HomeMy WebLinkAboutMakallon Atlanta Huntington Beach. LLC - Makar - 2008-04-21Mc6�-N-A
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Council Meeting Date: 4/21/2008 Department ID Number: CA 08-04
CITY OF HUNTINGTON BEACH
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: HONORABLE MAY MEMBERS OF THE CITY COUNCIL
SUBMITTED BY: JENNIFER McGRA i Attorney
PREPARED BY: SCOTT FIELD, Assistant City Attorney(i
SUBJECT: Approve Arbitration Agreement for Park In Lieu Fees for Pacific City
(Tract Map No. 16338)
Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s)
Statement of Issue: At issue is the Park Fee for Pacific City. Section 254.08 of the Zoning
and Subdivision Code provides that the Park In Lieu Fee is based upon the appraised value
of the land to be subdivided. The Code provides that any dispute over land value be
resolved by way of binding arbitration. Because the City Code does not provide the details
for binding arbitration, the City Attorney has negotiated an Arbitration Agreement with Makar,
the owner of Pacific City. It is requested that the City Council approve the Arbitration
Agreement.
Recommended Action: Motion to: Approve the Arbitration Agreement and authorize the
Mayor to sign it.
Alternative Action(s): Reject the Arbitration Agreement and provide the City Attorney
direction regarding alternative means to resolve the dispute.
Analysis: Section 254.08 of the City Zoning and Subdivision Code requires a residential
subdivider to dedicate five acres of park land for every 1,000 new residents. The Code
permits a. Park In Lieu Fee to be paid equal to the value of the land that would have been
dedicated. When an In Lieu Fee is required, the City initially obtains an appraisal to
determine the value of the land. The subdivider may dispute the City's appraisal with its own
appraisal. The difference between the two appraisals is then submitted to binding arbitration
at the expense of the subdivider.
REQUEST FOR CITY COUNCIL ACTION
MEETING DATE: 4/21/2008 DEPARTMENT ID NUMBER: CA 08-04
On June 7, 2004, the City Council approved the Tentative Tract Map for Pacific City. In lieu
of a public park within the tract, Condition No. 11 required that an equivalent In Lieu Fee be
paid.
The City's consultant completed its appraisal of the property on May 18, 2007, determining
the fair market value of the property was $5,500,000 per acre. This resulted in a Park Fee
of $38,029,200. In response, Makar retained its own real estate appraiser who estimated
the value at $2,558,139 per acre, resulting in a Park Fee of $17,686,012. On October 5,
2007, Makar appealed the City's appraisal. Makar also challenged the legality of the
binding arbitration provision.
To resolve the dispute on the enforceability of the arbitration clause, and to better set forth
the procedures to be followed in binding arbitration, the City Attorney has negotiated with
Makar's attorney an agreement on the procedure to be followed. The Agreement provides
that the Arbitration will be conducted by the Judicial Arbitration and Mediation Service, with
the parties to split the fees. The parties have selected three retired judges from the Orange
County Superior Court to hear the matter. The Arbitration will be conducted on June 11, 12,
and 13, 2008.
It also should be noted that on October 16, 2006, the City Council amended the Tentative
Tract Map to provide that Makar will satisfy its Park Fee by first, developing, designing and
constructing the Senior Center. In exchange for constructing the Senior Center, Makar will
receive a credit against the In Lieu Fee in an amount of no more than $21,850,000.
Strategic Plan Goal:. Infrastructure: Improve the City's plan for funding and completing
infrastructure needs; Land Use and Economic Development: Maintain Open Space; City
Services: Provide quality public services.
Environmental Status: Not applicable.
Attachment(s):
-2- 4/14/2008 9:35 AM
ATTACHMENT 1
AGREEMENT REGARDING PROCEDURES FOR
DETERMINING PARKLAND DEDICATION FEE FOR
TENTATIVE TRACT MAP NO. 16338 PURSUANT TO SECTION 254.08
OF THE HUNTINGTON BEACH ZONING AND SUBDIVISON CODE
This AGREEMENT ("Agreement") dated as of &A / L a / , 2008 for references
purposes only, is entered into by and among the CITY OF HUNTINGTON BEACH, a charter city
("City"), and MAKALLON ATLANTA HUNTINGTON BEACH, LLC, a Delaware limited
liability company ("Makar").
