RES-1989-088RESOLUTION NO. 89R-88
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ANAHEIM APPROVING THE FOURTH AMENDMENT TO THE
DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE
ANAHEIM REDEVELOPMENT AGENCY AND MEYER INVESTMENT
PROPERTIES, INC., WHICH PROVIDES FOR REVISION OF THE
PURCHASE PRICE FOR THE SALE OF CERTAIN REAL PROPERTY
PURSUANT THERETO, THE LEASE WITH OPTION TO PURCHASE
OF CERTAIN OTHER REAL PROPERTY PURSUANT THERETO, AND
MAKING CERTAIN FINDINGS WITH RESPECT TO SUCH FOURTH
AMENDMENT
WHEREAS, the Anaheim Redevelopment Agency (the "Agency")
is engaged in activities necessary to execute and implement the
Redevelopment Plan (the "Redevelopment Plan") for Redevelopment
Project Alpha (the "Project"); and
WHEREAS, in order to implement the Redevelopment Plan,
the Agency entered into that certain Disposition and Development
Agreement with Meyer Investment Properties, Inc. ("Meyer") dated
November 8, 1983 (the "DDA"), for the sale of certain real
property (the "Site") located at the northeast corner of Broadway
and Harbor Boulevard; and
WHEREAS, the DDA was amended by that certain First
Amendment dated December 11, 1984, that certain Second Amendment
dated September 9, 1986, and that certain Third Amendment dated
March 17, 1988; and
WHEREAS, the Site is to be developed in phases and has
generally been subdivided for such purpose; and
WHEREAS, certain of the parcels of the Site are: (1)
Parcel PA (an air rights parcel), immediately east of that
certain office building located at 222 South Harbor Boulevard
along Broadway, on which a parking structure has been constructed
by Agency to provide appurtenant parking for said office building
(the "Parcel PA Parking Structure"); (2) Parcel PC (an air rights
parcel), immediately above Parcel PA, on which Agency proposes to
construct and lease to Meyer a four level expansion of the Parcel
PA Parking Structure (the "Parcel PC Parking Structure") to
provide appurtenant parking for an office building to be built
immediately to the east of the Parcel PA/PC Parking Structure;
(3) Parcel C, bounded by the Parcel PA Parking Structure,
Chestnut Street, Clementine Street and Broadway, on which Meyer
is to build an office building (the "Parcel C Office Building");
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(4) Parcels E/F, south of Lincoln Avenue, west of Clementine
Street and north of Chestnut Street, on which Meyer is to build a
hotel; (5) Parcels B, PB and H, immediately east of Harbor
Boulevard and north of Chestnut Street, on which Meyer is to
construct an office building and appurtenant parking structure;
and
WHEREAS, Meyer has executed and submitted to Agency
copies of a proposed Fourth Amendment to the DDA (the "Fourth
Amendment") which would, inter alia: (1) provide for the lease
with option to purchase of the Parcel PA Parking Structure by
Agency to Meyer; (2) provide for the construction and lease with
option to purchase of the Parcel PA Parking Structure by Agency
to Meyer; (3) revise the purchase price that Meyer would pay to
Agency for sale of Parcels E/F; (4) delete Parcels B, PB and H
from the Site; (5) revise the Schedule of Performance by which
Meyer will be obligated to develop Parcels C, E/F; (6) modify the
form and amount of the Good Faith Deposit made by Meyer to
Agency; and (7) provide for good faith negotiations between Meyer
and Agency for the lease of space for the Community Development
Department in the Parcel C Office Building;
WHEREAS, Agency has prepared a summary setting forth the
cost to Agency of the DDA, as amended by the Fourth Amendment,
the estimated value of the interests to be conveyed at the
highest uses permitted under the Redevelopment Plan, the purchase
prices and rental payments, and has made said summary available
for public inspection in accordance with the California Community
Redevelopment Law; and
WHEREAS, the Fourth Amendment does not substantially
change the development of the Site or the environmental impact
considered in the Final Subsequent Environmental Impact Report
previously prepared for the DDA; and
WHEREAS, the Community Redevelopment Commission of the
City of Anaheim has reviewed the proposed Fourth Amendment and
has recommended its approval by the Agency and the City Council
of the City of Anaheim (the "City Council"); and
WHEREAS, pursuant to the California Community
Redevelopment Law, Agency and the City Council held a joint
public hearing on the Fourth Amendment, including, without
limitation, the revised terms of sale of Parcel E/F, and the
lease terms of Parcels PA and PC; and
WHEREAS, the City Council has duly considered all terms
and conditions of the Fourth Amendment, and finds that the
changes contained in the Fourth Amendment are in the best
interests of the City of Anaheim and the health, safety, morals
and welfare of its residents, are in accord with the public
purposes and
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provisions of applicable State and local law requirements, and
are necessary to effectuate the Redevelopment Plan.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF ANAHEIM AS FOLLOWS:
1. The City Council hereby finds and determines that
the certifications, findings, and determination with respect to
environmental impacts of the proposed development of the Site are
not changed by the Fourth Amendment, and such certifications,
findings and determinations are hereby ratified in their
entirety.
