HomeMy WebLinkAboutNF Huntington Retail, LP - 2010-12-20J177 L 2)J/
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Council Meeting Date: December 20, 2010 Department ID Number: ED 10-027
CITY OF HUNTINGTON BEACH
REQUEST FOR REDEVELOPMENT AGENCY ACTION
SUBMITTED TO: Honorable Chairman and Agency Members
SUBMITTED BY: Fred A. Wilson, Executive Director
PREPARED BY: Stanley Smalewitz, Deputy Executive Director
SUBJECT: Adopt Resolution No. 386 and authorize execution of the Agreement
for Purchase and Sale of Real Property between the Redevelopment
Agency and NF Huntington Retail, LP for property located at the
intersection of Cypress Avenue and Elm Street
Statement of Issue: Approve the sale of the property located at the intersection of Cypress
Avenue and Elm Street (APN 165-364-24) in order to enable the adjoining property owner to
construct a parking lot benefiting the commercial building located at 17131 Beach Blvd. The
building is currently under parked and therefore cannot be fully leased.
Financial Impact: The sale of the Agency owned property will generate $208,672 in
revenue ($195,000 sale price plus $13,672 in accrued interest payments).
Redevelopment Agency Recommended Action: Motion to:
A) Adopt Resolution No. 386,"A Resolution of the Redevelopment Agency of the City of
Huntington Beach Approving the Sale of Property Located Within the Huntington Beach
Redevelopment Project Area (Cypress/Elm Parcel)" authorizing the Agency to enter into the
"Agreement for Purchase and Sale of Real Property and Escrow Instructions" between the
Redevelopment Agency of the City of Huntington Beach and NF Huntington Retail, LP, a
California limited partnership; and,
B) Authorize the Chairperson, Executive Director, and Agency Secretary to sign all related
documents.
Alternative Action(s):
Do not approve the Agreement and/or direct staff accordingly.
P
HB -551- Item 19. - 1
REQUEST FOR COUNCIL ACTION
MEETING DATE: 12/20/2010 DEPARTMENT ID NUMBER: ED 10-27
Analysis:
The Agency is entering into an Agreement for Purchase and Sale of Real Property with NF
Huntington Retail, LP (Buyer) for the Agency -owned real property located near the northeast
corner of Cypress Avenue and .Elm Street, Assessor Parcel Number 165-364-24 (Attachment
3 — Site Plan).
The total purchase price to be paid by the Buyer to the Agency for the property will be one
hundred ninety five thousand dollars ($195,000). Engel & Associates, a certified MAI
appraiser, determined that the fair market value of the property was one hundred sixty five
thousand dollars ($165,000). The Agency staff and the Buyer have negotiated a purchase
price of one hundred ninety five thousand dollars ($195,000) due to the three payment terms
as discussed below.
Buyer will pay an initial deposit to the Agency in the amount of nine thousand seven hundred
fifty dollars ($9,750). Upon close of escrow, Buyer will pay an additional forty eight thousand
seven hundred fifty ($48,750) for a total down payment of fifty eight thousand five hundred
dollars ($58,500). The remaining balance of one hundred thirty six thousand five hundred
dollars ($136,500) will be amortized at a six percent (6%) interest over three (3) years and be
paid in quarterly payments in the amount of twelve thousand five hundred fourteen dollars
and thirty two cents ($12,514.32) starting three months after the close of escrow.
The property is approximately 0.25 acres (11,016 SF) and located near the northeast corner
of Cypress Avenue and Elm Street. The property is currently vacant and is located within the
Huntington Beach Redevelopment Project (Subarea 2). The parcel is irregular shaped (L-
shaped) and sits between two other vacant parcels owned by the Buyer, making it unfeasible
to develop as a standalone project.
The Buyer is the current owner of the Huntington Plaza commercial center located on the
southwest corner of Beach Blvd and Warner Ave. The commercial building located at 17131
Beach Blvd within Huntington Plaza does not have adequate parking and therefore cannot
be fully leased. The Buyer proposes to develop a parking lot on the Agency owned property
to meet the parking shortage of the 17131 Beach Blvd commercial building until the time the
Huntington Plaza is redeveloped. The construction of the proposed lot would result in the
addition of 25 new off-street parking spaces.
It is the Agency's policy to encourage property owners to participate in the redevelopment
process. On January 11, 2010, the Agency issued a Request for Statements of Interest and
Proposals to the commercial property owners of the two neighboring properties to determine
their interest in acquiring and redeveloping the Agency owned property.
Only Decron Properties, the managing agent for the Buyer, responded with a proposal. The
other property owner submitted a signed refusal letter indicating that he had no interest in
acquiring and redeveloping the property.
Total Agency costs estimated at $205,295 of which $180,295 was for the original purchase of
property including demolition of duplex and relocation of tenants, plus $25,000 in
administrative costs as referenced in Summary Report Pursuant to Section 33433 of the
Community Redevelopment Law on the Agreement for Purchase and Sale of Real Property
by and between the City of Huntington Beach Redevelopment Agency and NF Huntington
Retail, LP a California Limited Partnership (Attachment 4).
Item 19. - 2 HB -552-
REQUEST FOR COUNCIL ACTION
MEETING DATE: 12/20/2010 DEPARTMENT ID NUMBER: ED 10-27
Environmental Status: The scale of this project will not trigger environmental review and
therefore will be exempt from CEQA.
Strategic Plan Goal: Maintain financial viability and our reserves
Attachrnent(s):
'Description,
1. A reement for Purchase and Sale of Real Property and Escrow Instructions
2.
Resolution No. 386, "A Resolution of the Redevelopment Agency of the City of Huntington
Beach Approving the Agreement for Purchase- arid" Sale of Property Located Within the
Huntington Beach Redevelopment Project Area (Cypress/Elm Parcel)"
3.
Site Plan
4.
Summary Report Pursuant to Section 33433 of the Community Redevelopment Law on the
Agreement for Purchase and Sale of Real Property by and between the City of Huntington
Beach Redevelopment Agency and NF Huntington Retail, LP a California Limited
Partnership
5.
PowerPoint
HB -553- Item 19. - 3
ATTACHMENT #1
AGREEMENT FOR PURCHASE AND SALE OF REAL
PROPERTY AND ESCROW INSTRUCTIONS
This Agreement for Purchase and Sale of Property and Escrow Instructions
("Agreement") is made and entered into on this gQ 7" day of
20 /0 , by and between the Redevelopment Agency of the
City of Huntington Beach, a public body of the State of California, ("Agency" or "Seller")
and NF Huntington Retail LP, a California limited partnership ("Buyer") collectively the
"Parties."
WHEREAS, the Agency owns that certain real Property located in the City of
Huntington Beach, Orange County, California, which pursuant to Huntington Beach
Municipal Code Chapter 3.06 has been determined to be surplus real Property and available
for disposal; and
The Agency Council authorized the disposal of the surplus real Property on
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NOW, THEREFORE, in consideration of the foregoing recitals and for other good and
valuable consideration, the Parties agree as follows:
1. PROPERTY
1.1 Property. Agency agrees to sell and convey to Buyer, and Buyer
agrees to purchase from Agency, the real Property (the "Property"), hereinafter described,
subject to the terms and conditions set forth in this Agreement. The Property that is the
subject of this offer consists of approximately 11,016 square feet located near the northeast
corner of Cypress and Elm Streets in the City of Huntington Beach, County of Orange, State
of California and legally described in the attached Exhibits "A" and "B."
2. PURCHASE PRICE
2.1 Purchase Price. The total purchase price to be paid by Buyer to
Agency for the Property shall be One Hundred Ninety Five Thousand Dollars ($195,000.00).
The Purchase Price for the Property shall be payable by Buyer as follows: Buyer shall deposit
with Escrow Holder, and cause to be recorded at the close of escrow a deed of trust on the
Title Company's standard form in favor of the Agency with a lien in the amount of $136,500
against the Property. The lien obligation will remain in first position against any future
obligations secured by the Property. Buyer will also execute a Promissory note on the title
company's standard form and in favor of the Agency, which will be delivered to the Agency
by Escrow Holder at the close of escrow.
2.2 Initial Down Payment Deposit. Buyer agrees to make an initial down
payment deposit to Escrow Holder of $9,750.00 within seven calendar days of Agency
approval of this Agreement.
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2.3 Down Payment Balance. Upon the Close of Escrow, Buyer shall pay
City the down payment balance of Forty Eight Thousand Seven Hundred Fifty Dollars
($48,750.00) (for a total down payment of $58,500), plus Escrow Holder's estimate of
Buyer's closing costs, prorations and charges payable pursuant to this Agreement. All taxes,
escrow fees, recording and title insurance costs are to be funded by Buyer into escrow and
disbursed by Escrow Holder at the close of escrow.
