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HomeMy WebLinkAboutTermination of Owner Participation Agreement - OPA - among tAGENDA REPORT Huntington Beach Oversight Board of the Successor Agency to the Redevelopment Agency MEETING DATE: August 23, 2012 3) SUBJECT/ ACTION: Adopt a Resolution Consenting to and Approving the Termination of an Owner Participation Agreement (OPA) among the City, the former Redevelopment Agency, and Makallon Atlanta Huntington Beach LLC. RECOnIIMENDED ACTION: Motion to: Adopt Resolution No. 2012 -04, "A Resolution of the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Huntington Beach Consenting to and Approving the Termination of Agency Owner and rtMakallon icipation Agreement Among the City, the Former Redevelopment Atlanta Huntington Beach, LLC." BACKGROUND AND DISCUSSION: The former Redevelopment Agency, the City and Makallon Atlanta Huntington Beach, LLC., a Delaware limited liability company ("Makar"), executed and delivered an Owner Participation Agreement pursuant to Agency Resolution No. 364 and City Resolution No. 2006-67 approved and adopted at the October 16, 2006, City Council meeting, as supplemented by letter dated February 1, 2008, and that certain Implementation Agreement entered into as of December 15, 2008, (collectively, the `OPA") for development of Pacific City. Due to the foreclosure of a deed of trust secured by the property, which was the subject of the OPA, Makar is no longer the owner of the property. Staff believes the OPA has been terminated and is no longer in force effect, but the precOPAautionary measure, desires to take these perfunctory actions to The OPA was to provide for the development of Pacific City, a 'byd-use project the property{ as proposed by Makar. In October 2011, a deed of trustsecured which was the subject of the OPA was in default, was foreclosed on, and was sold through a Trustee Sale. ble material incurable Pursuant to Section 1007 of the OPA, there has been an of default under the OPA due to an assignment without the prior written approval the City and former Redevelopment Agency. The OPA has been terminated and is no longer in force and effect due to the incurable material default pursuant to Section 1007 of the OPA, the fact that the OPA was never implemented by Makar and Makar is no longer the owner of the property, which was the subject of the OPA, and by the foreclosure of the deed of trust which was secured by the property which was the subject of the OPA. The City and Successor. Agency to the Redevelopment. Agency provided notice of an incurable material default and termination of the OPA to Makar and the current owner of the Property, 21002 HB, LLC, a Delaware limited liability company ("New Owner"). The New Owner agrees that the OPA has been terminated for the reasons described above. On August 20, 2012, the Successor Agency to the Redevelopment Agency and the City approved, by Resolutions, the perfunctory termination and recommended it be sent to the Oversight Board for consideration in accordance with applicable law. FINANCIAL IMPACT: Not Applicable. Huntington Beach Oversight Board. Item No. 3 Staff Report August 23, 2012 Page 2 of 2 RESOLUTION 2012-04 A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH CONSENTING TO AND APPROVING THE TERMINATION OF AN OWNER PARTICIPATION AGREEMENT AMONG THE CITY, THE FORMER REDEVELOPMENT AGENCY AND MAKALLON ATLANTA HUNTINGTON BEACH, LLC WHEREAS, on December 29, 2011, the California Supreme Court delivered its decision in California Redevelopment Association v. Matosantos, finding ABxI 26 (the "Dissolution Act") largely constitutional; and Under the Dissolution Act and the California Supreme Court's decision in California Redevelopment Association v. Matosantos, all California redevelopment agencies, including the Redevelopment Agency of the City of Huntington Beach (the "Former Agency"), were dissolved on February 1, 2012; and The City Council adopted a resolution accepting for the City the role of Successor Agency to the Former Agency (the "Successor Agency"); and The Dissolution Act was amended when the Governor signed Assembly Bill 1484 ("AB 1484") on June 27, 2012; and Under the Dissolution Act, each Successor Agency shall have an oversight board with fiduciary responsibilities to holders of enforceable obligations and the taxing entities that benefit from distributions of property taxes and other revenues pursuant to Section 