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HomeMy WebLinkAboutMayer Financial, LP - PCH Beach Resort, LLC - 2003-07-21Council/Agency Meeting Held- Deferred/Continued to pproved ❑ Conditionally Approved ❑ Denied City Clerk's Sig ture Council Meeting Date: July 21, 2003 Department ID Number, ED 03-14 CITY OF HUNTINGTON BEACH q r REQUEST FOR COUNCIL ACTION SUBMITTED TO: HONORABLE MAYOR AND CITYeNCILBERSSUBMITTED BY: RAY SILVER, City AdministratorPREPARED BY: DAVID C BIGGS, Director of Ecoent ROBERT F BEARDSLEY, Director of Public Work e� JENNIFER McGRATH, City Attorney SUBJECT: APPROVE SETTLEMENT AGREEMENT AND MUTUAL RELEASE WITH PCH BEACH RESORT, LLC, AND MAYER FINANCIAL, LP Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s) Statement of Issue: A dispute has arisen regarding which development impact fees are payable for the various phases of the Waterfront Development under the terms of the Development Agreement_ Approval of the Settlement Agreement and Mutual Release resolves this dispute. Funding Source: NIA Recommended Action: Approve a Settlement Agreement and Mutual Release with PCH Beach Resort, LLC, and Mayer Financial, LP and authorize the Mayor and City Clerk to execute the Settlement Agreement and Mutual Release. Alternative Action(s): 1) Approve a modified version of a Settlement Agreement and Mutual Release; or 2) Disapprove the Settlement Agreement and allow the dispute to be settled through litigation. REQUEST FOR COUNCIL AC7iON MEETING DATE: July 21, 2003 DEPARTMENT ID NUMBER: ED 03-14 Analysis: In September 1998, the City Council approved an Amended and Restated Development Agreement for the various phases of the Waterfront Development. Section 2.11 of the Development Agreement addresses development fees and what fees are due on future phases of the project. The original Development Agreement was approved in 1988, which has contributed to the lack of clarity regarding which fees applied. In particular, what level of Water Connection Fees and Traffic Impact Fees should apply are at issue. Staff and Mayer Financial have reached an agreement that the 1982 Water Connection Fees will apply to the Waterfront Development and that Traffic Impact Fees at the 1990 level will apply. The Settlement Agreement documents this agreement for the current phases, the Hyatt Regency and Waterfront residential, as well as for the future third hotel. This should eliminate any disputes in the future. Environmental Status: The Amended and Restated Development Agreement was approved relying on an Addendum to Supplemental EIR 82-2 certified on September 14, 1998. Attachment(s): RCA Author D Biggs, 'exL 5909 G-1David1RCASIRCA ED03-14 doc -2- 7/1112003 8:29 AM 0 i i CITY OF H UNTINGTON BEACH InterOffice Communication Economic Development Department TO: Connie Brockway, City Clerk FROM: William P. Workman, Assistant City Administrator DATE: July 11, 2003 SUBJECT: LATE ITEM FOR THE JULY 2 1 " CITY COUNCIL AGENDA Economic Development Director David Biggs has requested special consideration in adding a late item to the City Council agenda for July 21". The attached item is now complete and would be a Consent Calendar item. The issues addressed in this Settlement Agreement will allow the construction of the Waterfront Residential project to proceed in a timelier manner. The City's Redevelopment Agency is losing tax increment revenue of nearly $3,000 per day for each day the construction of the residential units is delayed. I concur with his request and hope that adding this item would be possible. We appreciate your assistance in being flexible as to the agenda deadlines when circumstances warrant. WPW/dcb xc: David C. Biggs, Director of Economic Development �, h yr nut- cA ks 4. V-r' C-U C_� Cam- � REQUEST FOR LATE SUBMITTAL (To accompany RCA's submitted after Deadline Department: Economic Development Council Meeting Date: 7/21 /03 Subject APPROVE SETTLEMENT AGREEMENT AND MUTUAL RELEASE WITH PCH BEACH RESORT, LLC, AND MAYER FINANCIAL, LP Date of This Request: July 11, 2003 REASON(Why is this RCA being submitted late?): The Settlement Agreement was finalized on 7110 and signed by the outside party on 7/10 EXPLANATION(Why is this RCA necessary to this agenda?): Delay of this action may delay future phases of the Waterfront residential development CONSEQUENCES How shall delay of this RCA adversely impact the City?): Each day of delay mean foregone revenue to the Redevelo ment A enc Signature: Departm Head r roved Denied Ray Silver ity Administrator Documend 07114/94 . G;f� CIFRks Of? 16-1r1AL SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE This SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE ("Agreement") is entered into as of 0 1.i a.1 , 2003 (the "Effective Date"), by and among the CITY OF HUNTINGTON BEACH, a California municipal corporation (the "City"), PCH BEACH RESORT, LLC, a California limited liability