burden of maintaining, managing and operating Diamond Stadium under the Stadium Operations Contracts would fall onto the Successor Agency. Pursuant to the Dissolution Act and provisions of AB 1484, the Successor Agency prepared a Recognized Obligation Payment Schedule for the period from January 1, 2016 through June 30, 2016 (the "ROPS 15 -16B ") which lists, among other things, as enforceable obligations of the Successor Agency, the obligations related to the (i) License Agreement; (ii) Maintenance Agreement; (iii) Concession Agreement; (iv) Stadium operations and maintenance obligations, and (v) the Interim Agreement. Consistent with the legislative authorization contained in AB 1484 allowing successor agencies to enter into enforceable obligations for the purpose of maintaining the assets of the former Redevelopment Agency, a Third Amendment to the Interim Agreement was prepared to provide for the continued, efficient and cost effective management, maintenance and operation of the Stadium through 2016 (Third Amendment (2016)). On September 22, 2015, the Oversight Board adopted Resolution No. OB 2015 -004 approving the Third Amendment (2016) and following such approval by the Oversight Board and the Successor Agency, the Third Amendment (2016) was submitted to and reviewed by the State Department of Finance (DOF). On November 18, 2015, the Successor Agency was notified by DOF that Oversight Board Resolution No. OB- 2015 -004 related to the approval of the Third Amendment (2016) was not approved by DOF. While DOF acknowledged that Health & Safety Code section 34171(d)(1)(F) allows contracts or agreements necessary for the maintenance of assets prior to disposition, DOF expressed its reservations about the Third Amendment (2016)'s increase in the estimated Capital Repair Schedule costs by $1,921,912 to a total of $3,286,912. [Note: DOF misinterpreted the monetary provisions of the Third Amendment which was Reconsideration of Third Amendment To Stadium Interim Management Agreement December 15, 2015 Page 3 addressed by Successor Agency staff at its Meet and Confer meeting with DOF discussed below.] DOF concluded this increase would not be in the best interests of the taxing entities and directed the Oversight Board to reconsider the matter. That reconsideration is now before the Oversight Board. In addition to referring the action back to the Oversight Board, DOF denied the Successor Agency the requested allocation of Real Property Tax Funds on the ROPS 15 -16B for the Third Amendment. The Successor Agency Executive Director, Director of Administrative Services and Agency Counsel attended a Meet and Confer with DOF on December 3, 2015 appealing that determination. The matter in presently under consideration and DOF is expected to issue its findings by December 17, 2015. As part of that evaluation, DOF will look to the Oversight Board action upon reconsideration. Discussion The Stadium Operations Contracts are in full force and effect and constitute enforceable obligations of the Successor Agency. Successor Agency staff continues to believe that approval of the attached Third Amendment (2016) to the Stadium Interim Management Agreement is critical to ensuring the Successor Agency can meet its legal obligations under the Stadium Operations Contracts to operate, manage and maintain the Stadium in first class condition and to ensure that the "Lake Elsinore Storm" can continue to play its home baseball games at the Stadium. Failure to meet those obligations exposes the Successor Agency to the possibility of litigation. Moreover, the Successor Agency lacks the resources both in staffing and expertise to otherwise comply with those obligations. Contracting with the Storm to perform the Agency's obligations provides for the efficient and cost effective management, maintenance and operation of the Stadium which is in the best interest of the taxing entities. DOF has questioned the necessity of certain capital expenditures. But DOF has fundamentally failed to recognize that certain capital facilities and equipment at the Stadium have simply worn out or are in a condition of disrepair. The Stadium is 22 years old, and despite the ongoing maintenance being performed in accordance with applicable agreements, certain structural elements, capital components, operational systems and equipment require replacement in order to maintain the Stadium in accordance with the Stadium Operations Contracts and to protect the safety of the players and the spectators consistent