RFCTTAT.0
1. Makar owns a 31.5 acre site at 21002 Pacific Coast Highway, between First and
Huntington Streets, south of Atlanta Avenue, in Huntington Beach.
2. On June 7, 2004, the City approved Tentative Tract Map No. 16338 subdividing the
site into three parcels for a mixed unit development, which will be referred to as "Pacific City."
The residential component of Pacific City is a 17.23 acre site approved for 516 condominiums
within a mix of two, three, and four story buildings. This 17.23 acre site will be known as the
"Property."
3. Condition of Approval No. 11 of Tentative Tract Map No. 16338 requires Makar to
pay a Park In -Lieu Fee for the residential portion of Pacific City (the "Park Fee"). Section 254.08
of the Huntington Beach Zoning and Subdivision Code governs the calculation of the Park Fee.
4. Section 254.08I requires that an appraisal of the Property be used to determine the
fair market value of the Property (on a per -acre basis) for purposes of calculating the Park Fee.
Section 245.08I provides that the date of the value of the Property for purposes of appraisal shall be
within 60 days of recordation of the final map, which date is August 30, 2007.
07-1249/20871
5. Once the fair market value of the Property (on a per -acre basis) is established, the
amount of the Park Fee is established pursuant to the formula set forth in Section 254.08.
6. The Park Fee is subject to certain potential offsets, as set forth in the Owner
Participation Agreement between the City, the City Redevelopment Agency, and Makar, dated
October 16, 2006. The resolution of the value of these offsets, if any, is not the subject of this
Agreement.
7. The City obtained an opinion of the fair market value of the Property to be used in
setting the amount of the Park Fee. Makar objected to the City's valuation and provided another
opinion of the fair market value of the Property. The City did not accept Makar's valuation. On
October 5, 2007, Makar requested, pursuant to Section 254.08, that the matter be submitted to
arbitration.
NOW, THEREFORE, IT IS AGREED BETWEEN THE PARTIES AS FOLLOWS:
1. Agreement To Binding_ Arbitration. The parties agreed that a three judge arbitration
panel administered by JAMS shall determine the fair market value of the Property. The parties
agreed upon the selection of Retired Judges Robert E. Thomas, Judith M. Ryan, and Jack K. Mandel
to sit as the panel, with Judge Thomas sitting as the presiding arbitrator. All fees shall be split
evenly between the parties. The panel shall use Section 254.08 to determine the value of the
Property. The panel shall conduct the arbitration pursuant to the "Comprehensive Arbitration Rules
and Procedures" of JAMS, as modified herein. The panel shall comply with Code of Civil
Procedure Section 1281.85-1281.95 regarding conflicts of interest and disclosure. The sole
grounds for vacating, correcting or rehearing the determination of value shall be as set forth at Code
of Civil Procedure Sections 1286.2-1287.
07-1249/20871 2
2. Modification of JAMS Comprehensive Arbitration Rules and Procedures. The
JAMS Comprehensive Arbitration Rules and Procedures are modified to permit the depositions of
expert witnesses only.
The parties agree to the following arbitration schedule, unless modified by the agreement of
the parties, or upon a request made to the presiding officer and a showing of good cause:
• Disclosure/Exchange of Witnesses, Experts,
Appraisals, and Supporting Documentation:
• Supplemental Disclosures and Exchange:
• Completion of Depositions:
• Exchange of Pre -Hearing Submissions,
Witness & Exhibit Lists, and Briefs:
• Arbitration:
April 30, 2008
May 14, 2008
May 23, 2008
June 4, 2008
June 11, 12, & 13, 2008
3. Enforceability of Section 254.08. Makar had objected to the validity of Section
254.08 on the grounds that it does not provide for judicial review, and that it requires Makar to bear
the cost of the arbitration. In order to resolve this dispute, the parties agree that the fair market
value of the Property (on a per -acre basis) shall be determined by arbitration pursuant to this
Agreement. Makar and the City further agree that the Park Fee shall be the fair market value of the
Property (on a per -acre basis) multiplied by 6.9144 acres. For and in consideration of the City's
agreement set forth in this Agreement (which agreements the City hereby makes and ratifies)
regarding the procedure for determining the fair market value of the Property (on a per -acre basis)
07-1249/20871 3
to be used in determining the amount of the Park Fee, Makar agrees not to contest the validity of
Section 254.08.