34188; and The oversight board has been established for the Successor Agency (hereinafter referred to as the "Oversight Board") and all seven (7) members have been appointed to the Oversight Board pursuant to California Health and Safety Code Section 34179. The duties and responsibilities of the Oversight Board are set forth in Health and Safety Code Sections 34179 through 34181 of AB 26 as amended by AB 1484; and The Former Agency, the City, and Makallon Atlanta Huntington Beach, LLC., a Delaware limited liability company ("Makar"), entered into that certain Owner Participation Agreement executed and delivered pursuant to Agency Resolution No. 364 and City Resolution No. 2006-67 approved and adopted at the October 16, 2006 City Council meeting, as supplemented by letter dated February 1, 2008 and that certain Implementation Agreement entered into as of December 15, 2008 (collectively, the `OPA"); and Makar defaulted on a promissory note which was secured by a deed of trust recorded against the property which was the subject of the OPA ("Property"). The holder of the promissory note foreclosed on the deed of trust and became the new owner of the Property; and The OPA has been terminated and is no longer in force and effect due to the fact that the OPA was never implemented by Makar, due to a material incurable default under the OPA (an assignment without the City and Former Agency's approval), and by the foreclosure of the deed of trust. Assuming 12-3440/82897 Oversight Board Resolution No. 2012-04 arguendo that the OPA was implemented, was not automatically terminated due to a material incurable default under the OPA , did survive the foreclosure of the deed of trust, and is in force and effect, as a precautionary measure, the current owner of the Property, 21002 HB, LLC, a Delaware limited liability company ("New Owner"), the City and the Successor Agency (as the successor -in -interest to the Former Agency under the OPA) all agree to terminate the OPA. The City and New Owner have negotiated a Development Agreement pertaining to the Property. The Development Agreement terms provide that the OPA has been terminated and is no longer in force and effect; and Health and Safety Code Section 34171(d)(1)(E) provides that nothing in the Dissolution Act prohibits the Successor Agency, with the approval or at the direction of the Oversight Board, from terminating any existing agreements or contracts; and All legal prerequisites to the adoption of this Resolution have occurred. NOW, THEREFORE, the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Huntington Beach does hereby resolve as follows: The Oversight Board hereby finds and determines that the foregoing recitals are true and correct. 2. Assuming arguendo the OPA is still in effect, the Oversight Board hereby consents to and approves the termination of the OPA. 3. Without the requirement of any further approval of the Oversight Board, the Executive Director of the Successor Agency or designee is authorized and directed to take any action and execute any and all documents and agreements necessary to implement and effectuate the actions approved by and the purposes of this Resolution, including, without limitation, executing any and all documents on behalf of the Successor Agency. PASSED AND ADOPTED by the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Huntington Beach at a special meeting thereof held on the 23rd day of August 20 12. V"Ir Chairperson ND APPROVED: INITMED AND APPROVED: Director Deputy Executive Director APP OVED AS TO FORM: Bo rd Co se u I Oversight Board Res. No. 2012-04 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss CITY OF HUNTINGTON BEACH ) I, JOAN FLYNN, Secretary of the Huntington Beach Oversight Board of the Successor Agency of the Former City of Huntington Beach Redevelopment Agency, Huntington Beach, California DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Huntington Beach Oversight Board of the Successor Agency of the Former City of Huntington Beach Huntington Beach Redevelopment Agency at a meeting held on August 23, 2012 and that it was so adopted by the following vote: AYES: Board Members: Hansen, Carchio, Bone, A. Dunn, Fritzal NOES: Board Members: None ABSENT: Board Members: L. Dunn, Delgado ABSTAIN: Board Members: None 04") Sec ary of the Huntington each Oversight Board of the Successor Agency of the Former City of Huntington Beach Redevelopment Agency Huntington Beach, California