with applicable laws and standards. Because these other repairs /replacements are necessary to continue to meet the Successor Agency's obligation under the Stadium Operations Contracts, Successor Agency staff believe that the Third Amendment (2016) should, again, be approved by the Oversight Board. As noted in the prior staff report on the Third Amendment (2016), The Storm continues to possess the experience, capabilities and qualifications to best carry out these Reconsideration of Third Amendment To Stadium Interim Management Agreement December 15, 2015 Page 4 obligations. The terms of the Interim Management Agreement and Third Amendment (2016) are discussed below. Interim Management Agreement - The Interim Stadium Management Agreement as amended by the proposed Third Amendment (2016) incorporates the obligations under the Stadium Operations Contracts and provides for a Capital Improvement Schedule. During the 2016 term of the Third Amendment (2016), compensation to the Storm for the performance of the maintenance, management and operations services shall be as follows: (a) Assignment of GRCS Concession Fee. Successor Agency assigns Successor Agency's right to payment of the GRCS Concession Fee under the Concession Agreement to the Storm during the 2016 term, estimated at $34,000 annually; and (b) Waiver of License Fee. Successor Agency waives Successor Agency's right to payment of the License Fee in the amount of $497,297 under the License Agreement during 2016 as an offset against the payments due by the Successor Agency to the Storm; and (c) Payment of Maintenance Fee. Successor Agency shall pay the Annual Maintenance Fee in the amount of $232,159 under the Stadium Field And Maintenance Agreement during 2016; and (d) Payment of Additional Interim Management Fee. Successor Agency shall pay to Storm $435,589, payable in equal monthly installments ( "Additional Interim Management Fee "). The Maintenance Fee along with the Additional Interim Management Fee will result total cash payment from the Successor Agency to the Storm of $667,752 as consideration for services provided under the Stadium Operations Contracts and the Interim Stadium Management Agreement as amended by the Third Amendment (2016), which aggregate amount shall be payable in equal monthly installments of $56,646. The Successor Agency continues to be responsible for all Capital Repairs and alterations consistent with the Stadium Operations Contracts, which are expected to be significant over the next few years. In connection with the preparation and negotiation of the Third Amendment (2016), the City's Building Official surveyed the Stadium with representatives of The Storm and agreed upon necessary Capital Repairs. Quotes or estimates for the costs of such Capital Repairs were also obtained. Capital repairs for 2016, as included in the Third Amendment (2016), reflect that the Stadium is twenty two (22) years old and include, without limitation, replacement of Stadium seating, improvements to comply with revisions to the Americans with Disabilities Act (ADA), retrofitting of plumbing, containment of run -off to comply with the National Pollutant Discharge System imposed by the Environmental Protection Agency Reconsideration of Third Amendment To Stadium Interim Management Agreement December 15, 2015 Page 5 (EPA), improvements to and replacement of the heating, ventilation and air condition (HVAC) system, repaving of the parking lots and replacement of old equipment. The Third Amendment (2016) provides for proposed 2016 Capital Repairs of approximately $3,286,912. The Third Amendment (2016) includes a Capital Repair schedule, which will be updated annually or, if necessary, semi - annually in accordance with future ROPS. Capital Repairs for the ROPS 15 -16B period (January 1, 2016 through June 30, 2016) are estimated to be $1,580,912, which includes (but is not limited to) beginning the replacement of Stadium seating, improvements to comply with revisions to the ADA, retrofitting of plumbing, containment of run -off to comply with the National Pollutant Discharge System imposed by the EPA, improvements to and replacement of the HVAC system, and replacement of old equipment. Fiscal Impact The ROPS 15 -16B allocates Real Property Tax Trust Funds to cover the Successor Agency obligations for the period of January 1, 2016 through June 30, 2016. In addition, the attached Resolution authorizes the Executive Director to comply with any findings of the Department of Finance in connection