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HomeMy WebLinkAbout2015-07-14 - AGENDA REPORTS - SCRDA BLOCK (2)Agenda Item: 18 CITY OF SANTA CLARITA Q) AGENDA REPORT NEW BUSINESS —4 CITY MANAGER APPROVAL: DATE: July 14, 2015 SUBJECT: EXCLUSIVE NEGOTIATION AGREEMENTS FOR OLDToWN NEWHALL REDEVELOPMENT BLOCK AND TRANSFER OF REDEVELOPMENT BLOCK TO THE SUCCESSOR AGENCY DEPARTMENT: Community Development PRESENTER: Jason Crawford RECOMMENDED ACTION City Council: Authorize the City Manager or his designee to enter into an Exclusive Negotiation Agreement with Laenimle Theatre for the development of a portion ofthe Redevelopment Block, subject to approval by the City Attorney. 2. Adopt a resolution to approve and authorize the City Manager or his designee to execute the transfer of real property consisting of nine (9) parcels constituting the Redevelopment Block via Quitclaim Deed from the City of Santa Clarita to the Successor Agency. Successor Agency Board: Authorize the Executive Director or his designee to enter into an Exclusive Negotiation Agreement with Laemmle Theatre for the development of a portion of the Redevelopment Block, subject to approval by the Oversight Board and the California Department of Finance. 2. Authorize the Executive Director or his designee to enter into an Exclusive Negotiation Agreement with Serrano Development Group/Pacific Coast Housing Development for the development of a portion ofthe Redevelopment Block, subject to approval by the Oversight Board and the California Department of Finance. 3. Adopt a resolution to approve the acceptance ofthe transfer of real property consisting of nine (9) parcels constituting the Redevelopment Block via Quitclaim Deed from the City of Santa Clarita to the Successor Agency. goo Page I ARMED BACKGROUND The Redevelopment Agency of the City of Santa Clarita (Redevelopment Agency), in partnership with the City of Santa Clarita (City), acquired a block of property in Old Town Newhall in November 2008. The approximately 2 -acre site encompasses one full City block, directly across the street from the Old Town Newhall Library, bounded by Lyons Avenue to the north, Railroad Avenue to the cast, 9"' Street to the south, and Main Street to the west (the Redevelopment Block). As a result of the dissolution of the Redevelopment Agency as dictated by ABxI 26 and AB 1484 (collectively - the Redevelopment Dissolution Bills), the Redevelopment Block now has multiple ownership interests due to the type of funds used to purchase the property, and includes: the City; the City as the Housing Successor Agency to the former Redevelopment Agency; and the Successor Agency to the former Redevelopment Agency. In March 2011, the parcels constituting the Redevelopment Block were transferred from the former Redevelopment Agency to the City in anticipation of the Legislature's enactment of the first of the Redevelopment Dissolution Bills. As part of the dissolution of the Redevelopment Agency, any property that was owned either wholly or in part by the former Redevelopment Agency, with the exceptions of those determined to be assets of the Housing Successor Agency, are subject to a Long Range Property Management Plan (I.RPMP), which governs the disposition and use of Redevelopment Agency properties. The LRPMP, which was approved by the Oversight Board on December 17, 2013, and approved by the California Department of Finance (DOF) on June 27, 2014, indicated that the Redevelopment Block should be listed for sale. The City still holds title to the Redevelopment Block, a situation that is not unique to Santa Clarita. Many cities that received real property from their Successor Agencies in anticipation of the Redevelopment Dissolution Bills hold title to that property, in good faith, for the purpose of not clouding title to the property and with plans to transfer any funds received from the sale of the property to their respective Successor Agencies for use or distribution consistent with the Redevelopment Dissolution Bills. The DOF recently began addressing this issue and has ordered that parcels must be first transferred to Successor Agencies before they can be disposed of consistent with an adopted LRPMP. As part of the LRPMP submittal, the Oversight Board and the DOF also approved a set of property disposition procedures to guide the process that must be undertaken to sell the property. This included a requirement that potential purchasers submit a proposal for the development of the property that is consistent with the Old Town Newhall Specific Plan. The purpose of this requirement, and the other requirements in the procedures, was to drive the sale of the property to a buyer that will develop the property in a timely manner, meet the City's ultimate goals for the revitalization of the Old Town Newhall area, and provide the best benefit for the taxing entities over the long term, not just at the time of