2. The City Council hereby finds and determines that
the consideration for the sale of Parcels E/F is not less that
their fair market values in accordance with covenants and
conditions governing their sale.
3. The City Council hereby finds that the option
prices for the sale of Parcel PA and PC is not less than their
fair market values in accordance with covenants and conditions
governing their sale.
4. The City council hereby finds that the rental
payments for the lease of Parcel PA and PC is not less than fair
rental value in accordance with covenants and conditions
governing their lease.
Se
approved.
The Fourth Amendment to the DDA is hereby
THE FOREGOING RESOLUTION is approved and adopted by
the City Council of the City of Anaheim this 21st day
of March , 1989.
MAYOR
CITY OF ANAHEIM
ATTEST .'
CITY CLERK
CITY OF ANAHEIM
JB89-R3
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CLERK
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.
CITY OF ANAHEIM )
I, LEONORA N. SOHL, City Clerk of the City of Anaheim, do hereby certify that
the foregoing Resolution No. 89R-88 was introduced and adopted at a re§ular
meeting provided by law, of the City Council of the City of Anaheim held on
the 21st day of March, 1989, by the following vote of the members thereof:
AYES'
COUNCIL MEMBERS' Daly, Ehrle, Pickler, Kaywood and Hunter
NOES'
COUNCIL MEMBERS' None
ABSENT' COUNCIL MEMBERS' None
AND I FURTHER CERTIFY that the Mayor of the City of Anaheim signed said
Resolution No. 89R-88 on the 22nd day of March, 1989.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal
of the City of Anaheim this 22nd day of March, 1989.
GITY GLERK OF THE GITY OF ANAHEIM
(SEAL)
I, LEONORA N. SOHL, City Clerk of the City of Anaheim, do hereby certify that
the foregoing is the original of Resolution No. 89R-88 duly passed and adopted
by the Anaheim City Council on March 21, 1989.
CITY CLERK OF THE CiTY OF ANAHEIM
SUMMARY OF FOURTH AMENDMENT TO THE DISPOSITION AND DEVELOPMENT
AGREEMENT BY AND BETWEEN THE ANAHEIM REDEVELOPMENT AGENCY
(A PUBLIC BODY), AND MEYER INVESTMENT PROPERTIES, INC.,
ANAHEIM CITY CENTER - 1984; ANAHEIM CITY CENTER PROPERTIES,
LTD., RICHARD J. MEYER (DEVELOPERS) REGARDING DEVELOPMENT
PARCELS 8 & 9 (NORTHEAST CORNER OF BROADWAY AND HARBOR)
MARCH 21, 1989
1. INTRODUCTION
This Summary analyzes the costs to the Agency of the Fourth
Amendment to the Disposition and Development Agreement
(DDA) by and between the Anaheim Redevelopment Agency
(Agency), Meyer Investment Properties, Inc., Anaheim City
Center - 1984, Anaheim City Center Properties, Ltd.,
Richard J. Meyer, the developers of the Anaheim City Center
Project. This Summary is required in accord with Section
33433 of the California Community Redevelopment Law (Health
& Safety Code, Section 33000 et seq.).
2. BACKGROUND
In November, 1983 the Agency entered into a Disposition and
Development Agreement (DDA) with Meyer Investment
Properties for Agency-owned Parcels 8 & 9 consisting of
approximately 13 acres located at the northeast corner of
Broadway and Harbor Boulevards. Since execution of the
DDA, there have been three amendments.
The First Amendment, executed in November of 1984, provided
for the following: 1) Agency financing of the Phase I -
Parking Structure for an amount not to exceed $5,750,000;
2) assignment of Phase I from Meyer Investment Properties
to a limited partnership known as Anaheim City Center -
1984; 3) retention of air rights by the Agency above the
Phase I - Parking Structure necessary for future expansion;
and, 4) a mechanism for conveying Chestnut Street to the
developer as part of development phasing.
