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HomeMy WebLinkAboutOversight Board - 2014-09 Oversight Board RESOLUTION NO. 2014-09 A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE HUNTINGTON BEACH REDEVELOPMENT AGENCY APPROVING TWO PROPOSED ASSIGNMENTS AND AGREEMENTS RELATED THERETO PERTAINING TO THE STRAND PROJECT DISPOSITION AND DEVELOPMENT AGREEMENT WITH CIM/HUNTINGTON, LLC WHEREAS, the Redevelopment Agency of the City of Huntington Beach ("Redevelopment Agency") was a redevelopment agency in the City of Huntington Beach ("City"), duly created pursuant to the California Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the California Health and Safety Code) ("Redevelopment Law"); and In furtherance of the Redevelopment Law, the Redevelopment Agency entered into that certain Disposition and Development Agreement by and between the Redevelopment Agency and CIM Group, LLC dated June 17, 1999, which Disposition and Development Agreement was supplemented by that certain [First] Implementation Agreement entered into between the Redevelopment Agency and CIM Group, LLC dated April 6, 2000; that certain Second Implementation Agreement entered into between the Agency and CIM Group, LLC dated March 5, 2001, that certain Third Implementation Agreement entered into between the Agency and CIM/Huntington, LLC, CIM Group, LLC's successor-in-interest, dated October 30, 2002, that certain Fourth Implementation Agreement entered into between the Agency and CIM/Huntington, LLC dated as of September 15, 2003, that certain Fifth Implementation Agreement entered into between the Agency and CIM/Huntington, LLC dated as of July 19, 2004 and certain Sixth Implementation Agreement entered into between the Agency and CIM/Huntington, LLC dated as of November 3, 2008 (collectively, the "DDA"); and The DDA pertains to the development more commonly known as The Strand located in the City of Huntington Beach. The Strand includes retail and office space, a luxury boutique hotel (The Shorebreak Hotel, operated by Joie de Vivre), and a subterranean parking garage owned by the City; and Assembly Bill No. X1 26 (2011-2012 Is' Ex. Sess.) ("AB 26") was signed by the Governor of California on June 28, 2011, making certain changes to the Redevelopment Law and to the California Health and Safety Code ("H&S Code"), including adding Part 1.8 (commencing with Section 34161) ("Part 1.8") and Part 1.85 (commencing with Section 34170) ("Part 1.85") to Division 24 of the H&S Code; and Pursuant to AB 26, as modified by the California Supreme Court on December 29, 2011 by its decision in California Redevelopment Association v. Matosantos, all California redevelopment agencies, including the Redevelopment Agency, were dissolved on February 1, 2012, and successor agencies were designated and vested with the responsibility of paying, performing and enforcing the enforceable obligations of the former redevelopment agencies and 1 Oversight Board Resolution No. 2014-09 expeditiously winding down the business and fiscal affairs of the former redevelopment agencies; and The City Council of the City elected for the City to serve as the successor agency to the Redevelopment Agency upon the dissolution of the Redevelopment Agency under AB 26 ("Successor Agency"); and On June 27, 2012, the Legislature passed and the Governor signed Assembly Bill No. 1484 ("AB 1484", Chapter 26, Statutes 2012); and AB 26 and AB 1484, as further amended, are collectively referred to herein as the "Dissolution Act". The Successor Agency succeeded to all of the interest of the Redevelopment Agency as successor agency pursuant to the Dissolution Act; and H&S Code Section 34179 of the Dissolution Act establishes a seven (7) member local entity with respect to each successor agency and such entity is titled the "oversight board." The oversight board has been established for the Successor Agency (hereinafter referred to as the "Oversight Board"); and CIM/Huntington, LLC ("Owner") is intending to record two condominium plans that subdivide the office/retail/hotel components of The Strand project into the following air rights parcels: (a) in one condominium plan, a boutique hotel consisting of approximately 144,015 square feet of space (the "Hotel Parcel"); and (b) in a second condominium plan, a condominium unit that includes approximately 41,159 square feet of office improvements (the "Office Parcel") and a condominium unit that includes approximately 74,366 square feet of retail improvements (the "Retail Parcel"); and Owner is proposing to sell its interests in the Office Parcel and Retail Parcel to CAPREF ACQUISITIONS, LLC, a Texas limited liability company ("Office/Retail Assignee"). Owner (or CIM/HUNTINGTON HOTEL, L.P., a California limited partnership, an anticipated successor-in-interest to the Hotel Parcel as permitted by the DDA) is proposing to sell its interests in the Hotel Parcel to DIAMONDROCK ACQUISITION, LLC, a Delaware limited liability company ("Hotel Assignee"); and In connection with the sale of the Office Parcel, Retail Parcel and Hotel Parcel, City staff and Owner have negotiated three proposed agreements; namely, (a) a Termination Agreement by and among Dolores L. Cracchiolo and Salvator W. Cracchiolo, as trustees for the Declaration of Trust dated June 12, 1979, and Salvator W. Cracchiolo and Barbara F. Cracchiolo, as trustees of the Cracchiolo Family Trust dated March 28, 2003 (collectively, "Cracchiolo"), Owner, and the Successor Agency ("Termination Agreement'); (b) an Amendment of Declaration of Covenants, Conditions & Restrictions and Reciprocal Easement Agreement by and among the City, the Successor Agency, Cracchiolo, and Owner ("CC&Rs Amendment'); and (c) a Second Amendment to Agreement Containing Covenants Affecting Real Property by and between the Successor Agency, CIM/HUNTINGTON HOTEL, L.P., a California limited partnership, and Owner ("Second Amendment