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15-0602_SOUTH COAST INVESTOR_F15_Agenda ReportTO: FROM: DATE: SUBJECT: City of San Juan Capistrano Agenda Report Honorable Mayor and Members of the City Council 6/2/2015 F15 Charles View, Development Services Direct~ 'tF \\-- Prepared by: Sergio Klotz, Assistant Development Services Directo &J June 2, 2015 Consideration of Assignment and Assumption of Development Agreement for the Plaza Banderas Hotel and Mixed Use Project (South Coast Investor II, LLC, a Subs idiary of Rivendell Land Company, Inc.) RECOMMENDATION : By motion, adopt a Resolution approving the assignment and assumption of the Stroscher G3, LLC interest in the Development Agreement, for the Plaza Banderas Hotel and Mixed Use Project to South Coast Investor II , LLC a subsidiary of Rivendell Land Company, Inc. EXECUTIVE SUMMARY: On July 5, 2011, the City Council adopted Ordinance No. 988 approving a Development Agreement between Stroscher G3 , LLC and the City , allowing development of a 124- room hotel , office/retail building and restaurant on property consisting of 3 .18 acres of land located at the northeast corner of Ortega Highway and El Camino Real. Stroscher G3, LLC has sold ownership of the property and development of the project and is seeking the City's consent to assign the Development Agreement to the new owner, South Coast Investor II , LLC a subsidiary of Rivendell Land Company, Inc. Section 2 .5 of the Development Agreement provides that Stroscher G3, LLC may assign any of its rights under the Development Agreement , subject to written consent of the City, which consent shall not be unreasonably withheld . DISCUSSION/ANALYSIS: Assignment of the existing Development Agreement (Attachment 1) may be granted provided that: a) The proposed assignee is an entity legally formed and qualified to do business in California; City Council Agenda Report June 2, 2015 Page 2 of 3 b) Evidence is provided that the proposed assignee has the ability to comply with the Development Agreement; c) Owner and assignee execute an Assignment and Assumption Agreement to which the assignee expressly assumes all of the Owner's obligations under the Agreement; and d) The City shall bear no expenses in connection with such assignment. Staff has analyzed the applicant's request for assignment and finds the following: a) The Secretary of State's website identifies that Rivendell Land Company, Inc. is a corporation in good standing with the State and an entity legally formed and qualified to do business in California; b) Documentation has been provided demonstrating that Rivendell Land Company, .Inc. and its subsidiary South Coast Investors II, Inc. has the ability to comply with the Development Agreement. The applicant has provided documentation outlining development projects successfully executed (Attachment 2); c) The applicant has provided a copy of the executed Assignment and Assumption Agreement transferring the rights, title and interest, as well as to keep, perform and be bound by all of the terms, covenants and conditions under the Agreement (Attachment 3). The City Attorney has reviewed the Assignment and Assumption of Development Agreement document and confirmed compliance with the Development Agreement; and d) The cost for processing the assignment will be charged to the initial deposit paid by the applicant. FISCAL IMPACT: The cost for processing the assignment will be charged to the initial deposit paid by the applicant. ENVIRONMENTAL IMPACT: The request to assign a development agreement is exempt from review under the California Environmental Quality Act (CEQA). PRIOR CITY COUNCIL REVIEW: • On July 5, 2011, the City Council approved the Development Agreement. City Counci\ Agenda Report June 2, 2015 Page 3 of 3 COMMISSION/COMMITTEE/BOARD REVIEW AND RECOMMENDATIONS: • On December 14, 2010 the Planning Commission forwarded the Development Agreement to the City Council with comments. NOTIFICATION: Consideration of a Resolution to assign a development agreement does not require public notification. ATTACHMENT(S): Attachment 1 --:-Section 2.5, Transfers and Assignments of Development Agreement Attachment 2 -Rivendell Land Company Development Portfolio Attachment 3 -Privately Executed Assignment and Assumption of Development Agreement Between Seller and Buyer Attachment 4 -Draft Resolution 2.5 Transfers and Assignments. 