HomeMy WebLinkAboutWL DIRECT HUNTINGTON BEACH, LLC - 2005-05-16Council/Agency Meeting Held: Z) L1rv/D.1
Deferred/Continued to:
Approved l] Conditionally Approved ❑ Denied r L rK;# big ure
Council Meeting Date: May 16, 2005 Departme Number: PL05-05
CITY OF HUNTINGTON BEACH
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: HONORABLE MAYOR AND CITY C UNCIL MEMBERS -=
SUBMITTED BY: PENELOPE !LBREVFH- RAFT, Cit�Aministrat�
-
PREPARED BY: HOWARD ZELEFSICY, Director of Planningi'=�. ,
SUBJECT: APPROVE REIMBURSEMENT AGREEMENT BETWEEN THE dry
OF HUNTINGTON BEACH AND WL DIRECT HUNTINGTON
BEACH, LLC FOR COSTS INCURRED FOR PROFESSIONAL
PLANNING SERVICES IN CONNECTION WITH THE NEWLAND
STREET RESIDENTIAL PROJECT
Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s)
Statement of Issue:
Transmitted for City Council's consideration is a Reimbursement Agreement between the
City and WL Direct Huntington Beach, LLC. The Reimbursement Agreement will defray the
costs of professional planning services associated with preparation of an environmental
impact report for the Newland Street Residential project.
Funding Source:
The proposed Reimbursement Agreement between the City and WL Direct Huntington
Beach, LLC requires the developer to defray the costs of professional planning services by
making an initial deposit of Seventy-three Thousand Seven Hundred Ninety -Three Dollars
($73,793.00) with the City. The remaining Two Hundred Thousand Dollars ($200,000.00) is
to be paid in quarterly payments by the developer until completion of the project.
Recommended Action:
Motion to:
"Approve the Reimbursement Agreement between the City and WL Direct
Huntington Beach, LLC and authorize the Mayor and City Clerk to sign."
�-S-
REQUEST FOR ACTION
MEETING DATE: May 16, 2005 DEPARTMENT ID NUMBER: PL05-05
Alternative Action(s):
The City Council may make the following alternative motions:
"Deny the Reimbursement Agreement between the City and WL Direct
Huntington Beach, LLC."
2. "Continue the item and direct staff accordingly."
Analysis:
In order to assist the development community on major projects involving the preparation of
Environmental Impact Reports, it is necessary for the City to hire contract staff personnel to
be responsible for all studies and documentation necessary to comply with the provisions of
the California Environmental Quality Act (CEQA). In recognition of the costs associated with
these services, WL Direct Huntington Beach, LLC, project proponent for the Newland Street
Residential Project, has agreed to enter into a Reimbursement Agreement to defray the
costs related to their project.
The agreement will reimburse the City $273,793.00' for professional planning services.
Initially, Seventy-three Thousand Seven Hundred Ninety -Three Dollars ($73,793.00)' will be
paid to the City by WL Direct Huntington Beach, LLC, the project proponent, and the
remaining Two Hundred Thousand Dollars ($200,000.00) is to be paid in subsequent
quarterly payments, as billed by the City, until completion of the project.
There have been many reimbursement agreements requested by staff and the development
community. This is an acceptable method to give developers greater assurance of timely
entitlement processing in the City of Huntington Beach. Staff recommends the City Council
approve the reimbursement agreement.
Environmental Status:
Projects over which public agencies exercise ministerial authority, such as this
reimbursement agreement, are categorically exempt from the California Environmental
Quality Act pursuant to Section 15300.1.
Attachment(s):
RCA Author: Jane James/Mary Beth Broeren
PL05-05 WL Direct Reimbursement -2- 412712005 2:07 PM
REIMBURSEMENT AGREEMENT BETWEEN THE
CITY OF HUNTINGTON BEACH AND
WL DIRECT HUNTINGTON BEACH, LLC
FOR COSTS INCURRED FOR PROFESSIONAL SERVICES
THIS AGREEMENT ("Agreement") is made and entered into by and between the City of
Huntington Beach, a municipal corporation of the State of California, hereinafter referred to as
"CITY," and WL DIRECT HUNTINGTON BEACH, LLC, hereinafter referred to as
"DEVELOPER."