2.4 Remaining Balance. The remaining balance of the purchase price will
be amortized at a six percent (6%) interest over three (3) years and paid in twelve (12)
quarterly payments in the amount of $12,514.32 every three (3) months to begin three (3)
months following the close of escrow, over the term of the loan period. Upon receipt of final
payment as contemplated in this Section 2.3, Agency will extinguish and reconvey the deed of
trust.
3. CONDITIONS OF SALE
3.1 Buyer's Costs. Buyer shall pay all recording fees, documentary
transfer taxes, escrow fees, premiums for the Buyer's policy of title insurance, and other
normal costs payable to escrow, title or County Records at the closing of this transaction.
3.2 Further Documents and Assurances. Buyer and Agency shall each,
diligently and in good faith, undertake all actions and procedures reasonably required to place
the escrow in condition for closing as and when required by this Agreement. Buyer and
Agency agree to execute and deliver all further documents and instruments reasonably
required by the Escrow Holder or Title Company. Agency shall deliver or cause to be
delivered to Escrow Holder in time for delivery to Buyer at the closing an original ink signed
Grant Deed, duly executed and in recordable form, conveying fee title to the Property to
Buyer.
3.3 Opening of Escrow. Escrow Holder and the Title Company shall be
Chicago Title Company, Los Angeles, California. For purposes of this Agreement, the
Escrow shall be deemed opened on the date Escrow Holder shall have received an executed
counterpart of this Agreement from both Buyer and Agency ("Opening Date"). Escrow
Holder shall notify Buyer and Agency, in writing, of the date Escrow is opened and the
Closing Date, as defined in Paragraph 3.4, below. In addition, Buyer and Agency agree to
execute, deliver, and be bound by any reasonable or customary supplemental escrow
instructions of Escrow Holder, or other instruments as may reasonably be required by Escrow
Holder, in order to consummate the transaction contemplated by this Agreement. Any such
supplemental instructions shall not conflict with, amend, or supersede any portion of this
Agreement. If there is any inconsistency between such supplemental instructions and this
Agreement, this Agreement shall control.
3.4. Close of Escrow. For purposes of this Agreement, "Close of Escrow"
shall be defined as the date that the Grant Deed, conveying the Property to Buyer, is recorded
in the Official Records of Orange County, California. This Escrow shall close within ninety
(90) days of the Opening Date ("Closing Date").
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3.5. Conditions of Title. It shall be a condition to the Close of Escrow and
a covenant of Agency that title to the Property shall be conveyed to Buyer by Agency by the
Grant Deed, subject only to the following Approved Conditions of Title ("Approved
Condition of Title"):
3.5.1. Matters affecting the Approved Condition of Title created by or
with the written consent of Buyer.
3.5.2. Exceptions which are disclosed by the Report described in
Paragraph 3.7.1 hereof and which are approved or deemed approved by Buyer in
accordance with Paragraph 3.7.1 hereof.
Agency covenants and agrees that during the term of this Escrow, Agency will
not cause or permit title to the Property to differ from the Approved Condition of Title
described in this Paragraph. Any liens, encumbrances, easements, restrictions, conditions,
covenants, rights, rights -of -way, or other matters affecting the Approved Condition of Title
which may appear of record or be revealed after the date of the Report described in Paragraph
3.7.1 below, shall also be subject to Buyer's approval and must be eliminated or ameliorated
to Buyer's satisfaction by Agency prior to the Close of Escrow as a condition to the Close of
Escrow for Buyer's benefit.
3.6. 'Title Policy. Title shall be evidenced by the Title Company's issuance
of CLTA Standard Form Policy or Binder of Title Insurance ("Title Policy") at the close of
escrow in the amount of the Purchase Price showing title to the Property vested in Buyer
subject only to the Approved Condition of Title.
3.7. Conditions to Close of Escrow.
3.7.1. Conditions to Buyer's Obligations. The Close of Escrow and
Buyer's obligation to consummate the transaction contemplated by this Agreement are
subject to the satisfaction of the following conditions for Buyer's benefit on or prior to
the dates designated below for the satisfaction of such conditions:
(a) Title Review.
(i) Within ten (10) business days after the Effective Date, Seller
will cause the Title Company to deliver to Buyer a preliminary title
report for a CLTA owner's policy of title insurance for the Property
and, to the extent available, copies of the documents referred to in the
report as exceptions to title (collectively, the "Preliminary Title
Report"). Buyer has fifteen (15) days from delivery of the Preliminary
Title Report to notify Seller, in writing, of any objections Buyer has to
any exceptions to title contained in the Preliminary Title Report
("Buyer Objection Notice"). Any item contained in the Preliminary
Title Report to which Buyer does not timely object will be a Permitted
Exception.
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(ii) If Buyer timely delivers to Seller a Buyer Objection Notice,
Seller may, but is not obligated to, elect to cure Buyer's objections.
Within five (5) business days after Seller receives the Buyer Objection
Notice (the "Seller's Response Period"), Seller will notify Buyer in
writing whether Seller elects to cure or not cure those objections
("Seller's Cure Notice"). Seller will have until the Closing Date to cure
those objections specified in Buyer's Objection Notice it elects in the
Seller's Cure Notice to cure. Failure of Seller to timely deliver the
Seller's Cure Notice shall be deemed Seller's election not to cure any of
the items in the Buyer Objection Notice.
(iii) If Seller has not elected (or is deemed not to have, elected) to
cure all of the objections specified in the Buyer Objection Notice, then
Buyer has the following options: (i) accept a conveyance of the
Property subject only to the Permitted Exceptions, which will include
any matter objected to by Buyer in Buyer's Objection Notice which
Seller elected in Seller's Cure Notice (or has been deemed to have
elected) not to cure, without reduction of the Purchase Price; or (ii)
terminate this Agreement in accordance with Section 3.7.1(a)(iv)
below.
(iv) If, in Seller's Cure Notice (or by Seller's failure to timely deliver
the Seller's Cure Notice), Seller notifies (or is deemed to have notified)
Buyer that Seller elects not to cure an objection contained in a Buyer
Objection Notice, Buyer will notify Seller in writing within five (5)
business days after receiving Seller's Cure Notice (or, if Buyer does not
timely receive the Seller Cure Notice, then within five (5) business
days after the expiration of the period for Seller to deliver the Seller's
Cure Notice to Buyer) whether Buyer elects to accept the conveyance
or terminate this Agreement under Section 3.7.1(a)(iii). If Buyer elects
the latter, Escrow Agent will return the Initial Deposit to Buyer and this
Agreement will terminate, following which neither Party will have any
further rights, obligations or liabilities under this Agreement except
regarding any default on the part of Buyer existing as of that date or to
the extent that any right, obligation or liability expressly survives
termination of this Agreement. Buyer's failure to make a timely
election pursuant to this Section 3.7.1(a)(iv) shall be deemed to
constitute Buyer's election to proceed to purchase the Property under
Section 1.1(c).
(v) Notwithstanding anything to the contrary in this Section Seller
will cause the Owner's Title Policy to be issued at the Closing free from
exceptions for (i) voluntary monetary liens existing of record prior to
the Closing, (ii) delinquent property taxes, bonds and assessments, and
(iii) mechanics' liens.
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(b) Later Exceptions.
(i) If the Title Company issues a supplement or amendment to the
Preliminary Title Report, the Title Company shall deliver to Buyer the
supplement or amendment, together with a copy of any document or
instrument it describes (collectively "Additional Title Documents").
Buyer has five (5) business days after it receives any Additional Title
Documents to give Seller and the Escrow Holder written notice
("Buyer's Supplemental Objection Notice") of Buyer's objection to any
Additional Title Document. The failure of Buyer to give Buyer's
Supplemental Objection Notice constitutes Buyer's approval of the
Additional Title Documents, as the case may be, and any matters
contained therein are Permitted Exceptions.
(ii) Within five (5) business days after Seller receives Buyer's
Supplemental Objection Notice, Seller will notify Buyer in writing
("Seller's Supplemental Cure Notice") whether Seller elects to cure or
not to cure those objections. Seller will have until the Closing Date to
cure those objections in Buyer's Supplemental Objection Notice that it
timely elected to cure. The Closing Date automatically will be extended
without necessity of any amendment hereto until a date which is five
(5) business days following Buyer's receipt of Seller's Supplemental
Cure Notice if such date is later than the Scheduled Closing Date.
Failure of Seller to timely deliver the Seller's Supplemental Cure
Notice shall be deemed Seller's election not to cure any of the items in
the Buyer's Supplemental Objection Notice.
(iii) If Seller elects (or is deemed to have elected) not to cure any
objections specified in Buyer's Supplemental Objection Notice, Buyer
has, with respect to such objections, the same options it has under
Section 3.7.1(a)(iii) and the same obligations it has under Section
3.7. 1 (a)(iv).
