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HomeMy WebLinkAboutE-12 Staff Report - Fourth Amendment to DDA 4th and Assignment - Costanzo InvestmentCONSENT ITEM E-12 TO: HONORABLE CHAIR AND MEMBERS OF THE SUCCESSOR AGENCY TO THE AZUSA REDEVELOPMENT AND MAYOR AND CITY COUNCIL VIA: SERGIO GONZALEZ, CITY MANAGER FROM: MATT MARQUEZ, ECONOMIC AND COMMUNITY DEVELOPMENT DIRECTOR DATE: NOVEMBER 2, 2020 SUBJECT: SUCCESSOR AGENCY APPROVE THE ASSIGNMENT AND ASSUMPTION AGREEMENT ASSIGNING THE PURCHASE AND SALE AGREEMENT BETWEEN THE SUCCESSOR AGENCY AND COSTANZO INVESTMENTS, LLC TO THE AVENUE AZUSA, LLC AND THE CITY COUNCIL APPROVE THE ASSIGNMENT AND ASSUMPTION AGREEMENT ASSIGNING THE DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE CITY OF AZUSA AND COSTANZO INVESTMENTS, LLC TO THE AVENUE AZUSA, LLC AND APPROVE THE FOURTH AMENDMENT TO THE DISPOSITION AND DEVELOPMENT AGREEMENT. (APNs 8608-025-902, 8608-025-907, 8608-025-908, 8608-025-909, 8608-025-910 AND A PORTION OF 8608-025-914) BACKGROUND: The City and Successor Agency to the Redevelopment Agency are owners of several parcels generally located on the southeast corner of Azusa Avenue and 9th Street in the City (APNs 8608-025-902, 8608- 025-907, 8608-025-908, 8608-025-909, 8608-025-910 and a portion of 8608-025-914) (“Property”). The Successor Agency, pursuant to the Long Range Property Management Plan, desires to sell and the City desires to sell for economic development purposes, their respective portions of the Property to Costanzo Investments, LLC (“Developer”). On June 19, 2017, the City entered into a Disposition and Development Agreement (DDA) and the Successor Agency entered into a Purchase and Sale Agreement and Joint Escrow Instructions (PSA) with the Developer to sell the Property. This action approves the assignment of the PSA and the DDA to The Avenue Azusa, LLC, a joint venture between Costanzo Investments and Serrano Development and the Fourth Amendment to the DDA. APPROVED CITY COUNCIL 11/02/2020 Approve Amendments with Costanzo Investments, LLC. November 2, 2020 Page 2 RECOMMENDATION: Staff recommends that the following actions be taken: 1) The City Council approve, in substantially final form, an Assignment and Assumption Agreement conveying Costanzo Investment’s interest in the DDA to The Avenue Azusa, LLC and approve in substantially final form the Fourth Amendment to the DDA; and 2) The Successor Agency approve, in substantially final form, an Assignment and Assumption Agreement conveying Costanzo Investments interest in the PSA to The Avenue Azusa, LLC; and 3) Authorize the City Manager to execute the agreements, in a form acceptable to the City Attorney, and to take any additional actions necessary to conclude the transactions provided there is no additional cost to the City or the Successor Agency. ANALYSIS: The City and the Successor Agency entered into their respective agreements with Costanzo Investments (“Developer”) in 2017. Since that time the Developer has pursued the project but, as a result of changes in the economy and processing issues, the proposed project has not been financeable and has not progressed through construction drawings. The proposed project is entitled. Recently the Developer indicated that he was pursuing a joint venture with Serrano Development (“Serrano”). The Developer and Serrano have come to terms and entered into a joint venture arrangement to secure the development of the project as originally entitled. At this time, the Developer and Serrano seek the Successor Agency and City’s consent to the assignment of the PSA and DDA to the new joint venture entity, The Avenue Azusa, LLC. Additionally, Serrano, on behalf of The Avenue Azusa, LLC, is requesting certain modifications to the DDA including: • Update to the Schedule of Performance as follows: o Developer Submits to Plan Check – 2/22/21 o Developer responds to plan check comments – 30 days after receipt o Closing Date – 75 days after Ready to Issue Permits from the City o Developer to tender payment of Building Permit fees and request issuance of Building Permit – 10 days after Closing Date o Developer to commence construction – 75 days from Ready to Issue Permits o Project Completion Date – 29 months from commencement of construction • Commitment from the City to process the necessary alley vacation and to record easements consistent with the approved tentative map. • Commitment from the Developer to process the revised tentative map and other documents to clean up the lot lines and create the new lots necessary to complete the conveyance. • Commitment