company ("PCH"), and MAYER FINANCIAL, L.P., a California limited partnership ("Mayer"). A. On or about September 21, 1998, City and Mayer entered into that certain Amended and Restated Development Agreement, which was recorded on October 21, 1998, in the Official Records of Orange County, California, as Instrument No. 1998071 1512, and re- recorded in the Official Records of Orange County, California, on December 7, 1998, as Instrument No. 19980838602 (the "Development Agreement"). B. This Agreement affects the "Property," as that term is defined in Section 2.24 of the Development Agreement and Exhibits C and D thereto, excluding only the portion of the Property consisting of the Degraded Wetlands Area Lot and the Buffer Zone Lot referred to hereinbelow. At this time the Property consists of the following five (5) parcels: (i) An approximately 15.103-acre parcel more particularly described as Lot I of Tract No. 15535, as shown on a Map filed in Book 790, pages 44 to 50, inclusive, of Miscellaneous Maps of the Records of Orange County, California (the "Hyatt Regency Parcel"). The Hyatt Regency Parcel is owned by the Redevelopment Agency of the City of Huntington Beach (the "Agency") and is leased to PCH. PCH has developed and owns and operates a Hyatt Regency hotel and conference center on the Hyatt Regency Parcel. (ii) Approximately 21.65 acres of land area more particularly described as Lots 1-21, inclusive, together with lettered Lots A-Z, inclusive, of Tract No. 15549, as per the map filed in Book 842, pages 28-44, inclusive, of Miscellaneous Records of Orange County, California (the "Residential Parcel"). On June 12, 2003, Mayer conveyed fee title to the Residential Parcel to PLC/Lyon Waterfront Residential LLC, a Delaware limited liability company ("PLC/Lyon"). PLC/Lyon intends to transfer from time to time certain portions of the Residential Parcel to William Lyon Homes, AgecO3jlVaterfront 1 u Inc. ("Lyon"), PLC Waterfront LLC ("PLC"), and a homeowner's association to be formed ("Association"), all in conjunction with the planned development of approximately 184 residential dwelling units and incidental improvements on the Residential Parcel in accordance with the Development Agreement. (iii) Approximately 3.55 acres of land area more particularly described as Lot 2 of Tract No. 15535, as shown on a Map filed in Book 790, pages 44 to 50, inclusive, of Miscellaneous Maps of the Records of Orange County, California ("Parcel C"). Parcel C is owned by the Agency and currently is ground leased to Waterfront Hotel, LLC. Mayer has certain contractual rights with the Agency to acquire a long-term leasehold interest in Parcel C to develop an additional hotel or similar commercial project thereon. (iv) A degraded wetland area owned by the Agency and designated as Lot AA of Tract No. 15549, as per the map filed in Book 842, pages 28-44, inclusive, of Miscellaneous Records of Orange County, California (the "Degraded Wetlands Area Lot" (v) A lot owned by City and more particularly described as Lot BB of Tract No. 15549, as per the map filed in Book 842, pages 28- 4, inclusive, of Miscellaneous Records of Orange County, California (the "Buffer Zone Lot"). C. The completed Hyatt Regency hotel and conference center and related improvements on the Hyatt Regency Parcel and the planned future developments on the Residential Parcel and Parcel C are referred to in the Development Agreement and in this Agreement as the "Project." D. The Development Agreement provides the Project will be subject to certain "Development Fees" as that term is defined in Section 2.11 of the Development Agreement. E. The Parties are in dispute regarding certain of the Development Fees applicable to the Project. The City contends it may charge a water connection fee for the Project that was first established before the November 2, 1988, "Effective Date" of the Development Agreement and certain other Development Fees that were established subsequent to the Effective Date. PCH and Mayer contend that pursuant to Section 3.3 of the Development Agreement City may not charge any new or increased Development Fee that was not in effect Agree03/Waterfront 2 prior to the November 2, 1988, Effective Date of the Development Agreement, nor may the City after that date increase the amount of any Development Fee in excess of the increase in the reasonable cost of providing the improvement or service for which the Development Fee is imposed, subject only to the exception that the City shall have the right to charge the park acquisition and development fee applicable to the Property that was established by City Council Resolution No. 6226 adopted on November 19, 1990 (the "Dispute"). F. On or about April 11, 2003, PCH paid to City a Traffic Impact Fee for the development on the Hyatt Regency Parcel in the amount of $ l 38,412.50. On or about June 10, 2003, PCH submitted a formal