WHEREAS, DEVELOPER is proposing to develop an area within the City of
Huntington Beach known as the Newland Street Residential Project (hereinafter referred to as
the "Project"); and
DEVELOPER is required to submit applications to CITY for approval of various
entitlements, applications, land use and subdivision approvals and environmental assessments
related to the Project; and
DEVELOPER desires that all entitlements applications, land use approvals, and
environmental assessments related to the Project be processed as soon as possible; and
DEVELOPER desires to have CITY commit sufficient resources to enable the
expeditious processing of applications and other necessary documentation related to the Project;
and
Pursuant to California Government Code Section 87103.6, DEVELOPER is allowed to
defray the cost of processing development applications and entitlements review related to the
Project by reimbursing CITY for such costs,
NOW, THEREFORE, in consideration of the promises and agreements hereinafter made
and exchanged, the parties agree as follows:
05agree/reimbursement agreement-wt direct
1. PAYMENT
DEVELOPER agrees to reimburse CITY for a portion of its professional services
related to the Project (the "Reimbursement Services") in the total amount of Two Hundred
Seventy-three Thousand Seven Hundred Ninety -Three Dollars ($273,793.00) (the
"Reimbursement Amount") as follows:
A. Within ten (10) calendar days following approval of this Agreement by CITY,
DEVELOPER will make an initial payment to CITY in the amount of Seventy-three Thousand
Seven Hundred Ninety -Three Dollars ($73,793.00) for the quarterly period of April 1, 2005 to
and including June 30, 2005. Thereafter, beginning on July 1, 2005, and continuing on the first
day of each third month thereafter, Developer will make payments to the CITY in the amount of
Fifty Thousand Dollars ($50,000.00) (the "Quarterly Payment"). The Quarterly Payments shall
continue until the total Reimbursement Amount has been paid to CITY. Additionally, if the total
amount deposited by DEVELOPER is reduced to less than Ten Thousand Dollars ($10,000.00),
DEVELOPER shall make the next Quarterly Payment within ten (10) days notice from CITY.
DEVELOPER acknowledges that the Reimbursement Amount referenced in this Agreement is
the CITY's best estimate of the cost of the Reimbursement Services described herein, and that
the actual cost of the Reimbursement Services may be higher. In the event that the actual cost of
the Reimbursement Services exceeds the estimated cost, DEVELOPER agrees to pay the actual
cost within ten (10) days after receiving CITY's invoice for same. In the event the actual cost of
the Reimbursement Services is less than the estimated cost, CITY will refund the difference
between the actual and estimated cost.
B. A late payment fee of ten percent (10%) will be assessed if CITY receives any
payment Iaer than the thirtieth (30th) day after that payment is due but unpaid. In addition, one
05agree/reimbursement agreement-wl direct 2
and one-half percent (11/2) interest per month shall be added for each month the payment
hereunder is due but unpaid.
C. The estimated cost of the Reimbursement Services is Two Hundred Seventy-three
Thousand Seven Hundred Ninety -Three Dollars ($273,793.00).
2. STATEMENT OF INTENT
The amounts reimbursed to CITY pursuant to this Agreement will help defray
CITY's cost of the professional planning, engineering, building, fire, and legal services required
to process the Project.
3. EXCLUSIVE CONTROL BY CITY
CITY will maintain exclusive control over the work described herein. Nothing in
this Agreement:
A. Shall be deemed to require CITY to approve the Project or any plan,
proposal, suggestion, application or request submitted by DEVELOPER.
B. Shall be deemed to limit, in any respect whatsoever, CITY's sole authority
to direct and control CITY staff and consultant(s) assigned to the Project.
C. Shall be deemed to impose any liability on CITY different from any
liability as may otherwise be established by law.
4. TIME IS OF THE ESSENCE
CITY agrees that time is of the essence for the professional services to be funded
pursuant to this Agreement.
5. TERMINATION OF AGREEMENT
Either party may terminate this Agreement at any time with or without cause,
upon ten (10) days prior written notice to the other party. DEVELOPER shall be responsible for
05agreeheimbursemen€ agreement-wi direct
all costs incurred prior to termination, including any and all costs incurred after notice of
termination has been given.
6. TERM
This Agreement shall be effective as of the date it is approved and adopted by
CITY. This Agreement shall expire when terminated as provided herein.
7. NOTICES
Any notices, certificates, or other communications hereunder shall be given either
by personal delivery to DEVELOPER's agent (as designated in Section 1 hereinabove) or to
CITY as the situation shall warrant, or by enclosing the same in a sealed envelope, postage
prepaid, and depositing the same in the United States Postal Service, to the addresses specified
below; provided that CITY and DEVELOPER, by notice given hereunder, may designate
different addresses to which subsequent notices, certificates or other communications will be
sent:
TO CITY:
City of Huntington Beach
ATTN: Director of Planning
2000 Main Street
Huntington Beach, CA 92648
8. MODIFICATION
TO DEVELOPER:
WL Direct Huntington Beach, LLC
Ms. Debra Pember
3121 Michelson Drive, Suite 200
Irvine, CA 92612
No waiver or modification of any language in this Agreement shall be valid
unless in writing and duly executed by both parties.