to Agreement Containing Covenants"). The Termination 2 Oversight Board Resolution No. 2014-09 Agreement releases the Successor Agency, the Redevelopment Agency, and the City from liability with respect to a Ground Lease and Sublease entered into in connection with the DDA and The Strand project. The CC&Rs Amendment is necessary to make certain clarifications due to the proposed sale of the Office Parcel, Retail Parcel and Hotel Parcel. The Second Amendment to Agreement Containing Covenants was contemplated in the DDA as set forth in Section 3 of the Fifth Implementation Agreement to the DDA to reflect separate ownership of the Hotel Parcel and the balance of the Site (as defined in the DDA). The Termination Agreement, the CC&Rs Amendment, and the Second Amendment to Agreement Containing Covenants may be collectively referred to herein as the "Transfer Agreements"; and The Transfer Agreements were approved by the Successor Agency on November 17, 2014; and All of the prerequisites with respect to the approval of this Resolution have been met. NOW, THEREFORE, the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Huntington Beach does hereby resolve as follows: 1. The Oversight Board hereby finds and determines that the foregoing recitals are true and correct. 2. The Oversight Board hereby approves of an assignment of the Office Parcel and Retail Parcel to Office/Retail Assignee, subject to the approval by the Successor Agency's Executive Director of any entity formation agreements and documents (or changes therein) related to the sale, as well as the agreements and documents effectuating the sale; and further subject to the approval by the Successor Agency's Executive Director of a written assignment and assumption agreement whereby Office/Retail Assignee assumes the rights and obligations transferred by Owner and agrees to keep and perform all covenants, conditions and provisions of the DDA and related agreements which are applicable to the rights acquired. 3. The Oversight Board hereby approves of an assignment of the Hotel Parcel to Hotel Assignee, subject to the approval by the Successor Agency's Executive Director of any entity formation agreements and documents (or changes therein) related to the sale, as well as the agreements and documents effectuating the sale; and further subject to the approval by the Successor Agency's Executive Director of a written assignment and assumption agreement whereby Office/Retail Assignee assumes the rights and obligations transferred by Owner and agrees to keep and perform all covenants, conditions and provisions of the DDA and related agreements which are applicable to the rights acquired. 4. The Oversight Board hereby approves of the Transfer Agreements in the form submitted to the Oversight Board. 5. The Executive Director, or designee, of the Successor Agency is hereby. authorized and directed to: (a) make non-substantive changes and amendments to the Transfer Agreements deemed necessary and as approved by the Executive Director of the Successor 3 Oversight Board Resolution No. 2014-09 Agency and its legal counsel; and (b) take such other actions and execute such other documents as are necessary to effectuate the intent of this Resolution on behalf of the Successor Agency. 6. The staff of the Successor Agency is hereby authorized to execute and record such documents and instruments and to do any and all other things which they may deem necessary or advisable to effectuate the intent of this Resolution and any such actions previously taken are hereby ratified. 7. The adoption of this Resolution is not intended to and shall not constitute a waiver of any constitutional, legal or equitable rights that the Successor Agency or Oversight Board may have to challenge, through any administrative or judicial proceedings, the effectiveness and/or legality of all or any portion of the Dissolution Act, any determinations rendered or actions or omissions to act by any public agency or government entity or division in the implementation of the Dissolution Act, and any and all related legal and factual issues, and the Successor Agency or Oversight Board expressly reserves any and all rights, privileges, and defenses available under law and equity. 8. If any provision of this Resolution or the application of any such provision to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Resolution that can be given effect without the invalid provision or application, and to this end the provisions of this Resolution are severable. The Oversight Board declares that its Board would have adopted this Resolution irrespective of the invalidity of any particular portion of this Resolution. 9. This Resolution shall take effect upon the date of its adoption. PASSED AND ADOPTED by the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Huntington Beach at a meeting thereof held on the 24th day of November, 2014. Cha`rperson REVIEWED AND APPROVED: INITIATED AND APPROVED: fw C—/4Xxecutive Director Deputy Executive Director APPROVED S,TO FORM: .y. �,gBoard Co nsel 4 Res. No. 2014-09 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) CITY OF HUNTINGTON BEACH ) I, JOAN FLYNN, Secretary of the Huntington Beach Oversight Board of the Successor Agency of the Former City of Huntington Beach Redevelopment Agency, Huntington Beach, California DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Huntington Beach Oversight Board of the Successor Agency of the Former City of Huntington Beach Redevelopment Agency at a meeting held on November 24,2014 and that it was so adopted by the following vote: AYES: Board Members: Bone, Carchio, L. Dunn, Fritzal, Harper NOES: Board Members: None ABSENT: Board Members: A. Dunn, Delgado ABSTAIN: Board Members: None g Secreta 19, of the HuntingtorfM each Oversight Board of the Successor Agency of the Former City of Huntington Beach Redevelopment Agency Huntington Beach, California