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HomeMy WebLinkAbout1978-08-01; City Council; 3481-18; Plaza Camino Real Shopping Center Expansion.. CITY OF CARLSBAD AGENDA BILL NO: 3##/ -- DATE : August 1, 1978 Initial : Dept . Hd. C. Atty.vm DEPARTMENT: City Attorney C. Mgr. Subject: FOURTH SUPPLEMENT TO THE AGREEPVIEX'lT FOR THE EXPANSION OF THE PLAZA CAFlINO IiEAL SHOPPING CENTER Statement of the Matter The Basic Agreement between the Parking Authority, City and Plaza Camino Real for the expansion of the Shopping Center ' was ap2roved on November 5, 1975. It has been supplemented, subsequent to that time, on three occasions: February 3, 1976, May 11, 1976 and November 16, 1976. As a result of the negotiations between the May Company and the City in regards to those items necessary to carry the Plaza Camino Real expansion-into effect, it has been determined that a Fourth Supplement to the Basic Agreement is in order. A memorandum from the City Attorney, discussing the matters contained in the Fourth Supplement, is attached. The Fourth Supplement and the exhibits there to are on file in the office of the City C.lerk. It is recommended that \he Council approve the Fourth Supplement and a resolution in that regard is attached. Exhibits I. The Fourth Supplement to the Agreement is on file with the City Clerk and incorporated by reference herein, 2. City Attorney's memorandum to the Mayor and City Council dated July 27, 1978. 3. Resolution No.JLTd&. Recommendation If the City Council concurs, your action is to adopt Resolution No.-. Counci? action I . ..-.-- 8-1-78 The matter was continued to an adjourned meeting to be held August. 3, 1978. 8-3-78 Resojution #5502 was adopted, approving a Fourth Supplement .amending the Agreement. MEMORANDUM DATE : TO : FROM: SUBJECT: July 27, 1978 Mayor and City Council City Attorney FOURTH SUPPLElTENT TO AGREEMETJT FOR EXPANSION OF PLAZA CAMINO REAL REGIONAL SHOPPING CENTER The May Company represents that they need to close their Shopping Center transaction during the month of August. That will entail City approval and recordation of the Subdivision Map, City approval of the final version of the Precise Plan, and the execution and recordation of the Amended and Restated Reciprocal Easement Agreement, Deeds, Leases and the myriad of other documents necessary to finalize the expansion. May Company has indicated they need to secure approval by the stores of all documents which will affect the Shopping Center and the public parking lots. The vehicle to accommodate that need has been determined to be a Fourth Supplement to the Agreement for the expansion of the Plaza Camino Real Regional Shopping Center. The Fourth Supplement fixes the form of various documents which will later be utilized in connection with the acquisition by the Parking Authority and the City of the new parking lot. The Fourth Supplement also amends the Basic Agreement in regards to certain conditions precedent. This memorandum will discuss, in turn, the five substantive matters contained in the Fourth Supplement. The first sentence of Section 1 deals with the Grant Deed from May Company to the Parking Authority of the new parking lot. The deed will be used to convey the lot to us upon payment to the Developer of the bond sale proceeds in accordance with the Basic Agreement. The Grant Deed details our rights to the lot. The matter has been the subject of extensive negotiations over a two-year period. The basic parameters of those negotiations were established by the substance of the initial Plaza Camino Real transaction. The form of the Grant Deed which we now recommend reflects a series of compromises. It is more favorable for the City than the original Grant Deed in several material respects. Your approval of the Fourth Supplement will make the specific form of the Grant Deed a part of our Agreement. Once approved it will not be possible to make any changes without the approval of all of the major stores in the Shopping Center. Mayor and City Council -2- July 27, 1978 The second sentence of Section 1 of the Fourth Supplement gives City approval for the encumbrances on the title to the new lot which we will acquire from Developer. The encumbrances are listed on Exhibit "D" to the Fourth Supplement as follows: Amended and Restated Construction, Operation and Reciprocal Easement Agreement: This document has been distributed separately to the Council and has been discussed in connection with the Subordination Agreement. Although the document will significantly restrict the City and Parking Authority's rights in the lot, there is nothing legally inconsistent between the REA and the other documents in connection with the parking lot. Assignment of Rights of Reentry: The Grant Deed conveys the parking lot to the Parking Authority for use as a public parking lot. It provides further that if at any time the property is not so used, or if any of the other CC&R's are not complied with, that the May Company has a right to reenter the property and reacquire ownership. They have assigned that right to each of the major stores in the Shopping Center. Second Amendment of Slope Agreement: Apparently Grove Apartments, May Company and the other parties interested in the Shopping Center have reached agreement in regards to rights to the slopes adjacent to Marron Road. The Second Amendment makes certain changes in that Agreement in regards to the expansion of the Shopping Center. Sears Easements: May Company's Lease of the Sears' site carries with it the grant of certain easements for access over the public parking area. Reflect easements from May Company to Federated and Carter. May Company's Attorney has represented that the terms of these easements are identical to those contained in the Sears' documents. Bond Counsel has no objections to any of these title matters and it appears they are all necessary if the Shopping Center is to proceed as proposed by the Developer. Mayor and City Council -3- July 27, 1978 The third sentence of Section 1 of the Fourth Supplement deletes the reference in the Basic Agreement to the form of the Grant Deed. Since we have now agreed as to what is