with its review of the ROPS 15- 16B or the attached Resolution, and make such changes as necessary so that the Third Amendment (2016) can be implemented in accordance with the ROPS approved by DOF. The ROPS 16 -17A (for the second half of calendar year 2016) will be prepared to similarly reflect these obligations which will be presented to the Oversight Board and DOF and upon approval will provide funds for the second six months of the term of the Third Amendment. Prepared by: Barbara Leibold, Successor Agency Counsel Attachments: Resolution No. OB- 2015 -0 Third Amendment (2016) DOF November 18, 2015 Letter RESOLUTION NO. OB- 2015 -0 A RESOLUTION OF THE OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE FINDING THE THIRD AMENDMENT (2016) TO THE STADIUM INTERIM MANAGEMENT AGREEMENT IS IN THE BEST INTERESTS OF THE TAXING ENTITIES AND CONFIRMING APPROVAL OF THE THIRD AMENDMENT (2016) WHEREAS, the Oversight Board to the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore ( "Oversight Board ") has been established to direct the Successor Agency to take certain actions to wind down the affairs of the former Redevelopment Agency of the City of Lake Elsinore in accordance with the California Health and Safety Code; and WHEREAS, by adoption of its Resolution No. OB 2012 -013 on December 11, 2012, the Oversight Board approved the Stadium Interim Management Agreement dated January 1, 2013 by and between the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore and the Lake Elsinore Storm LP (the "Interim Agreement') and following such approval by the Oversight Board and the Successor Agency, the Interim Agreement was submitted to and reviewed by the State Department of Finance; and WHEREAS, by adoption of its Resolution No, OB 2013 -007 on September 24, 2013, the Oversight Board approved the First Amendment to Stadium Interim Management Agreement dated January 1, 2014 by and between the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore and the Lake Elsinore Storm LP (the "First Amendment') and following such approval by the Oversight Board and the Successor Agency, the First Amendment was submitted to and reviewed by the State Department of Finance; and WHEREAS, by adoption of its Resolution No. OB 2014 -005 on September 23, 2014, the Oversight Board approved the Second Amendment to Stadium Interim Management Agreement dated January 1, 2015 by and between the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore and the Lake Elsinore Storm LP (the "Second Amendment') and following such approval by the Oversight Board and the Successor Agency, the Second Amendment was submitted to and reviewed by the State Department of Finance; and WHEREAS, by adoption of its Resolution No. OB 2015 -004 on September 22, 2015, the Oversight Board approved the Third Amendment (2016) to the Stadium Interim Management by and between the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore and the Lake Elsinore Storm LP (Third Amendment (2016)) and following such approval by the Oversight Board and the Successor Agency, the Third Amendment (2016) was submitted to and reviewed by the State Department of Finance; and OVERSIGHT BOARD RESOLUTION NO. OB 2015 -0_ Page 2 WHEREAS, the Department of Finance has returned Oversight Board Resolution 2015 -04 approving the Third Amendment (2016) to the Oversight Board for its reconsideration; and WHEREAS, the Oversight Board has reconsidered the Third Amendment (2016), and given the Successor Agency's pre - dissolution enforceable obligations to operate and maintain the Stadium as set forth in the Stadium Operations Contracts, given the Successor Agency's lack of resources to otherwise comply with those obligations, and given the possibility of litigation were the Successor Agency to fail to meet such obligations, the Oversight Board finds it to be in the best interest of the Taxing Entities to approve the entry by the Successor Agency into the Third Amendment (2016); and WHEREAS, the Interim Agreement and the First and Second Amendments have been successfully implemented to provide for efficient and cost effective management, maintenance and operation of the Diamond Stadium but, absent a third amendment, the Interim Amendment will expire on December 31, 2015; and WHEREAS, consistent with the legislative authorization contained in AB 1484 allowing successor agencies to enter into enforceable obligations for the purpose of maintaining the assets of the former redevelopment agency, the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore seeks to provide for the continued, efficient and cost effective management, maintenance and operation of the Stadium and to retain the Storm to carry out such continuing obligations on an interim basis for calendar year 2016 in accordance with the proposed Third Amendment (2016) to the Interim Agreement; and WHEREAS, pursuant to Health and Safety Code Section 34169 a "Recognized Obligation Payment Schedule" that lists all obligations of the former redevelopment agency that are enforceable within the meaning of subdivision (d) of Section 34167 for the six month period January 2016 — June 2016 (the "ROPS 15 -16B ") which lists, among other things, as enforceable obligations of the Successor Agency, the following obligations related to the Lake Elsinore Diamond Stadium (the 'Stadium "): (i) License Agreement; (ii) Maintenance Agreement; (iii) Concession Agreement; (iv) Stadium operations and maintenance obligations, and (v) the Interim Agreement (as amended by the proposed Third Amendment (2016) was approved by the Successor Agency and the Oversight Board on September 22, 2015. NOW, THEREFORE, THE OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. The Recitals set forth above are true and correct and incorporated herein by reference. SECTION 2. Based on the information presented in the staff reports and testimony received, the Oversight Board finds (i) that the proposed Third Amendment OVERSIGHT BOARD RESOLUTION NO. OB 2015 -0 Page 3 (2016) to the Interim Agreement is reasonable and necessary to satisfy the Successor Agency's enforceable obligations and to protect and maintain the assets of the former Redevelopment Agency, (ii) that Real Property Tax Trust Fund (RPTTF) revenues set forth in the ROPS 15 -16B include funds necessary to meet the Successor Agency's enforceable obligations with respect to the Stadium, including the proposed Third Amendment (2016) to the Interim Agreement, and (iii) that the Third Amendment (2016) to the Interim Agreement is in the best interests of the taxing entities. Based on the above findings, the Oversight Board approves the Third Amendment (2016) to the Stadium Interim Management Agreement by and between the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore and the Lake Elsinore Storm LP SECTION 3. The Executive Director is hereby authorized to enter into the Third Amendment and, if required to comply with any findings of the Department of Finance in connection with its review of Recognized Obligation Schedule (ROPS) 15 -16B or this resolution, make such changes as necessary such that the Third Amendment can be implemented in accordance with the ROPS approved by the Department of Finance. The Executive Director is further authorized to take such additional actions as he deems necessary to effectuate the foregoing. SECTION 4. If any provision of this Resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Resolution which can be given effect without the invalid provision or application, and to this end the provisions of this resolution are severable. The Oversight Board hereby declares that it would have adopted this Resolution irrespective of the invalidity of any particular portion thereof. OVERSIGHT BOARD RESOLUTION NO. OB 2015 -0_ Page 4 SECTIONS. This Resolution shall take effect from and after the date of its passage and adoption in accordance with applicable law. PASSED, APPROVED AND ADOPTED at a special meeting of the Oversight Board to the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore, held this 15th day of December, 2015 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Genie Kelley, Vice - Chairperson Oversight Board to the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore ATTEST: Susan Domen, , Oversight Board Secretary THIRD AMENDMENT (2016) TO STADIUM INTERIM MANAGEMENT AGREEMENT THIS THIRD AMENDMENT (2016) TO STADIUM INTERIM MANAGEMENT AGREEMENT (the "Third Amendment "), dated for identification as of September 22, 2015, is made by and between the SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE ( "Successor Agency "), and the LAKE ELSINORE STORM LP, a California limited partnership ("Storm")- RECITALS The following recitals are a substantive part of this Amendment: A. The Successor Agency and the Storm entered into that certain Stadium Interim Management Agreement dated January 1, 2013 (the `Interim Agreement') to provide for the performance by the Storm of certain maintenance, upkeep, and operations of the Premises (as defined in the Interim