(c) Representations, Warranties, and Covenants of Agency.
Agency shall have duly performed each and every agreement to be
performed by Agency hereunder and Agency's representations,
warranties, and covenants set forth in Paragraph 4 shall be true and
correct as of the Closing Date.
(d) No Material Changes. At the Closing Date, there shall have
been no material adverse changes in the physical or financial condition
of the Property.
(e) Inspections and Studies. On or before forty-five (45) days
after Opening Date ("Due Diligence Period"), Buyer shall have
approved the results of any and all inspections, investigations, tests and
studies (including, without limitation, investigations with regard to
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governmental regulations, engineering tests, soil and structure
investigation and analysis, seismic and geologic reports) with respect to
the Property (including all structural and mechanical systems and
leased areas) as Buyer may elect to make or obtain. The failure of
Buyer to disapprove said results on or prior to the expiration of the Due
Diligence Period shall be deemed to constitute Buyer's approval of the
results. The cost of any such inspections, tests and studies shall be
borne by Buyer. During the term of this Escrow, Buyer, its agents,
contractors and subcontractors shall have the right to enter upon the
Property, at reasonable times during ordinary business hours, to make
any and all inspections and tests as may be necessary or desirable in
Buyer's sole judgment and discretion. Buyer shall use care and
consideration in connection with any of its inspections. Buyer shall
indemnify and hold Agency and the Property harmless from any and all
damage arising out of, or resulting from the negligence of Buyer, its
agents, contractors and/or subcontractors in connection with such entry
and/or activities upon the Property. Buyer will provide Agency, upon
request, at no cost, copies of any Buyer's investigation reports obtained
by the Buyer, if any.
(f) Agency Approval. The completion of this transaction, and the
escrow created hereby, is contingent upon the specific acceptance and
approval of the Redevelopment Agency by its action as evidenced by
execution of the Agreement by the Agency Chairman and Agency
Clerk.
(g) The Property is sold in its present condition as of the date of
acceptance subject to the Buyer's investigation rights.
(h) It is a condition to Buyer's obligation to close escrow that a
permit for parking on the Property be issued by the City pursuant to a
plan submitted by Buyer and that said permit, if issued, will run with
the land; and that the Buyer acknowledges that execution of this
agreement does not in any way guarantee City approval of the proposed
parking lot and is merely a condition of closing.
(i) If a condition for Buyer's benefit fails, the deposit will be
immediately returned to Buyer, this Agreement will be terminated and
the parties will have no further obligations under this Agreement except
those that expressly survive a termination of this Agreement.
3.7.2. Conditions to Agency's Obligation. For the benefit of
Agency, the Close of Escrow shall be conditioned upon the occurrence and/or
satisfaction of each of the following conditions (or Agency's waiver thereof, it being
agreed that Agency may waive any or all of such conditions):
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(a) Buyer's Obligations. Buyer shall have timely performed all of
the obligations required by the terms of this Agreement to be performed
by Buyer, and
(b) Buyer's Representations. All representations and warranties
made by Buyer to Agency in this Agreement shall be true and correct
as of the Close of Escrow.
3.8. Deposits by Agency. At least one (1) business day prior to the Close
of Escrow, Agency shall deposit or cause to be deposited with Escrow Holder the Grant Deed
conveying the Property to Buyer duly executed by Agency, acknowledged and in recordable
form.
3.9. Deposits by Buyer. Buyer shall deposit, or cause to be deposited with
Escrow Holder, the funds which are to be applied toward the payment of the Purchase Price in
the amounts and at the times if designated herein (as reduced or increased by the prorations,
debits and credits hereinafter provided). Buyer shall also deposit a deed of trust in favor of
the Agency to be recorded and run with the land as provided herein.
3.10. Costs and Expenses. The cost and expense of the Title Policy
attributable to CLTA coverage shall be paid by Buyer. The escrow fee of Escrow Holder
shall be paid by Buyer. Buyer shall pay all documentary transfer taxes, if any, payable in
connection with the recordation of the Grant Deed. The amount of such transfer taxes shall
not be posted on the Grant Deed, but shall be supplied by separate affidavit. Buyer shall pay
the Escrow Holder's customary charges to Buyer and Agency for document drafting,
recording, and miscellaneous charges. If, as a result of no fault of Buyer or Agency, Escrow
fails to close, Buyer shall pay all of Escrow Holder's fees and charges. Penalties for
prepayment of bona fide obligations secured by any existing Deed of trust or mortgage shall
be waived pursuant to Civil Code Procedures Section 1265.240.
3.11. Disbursements and Other Actions by Escrow Holder. Upon the
Close of Escrow, the Escrow Holder shall promptly undertake all of the following in the
manner indicated:
3.11.1 Recording. Cause the Grant Deed and Deed of Trust, and any
other documents which the parties hereto may mutually direct, to be recorded in the
Official Records of Orange County, California, in the order set forth in this
subparagraph. Escrow Holder is instructed not to affix the amount of documentary
transfer tax (if any) on the face of the Deed, but to supply same by separate affidavit.
3.11.2 Funds. Disburse from funds deposited by Buyer with Escrow
Holder toward payment of all items chargeable to the account of Buyer, pursuant
thereto in payment of such costs, and disburse the balance of such funds, if any, to
Buyer.
3.11.3 Documents to Buyer. Deliver when issued, the Title Policy to
Buyer.
3.11.4 Pay demands of existing lienholders. Escrow Holder is
hereby authorized and instructed to cause the reconveyance, or partial reconveyance,
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as the case may be, of any such monetary exceptions to Buyer's title to the Property at
or prior to the Close of Escrow.
4. AGENCY'S REPRESENTATIONS, WARRANTIES, AND
DISCLOSURES. In addition to any express agreements of Agency contained herein, the
following constitute representations and warranties of Agency to Buyer, of this Agreement:
4.1 Authority of State.
(a) Agency is a government entity, duly organized and validly
existing under the laws of the State of California. Agency has full power and authority to
own, sell, and convey the Property to Buyer and to enter into and perform its obligations
pursuant to this Agreement.
(b) The individuals executing this Agreement and the instruments
referenced herein on behalf of Agency have the legal power, right, and actual authority to
bind Buyer to the terms and conditions hereof and thereof.
(c) This Agreement is, and all other instruments, documents and
agreements required to be executed and delivered by Agency in connection with this
Agreement are and shall be, duly authorized, executed and delivered by Agency and shall be
valid, legally binding obligations of and enforceable against Buyer in accordance with their
terms.
(d) All requisite action (municipal or otherwise) has been taken by
Agency in connection with the entering into this Agreement, the instruments referenced
herein, and the consummation of the transactions contemplated hereby. No consent of any
partner, shareholder, creditor, investor, judicial or administrative body, authority other party is
required other than Agency approval as of the date of this Agreement.
(e) Neither the execution and delivery of this Agreement and
documents referenced herein, nor the incurrence of the obligations set forth herein, nor the
consummation of the transactions herein contemplated, nor compliance with the terms of this
Agreement and the documents referenced herein conflict with or result in the material breach
of any terms, conditions or provisions of, or constitute a default under, any bond, note, or
other evidence of indebtedness or any contract, indenture, mortgage, Deed of trust, loan,
partnership agreement, lease or other agreements or instruments to which Agency is a party or
affecting the Property.
4.2 Taxes. Agency is exempt from Property taxes and assessments and
none are or will be owing at close of escrow.
4.3 Disclosures. Buyer acknowledges that Buyer is purchasing the
Property solely in reliance on Buyer's own investigations. Except as expressly set forth in this
Agreement, no representations or warranties of any kind whatsoever, expressed or implied,
have been made by Agency, Agency's agents, or employees, including in any investigations,
studies or documents identified under Section 4.6 below. Buyer further acknowledges and
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warrants that as of the close of escrow Buyer will be aware of all zoning regulations, other
governmental requirements, site and physical conditions (including the presence of hazardous
materials or other adverse environmental conditions), and other matters affecting the use and
condition of the Property including any investigations, studies, and documents identified in
section 4.6. Buyer agrees to purchase the Property in the condition that it is in at close of
escrow, subject, however, to Buyer's right to terminate should the Property be damaged or
destroyed by causes other than causes attributable to Buyer's entry on the Property and
inspections ordered by Buyer prior to close of escrow. Buyer shall be responsible at Buyer's
sole expense for any or all remediation required to make Property usable for Buyer's intended
purpose.