to he the reference, it is no longer required. Section 2 of the Fourth Supplement fixes the form of the Lease to be utilized between the Parking Authority and the City for the new parking lot. The Council understands that the rent paid by the City pursuant to this Lease is the revenue source upon which the Parking Authority will issue the bonds which will generate the funds necessary to pay May Company for the parking lot. We have agreed to fix the term of the Lease at this time with some reluctance and solely as an accommodation to May Company. It has been my view that the terms of the Lease between the Parking Authority and the City were a matter for our sole discretion. Nevertheless, May Company insisted and we have conceded the point. However, we have agreed that we do retain the right to make changes in the Lease as Bond Counsel determines are necessary. The final sentence of that section removes the reference to the form of the Lease from the Basic Agreement since we havenowagreed on it. Section 3 of the Fourth Supplement fixes the terms of the Operating Agreement. Section 2.7 of the Basic Agreement contemplates that we will negotiate an Operating Agreement for the new lot with May Company which may include the existing lot. That has been accomplished and the Operating Agreement, when it goes into effect, will supersede the existing Operating Agreement and 'cover the existing and the new lot. Along with the Grant Deed, the Operating Agreement has been the subject of extensive negotiations over a two-year period. Those negotiations have involved the City Manager, the Planning Director and the Public Works Administrator. Again, it reflects a series of compromises. Since the Agreement deals primarily with the maintenance, management and operation of the parking lot, these compromises were arrived at on the advice of the City Manager. The existing Operating Agreement consists of only a few pages and, in my opinion, is inadequate. The new Operating Agreement is a substantial improvement over that document in a number of respects of some importance to the City. It is consistent with the Council's direction in the Basic Agreement, that the lot will be operated, maintained and managed by May Company at no cost to the City. The Agreement provides that the City may not make any changes in the parking lot without securing the approval of May Company and the other major stores in the Shopping Center. If the Fourth Supplement is approved the Operating Agreement may not be changed without the approval of all the stores. It will control the parking lot insofar as the City and the Parking Authority are Mayor and City Council -4- July 27, 1978 concerned for the next fifty years and its terms should be reviewed by the Council. The second sentence of Section 3 of the Fourth Supplement deletes in its entirety Section 2.7 of the Basic Agreement which deals with the operation and maintenance of the parking areas. Since we have now agreed that the form of the new Operating Agreement will become effective for the entire lot when we take title to the new parking lot,most of Section 2.7 is unnecessary. Section 3 does reflect the basic understanding that Developer will operate and maintain the lot at no cost to the City or the Parking Authority. Section 4 and Section 5 of the Fourth Supplement relate to a significant matter in regards to the City's obligation to sell bonds. The Council may recall that Section 4.1 and Section 4.2 of the Basic Agreement contain a series of conditions precedent to our obligations to sell bonds. With one exception, they have all been accomplished. The exception is an important protection to the City which limits our obligation to sell bonds to tax exempt issues. Section 5 will eliminate all of the conditions precedent. Protections in regards to the bonds have been carried over by amending Section 3.2 of the Basic Agreement. That amendment is set forth in Section 4 of the Fourth Supplement. We have agreed that our obligation to sell bonds is limited to bonds at an interest rate of 8%. If we cannot sell bonds at that figure, May Company must buy them at a rate not to exceed 8%. The matter is simple to state but has important ramifications for the City. If a member of the Council has any questions about the status of our obligations in regards to the $1.5 million bond sale under the Basic Agreement before the Fourth Supplement and our obligations after the Fourth Supplement, they should discuss it with me individually. It has been discussed in detail with the City Manager and he is in con- currence with the amendments. All of the documents referenced in this memorandum, as well as the various other documents which will be before the Council for approval at your August 1, 1978 meeting, have been bound and furnished to you individually. If you have any questions, I will be prepared to answer them at the August 1, 1978 meeting. VFB/mla VINCENT F. BIONDO, JR. City Attorney 1 ! 1( 1: 1: 0 a l< 2( 21 2: 2; 24 2: 2E 27 2E 1 RESOLUTION NO. 5502 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA APPROVING A FOURTH SUPPLEMENT AMEND- ING THE AGKEEMENT BETWEEN THE CITY OF CARLSBAD, THE PARKING AUTHORITY AND PLAZA CAMINO REAL FOR EXPANSION OF PLAZA CPJ4INO REAL REGIONAL SHOP- PING CENTER AND AUTHORIZING THE MAYOR TO EXECUTE SAID AGREEMETIT. - The City Council of the City of Carlsbad, California, does hereby resolve as follows : 1. That that certain Fourth Supplement to Agreement, dated A~~~~;~ 3- , 1978, between the City of Carlsbad, the Parking Authority and Plaza Camino Real for expansion of the Plaza Camino Real Regional Shopping Center, on file with the City Clerk and incorporated by reference herein, is hereby approved. 2. That the Mayor of the City of Carlsbad is hereby authorized and directed to execute said Agreement for and on behalf of the City of Carlsbad. an adjourned PASSED, APPROVED AND ADOPTED at /regular meeting of the City Council of the City of Carlsbad, California, held on the 3rd day of AU~S~. , 1978 by the following vote, to wit: AYES : Councilmen Packard Skotnic k NOES : None ABSENT : Councilwoman Caslpr--3 Lewis and Anear ATTEST: A /1 (SEAL)