Agreement). Capitalized terms used herein which are not otherwise defined herein shall have the meaning ascribed to them in the Interim Agreement. B. The Interim Agreement was successfully implemented during calendar year 2013 to provide for efficient and cost effective management, maintenance and operation of the Premises. C. In order to provide for the efficient and cost effective management, maintenance and operation of the Premises for calendar year 2014, the Successor Agency and the Storm entered into that certain First Amendment (2014) to Stadium Interim Management Agreement dated September 24, 2013 (the "First Amendment'). D. In order to provide for the efficient and cost effective management, maintenance and operation of the Premises for calendar year 2015, the Successor Agency and the Storm entered into that certain Second Amendment (2015) to Stadium Interim Management Agreement dated September 23, 2014 (the "Second Amendment'). E. The obligations set forth in the Interim Agreement, First Amendment, and Second Amendment have been included in prior Recognized Obligation Payment Schedules approved by the Successor Agency, the Oversight Board of the Successor Agency ( "Oversight Board ") and the Department of Finance ( "DOF "). F. The Second Amendment will expire on December 31, 2015 and the parties desire to enter into this Third Amendment to provide for the efficient and cost effective management, maintenance and operation of the Premises for calendar year 2016. G. Capital repairs for 2016 of approximately $3,286,912, as included in this Third Amendment, reflect that the Stadium is twenty two (22) years old and in need of significant capital repairs, including, without limitation, replacement of Stadium seating, improvements to comply with revisions to the Americans with Disabilities Act, retrofitting of plumbing, Thiid Amendment to Stadium Inlenm Management Agt Final - I - containment of run -off to comply with the National Pollutant Discharge System imposed by the Environmental Protection Agency, improvements to and replacement of the heating, ventilation and air condition (HVAC) system, repaving of the parking lots and replacement of old equipment. H. In accordance with AB 1484, a Recognized Obligation Payment Schedule will be adopted for the period from January 1, 2016 through ,Tune 30, 2016 (herein referred to as the "ROPS 15 -16B ") and for all subsequent Recognized Obligation Payment Schedule periods. AB 1484 sets forth the review period and authority of DOF to review and approve Recognized Obligation Payment Schedules. 1. On September 22, 2015, the Oversight Board and the Successor Agency will consider approval and adoption of the ROPS 15 -16B which includes the obligations set forth in this Amendment and lists, among other things, as enforceable obligations of the Successor Agency, the following obligations related to the Premises as more fully described and referenced therein: (i) Concession License Agreement, as amended ( "Concession Agreement "); (ii) License Agreement, as amended ( "License Agreement "); (iii) Stadium Field and Maintenance Agreement, as amended ( "Maintenance Agreement "); (iv) Stadium operations and maintenance obligations; and (v) The Stadium Interim Management Agreement. J. Following approval of the ROPS 15 -16B by the Oversight Board and the Successor Agency, the ROPS 15 -16B will be transmitted to the DOF for its review and approval. K. Consistent with the legislative authorization contained in AB 1484 allowing successor agencies to enter into enforceable obligations for the purpose of maintaining the assets of the former Redevelopment Agency, the Successor Agency seeks to provide for the continued efficient and cost effective management, maintenance and operation of the Premises for calendar year 2016 and to retain the Storm which possesses the experience and qualifications to carry out such continuing obligations on an interim basis so as to ensure that the "Lake Elsinore Storm," a single "A" baseball team which is a member of the California League of the National Association of Professional Baseball and owned by Storm LP, continue to play its home baseball games at the Stadium. L. In furtherance of the purpose and intentions of the parties as with respect to the Interim Agreement, the parties hereto agree to amend the Interim Agreement as provided herein. AGREEMENT NOW THEREFORE, in consideration of the foregoing Recitals and the terms contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows: Third Amendment to Stadium Inteltn Management Agt Final- - 2 - I. Term of Agreement; Termination. Section 6 of the Interim Agreement, entitled "Term of Agreement; Termination," is hereby deleted in its entirety and replaced with the following: 6. Term of Agreement; Termination 6.1. Term. The term of the Interim Agreement (hereinafter the Fern ") shall commence on the Effective Date and shall, unless earlier terminated in accordance with Sections 6.2, 19, or 20 hereof, automatically terminate on December 31, 2016. 