2.5.1 STROSCHER ("Owner'') shall not assign all or any part of this Agreement without the prior written approval of the CITY. Such written approval by the CITY shall not be unreasonably withheld, provided that: (a) if Owner's proposed assignee is an entity, such entity shall be legally formed and qualified to conduct business in the State of California; (b) Owner shall have delivered evidence to CITY that Owner's proposed assignee has the ability to comply with the Agreement; (c) Owner and its/their assignee execute an assignment and assumption agreement pursuant to which the assignee expressly assumes all of Owner's obligations under the Agreement; and (d) CITY shall bear no expenses in connection with such assignment. Notwithstanding any other provision of this Agreement, Owner need not obtain the prior written approval of CITY for the assignment of this Agreement to a limited liability company, limited partnership or corporation wholly-owned by, or under Owner's control. ATTACHMENT 1 RivendeH Land Company, Inc. 31866 Camino Capistrano, San Juan Capistrano, CA 92675 • Ph: (949} 496·1316 • Fax (949} 4915-1274 • info@RivendalllandCompanycom May 26,2015 Honorable Mayor and Members of the City Council City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Re: Consent to the Assignment of the Plaza Band eras Development Agreement Dear Mayor Reeve and Members of the Council: We respectfully request that you consent to the assignment of the Development Agreement for the Plaza Banderas project from Stroscher G3, LLC to South Coast Investors tl, Inc. which Is a wholly owned subsidiary of Rlvendell Land Company. Rivendelt land Company is a family owned real estate Investment and development company with over 35 years of significant Southern California real estate and development experience. The Griffith famfly have been residents in San Juan Capistrano for 30 years. Pursuant to section 2.5.1(b) of the Development Agreement, we have been asked by City staff to submit evidence that the proposed assignee has the ability to comply with the Development Agreement. We provide the following information to you as evidence of not only our ability, but also our commitment to develop the hotel site in a manner that will not only add value to the entire Historic Town Center but also be an Important asset bringing benefits to all of San Juan Capistrano residents for the future. Rivendell Land Company, Inc. is recognized as one of the premier master developers of planned communities, office and industrial centers in southern California. Our award winning developments are noted for their innovative design, attention to de tall and quality of construction. Rivendell has developed properties valued in excess of $400 million. We are ready, willing and able to execute this project in compliance with the conditions of approval and the provisions of the development agreement. More specifically: 1. We purposely purchased this property to develop it as a Hotel Site under the approvals previously given by the City of San Juan Capistrano and under development assurances granted in the Development Agreement. In addition to the cash that we committed in the purchase, we immediately committed an additional $672,000 in cash for the construction of a water line within the Ortega Highway interchange project to ensure that the conditions of the project relating to water service standards were satisfied. 2. Since acquiring the site we have re-engaged and contractually retained many ofthe prior focal professional design consultants to restart t~e development process. A list of the professional development team is attached. ATTACHMENT 2 3. We have actively engaged with several potential internationally recognized and industry leading hotel operators to evaluate their interest in operating an entry level luxury hotel (Four Star/Full Service) tn the Historic Town Center of San Juan Capistrano. The results have been ve,ry encouraging and we are confident that a selection will be made in the very near future. 