9. SECTION HEADINGS
The titles, captions, section, paragraph and subject headings, and descriptive
phrases at the beginning of the various sections in this Agreement are merely descriptive and are
05agreelreimbursement agreement-wl direct 4
included solely for convenience of reference only and are not representative of matters included
or excluded from such provisions, and do not interpret, define, limit or describe, or construe the
intent of the parties or affect the construction or interpretation of any provision of this
Agreement.
10. INTERPRETATION OF THIS AGREEMENT
The language of all parts of this Agreement shall in all cases be construed as a
whole, according to its fair meaning, and not strictly for or against any of the parties. If any
provision of this Agreement is held by an arbitrator or court of competent jurisdiction to be
unenforceable, void, illegal or invalid, such holding shall not invalidate or affect the remaining
covenants and provisions of this Agreement. No covenant or provision shall be deemed
dependent upon any other unless so expressly provided here. As used in this Agreement, the
masculine or neuter gender and singular or plural number shall be deemed to include the other
whenever the context so indicates or requires. Nothing contained herein shall be construed so 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 or future statute, law, ordinance or regulation
contrary to which the parties have no right to contract, then the latter shall prevail, and the
provision of this Agreement which is hereby affected shall be curtailed and limited only to the
extent necessary to bring it within the requirements of the law.
11. DUPLICATE ORIGINAL
The original of this Agreement and one or more copies hereto have been prepared
and signed in counterparts as duplicate originals, each of which so executed shall, irrespective of
the date of its execution and delivery, be deemed an original. Each duplicate original shall be
deemed an original instrument as against any party who has signed it.
05agree/reimbursement agreement-wl direct
12. IMMIGRATION
DEVELOPER shall be responsible for full compliance with the immigration and
naturalization laws of the United States and shall, in particular, comply with the provisions of the
United States Code regarding employment verification.
13. LEGAL SERVICES SUBCONTRACTING PROHIBITED
DEVELOPER and CITY agree that CITY is not liable for payment of any
subcontractor work involving legal services, and that such legal services are expressly outside
the scope of services contemplated hereunder. DEVELOPER understands that pursuant to
Huntington Beach City Charter Section 309, the City Attorney is the exclusive legal counsel for
CITY; and CITY shall not be liable for payment of any legal services expenses incurred by
DEVELOPER.
14. HOLD HARMLESS
DEVELOPER hereby agrees to protect, defend, indemnify and hold harmless
CITY, its officers, elected or appointed officials, employees, agents and volunteers from and
against any and all claims, damages, losses, expenses, judgments, demands and defense costs
(including, without limitation, costs and fees of litigation of every nature or liability of any kind
or nature) arising out of or in connection with the Project, CITY'S processing or consideration of
the Project, CITY'S ultimate approval or denial of the Project, DEVELOPER'S (or
DEVELOPER'S subcontractors, if any) performance of this Agreement, or the failure to comply
with any of the obligations contained in this Agreement by DEVELOPER, its officers, agents or
employees, except such loss or damage which was caused by the sole negligence or willful
misconduct of CITY. DEVELOPER will conduct all defense at its sole cost and expense and
CITY shall approve selection of DEVELOPER'S counsel. This indemnity shall apply to all
05agree/reimbursement agreement-wl direct 6
claims and liability regardless of whether any insurance policies are applicable. The policy
limits do not act as limitation upon the amount of indemnification to be provided by
DEVELOPER.
15. ATTORNEY' S FEES
Except as expressly set forth in Section 8 of this Agreement, 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.
16. GOVERNING LAW
This Agreement shall be governed and construed in accordance with the laws of
the State of California.
17. ENTIRETY
This Agreement, and the attached exhibits, contains the entire agreement between
the parties respecting the subject matter of this Agreement and supersedes all prior understanding
and agreements whether oral or in writing between the parties respecting the subject matter
hereof.
REST OF PAGE INTENTIONALLY UNUSED
05agree/reimbursement agreement-wl direct 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by and through their authorized officers on , 2005.