4.4 As -Is Purchase. Except as provided in this paragraph, Buyer
specifically acknowledges and agrees that Agency will sell and Buyer will purchase the
Property on an "as -is with all faults" basis, and that having been given the opportunity to
inspect the Property and review information and documentation affecting the Property, Buyer
is not relying on any representations or warranties of any kind whatsoever, express or implied,
from Agency or its agents as to any matters concerning the Property, including without
limitation: (i.) the quality, nature, adequacy, and physical condition of the Property including
soils, geology, and any groundwater; (ii.) the existence, quality, nature, adequacy, and
physical condition of utilities serving the Property; (iii.) the development potential of the
Property and the Property's use, merchantability, fitness, suitability, value, or adequacy of the
Property for any particular purpose; (iv.) the zoning or other legal status of the Property or
any other public or private restrictions on use of the Property; (v.) the compliance of the
Property or its operation with any applicable codes, laws, regulations, statutes, ordinances,
covenants, conditions, and restrictions of any governmental or quasi -governmental entity or of
any other person or entity; (vi.) the presence of hazardous materials on, under, or about the
Property or the adjoining or neighboring property; (vii.) the condition of title to the Property;
and (viii.) the economics of the operation of the Property.
4.5 Investigations, Studies, and Documents. Agency has conducted no
investigations or studies in connection with the Property.
4.6 Absence of Fraud and Misleading Statements. To the best of
Agency's knowledge, no statement of Agency in this Agreement or in any document,
certificate, or schedule furnished or to be furnished to Buyer pursuant hereto or in connection
with the transaction contemplated hereby contains any untrue statement of material fact.
4.7 General Representation. No representation, warranty or statement of
Agency in this Agreement or in any document, certificate or schedule furnished or to be
furnished to Buyer pursuant hereto contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the statements or facts
contained therein not misleading. Agency's representations and warranties made in this
Agreement shall be continuing and shall be true and correct as of the date of the close of
escrow with the same force and effect as if remade by Agency in a separate certificate at that
time. The truth and accuracy of Agency's representations and warranties made herein shall
constitute a condition for the benefit of Buyer to the close of escrow (as elsewhere provided
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herein) and shall not merge into the close of escrow or the recordation of the Grant Deed in
the Official Records, and shall survive the close of escrow.
4.8 At the closing, there will be no leases or occupancy agreements
affecting the Property.
4.9 Compliance with Laws. To the best of Agency's knowledge, there are
no violations of laws concerning the Property, including without limitation, laws concerning
various materials and hazardous substances.
5. BUYER'S REPRESENTATIONS AND WARRANTIES. In addition to
any express agreements of Buyer contained herein, the following constitute representations
and warranties of Buyer to Agency, of this Agreement:
5.1 Representations Regarding Buyer's Authority.
(a) Buyer has the legal power, right and authority to enter into this
Agreement and the instruments referenced herein, and to consummate the transactions
contemplated hereby.
(b) The individuals executing this Agreement and the instruments
referenced herein on behalf of Buyer have the legal power, right, and actual authority to bind
Buyer to the terms and conditions hereof and thereof.
(c) This Agreement is, and all other instruments, documents and
agreements required to be executed and delivered by Buyer in connection with this
Agreement are and shall be, duly authorized, executed and delivered by Buyer and shall be
valid, legally binding obligations of and enforceable against Buyer in accordance with their
terms.
(d) All requisite action (corporate, trust, partnership or otherwise)
has been taken by Buyer in connection with the entering into this Agreement, the instruments
referenced herein, and the consummation of the transactions contemplated hereby. No consent
of any partner, shareholder, creditor, investor, judicial or administrative body, authority other
party is required.
(e) Neither the execution and delivery of this Agreement and
documents referenced herein, nor the incurrence of the obligations set forth herein, nor the
consummation of the transactions herein contemplated, nor compliance with the terms of this
Agreement and the documents referenced herein conflict with or result in the material breach
of any terms, conditions or provisions of, or constitute a default under, any bond, note, or
other evidence of indebtedness or any contract, indenture, mortgage, Deed of trust, loan,
partnership agreement, lease or other agreements or instruments to which Buyer is a party or
affecting the Property.
5.2 General Representation. No representation, warranty or statement of
Buyer in this Agreement or in any document, certificate or schedule furnished or to be
furnished to Agency pursuant hereto contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make the statements or
facts contained therein not misleading. Buyer's representations and warranties made in this
Agreement shall be continuing and shall be true and correct as of the date of the close of
10
10-2517.003/5559455594
escrow with the same force and effect as if remade by Buyer in a separate certificate at that
time. The truth and accuracy of Buyer's representations and warranties made herein shall
constitute a condition for the benefit of Agency to the close of escrow (as elsewhere provided
herein) and shall not merge into the close of escrow or the recordation of the Grant in the
Official Records, and shall survive the close of escrow.
6. DUE DILIGENCE.
6.1 Buyer's Investigation of Property Condition. Real Property often
contains defects and conditions which are not readily apparent and which may affect the value
or desirability of the Property. Therefore, it is the affirmative duty of Buyer to exercise
reasonable care to discover those facts which are unknown to Buyer or within the diligent
attention and observation of Buyer. Buyer agrees to provide to Agency, at no cost, upon
request of Agency, complete copies of all inspection reports obtained by Buyer concerning
the Property.
6.2 Buyer's Acceptance of Property Condition. Buyer's acceptance of
the condition of the Property is a contingency of this Agreement; accordingly, Buyer shall
have the right to conduct inspections, investigations, tests, surveys, and other studies at
Buyer's expense. Buyer is strongly advised to exercise these rights and select professionals
with appropriate qualifications to conduct inspections of the entire Property. If Buyer does not
exercise these rights, Buyer is acting against the advice of Agency.
6.3 Scope of Buyer's Investigations. Buyer agrees and warrants, or by the
failure to do so shall have waived any rights to do so hereunder, that at close of escrow Buyer
shall have investigated the condition and suitability of all aspects of the Property and all
matters affecting the value or desirability of the Property, including but not limited to the
following:
6.3.1 Lines and boundaries. Property lines and boundaries.
6.3.2 Waste disposal. Type, size, adequacy, and condition of sewer
and/or septic systems and components.
6.3.3 Governmental requirements and limitations. Availability of
required governmental permits, inspections, certificates, or other determinations affecting the
Property, including historical significance. Any limitations, restrictions, zoning, building size
requirements, or other requirements effecting the current or future use or development of the
Property.
6.3.4 Rent and occupancy controls. Any restrictions that may limit
the amount of rent that can legally be charged and the maximum number of persons who can
lawfully occupy the Property.
6.3.5 Water and utilities; well systems and components.
Availability, adequacy, and condition of public or private systems.
6.3.6 Environmental hazards. The presence of asbestos,
formaldehyde, radon, methane, other gases, lead based paint, other lead contamination, fuel or
chemical storage tanks, waste disposal sites, electromagnetic fields, and other substances,
materials, products, or conditions.
11
10-2517.003/5559455594
6.3.7 Geologic conditions. Geologic/seismic conditions, soil
stability/suitability, and drainage.
6.3.8 Neighborhood, area, subdivision requirements. Neighborhood
or area conditions including schools; proximity and adequacy of law enforcement; proximity
to commercial, industrial, or agricultural activities; crime statistics; fire protection; other
governmental services; existing and proposed transportation; construction and development
which may affect noise, view or traffic; airport noise; and noise or odor from any source, wild
or domestic.
6.3.9 Matters of record. Covenants, conditions, and restrictions; Deed
restrictions; easements; and other title encumbrances of record.
6.3.10 Other matters. Any and all other matters such as availability of
suitable public infrastructure, assessment, other special service districts, and soil or other
conditions on the Property, not herein listed, which are or may be pertinent to Buyer's
purpose for acquiring the Property.
7. INDEMNIFICATION. Each Party shall defend, indemnify, and hold the
other Party harmless from and against any and all claims, liabilities, obligations, losses,
damages, costs, and expenses, including, but not limited to, attorney's fees, court costs, and
litigation expenses that the other Party may incur or sustain by reason of or in connection with
any misrepresentation made by the indemnifying Party pursuant to this Agreement.
8. MINERAL RESERVATIONS. Agency shall retain all mineral rights in the
Property lying below a depth of 500 feet from the surface, and the Grant Deed shall contain
the following language:
"EXCEPTING therefrom all oil, gas and other hydrocarbon substances and
minerals lying below a depth of 500 feet from the surface of said land, but
without the right of surface entry at any time upon said land or within the top 500
feet thereof, for the purpose of exploiting, developing, producing, removing and
marketing said substances."
9. PRIOR AGREEMENTS. This Agreement, in effect as of the Date of
Agreement, supersedes any and all prior agreements (if any) between Agency and Buyer
regarding purchase and sale of the Property.