by the Developer to enter into a Maintenance Agreement whereby Developer will be responsible for the ongoing maintenance of certain areas surrounding the final project. Approve Amendments with Costanzo Investments, LLC. November 2, 2020 Page 3 In 2015, the City adopted the TOD Specific Plan and its corresponding environmental impact report (EIR). The site subject to these agreements is included within the boundaries of the Specific Plan project area and was included in the environmental analysis in accordance with Public Resources Code section 21166 and State CEQA Guidelines, section 15162. The actions contemplated in this staff report do not constitute a significant change and therefore are consistent with the EIR previously adopted for the TOD Specific Plan. Therefore, no further environmental review is required. FISCAL IMPACT: The City will receive compensation based upon the final square footage of land conveyed. Prepared by: Reviewed and Approved: Carina Campos Matt Marquez Economic Development Specialist Economic and Community Development Director Reviewed and Approved: Sergio Gonzalez City Manager Attachments: 1) Fourth Amendment to the Disposition and Development Agreement 2) Assignment and Assumption Agreement for the Purchase and Sale Agreement 3) Assignment and Assumption Agreement for the Disposition and Development Agreement 45635.01849\33422860.6 FOURTH AMENDMENT TO THE DISPOSITION AND DEVELOPMENT AGREEMENT (The Avenue Azusa LLC/A-2 Property) THIS FOURTH AMENDMENT TO THE DISPOSITION AND DEVELOPMENT AGREEMENT (this “Fourth Amendment”) is dated as of, ____ 2020 for reference purposes only, and is entered into by and between the City of Azusa, a California municipal corporation (the “City”), and The Avenue Azusa LLC, a Delaware limited liability company (the “Developer”) (collectively, the “Parties,” and each a “Party”). The Parties enter into this Fourth Amendment with reference to the following facts: RECITALS A.The Successor Agency to the Azusa Redevelopment Agency (“Successor Agency”) is the owner of that certain real property located at 826, 858, 832, and 830 N. Azusa Avenue, Azusa (APNs 8608-025-902, 8608-025-907, 8608-025-908, 8608-025-909, and 8608- 025-910) (“SA Property”). B.The Successor Agency and Costanzo Investments, LLC (“CI”), entered into that certain 2017 Purchase and Sale Agreement for the sale of the SA Property to CI. C.The Parties acknowledge that as a result of a clerical error APN 8608-025-909 is only referenced in certain Successor Agency documents as being included in the Successor Agency transaction. The Successor Agency and Developer memorialized in that certain Assignment and Assumption Agreement approved by the Successor Agency on November 2, 2020 that the omission of the parcel APN 8608-025-909 was in error and is intended to be included in the sale of the SA Property. D.The City is the owner of that certain remnant parcel formerly known as a portion of APN 8608-025-906 (“City Property”). The SA Property and City Property are collectively referred to as the “Properties.” E.The City and CI entered into that certain Disposition and Development Agreement, dated March 6, 2017 (the “Original Agreement”), for the sale and development of the City Property. F.The Parties acknowledge that as a result of mapping and other changes, the parcel formerly identified as APN 8608-025-906 was modified and subsumed into new parcels APN 8608-025-914 and 915 through the parcel map process creating the lot for the parking structure. F.The City and CI entered into a First Amendment to the Original Agreement on April 8, 2019, a Second Amendment to the Original Agreement on or about October 3, 2019 and a Third Amendment on or about August 17, 2020 (collectively referred to as the “DDA”). All capitalized terms used herein and not defined shall have the same meaning as within the Original Agreement. G.Pursuant to that certain Assignment and Assumption Agreement by and between CI, The Avenue Azusa LLC and the City, the DDA was assigned to Developer. Attachment 1 45635.01849\33422860.6 H. Following the assignment of the DDA, the Parties desire to clarify and modify the DDA to reflect the current terms and conditions of the sale and development of the Properties. NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH THE PARTIES ACKNOWLEDGE, AND PURSUANT TO THE PROMISES AND COVENANTS SET FORTH IN THIS FOURTH AMENDMENT, THE PARTIES AGREE, AS FOLLOWS: 1. Schedule of Performance. The Schedule of Performance in the DDA is hereby revised as provided in the Schedule of Performance attached hereto as Exhibit 1. To the extent there are inconsistencies between the DDA and its Schedule of Performance and this Amendment and Exhibit 1, the language in this Amendment and Exhibit 1 shall prevail. 