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HomeMy WebLinkAbout2002-11-26 - AGENDA REPORTS - BERMITE PORTA BELLA COMPLIANCE (2)CITY OF SANTA CLARITA AGENDAREPORT City Manager Approv 4---ew Item to be presented by: Jeffrey Lambert PUBLIC HEARING DATE: November 26, 2002 SUBJECT: APPEAL OF THE PLANNING COMMISSION'S ADOPTION OF RESOLUTION P02-12, FINDING THAT SANTA CLARITA, LLC AND BERMITE RECOVERY, LLC HAVE NOT COMPLIED IN GOOD FAITH WITH THE TERMS OF THE PORTA BELLA DEVELOPMENT AGREEMENT DEPARTMENT: Department of Planning and Building Services RECOMMENDED ACTION City Council adopt Resolution upholding the Planning Commission's finding that Santa Clarita, LLC and Bermite Recovery, LLC have not complied in good faith with the terms of the Porta Bella Development Agreement between the City of Santa Clarita and Whittaker Porta Bella, Inc., approved by the Council on February 27, 1996. BACKGROUND In February 1996, the Porta Bella Development Agreement (the "Agreement") was approved by the Santa Clarita City Council in connection with the proposed development of the 988.6 -acre Porta Bella project site. At the time this Development Agreement was signed, Whittaker Porta Bella, Inc. was the property owner. In January, 1999, ownership of the Porta Bella property transferred to Santa Clarita, LLC ("SCLLC"), led by its managing member Remediation Financial, Inc. ("RFI"). Subsequently, an approximate 10 acre (more or less) parcel was acquired by Bermite Recovery, LLC ("Bermite"). At its regular meeting of September 25, 2001, the Santa Clarita City Council directed City staff to initiate a compliance review of the Agreement in accordance with Section 6(b)(x) of the Agreement. On October 3, 2001, (for SCLLQ and October 25, 2001 (for Bermite), the City provided written notice of the City's initiation of the compliance process. The City's Director of Planning and Building Services performed a review of the Agreement and the performance of SCLLC and Bermite Continued To: Agenda Item: under the terms of the Agreement. The Director concluded that SCLLC and Bermite have not complied in good faith with the terms of the Agreement. On March 14, 2002, the Planning Commission conducted a public hearing to determine whether Santa Clarita, LLC and Bermite Recovery, LLC have complied in good faith with the provisions of the Porta Bella Development Agreement. Following consideration of the staff report and written materials submitted by the public and by SCLLC, a staff presentation, a presentation from SCLLC, and public testimony, the Commission found that SCLLC and Bermite Recovery, LLC are noncompliant with four provisions of the Porta Bella Development Agreement, as had been outlined by the City's Director of Planning & Building Services. At the April 2, 2002, Planning Commission meeting, the Commission adopted Resolution P02-12 finding that Santa Clarita, LLC and Bermite Recovery, LLC have not complied in good faith with the provisions of the Porta Bella Development Agreement. The Commission provided direction to staff on possible actions to be used as remedies for each of the four areas of noncompliance, which were incorporated into the resolution. Per the terms of the Ports. Bella Development Agreement, SCLLC has 120 days from April 2, 2002, to come into compliance with the Development Agreement. Since the April 2' meeting, the Planning Commission has received two status reports (May 7, 2002 and June 18, 2002) on SCLLC's progress with implementing the remedies specified in the resolution. It was agreed by the Commission that staff will continue to bring monthly status reports to the Planning Commission on SCLLC's progress. On May 2, 2002, SCLLC submitted a letter to the City of Santa Clarita appealing the Planning Commission's adoption of Resolution P02-12. In their letter, SCLLC states, "We believe we are compliant with our Development Agreement in the four areas particularized by the Planning Commission." In the analysis section below, a description of each finding of noncompliance, the remedies, actions to date and SCLLC's response (grounds for appeal) are provided for Council consideration. A public hearing to consider SCLLCs appeal of the Planning Commission's decision was originally scheduled for the June 25, 2002, City Council meeting and noticed accordingly. This item was continued from the June 25' meeting to October 22, 2002. On September 20, 2002, RF1/SCLLC submitted a letter requesting a further continuance of this hearing. At the October 22" meeting, the Council continued the public hearing on this matter to November 26, 2002. ANALYSIS Resolution P02-12 reflects the remedies suggested by the Commission and discussed with representatives of Santa Clarita, LLC and Bermite Recovery, LLC. The four findings of noncompliance and the associated remedies