HomeMy WebLinkAbout2003-04-22 - AGENDA REPORTS - WHITTAKER BERMITE CLEAN AGMT (2)Agenda Item: /J
CITY OF SANTA CLARITA
AGENDA REPORT
NEW BUSINESS City Manager Approval:
Item to be presented by: Jeffrey Lambert
DATE: April 22, 2003
SUBJECT: WHITTAKER-BERMITE CLEAN-UP AND REUSE PROJECT
CITY -CHEROKEE REIMBURSEMENT AGREEMENT
DEPARTMENT: Planning and Building Services
RECOMMENDED ACTION
City Council receive and provide direction on the Reimbursement Agreement for City
Services Associated with Development of the Whittaker-Bermite Property, and continue the
item to the May 13, 2003, City Council meeting for formal action.
BACKGROUND
The potential new buyer of the Whittaker-Bermite property, Cherokee Investment Partners,
signed a Purchase and Sale Agreement with SCLLC for the acquisition of the former
Whittaker property in October 2002. During this time period, Cherokee has had numerous
meetings with the City, community leaders, regulatory agencies and other Valley
stakeholders to learn about this property and share their ideas about the soil and
groundwater remediation plan, and their proposed timeframe for clean-up and development.
The City, too, has conducted extensive due diligence on Cherokee and has found that
Cherokee has the reputation, financial resources and technical expertise to accomplish the
soil and groundwater clean-up in an expedited, first rate manner in accordance with DTSC
regulations and water agency goals. Over the past six months, the City and Cherokee have
met regularly to discuss their respective goals and objectives relating to the
Whittaker-Bermite property. Based on these goals, due diligence efforts and discussions,
both Cherokee and the City are interested in working together to identify, evaluate and
formally consider on a mutually -acceptable timeline modifications to the property
entitlements currently in place (Porta Bella Specific Plan and Development Agreement).
In anticipation of Cherokee's purchase of the Whittaker-Bermite property, the City's
Whittaker-Bermite Strategy Team, together with Cherokee Investment Partners, has
Continued To:-� 00 3
drafted a reimbursement agreement. The purpose of this agreement is to set forth
procedures and a funding mechanism for the processing of certain entitlement applications
associated with the future reuse of the Whittaker-Bermite property. It is the City's and
Cherokee's shared goal to remediate the contamination and reuse the property in a way that
is economically viable for the developer and provides value to the community. This
agreement also serves to implement many items in the City Council's 14 -point action plan for
the Whittaker-Bermite Clean-up and Reuse project. The agreement will set in motion the
settlement of two pending lawsuits associated with the Whittaker-Bermite property -
the Soledad Metrolink Station parking area and Golden Valley Road right-of-way.
In this agreement, Cherokee agrees to reimburse City staff and consultant expenses during
the entitlement process, in an amount not to exceed $1.75 million. This $1.75 million total
includes a payment to the City of $250,000 for pre -application costs incurred by the
Whittaker-Bermite Strategy Team. It is specified in the reimbursement agreement
that Cherokee is not bound to pay any portion of the pre -application reimbursement costs in
the event Cherokee does not purchase the property. However, the agreement specifies that,
following the approval of this reimbursement agreement, that any costs incurred by the City
that have been authorized by Cherokee will be reimbursed regardless of whether Cherokee
purchases the property.
Appendix B of the document details a number of processes to occur during a 24 -month time
period including property clean-up timeframe, resolution of legal issues, land use/planning,
economic feasibility evaluation, public financing, Cherokee's financial assurance mechanism,
environmental insurance, CEQA, and community outreach. It is important to note that this
document does not make any land use or entitlement decisions. In fact, the agreement
clearly states that no part of the agreement or its appendices shall be deemed a commitment
by the City to approve Cherokee's future entitlement requests. However, this agreement
documents the City's willingness to consider modifications to the existing Development
Agreement on an agreed -to schedule and to consider public financing options to help finance
major transportation infrastructure. The City's adjacent property will also be considered as
part of the planning process. Before developing a project description, the agreement
specifies that the City and Cherokee will pursue a market study/financial feasibility study for
a range of land uses that could serve as an economic engine for the Valley including
convention center, hotel, entertainment complex, filming uses, and recreational uses.
The City's willingness to proceed with this agreement is based on the assumptions that
Cherokee will remain committed to devote the necessary financial and managerial resources
needed to bring about a thorough and expeditious clean-up of the soil and groundwater.
Also, Cherokee will consider amendments to the current Development Agreement that result
in fewer residential units in exchange for public financing and reduced infrastructure
obligations.
ALTERNATIVE ACTIONS
I. Other actions as determined by Council
FISCAL IMPACT
In executing this agreement, Cherokee Investment Partners agrees to pay the City an
amount not to exceed $1.75 million for City services related to the processing of applications
for the Whittaker-Bermite Clean-up and Reuse Project. Of the $1.75 million total, $250,000
will be paid to the City for pre -application costs the City has incurred to date. If Cherokee
does not take ownership of the Whittaker-Bermite property, they will not be required to
reimburse the City the $250,000 of pre -application costs. However, upon approval of this
reimbursement agreement, Cherokee will reimburse to the City any costs authorized by
Cherokee (regardless of whether Cherokee purchases the property) for work undertaken by
the City following the execution of this Agreement.