6.2. Rights of Termination Prior to Commencement and Expiration of the Term (a) January 1, 2016 Termination. Successor Agency may terminate this Interim Agreement prior to the Commencement Date, by giving written notice thereof to the Storm no later than November 30, 2015. (b) June 30, 2016 Termination. Successor Agency may terminate this Interim Agreement effective as of June 30, 2016, by giving written notice thereof to the Storm no later than May 30, 2016. (c) Default. The Successor Agency and Storm shall have the right to terminate this Interim Agreement as a result of an uncured Default hereunder. Any such termination shall be made in accordance with Sections 19 or 20. (d) Party's Property and Offset. Upon termination of this Interim Agreement under this Section 6.2, all materials and equipment purchased by either party hereunder in connection with this Interim Agreement shall remain that party's property. In addition, the Storm shall be entitled to an offset for all of the Storm's services rendered hereunder through the effective date of any such termination. (e) Effect of Termination. Notwithstanding the termination of this Interim Agreement pursuant to this Section 6.2, the provisions of Stadium Operations Contracts shall remain in full force and effect. 2. Compensation. Section 7 of the interim Agreement, entitled "Compensation," is hereby deleted in its entirety and replaced with the following: 7. Compensation 7.1. Stadium Operations Contracts Compensation Recap. Pursuant to the Stadium Operations Contracts, the Storm and /or the Successor Agency are entitled to compensation during the Term as follows: (a) 2016 License Tee: Under the License Agreement, the Stony is required to pay to the Successor Agency a License Fee in the amount of $497,297 for 2016. Third Amendment to Stadium Interim Management Agi Pina1 -3 - (b) Percentage of Concessions: Under the Concession Agreement, the Storm's affiliate, Golden State, is required to pay Successor Agency a percentage of the GRCS pursuant to Section 6 thereof (the "GRCS Concession Fee. "). (c) Annual Maintenance Fee: Under the Maintenance Agreement, Successor Agency is required to pay Storm an Annual Maintenance Fee of $232,159 for 2016. 7.2. Storm Compensation January 1, 2016 — December 31, 2016. Commencing upon the Commencement Date (January 1, 2016) and continuing through the expiration of the Term (December 31, 2016) and as consideration for the performance of the services set forth herein, the Storm shall be compensated as follows: (a) Assignment of GRCS Concession Fee. Successor Agency hereby assigns Successor Agency's right to payment of the GRCS Concession Fee under the Concession Agreement to the Storm during the Term, estimated at $34,000 annually; and (b) Waiver of License Fee. Successor Agency hereby waives Successor Agency's right to payment of the License Fee under the License Agreement during the Term as an offset against the payments due by the Successor Agency to the Storm hereunder; and (c) Payment of Maintenance Fee. Successor Agency shall continue to pay the Annual Maintenance Fee as identified in Section 7.1(d) (i.e., $232,159). (d) Payment of Additional Interim Management Fee. Successor Agency shall pay to Storm $445,589, payable in equal monthly installments ( "Additional Interim Management Fee "). The Maintenance Fee along with the Additional Interim Management Fee Will result total cash payment from the Successor Agency to the Storm of $667,752 as consideration for services provided under the Stadium Operations Contracts and this Interim Agreement, which aggregate amount shall be payable in equal monthly installments of $56,646. The Storm acknowledges and agrees that in no event will the Agency be required to provide the Storm with any other form of payment for performance of the services as provided in this Interim Agreement. The parties acknowledge that the historic operating costs of the Stadium equal or exceed the compensation due to Storm hereunder and that it is in each of the party's best interests to enter into this Agreement for the efficient use and operation of the Stadium. 