WL DIRECT HUNTINGTON BEACH, LLC
Z3?rM;rf—
AND
REVIEWED AND APPROVED:
/"-J- agz�g "
ity Administrator
CITY OF HUNTINGTON BEACH, a
municipal corporation of the State of
California
d
F City Clerk
E
APPROVED AS TO FORM:
�J City AtIomey 2
'4 c S%a.i
INITIATED AND APPROVED: 1" ' ffzs10s
ector of Planning
05agree/reimbursement agreement-wl direct 8
WL DIRECT HUNTINGTON BEACH, LLC
BY :Direct Investors II, a California limited liability company
By: By:
Kurt Nelson Steve Schwartz
It's Managing Members
WL Homes, LLC, a Delaware limited liability company
By: � /I
Jef n
VP Finance
Direct Investors H., LLC
3450 Torrance Blvd,, Ste. 300
Torrance, CA 90503
Ms. Jane James, Senior Planner
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Dear Jane,
April 22, 2005
As discussed, this letter is written to provide information and proper authorization for the
signature block and signatories to the reimbursement and indemnity agreement
concerning EIP's contract for preparation of the project EIR.
The project applicant and the guarantorlindemnitor for the subject agreement is WL
Direct - Huntington Beach, LLC, a California Limited Liability Company ("WL -
Direct"). The two Members of WL - Direct are themselves limited liability companies,
being Direct Investors II, LLC, (the JCC Member) and WL Homes, LLC (the John Laing
Member). Therefore, we provided a signature block to the subject agreement which had
execution lines for both Members of WL Direct. Steve Schwartz and the undersigned, as
cc -Managing Members of Direct Investors 11, LLC signed for that entity, and Mr. Jeff
Herrmann executed on behalf of WL Homes, LLC.
I have enclosed for your records a copy of Article 5, Section 5.2 of the Operating
Agreement for WL Direct, which sets forth the fact that the LLC shall have 2 Managers,
being WL Homes, LLC and Direct Investors I1, LLC, and that either Mr. Schwartz or the
undersigned are the authorized parties to act on behalf of Direct Investors, LLC, and that
Mr. Herrmann is one of 5 authorized parties to act on behalf of WL Homes, LLC.
I trust that you now have enough authorization information for the executed agreement
Concerning reimbursement and indemnity with respect to the EIP contract, and that the
contract may be ratified by the City Council next month.
As always, thank you for your assistance, and please let me know if you need anything
else in connection with the subject agreement.
Sincerely,
Kurt Nelson
Direct Investors 1I, LLC
cc Debra Pember
!nent to be executed by Mayer and DIRECT and shall be of no concern of the Company or WL
t as expressly provided in this Agreement. Mayer shall bear all its own expenses incurred in
connection with.the development of the Property unless approved in writing in advance by the
Manager. The Members hereby approves retaining Steven Kaufmann of the Richards Watson law
firm to advise the Company on issues. related to the Coastal Commission.
ARTICLE 5.
MANAGEMENT OF THE COMPANY
5.1 Management of the Company. by Manager.
I
5.1(a) Exclusive . Management by Manager. The business, property and
affairs of the Company shall be managed exclusively by the Manager. Except for situations in which
the approval of the Members is expressly required by the Articles or this. Agreement, the Manager
shall have fail, complete and exclusive authority, power, and discretion to manage and control the
business, property and affairs of the Company, to mare all decisions regarding those matters and to
perform or cause to be performed any and all other acts or activities customary or incident to the
management of the Company's business, property and affairs, including, but not limited to the
financing, sale, lease or exchange of the Property..
5.1(b) Agency Authori�y of Manager. The Manager is authorized to endorse
checks, drafts, and other evidences of indebtedness made payable to. the order of the. Company, and
to sign contracts, documents, notices, letters, agreements and obligations. on behalf of the Company.
5.2 Appointment of Manager.
5.2(a) Number and Qualifications. The Company shall have two (2)
managers who initially shall be. WL and DIRECT.. WL's representatives authorized to act on behalf
of. WL. as Member and as. Manager shall be any of Steve Kabel, Ken Nishikawa, Jeffrey Herrmann,
David Prolo,. and Daniel Flynn. DIRECT's representatives authorized to act on behalf of DIRECT
as. Member and as Manager shall be any of Steve Schwartz and Kurt Nelson.. As used herein,
"Manager" shall mean DIRECT and WL acting jointly.