10. NOTICES. Any notice, tender, delivery, or other communication pursuant to
this Agreement shall be in writing and shall be deemed to be properly given if delivered,
mailed or sent by wire or other telegraphic communication in the manner provided in this
Agreement, to the following persons:
12
10-2517.003/5 5 5945 5 594
If to Agency:
Redevelopment Agency of the City
of Huntington Beach
Attn: Real Estate Services
2000 Main Street
Huntington Beach, CA 92647
If to Buyer:
NF Huntington Retail, LP
c/o Decron Properties Corporation
Attn: David J. Nagel, Daniel N. Nagel
and Tom E. Schiff
6222 Wilshire Boulevard, Ste. 400
Los Angeles, CA 90048
11. CALCULATION OF TIME. Under this Agreement, when the day upon
which performance would otherwise be required or permitted is a Saturday, Sunday or
holiday, then the time for performance shall be extended to the next day which is not a
Saturday, Sunday or holiday. The term "holiday" shall mean all and only those State holidays
specified in Sections 6700 and 7701 of the California Government Code.
12. TIME OF ESSENCE. Time is of the essence of this Agreement and each and
every provision hereof.
13. ENTIRE AGREEMENT. This Agreement shall constitute the entire
understanding and agreement of the Parties hereto regarding the purchase and sale of the
Property and all prior agreements, understandings, representations or negotiations are hereby
superseded, terminated and canceled in their entirety, and are of no further force or effect.
14. AMENDMENTS. This Agreement may not be modified or amended except
in writing by the Parties.
15. APPLICABLE LAW. The Parties hereto acknowledge that this Agreement
has been negotiated and entered into in the State of California. The Parties hereto expressly
agree that this Agreement shall in all respects be governed by the laws of the State of
California.
16. SEVERABILITY. Nothing contained herein shall be construed as to require
the commission of any act contrary to law, and wherever there is any conflict between any
provision contained herein and any present statute, law, ordinance or regulation as to which
the Parties have no legal right to contract, the latter shall prevail, but the affected provisions
of this Agreement shall be limited only to the extent necessary to bring them within the
requirements of such law.
17. SEPARATE COUNTERPARTS. This Agreement may be executed in
separate counterparts, each of which when so executed shall be deemed to be an original.
Such counterparts shall, together, constitute and be one and the same instrument.
18. EXHIBITS. The following Exhibits are attached to this Agreement and
incorporated by reference herein:
Exhibit A. Property Description
Exhibit B: Property Sketch
13
10-2517.003/5559455594
19. SURVIVAL. All terms and conditions in this Agreement, which represent
continuing obligations and duties of the Parties, that have not been satisfied prior to close of
escrow shall survive close of escrow and transfer of title to Buyer and shall continue to be
binding on the respective obligated party in accordance with their terms. All representations
and warranties and statements made by the respective parties contained herein or made in
writing pursuant to this Agreement are intended to be, and shall remain, true and correct as of
the close of escrow, shall be deemed to be material, and, together with all conditions,
covenants and indemnities made by the respective parties contained herein or made in writing
pursuant to this Agreement (except as otherwise expressly limited or expanded by the terms
of this Agreement), shall survive the execution and delivery of this Agreement and the close
of escrow, or, to the extent the context requires, beyond any termination of this Agreement.
20. LEGAL FEES. In the event suit is brought by either party to construe,
interpret and/or enforce the terms and/or provisions of this Agreement or to secure the
performance hereof, each party shall bear its own attorney's fees, such that the prevailing
party shall not be entitled to recover its attorney's fees from the non -prevailing party.
21. ASSIGNMENT. Buyer may not assign, transfer or convey its rights or
obligations under this Agreement without the prior written consent of Agency, and then only
if Buyer's assignee assumes in writing all of Buyer's obligations hereunder; provided,
however, Buyer shall in no event be released from its obligations hereunder by reason of such
assignment.
22. BROKERAGE COMMISSIONS. Each party represents to the other that
there has been no broker, real estate agent, finder or similar entity engaged in connection with
this Agreement or the sale of the Property from the Agency to Buyer, if consummated as
contemplated hereby. Each party agrees that should any claim be made for brokerage
commissions or finder's fees by any broker, agent, finder or similar entity, by, through or on
account of any acts of such party or its agent, employees or representatives, such party will
indemnify, defend and hold the other party free and harmless from and against any and all
loss, liability, cost, damage and expense (including attorneys' fees and court costs) in
connection therewith. Each party agrees to pay, at its sole cost and expense, when due, any
and all brokerage commissions incurred by such party heretofore or hereafter incurred prior to
close of escrow. The Parties' obligations under this Section 22 survive at close of escrow and
survive a termination of this Agreement.
23. MISCELLANEOUS.
23.1. Captions. Any captions to, or headings of, the paragraphs or
subparagraphs of this Agreement are solely for the convenience of the parties hereto, are not a
part of this Agreement, and shall not be used for the interpretation or determination of the
validity of this Agreement or any provision hereof.
23.2. No Obligations to Third Parties. Except as otherwise expressly
provided herein, the execution and delivery of this Agreement shall not be deemed to confer
14
10-2517.003/5 55945 5594
a Ace K
any rights upon, nor obligate any of the parties hereto, to any person or entity other than the
parties hereto.
23.3. Exhibits and Schedules. The Exhibits and Schedules attached hereto
are hereby incorporated herein by this reference.
23.4. Waiver. The waiver or failure to enforce any provision of this
Agreement shall not operate as a waiver of any future breach of any such provision or any
other provision hereof.
23.5. Fees and Other Expenses. Except as otherwise provided herein, each
of the parties shall pay its own fees and expenses in connection with this Agreement.
23.6. Liquidated Damages. The sole remedy for failure to close due to
Buyer's breach is Buyer's relinquishment of Buyer's initial deposit.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by and through their authorized offices the day, month and year first above written.
BUYER REDEVELOPMENT AGENCY OF THE
NF HUNTINGTON RETAIL, LP, a California CITY OF HUNqIINGTON BEACH, a public
limited partnership-n body p e of California
print name
AND
By: Q,
print name
ITS: -Partner
10-2517,003/5559455594
INITIATED AND APPROVED:
Deputy Executive Director
APPROVED:
Director
APPROVED AS TO FORM:
. Agency Counsel In 12,
_ G _!U
15 (p./D
ESCROW HOLDER:
Escrow Holder hereby acknowledges that it has received a fully executed counterpart of this
Agreement and agrees to act as Escrow Holder hereunder and to be bound by and strictly
perform the terms hereof as they apply to Escrow Holder.
CHICAGO TITLE COMPANY
IIn
Its: [title]
Date signed:
16
10-2517.003/5559455594
Exhibit A — Property Description
The property located in the State of California, County of Orange, City of Huntington Beach described as
an approximately 11,016 square foot vacant L-shaped lot located at the northeast corner of Cypress
Avenue and Elm Street, otherwise referred to as Assessor's Parcel Number 165-364-24.
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RESOLUTION NO. 386
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY
OF HUNTINGTON BEACH APPROVING THE SALE
OF PROPERTY LOCATED WITHIN THE HUNTINGTON BEACH
REDEVELOPMENT PROJECT AREA (CYPRESS/ELM PARCEL)
WHEREAS, the Redevelopment Agency of the City of Huntington Beach (the "Agency")
is engaged in activities necessary to carry out and implement the Redevelopment Plan for the
Merged Redevelopment Project Areas of the City of Huntington Beach (collectively the
"Redevelopment Plan"); and
Pursuant to the California Community Redevelopment Law (California Health and Safety
Code, Section 33000, et seq.), the Agency acquired real property located at the northeast corner
of the intersection of Cypress and Elm Streets, which is located in the Redevelopment Project
Area; and
The real property consists of an approximately 11,0.16 square foot parcel, and is legally
described as Assessor's Parcel Number 165-364-24 (hereafter, the "Property"); and
The Agency purchased the Property in anticipation of acquiring adjacent parcels for a
larger redevelopment site. However, as a result of the pattern of land use and private
redevelopment activities, the Agency has determined that acquiring adjacent parcels is no longer
feasible; and
It is the Agency's policy to encourage property owners to participate in the
redevelopment process, in order to carry out and implement the Redevelopment Plan; and
The Agency submitted a Request for Statement of Interest and Proposal to adjacent
property owners to acquire and redevelop the Property consistent with the Redevelopment Plan;
and
The Agency proposes to enter into an Agreement for Purchase and Sale of Real Property
(the "Agreement") for the Property; and
Pursuant to the California Community Redevelopment Law (California Health and Safety
Code, Section 33433) the Agency and the City Council held a joint public hearing on the
Agreement, having duty published notice of such public hearing and having made copies of the
proposed Agreement and other reports and documents (including the Summary Report required
by Section 33433) available for public inspection and copying; and
The Agency has duly considered all terms and conditions of the proposed transaction and
believes that it is consistent with the Redevelopment Plan, will assist in eliminating blight in the
Redevelopment Project area, is in the best interests of the Redevelopment Project area, the City
and the health, safety, morals and welfare of its residents, and is in accord with the public
purposes and provisions of applicable State and local law and requirements.