protest of said fee to City on the basis that said fee was imposed by City in violation of the Development Agreement (the "Development Fee Protest Letter"). G. The Parties desire to finally resolve and settle the Dispute. COVENANTS: NOW THEREFORE, in consideration of the foregoing Recitals, which are incorporated herein by this reference, and the mutual covenants of the Parties set forth herein, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties agree as follows: Purpose. It is the intention and purpose of all Parties in entering into this Agreement to amicably fully, and finally settle and resolve any and all disputes, claims, differences, actions or causes of action, whether actual or potential, in connection with the Dispute. In order to resolve the Dispute, the Parties recognize that a compromise is necessary and, accordingly, enter into this Agreement. 2. Settlement Terms. 2.1 Water Connection Fee. 2.1.1 Hyatt Regency Parcel. On or about August 6, 1999, PCH and/or its predecessor -in -interest paid a water connection fee of $5,590.50 for development of the Hyatt Regency hotel and conference center on the Hyatt Regency Parcel pursuant to Huntington Beach Municipal Code ("HBMC") § AgneO?Waterfront 3 14.12.010(b). City and PCH agree there is an outstanding amount due of $25,429.50, which amount shall be paid by PCH to City within 14 days of the Effective Date of this Agreement. 2.1.2 Residential Parcel. City and Mayer acknowledge and agree that the water connection fee authorized pursuant to HBMC § 14.12.010(b) and currently in effect shall be paid with respect to development occurring on the Residential Parcel. Based on the fees established by City in 1992 (the last time said fee was adjusted prior to the Effective Date of the Development Agreement), said fee shall be $60.00 per dwelling unit ($11,040 total for the Residential Parcel assuming 184 dwelling units are constructed on the Residential Parcel), payable as of the date(s) building permits are issued. 2.1.3 Parcel C. City and Mayer acknowledge and agree that the water connection fee authorized pursuant to HBMC § 14.12.010(b) and currently in effect applies to the future development of Parcel C. Based on the fees established by City in 1982, said fee shall be $60.00 per room/unit, payable as of the date a building permit is issued. 2.2 Library Development Fee. The Hyatt Regency Parcel, the Residential Parcel, and Parcel C shall not be subject to and shall not be required topay the Library Development Fee established by City pursuant to Chapter 17.66 of the HBMC. 2.3 Traffic Impact Fee. 2.3.1 Hyatt Regency Parcel. City and PCH acknowledge and agree that PCH has paid the full Traffic Impact Fee for development of the Hyatt Regency Parcel pursuant to HBMC § 17.65.040(b), as referred to in Recital F of this Agreement. PCH hereby withdraws the Development Fee Protest Letter. 517 rooms x 10 trips 5170 trips less 25% job/housing credit (1292.50 trips) less credit for prior uses on the Property (2032 trips) AgreeO3fWaterfront 4 • Net Trips 1845.50 trips x $75 per trip = $138,412.50 (The credit for prior uses on the Property was not allocated proportionately to the Hyatt Regency, Residential Parcel and Third Hotel, but at Mayer's option, was applied entirely to the Hyatt Regency. Consequently, no credit for prior uses is available for the Residential Parcel or the Third Hotel.) 2.3.2 Residential Parcel. Prior to the City's issuance of a certificate of occupancy for each residential dwelling unit on the Residential Parcel, City shall be authorized to impose a Traffic Impact Fee to City pursuant to HBMC § 17.65.040 in the amount of $525 per unit pursuant to HBMC § 17.65.040(b), calculated as follows: S75.00/trip x 7 trips per residential unit = S525/unit 2.3.3 Parcel C. Prior to the issuance of the final certificate of occupancy for the planned future development on Parcel C, Waterfront or Mayer, as applicable, shall pay a Traffic Impact Fee to City pursuant to HBMC § 17.65.040(b) of S168,750, calculated as follows: 300 rooms (assumed] x 10 trips r 4 3000 trips less 25% job/housing credit (750 trips) Net Trips 2250 trips x $75 per trip = $168,750 (The actual fee for the development on Parcel C will be adjusted based on the final room or unit count.) 