ATTACHMENTS
Reimbursement Agreement
DRAFT
This Reimbursement Agreement for City Services Associated with Development of the
Whittaker-Bermite Property ("Agreement") is made and entered into as of
2003, by and between CIP III ACQUISITION, LLC ("Developer"), and the CITY OF SANTA
CLARITA ("City") (collectively, the "Parties").
RECITALS
A. The Whittaker-Bermite property (the "Property") encompasses approximately 996
acres of real property within the City. The Property is a polluted, former industrial
manufacturing site. In 1995 and 1996, the City approved, among other things, a General Plan
Amendment, Vesting Tentative Tract Map 51599, the Porta Bella Specific Plan (Specific Plan
91-001), and Development Agreement 93-002 (collectively, the "Existing Approvals") which
provide for the conversion of the Property from its historic industrial manufacturing uses to a
mixture of uses. Under the Existing Approvals, the property is entitled for 1,244 single-family
dwelling units, 1,667 multi -family dwelling units, 1,947,904 square feet of gross leaseable space
for commercial office, retail, and business park uses, one hotel, one area for institutional use, and
approximately 435 acres of parks and open space. The Existing Approvals also provide for the
construction of roads and other infrastructure.
B. In October, 2002, Developer entered into a Purchase and Sale Agreement with the
current owner of the Property. Developer desires to purchase the Property (the "Acquisition")
and subsequent to the Acquisition, Developer intends to (1) implement an environmental
characterization and cleanup program for the Property and its groundwater to the satisfaction of
appropriate regulatory agencies (the "Cleanup") and (2) develop the Property into a mixed-use
development consisting of the types of uses provided for in the Existing Approvals. However,
based on information provided thus far by Developer, the Parties believe the burden of costs
associated with the Cleanup and the infrastructure costs required by the Existing Approvals
severely impairs the value of the Property and makes the purchase of the Property, Cleanup and
development of the Property infeasible. Therefore, Developer seeks a modification to the
Existing Approvals to reduce the burden of infrastructure costs so as to make the Acquisition,
Cleanup and development of the Property feasible and provide Developer with an economic
benefit commensurate with the risks associated with such activities.
C. The City's objectives for the Property are the following:
1. Site -wide characterization of the soil contamination (including UXO) and
cleanup to residential standards in accordance with applicable regulations and an expedited
schedule.
2. Expedited implementation of a groundwater remediation program in
accordance with the California Department of Toxic Substances Control ("DTSC") and Castaic
Lake Water Agency ("CLWA") standards, which based on presently available information will
likely include the installation and operation of well head treatment for certain production wells as
well as treatment of groundwater.
3. Construction of major roadway infrastructure to serve the central Santa
Clarita Valley area.
4. Continued public access to and operation of the Soledad Metrolink station.
5. Conversion of the Property to productive uses which provide long-term
economic benefits to the City and which involve fewer residential units than permitted under the
Existing Approvals.
D. Since October, 2002, City and Developer have each conducted due diligence
relating to the possible Cleanup and development of the Property and have, among other things,
met regularly to discuss their respective goals and objectives relating to the Property. Based on
their respective goals, due diligence efforts and discussions, Developer and City are interested in
working together to identify, evaluate, and formally consider on a mutually -acceptable timeline,
modifications to Development Agreement 93-002 and the other Existing Approvals. Developer
is interested in modifications that would lessen the impact of infrastructure, such as those
reflected in Sections I and II of Appendix A to this Agreement. Particularly, Developer seeks to
(i) reduce infrastructure costs to a level supportable by the Property and (ii) pursue public
finance options to finance such reduced infrastructure costs. The City is interested in (x)
accomplishing its objectives, (y) facilitating a comprehensive Cleanup and the Acquisition and
development of the Property, and (z) such modifications to the Existing Approvals as City may
desire to pursue.
E. In the event of Acquisition, Developer will be expending considerable sums and
assuming considerable liabilities with respect to the Property and Cleanup prior to the City's
consideration of any modifications proposed by the Developer to the Existing Approvals.
Developer's willingness to proceed with the Acquisition, Cleanup and development of the
Property is dependent, in part, on (i) reaching an agreement with the City concerning the process
and schedule for the submittal, processing, hearings, and action on the Application (as defined in
Recital F), (ii) the City's willingness to consider Developer's proposals to reduce infrastructure
costs and to pursue public finance options, and (iii) the City's willingness to consider such other
modifications to the Existing Approvals as may be proposed by Developer. The City would
view positively this modification of public benefit in exchange for Developer's expedited
performance of soil and groundwater remediation, a goal which is not reflected in Development
Agreement 93-002. The City's willingness to proceed with this Agreement and the tasks
contemplated herein is dependent, in part, on (i) continuation of the commitment Developer has
demonstrated thus far to devoting the necessary financial and managerial resources needed to
bring about a thorough and expeditious Cleanup of the Property and (ii) Developer's willingness
to consider such other modifications, proposals and counter proposals to the Existing Approvals
as may be proposed by the City. Nothing in this Agreement shall constitute a modification to the
Existing Approvals or obligate a Party to accept any modification proposed by the other Party.
F. Developer anticipates submitting land use applications for the Property, including
without limitation, amendments to Development Agreement 93-002 (collectively, the
"Application") later this year. Developer has not completed a project description on which it will
base its Application but has provided a preliminary, conceptual listing of amendments to
Development Agreement 93-002 set forth as Appendix A to this Agreement. The City
anticipates processing Developer's Application and both City and the Developer would like to
assure that the Application and the associated environmental review proceed in an efficient,
timely, and thorough manner. The Parties anticipate that processing the Application and the
associated environmental review will require significantly greater expenditures of staff and third
party consultant resources than a typical development project within the City. The Parties
further anticipate that the City's standard development processing fees would not adequately
compensate the City for the level of staff and third party consultant effort expected.