the property sale. The City of Santa Clarita also has a new five year strategic plan called Santa Clarita 2020. It identifies the creation of a partnership and funding strategy for development of the City -owned block in Old Town Newhall to strengthen and grow the Santa Clarita economy. Page 2 Packet Pg RFQ Process To facilitate the sale of the Redevelopment Block, a Request for Qualifications (RFQ) to find one or more development partners was released in November 2014. The RFQ was delivered to over 98 development firms, as well as being posted on the City's website. The RFQ asked potential development partners to submit proposals that would provide for a high quality, mixed- use project on this site that combines retail and residential uses, a theater component, public parking, or other similar uses. The RFQ process included a two -round submittal and evaluation approach, with the following elements: Round One: Respondents were required to provide a letter of introduction, identify key team development members, share relevant project experience, outline details related to how they intend to approach the projects, provide financial data to ensure they have the capital necessary to build this project, and references. Round Two: Selected developers were requested to submit a Letter of Intent that identifies the development proposal, including land uses, massing, financing structure, estimated property value, and any other considerations for the City and the Successor Agency to evaluate as part of their proposal. First round responses were due to the City on January 30, 2015, and five responses were received. City staff and Kosmont Companies, the consultant retained by the Successor Agency to assist with the RFQ process, reviewed the proposals. Kosmont Companies has extensive experience with helping Successor Agencies evaluate proposals from developers. Three proposals were eliminated and two were moved forward to the second round. The three eliminated from the process did not include a theater component in their proposals, nor did they include public parking. The two proposals moved forward were Laemmle/Scrrano/Pacific Coast and Maya/1-fighRidge Costa. These two proposals best understood the goals of the City and the Successor Agency, provided projects that were consistent with the types of uses requested, and showed that they had the financial capability to develop the site. The second round included meetings with City staff to discuss and refine their individual projects to best meet the goals of the City and the Successor Agency. Both developers provided a response to the second round of the RFQ process, and staff, along with Kosmont Companies, evaluated those responses based on development tinielines, the proposed development profile, proposed acquisition structure, public amenities to be provided, public parking availability, financing mechanism to support the development, and the financial impact for the City, the Successor Agency, and the taxing entities as a result of the ultimate development of the site. On June 2, 2015� City staff met with the Downtown Newhall Specific Plan Ad Hoc Committee to discuss the two proposals and staff s recommendation. The City Councilmembers who attended the Downtown Newhall Specific Plan Ad Hoc Committee were Mayor McLean (alternate) and Mayor Pro Tern Kellar. Page 3 Packet Pg. 178 Proposed Development Par1ner(s) As a result of this extensive review process, it was cleterinined that the best proposal at this point for the development of the Redevelopment Block would require multiple developers to meet the City's and Successor Agency's objectives. It is therefore recommended that the City and the Successor Agency enter into an Exclusive Negotiation Agreement (ENA) with Laemmle Theatrc for one portion of the Redevelopment Block to build a movie theater, and that the Successor Agency enter into a separate ENA with Serrano Development Group, Inc./Pacific Coast Housing Development, LI -C, (Serrano) for a second portion of the Redevelopment Block to build a mixed -Use project. A third portion of the Redevelopment Block would potentially be purchased by the City for development and ownership of a public parking facility. Laernnile Theatres Laeminle Theatres, LLC, has been in operation for over 70 years providing independent, foreign, and art house cinerna in the greater Los Angeles region. Serrano Development Group, Ine./Paefflic Coast Housini,, Development, LLC Serrano Development Group, Inc., is a multifaceted real estate investment and development company based out of Glendale, California. They have experience in multi- family, industrial, and retail projects throughout the southwestern United States, including the current 'Laemm le Lofts'project in Glendale. Serrano Development Group, Inc., has assembled Pacific Coast Housing Development, LLC, as their development partners in this project. Pacific Coast Housing