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2005 11 01 RDAeaf qkadja Redevelopment Agency Agendas are Available on the City's Web Page @ www.la-quinta.org REDEVELOPMENT AGENCY AGENDA CITY COUNCIL CHAMBERS 78-495 Calle Tampico La Quinta, California 92253 Regular Meeting November 1, 2005 - 2:00 P.M. Beginning Resolution No. RA 2005-01 1 CALL TO ORDER Roll Call: Agency Board Members: Adolph, Henderson, Perkins, Sniff, and Chairman Osborne PUBLIC COMMENT At this time, members of the public may address the Redevelopment Agency on any matter not listed on the agenda. Please complete a "request to speak" form and limit your comments to three minutes. Please watch the timing device on the podium. CLOSED SESSION NOTE: Time permitting the Redevelopment Agency Board may conduct Closed Session discussions during the dinner recess. In addition, persons identified as negotiating parties are not invited into the Closed Session meeting when the Agency is considering acquisition of real property. 1 . CONFERENCE WITH THE AGENCY'S REAL PROPERTY NEGOTIATOR, DOUGLAS R. EVANS, PURSUANT TO GOVERNMENT CODE SECTION 54956.8 CONCERNING POTENTIAL TERMS AND CONDITIONS OF ACQUISITION AND/OR DISPOSITION OF REAL PROPERTY LOCATED AT THE SOUTHEAST CORNER OF MILES AVENUE AND WASHINGTON STREET. PROPERTY OWNER/NEGOTIATOR: CP DEVELOPMENT LA QUINTA, LLC ' Ct Redevelopment Agency Agenda 1 November 1, 2005 2. CONFERENCE WITH AGENCY'S LEGAL COUNSEL REGARDING PENDING LITIGATION, JOSE DE LA PENA, ET AL V. CITY OF LA QUINTA, ET AL, RIVERSIDE SUPERIOR COURT CASE NO. INC 047843, PURSUANT TO GOVERNMENT CODE SECTION 54956.9(a) 3. CONFERENCE WITH AGENCY'S REAL PROPERTY NEGOTIATOR, THOMAS P. GENOVESE, PURSUANT TO GOVERNMENT CODE SECTION 54956.8 CONCERNING POTENTIAL TERMS AND CONDITIONS OF ACQUISITION AND/OR DISPOSITION OF A PORTION OF 525 ± ACRES LOCATED AT THE SOUTHWEST CORNER OF AVENUE 52 AND JEFFERSON STREET. PROPERTY OWNER/NEGOTIATOR: THEODORE LENNON, DDC DESERT DEVELOPMENT, INC. RECONVENE AT 3:00 P.M. PUBLIC COMMENT At this time members of the public may address the Agency Board on items that appear within the Consent Calendar or matters that are not listed on the agenda. Please complete a "request to speak" form and limit your comments to three minutes. When you are called to speak, please come forward and state your name for the record. Please watch the timing device on the podium. For all Agency Business Session matters or Public Hearings on the agenda, a completed "request to speak" form should be filed with the City Clerk prior to the Agency beginning consideration of that item. CONFIRMATION OF AGENDA APPROVAL OF MINUTES 1. APPROVAL OF MINUTES OF OCTOBER 18, 2005. CONSENT CALENDAR NOTE: Consent Calendar items are considered to be routine in nature and will be approved by one motion. 1 . APPROVAL OF DEMAND REGISTER DATED NOVEMBER 1, 2005. 2. APPROVAL OF AN AMENDMENT TO THE ASSET LIMITATION REQUIREMENTS CONTAINED IN THE IMPLEMENTATION MANUAL OF THE LA QUINTA HOUSING PROGRAM AS IT RELATES TO SENIOR CITIZEN FOR SALE HOUSING UNITS. r Redevelopment Agency Agenda 2 November 1, 2005 3. ADOPTION OF A RESOLUTION APPROVING AMENDMENT NO. 3 TO THE DISPOSITION AND DEVELOPMENT AGREEMENT ENTERED INTO BY AND BETWEEN THE LA QUINTA REDEVELOPMENT AGENCY AND CP DEVELOPMENT LA QUINTA, LLC TO MODIFY THE PERMITTED LAND USES AND THE SCHEDULE OF PERFORMANCE. BUSINESS SESSION - NONE STUDY SESSION - NONE CHAIR AND BOARD MEMBERS' ITEMS - NONE PUBLIC HEARINGS - NONE ADJOURNMENT Adjourn to a regularly scheduled meeting of the Redevelopment Agency to be held on November 15, 2005 commencing with closed session at 2:00 P.M. and open session at 3:00 P.M. in the City Council Chambers, 78-495 Calle Tampico, La Quinta, CA 92253. DECLARATION OF POSTING I, June S. Greek, City Clerk of the City of La Quinta, do hereby declare that the foregoing agenda for the La Quinta Redevelopment Agency meeting of November 1, 2005, was posted on the outside entry to the Council Chamber at 78-495 Calle Tampico and on the bulletin boards at 51-321 Avenida Bermudas and 78-630 Highway 1 1 1, on October 28, 2005. DATED: October 28, 2005 I JUNE S. GREEK, CMC, City Clerk City of La Quinta, California Redevelopment Agency Agenda 3 November 1, 2005 • t 4 " AGENDA CATEGORY: BUSINESS SESSION COUNCIL/RDA MEETING