Accordingly, one purpose of this Agreement is to ensure that the City has the resources to
complete processing of and hearings on the Application in accordance with the various processes
and timeframes set forth in Appendix B (the" Application Processes") and elsewhere in this
Agreement.
G. The Parties enter into this Agreement to provide, among other things, a fair and
equitable means to assure both timely and thorough processing of the Application and payment
to the City of funds with which the City can offset certain costs incurred and to be incurred in
connection with processing the Application.
AGREEMENT
In recognition of the recitals above, the promises and commitments reflected below, and
other good and valuable consideration, the receipt and adequacy of which are hereby affirmed,
the Parties agree as follows:
I. Expression of Intent. The intent of this Agreement is to set forth procedures and a
funding mechanism for the processing of the Application and action taken on the Application by
the City. Neither this Agreement nor any of the tasks undertaken pursuant to this Agreement in
any way commits the City to any particular outcome, decision, or vote on the Application or the
use of the Property. Similarly, neither this Agreement nor any of the tasks undertaken pursuant
to this Agreement in any way commits the Developer to acquire and develop the Property.
The City enters into this Agreement on the belief,.and Developer hereby represents, that
Developer and its affiliate Cherokee Investment Partners III L.P. have the financial resources and
the technical expertise needed to accomplish the Cleanup in an expedited, first rate manner and
thereafter to bring about high quality, mutually -beneficial development of the Property. The
City specifically acknowledges that since October 2002, Developer has, among other things, (1)
demonstrated a unique, aggressive approach to solving the contamination issues at and
emanating from the Property, (2) articulated a preliminary set of land use concepts that if
ultimately approved would increase public open space and reduce the grading envelope
contemplated in the Existing Approvals so as to lessen impacts on the natural ridgelines on the
Property, and (3) demonstrated a willingness as reflected in this Agreement to work with the City
to evaluate opportunities to enhance transit -oriented development around the Soledad Metrolink
Station and opportunities that may exist for use of the City -owned property adjacent to the
Property.
2. Processing Services and Related City Costs. The Parties have set out in Appendix B,
Application Processes, the steps the Parties foresee undertaking on a cooperative basis over an
approximately 26 -month period from the Effective Date (as defined below). Through its
Planning Department, City will endeavor to expeditiously, efficiently and thoroughly undertake
and/or contract for such services as may be necessary to carry out those portions of the
Application Processes for which the City is primarily responsible. Developer similarly commits
to expeditiously, efficiently and thoroughly undertake and/or contract for such services as may
be necessary to cavy out those portions of the Application Processes for which it is primarily
responsible. Under no circumstances, however, shall Appendix B or this Agreement be deemed
a commitment by the City to approve the Application within a specified time period or at all
since such final action is not within the control of the Planning Department.
City estimates that by June 30, 2003, it will have incurred approximately $500,000 in
costs (the City's "Initial Phase Processing Costs") of the type it anticipates incurring over the 26 -
month period noted above and in connection with the Application Processes. Within thirty (30)
days of the Effective Date, City shall provide Developer with documentation verifying its Initial
Phase Processing Costs. In the event of Acquisition, Developer agrees to reimburse City through
Developer's Initial Deposit (as defined below) for one half of those costs, not to exceed
$250,000.
In the event Developer does not close escrow on the Acquisition, Developer's liability for
the City's Processing Costs (whether Initial Phase, Second Phase, or both) shall be limited to
those costs incurred by the City from the Effective Date to the Termination Date defined by
Section 7(i) below with the prior written consent of Developer.
City presently estimates that its quarterly costs to undertake the Application Processes
will be $187,500 for the calendar quarters beginning July 1, 2003; October 1, 2003; January 1,
2004; April 1, 2004; July 1, 2004; October 1, 2004; January 1, 2005; and April 1, 2005 (the
City's "Second Phase Processing Costs"). Within 30 days of the Effective Date and after
consultation with Developer, City shall provide Developer with a budget estimating the City's
Processing Costs for the period July 1, 2003 to June 30, 2005 (the "City's Processing Cost
Budget"). The City's Processing Cost Budget shall identify, among other things, estimates for
staff time, consultants (including attorneys), other expenses required for or appropriate to the
City's performance of the Application Processes, and the extent to which the expected
Processing Costs would exceed the application fees to be charged to Developer based on the
City's published fee schedule. Nothing in this Agreement shall prevent the City from dedicating
resources in excess of the amounts stated in this Section 2 to the Application Processes.
However, Developer's liability for the City's Second Phase Processing Costs shall not exceed
$1,500,000 unless (1) Developer causes the increase beyond $1,500,000 (in which case
Developer shall be responsible for the excess it causes) or (2) Developer provides written
consent after City has provided a detailed written explanation of (a) why the Second Phase
Processing Costs exceed $1,500,000 and (b) why the overage is attributable to circumstances
beyond the City's reasonable control. In the event City provides such detailed, written
explanation, Developer's consent to such additional Second Phase Processing Costs shall not be
unreasonably withheld.
