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HomeMy WebLinkAboutR05-Redevelopment Agency - - L .' c o 0 Redevelopment Agency · City of San Bernardino 300 NarIh "I)" SIIeeI, Faurlh Floor . San BomonIiDo, CoIifamia 92418 (714) 384-5081 FAX (714) 888-9413 o PrIde ~ ~- " o 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: o 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 o ...._ __.,.c.~~...- c o o o 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. o o SHD:JH:sm:2120H 2 ~.......:..;:..: c o o o ~ o o o 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 SHD:JW:sm:2120H 3 ., h o '0 o o R_~~mm~mq o o o 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. SHD:JW:sm:2120H 4 " " o o o 1 c o o o gAe ..r#h-rfi'~~ t:?~. ~, ek. 31500 ..~.IED" aOUU:V..ltD 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 ~ ~ ~ 0 '. Q < 0 o -... ,.... -, o . - " . " CITY OF SAN BERNARDINO .INTEROFFlCE MEMORANDUM - " ~. y - -J '/ . '.' TO: Steven H. Dukett, Executive Director .- FROM: Dennis A. Barlow, Sr. Asst. City Attorney -' '". - '" ~. ':1} .... .. . DATE: June 29, 1989 .. "'" ..... -. ..' ~ 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 1 o ~ o o c o o o Memo Re: June to Steven H. Dukett Pace Warehouse Project 29, 1989 ... 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? 2 o o o o Memo Re: June o o o 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 3 c o o o .. o 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. o 1 ~ ~ o o o () o o o 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. 2 c '. o o o o o o 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 3 t c o o o , o 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 o 1 c o o o o o 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~. o 2 -- : ~ o o o c o o o , 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 3 5"""'-""'- ... . - C' "', . . . f' . - .. .' . ('. c :) ( . . '(C ,-0 ..0 '""" "" i ~ - U . rl - ~l r