3. Restrictions on Additional Development Fees. Except as expressly set forth in Paragraph 2.1 and 2.3 of this Agreement, during the "Term" of the Development Agreement the "Developer" thereunder shall not be responsible for paying any Development Fees or for providing or contributing to any improvements or services not required to be paid, provided, or contributed to under City ordinances, regulations, rules, and official policies in force as of the November 2, 1988, Effective Date of the Development Agreement (with the exception of the Agree03lWaterfront • park acquisition and development fee referred to in Section 3.3.2 of the Development Agreement) and, in addition, the Developer shall not be responsible for paying any increased fee or charge for any Development Fee that was in effect as of the November 2, 1988, Effective Date of the Development Agreement to the extent that any such increase exceeds the increase in the reasonable cost of providing the improvement or service for which the fee or charge was imposed prior to said Effective Date. 4. Mutual Discharge. City, on the one hand, and PCH and Mayer, on the other hand (each a "Releasor") hereby releases and forever discharges one another, together with each of the other's agents, representatives, employees, officers, directors, partners, stockholders, attorneys, predecessors, successors, assigns, heirs, personal representatives and executors, both past and present, and all persons, firms, associations, co-partners, co -venturers, insurers, contractors, engineers, subcontractors, subsidiaries, parents, affiliates, or corporations connected therewith, and each of them (collectively, the "Releasees") from any and all claims, debts, liabilities, demands, obligations, costs, expenses, attorneys' fees, actions, and causes of actions of every nature, character, and description, whether in law or in equity and whether known or unknown, which the Releasors have held, now hold, or may hold in the future arising out of any matter, fact, and/or allegation arising from, regarding or relating to the Dispute provided, however, that nothing herein is intended or shall be interpreted as a release or discharge of any Party's remaining rights and obligations under the Development Agreement (as modified or compromised by this Agreement) with respect to the payment of Development Fees for the Property. No Further Action or Claim. Each of the Parties agrees that it will not pursue any action of any sort before any court or agency against any of the other Parties hereto in violation of or inconsistent with the compromise, release, and settlement of the Dispute as provided herein, nor will such Party make any further claim, complaint, grievance, or the like against any of the other Parties hereto related to matters compromised, released, and settled by virtue of this Agreement; provided, however, that each Party reserves all of its rights to enforce the provisions of the Development Agreement (as modified or compromised by this Agreement) with respect to the payment of Development Fees for the Property. Agree03r waterfront 6 b. No Admission of Liability. Nothing herein shall be construed as an admission of liability on the part of any of the Parties with respect to any claims, demands, causes of action, obligations, damages or liabilities asserted by any other Party. Informed Consent. Each Party declares that prior to the execution of this Agreement, it and/or its duly authorized representatives have apprised themselves of sufficient relevant data, either through experts or other sources of their own selection, in order to intelligently exercise their judgment in deciding whether to execute, and in deciding the contents of, this Agreement. Each Party states that this Agreement is entered into freely and voluntarily, upon the advice and with the approval of its counsel. 8. Construction. The drafting and negotiation of this Agreement has been participated in by each of the Parties and its counsel and for all purposes of this Agreement shall be deemed to have been drafted jointly by all Parties. 9. Entire Agreement. This Agreement constitutes the entire agreement and understanding between and among the Parties relating to settlement of the Dispute and supersedes all prior agreements, written or oral, among the Parties on that subject. There are no oral understandings, terms or conditions, and no Party has relied upon any representation, express or implied, not contained in this Agreement with respect thereto. All prior understandings, terms or conditions with respect to settlement of the Dispute are deemed merged into this Agreement. Notwithstanding the foregoing, it is understood that except as expressly set forth herein the Development Agreement shall remain in full force and effect in accordance with its terms, including without limitation the provisions of Section 3.3 of the Development Agreement relating to the DeveIoper's obligation to pay Development Fees and the limitations and restrictions on the City's authority to impose new or increased Development Fees. 10. Execution in Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. 