2. City shall: a. Within 90 days of the Effective Date of this Amendment process a vacation of the alleyway in the approximate dimensions and size depicted in area identified in green as the “Alley Vacation” on Exhibit 2. b. Record an easement over the area identified in blue as the “Proposed Outdoor Plaza” on Exhibit 2 to allow Developer to utilize the area for the benefit of the adjacent retail tenants in the Project and such other easements as reflected on the tentative map or otherwise determined by staff as necessary and consistent with the development of the Project. 3. Developer shall process, prior to the close of escrow, a revised tentative map, lot line adjustment, or other appropriate document(s) to: a. Create a new lot consisting of the portion of the former APN 8608-025-906 that will become the lot being sold pursuant to the Original Agreement. 4. Prior to the close of escrow, Developer and City shall enter into: a. The Parking Agreement as described in Section 2.6.2 of the Original Agreement. b. A Maintenance Agreement whereby Developer shall be responsible for the ongoing maintenance of the easement area granted pursuant to Section 2(b) above and that area identified as the “Dedication Area” on Exhibit 2. 5. Effective Date of Fourth Amendment. This Fourth Amendment shall be effective on the date last signed by the Parties following approval by the City Council. If this Fourth Amendment is not fully executed within thirty (30) days of the Council action it shall be null and void and of no further force or effect. 6. Effect Upon Original Agreement. Except as expressly amended by this Fourth Amendment, the Original Agreement remains in full force and effect, unmodified except as otherwise expressly provided herein. Wherever the term “Agreement” appears in the Original Agreement, it shall be read and understood to mean the Original Agreement as amended by the First, Second and Third Amendments, as well as by this Fourth Amendment. In the event of any direct conflict or inconsistency between the terms of the Original Agreement (and/or any prior amendments) and this Fourth Amendment, the terms of this Fourth Amendment shall be controlling to the extent of such conflict or inconsistency. 45635.01849\33422860.6 7. Counterparts. This Fourth Amendment may be executed in one or more counterparts, including the transmission of counterparts by facsimile or electronic mail, each of which shall be deemed an original but all of which, taken together, shall constitute one in the same Fourth Amendment. [Signatures on following page] 45635.01849\33422860.6 SIGNATURE PAGE TO THE FOURTH AMENDMENT TO THE 2017 DISPOSITION AND DEVELOPMENT AGREEMENT (The Avenue Azusa LLC/A-2 Property) IN WITNESS WHEREOF, the City and the Developer have executed this FOURTH AMENDMENT TO THE DISPOSITION AND DEVELOPMENT AGREEMENT by and through the signatures of their duly authorized representative(s) set forth below: CITY: CITY OF AZUSA, a California municipal corporation By: ______________________________ Name: Sergio Gonzalez Its: City Manager Date: ____________________ Attest: By:_______________________________ City Clerk Date: _________________________ APPROVED AS TO FORM: By:______________________________ City Attorney Date:_________________________ DEVELOPER: THE AVENUE AZUSA LLC, a Delaware limited liability company By:______________________________________ Name: ___________________________________ Its: Managing Member Date: __________________________ 45635.01849\33422860.6 Exhibit 1 To the Fourth Amendment to the Disposition and Development Agreement by and between the City of Azusa and The Avenue LLC REVISED SCHEDULE OF PERFORMANCE 45635.01849\33422860.6 . EXHIBIT C TO 2017 DISPOSITION AND DEVELOPMENT AGREEMENT (Costanzo Investments, LLC/A-2 Property) Replace with the following in the chart below: • Developer Submits to Plan Check – 2/22/21 • Developer responds to plan check comments – 30 days after receipt • Closing Date – 75 days after Ready to Issue Permits from the City • Developer to tender payment of Building Permit fees and request issuance of Building Permit – 10 days after Closing Date • Developer to commence construction – 75 days from Ready to Issue Permits • Project Completion Date – 29 months from commencement of construction Outside Project Completion date (based on a six month plan check timeline