HomeMy WebLinkAboutR05-Redevelopment Agency
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I RE~VELOPMENT AGENCY .~UEST FOR ~MMISSION/COUNCIL Ac:JON
From: Glenda Saul, Executive Director
,"".' t: Redevelopment Agency
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Date: June 10, 1986
Su bject:
CHUCK KING & ASSOCIATES - SElP
Synopsis of Previous Commission/Council action:
6/29/78 Resolution No. 3674 adopted to condemn property.
5/7/79 Motion to negotiate a direct sale between San Bernardino Industrial
Park, Inc., and Chuck King & Associates and to dismiss a previously
filed condemnation action.
8/18/80 Resolution No. 4097 authorized an amendment to the Disposition &
Joint Development Agreement between the Agency and King Industrial
Park.
Recommended motion:
(MAYOR & COMMON COUNCIL)
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Move to authorize the City Attorney to take the legal steps necessary to
enforce the provisions of the Disposition & Joint Development Agreement by and
between the Redevelopment Agency of the City of San Bernardino, California and
San Bernardino Industrial Park, Inc. and King Industrial Park dated September
11, 1979.
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Signature
Glenda Saul
Supporting data attached:
YES
Phone: 383-5081
1
Contact person:
FUNDING REOUIREMENTS:
Amount: $
Cost of
No adverse Impact on City:
Date:
16, 1986
Council Notes:
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1052G/JH
06/16/86
Agenda Item No.
5
.CI1COF SAN BERNARDIQ) - REQUEC1 FOR COUNCIL AeON
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75-0264
STAFF REPORT
Staff has calculated that King Industrial Park owes the Agency $26,000 for "In
Lieu" payments under their development agreement. Mr. King's representatives have
twice offered to settle for $4,00 to $5,000.
While counsel felt there was some merit to part of the arguments made by Mr.
King's attorney, the Redevelopment Committee is recommending to the Commission
that they pursue legal steps to collect the full $26,000 because settling for less
would set an undesirable precedent.
Background
In 1979, the Agency entered into an agreement with King Industrial Park for the
development of approximately 9 acres located at Tippecanoe and Cooley Avenue. The
development was for a 145,000 square foot industrial park, to be constructed over
four years. In 1985, one parcel had been developed, one sold and two remained
undeveloped.
Under the agreement with King, the developer agreed to pay to the Agency $2,000
per year, per lot for each lot not improved in accordance with the build-out
schedule. Under these terms, King was required to pay $26,000 as a penalty for
not developing the property.
The agreement further provided that the Agency would consider suspending or
waiving this penalty in the event of poor economic conditions which would prevent
development. Such suspension or waiver was not sought at the time. In 1985, King
sought Agency approval for the release of property from his agreement and he
offered a settlement of $4,000 ($2,000 for each of two lots for one year).
In July of 1985, the Redevelopment Committee considered the matter and recommended
pursuit of the full $26,000. Staff wrote letters to King requesting payment and
in March of 1986, received a reply from Mr. Hagen (King's attorney). In part, the
reply said:
"Further, it is the position of my clients and my legal opinion that the
proposed build-out provisions, if originally enforceable at all, became
impossible to fulfill because of the intervening economic conditions during
the period in question in the City of San Bernardino including this
particular property. Interest rates were such that even if the property was
owned free and clear (which was the case with my clients), one could not
build a structure on the premises and lease the premises for the then
existing rental rates and cover the debt overhead on the building. This fact
was well known to the Redevelopment Agency and so far as can be determined,
the Agency did not attempt to enforce any of the build-out provisions. To do
so may have been an impermissible taking without appropriate compensation."
Mr. Hagen increased the settlement offer slightly by proposing an amount of $4,000
to $5,000.
In reviewing Hagen's letter, Agency Counsel felt:
1052G/JH
06/16/86
.CITe OF SAN BERNARDI~ - REQUE~ FOR COUNCIL ACT.,N
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7s..0264
STAFF REPORT
"There clearly is a breach of the (development) agreement, but Mr. Hagen's
position that the breach is excused because of commercial impossibility
brought on by conditions beyond the developer's control may have some
validity. If truly impossible, the court might regard that as a defense.
(Impossibility is a valid defense if it can be established that no one could
have complied under the circumstances; inability of the developer is no
defense unless developers in eneral would have found development impossible
or at least extremely impractical. ..
On June 5, 1986, the Redevelopment Committee reviewed Mr. Hagen's repeated offer
and is recommending to the Commission that they authorize the City Attorney to
pursue collection of the $26,000 owed by taking the necessary legal steps. The
Committee feels that accepting less would set an unfortunate precedent that would
hinder us in the future.
1052G/JH
06/16/86