Loading...
HomeMy WebLinkAbout0004_3_Implementation Agrmt - Exhibit B Agreement1 3788140.2 SECOND IMPLEMENTATION AGREEMENT PURSUANT TO AMENDED AND RESTATED DISPOSITION AND DEVELOPMENT AGREEMENT, SUMMERLY THIS SECOND IMPLEMENTATION AGREEMENT PURSUANT TO AMENDED AND RESTATED DISPOSITION AND DEVELOPMENT AGREEMENT (“Agreement”) dated for identification purposes only as of January 24, 2017 is made and entered into by and among the SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE, a public body, corporate and politic (“Successor Agency”), MCMILLIN SUMMERLY, LLC, a Delaware limited liability company (“Developer”), and CIVIC PARTNERS- ELSINORE LLC, a California limited liability company (“Master Developer”) (each, a “Party,” or, collectively, the “Parties”). RECITALS The Successor Agency, Master Developer and Developer have entered into this Agreement with reference to the following recitals, which are a substantive part of this Agreement: A.On June 8, 1993, the City Council of the City of Lake Elsinore (“City”) adopted Ordinance No. 955 approving and adopting the East Lake Specific Plan (“ELSP”). The ELSP covered approximately 3,000 acres of property, more specifically described therein, and provided for up to 9,000 residential dwelling units, as well as commercial, recreational and open space uses. B.The property included within the East Lake Specific Plan is situated within the Rancho Laguna Project Area II Redevelopment Plan and the Rancho Laguna Project Area III Redevelopment Plan (the “Redevelopment Plans”) adopted by the former Redevelopment Agency of the City of Lake Elsinore (“Agency”) in accordance with Part 1 of Division 24 of the Health and Safety Code of the State of California, as amended (the “Redevelopment Law”). C.In furtherance of the objectives of the Redevelopment Plans, on or about December 26, 2002, the Agency, Master Developer and Laing-CP Lake Elsinore, LLC (“Original Developer”)entered into a Disposition and Development Agreement (“2002 DDA”) relating to the acquisition and development of certain property located within the ELSP (“Project,” also referred to herein as “Summerly”). 2 3788140.2 D.The ELSP was amended on August 24, 2004 when the City Council adopted Ordinance No. 1126 approving and adopting East Lake Specific Plan Amendment 6 ("SPA 6") covering a 706.7 acre portion of the Specific Plan Area referred to as the Developer Property. When SPA 6 was approved in August, 2004, it provided for development of up to 1,955 dwelling units on 326.3 acres of residentially designated property (6 DU/Acre; RES-1)). It also included an approximate 13-acre site proposed for a future elementary school in the center of the development (Parcel 18), subject to school district approval and acquisition of the site. An underlying land use designated of RES-1 was established for Parcel 18. E.On or about March 8, 2011, Agency, Developer (as successor in interest to Original Developer),and Master Developer, entered into that certain Amended and Restated Disposition and Development Agreement (“DDA”), which amended and restated the 2002 DDA.1 F.Thereafter, the California State Legislature adopted and the Governor signed several budget trailer bills to implement the State Budget for Fiscal Year 2011-2012, including AB x1 26 (Stats. 2011, 1st Ex. Sess. 2011-2012, Ch. 5) (“Dissolution Act”) and AB x1 27 (Stats. 2011, 1st Ex. Sess. 2011-2012, Ch. 6) (“VARP Legislation”) addressing redevelopment (collectively, "Redevelopment Restructuring Legislation"). The Dissolution Act provided for the dissolution of all redevelopment agencies no later than November 1, 2011, and the VARP legislation permited an agency to be exempted from the Dissolution Act upon the payment of certain funds (“Remittance(s)”) and satisfaction of various other conditions. G.On November 22, 2011 the Parties entered into the First Implementation Agreement Pursuant to [Amended] Disposition and Development Agreement for the purpose of assisting City in funding its Remittance amount for 2011-2012 as determined by the Department of Finance pursuant to the VARP Legislation. Thereafter, the California Supreme Court upheld the constitutionality of AB x1 26, but invalidated AB x1 27, rendering the First Implementation Agreement unenforceable. H.Pursuant to AB X1 26 2 as of February 1, 2012, all redevelopment agencies in the State were dissolved, including the Agency, and successor agencies were designated as 1 Capitalized terms not defined in this Agreement shall have the meaning given such terms in the DDA 2 The primary provisions enacted by AB X1 26 relating to the dissolution and wind down of former redevelopment