HomeMy WebLinkAboutR05-Redevelopment Agency
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Redevelopment Agency · City of San Bernardino
300 NarIh "I)" SIIeeI, Faurlh Floor . San BomonIiDo, CoIifamia 92418
(714) 384-5081 FAX (714) 888-9413
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Ste_ H. Bullett
EaflClllive Director
JUNE 30, 1989
PACE WAREHOUSE-CERTIFICATE OF COMPLIANCE
Synopsis of Previous Commission/Council/Committee Action:
07-07-86 Approval In concept of Owner's Participation Agreement.
07-21-86 Resolution 4908-Commlsslon Approved (In concept) Owner's
Participation Agreement.
(continued on page 2)
(COMMUNITY DEVELOPMENT COMMISSION)
Recommended Motion:
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Move to authorize the execution of a Second Amendment to Owner's
Participation Agreement and Issuance of a Certificate of Compliance for
Haagen-Trl-Clty Center.
u ett,
Supporting data attached: Yes
FUNDING REQUIREMENTS: None
Ward:
1st
Project: TC
Commission Notes:
Agenda of: July 5. 1989
Item No. .5
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Redevelopment Agency
c::; (contInued from page 1)
07-28-86 ResolutIon 4909-Commlsslon ratIfIed executIon of Owner's
PartIcIpatIon Agreement.
07-05-88 ResolutIon 5126-Commlsslon approved FIrst Amendment to Owner's
PartIcIpatIon Agreement.
06-29-89 CommIttee recommended that developer's request for a CertIfIcate of
ComplIance be forwarded to CommIssIon for consIderatIon.
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Redevelopment Agency
S T A F F R E P 0 R T
Haagen-Trl-Clty Center, developer of the Pace Warehouse project, has requested
that the Agency Issue a Certificate of Compliance. Although Haagen's
obligations under the Owner's Participation Agreement (OPA) are not
technically complete, they have substantially finished the project. Staff's
recommendation Is that a Second Amendment be executed and a Certificate of
Compliance Issued. The amendment will provide that no reimbursements from the
Agency will be due until the completion of construction and Issuance of a
certificate of occupancy for a Yoshlnoya Beef Bowl restaurant.
BACKGROUND
On July 23, 1986, the Redevelopment Agency entered Into an OPA with Haagen
-Trl-Clty Center for the development of a 167,000 square foot development In
the Trl-CltyProject Area to Include a Pace Warehouse discount store. Sports
Club was to have located In the center as well, but Instead went across the
freeway Into the Slmchowltz "Club" development. Haagen, however, was able to
sign Sportmart, a discount sporting goods store reqUiring about two thirds the
space that would have been occupied by Sports Club. A First Amendment to the
OPA was executed on July 5, 1988, reflecting the downsized bulldout and
stricter parking requirements and proportionately reducing the Agency's first
five years reimbursement obligation.
To date, Pace Warehouse, Sportmart and a retail shop building have been
completed. The remaining construction obligation Is approximately 3,500
square feet of retail. Haagen has signed a ground lease with Yoshlnoya West
Beef Bowl Restaurants for the final retail pad and construction should begin
In the next few months. The following table represents the current status of
the development:
Per Aqreement
Actual
Variance
Value $12,450,000 (est.) $11,080,915 $1,369,085
Sq. Ft. 151,000 (approx.) 147,510 3,490
Completion June 30, 1987 Not yet completed 2 yrs.
It should be noted that the amended OPA calls for "approximately" 151,000
square feet with an "estimated" value of $12,450,000. As such, Haagen has
completed about 98t of the square footage required. In terms of value,
although the most current County Assessor's records Indicate a value of about
$11,081,000, Haagen plans to sell the center In August for $14,700,000. The
sale should trigger a new assessment, resulting In a valuation $2,250,000
higher than required by the amended OPA.
The Redevelopment Agency's obligation Is to make reimbursement payments up to
a maximum of $1,162,400. The first five year's payments represent
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reImbursement for upgraded design and landscapIng, and amount to $72,480 per
year. Payments durIng years sIx through fIfteen are reImbursements for the
performance of operatIons, are capped at $160,000 per year and are based upon
sales tax generated by the center (actual payment, however, Is made from
Redevelopment Agency tax Increment revenues>. ReImbursement payments are not
to begIn untIl construction has been completed and a certIficate of occupancy
has been Issued for the Yoshlnoya Beef Bowl restaurant.