assumption), subject any extensions provided in the Original Agreement shall be October 30, 2024 45635.01849\33422860.6 Exhibit 2 To the Fourth Amendment to the Disposition and Development Agreement by and between the City of Azusa and The Avenue LLC REVISED SITE PLAN 45635.01849\33422860.6 • Yellow area: City alley to be maintained by Developer • Green area: City alley to be vacated and conveyed to Developer at an additional cost pursuant to the Second Amendment • Blue area: City land to be encumbered with an easement in favor of Developer and to maintained by Developer pursuant to Maintenance Agreement • Pink area: Land to be dedicated to the City though maintained by Developer pursuant to Maintenance Agreement 45635.01849\33428065.3 ASSIGNMENT AND ASSUMPTION AGREEMENT By and Between Costanzo Investments, LLC And The Avenue Azusa LLC THIS ASSIGNMENT AND ASSUMPTION AGREEMENT dated __________, 200__ ("Agreement") is entered into by and among Costanzo Investments, LLC, a Delaware limited liability company ("Assignor”), and The Avenue Azusa LLC, a Delaware limited liability company ("Assignee"). RECITALS 1.Assignor and the SUCCESSOR AGENCY TO THE CITY OF AZUSA REDEVELOPMENT AGENCY, a California municipal corporation ("SA") have previously entered into that certain Purchase and Sale Agreement dated ________________, as amended by [ , , ] copies of which are attached hereto as Exhibit "A" (collectively, "Original Agreement"). 2.Assignor desires to assign to Assignee all of Assignor's rights and interests in and to the Original Agreement and to delegate to Assignee all of Assignor's duties and obligations under the Original Agreement. Assignee desires to accept the assignment of such rights and interests and assume such obligations thereunder. 3.Assignor seeks the SA’s consent to assign the Original Agreement to a development entity. As of today’s date, Assignee’s ownership consists of two members, CI Azusa, LLC (a related party to Costanzo Investments, LLC) and Azusa Investors, LLC (a related party to Serrano Development Company, Inc.). Assignee’s manager is MT Partners II, LLC, a non-member related party of Serrano Development Company. NOW, THEREFORE, in consideration of the mutual covenants, agreements and terms and conditions contained herein, the parties hereto hereby agree as follows: 1.Incorporation of Recitals and Exhibits. The "Exhibits" and "Recitals" of this Agreement constitute a material part of this Agreement and are incorporated by reference as though fully set forth hereat. 2.Assignment of Rights and Interests in the Original Agreement. Assignor hereby assigns and transfers to Assignee all of Assignor's rights and interests in and to the Original Agreement, and Assignee hereby accepts from Assignor the assignment of any and all rights and interests of Assignor under the Original Agreement. Additionally, all personal representations or warranties of Chris and James Costanzo in the Original Agreement shall now be made by Jason Tolleson, representative of Assignee. Attachment 2 45635.01849\33428065.3 3. Delegation and Assumption of Obligations Under the Original Agreement. Assignor hereby delegates to Assignee all Assignor's obligations, covenants and promises under the Original Agreement, and Assignee hereby accepts the foregoing delegation of such obligations and covenants, and promises and agrees to fully perform such obligations and fulfill such covenants and promises, regardless of whether they accrued or arose before, on or after the date hereof, and Assignor (including its affiliates, members, partners and employees) is hereby released of any and all past, current and future obligations, covenants, promises and liabilities whatsoever in connection with the Original Agreement. 4. Property Description. The Original Agreement contemplated and memorialized the sale of the SA Property. located at 826, 858, 832, and 830 N. Azusa Avenue, Azusa (APNs 8608-025-902, 8608-025-907, 8608-025-908, 8608-025-909, and 8608-025-910) (“SA Property”). As a result of a clerical error APN 8608-025-909 is only referenced in certain Successor Agency documents as being included in the Successor Agency transaction. The omission of the parcel APN 8608-025-909 was in error and is intended to be included in the sale of the SA Property. 