agency affairs are Parts 1.8 (commencing with Section 34161) and 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code of the State, as amended on June 27, 2012 by Assembly Bill No. 1484, enacted as 3 3788140.2 successors-in-interest to the former redevelopment agencies and charged with expeditiously winding down the affairs of the former redevelopment agencies. I.On January 10, 2012, pursuant to Resolution No. 2012-001 and Sections 34171(j) and 34173 of the Dissolution Act, the City Council of City elected to serve as successor agency to the Agency and, on February 14, 2012, the City Council held its first meeting as the governing body of the Successor Agency. In accordance with the Dissolution Act, the Successor Agency succeeded to the rights and obligations of the Agency, including, without limitation, all rights and obligations of the Agency under the DDA. J.On June 30, 2015 the Successor Agency submitted a request to the California Department of Finance (“DOF”) for a final and conclusive determination regarding the DDA pursuant to California Health & Safety Code section 34177.5 (i). The irrevocable pledge of property tax increment made by the DDA is reported on the Successor Agency’s recognized obligation payment schedule (“ROPS”) as ROPS item 12 and ROPS item 13 for the Summerly DDA Extraordinary Infrastructure Fund. On November 19, 2015, DOF issued its final and conclusive determination, finding both ROPS items to be enforceable obligations. K.The first tentative subdivision tract map for Summerly, Amendment 1 to Tentative Tract Map 31920, created a total of 1,481 single family building lots3. Parcel 18, the potential future school site, was left un-subdivided by Amendment 1. 4 L.The school district later determined that the proposed school was unnecessary and that it did not intend to acquire the site for future school development. Thus, Parcel 18 reverted to its residential land use designation. M.Five additional amendments to the East Lake Specific Plan were approved and adopted, including East Lake Specific Plan Amendment 10 (“SPA 10”) adopted on August 13, 2013 by Ordinance 2013-1316 and East Lake Specific Plan Amendment 6 Erratum (“SPA 6 Erratum”) adopted April 26, 2016 by Ordinance 2016-190. N.The recreation center for the Summerly Project was originally located on Planning Area 46 (Parcel 27) (originally designated as open space in SPA 6). However, when the City determined that small park sites within the Summerly Project were not consistent with Chapter 26, Statutes of 2012 and further amended by Senate Bill 107, enacted as Chapter 325, Statutes of 2015 (as amended from time to time, the “Dissolution Act”). 3 The final map (31920-6) was approved with one additional unit making the total mapped units 1482. 4 Pursuant to the RES 1 designation of 6 DU/acre, a total of 78 separate lots were authorized for Parcel 18. 4 3788140.2 its overall park goals and elected to reconvey ownership of Planning Area 42 (Parcel 19) (also designated as open space under SPA 6) to the Developer, the recreation center was moved from Planning Area 46 (Parcel 27) to Planning Area 42 (Parcel 19), where it would be more centrally located within and more readily accessible to future residents of the Summerly community. This relocation of the recreation facility to Planning Area 42 (Parcel 19) eliminated the need for a recreation facility on Planning Area 46 (Parcel 27). O.SPA 10 changed the land use designation of Planning Area 46 (Parcel 27) from Open Space to RES-1, permitting the construction of 24 additional residential units on the approximately 4 acre parcel. P.Amendment 2 to Tentative Tract Map No. 31920 was concurrently approved on August 13, 2013, implementing the land use change for Planning Area 46 (Parcel 27), mapping a total of 17 residential units on Parcel 27, and reconfiguring the lots in the adjacent Parcel 26 to limit changes to the circulation system and maintain consistent lot sizes. Q.Later, SPA 6 Erratum changed the land use designation of the former school site, Parcel 18, to RES-2 and adjusted the acreage split between Parcel 18 and Parcel 19 (the recreation center site). SPA 6 Erratum allowed changes to the maximum number of dwelling units permitted on Parcel 18 from 78 (at 6 du/ac authorized by RES-1) to 182 (at 14 du/ac authorized by RES-2). R.Amendment 3 to Tentative Tract Map 31920 was concurrently approved on April 26, 2016 to subdivide Parcel 18 into 95 additional individual building lots, increasing the total number of residential lots within the Summerly project to 15955, a number well below the 1,955 approved as part of SPA 6. S.On April 10, 2012, the