10-2706/55596
Agency Resolution No. 386
NOW, THEREFORE, the Redevelopment Agency of the City of Huntington Beach does
hereby resolve as follows:
1. The Agency hereby finds and determines that the consideration to be paid for the
purchase of the Property is not less than the fair reuse value at the uses and with the covenants
and conditions and development authorized by the sale.
2. The Agency hereby finds and determines that the sale of the Property within the
Project area pursuant to the Agreement will assist in the elimination of blight.
3. The Agency hereby finds and determines that the sale of the Property pursuant to
the Agreement is consistent with the implementation plan adopted pursuant to Section 33490 of
the Health and Safety Code.
4. The Agreement is hereby approved in substantially the form presented at this
meeting, with such minor changes as may be approved by the Executive Director of the Agency
with the approval as to form by the Agency Counsel.
SECTION 5. The Summary Report prepared pursuant to Section 33433 is hereby
adopted.
PASSED AND ADOPTED
regular meeting thereof held on the
by the City Council of the City of Huntington Beach at a
20th day of December � 20 10
®rma�n
REVIE D APPROVED:
Exe i irector
INITIATED AND APPROVED:
v
Deputy Execu% . irector
APPR VED AS TO FORM:
A ency Counsel
10-2706/55596 2
Res. No. 386
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss
CITY OF HUNTINGTON BEACH )
I, JOAN FLYNN, Clerk of the Redevelopment Agency of the
City of Huntington Beach, California, DO HEREBY CERTIFY that the
foregoing resolution was duly adopted by the Redevelopment Agency of
the City of Huntington Beach at a regular meeting of said Redevelopment
Agency held on December 20, 2010 and that it was so adopted by the
following vote:
AYES: Shaw, Harper, Hansen, Carchio, Bohr, Dwyer
NOES: None
ABSENT: Boardman
ABSTAIN: None
CI of the Redevelopm Agency
of the City of Huntington Beach, CA
ATTACHMENT #3
HB -575- Item 19. - 25
CD
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ATTACHMENT #4
HB -577- Item 19. - 27
SUMMARY REPORT PURSUANT TO
SECTION 33433
OF THE
COMMUNITY REDEVELOMENT LAW
ON THE
AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY
by and between the
CITY OF HUNTINGTON BEACH REDEVELOPMENT AGENCY
and
NF HUNTINGTON RETAIL, LP A CALIFORNIA LIMITED PARTNERSHIP
AS OF DECEMBER 20, 2010
INTRODUCTION
The following Summary Report ("Report") has been prepared for consideration at a public
hearing as required by California Redevelopment Law section 33431 and in a format provided
for by section 33433 regarding the agreement to convey and sell property from the City of
Huntington Beach Redevelopment Agency (the "Agency") to NF Huntington Retail, LP, a
California Limited Partnership (the "Buyer")
The Agency is entering into an Agreement for Purchase and Sale of Real Property (" Agreement" )
with Buyer for the Agency -owned real property located near the northeast corner of Cypress
Avenue and Elm Street referenced as Orange County Assessor Parcel Number 165-364-24
("Property"). (Attachment A)
The total purchase price to be paid by Buyer to Agency for the Property shall be One Hundred
Ninety Five Thousand Dollars ($195,000).
1
Item 19. - 28 Ng -578-
Site Identification and Location
The Property is Agency owned Orange County Assessor Parcel Number 165-364-24. The
Property is approximately .25 acres (11,016 SF) and located near the northeast corner of Cypress
Avenue and Elm Street. The Property is currently vacant and is located within the Huntington
Beach Redevelopment Project (Subarea 2). (Attachment B)
Solicitation of Proposals from Neighboring Business Owners
It is the Agency's policy to encourage all property owners to participate in the redevelopment
process with respect to the Agency's redevelopment project areas, including the Huntington
Beach Redevelopment Project. As such, on January 11, 2010, the Agency issued a Request for
Statements of Interest and Proposals to the owners of the two neighboring properties to
determine their interest in acquiring and redeveloping the Property.
Of the two owners that received an Inquiry Letter regarding acquisition and redevelopment of
the Property, only Decron Properties, the managing agent for the Buyer, responded with a
proposal dated February 10, 2010. The other property owner failed to submit a proposal and
instead submitted a signed refusal letter dated February 4, 2010 indicating that he had no
interest in acquiring and redeveloping the Property.
The property owned by the neighboring property owner who declined to submit a proposal will
not be needed for the project and will not be negatively impacted by the redevelopment of the
Property.
Project Description
The Buyer controls two vacant land parcels adjacent to the Property as well as several parcels
developed for office and retail use commonly referred to as Huntington Plaza. The Buyer has
proposed to combine the three vacant parcels into a parking lot that will serve as additional
parking for Huntington Plaza until the property is redeveloped into a higher density mixed -use
center that meets the intent of the City of Huntington Beach's Beach Boulevard and Edinger
Avenue Corridors Specific Plan.
Under the Beach and Edinger Corridors Specific Plan, Huntington Plaza and the Property are
designated Neighborhood Center. As such, the Buyer has proposed a mixed -use center on the
2
Ng -579- Item 19. - 29
entire L-Shaped 9.4-acre site bounded to the north by Warner Avenue, to the east by Beach
Boulevard, the south by Cypress Avenue and the west by Elm Street and Ash Street (Attachment
Q.
The proposed mixed -use center includes the construction of two new retail buildings at the
corner of Warner Avenue and Beach Boulevard, new mixed -use buildings along both Warner
Avenue and Beach Boulevards, and two new parking structures. The existing 15-story office
tower, the 18,531 square feet of retail and restaurant space along Warner Avenue, the 7,205
square foot restaurant on Beach Boulevard and the 863-stall parking structure located on the
northeast corner of Sycamore Avenue and Ash Street would all remain.
The sale and development of the Property as a parking lot would provide additional parking for
the existing uses. Additionally, the sale of the property meets the goals of the Agency by
assembling an irregular parcel under common ownership and creating a project area feasible for
mixed -use development that meets the intent of the Beach and Edinger Corridors Specific Plan.
3
Item 19. - 30 HB -580-
This Report addresses the following major issues:
I. Summary of the Salient Points of the Proposed Agreement: This section includes a
description the major responsibilities imposed on the Buyer and the Agency by the proposed
Agreement.
II. Net Benefit and Cost of the Agreement to the Agency and City: This section details
the differential in total net cost and revenue to the Agency associated with implementing the
terms of the proposed Agreement.
IIl. Estimated Value of the Interests to be Conveyed: This section summarizes the
estimated value of the interests to be conveyed with the conditions and covenants required by
the Agreement.
IV. Consideration Received and Comparison with Established Value: This section
describes the total revenue to be received by the Agency, and explains any difference between
the total revenue and the established value of the site.
V. Blight Elimination: This section describes the existing blighting conditions on the
Property, and explains how the conveyance of the Property will assist in alleviating blight.
Vl. AB 1290 Implementation Plan Conformance: This section describes how this project
will further the goals adopted in the Project Area Implementation Plan.
4
HB -581- Item 19. - 31
I. SUMMARY OF THE TERMS OF THE PROPOSED AGREEMENT
A. Proposed Terms and Responsibilities
Agency Obligations
• Agency will convey the Property to the Buyer at a total purchase price of $195,000.
• Agency covenants and agrees that during the term of Escrow, Agency will not cause or
permit title to the Property to differ from the Approved Conditions agreed upon with
Buyer.
• At least one (1) business day prior to the Close of Escrow, Agency shall deposit or cause
to be deposited with Escrow Holder the Grant Deed conveying the Property to the Buyer
duly executed by the Agency.
Buyer Obligations
• The Buyer will purchase the Property from the Agency at a total purchase price of
$195,000.
• The Buyer will pay an initial down payment deposit of $9,750 within seven calendar
days of Agency approval of the Agreement.
• Upon the close of escrow, Buyer shall pay the City the down payment balance of $48,750
for a total down payment of $58,500.
• The remaining balance of the purchase price will be amortized at 6%. interest over 3
years and paid in 12 quarterly payments of $12,514.32 per quarter to begin 90 days
following the close of escrow, over the term of the loan period.
• The Buyer will pay all recording fees, documentary transfer taxes, escrow fees, premiums
for the Buyer's policy of title insurance, and other normal costs payable to escrow, title
or County Records at the closing of this transaction.