3. Capital Repairs. Section 8 of the Interim Agreement, entitled "Capital Repairs," is hereby deleted in its entirety and replaced with the following: 8. Capital Repairs. Capital Repairs shall be governed by the applicable provisions of the Stadium Operations Contracts. A Capital Repair Schedule with estimated costs budgeted for ROPS 15 -16B and 16 -17A is set forth in Exhibit "C" attached hereto and incorporated by reference herein. I and Amendment to Stadium Interim Managemenl Apt Final -4- The Successor Agency's Executive Director or designee ( "Executive Director ") will designate certain Capital Projects that shall be subject to the Department of Public Works' direct administration of the bid process and award of contract consistent with the applicable legal requirements. The Storm will undertake and complete Such other Capital Repairs as set forth in Exhibit "C" as are mutually agreed. To the extent that The Storm undertakes such other Capital Repairs not undertaken by the Successor Agency, The Storm shall obtain not less than three (3) bids from qualified contractors unless otherwise excused by the Executive Director. Without limiting the Executive Director's discretion, the bidding requirement herein may be excused in situations involving emergencies and sole source contractors. In addition, The Storm acknowledges the general requirement that certain Capital Repairs are Subject to the requirements of California Labor Code Section 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 16000, et seq., ( "Prevailing Wage Laws "), which require the payment of prevailing wage rates with respect to certain capital improvements, repairs and maintenance work paid for in whole or in part out of public funds. Accordingly, The Storm agrees to, in the administrative of the bidding and contractor selection process, inform prospective bidders of the requirement to comply with the Prevailing Wage Laws. The Storm may confer with the Executive Director and seek direction with respect to whether or not a certain Capital Repair is subject to the Prevailing Wage Law. Prior to The Storm awarding a contract for a Capital Repair to a qualified contractor, the Executive Director shall: (i) confirm that The Storm has followed the proper bidding procedures for selection of a contractor; and (ii) approve the selection of the contractor and the form of any agreement between The Storm and the contractor. Upon completion of the Capital Repair (or a component thereof supporting a deposit or in- progress reimbursement), The Storm shall deliver to the Executive Director a written reimbursement request and supporting documentation (such as third party invoices, lien releases and cancelled checks). To the extent that the reimbursement request is for a completed Capital Repair, The Storm shall, if applicable, submit as -built drawings or similar plans and specifications for the items to be reimbursed. 4. Accuraev of Recitals. The Parties acknowledge the accuracy of the foregoing Recitals, which are incorporated herein by this reference. Third Amendment to StadlUnl Interim Management Agt Final - 5 - 5. Authority; Priority of Amendment. ']'his Amendment is executed by the Parties' authorized representatives. Except as expressly modified herein, all of the terms of the Interim Agreement shall remain unchanged and in full force and effect, and the Parties shall continue to fulfill thew respective obligations under the Interim Agreement as amended by this Amendment. To the extent of any conflict between the terms of the Interim Agreement and the terms of this Amendment, the terms of this Amendment shall control. 8. Captions. The captions appearing in this Amendment are for convenience only and are not a part of this Amendment and do not in any way limit, amplify, define, construe, or describe the scope or intent of the terms or provisions of this Amendment. 9. Counterparts. This Amendment may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute but one and the same document. 