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HomeMy WebLinkAboutCity Council - 2015-02 RESOLUTION NO. 2015-02 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH APPROVING TWO PROPOSED ASSIGNMENTS AND AN AMENDMENT RELATED THERETO PERTAINING TO THE STRAND PROJECT DISPOSITION AND DEVELOPMENT AGREEMENT WITH CIM/HUNTINGTON, LLC WHEREAS, the former Redevelopment Agency of the City of Huntington Beach ("Redevelopment Agency"i) 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 1St 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"); 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 The City Council of the City elected for the City to serve as the successor agency to the Redevelopment Agency ("Successor Agency"); and 15-4563/116385.doc 1 Reso. 2015-02 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 STRAND, LLC, a Delaware limited liability company, and CAPREF STRAND TRS, LLC, a Delaware limited liability company, jointly and severally (collectively, the "Office/Retail Assignee"). Owner (or CIM/HUNTINGTON HOTEL, L.P., a Delaware 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 IIContaining 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 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 15-4563/116385.doc 2 Reso. 2015-02 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, approved by the Oversight Board on November 24, 2014 and by the State Department of Finance on January 9, 2015; and All of the prerequisites with respect to the approval of this Resolution have been met. NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby resolve as follows: 1. The above recitals are true and correct and are a substantive part of this Resolution. 2. The City Council 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 City Council 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 IIdocuments (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 City Council hereby approves of the CC&Rs Amendment in the form submitted to the City Council. 5. The City Manager, or designee, is hereby authorized and directed to: (a) make non-substantive changes and amendments to the CC&Rs Amendment deemed necessary and as approved by the City Manager and the City Attorney; 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 City. 6. City staff 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. 1 5-4563/1 1 6385.doc 3 i Reso. 2015-02 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 City Council 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 City Council 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 City Council declares that its City Council 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 City Council of the City of Huntington Beach at a regular meeting thereof held on the 2nd day of February , 2015. Mayor REVIE ND APPROVED: APPROVEDr S TO FORM: City a4gVbr City Attorney 1HV , INITIATED AND APPROVED: zG� Deputy Director of B siness Development 15-4563/116385.doc 4 i �V G RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: CIM/Huntington, LLC 6922 Hollywood Blvd., 9th Floor Los Angeles, CA 90028 Attention: General Counsel AMENDMENT OF DECLARATION OF COVENANTS,CONDITIONS & RESTRICTIONS AND GRANT OF RECIPROCAL EASEMENTS (CIM-Huntington Beach) AMENDMENT OF DECLARATION OF COVENANTS, CONDITIONS & RESTRICTIONS AND RECIPROCAL EASEMENT AGREEMENT (CIM-Huntington Beach) This Amendment of Declaration of Covenants, Conditions &Restrictions and Reciprocal Easement Agreement("Amendment")is made and entered into as of the recordation hereof(the "Effective Date"),by the City of Huntington Beach, a municipal corporation("City"), the Successor Agency to the Redevelopment Agency of the City of Huntington Beach (the "Successor Agency'), 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") and CIM/Huntington LLC, a California limited liability company("Developer") (collectively, the"Parties"), with respect to real property located in Orange County, California described on Exhibit A attached hereto, comprised of the Parking Parcel, the Retail Parcel and the Hotel Parcel(as defined in the Original Declaration as defined below). RECITALS A. The City, Cracchiolo, Developer and the Redevelopment Agency of the City of Huntington Beach(the"Agency"),the Successor Agency's predecessor in interest, entered into that certain Declaration of Covenants, Conditions &Restrictions and Reciprocal Easement Agreement recorded as Instrument No. 2009000047214 on February 3, 2009 in the Official Records of Orange County,)California(the"Original Declaration"). The Parties now desire to amend the Original Declaration in the manner set forth below. Capitalized terms not otherwise defined herein shall have the same definitions as set forth in the Original Declaration. B. The Parties acknowledge that(i) Developer and other Owners are subject to other instruments conferring rights upon Successor Agency or the City and/or obligations on Developer and/or the other(Owners, including without limitation the Fifth Street Public Access Easement, the Maintenance License Agreement, the Operating Agreement and the Agreement Containing Covenants Affecting Real Property, and the DDA, and pursuant to Section 12.2 of the Original Declaration, nothing contained herein shall serve to limit the Parties' obligations as contained in and for the terms of such agreements, and(ii)nothing contained in this Declaration shall limit the City's police powers or shall allow Developer or any Owner to fail to comply with any applicable City code or ordinance. C. Immediately,after the recordation of this Amendment, Developer is recording two condominium plans relating to the Retail Parcel and the Hotel Parcel. -1- CIM HB CCRs Amendment 1. Modifications to Amendments. The following definitions shall replace in their entirety the corresponding definitions contained in the Original Declaration: 1.1 "Manager" means the person or entity responsible pursuant to the terms hereof for maintenance of the Common Areas and performance of all other obligations specifically allocated to the "Manager" hereunder. Manager may employ a person or entity to perform management functions in the Project, and in so doing may