The Parties each shall use their reasonable best efforts to timely complete the initial work
required for processing of the Application as outlined in the Application Processes. Should
Developer or City experience delays in the preparation of documents needed to fulfill obligations
under this Agreement, the Parties shall renegotiate the time line applicable to the Application
Processes and/or modify the terms of the Agreement to reflect such delays, and make
corresponding adjustments to the City's Processing Cost Budget.
3. Initial and Subsequent Deposits of Funds. Within ten (10) business days after the
Acquisition of the Property, Developer shall deliver to City by check or wire transfer the sum of
$437,500 ("Initial Deposit"). The City shall place up to $250,000 of the Initial Deposit into the
City's accounts as reimbursement for one-half of the City's Initial Phase Processing Costs, with
such amount not to exceed one-half of the costs verified by City pursuant to the second
paragraph of Section 2 above. The City shall place the remainder of the Initial Deposit into a
separate interest bearing account to be named the "Cherokee Cost Reimbursement Account" (the
"Account"). Interest on the Account shall be deposited into the Account but shall accrue to the
benefit of Developer and be credited toward any obligation of Developer under this Agreement.
Consistent with the terms of this Section 3, Developer shall make additional deposits into
the Account on a quarterly basis for the calendar quarters beginning October 1, 2003; January 1,
2004; April 1, 2004; July 1, 2004; October 1, 2004; January 1, 2005; and April 1, 2005. These
quarterly deposits shall be in the amount of $187,500 unless a different sum is mutually
determined by the parties for a particular quarter. Beginning with the October -December 2003
quarter and for each calendar quarter thereafter through June 30, 2005, the Parties shall meet at
least ten (10) but not more than fifteen (15) business days after the beginning of the quarter to
review (1) the amount of funds remaining in the Account, (2) expenses pending for payment
from the Account, and (3) expenses expected to be incurred during the quarter. The Parties will
negotiate in good faith to identify the work necessary to accomplish the Application Processes
for the current quarter and the estimated costs for the Application Processes for that quarter.
The City's Processing Costs Budget shall be revised accordingly, subject to the agreement of the
Parties. A credit in Developer's favor and in an amount equal to the standard application fees
actually paid by Developer will be reflected in City's Processing Cost Budget as soon as
practicable after Developer's payment of such standard application fees.
No later than twenty (20) business days after the beginning of each quarterly period,
Developer shall deposit into the Account either $187,500 or such other amount agreed upon by
the Parties and consistent with the City's updated Processing Costs Budget.
Concurrently with the provision of the City's Processing Cost Budget to the Developer,
the Developer shall provide a quarterly progress report regarding the Cleanup, including costs
incurred by Developer that quarter in connection with the Cleanup, and an estimate of costs to be
incurred in the following quarter relating to the Cleanup. Also concurrently with the provision of
the City's Processing Cost Budget, the City shall provide Developer with a progress report
relating to the status of the Land Use/Planning process set forth in Appendix B. The Parties will
meet each quarter, pursuant to the procedure and timetable set forth in this Section 3, to discuss
the Cleanup process as it relates to the Land Use/Planning process to ensure an efficient and
orderly synthesis of the two processes. If and to the extent the Land Use/Planning is delayed for
reasons which are not caused by Developer, Developer shall be entitled to a proportionate
extension in the time to complete the Cleanup. Any such extension shall be evidenced by a
written memorandum thereof.
4. Disbursement of Funds.
The Planning Department shall administer and maintain the accounting records for the
Account pursuant to customary accounting procedures accepted by the City which are reasonably
satisfactory to Developer. All funds in the Account, including accrued interest, shall be
collectively referred to as the "Funds."
The costs payable from the Funds which shall be included in the quarterly City's
Processing Costs Budget shall consist primarily of the following: (1) invoices submitted to the
City by outside consultants (e.g., attorneys, environmental consultants, and financial consultants)
that are assisting the City with the Application Processes; (2) a portion of the salary and benefit
costs for City staff working on the Application Processes; and (3) incidental costs (actual
telephone, facsimile, and other communications expenses incurred with respect to the
Application Processes, delivery services, reproduction costs, etc.) as are customary in connection
with rendering planning and processing services of the type envisioned in Appendix B. The City
will disburse Funds from the Account on a monthly basis; provided, however, that Funds in
excess of the City's Processing Costs Budget amount shall not be disbursed without Developer's
consent except for substantial cause or emergency. Not later than fifteen (15) days after the end
of each month, City shall provide to Developer an expense report for the previous month
itemizing all expenses incurred and showing a comparison of actual expenses to the City's
Processing Costs Budget.
If, during any calendar quarter, the City determines that the Funds in the Account will be
exhausted before the end of the then current quarterly period, the City shall promptly advise the
Developer in writing of the expected shortfall. Within ten days after receiving notice of the
expected shortfall, Developer and City shall meet to determine the amount of the additional
funds needed in the manner set forth in Section 3 above.
5. Selection and Direction of Staffing and Outside Experts. The Parties recognize and
agree that (1) the complexity of the Application Processes will require the assignment of highly
trained and skilled staff and outside consultants, including, without limitation, attorneys; (2) to
the extent practicable there should be continuity among the staff and consultants assigned to the
Application Processes; and (3) the members of their respective project teams (whether staff or
outside experts) shall be qualified, competent, and available to do the work necessary to perform
the Application Processes on a timely basis. Each Party shall retain the sole discretion to direct
the work of any staff or outside consultant retained by that Party to participate in the Application
Processes, and this Agreement is not contingent upon the hiring or retention of any specific
employee or outside consultant by either Party. Each Party shall have the right to express any
grievances it may have concerning the quality or timeliness of any services performed by the
assigned personnel and to request, but not require, the reassignment of such personnel.