By letter dated June 27, 1989 (copy attached>, Haagen requested that the
Agency Issue a CertIfIcate of ComplIance so that Its escrow can go forward.
The request would seem reasonable, gIven that they are wIthIn 21 of the square
footage requIrement and that the sale should result In a new assessed
valuatIon equal to the sales prIce of $14,700,000. Haagen has also agreed
that, If for any reason the escrow dId not close, the CertIfIcate of.
ComplIance would be returned to the Agency.
Haagen wIll also enter Into a Second Amendment reaffIrmIng that, regardless
that a CertIfIcate of Compllance'may have been Issued, reImbursement payments
from the Agency wIll begIn only upon completIon of constructIon and Issuance
of a certifIcate of occupancy for the restaurant. We wIll also ask that
Haagen provIde us wIth sales tax data requIred to determIne the amount of
payments for years sIx through fIfteen.
Attached for your reference are copIes of the CertIfIcate of ComplIance,
proposed Second Amendment, June 27, 1989 letter from Haagen, an analysIs by
Agency Counsel and a locatIon map.
RECOMMENDATION
It Is, therefore, requested that the CommIssIon authorize and the CouncIl
approve the Issuance of a CertIfIcate of ComplIance to and the executIon of a
Second Amendment wIth Haagen-Trl-Clty Center, provIdIng that reImbursement
payments from the Agency shall not begIn untIl completIon of constructIon and
Issuance of a certIfIcate of occupancy for the restaurant.
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80. 10010
"'ANMATTAN ...CH. CAuFOIINIA 802....)10 . 21.'.......20 . FAX ...5-84515
June 27, 1989
Mr. Steve Dukett
Executive Director
San Bernardino Redevelopment Agency
300 North "D" Street
San Bernardino, CA 92418
Dear Steve:
Pursuant to the OWner's Participation Agreement between the
Redevelopment Agency of the City of San Bernardino and Haagen-
Tri-City Center dated July 23, 1986, I would again like to
request that the Agency execute the Certificate of Compliance
evidencing the completion of our requirements under the OPA.
As you know, the Pace Membership Warehouse, which was the
principal inducement for the Agency entering into this Agreement,
has been open and operating for over two years now.
We have executed a lease for the remaining freestanding pad
site in the project area and are in the process of recording a
permanent loan with Metropolitan Life Insurance Company and in a
second transaction we will be selling the Center for a price of
$14,700,000 ($2,250,000 greater than the estimated value of the
development as stated in the OPAl.
Due to the permanent loan financing and pending sale, Haagen
Tri-City requests the City provide an executed Certificate of
Compliance to be placed into our loan escrow with the
instructions to the escrow agent to record the Certificate upon
closing of the permanent financing. The closing of the loan is
scheduled for July 11, and the sale closing is scheduled for
August 31, 1989. Your assistance in expediting this matter would
be greatly appreciated.
Please call me so that we may facilitate the preparation of
any necessary documents.
Very truly yours,
V ~". - ..1
~our ~ek
SK:db
cc: Alexander Haagen
Chris Fahey
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CITY OF SAN BERNARDINO
.INTEROFFlCE MEMORANDUM
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TO:
Steven H. Dukett, Executive Director
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FROM:
Dennis A. Barlow, Sr. Asst. City Attorney
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DATE:
June 29, 1989
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HE:
Pace Warehouse Project
At our meeting of June 28, 1989 regarding the proposal to
sell the above project, several issues were raise~ which must be
resolved. Some of these are legal questions but primarily they
are policy issues.
One question is whether or not the ~eveloper has met the
required estimated value. As I understand, John Wood was going
c:J to check with the Assessor to see if they had a more recent value
on the roll.
The difficulty is to obtain an independent third
party determination of value. The developer suggests that the
sales price should confirm their assertion of value. That mayor
may not be so.
The sales price could take into consideration
other benefits or inducements such as the income stream from the
Owners' Participation Agreement or the ongoing business
relationship between the parties.