Development, LLC, was formed in 2009 and focuses on the ownership and management of commercial and office real estate. The development profile that is currently being proposed for the Redevelopment Block includes the following elements of the two separate projects: Laenunle Theatres • Purchase approximately 12,000 square feet of the Redevelopment Block • Build a six -screen, 20,800 square -foot Laemmle Art House Movie Theatre Serrano Development Group, Inc.lPaciflc Coast Housine Development. LLC • Purchase approximately 37,500 square feet of the Redevelopment Block • Build a mixed-use project consisting of approximately 19,JOO square feet of retail and 46 ownership or rental residential units, with a product mix of k 2-, and 3 - bedrooms Parking The Old Town Newhall Specific Plan, approved by the City Council in 2005, calls for a public parking structure to be built in this area that would provide approximately 400 parking spaces. It is expected that a third, separate and coordinated project would move forward through the City process, and ultimately for City Council consideration, regarding the design and construction of a public parking structure. Initial estimates show that approximately 300 parking spaces could be provided. Page 4 Packet Pg. 179 Economic Inil)acl The Laemmle Theatres project and the Serrano project will generate increased sales tax and increased property tax to the City, while also serving as an anchor to bring additional customers to the Old Town Newhall area and increase economic activity lot those adjacent businesses. The estimated amount of new sales at businesses in Old Town Newhall that will be generated from these projects is expected to be approximately $4,000,000 annually. The amounts generated by the projects themselves are: Laenimle Thealres • Generate approximately $450.000 in sales in the first year • Increase the property tax to the City by approximately $6,475 in the first year Serrano Development Group, Inc.lPaciflc Coast HousinZ Development, LLC • Generate approximately $7,720,000 in sales in the first year • Increase the property tax to the City by approximately $22,950 in the first year Ncxl Steps The next step in confirming this selection is to authorize the City and the Successor Agency to enter into an ENA with Laenimle Theatres to address the sale of the portion of the Redevelopment Block needed for its project, as well as to determine the City's financial contribution for the project. In addition, the Successor Agency should be authorized to enter into an ENA with Serrano for the sale ofthe portion of.the Redevelopment Block needed for its project, which requires no City financial assistance. Each ENA would provide 90 days for all parties to reach the terms that Will ultimately guide the sale and development of the site, including refining the following details: purchase price; development phasing and timelines: details ofthe ultimate development that will be proposed through an entitlement process with the City-, and financial information. Each ENA would provide for the ability to extend the negotiation period, provided that satisfactory progress is being made during the negotiation period. Upon successful negotiation of each ENA, an item would be brought back to City Council and the Successor Agency, for their consideration, to enter into a Purchase and Sale Agreement (PSA) and financial assistance agreement with Laemmle Theatres and/or to enter into a PSA with Serrano. Upon execution of the PSA, Laemmle Theatres and Serrano would commence the project design and entitlement process. Concurrent with the ENA process, the City will transfer the parcels constituting the Redevelopment Block to the Successor Agency so the ultimate disposal of those parcels via the ENA process will not be unduly delayed by the DOF. The City will do so via Quitclaim Deed, which is attached to the resolutions. Again, this is a requirement of the State. Any action taken by the Successor Agency with relation to the disposition of the Redevelopment Block is subject to the Redevelopment Dissolution Bills. This means that actions taken by the Successor Agency must be provided to the Oversight Board for its approval. A meeting of the Oversight Board will be scheduled for consideration of this item. If approved by the Oversight Page 5 Packet Pg. 180 Board. the DOF must also review this action for approval, which may take up to 45 days from the date of the Oversight Board action. At that time, the City and the Successor Agency can execute the attached agreement with Laemmle Theatres, and the Successor Agency can execute the attached agreement with Serrano. ALTERNATiVE ACTION Other action as determined by City Council. FISCAL IMPACT No fiscal impact at this time. ATTACHMENTS Resolution - City Resolution - Successor Agency Exclusive Negotiation Agreement - Laerrunle Exclusive Negotiation Agreement - Serrano Page 6 Packet Pg. 18,