City and Developer entered into an Amended and Restated Park Implementation Agreement (“Park Agreement”) to implement the park land dedication and improvement provisions of City's Quimby Act Resolution No. 89-44, Government Code Sections 38501-38510, SPA 6, Tract No. 31920, and the First Amended and Restated Development Agreement for Summerly entered into pursuant to California Government Code Sections 65864-65869.5 and Chapter 19.12 of the Lake Elsinore Municipal Code Chapter 19.12 and to coordinate the phasing of such improvements with the provisions of the DDA. 5 Final tract map 31920-16 was approved on March 24, 2015 with one additional lot bringing the total mapped units to 1500 prior to Amendment 3 to TTM 31920. 5 3788140.2 T.The Park Implementation Agreement made minor changes to the original ELSP and SPA 6 by providing for one large improved "regional park" on Lot 29, foregoing Developer constructed park improvements in Lot 28 (which also provides water retention capacity and an EVMWD pump station facility), and relinquishing ownership of Lot 19. U.Pursuant to Section 501.2 of the DDA, the scope of the Project and the subsequent development on the Developer Property are established as provided in SPA 6, the conditions of approval to Tract Nos. 31920-1 through 31920-6, and related entitlements and development permits, as the same may be amended, modified and supplemented. V.The Project on the Developer Property is divided into eight Phases, described as Phase 1 and Phases A through G as depicted on Attachment 8 to the DDA (each, a “Phase”); and included in each Phase is the Backbone Infrastructure Scope of Work as described in Attachment 1 to the DDA. Further, Attachment 20 to the DDA sets forth a matrix of required infrastructure improvements and the timing for commencement of each. W.Neither Parcel 18 (the former school site) nor Parcel 27 (the former recreation center) was included in any Phase of the Project as depicted on Attachment 8 to the DDA. X.The minor modifications to the ELSP and SPA 6 made by the Park Agreement create some inconsistencies with Attachment 20 to the DDA concerning the commencement of various park improvements. Y.The Parties desire to enter into this Agreement in order to: (i) implement the provisions of SPA 10, the second Amendment to Tentative Tract Map 31920, the provisions of SPA 6 Erratum and the Third Amendment to Tentative Tract Map 31920 (as the same may be amended, modified and supplemented) in so far as they affect the Phased development of the Project on the Developer Property pursuant to the DDA, (ii) implement the provisions of the Park Agreement in so far as it relates to the commencement of park improvements reflected on Attachment 20 to the DDA; and (iii) acknowledge and confirm the Parties’ intent that (a) such amendments and modifications, as approved by the City, which are generally consistent with the density and intensity of use of the Developer Property as provided in SPA 6, are deemed consistent with the scope of the Project on the Developer Property as contemplated by the DDA, (b) Developer may modify the Phases of the Project to reflect modifications in the subdivision map for Summerly, Tentative Tract Map 31920 and modifications made by the Park Agreement, subject to City’s and Successor Agency’s determination at the Pre-Commencement Meeting that Developer is prepared to proceed with Commencement of such Phase (as 6 3788140.2 modified from time to time), including all Backbone Infrastructure Scope of Work (as modified from time to time), and (c) the Successor Agency has the right to issue bonds secured by property tax increment pledged in the DDA in accordance with Health & Safety Code Section 34177.5(a)(4) because the DDA includes the irrevocable commitment and pledge of property tax increment, formerly tax increment revenues, DOF has determined the pledge under the DDA to be an enforceable obligation, and the DDA includes the obligation to issue bonds secured by that pledge. NOW, THEREFORE, upon the Effective Date, for and in consideration of the mutual covenants hereinafter contained, the Parties hereto agree as follows: OPERATIVE PROVISIONS 100.IMPLEMENTATION OF DDA; EFFECTIVE DATE; AUTHORITY 101.Implementation of DDA. This Agreement is entered into to effectuate the purposes of the DDA, clarify the respective rights and obligations of the parties thereunder, and facilitate the development and completion of the Project on the Developer Property in accordance with the DDA. 102.Effective Date. This Agreement shall become effective upon signature hereof by the Executive Director. 