5. General Provisions. (a) This Agreement shall be governed and construed in accordance with the laws of the State of California. Venue shall be in Los Angeles County. (b) This Agreement and that certain ______________ Agreement between Assignor and Assignee dated __, 20__ pursuant to which this Agreement is being executed and delivered, and the exhibits and documents referenced therein or herein constitute the entire agreement between the parties with respect to the assignment and assumption of the Original Agreement and supersedes all prior agreements and understandings between the parties with respect thereto. (c) In the event a dispute arises concerning the meaning or interpretation of any provision of this Agreement, the party not prevailing in such dispute shall pay any and all costs and expenses incurred by the other part y in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorneys' fees. (d) This Agreement may be executed in one or more counterparts, each of which shall constitute an original, and all of which together shall constitute one in the same agreement. (e) In the event of a conflict between the terms of this Agreement and the terms of the Original Agreement, the terms of this Agreement shall control. (f) Notices, demands and communications between SA, Assignee and Assignor shall be sufficiently given if dispatched by registered or certified U.S. mail, postage prepaid, return receipt requested, to Assignor or Assignee as set forth below: Assignor: Costanzo Investments, LLC 17 Corporate Plaza Dr., Suite 250 45635.01849\33428065.3 Newport Beach, CA 92660 Assignee: The Avenue Azusa, LLC 500 N. Brand Boulevard, #2120 Glendale, CA 91203Attn: Jason Tolleson 6. The effective date of this Agreement shall be the date it has executed and delivered by Assignor and Assignee. 7. Status of Agreement. All terms, conditions and covenants set forth in the Original Agreement shall remain in full force and effect, subject only to the terms and amendments set forth in this Agreement. Dated: ________________ ASSIGNOR, COSTANZO INVESTMENTS, LLC, a Delaware limited liability company By: ______________________________ Its: Managing Member Dated: ________________ ASSIGNEE, THE AVENUE AZUSA LLC, a Delaware limited liability company By: ______________________________ Its: _______________________________ By: ______________________________ Its: _______________________________ Acknowledgement & Agreement: The Successor Agency to the City of Azusa Redevelopment Agency hereby acknowledges that this Agreement is in a form approved by the SA and acknowledges and consents to the assignment and assumption between Assignor and Assignee as set forth in this Agreement Dated: ________________ SUCCESSOR AGENCY TO THE CITY OF AZUSA REDEVELOPMENT AGENCY By: ______________________________ Executive Directorr 45635.01849\33428065.3 ATTEST: By: __________________________ City Clerk 45635.01849\33428065.3 EXHIBIT "A" [Copy of Original Agreement] 45635.01849\33428063.5 ASSIGNMENT AND ASSUMPTION AGREEMENT By and Between Costanzo Investments, LLC And The Avenue Azusa LLC THIS ASSIGNMENT AND ASSUMPTION AGREEMENT dated __________, 200__ ("Agreement") is entered into by and among Costanzo Investments, LLC, a Delaware limited liability company ("Assignor”), and The Avenue Azusa LLC, a Delaware limited liability company ("Assignee"). RECITALS 1.Assignor and the CITY OF AZUSA, a California municipal corporation ("City") have previously entered into that certain Disposition and Development Agreement dated ________________, [IF REAL PROPERTY IS INVOLVED, INSERT: recorded with the Los Angeles County Recorder’s Office as document no. ___________]), as amended by [ , , ] copies of which are attached hereto as Exhibit "A" (collectively, "Original Agreement"). 2.Assignor desires to assign to Assignee all of Assignor's rights and interests in and to the Original Agreement and to delegate to Assignee all of Assignor's duties and obligations under the Original Agreement. Assignee desires to accept the assignment of such rights and interests and assume such obligations thereunder. 3.The Original Agreement provides for and permits Assignor to assign its rights, interests and obligations thereunder as a "Permitted Transfer" subject to giving written notice of such Permitted Transfer to the City and using a form of assignment and assumption agreement that is subject to the City's reasonable approval. As of today’s date, Assignee’s ownership consists of two members, CI Azusa, LLC (a related party to Costanzo Investments, LLC) and Azusa Investors, LLC (a related party to Serrano Development Company, Inc). Assignee’s manager is MT Partners II, LLC, a non-member related party of Serrano Development Company. NOW, THEREFORE, in consideration of the mutual covenants, agreements and terms and conditions contained herein, the parties hereto hereby agree as follows: 1.Incorporation of Recitals and Exhibits. The "Exhibits" and "Recitals" of this Agreement constitute a material part of this Agreement and are incorporated by reference as though fully set forth hereat. 