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SA - Resolution SA-2012-12RESOLUTION NO. SA- 2012 -12 RESOLUTION OF THE SUCCESSOR AGENCY TO THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF SANTA ROSA, (1) APPROVING AND ADOPTING AN AGREEMENT TO EXTEND THE CLOSE OF ESCROW DATE FOR THE SALE OF THE FORMER AT &T SITE, 520 THIRD STREET, TO MUSEUM ON THE SQUARE, LLC, PURSUANT TO A DISPOSITION AND DEVELOPMENT AGREEMENT AND (2) AUTHORIZING THE EXECUTIVE DIRECTOR TO CLOSE ESCROW AND TO WAIVE CONDITIONS PRECEDENT TO THE CLOSE OF ESCROW. WHEREAS, on June 29, 2010, the Santa Rosa City Council and the former Redevelopment Agency of the City of Santa Rosa (Redevelopment Agency) approved a Disposition and Development Agreement (DDA) between the Agency and the Museum on the Square LLC (Developer); and per the DDA, the Agency would sell the former AT &T site to the Developer at an appraised, fair market value specified in the DDA; and WHEREAS, on December 29, 2011, the California Supreme Court issued its final decision in the litigation of California Redevelopment Association v. Matosantos, upholding Assembly Bill XI 26 (codified as Health and Safety Code § §34161- 34191) (AB X1 26) and invalidating Assembly Bill X1 27 (the legislation that would have permitted redevelopment agencies to continue operation if their sponsoring jurisdiction agreed to make certain payments for the benefit of schools and special districts). As a result, all California redevelopment agencies were dissolved, effective February 1, 2012. On June 27, 2012, the Governor signed AB 1484, which imposes important new tasks on county auditor - controllers and successor agencies; and WHEREAS, on January 10, 2012, by Resolution No. 28029, the Council of the City of Santa Rosa elected the City of Santa Rosa to become the Successor Agency of the former Redevelopment Agency(Successor Agency) pursuant to Health and Safety Code §34173(d); and WHEREAS, pursuant to DDA Section 203, the Redevelopment Agency and Developer may extend the close of escrow by mutual agreement in writing. Pursuant to AB X1 26, the Successor Agency serves the role of the former Redevelopment Agency; and WHEREAS, the original date by which the close of escrow was to occur pursuant to the DDA was June 29, 2011. In accordance with the Section 203 of the DDA, the Agency Executive Director granted two six -month time extensions for the close of escrow to occur on or before June 29, 2012; and on June 19, 2012, the Successor Agency executed_ an agreement with the Developer to extend the close of escrow through December 31, 2012; and WHEREAS, in a memorandum dated September 21, 2012, the Developer requested that the Successor Agency extend the deadline for fulfillment of all closing conditions by one year to December 31, 2013. While the closing is anticipated earlier, this date is requested to ensure (1) that there is adequate time to complete financing negotiations and transaction documentation; (2) that there is time to secure 2013 New Markets Tax Credits, should 2012 credits not be available; (3) that lenders and tax credit partners can be assured that there is no chance that DDA deadlines will interrupt transaction closing; and (4) that the state process allowing the Successor Agency to convey title can be completed, with all review deadlines expired, and as a result title insurance may be issued; and WHEREAS, pursuant to DDA Section 204.1, close of escrow is subject to the fulfillment or waiver of certain conditions precedent, which must be fulfilled or waived prior to the close of escrow. NOW, THEREFORE, BE IT RESOLVED that the Successor Agency to the former Redevelopment Agency of the City of Santa Rosa, hereby finds and determines: Section 1 . Recitals The Recitals set forth above are true and correct and are incorporated into this Resolution by this reference. Section 2 . CAA Compliance The Project is exempt from the California Environmental Quality Act (CEQA), Class 32 — Infill Projects. Section 3 . Extension Request Merited Approval of the request for a one -year extension of the close of escrow is merited pursuant to the DDA Section 203 in that the Developer has provided reasonably satisfactory evidence that the Developer has been unable to secure the financing necessary to complete the development of the Site, despite the Developer's best efforts, but is reasonably likely to secure such financing within the proposed extension period. Section 4 Payment of Operating, Maintenance and related Administrative Costs and Project Costs The payment of operating, maintenance, related administrative costs and project costs shall be made by the Developer as set forth in the Second Agreement to Extend the Close of Escrow Date for the Museum on the Square Project, Pursuant to the Disposition and Development Agreement By and Between the Redevelopment Agency of the City of Santa Rosa and Museum on the Square, LLC, 520 Third Street — Former AT &T Site (Second Agreement), attached hereto as Exhibit A. Section 5 Waiver of Certain Conditions Precedent to Close of Escrow are Merited In the unstable post- redevelopment environment, several conditions precedent to the close of escrow, set forth in DDA Section 204. 