5.2(r.) Resi�ation. DIRECT and WL may resign as Manager at any time
by giving written notice to the Members without prejudice to the rights, if any, of the. Company
under any contract to which it is a party. Any such resignation shall take effect upon receipt of that
notice or at such later time as shall be specified in the notice;. and, unless otherwise specified in the
notice, the acceptance of the resignation shall not be necessary to make. it effective. Any such
resignation of a Manager who, is also a Member shall not affect the Member's rights as a Member
and shall not constitute a withdrawal of a Member.
5.2 (c) Removal.. The Members shall not have the right to remove a Manager.
5.2(d) Vacancies. Any vacancy occurring for any reason in the position of
Manager may be filled by the affirmative vote of both Members. No person who is. not a Member,
or a trustee of a Member, may be a Manager.
SJD130156-01281344354.20
18 5/28/04
LLC Authorization of Direct Investors II, LLC,
a California Limited Liability Company
We, the Undersigned, do hereby certify:
1) That we are the Managing Members of Direct Investors II, LLC a California limited liability company formed
per Articles of Organization filed May 25, 2004 with the Calf. Secretary of State, a copy of which Articles are
attached hereto;
2) That the following is a true and correct authorization adopted by us with respect to the LLC's becoming a
Member of "WL Direct - Huntington Beach, LLC" and carrying out various duties and filings with respect to
such Membership.
RESOLVED FURTHER: That it has been deemed in the best interests of the LLC to join with WL Homes,
LLC, a Delaware Limited Liability Company, to form "WL Direct - Huntington Beach, LLC" a California limited
liability company, for the purose of investment in and entitlement of certain real property in the City of
Huntington Beach, California, and;
RESSOLVED FURTHER: That in order to conduct the business of WL Direct - Huntington Beach, LLC, it will
be necessary to execute various documents required for the entitlement of the property to be developed,
including without limitation, subdivision and other entitlement appllications, bonds, notes, deeds of trust,
guarantees of payment, indemnity(s) and other documents which shall be necessary from time to time to bind
the LLC and all its Members; and,
RESOLVED FURTHER: That all necessary Member consents have been given for the authorization of Kurt
Nelson and Steven Schwartz, as the Managing Members of Direct Investors 11, LLC, to execute on the LLC's
behalf any and all documents as are necessary to carry out the LLC's membership obligiations as Member of
WL Direct - Huntington Beach, LLC; and,
RESOLVED FURTHER, That such authorization has not been rescinded or amended
Dated: April 22, 2005
Direct Investors 11, LLC
Steven Schwartz, Managing Member
6�
Kurt Nelson, Managing Member
RCA ROUTING SHEET
INITIATING DEPARTMENT:
PLANNING DEPARTMENT
SUBJECT:
REIMBURSEMENT AGREEMENT WITH WL DIRECT
HUNTINGTON, LLC IN CONNECTION WITH THE
NEWLAND STREET RESIDENTIAL PROJECT
COUNCIL MEETING DATE:
May 16, 2005
RCA ATTACHMENTS
STATUS
Ordinance (w/exhibits & legislative draft if applicable)
Not Applicable
Resolution (wlexhibits & legislative draft if applicable)
Not Applicable
Tract Map, Location Map and/or other Exhibits
Not Applicable
Contract/Agreement (wlexhibits if applicable)
(Signed in full by the City Attomeyj
Attached
Subleases, Third Party Agreements, etc.
(Approved as to form by City Attome
Not Applicable
Certificates of Insurance (Approved by the City Attome
Not Applicable
Financial Impact Statement (Unbudget, over $5,000)
Not Applicable
Bonds (If applicable)
Not Applicable
Staff Report (If applicable)
Not Applicable
Commission, Board or Committee Report (If applicable)
Not Applicable
Findings/Conditions for Approval and/or Denial
Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED
RETURNED
FORWARP!D
Administrative Staff
Assistant City Administrator Initial
City Administrator Initial
City Clerk
EXPLANATION FOR RETURN OF ITEM:
RCA Author; HZ:SH:MBB:JJ:rI
ne
0
CITY OF HUNTINGTON BEACH
2000 MAIN STREET
CALIFORNIA 92648
OFFICE OF THE CITY CLERK
JOAN L. FLYNN
CITY CLERK
LETTER OF TRANSMITTAL OF ITEM APPROVED BY THE CITY COUNCIU
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
DATE:
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DEPARTMENT:
See Attached Action Agenda Item Date of Approval s/J6�i
Enclosed For Your Records Is An Executed Copy Of The Above Referenced Agenda Item.
Remarks:
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Clerk
Attachments: Action Agenda Page
Agreement
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