In connection with the Application Processes, the City advises Developer, and Developer
acknowledges, that the City anticipates that its project team will primarily consist of one member
of the City's upper management, one member of its middle management, one member of its
technical staff from the Department of Transportation and Engineering Services, one City
accountant, as well as legal, financial and environmental consultants. The City further advises,
and Developer further acknowledges, that from time to time additional technical staff from the
Department of Planning and Building Services, Department of Transportation and Engineering
Services, and/or other City departments, such as the Department of Parks, Recreation and
Community Services and/or Administrative Services, will provide substantial support in
connection with the Application Processes. The City shall have the sole discretion to replace any
employee or consultant assigned to its team. If any employee or consultant identified above is
replaced, the City shall promptly provide notice of such replacement to the Developer.
6. Record Management and Review. Before signing this Agreement, the City has
implemented, and throughout the term of this Agreement shall maintain, accounting procedures
which document the costs incurred in connection with the Application Processes. The Planning
Department shall keep records of all disbursements from the Account, all deposits to the
Account, and all expense reports. The Planning Department shall obtain receipts for or other
evidence of third party costs and the cost of all acquisitions of material and equipment and other
expenditures that it invoices or debits as costs incurred in connection with the Application
Processes. During the term of this Agreement and for a period of two years thereafter, the
Planning Department shall retain these records. The Developer or its representatives, from time
to time and upon reasonable notice, may examine and copy such records during normal business
hours. The Developer shall reimburse any reasonable costs incurred by the City as a result of
any copying of such records.
7. Term of Agreement. This term of this Agreement shall begin when the Agreement is
signed by both Parties (the "Effective Date"). It shall end on the earlier of (i) termination of
Developer's contract to purchase the Property, (ii) execution of an amended Development
Agreement for the Property, or (iii) the 61st day after a notice as provided for in Section 8
("Termination Date").
8. Termination. Either the Developer or the City may terminate this Agreement, with or
without cause, upon sixty (60) days' notice given to the other Party.
9. Effect of Termination. Upon termination of this Agreement pursuant to Section 7(ii)
or Section 7(iii), all obligations of both Parties under this Agreement shall terminate, and the
City shall return to the Developer any Funds remaining in the Account, less any Processing
Expenses incurred in due course through the Termination Date but not yet paid from the
Account. In the event of Termination pursuant to Section 7(i), Developer's liability for City's
Processing Costs (whether Initial Phase, Second Phase, or both) shall be limited to those costs
incurred by the City from the Effective Date to the Termination Date with the prior consent of
Developer.
10. Notices. Unless otherwise provided within this Agreement, any notice, request,
consent, instruction or other document to be given under this Agreement by either Party to the
other shall be in writing and delivered in person or by courier, telegraphed, telexed or by
facsimile transmission (with confirmed receipt) or mailed by first-class mail, postage prepaid
(each such notice to be effective on the date received), as follows:
If to Developer: CIP III Acquisition, LLC
5445 DTC Parkway, Suite 900
Greenwood Village, CO 80111
Attention: Dwight Stenseth
Phone: (303) 771-9200
Fax: (303) 771-9270
Email: dstenseth@cherokeefund.com
With a copy to: Susan K. Hori
Manatt, Phelps & Phillips LLP
650 Town Center Drive, Suite 1250
Costa Mesa, CA 92626
Phone: (714) 371-2528
Fax: (714) 371-2550
Email: short@manatt.com
And to: Steven M. Sommers
Brownstein Hyatt & Farber, P.C.
41017 th Street, 22" d floor
Denver, CO 80202
Phone: (303) 223-1100
Fax: (303) 223-1111
Email: ssommers@BHF-law.com
If to City: City of Santa Clarita
23920 Valencia Boulevard, Suite 302
Santa Clarita, California 91355
Attention: Jeffrey L. Lambert
Phone: (661) 255-4913
Fax: (661) 259-8125
Email: jlambert@santa-clarita.com
With a copy to: Carl K. Newton, City Attorney
Burke Williams & Sorenson, LLP
611 West Sixth Street, Suite 2500
Los Angeles, CA 90017-3102
Phone: (213) 236-0600
Fax: (213) 236-2700
Email: cnewton@bwslaw.com
And to: Preston W. Brooks
Cox, Castle & Nicholson LLP
2049 Century Park East, 281h Floor
Los Angeles, CA 90067-3284
Phone: (310) 284-2223
Fax: (310) 277-7889
Email: pbrooks@coxcastle.com
or to such other place and with such other copies as any Party may designate as to itself by
written notice to the other Party.
11. Mutual Drafting. It is expressly understood and agreed that this Agreement was
jointly drafted by the Parties with the assistance of legal counsel selected by each of the Parties.
Accordingly, the Parties hereby agree that any and all rules of construction to the effect that
ambiguity is construed against the drafting party shall be inapplicable in any dispute concerning
the terms, meaning or interpretation of this Agreement.
12. Entire Agreement. This Agreement, including the Recitals which are material
provisions of the Agreement, constitutes the entire agreement between the Parties pertaining to
the subject matter of this Agreement. It supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the Parties. No supplement,
modification, or waiver of this Agreement shall be binding unless executed in writing by the
Party to be bound.
13. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute a single agreement.
14. Severability. If any one or more of the provisions contained in this Agreement shall
be found to be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions shall not, in any way, be affected or impaired.
15. Governing Law. This Agreement shall be construed in accordance with and governed
by the laws of the State of California.
16. Headings and Captions. The headings and captions to the various articles, sections,
subsections, subdivisions and other provisions of this Agreement have been inserted for
convenient reference only, and shall not have the effect of amending or changing the express
terms and provisions of any such article, section, subsection, subdivision of this Agreement.
17. Public Record. This Agreement and all written non -privileged documents prepared
pursuant to this Agreement, shall be maintained as a public record.
18. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Parties, provided that consent of the other Party shall
be required to the effective assignment of a Party's interests under this Agreement. City
consents to any assignment by Developer of its rights and obligations to an affiliated limited
liability company which is controlled by Cherokee Investment Partners III, L.P., and which
succeeds to the interest of the Developer in the Property.
19. No Third -Party Beneficiaries. This Agreement is solely for their benefit of the
Parties, and it does not, nor is it intended to, create any rights in favor of or obligation owing to
any third parties.
[SIGNATURES BEGIN ON NEXT PAGE]
10
This Agreement has been signed and delivered, as of the date first appearing above, by
the duly authorized officers of the Parties.
Approved as to Form:
N
CITY OF SANTA CLARITA
Name:
Date:
DEVELOPER
CIP III ACQUISITION, LLC, a Delaware limited
liability company
S-1
Name: Dwight Stenseth
Title: President
APPENDIX A
Developer's Preliminary Proposed Development Agreement Modifications
Note: No action is being taken by the City on these items at this time, and this Agreement does
not bind the City to agree to any of the requested modifications now or in the future.
As part of the Application, Developer may propose the following modifications to Development
Agreement 93-002 and/or the Existing Approvals, among others:
I. INFRASTRUCTURE
1. Elimination of the requirement to build the funicular / escalator.
2. Relocation of the 8 -acre industrial site, and elimination of the grading and dedication (to
the City) requirements related to the 8 -acre industrial site.
3. Elimination of the grading and dedication (to the City) requirements relating to the
institutional lot at corner of Santa Clarita Parkway and Via Princessa.
4. Elimination of the requirement for the construction of two equestrian undercrossings on
south Santa Clarita Parkway.
5. Elimination of the requirement for the grading of any portion of the City's 200 -acre
adjacent site, including the 20 acres stipulated in the Development Agreement.
6. Elimination of the requirement to bring utilities to the City's 200 -acre adjacent site.
7. Substitution of a number of spaces standard rather than a total acreage standard for the
parking required for the Commuter Rail Station to facilitate transit -oriented residential
and commercial development surrounding Metrolink.
8. Securing the parking at the Commuter Rail Station site through a mutually acceptable
legal instrument.
9. Confirmation of a revised sequencing and timing schedule for construction of traffic
mitigation and other infrastructure
10. Assumption by the City of costs for acquiring and improving off-site roadways and other
off-site improvements necessary for the development of the Property.
11. Removal of certain infrastructure requirements including, without limitation, (a) the
alignment of Santa Clarita Parkway in the Existing Approvals; (b) the Santa Clarita
Parkway bridge across the Santa Clara River connecting to Soledad Canyon Road; (c) the
Santa Clarita Parkway and Soledad Canyon Road interchange; (d) the Santa Clarita
Parkway bridge south of Via Princessa; (e) the Santa Clarita Parkway extension south
from the Property to Placerita Canyon Road; (f) the Magic Mountain Parkway and San
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Fernando Road grade -separated interchange; and (g) Via Princessa east of Golden Valley
Road.
II. PUBLIC FINANCE
Deletion of the requirement in Section 8(c) of the Development Agreement that bonds issued by
a public finance district be paid off prior to residential occupancy so that Mello -Roos,
Communities Facilities District or other types of public and/or tax advantaged financing can be
used.
III. ON-GOING PROCESSING
1. Commitment by the City to dedicate sufficient staff resources and public meeting time to
processing such on-going approvals as may be necessary for both discretionary and
ministerial approvals required to implement the Specific Plan.
2. To the extent consistent with state law, the Development Agreement will clarify the
situations in which an Addendum, Supplemental, or Subsequent BIR (rather than a new
EIR) will be used to address project modifications.
IV. TERM
The term of an amended or new Development Agreement be extended in order to provide
Developer with an initial term of 20 years from date of execution.
V. RESERVATION OF OPTION TO SUPPLEMENT THE FOREGOING
This list of issues is not intended to reflect all issues which Developer may raise with respect to
the existing Development Agreement and potential amendments to that agreement. Developer
may propose additional changes as the Project evolves and reserves the right to propose a new,
rather than a revised, development agreement to reflect both project changes and changes to the
Development Agreement.
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APPENDIX B
APPLICATION PROCESSES
A. The Cleanup Process:
The Parties agree that the principal steps in this process are the following:
(1) Developer intends to pursue a remedial path for the site that will
substantially accelerate the existing cleanup schedule set forth in the
Unilateral Order issued by DTSC to the Whittaker Corporation.