1, offer minimal benefits to the Successor Agency. These include (1) binding financial commitments, (2) preparation of a deed of trust securing the construction loan for the site, and (3) building permits ready to be issued. At the same time they create uncertainties and risk for the Museum on the Square project in light of the complexities of project financing, cycles of New Markets Tax Credits, and anxiety among lenders, investors and title companies, caused by a lack of understanding and general uncertainty regarding the property disposition process required by the dissolution legislation. It is in the best interest of the Successor Agency and the affected taxing entities to delegate authority to the Executive Director to waive certain conditions precedent to the close of escrow in the event that she deems such waiver necessary and appropriate to allow the Project to proceed. Section 6 Developer's Commitment and Progress The Developer has made substantial investments and progress toward development of the project, indicative of their commitment to developing the site as proposed. Financially, the developer has invested substantial sums of money for architecture, engineering and other consultants, entitlement fees and building permit plan check fees. Purchasing the site for $1,930,000 would more than double this investment. In addition, since January, 2012, the developer has paid more than $3,000 per month in operating and maintenance costs. The developer was successful in obtaining a vehicular easement through the Transit Mall for residential tenants. Other progress includes obtaining all discretionary permits to develop the project; completing substantial work on construction drawings; and securing substantial financial Reso No. SA- 2012 -12 Page 2 of 3 commitments, though not binding at this time. In addition, the managing members of Museum on the Square, LLC have a very good track record in developing properties in Santa Rosa. Section 7 . Severability If any provision of this Resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Resolution which can be given effect without the invalid provision or application, and to this end the provisions of this Resolution are severable. The Council hereby declares that it would have adopted this Resolution irrespective of the invalidity of any particular portion thereof. BE IT FURTHER RESOLVED that the Successor Agency approves the Second Agreement for time extension for the close of escrow for the Site to occur on or before December 31, 2013, and approves and adopts the Second Agreement in substantially the same form as on file with the City Clerk. BE IT FURTHER RESOLVED that the Successor Agency authorizes and directs the Executive Director or her/his designee to execute the Second Agreement on behalf of the Successor Agency, subject to any minor, clarifying or technical modifications approved by the Successor Agency Counsel, and to take any action necessary to carry out the Second Agreement. BE IT FURTHER RESOLVED that the Successor Agency authorizes and directs the Executive Director or her/his designee to carry out all actions necessary to close escrow for the Site, and, further, specifically authorizes the Executive Director or her designee in her /his sole discretion to waive - in whole or in part - conditions precedent to the close of escrow in the event that she /he deems such waiver necessary and appropriate to allow the Project to proceed. BE IT FURTHER RESOLVED that the Successor Agency authorizes and directs the Chief Financial Officer to deposit funds received from the Developer to implement the Second Agreement in Fund 1286, Object Code 2101. IN SUCCESSOR AGENCY DULY PASSED this 6th day of November 2012. AYES: (6) Chair Olivares, Vice Chair Sawyer, Board Members Bartley, Gorin, Ours, Wysocky NOES: (0) ABSENT: (1) Board Member Vas Dupre ABSTAIN: (0) ATTEST: APPROVED. Secretary Chair APPROVED AS TO ORM: Genera Counsel Reso No. SA- 2012 -12 Page 3 of 3