The Second Amendment, executed in September of 1986,
provided the developer with financing for on-site
landscaping adjacent to the Phase I - Parking Structure.
This increased the loan to the developer by $250,000, for a
total loan of $6,000,000.
The Third Amendment modified the agreement as follows:
1) extended the "Schedule of Performance;" 2) reduced the
"Scope of Development" from 13 acres to 9 acres; 3)
increased the loan for the parking structure (Parcel "PA")
improvements by $855,097 to $6,855,097 and recast the terms
and conditions of the loan; 4) increased the public art
contribution on office building (Parcel "A") from 1% of
hard construction costs to 1.40%; and, 5) increased the
Agency's equity participation on Parcel "A" by $855,097.
Summary of the Fourth Amendment to the Disposition and
Development Agreement between the Anaheim Redevelopment Agency
and Meyer Investment Properties, et al.
March 21, 1989
3. DESCRIPTION OF PROPOSED MODIFICATIONS
This Fourth Amendment proposes the following modifications.
ao
"Schedule of Performance:" This proposal will extend
the deadline for: 1) Parcel "C" (office site) from
November 7, 1988 to July 1, 1989; and, 2) Parcels "E/F"
(hotel site) to May 12, 1989. Performance will be
measured by the submission of a non-contingent
construction loan commitment from a bonafide lender.
Be
"Scope of Development:" The size of the site is reduced
from 9 acres to 7 acres. Parcels "B," "PB" and "H" are
eliminated; those parcels are bounded by Harbor to the
west, Security Pacific to the north, Parcels "E/F" to
the east, and Harbor Place to the south.
Co
Lease/Purchase Option (Parcels "PA," "PC" and "G" -
structured parking and retail space): The existing
agreement requires the developer to purchase the
improvements through an installment sale agreement.
This amendment proposes a long term lease (45 years)
with an option to purchase at the greater of Fair Market
Value or the initial cost of construction.
De
Price of air rights for Parcel "PC" (structured
parking): This proposal would reduce the price to $5.00
per square foot from $10.00 per square foot to reflect
the terms and conditions of the parking structure lease.
Ee
Terms and conditions for the purchase of Parcels "E/F"
(hotel site): Under the existing agreement the
developer has the option of purchasing the site at the
time of conveyance through either: 1) a fixed purchase
price; or, 2) a price established through the existing
participation formula. This proposal would defer the
purchase price until the sale of the property at which
time the Agency will participate in the net proceeds of
such sale.
F.
Garaqe financinq for Parcels "E/F" (hotel site): Under
this proposal the Agency will finance up to $2.0 million
of improvements outside the building line including the
parking structure. The Agency will take a promissory
note from the developer for a term of 20 years at an
interest rate of 9%. The payment schedule will reflect:
1) credit for project generated tax increment throughout
the term of the note; and, 2) participation in gross
annual room sales from years 8 to 20.
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Summary of the Fourth Amendment to the Disposition and
Development Agreement between the Anaheim Redevelopment Agency
and Meyer Investment Properties, et al.
March 21, 1989
3. DESCRIPTION OF PROPOSED MODIFICATIONS (continued)
Ge
Good Faith Deposit: The deposit would be reduced to
$100,000 in cash or an equivalent. Currently the
deposit is in the form of a $400,000 promissory note
personally guaranteed by the developer.
H®
Automatic Termination Upon Default: In the event the
developer is unable to deliver the Good Faith Deposit
or meet the Schedule of Performance the agreement
would be terminated without notice. Currently the
developer would be notified of default only after an
Agency board action.
I ·
Adjacent Land Use: The Agency, for 18 months, would
agree to market the adjacent land uses for commercial
development only (office, retail or hotel). Other
proposed land uses would require the consent of the
developer. The "adjacent" land uses are defined as
the area bounded by Lincoln on the north, Anaheim
Boulevard on the east, Broadway on the south, and
Harbor Boulevard on the west. In the event the
developer defaults the Agency will not be restricted
to these land uses.