Assuming that appropriate resources can be dedicated by DTSC to
Developer's investigation and remediation of the Property, Developer
plans to complete all soil -related cleanup and installation of groundwater
remediation equipment within three years of Acquisition. Developer
anticipates completing all soil and groundwater characterization within the
first year. Developer expects remedial activities to overlap with
characterization during the first year and to extend for an additional two
years. Developer intends to pursue an expedited investigation and
remediation of the Property concurrently with an expedited consideration
of modifications of the Existing Approvals. If and to the extent the Land
Use/Planning Process set forth below is delayed for reasons not caused by
Developer, Developer shall be entitled to a proportionate extension of time
to complete the Cleanup.
(2) Based on the Parties' current understanding, the Parties agree that their
mutual intent is to achieve the following goals as expeditiously and as
thoroughly as possible:
(a) site -wide characterization for hazardous substances and UXO;
(b) soil remediation to a level that is consistent with unrestricted
residential use in all areas; and
(c) drinking water standards for the groundwater that is impacted by
perchlorates and other contaminants emanating from the Property.
Attainment of this goal shall be accomplished in accordance with
regulatory standards established by the State of California.
B. Resolution of Threshold Legal Issues
The Parties agree that the principal steps in this process are the following:
(1) Confirmation of Cure Period: It is the intention of City staff to
recommend to City Council that if the City makes any formal findings of
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default against the current owner for noncompliance with the
Development Agreement, then the following two provisions shall apply:
(a) Such default would be deemed cured upon the Acquisition and
Developer's agreement to three conditions: [1] providing insurance
coverage for the City as an insured under coverage provisions pre -
approved by the City ; [2] compliance with the provisions of the Unilateral
Order issued by DTSC regarding characterization and remediation of the
Property; and [3] agreeing to provide the City with an easement for 450
parking spaces for the Metrolink station parking lot which allows the City
access in perpetuity; and
(b) City agrees to toll the time period for Developer to accomplish
these three conditions for so long as the City determines in its discretion
that Developer is performing in good faith on these conditions. City may
revoke the tolling agreement upon sixty (60) days written notice to
Developer. Such revocation will have the effect of reinstating the cure
periods set forth under the existing Development Agreement, which cure
periods will be deem to commence upon the effective date of revocation of
the tolling agreement.
(2) Resolution of Pending Lawsuits
(a) A settlement with the City of the outstanding lawsuit involving the
condemnation for Golden Valley Road.
(b) A settlement with the City the outstanding lawsuit involving the
condemnation for the Soledad Metrolink property such that the City
retains perpetual access to minimum of 450 parking spaces in a manner
mutually -acceptable to City and Developer;
(c) The City and Developer cooperate, if necessary, in the settlement
of the outstanding CLWA litigation.
C. Land Use/Planning Process:
The Parties agree that the principal steps in this process are the following:
(1) Developer agrees to work with the City to formulate a "project" which
shall include, among other things, a final listing of all modifications
Developer seeks to the Development Agreement and Existing Approvals.
(2) Developer shall retain a consultant or work with existing City staff to
assist with preparation of traffic circulation and infrastructure studies; and
(3) The City has proposed a clarification of Condition DS -12 (Appendix C) to
better communicate the intent of this condition and reflect the current
understanding of the soil and groundwater remediation processes to occur
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on the property. The original Condition DS -12 was approved prior to the
discovery of perchlorate in the groundwater. This proposed clarification
reflects the current environmental condition on the property and better
articulates the intent of the condition, which is to (i) restrict the
construction and occupancy of structures prior to the completion of the
soil remediation process and final DTSC certification; and (ii) permit
grading, excavation and construction activity associated with the soil and
groundwater remediation work, in accordance with DTSC and City of
Santa Clarita requirements. The clarification and a corresponding
amendment to settlement agreement between PERC and the City will be in
place by the date of the Acquisition.
D. Economic Feasibility Evaluation/Public Financing Process:
The Parties agree that the principal steps in this process are the following:
(1) Developer and City shall each retain separate consultants (and have each
consultant work with the other) to evaluate the need for and the feasibility,
desirability and effectiveness of using public finance mechanisms,
including without limitation Community Facilities District(s), Mello -Roos
districts, Assessment Districts, Tax Increment, and/or a Redevelopment
Plan Area to defray the combined weight of environmental remediation,
infrastructure costs, and other financeable costs applicable to the
Developer's proposed plan, cleanup and infrastructure obligations. The
City agrees to support Developer's efforts to use a public finance
mechanism as appropriate to fund infrastructure and other financeable
costs.
(2) Before preparing the NOP for the environmental review documentation
for Developer's proposed project, the City will assess the feasibility of
including the adjacent City property within the boundaries of Developer's
project. In so doing, City will consider the planning and economic
viability of including within Developer's project proposal uses for the City
property. In so doing, the planning and financial consultants for both the
City and Developer shall work together to evaluate the feasibility of a
range of land uses for the Property and/or the adjacent City -owned
property that have the potential to provide long-term economic benefits to
the City. The potential uses to be evaluated include without limitation a
convention center, hotel/resort uses, entertainment complex, film
production facilities, recreational uses, and open space uses. Because
there presently are no plans for development of the City property, the City
will not without Developer's prior consent include the City property
within Developer's project boundaries. The financial consultants shall be
tasked with conducting a market study and determining the financial
benefits and detriments of the construction and long-term operation of
various land use scenarios, including those listed above.