10. Commencement Date. Unless earlier terminated in accordance with Section 6.2(a), the provisions of this Amendment shall commence on January I, 2016 (the "Commencement Date")- 'Fhnd Amend inent to Sladimmn Interim Managemonl Agl Final - 6 - IN WITNESS WHEREOF, the parties have executed this Amendment on the respective dates set forth below. Dated:_ ATTEST: "SUCCESSOR AGENCY" SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE, ELSINORE By: SUCCESSOR AGENCY ACTING SECRETARY By: Diana Girbn APPROVED AS TO FORM: LFIBOLD McCLENDON & MANN, P.C. Successor Agency Counsel By: Barbara Leibold Grant Yates, Executive Director "STORM" LAKE ELSINORE STORM LP, a California limited partnership By: GJJ STORM MANAGEMENT, LLC, a California limited liability company Its: General Partner Dated: By: Gary E. Jacobs, Manager Third Amendment to Stadium Interim Management Agt Pina] -. % — EXHIBIT "C" CAPITAL REPAIR SCHEDULE See Attached EXHIBIT "C' LAKE ELSINORE STORM - DIAMOND STADIUM CAPITAL REPAIR SCHEDULE THIRD AMENDMENT TO TI4E INTERIM MANAGEMENT AGREEMENT CAPITAL REPAIR Reirofi111VAC. system Repaving parking lots A& 13 Stadium seating Rapaili fugstaditmt green (remaining steeland pipes) Diamond Club furniture Desert landscaping stadium Sewer Lift Station Concessions /Plumbing Reho fit Diamond Club Lights liome/Visitor Lockcr Room Carpet Diamond Club Refurbishment Electrical Upgrade. FunZone Replace Wall Padding Stadium backstop netting Souvenir Lighting & Ceiling Tiles Flooring & painting (Visitorrs side /Home Side /Press Box) Press Box renovation Toilots,'hash Can, Tables First Aid Roam Upgrade Media Room Upgrade Bathrooms Qipoty - OPS /Fanny) Refurbish Counting Boom Diamond Club Wood & Cabinet - Refinish Security Room Capet/ Wood Replacement Outfield Fencing Equipment ReptecemenC Forklift John Deere Pro Gator maintenance John Dem'e Aerator Polaris Ranger Cleaning (:art Honda Plat Compactor Honda FC600 Walk Behind Tiller Two Generators Fairtender Conditioners Shaft Blades Gaut Drive EXHIBIT "U" ROPS 15 -16B HOPS 16 -17A § 1.03,234.06 $ - - 345,000.00 350,000.00 075,000.00 - 100,000.00 29,500.00 - - 40,000.00 350,000.00 - 230,500.00 275,000.00 22,000.00 - 30,000.00 - - 14,000.00 - 24,000.00 55,000.00 - 45,000.00 - 20,000.00 - 64,000.00 - 28,500.00 - 59,600.00 - 17,500.00 - -. 12,000.00 - 21,000.00 16,000.00 - 14,000.00 - 4,667.00 - 15,000.00 - 30,000.00 - 27,500.00 - 19,800.00 - 15,000.00 - 15,000.00 - 8,010.00 - 2,1.50.00 - 2,100.00 - 4,050.14 - 7,800.00 - $ 1,580,912.00 $ 1,706,000.00 ar z w IIII n o � DEPARTMENT OF EDMUND G. GROWN JR. GOVERNOR OAOPU%rN%P F I N AN c 91 S L STREET • SACRAMENTO MAN 9591 �- 3906 `I WWW.00c.cA.FOV November 18, 2015 Mr. Jason Simpson, Director of Administrative Services City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 Dear Mr. Simpson: Subject: Objection of Oversight Board Action The City of Lake Elsinore Successor Agency (Agency) notified the California Department of Finance (Finance) of its September 22, 2015 Oversight Board (OB) resolution on October 2, 2015. Pursuant to Health and Safety Code (HSC) section 34179 (h), Finance has completed its review of the OB action. Based on our review and application of the law, the Agency's OB Resolution No. OB- 2015 -004, related to the approval of the Third Amendment to the Stadium Interim Management Agreement between the Agency and the Lake Elsinore Storm, LP, is not approved. MSC section 34181 (e) allows an oversight board to determine whether any contract, agreement, or other arrangement between the dissolved redevelopment agency and private parties should be terminated or renegotiated to reduce liabilities and increase net revenues to the taxing entities. The oversight board is also allowed to approve any amendments to or early termination of those agreements if it finds that amendments or early termination would be the best interests of the taxing entities. This amendment, however, would increase the estimated Capital Repair Schedule costs by $1,921,912 to a total of $3,286,912, and therefore would not be in the best interests of the taxing entities. Although HSC 34171 (d) (1) (F) allows contracts or agreements necessary for the maintenance of assets prior to disposition, the type of costs identified in relation to the increased contract amount are capital repairs that go beyond the scope of maintaining the property, such as purchase of replacement stadium seating and equipment (e.g., Forklift and Polaris Ranger), media room upgrade, and Diamond Club wood and cabinet refinishing. As authorized by HSC section 34179 (h), Finance is returning your OB action to the board for reconsideration. Mr. Jason Simpson November 18, 2015 Page 2 Please direct inquiries to Cindie Lor, Supervisor, or Satveer Ark, Lead Analyst, at (916) 445 -1546. ager cc: Mr. Grant Yates, Executive Director, City of Lake Elsinore Ms. Pam Elias, Chief Accountant Property Tax Division, Riverside County