4. We have been in communication with Historic Town Association, the Chamber of Commerce, the Mission staff and Board, as well as many department heads within the City of San Juan Capistrano. We are committed to developing Mission Inn San Juan Capistrano In a manner that is consistent with the goals of the General Plan, the Historic Town Center Master Plan, pre-existing development agreement, and.economic development/ fiscal goals of the City of San Juan Capistrano. Mission Inn San Juan Capistrano wlll complement the San Juan Mission both architecturally and operationally. The combination of the Mission and the Mission Inn will become a legacy site at the entrance to our Historic Downtown. An enduring statement of community's values far into the future. The Mission Inn project represents a continuation of our family's ongoing commitment to invest in the historic fabric of Historic San Juan Capistrano. We recently purchased the Egan House {1886) and are In the final stages of lease negotiations to bring this important Heritage site back to life. Exterior restoration work has been on-going and work will commence soon on tenant improvements. We have been fortunate to benefit from the efforts of lise Byrnes in preparing an application to have the Egan House federally registered as a Historic Site, We are proud of our long term involvement in downtown San Juan. Our work and positive investment in town has shown on other properties, such as The Esslinger Building (1939 1) which we restored and proudly received recognition from the City leaders in May 2.004 as recipients of the Mayor's Community Pride Award. We sat on the steering committee for the HTC Master Plan with other Important stake holders, and we are also founding members of the Historic Town Association. Jn addition to the hotel project, we are very excited to start another significant project In downtown San Juan this summer. In June we will commence construction on a large exterior renovation proJect of the Capistrano Clock Tower Buildlng,just east of the Vans shopping center. This project will significantly improve the aesthetic of the southern gateway into downtown. Attached is a list of other properties which we own and manage in the downtown area of San Juan. We look forward to working with the City Council and community leaders in bringing forward a quality project that reflects the values and commitment we have demonstrated In our other ventures in San Juan Capistrano. Sincerely, M. William J. Griffith President Rlvendellland Company Owned and Managed San Juan Capistrano Properties We have 12 buildings totaling 112,000 square feet, with 60 separate business tenants which employee approximately 450 people locally. Name Esslinger Building Egan House Serra Plaza Bank of America Los Rios Plaza Capistrano Clock Tower United Health Care (Ross Medical) Solana Rincon Capistrano Village Center Address 31866 Camino Capistrano 31892 Camino Capistrano 31910 and 31920 Del Obispo 31902 Del Obispo 31897 and 31899 Del Obispo 32332 Camino Capistrano 32312 Camino Capistrano 32302 Camino Capistrano 32272 and 32282 Camino Capistrano Mission Inn San Juan Capistrano Design Team Consultant Trade Development Manager Architect Landscape Architect Civil Engineer Geotechnical Water Dry Utility FEMA Parking Company Name Friess Property Company Roy Nunn Architecture Land Concern Hunsaker and Associates GMU Dexter Wilson Engineering Butsko Utility Engineering Tory Walker Engineering International Parking Design RECORDING REQUESTED BY AND WHEN RECORDED, MAIL TO: Rivendell Land Company, Inc. 31866 Camino Capistrano Swt Juan Capistrano, CA 92675 Attn: WilHam J. Griffith (Space Above For Recorder's Use) ASSIGNMENT AND ASSUMPTION OF DEVELOPMENT AGREEMENT This ASSIGNMENT AND ASSUMPTION OF DEVELOPMENT AGREEMENT (this "Assignmenf') is made wtd is effective as of the date of recordation hereof {the "Effedive Date"), by and between STROSCHER G3, LLC, a California limited 1iability company (''Assignor'') and RIVENDELL LAND COMPANY, INC., a California corporation ("'•Assignee'). RECITAL The City of San Juan Capistrano, a municipal corporation {the .. City'') and Assignor entered into that certain Development Agreement (Plaza Banderas Hotel and Mixed Use Project) dated as of July 5, 2011 and recorded in the Official Records of Orange County, California on August 4, 2011 as Instrument No. 2011000382.839(the "Development Agreement). Capitalized tenns used and not defined herein sha11 have the meanings set forth in the Development Agreement. NOW, THEREFORE, for good and va1uable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follows: 1. Assignment. Assignor does hereby transfer and assign to Assignee all of its right, title and interest in and to, and obligations under, the Development Agreement (and all documents and instruments relating to or implementing the Development Agreement) with respect to the Property. 