103.Agency Authority. The Executive Director has the authority to execute this Agreement on behalf of the Successor Agency. By Resolution No. 2011-005, the Agency Board authorized the Executive Director to administer the DDA on behalf of the Agency and to sign all documents and instruments necessary to implement and carry out the DDA on behalf of the Agency in such form as is reasonably acceptable to Agency Counsel. Further, pursuant to Section 905 of the DDA, the Executive Director has the authority to approve certain clarifications of the DDA that do not materially change Agency’s rights or obligations thereunder. The clarifications and agreements set forth herein do not materially change Agency’s rights or obligations under the DDA. 200.RELOCATION AND ADDITION OF LOTS 201.Elimination of Small Park Sites. The Parties hereby acknowledge and agree that, pursuant to the Park Agreement, (a) no Developer constructed park improvements are required on Lot 28, and (b) Lot 19 was determined to be no longer necessary to serve the public 7 3788140.2 park purpose for which it was originally dedicated and so was reconveyed to Developer. Attachment 20 to the DDA requires Developer to improve Lots 19 and 28 upon the occurrence of certain events, which such requirements now need to be deleted. Accordingly, Attachment 20 to the DDA is hereby deleted and replaced in its entirety with Exhibit A attached hereto and incorporated herein by reference. 202.Relocation of Recreation Center. Pursuant to SPA 10, it is hereby acknowledged and agreed that the Recreation Center has been relocated from Parcel 27 to Parcel 19. The relocation of the Recreation Center to Parcel 19 as part of the Project on the Developer Property is not material in connection with the overall scope of the Project. 203.Reconfiguration and Phasing of Parcel 27. Pursuant to the Second Amended Tentative Tract Map 31920 and SPA 10, it is hereby acknowledged and agreed that Parcel 27 has been subdivided into seventeen (17) lots. Parcel 27 will be included in Phase G along with Parcel 23 and Parcel 26 and shall be developable in accordance with the terms and conditions of such Phase. No additional Backbone Infrastructure is required in connection with the subdivision of Parcel 27 and its inclusion in Phase G. Accordingly, Attachment 1 to the DDA shall remain unchanged. 204.Reconfiguration and Phasing of Parcel 18. Pursuant to the Third Amended Tentative Tract Map 31920 and SPA 6 Erratum it is hereby acknowledged and agreed that Parcel 18 has been subdivided into 95 RES 2 lots. For purposes of the DDA, Parcel 18 will be included in Phase D along with Parcels 15 and 16 and shall be developable in accordance with the terms and conditions of such Phase. No additional Backbone Infrastructure is required in connection with the subdivision of Parcel 18 and its inclusion in Phase D. Accordingly, Attachment 1 to the DDA shall remain unchanged. 205.Amendment to Attachment 8. To implement the revisions to the Project on the Developer Property reflected in the Second Amended Tentative Tract Map 31920 and SPA 10, and the Third Amended Tentative Tract Map 31920 and SPA 6 Erratum, Attachment 8 of the DDA is hereby deleted and replaced in its entirety with Exhibit B attached hereto and incorporated herein by reference. 206.Future East Lake Specific Plan and Tentative Tract Map 31920 Modifications and Phase Revisions. Developer may make application to modify the provisions of the East Lake Specific Plan and the subdivision map for Summerly, Tentative Tract Map 31920, during the remaining term of the DDA in accordance with applicable land use regulations of the City. 8 3788140.2 The Parties’ hereby confirm that (a) such amendments and modifications, as approved by the City, which are generally consistent with the density and intensity of use of the Developer Property as provided in SPA 6 are deemed to be de minimus and consistent with the scope of the Project on the Developer Property contemplated by the DDA; and (b) Developer may modify the Phases of the Project to reflect approved modifications in the subdivision map for Summerly, Tentative Tract Map 31920, subject to City’s and Successor Agency’s right to determine at the Pre-Commencement Meeting that Developer is prepared to proceed with Commencement of such Phase (as modified from time to time), including the Backbone Infrastructure Scope of Work relating to such Phase (as modified from time to time). The Parties agree to consider such additional implementation agreements from time to time as may be necessary to reflect and document any future modification in the lot composition of Phases of the Project to accommodate approved modifications to the East Lake Specific Plan and Amendments to the subdivision map for Summerly, Tentative Tract Map 31920, including the making of revisions to DDA Attachment 8, provided that the total number of Phases of the Project on the Developer Property do not exceed eight (8), and that any necessary additions or revisions to the Backbone Infrastructure Scope of Work for any Phase as reflected in Attachment 1 to the DDA are identified and set forth in the proposed implementation agreement. 