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(3) Developer may propose that it obtain from the City a right of first refusal
to purchase the adjacent City property. City agrees to consider any such
proposal by Developer in good faith, but City retains the sole and absolute
discretion to accept, reject, or make a counter -proposal in response to any
proposal the Developer may submit.
E. Developer's Financial Assurance Mechanism Process:
The Parties agree that the principal steps in this process are the following:
(1) Developer acknowledges that the City is concerned with allowing
Developer to proceed with the Cleanup and reuse of the Property without
sufficient financial assurances being provided by Developer to the City
and the surrounding community to ensure that the Cleanup and reuse of
the Property will be completed as contemplated.
(2) Therefore, the Parties agree that the requisite financial assurances will be
provided and will be in place by the date of the Acquisition, and will
consist of a combination of the following mechanisms: (a) deposits of any
proceeds derived from a settlement or other financial arrangement from
third parties relating to the Property or of other funds into an account
whereby funds will be dedicated to the Cleanup; (b) environmental
insurance, in a form satisfactory to City's counsel (with certain coverage
parts discussed in more detail below); (c) one or more letters of credit on
such terms as shall be mutually agreeable; and/or (d) a guaranty by
Developer's parent Cherokee Investment Partners III, L.P.
F. Environmental Insurance Process:
The Parties agree that the principal steps in this process are the following:
(1) In order to address concerns that Developer's budgeted cost of the
Cleanup may be exceeded in the future, Developer shall obtain a bindable
quote from a mutually -acceptable insurance carrier providing coverage for
cost overruns in connection with such Cleanup. The quote shall include
reference to coverage parts, relevant policy provisions, endorsements and
binding conditions. Upon negotiation of terms and conditions with the
insurance carrier(s) (which process shall include consultation with the
City) and at the time of Acquisition of the Property, Developer shall cause
a policy to be issued, with the City named as an insured in a manner
mutually acceptable to the Parties.
(2) In order to address the potential for third -party lawsuits for bodily injury
or property damage resulting from either the pre-existing contamination at
the Property or the Cleanup, and to address the concern that the City might
be required to undertake the Cleanup, Developer shall provide a bindable
quote for pollution legal liability coverage from a mutually -acceptable
insurance carrier providing coverage parts addressing these concerns. The
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quote shall include reference to coverage parts, relevant policy provisions,
endorsements and binding conditions. Upon negotiation of terms and
conditions with the insurance carrier(s) (which process shall include
consultation with the City) and at the time of the Acquisition of the
Property, Developer shall cause a policy to be issued, with the City named
as an insured in a manner mutually acceptable to the Parties.
G. California Environmental Quality Act (CEQA) Process:
The Parties agree that the principal steps in this process are the following:
(1) The Parties recognize that discretionary governmental approvals relating
to the Cleanup and reuse of the Property must comply with
CEQA. Environmental impacts associated with some of the
contamination giving rise to the Cleanup, as well as environmental
impacts associated with the currently entitled uses for the Property, were
evaluated in an Environmental Impact Report approved by the City in
1995. The parties recognize that the 1995 EIR may need further analysis
in certain respects and on a timeline consistent with (1) issuance by the
City of a grading permit (and other permits if necessary) in connection
with prompt implementation of certain "removal" activities and/or
"interim" remedial measures and (2) timely review of and action on the
Application.
The parties mutually desire to expedite the consideration, approval, and
implementation of "removal" and certain "interim" remedial measures, and
accordingly anticipate working cooperatively with one another, with
DTSC, and with other stakeholders to prepare and consider a Supplement
to the 1995 EIR or a subsequent EIR that is sufficient in scope and detail
to permit the City and DTSC to issue whatever discretionary approvals
may reasonably be required to implement the removal and/or interim
remedial actions such as soil removal in the portion of the property known
as Area 55.
(2) In addition to the steps described above, the Parties anticipate working
cooperatively with one another, with DTSC, and with other stakeholders
to prepare additional CEQA documentation, such as a Supplement to the
1995 EIR or a Subsequent EIR to address (1) those portions of the
Cleanup not addressed in an initial supplement and (2) project -related
impacts other than those associated with the Cleanup, such as traffic and
circulation impacts associated with modifications the Developer may
propose in its Application.
H. Community Outreach Process:
(1) Pursuit by the City and Developer of appropriate community outreach
initiatives, including (a) working with a community group comprised of
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members of the City Council Sub -Committee, City staff, the Citizens'
Advisory Group, PERC, the water community and the Circle J Ranch
homeowners to advise of the status of the Cleanup and the Project and (b)
working with the Multi -Jurisdictional Task Force and the Citizens'
Advisory Group on a regular basis throughout the processes described in
this Agreement.
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APPENDIX C
Original Approved Condition DS -12 Text:
The Mitigation Monitoring Plan is attached as Exhibit "F". The applicant is responsible
for implementing the mitigation measures to the satisfaction of the City for the life of the
project. Mitigation Measures RU -1 and RU -3 are superseded by the following language:
For the entire 996 -acre site, the applicant and/or future developer shall provide evidence,
to the satisfaction of the City, of proper hazardous waste identification and remediation,
from Califomia Environmental Protection Agency/Department of Toxic Substances
Control prior to the issuance of any grading permits. Until such evidence has been
received, no construction may commence on the entire site until it is cleared by Cal
EPA/DTSC.
Proposed Clarification of Condition DS -12 Text:
[text to be inserted after completion of on-going three -party discussion among PERC
representatives, City, and Developer]
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