These considerations could
make the actual value higher or lower than the sales price.
These considerations should be discussed with the developer.
I also understand that there is some question relating to
the "approximate" square footage requirement.
Although the
Agreement contains "approximate" language it also requires that
c:> site plans be submitted and approved, which was done. The
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Memo
Re:
June
to Steven H. Dukett
Pace Warehouse Project
29, 1989
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developer, however, has not completed construction of all the
structures shown on these plans.
If they were completed the
actual square footage would meet the estimated square footage.
As it stands. the development is within 2 to 2 1/2 percent of the
estimated size.
Another issue relates to the payment of prevailing wage for
off-site public improvements. I understand that your records
show that such off-site improvements were completed, but that the
developer is indicating that this may not be the case.
In addition the Agreement requires that mature trees be
planted along 1-10 and there is some question whether those that
have been planted meet that requirement.
Up to this point the Agency has taken the position that the
project is not completed and therefore the payments required to
be made under the Agreement have not commenced. If a certificate
of completion is issued then the payments would begin.
Finally it would be naive to assume that what we do with
this project would not affect what the relationship of the same
parties would be in regard to the Wests ide Shopping Center
project. Perhaps if we give something here, we should get
something in return out there. But in any event, we should
consider the effect of our actions on the larger picture.
I understand that the following issues are going to be
reviewed by your staff:
1. Independent determination of value.
2. Will the buyer or the seller have the benefit and
any remaining responsibility of the Owners' Participation
Agreement?
3. Were off-site public improvements completed?
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June
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4. If so, were prevailing wages
to Steven H. Dukett
Pace Warehouse Project
29, 1989
paid for such work.
5. The age of the trees planted along 1-10.
6. What are the plans for the not-yet-constructed
restaurant?
7. Can the developer be responsible for providing ,
sales tax information for the center which is used to
calculate the payments under the Agreement?
8. What is our evaluation of the effect of our actions
on this project on the Westside Shopping Center project?
staff or the committee conclude need to be prepared.
As I indicated I stand ready to draft whatever document
BY~
/D NIS A. LOW
DAB: br
June 29, 1989
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CERTJ:FZCA'l'B OF CX)MpLZANCB
FOR PROPERTY OWNER'S PARTZCZPATZON AGREEMENT
WHBREAS, Haagen-Tri-Ci~y Cen~er, a general par~nership
hereinaf~er referred ~o as ~he -Owner Pa~icipant-, has entered
in~o a Proper~y Owner's Par~icipation Agreement with the
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, CALIFORNIA,
hereinafter called ~he -Agency-: and
WHEREAS, said Proper~ Owner's Participation Agreement, was
da~ed the 23rd day of July, 1986 and was amended on the 5th day
o of July, 1988: and
WHBRBAS, in Section 10 of said Property Owner's
Par~icipation Agreemen~ and amended pursuan~ ~o ~he first
Amendment ~o Agreemen~, ~he Owner Participant and ~he Agency
agreed ~at upon the completion by the Owner Par~icipant of the
improvements, namely to develop an epproximately 151,000 square-
foo~ re~ail complex ~o inClude Pace Warehouse Store, in a manner
satisfac~ory ~o ~he Agency and subsequent ~o ~e issuance of a
Ce~ifica~e of Occupancy by the City of San Bernardino, the
Agency would cause ~o be prepared and recorded a Certificate of
Compliance.
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NOW, 'l'IIBRBPORB, BB %'1' RESOLVED by the ReeSevelopment Agency
of t:he Cit:y of San BernareSino, California, t:hat t:he Agency does
hereby eSetermine, conclusively certifies, aneS gives notice that
the Owner Participant has fully satisfieeS, terminateeS, aneS
completeeS, for itself, its successors aneS assigns, all covenants
aneS agreements with respect to the Obligations of Owner
Participant for the buileSing upon aneS improvements to said land,
carrieeS out in conformit:y with t:he fire, health, aneS building
code requirements of the City of San BernareSino, aneS the
provisions of the ReeSevelopment Plan for the Tri-City
ReeSevelopment Project Area, and t:he Declaration of Restrictions,
aneS in accordance with the final plans aneS specifications
approveeS by the Agency, aneS the eSates for the beginning and
completion thereof, provideeS for in said Agreement, upon the
hereinafter eSescribed real proper1::y:
A twelve acre parcel of laneS in the Tri-cit:y Project Area
bounded on the west by the Gage Canal, on the north by Harriman
Place, on the south by the 1-10 Freeway, and lying westerly of
Tippecanoe Avenue. The exact legal description is as follows:
Lots 25 and 26, Tract No. 12034, in the Cit:y
of San Bernardino, Count:y of San Bernardino,
State of California, as per plat recoreSeeS in
Book 168 of Maps, Pages 75 through 87,
inclusive, RecoreSs of Said Count:y.