300.ISSUANCE OF BONDS Health & Safety Code Section 34177.5(a)(4) states that a successor agency shall have the authority, rights, and powers of the redevelopment agency to which it succeeded for the purpose of issuing bonds or incurring other indebtedness to make payments under enforceable obligations when the enforceable obligations include the irrevocable pledge of property tax increment, formerly tax increment, and the obligation to issue bonds secured by that pledge. Section 606 of the DDA makes an irrevocable pledge of property tax increment, formerly tax increment,6 and DOF has determined that the pledge constitutes an enforceable obligation. 6 Section 606 is entitled: “Pledge of Tax Revenues; Miscellaneous Agency Financial Covenants to Protect Developer’s and Master Developer’s Security” and provides in pertinent part as follows: “The pledges of Developer [sic] and Master Developer’s Property Tax Revenues in the 2002 DDA shall remain in full force and effect from and after the 2002 DDA Effective Date. Agency hereby confirms its prior irrevocable pledge of the Developer Property Tax Revenues to Developer for the purpose of securing Developer’s right to receive the unrestricted portion of the Developer’s Share of the Developer Property Tax Revenues that is payable pursuant to Section 602 of this agreement…. In addition, Agency hereby confirms its prior irrevocable pledge of the Master Developer Property Tax Revenues to Master Developer for the purpose of securing Master Developer’s right to receive the Unrestricted Portion of the Master Developer’s Share of the Master Developer Property Tax Revenues that is payable pursuant to Sections 601-603 of this Agreement…. Finally, Agency hereby confirms its prior irrevocable pledge of the Net Available Specific Plan Area Tax Revenues, the Unrestricted Portion of the 9 3788140.2 Additionally, the DDA includes the obligation of the Successor Agency to issue bonds secured by the pledge of property tax increment. Section 607 of the DDA requires that the Agency issue bonds, if requested, to pay the portions of the Tax Revenues owing to Developer and/or Master Developer pursuant to Sections 602.2 (Developer’s and Master Developer’s Unrestricted Share), 604.2 (Extraordinary Infrastructure) and 605 (Priority of payment between Developer and Master Developer).7 The DDA imposes standards and restrictions on the Agency in sizing such bond issues.8 In connection with the Master Developer Cap, the DDA clearly states the parties’ agreement that “as Agency issues and sells Bonds” only the net proceeds from the issuance of bonds will be applied to reduce the Cap.9 The DDA also sets forth the requirement that Agency make a reasonable bond issuance proposal, within the Developer’s Share of the Developer Property Tax Revenues that is attributable to any defaulted Phase of the Project as to which this Agreement has been terminated as provided in Section 807 and the Unrestricted Portion of the Master Developer’s Share of the Master Developer Property Tax Revenues in excess of the Master Developer Payment Cap to Developer for the purpose of securing Developer’s right to receive the Extraordinary Infrastructure Costs payable out of such sources of funds in accordance with section 604 of this Agreement….” “Such pledge(s) shall be to the fullest extent permitted by Section 33671.5 of the Redevelopment Law and any other applicable Governmental Requirements. Such pledges shall be valid and binding and shall constitute a lien and security interest which shall immediately attach from and after the Agreement Date as between Agency and Developer and Agency and Master developer, respectively, provided that such pledge shall not invalidate any pledge made pursuant to the 2002 DDA from and after the 2002 Effective Date against all parties having claims of any kind….” …. Agency further covenants as follows: …. “(c) Agency shall preserve and protect the security of the funds pledged for payment to Developer and Master Developer hereunder and Agency shall not take any action to impair the security or priority of such funds.” …. “(f) Agency shall at all times, to the extent permitted by law, defend, preserve, and protect the pledge of the portions of the Tax Revenues provided to Developer and Master Developer herein and all of the rights created hereunder against all claims and demands of all persons whomsoever.” 