J·
Lease of Office Space - Parcel "C": The Community
Development Department agrees to negotiate for a lease
of approximately 18,000 square feet (1 floor) for a
term of 5 years commencing with the Certificate of
Occupancy. The remaining term of the lease at 300
South Harbor shall be purchased by the developer. In
the event staff and the developer cannot agree upon
the terms and conditions for a lease, the developer
will be required to commence construction on Parcel
II C , II
4. TOTAL COST TO THE AGENCY
The Agency's total costs are as follows:
Site Assemblage ................. $ 7,975,130
Relocation ...................... 348,045
Demolition & Clearance .......... 63,690
Public Improvements ............. 2,600,000
Total Costs w/o Interest ........ $10,987,165 /$36 psf
Interest @ 8.75%*/30 yrs ........ ~0,387,530
TOTAL COSTS WITH INTEREST ....... $31,374,695
* estimated interest rate for all debt issues
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Summary of the Fourth Amendment to the Disposition and
Development Agreement between the Anaheim Redevelopment Agency
and Meyer Investment Properties, et al.
March 21, 1989
4. TOTAL COST TO THE AGENCY (continued)
These costs have been financed through tax-exempt bonds for
Project Alpha in its entirety, not this specific project.
The initial Summary presented to the Agency in November,
1983 took into consideration a site totaling 13 acres. The
development site has been reduced to approximately 7 acres;
the costs stated in Section 3 reflect this newly configured
site.
5. ESTIMATED VALUE OF THE SITE
A. HIGHEST VALUE
The estimated value of vacant commercial land within the
downtown area, assuming the highest use (i.e. the use which
yields the highest net return) permitted under the
redevelopment plan, is as follows:
1)
Low-rise Office ("garden office") with surface
parking - assumes building coverage ratio of 45%:
approximately $11.00 to $13.00 per square foot.
2)
Retail ("neighborhood center") with surface
parking - assumes building coverage ratio of 20%:
approximately $13.00 - $15.00 per square foot.
The disposition prices proposed are less than the "highest
uses" allowed under the redevelopment plan. However, the
proposed prices are the "highest" prices achievable given
the proposed product and density. For all proposed
products, the densities exceed a floor-to-area ratio of 1.5,
thus requiring structured parking which cannot be
economically supported in the current northern Orange County
market.
B. TAX INCREMENT
The Agency will net 90% of all project generated tax
increment from Parcels "PA," "C " "PC " and "G" for
discretionary use. Project generated tax increment from
Parcels "E/F" (hotel) will be used to reduce the developer's
debt obligation over the 20 year period of the note.
Project generated tax increment from Parcels "E/F" will be
retained by the Agency upon expiration of this note.
The base year's tax increment is established by the County
Assessor. This base year may be adjusted upward by 2%
annually or readjusted when the property is conveyed through
a sale transaction.
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Summary of the Fourth Amendment to the Disposition and
Development Agreement between the Anaheim Redevelopment Agency
and Meyer Investment Properties, et al.
March 21, 1989
B. TAX INCREMENT (continued)
The Agency's estimated discretionary annual tax increment,
for the initial base year, from each parcel is anticipated
as follows:
1)
2)
3)
4)
Parcel "PA" .... $ 63,000 /base year annual
Parcel "C" .... $253,000 /base year annual
Parcel "PC" .... $ 54,000 /base year annual
Parcel "G" .... $ 5,400 /base year annual
TOTAL:
$375,400 /base year annual
6. PURCHASE PRICE/LEASE PAYMENTS REQUIRED OF DEVELOPER
A. Parcel "PA" (Parcel "A", Parking Structure)
The Agency will lease the parking structure to the
developer, with an option to purchase both the air
rights and the improvements. The following is a summary
of the terms and conditions.
1)
2)
Purchase Price: The purchase price of the garage is
the greater of the FMV or the initial cost of
improvements ($6,855,000). The purchase price will
not be discounted to reflect credit for project
generated tax increment or lease payments.
Lease: The lease term is 45 years. The developer
will lease, from the Agency, the garage at an annual
fixed rate for the first 20 years. The lease rate
will be adjusted upward every 5th year by 25%. The
total lease payments for this period will be
$2,065,000; unless, the garage is purchased prior to
this 20 year period expiring.
For the remaining 25 years of the lease, years 21
through 45, the lease rate shall be established
through appraisal at FMV using gross receipts for
comparable parking. In no event shall the lease
rate exceed 30% of the previous adjustment period's
lease rate. The lease rate shall be adjusted every
5th year. The maximum value of the lease for this
period is estimated to be $8,523,122.