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IN WI7NBSS WHEREOF, the Agency has caused this certificate
to be duly executed on its behalf and its seal to be hereunto
affixed and attested on this
day of
,
1989.
REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO
CHAIRMAN
SECRETARY
APPROVED AS TO FORM
AND LEGAL CONTENT:
BY:~)
~gency sel
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SBCOND AMENDMENT '1'0 PROPBI<'1'Y OWNER'S
PARTJ:CJ:PATJ:ON AGRBBMBNT
IlAAGBN-TRJ:-CJ:TY CENTER
TRJ:-CJ:TY PROJECT AREA
SAN BERNARDJ:NO, CALJ:FORNJ:A
THJ:S SBCOND AMENDMENT TO AGREEMENT, ma~e an~ entere~ into
this
~ay of
, 1989, by an~ between the
COMMUNJ:TY DEVELOPMENT COMMJ:SSJ:ON OF THE CJ:TY OF SAN BERNARDINO on
behalf of THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO,
a public bo~y corporate an~ politic ("Agency"), an~ HAAGEN-TRI-
CITY.CENTER, a general partnership ("Participating OWner"):
WJ:TNESSBTH:
WHERBAS, the parties have entere~ into that certain Property
o OWner's Participation Agreement dated July 23, 1986, providing
for development of approximately a 167,000 square foot retail
complex with payments to be ma~e by Agency to Participating OWner
of $80,000 per year for five years, along with other incentives,
which total payments were not to excee~ $1,200,000; and
WHEREAS, the parties have entered into a First Amendment to
sai~ Agreement ~ate~ July 5, 1988, to ~own-size the ~evelopment
to approximately 151,000 square foot retail complex with
resultant changes in the incentives; and
WHEREAS, the parties desire to further amend the Agreement
to provide that the Participating OWner will be responsible for
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providing sales ~ax data, and ~ha~ ~he ~ayments ~o be made under
~he Agreemen~ will no~ commence until full comple~ion of the
developmen~ and af~er all certifica~es of OCcupancy are issued by
~he Ci~ of San Bernardino,
NOW 'l'HEREFORE, '1'HB PARTZES HERETO AGREE AS FOLLOWS:
1. Paragraph 1 of Exhibi~ "B" attached ~o the above-
referenced Agreemen~, as amended,. is fur~her amended ~o
provide ~hat comp1e~ion of cons~ruction shall be determined
when all cons~ruc~ion shown on ~e plans approved pursuant
~o paragraph 3 of Exhibi~ "C" have been comp1e~ed, and to
provide that commencement of operations shall be determined
when Certificates of Occupancy have been issued by the City
of San Bernardino for the free standing pad as disclosed on
said approved plans.
2. Paragraph 2 of Exhibi~ "B" attached to the above-
referenced Agreement, is amended ~o provide that the
Participating Owner may provide the necessary sales tax data
to ~he Agency ~o use in calculating ~he paymen~s to be made.
Agency shall re~ain ~he righ~ ~o confirm such da~a from
o~her sources.
3. Excep~ as amended herein, said Property Owner's
Par~icipa~ion Agreement, as amended, shall remain in full
force and effec~.
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IN WI~NBSS WHBRBOF. ~he par~ies here~o have executed
~his Agreemen~ on ~he day and da~e firs~ above shown.
APPROVED AS TO FORM
AND LEGAL CONTENT:
BY:~4 J
~gency Co sel
COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF SAN BERNARDINO
By:
Chairman
By:
Secre~ary
HAAGEN-~RI-CITY CENTER
A General Par~nership
By:
Ti~le
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