7 “From time to time, and upon Developer’s and/or Master Developer’s written request, Agency shall consult and cooperate with Developer and/or Master Developer periodically with respect to the issuance and sale of bonds, notes, or other evidence of indebtedness (herein “Bonds”) secured by Project Area II Tax Revenues and Project Area III Tax Revenues [property tax increment pledged to Developer and Master Developer] to pay to Developer and/or Master Developer, as applicable, the portions of such Tax Revenues owing to each of them pursuant to Sections 602.2, 604.2 and 605 of this Agreement.” (DDA Section 607.) 8 “It is understood that in sizing any issuance of Bonds including any coverage requirements therefor, Agency shall be required to utilize one hundred percent (100%) of the sum of the portions of the Tax Revenues that are, or are projected by an independent financial consultant appointed by Agency to become, available and that are pledged for payment to Developer and Master Developer hereunder….” (DDA Section 607.) 9 “For purposes of this Agreement…as Agency issues and sells Bonds in accordance with Section 607, the reductions of the Master Developer Payment Cap shall be based upon the proceeds of the Bonds actually paid to and received by Master Developer and shall not include any amount attributable to the costs of issuance of the Bonds, capitalized interest, or the like.” (DDA Section 601.2.) 10 3788140.2 context of the standards set forth, and the right of the Developer/Master Developer (not the Agency) to reject any such proposal.10 Accordingly, the Parties acknowledge and agree that because the DDA meets the requirements of Section 34177.5(a)(4), the Successor Agency has the authority to issue bonds secured by the irrevocable pledge of property tax increment, formerly tax increment, made in the DDA. 400.MISCELLANEOUS 401.Interpretation. The agreement of the Parties set forth herein shall supplement, and not supersede, the provisions of the DDA. In the event of any conflict between the provisions of the DDA, as originally in effect, and the provisions of this Agreement, the provisions of this Agreement shall control. In the absence of any conflict, the original provisions of the DDA shall remain in full force and effect. The recitals are a substantive part of this Agreement and are incorporated herein by this reference. This Agreement shall be governed by, and interpreted in accordance with, the laws of the state of California. 402.Severability. The invalidity, in whole or in part, of any provision of this Agreement shall not affect the validity or enforceability of any other of its provisions. 403.Counterparts. This Agreement may be executed in counterparts, each of which so executed shall be deemed an original, and such counterparts together shall constitute one Agreement. [Signature Pages Follow] 10 “Agency shall submit to Developer and Master Developer a reasonable proposal to issue Bonds including the timing, structuring, and marketing of the Bonds and shall consult and cooperate with Developer and/or Master Developer with respect thereto. Developer and Master Developer each shall have the right to reject, each in its sole and absolute discretion, the Agency’s proposal.” (DDA Section 607.) 11 3788140.2 IN WITNESS WHEREOF, the Parties have executed this SECOND IMPLEMENTATION AGREEMENT PURSUANT TO AMENDED AND RESTATED DISPOSITION AND DEVELOPMENT AGREEMENT to be effective as of January 24, 2017 (the “Effective Date”). SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE By: Grant M. Yates, Executive Director APPROVED AS TO FORM: Leibold McClendon & Mann, P.C. By: ___________________________ Barbara Leibold, Successor Agency Counsel ATTEST: _______________________________ Susan M. Domen, Successor Agency Secretary [Signatures Continue On Next Page] 12 3788140.2 MCMILLIN SUMMERLY LLC, a Delaware limited liability company By: PV DEVELOPMENT MANAGEMENT LLC, a Delaware limited liability company, as property manager By: PACIFIC VENTURES MANAGEMENT LLC, a Delaware limited liability company, its Manager By: ______________________________ Name: ___________________________ Title: _____________________________ CIVIC PARTNERS- ELSINORE LLC, a California limited liability company By: ______________________________ Steven P. Semingson, Manager 13 3788140.2 EXHIBIT A Revised DDA Attachment 20 14 3788140.2 EXHIBIT B Revised DDA Attachment 8