• It is the responsibility of the Buyer to approve the results of any and all inspections,
investigations, test and studies of the Property.
• The Buyer acknowledges that Buyer is purchasing the Property solely in reliance on
Buyer's own investigation.
5
Item 19. - 32 HB -5 2-
II. NET BENEFIT AND COST OF THE AGREEMENT TO THE AGENCY AND CITY
RPnPfitc
The total purchase price to be paid by the Buyer to the Agency for the Property will be One
Hundred Ninety Five Thousand Dollars ($195,000). Buyer agrees to pay an initial deposit to
Escrow Holder of Nine Thousand Seven Hundred Fifty Dollars ($9,750). Upon close of Escrow,
Buyer will increase its down payment by Forty Eight Thousand Seven Hundred and Fifty Dollars
($48,750) for a total down payment of Fifty Eight Thousand Five Hundred Dollars ($58,500). The
remaining balance of One Hundred Thirty Six Thousand Five Hundred Dollars ($136,500)
[$195,000-$58,500=$136,500] will be amortized at a six percent (6%) interest over three (3)
years and be paid in twelve quarterly payments over the term of the loan period.
Thus, the actual revenue to the Agency must include the interest received over the three (3) year
loan period. The total interest received by the Agency assuming a balance of $136,500 and a
three (3) year loan period amortized at 6% on a quarterly basis is $13,672. In total, the Agency
will receive $252,800 in revenue over a three year period from the conveyance of the Property.
The Property is currently owned by the Agency, and thus generates no property taxes for the
City or tax increment for the Redevelopment Agency. By conveying the Property to a private
business for commercial use, the Property will be placed on the tax rolls and will be able to
generate property taxes and subsequent tax increment.
Assuming the County Assessor places the value of the Property as the Purchase Price ($195,000)
plus the estimated value of approximately Fifty Five Thousand Eighty Dollars ($55,080) for
improvements ($5 PSF for a parking lot at 11,016 SF); the total estimated Property Value would
be $250,080.
Based upon the Property being vacant for more than twenty (20) years, the base value for the
Property is assumed to be $0 for tax increment purposes due to the Agency's ownership Thus,
the estimated Property Value of $250,080 can be viewed as incremental value.
The Agency has the ability to collect tax increment in the Project Area until 2035. As such,
assuming an annual property value increase of 2% over the next 26 years, the Property is
expected to generate a total of $84,204 in gross redevelopment tax increment; $16,841 of which
C:
HB -583- Item 19. - 33
would be dedicated to the Low and Moderate Housing Set -Aside Fund. The present value of the
tax increment generated over 26 years discounted at 5% is $44,128; with a present value of the
amount dedicated to the Low and Moderate Housing Set -Aside Fund being $8,826.
The Agency would also gain significant public benefits in the removal of a blighting condition
through the development of a difficult irregular site that has remained undeveloped for an
extended period of time and has no clear use as a commercial or retail site as currently zoned.
By developing a parking lot on the Property, neighboring businesses will benefit as their need
for parking is met.
Costs
The Agency originally purchased a piece of vacant land and a duplex in 1987 for a combined
price of $180,295. These costs included the occupied properties and the relocation of the
residents of the two dwelling units and the demolition costs. Subsequently the duplex was
demolished and the parcels were reconfigured and split into a new arrangement in order to sell a
portion (12,829 square feet) to the original developer of the property at 17131 Beach Blvd. The
Property is the remaining vacant land (11,016 Square Feet).
Additionally, the Agency has incurred additional expenses for legal counsel, redevelopment
financial consultant, appraisal fees, and staff time to complete numerous rounds of negotiations
and develop terms of agreements during the 23-year period in the approximate total amount of
$25,000. As a result, it is estimated that total Agency cost is approximately $205,295.
It is anticipated that there would be no further project related costs to the Agency associated
with the pursuit of the proposed conveyance.
7
Item 19. - 34 HB -584-
Estimated Cost of the Agreement to the Al
Land Purchase
Total Land Acquisition Costs
Administrative Costs (staff, Consult, Lgl.)
Estimated Total Agency Costs
Purchase Price
Interest Collected Over Three Year Loan
NPV of Gross Tax Increment
Estimated Total Public Revenue
Estimated Total Public Revenue
Estimated Total Costs
Net Public Revenue/(Cost of the Agreement to the
n
$ 180,295
$180,295
$25,000
$205, 295
$195,000
$13,672
$44,128
$252, 800
$252,800
(205,295
7,505
Taking into consideration the total cost to the Agency (including administrative fees), the
Agreement results in a Net benefit of $47,505.
III. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT THE
HIGHEST USE PERMITTED UNDER THE REDEVELOPMENT PLAN
Pursuant to Section 33433 of the California Health and Safety Code, this section presents an
analysis of the fair market value of the subject property at the highest and best use. Under
current market conditions it is assumed that a retail use would be the highest and best use of the
site.
In appraisal terminology, the highest and best use can be defined as the legal use (i.e., uses
allowed under the Redevelopment and General Plan) that will yield the highest value to the land.
Therefore, the definition of highest and best use is based solely on the value created and not on
whether it enhances or carries out the redevelopment goals and policies established by the
Agency.
The Property is zoned for commercial use and though a retail development may be viewed as the
highest and best use, due to the irregular shape and size of the Property combined with the City' s
0
HB -585- Item 19. - 35
parking requirements, a retail use is not feasible. As such, the highest and best use for the
Property as a stand alone parcel is a parking lot for the adjacent retail and office uses.
Based upon inspections of the Property on September 18, 2009 and October 20, 2009; an
Appraisal Report was produced for Buyer dated October 22, 2009. The Appraisal Report found
that the "as is" market value of the fee simple estate of the Property, as of October 20, 2009, was
One Hundred Sixty Five Thousand Dollars ($165,000). The Property will be conveyed to the
Buyer "as is" and will be developed as aparking lot at the Buyer's expense.
The Buyer intends to include the Property in a proposed mixed -use center to be developed on
the 9.4-acre L-Shaped site bounded to the north by Warner Avenue, to the east by Beach
Boulevard, the south by Cypress Avenue and the west by Elm Street and Ash Street (Attachment
• Q.
The proposed mixed -use center includes the construction of two new retail buildings at the
corner of Warner Avenue and Beach Boulevard, new mixed -use buildings along both Warner
Avenue and Beach Boulevards, and two new parking structures. The existing 15-story office
tower, the 18,531 square feet of retail and restaurant space along Warner Avenue, the 7,205
square foot restaurant on Beach Boulevard and the 863-stall parking structure located on the
northeast corner of Sycamore Avenue and Ash Street would all remain.
The sale and development of the Property as a parking lot would provide additional parking for
the existing uses. Additionally, the sale of the property meets the goals of the Agency by
assembling an irregular parcel under common ownership and creating a project area feasible for
mixed -use development that meets the intent of the Beach and Edinger Corridors Specific Plan.
IV. CONSIDERATION RECEIVED AND COMPARISON WITH ESTABLISHED VALUE
The Property is to be conveyed at the Purchase Price of $195,000. An Appraisal Report dated
October 22, 2009 for the Property found that the "as is" market value of the fee simple estate of
the Property was $165,000. The excess revenue of $30,000 is the result of negotiations between
Buyer and Agency and accounts for the passing of time and increase in value over the last
twelve (12) months since the most recent appraisal was completed. The agreed to Purchase Price
represents an 180/6 increase during the past twelve 12 months.
A
Item 19. - 36 HB -586-
V. BLIGHT ELIMINATION
The actions contemplated under the Agreement will redevelop a property that currently is vacant
and underutilized. The Property as it is now zoned is not suitable for any purpose other than a
parking lot as proposed by Buyer. The parking lot will serve patrons of the surrounding retail
and commercial uses and will provide necessary excess parking to successful businesses in the
immediate vicinity.
VI. CONFORMANCE WITH THE FIVE YEAR IMPLEMENTATION PLAN
The Five Year Implementation Plan specifies that the Agency will accomplish goals through the
implementation of activities as directed by the Redevelopment Plan for the Huntington Beach
Redevelopment Project (Subarea 2). Specific to the redevelopment of the Property are the
following goals:
1) Eliminate and prevent the spread of blight by creating new development on
underutilized land;
2) Stimulate economic growth by increasing general fund, sales tax;
3) Protect local businesses by encouraging the cooperation and participation of businesses
in the redevelopment of the Project Area;
4) Remove impediments to land disposition and development through the assembly of
property into reasonably sized and shaped parcels served by improved infrastructure and
public facilities; and
5) Recycle and/or develop underutilized parcels to accommodate higher and better
economic uses while enhancing the City' s financial resources.
The Agreement implements these goals and actions.