2.Assignment of Rights and Interests in the Original Agreement. Assignor hereby assigns and transfers to Assignee all of Assignor's rights and interests in and to the Original Agreement, and Assignee hereby accepts from Assignor the assignment of any and all Attachment 3 45635.01849\33428063.5 rights and interests of Assignor under the Original Agreement. Additionally, all personal representations or warranties of Chris and James Costanzo in the Original Agreement shall now be made by Jason Tolleson, representative of Assignee. 3. Delegation and Assumption of Obligations Under the Original Agreement. Assignor hereby delegates to Assignee all Assignor's obligations, covenants and promises under the Original Agreement, and Assignee hereby accepts the foregoing delegation of such obligations and covenants, and promises and agrees to fully perform such obligations and fulfill such covenants and promises, regardless of whether they accrued or arose before, on or after the date hereof, and Assignor (including its affiliates, members, partners and employees) is hereby released of any and all past, current and future obligations, covenants, promises and liabilities whatsoever in connection with the Original Agreement. 4. General Provisions. (a) This Agreement shall be governed and construed in accordance with the laws of the State of California. Venue shall be in Los Angeles County. (b) This Agreement and that certain ______________ Agreement between Assignor and Assignee dated __, 20__ pursuant to which this Agreement is being executed and delivered, and the exhibits and documents referenced therein or herein constitute the entire agreement between the parties with respect to the assignment and assumption of the Original Agreement and supersedes all prior agreements and understandings between the parties with respect thereto. (c) In the event a dispute arises concerning the meaning or interpretation of any provision of this Agreement, the party not prevailing in such dispute shall pay any and all costs and expenses incurred by the other part y in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorneys' fees. (d) This Agreement may be executed in one or more counterparts, each of which shall constitute an original, and all of which together shall constitute one in the same agreement. (e) In the event of a conflict between the terms of this Agreement and the terms of the Original Agreement, the terms of this Agreement shall control. (f) Notices, demands and communications between City, Assignee and Assignor shall be sufficiently given if dispatched by registered or certified U.S. mail, postage prepaid, return receipt requested, to Assignor or Assignee as set forth below: Assignor: Costanzo Investments, LLC 17 Corporate Plaza Dr., Suite 250 Newport Beach, CA 92660 Assignee: The Avenue Azusa, LLC 500 N. Brand Boulevard, #2120 45635.01849\33428063.5 Glendale, CA 91203 Attn: Jason Tolleson 5. The effective date of this Agreement shall be the date it has executed and delivered by Assignor and Assignee. 6. Status of Agreement. All terms, conditions and covenants set forth in the Original Agreement shall remain in full force and effect, subject only to the terms and amendments set forth in this Agreement. Dated: ________________ ASSIGNOR, COSTANZO INVESTMENTS, LLC, a Delaware limited liability company By: ______________________________ Its: Managing Member Dated: ________________ ASSIGNEE, THE AVENUE AZUSA LLC, a Delaware limited liability company By: ______________________________ Its: _______________________________ By: ______________________________ Its: _______________________________ Acknowledgement & Agreement: The City of Azusa, a California municipal corporation, hereby acknowledges that this Agreement is in a form approved by the City pursuant to the Original Agreement, and acknowledges the assignment and assumption between Assignor and Assignee as set forth in this Agreement and, notwithstanding anything to the contrary in the Original Agreement, hereby deems it a “Permitted Transfer”, as that term is used under the Original Agreement. Dated: ________________ CITY OF AZUSA a California municipal corporation By: ______________________________ City Manage r ATTEST: 45635.01849\33428063.5 By: __________________________ City Clerk 45635.01849\33428063.5 EXHIBIT "A" [Copy of Original Agreement]