11. Written Notification. Any notice, demand, request, consent, approval or communications that any Party desires or is required to give to any other Party shall be in writing and either served personally or sent by prepaid, first-class mail. Any such notice, demand, etc. shall be addressed to the other Party or Parties at the address set forth AgrceDYWaterfront 7 0 • hereinbelow. Any Party may change its address by notifying the other Party of the change of address. Notice shall be deemed communicated within three (3) business days from the time of mailing if mailed as provided in this Section. PCH and Mayer c/o The Robert Mayer Corporation 660 Newport Center Drive, Suite 1050 P.O. Box 8680 Newport Beach, CA 92658-8680 Attention: Stephen K. Bone Fax: (949) 720-1017 Phone: (949) 759-8091 with copies to: Rutan & Tucker, LLP 611 Anton Boulevard, Suite 1400 Costa Mesa, CA 92626-1998 Attention: Jeffrey Oderman, Esq. Fax: (714) 546-9035 Phone: (714) 641-5100 City: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Fax: (714) 374-1557 Phone: (714) 536-5227 with copies to: City Attorney City of Huntington Beach 2000 Main Street, 4th Floor Huntington Beach, CA 92648 Fax: (714) 374-1590 Phone: (714) 536-5555 12. No Assignment. Each Party represents and warrants that there has been no assignment or other transfer of any claims, actions, causes of action, demands, rights, damages, costs, expenses, compensation, or any other interests which it may have, or may have had, at any time whatsoever against any of the other Parties, or any of its or their officers, agents, partners, representatives, employees, successors, assigns or affiliates to any person, firm, corporation, partnership, or any other entity of any kind whatsoever. 13. Successors and Representatives. This Agreement shall bind and inure to the benefit of each Party and each Party's agents, representatives, employees, beneficiaries, AgrceW/Waterfront • 9 officers, directors, predecessors, successors, and assigns. Not by way of limitation of the foregoing, PLC/Lyon, Lyon, and PLC are intended as third party beneficiaries of the provisions set forth in this Agreement relating to the Residential Parcel. 14. Further Actions and Documents. Each Party shall take such further actions and shall execute, acknowledge and deliver, or cause to be executed, acknowledged or delivered, to the other Party or Parties such further instruments and documents as may be necessary in order to effectuate this Agreement. 15. Forum Selection/Attorneys Fees. In the event of a dispute and/or any legal action taken to enforce the terms of this Agreement any such action shall be filed and maintained in Orange County, California. Each Party shall bear its own attorneys' fees, costs, and expenses. 16. Severability. Should any provision of this Agreement be determined to be illegal or unenforceable, all other provisions of this Agreement shall be given effect to the fullest extent permitted by law. 17. "rime of the Essence. Time is of the essence of this Agreement and of the performance of all obligations hereunder. ASree03/Waterfn>nt 9 • 0 WHEREFORE, the Parties have executed this Agreement to be effective as of the Effective Date first written above. ATTEST: City Clerk ElY 03 REVIEWED AND APPROVED: City Administrator f , Agree03/Waterfront CITY OF HUNTINGTON BEACH APPROVED AS TO FORM: �f►, 10 INITIATED AND APPROVED: C- Economic Development Director MAYER FINANCIAL, L.P., a California limited partnership By: RLM Management, Inc., a California corporation, General Partner By: ! L' Name: Robert L. Mayer Title: President and Chairman and By: Name: Robert 1Aay I Title: Secreta PCH BEACH RESORT, LLC, a California limited liability company By: Grand Resort, LLC, a California limited liability company, Managing Member By: RLM Management, Inc., a California corporation, Manager By: c ame: obert L. ' aver Title: President or By: Name:NVie Mayer, Jr. Title:ident Agree03fWatcrfront E Cfe J. Lo- 19 - CITY OF HUNTINGTON BEACH 2000 MAIN STREET OFFICE OF THE CITY CLERK CONNIE BROCKWAY CITY CLERK August 4, 2003 Rutan & Tucker, LLP Attn: Jeffrey Oderman, Esq. 611 Anton Boulevard, Sute 1400 Costa Mesa, CA 92626-1998 CALIFORNIA 92648 The City Council of the City of Huntington Beach approved at its council meeting on July 21, 2003 a Settlement Agreement and Mutual Release with PCH Beach Resort, LLC, and Mayor Financial, LP and authorized the Mayor and City Clerk to execute the Settlement Agreement and Mutual Release. Enclosed is your original copy Sincerely Conic Brockway, CMC City Clerk Enclosure Original copy. (THophons: 714536-62171 Lj„& CITY OF HUNTINGTCN BEACH 2000 MAIN STREET CALIFORNIA 92648 OFFICE OF THE CITY CLERK CONME BROCKWAY CITY CLERK August 4, 2003 The Robert Mayer Corporation Attn: Stephen K. Bone 660 Newport Center Drive, Ste. 1050 P.O.Box 8680 Newport Beach, CA 92658-8680 The City Council of the City of Huntington Beach approved at its council meeting on July 21, 2003 a Settlement Agreement and Mutual Release with PCH Beach Resort, LLC, and Mayor Financial, LP and authonzed the Mayor and City Clerk to execute the Settlement Agreement and Mutual Release. Enclosed is your original copy Sincerely Connie Brockway, CMC City Clerk Enclosure Original copy. (Telephone: 71453"227 )