are described on the following pages. FINDING 1: FAILURE TO PROVIDE EVIDENCE OF GOOD FAITH COMPLIANCE Santa Clarita, LLC and Bermite Recovery, LLC failed to provide evidence of good faith compliance with the Agreement as required by Section 6(b)(x) of the Agreement. Remedy: Santa Clarita, LLC and Bermite Recovery, LLC shall provide a letter to the City restating the contents of the February 18th letter and also indicating that Santa Clarita, LLC and Bermite Recovery, LLC will comply with all future Porta Bella Development Agreement compliance reviews. The new letter shall indicate Santa Clarita, LLC's and Bermite Recovery, LLC's commitment to cooperate with the City's initiation of the annual compliance review process. Actions to Date: Santa Clarita, LLC submitted a letter dated April 15, 2002, to the City of Santa Clarita, providing written evidence of all actions undertaken by Santa Clarita, LLC, and the costs incurred to remediate the environmental contamination on the Porta Bella property. In their letter, Santa Clarita, LLC states that the contents of the letter serve as evidence of good faith compliance with the terms of the Porta Bella Development Agreement. In the first paragraph of this letter, it states that both Santa Clarita, LLC and Bermite Recovery, LLC will "comply and cooperate with all future annual reviews initiated by you and will provide information to the City in accordance with the schedule for compliance reviews specified in our Development Agreement." At their May 7, 2002, meeting, the Planning Commission found that SCLLC had satisfied the first area of noncompliance by submitting April 15, 2002, letter. SCLLC Grounds for Appeal: In their May 2, 2002, letter, SCLLC states that their letter of December 4, 2001, which provides a conclusion that SCLLC is compliant, satisfies this condition of the Development Agreement compliance review process. SCLLC argues that the Development Agreement does not specify the level of detail required to meet the request for compliance information. FINDING 2: FAILURE TO PROVIDE REQUIRED INSURANCE PROTECTION FOR TIRE CITY Santa Clarita, LLC and Bermite Recovery, LLC have failed to have the City named as an additional insured on policies covering the risks of liability from hazardous substances or materials as is required by Paragraph 2 of Exhibit J (the Indemnification Agreement) of the Development Agreement. Remedy: Santa Clarita, LLC and Bermite Recovery, LLC shall make an unequivocal and unconditional request to Steadfast Insurance Company, their present insurance carrier, to name the City of Santa Clarita as an additional insured on Santa Clarita, LLC's policy. In addition, Santa Clarita, LLC and Bermite Recovery, LLC shall advise the City of Santa Clarita in writing of their intent to make this same request of all future insurance carriers that write policies for the Porta Bella Project. Santa Clarita, LLC shall provide to the City written evidence that these requests have been made. The City also encourages Santa Clarita, LLC and Bermite Recovery, LLC to aggressively pursue appropriate resolution of the existing lawsuit with Steadfast Insurance Company that addresses the coverages available with the current Steadfast policy. Actions to date: In a letter dated March 19, 2002, to Arthur J. Gallagher & Co., Santa Clarita, LLC requested that their insurance carrier, Steaffast/Zurich, add the City of Santa Clarita as an additional insured on the current insurance policy. In a letter to the City of Santa Clarita dated April 15, 2002, Santa Clarita, LLC confirms that should Santa Clarita, LLC obtain insurance covering the risk of liability arising from toxic or hazardous substances, or materials on the project site from a carrier other than the present carrier, that Santa Clarita, LLC would make this same request to name the City as an additional insured. At their May 7, 2002, meeting, the Planning Commission found that although SCLLC had submitted the letter making the request that the City be added as an additional insured, SCLLC needs to be more assertive in pursuing insurance coverage for the City. SCLLC Grounds for Appeal: In their May 2, 2002, letter, SCLLC states that they had submitted a letter dated May 25, 2001, to their insurance broker, asking that the City be named as an additional insured, therefore satisfying this requirement months before the Development Agreement compliance review as initiated by the City. FINDING 3: FAILURE TO COMPLY WITH THE REQUIREMENTS OF THE DEPARTMENT OF TOXIC SUBSTANCES CONTROL The City entered into the Development Agreement in order to facilitate the achievement of a series of public objectives that are identified in general in Recital F of the Agreement and that are described in additional detail throughout the Agreement. None of these objectives can be achieved without a timely and thorough investigation and remediation of the Porta Bella project site. Santa Clarita, LLC executed an Enforceable Agreement with the Department of Toxic Substances Control ("DTSC") on February 14, 2001, addressing. the investigation and remediation. requirements applicable to the Porta Bella Project. In a letter dated September 10, 2001, the DTSC identified multiple deficiencies in the compliance of Santa Clarita, LLC with the Enforceable Agreement and demanded immediate action to correct the identified deficiencies. In addition DTSC's letter dated December 11, 2001 specifically determines that Santa Clarita', LLC is not in compliance with the Enforceable Agreement. 