The total maximum lease value over the 45 year term
is $10,588,122. This lease value does not reflect a
present value analysis or the reinvesting of annual
proceeds from lease payments.
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Summary of the Fourth Amendment to the Disposition and
Development Agreement between the Anaheim Redevelopment Agency
and Meyer Investment Properties, et al.
March 21, 1989
B. Parcel "C" (Office site) - Purchase Pric~
The Agency will receive $407,720 ($10.00 psf) upon
conveyance of the site. The payment will be in cash.
C. Parcel "PC" (Parcel "C", Parkinq Structure)
The Agency will lease the parking structure to the
developer, with an option to purchase both the air
rights and the improvements during the term of the
lease. The following is a summary of the financial
terms and conditions.
1)
Purchase Price: Both the payment for the air rights
and the improvements will be in cash.
(a) Air Riqhts - The purchase price will be the
greater of FMV of the air rights or $510,000
($5.00 psf) .
(b) Improvements - The purchase price of the garage,
excluding the air rights, will be the greater of
the FMV or the initial cost of the improvements
(estimated at $6,000,000).
2)
Lease: The lease term is 45 years. The developer
will lease, from the Agency, the garage at an annual
fixed rate for the first 20 years. The lease rate
will be adjusted upward every 5th year by 25%. The
total lease payments for this period will be
$2,775,000; unless, the garage is purchased prior to
the expiration of this 20 year period.
For the remaining 25 years of the lease, years 21
through 45, the lease rate shall be established at
FMV through appraisal using gross receipts for
comparable parking. In no event shall the lease
rate exceed 30% of the previous adjustment period's
lease rate. The lease rate shall be adjusted every
5th year. The maximum value of the lease for this
period is estimated to be $11,462,129.
The total maximum lease value over the 45 year term
is $14,237,129. This lease value does not reflect a
present value analysis or the reinvesting of annual
proceeds from lease payments.
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Summary of the Fourth Amendment to the Disposition and
Development Agreement between the Anaheim Redevelopment Agency
and Meyer Investment Properties, et al.
March 21, 1989
Ce
Parcel "G" (Retail space inteqrated into parkinq
structure at grade level, Parcel "PA")
1)
Purchase Price: The purchase price shall be the
greater of: (a) the initial cost of construction of
the improvements (as a pro rata portion of Parcel
"PC") and approximately $33,000 ($5.00 psf); or,
(b) the Fair Market Value of the air rights as
established through appraisal. The payment must be
in cash.
The developer has the option to purchase this parcel
including improvements at anytime during the term of
the lease; however, the developer may not purchase
the garage without purchasing the air rights and the
improvements.
2)
Lease: The term is 45 years, unless the developer
purchases the improvements prior to the expiration
of the term.
The lease rate for years 1 through 20 is considered
in the lease of Parcel "PC" (garage); this lease
schedule assumes' that the retail space is an amenity
which will accelerate the overall development of the
site. For years 21 through 45 the annual lease rate
shall be equal to 75% of the gross receipts.
D. Parcels "E/F" (Hotel site)
1)
Purchase Price: The price will be determined with
the first sale of the hotel. In the event the hotel
is sold within three years of the Certificate of
Occupancy being issued, the Agency shall receive the
greater of: (a) $750,000; or, (b) all remaining net
proceeds after subtracting the cost of construction.
In the event the hotel is sold after the initial
three year period the Agency will receive the
greater of: (a) $750,000 as increased by the
consumer price index from the date of conveyance;
or, (b) 25% of net proceeds after subtracting the
cost of construction and a 20% developer's profit.
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Summary of the Fourth Amendment to the Disposition and
Development Agreement between the Anaheim Redevelopment Agency
and Meyer Investment Properties, et al.
March 21, 1989
D. Parcels "E/F" (Hotel site)
2)
Loan: The Agency will loan the developer, secured
through a promissory note, $2,000,000 for
construction of code required parking. The term
will be 20 years with interest accruing at 9%
annually on the unpaid balance.
The balance on the note for years 1 through 8 will
be reduced annually from tax increment generated by
the hotel. For years 9 through 20 the balance of
the note shall be additionally reduced with the
Agency taking one percentage of gross room receipts
once gross room sales have achieved $3,750,000; this
will be increased to two percent when gross room
sales have achieved $4,750,000.
VI. IMPACT UPON LAND USES
The proposed terms and conditions of the amendment do not
change the land uses in the existing DDA as amended.
JB89-S12
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