assign and delegate to such person or entity all or a portion of Manager's rights and obligations under this Declaration(and, subject to any limitations thereon set forth in Article H below,may include the reasonable costs of compensating any agents, contractors or professional managers engaged to perform such functions in the Common Area Expenses); provided however, that Manager shall remain responsible for the performance of such obligations by such person or entity. The Manager shall initially be Developer or any successor-in-interest to all (but not less than all) of Developer's Interest in the Parcel 1 of the Retail Parcel ("Retail Parcel 1"), provided,however,that Retail Parcel 1 Owner's rights and obligations as Manager shall be deemed assigned to the Property Owners Association(or, with the consent of the City, a Condominium Association)upon formation thereof on the terms set forth in Article 13 below. Notwithstanding the foregoing, with respect to the City and the Agency only, Developer and Developer's successor-in-interest to Developer's Interest in Retail Parcel 1 shall remain obligated to perform any obligation of Manager hereunder to the extent not performed by the Property Owner's Association or designated Condominium Association(and the Parties to this Declaration authorize such performance by Developer or Developer's successor-in-interest),provided that any such successive holder of Developer's Interest in Retail Parcel 1 shall be relieved of any liability for such performance upon the transfer of such holder's interest in Retail Parcel 1 and any transferee of such holder's interest shall be deemed to have assumed such obligation from and after the effective date of such transfer. 1.2 "Master Parcel Owner"shall mean the Retail Parcel 1 Owner. Notwithstanding the foregoing,there shall be no voting, consent or approval rights hereunder appurtenant to ownership of the Master Parcel nor shall any person or entity holding title to the Master Parcel by virtue thereof be deemed an"Owner" for purposes of exercising any voting or consent rights appurtenant to ownership of a Parcel hereunder. 1.3 "Parcelization Amendment" shall mean this Amendment. 1.4 "Proportionate Share" means (i)with respect to the Class A Common Area Expenses, the total Floor Area within all buildings within a Parcel (excluding the Master Parcel), divided by the total Floor Area within all buildings within the Project (excluding the Master Parcel), provided that with respect to Class A Common Area Expenses that relate to maintenance,repair or restoration costs, "Proportionate Share" shall be calculated so that the Proportionate Share of the Retail Parcel Owner shall be 51% and the Proportionate Share of the -2- CIM HB CCRs Amendment Hotel Parcel Owner shall be 49%, and(ii) with respect to the Class B Common Area Expenses, the Proportionate Share of the Retail Parcel Owner shall be 51%and the Proportionate Share of the Hotel Parcel Owner shall be 49%." 2. Modification of Section 16.26. Section 16.26 of the Original Declaration shall be deleted and the following substituted in its place: " 16.26 Authority of Successor Agency Executive Director to Act for Successor A enc . Except as otherwise expressly provided in this Declaration, any consent, approval or other instrument described in this Declaration may be granted, given or executed by the Successor Agency Executive Director or designee on behalf of the Successor Agency hand the Successor Agency Executive Director or designee shall be authorized to take any other action on behalf of the Successor Agency without the need for further authorization from the Successor Agency; provided, however that, notwithstanding the foregoing, the Successor Agency Executive Director or designee may, in his or her sole discretion, refer to the Successor Agency any item for which the Successor Agency Executive Director or designee has authority to act hereunder." 3. Agreement to Hold Hotel Units by One Owner. Developer hereby covenants, on behalf of itself and all future owners of the individual condominium units within the Hotel Parcel, that all such units shall be owned by the same owner(s) (provided that ownership by tenants-in-common of such units shall not violate the foregoing covenant). 4. Limitation of Amendment. Except as expressly set forth in this Amendment, the Original Declaration shall remain in full force and effect. [signatures on following pages] -3- CIM HB CCRs Amendment IN WITNESS WHEREOF, the Parties hereto have executed this Declaration as of the date first written above. SUCCESSOR AGENCY TO THE CITY OF HUNTINGTON BEACH, a HUNTINGTON BEACH municipal corporation of the State of REDEVELOPMENT AGENCY, a public body California corporate and politic By: By: Mayor Chairperson ATTEST: ATTEST: By: By: City Clerk Agency Clerk APPROVED AS TO FORM: APPROVED AS TO FORM: By: By: Agency Counsel City Attorney APPROVED AS TO FORM: INITIATED AND APPROVED: By: By: Kane Ballmer&Berkman Deputy Director of Business Development Successor Agency Special Counsel INITIATED AND APPROVED: REVIEWED AND APPROVED: By By: Dcputy Executive Director City Manager REVIEWED AND APPROVED: APPROVED AS TO FORM By; �.,.. U C' y Executive Director 't')S�- -4- CIM HS CCRs Amendment i Item 6. - I I HB -104- "Developer" CIM/Huntington, LLC, a California limited liability company By: Name: Title: "Cracchiolo" Salvator W. Cracchiolo, trustee for the Declaration of Trust dated June 12, 1979 Dolores L. Cracchiolo, trustee for the Declaration of Trust dated June 12, 1979 Barbara F. Cracchiolo, trustee of the Cracchiolo Family Trust dated March 28, 2003 Salvator W. Cracchiolo, trustee of the Cracchiolo Family Trust dated March 28, 2003 -5- CIM HB CCRs Amendment Res. No. 2015-02 STATE OF CALIFORNIA COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, JOAN L. FLYNN the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at a Regular meeting thereof held on February 2, 2015 by the following vote: AYES: Posey, O'Connell, Katapodis, Hardy, Sullivan, Delgleize, Peterson NOES: None ABSENT: None ABSTAIN: None e City rk and ex-officio Jerk of the City Council of the City of Huntington Beach, California