A copy of the Agreement is attached to this Report as Attachment D and is available for review
at Agency offices, located at the City of Huntington Beach, 2000 Main Street, Huntington Beach,
California. The Agreement will be the subject of a joint public hearing of the Agency and City
Council on December 20, 2010, at 4:00 p.m. in the City Council Chambers of the City of
Huntington Beach.
10
HB -587- Item 19. - 37
ATTACHMENT A
11
Item 19. - 38 HB -588-
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Subject Property
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PARCEL NUMBERS - 800K 165- PACE 36' tj;70i
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Item 19. - 40 HB -590-
Huntington Beach Redevelopment Project Subarea 2 Map
.;,` Subject Property
HB -591- Item 19. - 41
ATTACHMENT C
15
Item 19. - 42 H B -592-
Proposed Mixed -Use Center Site
Source: Beach and Warner Mixed -Use EIR
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Item 19. - 44 HB -54-
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CITY OF HUNTINGTON BEACH
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
NOTICE OF A PUBLIC HEARING
ON THE SALE OF AGENCY OWNED PROPERTY
CYPRESS/ELM (APN# 165-364-24)
NOTICE IS HEREBY GIVEN that the City Council and the Redevelopment
Agency of the City of Huntington Beach ("Agency") will hold a joint public hearing on
Monday, December 20, 2010 at 6:00 p.m. or soon thereafter in the City Council
Chambers, located at 2000 Main Street, Huntington Beach, California, to consider the
sale of the vacant property located on the Northeast quadrant of Cypress Avenue and
Elm Street (APN# 165-364-24). The property is located in the Huntington Beach
Redevelopment Project Area, specifically in the Oakview sub -area.
As required by California Redevelopment Law (Section 33433), a report on the sale is
available for public inspection in the Department of Economic Development. The report
summarizes the costs of the agreement to the Agency, the estimated value of the
property to be conveyed to NF Huntington Retail, LP as determined at the highest and
best uses permitted under the redevelopment plan, and an explanation of why the sale
of the property will assist in the elimination of blight, with reference to all supporting
facts and materials relied upon in making this explanation. Interested persons may
inspect and, upon payment of the costs of reproduction, obtain copies of the 33433
Report and sale documents.
ALL INTERESTED PERSONS are invited to attend said hearing and express opinions
or submit to the City Clerk written evidence for or against the application as outlined
above. If you challenge the City Council/Agency's action in court, you may be limited to
raising only those issues that you or someone else raised at the public hearing
described in this notice or in written correspondence delivered to the City at, or prior to,
the public hearing. If there are any further questions, please call Mr. Luis Gomez,
Economic Development Department, at (714) 536-5544. Direct your written
communication to:
JOAN L. FLYNN, CITY CLERK
CITY OF HUNTINGTON BEACH
2000 MAIN STREET — 2ND FLOOR
HUNTINGTON BEACH, CALIFORNIA 92648
(714) 536-5227
CityClerkAgenda(a)-surfcity-hb.org
http://www.huntinfztonbeachea.gov/
P
STATE OF CALIFORNIA)
COUNTY O ORANGE
_
I am a citizen of the United States and a
resident of" the County aforesaid; I am
over the age of eighteen years, and not
a party to or interested in the notice
published. I am a principal clerk of the
HUNTINGTON BEACH INDEPENDENT,
which was adjudged a newspaper of
general circulation on August 24, 1994,
case A50479, for the City of Huntington
Beach, County of Orange, and:the State
of California.Attached. to this. Affidavit is
a.. true and complete copy, as was printed,.
'and published on the following date(s):
December 2, 9, 2010
I certify (or declare) finder penalty of
perjury that the foregoing is true and
correct.
Executed on December 15, 2010
at Costa Mesa, California
REDEVELOPMENT AGENCY OF THE CITY Of HUNTINGTON BEACH
1I NOTICEOFA PUSUCHEARING
ON THE SALE OF AGENCY OWNED PROPERTY:
CYPRESS/ELM (APN# 165-364-14) .
NOTICE IS HEREBY GIVEN that .the City Council and the Redevelopment
Agency of the City of Huntington Beach ("Agency") .will hold a joint public
hearing on Monday, December'20, 2010, at 6:00 p.m. or soon thereafter in
the City Council. Chambers, located.at 2000 Main Street; Huntington Beach,
p California; to consider the sale of the vacant property, located on the
Northeast quadrant of Cypress Avenue and Elm Street (APN# 165-364-24).
The property,is located in the Huntington, Beach Redevelopment Project
Area, specifically in the Oakview sub -area.
As required by California Redevelopment Law (Section 33433), a'report on
the sale is available for public inspection in .the Department of Economic
Development. The report summarizes the costs of the agreement to the
Agency, the estimated value' of the, property to be conveyed .to NF
Huntington Retail, LP as determined at the highest and best uses permitted
under the redevelopment plan, and an explanation of why,the sale of the
property will assist in the eliminationof blight, with reference to all
supporting facts and materials relied , upon in making this explanation.
Interested persons 'may inspect and, upon payment of the costs of
reproduction, obtain copies of the 33433 Report and sale documents.
ALL, INTERESTED PERSONS are invited to attend said hearing and express
opinions or submit to the City Clerk ,written ,evidence for or against the
application as outlined above. It 'you challenge the City Council/Agency's
action in court, you may, be limited to, raising only those 'issues that you
or someone else'raised -at the public hearing described in this notice or
in written correspondence delivered to.the,City at, or prior to, the public
hearing. If there are any further' questions, please call Mr. Luis Gomez,
I Economic Development Department, at (714) 536-5544. Direct your written
communicatiowto:
JOAN'L. FLYNN, CITY CLERK
CITY OF HUNTINGTON BEACH
I 2000 MAIN STREET - 2ND FLOOR
HUNTINGTON BEACH, CALIFORNIA 92648,
(714)'536-5227
CityClerlcAgenda@surfcity-hh.org -
COUNTYSTATE OF CALIFORNIA)
ORANGE
I am a citizen of the United States and a
resident of the County aforesaid; I am
over the age of eighteen years, and not
a party to or interested in the notice
published. I am a principal clerk of the
HUNTINGTON BEACH INDEPENDENT,
which was adjudged a newspaper of
general circulation on August 24, 1994,
case A50479, for the City of Huntington
Beach, .County of Orange, and the State
of California . Attached to this Affidavit is
a true and complete. copy as was printed
and published+on the following date(s): , . .
December 2, 9, 2010
I certify (or declare) under penalty of
perjury that the foregoing is true and
correct.
Executed on December 15, 2010
at Costa Mesa, California
et ic
Signat
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
NOTICE OF A PUBLIC HEARING
ON THE SALE OF AGENCY OWNED PROPERTY
CYPRESS/ELM (APN# 165-364-24)
NOTICE IS HEREBY GIVEN„ that the City Council and the Redevelopment
Agency of the City of Huntington Beach ("Agency") will hold a joint public
hearing on Monday,, December 20, 2010 at 6:00 p.m. or soon thereafter in
the City Council Chambers, located at 2000 Main Street, Huntington, Beach,
California, to consider the sale of the vacant property located on the
Northeast quadrant of Cypress Avenue and Elm Street (APN# 165-364-24).
The ,property is located in the Huntington Beach Redevelopment Project
Area;; specifically in the Oakview sub -area.
As required by California Redevelopment Law.(Section,33433), a report on
the sale is available for public inspection in the Department of Economic
Development. The report summarizes the costs of the agreemerit to the
Agency, the estimated .value of the, property to, be conveyed, to NF
Huntington Retail, LP as determined at the highest and best uses permitted
under the redevelopment plan, and an explanation of, why the sale of the
property will assist in the elimination of blight, with reference to all
supporting facts and materials relied upon in making this explanation.
Interested persons may. inspect and, upon payment of the costs of
reproduction, obtain copies of the 33433 Report and sale documents.
ALL INTERESTED PERSONS are invited to attend said hearing and express
opinions .or submit to the City Clerk written evidence for .or against the
application as outlined above. If you challenge the, City Council/Agency's
action in court, you may be limited to raising only those issues that you
or someone else raised at the public hearing described in this notice or
in written correspondence delivered to,the City at, or prior to, the public
hearing. If there are any further 'questions, please call Mr. Luis Gomei,
Economic Development Department, at ,(714) 536-5544. Direct your written
communication to: -
JOAN L. FLYNN, CITY CLERK
CITY OF HUNTINGTON BEACH
2000 MAIN STREET - 2ND FLOOR
,. HUNTINGTON BEACH, CALIFORNIA 92648
(714)536-5227 ,
CityClerkAgenda a surfcity-hb.org
http://www.huntingtonbea chca:gov/
Published Huntington Beach I'ndeoendent December 2.'9.2010 121-245