'fhus, Santa Clarita, LLC and Bermite Recovery, LLC continue to frustrate the objectives of the Development Agreement to arrange for the timely development of the Porta Bella Project by failing to bring themselves into compliance with the Enforceable Agreement requirements of the DTSC. Remedy: The City directed Santa Clarita, LLC and Bermite Recovery, LLC to promptly take positive steps to resolve all issues with the DTSC. To this end, Santa Clarita, LLC and Bermite Recovery, LLC was directed to return in 30 days from April 2, 2002, (May 7, 2002) with a strategy that lists a specific sequence of activities to be undertaken by Santa Clarita, LLC, Bermite Recovery, LLC and others to cause the termination of the enforcement action that DTSC has recommended to the Attorney General's office. It is anticipated that the resolution of this issue will result in revisions to the Enforceable Agreement, including the overall remediation schedule. Actions to Date: In a letter to the City of Santa Clarita dated April 24, 2002, Santa Clarita, LLC provides a "comprehensive sequence of actions designed to continue environmental clean-up on the site by attracting private capital." On page 2 of the letter, Santa Clarita, LLC lists 13 specific actions related to soil remediation, groundwater remediation, establishment of a remediation escrow account, and steps to comply with DTSC requirements, among others. The letter states that these actions are contingent upon the City initiating the process to amend the Specific Plan, tentative map and Development Agreement for the property, and conducting a number of other actions. Santa Clarita, LLC concludes that the actions listed in the letter would improve Santa Clarita, LLC's relationship with the DTSC and allow for the ultimate clean-up of the Porta Bella site. At the May 7, 2002, Planning Commission meeting, the Commission directed staff to work with SCLLC to prepare a more detailed timeline and task list so that the Commission and the public can monitor progress toward actual site characterization and clean up. Staff, in working with SCLLC, developed a proposed timeline which highlights the major activities to occur as part of the Porta Bella clean-up and development project. SCLLC Grounds for Appeal: : In their May 2, 2002, letter, SCLLC states that compliance with DTSCs Enforceable Agreement is not required in the Development Agreement, until SCLLC applies for a grading permit and, therefore, should not be considered as part of the Development Agreement compliance review. In addition, SCLLC argues that the timing of development activities is within and at the developer's discretion. FINDING 4: ATTEMPTED TERM[INATION OF THE CITYS RIGHT TO OCCUPY AND USE PROPERTY ADJACENT TO THE METROLINK STATION. Bermite Recovery, LLC, and Santa Clarita, LLC, through their managing member Remediation Financial, Inc., sought to terminate the City's right to occupy and use property underlying the parking lot and access areas of the Metrolink Station by the purported termination of the lease of said property. Under the terms of the Development Agreement, the City is to have the use and occupancy of the property to support a commuter rail station during the term of the Development Agreement. (Development Agreement, p. 25.) Thus, the Notice of Termination of Lease sent by Bermite Recovery, LLC, Remediation Financial, Inc. and Santa Clarita, LLC on July 31, 2001 to be effective August 31, 2001, breached the developer's obligation under the terms of the Development Agreement. Remedy: The Planning Commission, at their March 14, 2002, meeting, determined, consistent with the terms of the Porta Bella Development Agreement, that as long as the Development Agreement is in effect, the City of Santa Clarita has the right to use the property adjacent to the Metrolink Station for commuter rail station parking and access. The Commission directed that Santa Clarita, LLC and Bermite Recovery, LLC enter into an agreement with the City to be incorporated into and resolve the currently pending injunction proceedings brought by the City against Bermite