4. General Provisions.
This Agreement represents the entire agreement between the Parties or their
agents with respect to the procedure for determining the fair market value to be used in determining
the amount of the Park Fee. Any oral representation, modification or waivers concerning this
instrument shall be of no force or effect except in a subsequent instrument made in writing, and
signed by all the Parties. Time is of the essence in the performance of the Parties' respective
obligations herein contained. This Agreement shall inure to the benefit of and be binding upon the
Parties and their respective successors and assigns. The invalidity of any provision in this
Agreement, as determined by a court of competent jurisdiction, shall in no way affect the validity of
any other provision hereof.
b. Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, other than the Parties and their respective successors and assigns, any
legal or equitable right, remedy or claim under or in respect of this Agreement or any provisions
hereof and this Agreement is intended to be for the sole and exclusive benefit to the Parties and
their successors and assigns, and for the benefit of no other person.
c. All documents, correspondence and written communications concerning this
transaction shall be directed as set forth below or as any Party may hereafter designate by written
notice:
For Makar:
K. Erik Friess
John P. Erskine
Nossaman, Guthner, Knox & Elliott, LLP
18101 Von Karman Avenue, Suite 1800
Irvine, California 92612
07-1249/20871 4
For CITY:
City Administrator
City of Huntington Beach
2000 Main Street, CA 92648
Planning Director
City of Huntington Beach
2000 Main Street, CA 92648
With copy to:
City Attorney
City of Huntington Beach
2000 Main Street, CA 92648
d. Each of the persons executing this Agreement represents and warrants that he
or she is duly authorized to act on behalf of the Party obligated by the terms hereof, and that his or
her execution of this Agreement binds the Party on whose behalf he or she has executed this
Agreement.
e. This Agreement shall be governed by and construed according to the laws of
the State of California.
f. This Agreement shall become effective immediately following execution by
each of the Parties.
g. Each party shall bear its own attorney's fees at the arbitration and in any
proceeding to enforce this Agreement.
07-1249/20871
5
h. This Agreement may be executed in counterparts, and photocopies or
facsimile copies of this Agreement may be used as originals. Each such counterpart, photocopy or
facsimile copy of this Agreement shall be deemed an original, all of which together shall constitute
one and the same instrument.
Date:
Date: a/g00
ATTEST:
y Clerk H 2
APPROVED AS TO FORM:
City Attorney
MAKALLON ATLANTA HUNTINGTON BEACH
LLC, a Delaware limited liability company,
By: Makar Properties, LLC, a Delaware limited
liability company, its Authorized Member
By:
Paul Makarechian
Chief Executive Officer
CITY OF HUNTINGTON BEACH
By:)a4ki
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Mayor
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07-1249/20871 6
RCA ROUTING SHEET
INITIATING DEPARTMENT:
City Attorney
SUBJECT:
Arbitration Agreement for Park In Lieu Fees for Pacific
City Tract Map No. 16338
COUNCIL MEETING DATE:
April 21, 2008
Ordinance (w/exhibits & legislative draft if applicable)
Attached
LJ
Not Applicable
Resolution (w/exhibits & legislative draft if applicable)
Attached
❑
Not Appiicable
Tract Map, Location Map and/or other Exhibits
Attached
❑
Not Applicable
Contract/Agreement (w/exhibits if applicable)
Attached
(Signed in full by the City Attorney)
Not Applicable
❑
Subleases, Third Party Agreements, etc.
Attached
❑
(Approved as to form by City Attorney)
Not Applicable
Certificates of Insurance (Approved by the City Attorney)
Attached
❑
Not Applicable
Fiscal Impact Statement (Unbudgeted, over $5,000)
Attached
❑
Not Appiicable
Bonds (If applicable)
Attt ed
El
A
Nopucable
Staff Report (If applicable)
Attached
❑
Not Appiicable
Commission, Board or Committee Report (If applicable)
Attached
❑
Not Applicable
Findings/Conditions for Approval and/or Denial
Attached
❑
Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
RCA Author: Scott Field
20874 07/14/94