2. Assurnotion. Assignee hereby accepts said assignment and agrees to keep, perform and be bound by all the terms, covenants and conditions contained in the Development Agreement (and al1 documents and instruments relating to or implementing the Development Agreement) relating to the Property, on the part of the Owner or Developer therein, which accrue and are to be performed subsequent to the date hereof, as though Assignee were the original Owner or Developer under the Development Agreement. 3. Condition Precedent. This Assignment is conditioned on and shall be effective only upon recordation of a deed conveying fee title to the Property to Assignee. In the event such condition is not satisfied within ninety (90) days from the date hereof, this Assignment shall terminate and be of no further force or effect ATTACHMENT 3 IN WITNESS WHEREOF, the parties have caused this Assignment and Assumption of Development Agreement to be duly executed as of the date first above written. ASSIGNOR: STROSCHER G3, LLC, a California limited liability company ~~ By;l~~-~/um~ Name: G ~rC H eAl s a oscwlff.l= THOM?o,J Title: f'&€SiD6A l T A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document State of California ) CountyofOF&Rge ~~ ) On(Y\o.rc:bl=a 3 0L5 .beforeme,~A ·~~ n~ ~~.rltc_ c r . IIIIIIC: ll1d title of the ol1ker)1 -....=o->, t" ..._, Notary Public, personally appeared w e::tc:h eo ste t:>>c:bf! C ::J-b~o N , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) isl&~~e subscribed to the within instrument and acknowledged to me that he/she/~ executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument I certify under PENAL 1Y OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. SigMtu~Q ~ 265010160S2-0031 1193826 (Seal) RESOLUTION 15-06-02-XX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN CAPISTRANO APPROVING ASSIGNMENT OF DEVELOPMENT AGREEMENT FOR THE DEVELOPMENT AGREEMENT BY AND BETWEEN THE CITY OF SAN JUAN CAPISTRANO AND SOUTH COAST INVESTORS II, LLC WHEREAS, Daniel Friess, on behalf of South Coast Investors II, LLC a subsidiary of Rivendell Land Company, Inc., has requested approval of Assignment of the "Plaza Banderas and Mixed Use Project Development Agreement" for the "Development Agreement By and Between the City of San Juan Capistrano and Stroscher G3, LLC, dated July 5, 2011 (the "Development Agreement"); and, WHEREAS, if approved, the proposed "Assignment of the DevelopmentAgreement" ("proposed DA Assignment") would assign the Development Agreement to South Coast Investors II, LLC; and, WHEREAS, Section 2.5 of the DevelopmentAgreement provides that Stroscher G3, LLC may assign any of its rights under the Development Agreement, subject to written consent of the City, which consent shall not be unreasonably withheld; and, WHEREAS, the California Secretary of State's website identifies that South Coast Investors II, LLC is a California limited liability company in good standing with the State and an entity legally formed and qualified to do business in California; and, WHEREAS, documentation has been provided to the City demonstrating that South Coast Investors II, LLC has the ability to comply with the Development Agreement. The applicant has provided documentation outlining developme-nt projects successfully executed; and, WHEREAS, the applicant has provided a copy of the executed Assignment and Assumption Agreement transferring the rights, title and interest to South Coast Investors II, LLC, as well as obligating South Coast Investors II, LLC to keep, perform and be bound by all of the terms, covenants and conditions under the Agreement (Attachment 3); and WHEREAS, the cost for processing the entitlement will be charged to and paid by the applicant; and, WHEREAS, the project has been reviewed in accordance with the California Environmental Quality Act (CEQA) by the City's Environmental Administrator who has determined that the project is exempt from further review pursuant to Section 15061 (b )(3) of the CEQA Guidelines because it can be seen with certainty that there is no possibility that this assignment may have a significant effect on the environment; and, 1 ATTACHMENT 4 WHEREAS, the City Council conducted a duly-noticed public meeting on June 2, 2015 to consider the proposed "Assignment of the Development Agreement." NOW THEREFORE, the City Council does hereby approve the"Assignment of the Development Agreement." PASSED, APPROVED AND ADOPTED this 2nd day of June 2015. DEREK REEVE, MAYOR ATTEST: MARIA MORRIS, CITY CLERK 2