Recovery, LLC, Santa Clarita, LLC and Remediation Financial, Inc. whereby these three parties will agree to forgo any attempt to regain possession of the subject property as long as the Development Agreement is in effect. In addition, Santa Clarita, LLC and Bermite Recovery, LLC shall present a written lease proposal to the City within 30 days. This formal, written proposal shall outline the terms of the City's lease of the subject property, specifying the number of years, payment schedule, and option to purchase details. Actions to Date: At a special meeting on July 17, 2002, the City Council made a determination that the public necessity required the acquisition of an easement ownership for public right-of-way and additional parking at the Santa Clarita Commuter Rail Station by means of condemnation. Pursuant to this action, on July 25, 2002, the City Attorney appeared in Los Angeles County Superior Court and was successful in securing a three-day prejudgment order of possession for the Santa Clarita Commuter Rail Station. SCLLC Grounds for Appeal: In their May 2, 2002, letter, SCLLC states that the expiration and non -renewal of the Metrolink lease agreement was consistent with the Development Agreement and applicable law, and that this fact was acknowledged through a number of lease extensions pursued by the City. ALTERNATIVE ACTIONS Other actions as determined by the City Council FISCAL IMPACTS No fiscal impacts to the City's budget are anticipated by the recommendation listed in this report. ATTACHMENTS 1. Resolution 2. May 2, 2002, letter from Santa Clarita, LLC to City of Santa Clarita re: appeal of the Planning Commission Resolution P02-12, April 2, 2002 (includes resubmittal of February 18, 2002, letter from SCLLC regarding their response to the Porta Bella Development Agreement Notice of Noncompliance) 3. Resolution P02-12 4. April 15, 2002, letter to City of Santa Clarita from Santa Clarita, LLC, regarding Ports. Bella Development Agreement 5. December 4, 2001, letter to City of Santa Clarita from Santa Clarita, LLC, regarding Compliance with Ports. Bella Development Agreement 6. March 19, 2002, letter to Arthur J. Gallagher & Co. from Santa Clarita, LLC regarding Porta Bella — Insurance 7. April 15, 2002, letter to City of Santa Clarita from Santa Clarita, LLC, regarding Ports. Bella — Insurance 8. April 24, 2002, letter to City of Santa Clarita from Santa Clarita, LLC, regarding a comprehensive Porta Bella clean-up and development strategy 9. April 30, 2002, letter to City of Santa Clarita from Santa Clarita, LLC, regarding a revision to the April 24, 2002 letter 10. Porta Bella Development Agreement JJL:LMH S: \ pbs \ advance \ ptabla \ ccl 12602ar.doc NOTICE OF CONTINUED PUBLIC HEARING CITY OF SANTA CLARITA CITY COUNCIL NOTICE IS HEREBY GIVEN that the City Council of the City of Santa Clarita, at its regular meeting held November 26, 2002, continued a public hearing on 11. APPEAL OF THE PLANNING COMMISSION'S ADOPrION OF RESOLUTION NO. P02-12, FINDING THAT SANTA CLARITA, LLC AND BERMITE RECOVERY, LLC HAVE NOT COMPLIED IN GOOD FAITH WITH THE TERMS OF THE PORTA BELLA DEVELOPMENT AGREEMENT - This item is for Council to consider an appeal of the Planning Commission's determination that Santa Clarita, LLC and Bermite Recovery, LLC have not complied in good faith with the terms of the Porta Bella Development Agreement. In accordance with the Section 6 (b)(x) of the Porta Bella Development Agreement, a compliance review was initiated in the Fall of 2001 and a public hearing before the Planning Commission was held on March 14, 2002, to inform the Commission of the Director of Planning and Building Service's findings of noncompliance and to consider other evidence. Thereafter, at its meeting on April 2, 2002, the Commission adopted Resolution P02-12 finding that Santa Clarita, LLC and Bermite Recovery, LLC have not complied in good faith with four provisions of the Porta Bella Development Agreement. Santa Clarita, LLC in a letter to the City dated May 2, 2002, appeal the Planning Commission's determination of noncompliance to the City Council. to February 25, 2003. The continued public hearing will be held at or after 6:00 p.m. in the Council Chamber at 23920 Valencia Blvd., Santa Clarita, California. Dated this 27thday of November, 2002. SHARON L. DAWSON, CITY CLERK STATE OF CALIFORNIA COUNTY OF LOS ANGELES SS. AFFIDAVIT OF POSTING CITY OF SANTA CLARITA SHARON L. DAWSON, being first duly sworn, deposes and says that she is the duly appointed and qualified City Clerk of the City of Santa Clarita and that on November 27, 2002, she caused the above notice to be posted at the door of the Council Chamber located at 23920 Valencia Blvd., Santa Clarita, California. .�4 - SHARON L. DAWSON, CITY CLERK Santa Clarita, California Forms/contph.doc