DATE: NOVEMBER 1, 2005 CONSENT CALENDAR ITEM TITLE: Demand Register Dated November 1, 2005 RECOMMENDATION: It is recommended the Redevelopment Agency Board: STUDY SESSION PUBLIC HEARING Receive and File the Demand Register Dated November 1, 2005 of which $4,612.87 represents Redevelopment Agency Expenditures. PLEASE SEE CONSENT CALENDAR ITEM NUMBER 1 ON CITY COUNCIL AGENDA C, C� T449� 4 aCP Q" COUNCIL/RDA MEETING DATE: November 1, 2005 Approval of an Amendment to the Asset Limitation Requirements Contained in the La Quinta Housing Program Implementation Manual as it Relates to Senior Citizen for Sale Housing Units RECOMMENDATION: AGENDA CATEGORY: BUSINESS SESSION: CONSENT CALENDAR: _- STUDY SESSION: PUBLIC HEARING: Approve an Amendment (Attachment 1) to the La Quinta Housing Program Implementation Manual that waives the Agency's general asset limitation for senior affordable units, but limits the capital gains exemption set forth in State law regarding the inclusion in an applicant's gross income of 10% of the value of the applicant's assets to the first $200,000 generated from the sale of an applicant's home within the past 12 months and the applicant's down payment. FISCAL IMPACT: None. BACKGROUND AND OVERVIEW: In 1996 the La Quinta Redevelopment Agency adopted the La Quinta Housing Program which established the Agency's Silent Second Trust Deed Mortgage Program. This Program funds second trust deed loans that bridge the gap between a homebuyer secured first trust deed mortgage and the dwelling's sales price, in order to insure that total housing costs are affordable to very low-, low- and moderate -income households. The second trust deed loans do not require principal and interest payments unless the home is no longer affordable to a very low-, low - or moderate -income household. These loans also feature covenants that require the home to remain affordable to the designated income category for 30 to 45 years (pre-2002 second trust deed mortgage loans have 30 year covenants and post-2002 loans have 45 year covenants; the Redevelopment Law was amended in 2002 to extend the time period to 45 years). If the home remains affordable for the term of the covenant, then the second trust deed loan is forgiven. The current maximum second trust deed loan amounts are as follows: C:\Documents and Setting s\bsawyer\Local Settings\Temporary Internet Files\OLK7\Staff Report prepared by Frank for Asset Limitation.DOC V ,� Moderate -Income Households $50,000 Low -Income Households $85,000 Very Low -Income Households 60% of the purchase price less down payment The second trust deed loan program has been successful in creating home ownership opportunities. Since 1996, 205 loans have been originated at a total cost of $10.9 million. The table below details the annual loan volume. Watercolors 1996-97 11 $476,550 1997-98 18 $660,350 1998-99 15 $663,100 1999-00 15 $649,993 2000-01 45 $1,783,089 2001-02 50 $2,972,518 2002-03 33 $2,340,804 2003-04 15 $1,140,956 2004-05 3 $205,000 Totals 205 $10,892,360 Development - Assets Limitation Amendment In January 2003 the Agency Board approved an Affordable Housing Agreement with Santa Rosa Development to facilitate construction of 149 single-family court homes that will be sold to moderate -income senior households, 55 years of age or older. The Agreement provides that the Agency will fund up to $7,000,000 in second trust deed loans to insure that total housing costs are affordable to moderate -income households. In return, the Agency will receive 149 dwellings that feature 45-year affordability covenants. The La Quinta Housing Program establishes a procedure for income eligibility which includes an asset limitation wherein an applicant may not have liquid assets in excess of $50,000 at the time they qualify for a second trust deed loan. Liquid assets include: 1. Cash on hand. 2. Cash in bank accounts, savings accounts, money market funds, etc. 3. The value of mutual funds, stocks, bonds, savings certificates and other investment accounts. 4. Interest and dividends. C:\Documents and Settings\bsawyer\Local Settings\Temporary Internet Files\OLK7\Staff Report prepared by Frank for Asset Limitation.DOC 2 5. The value of trusts. 6. Government disbursements such as social security payments. 7. Lump sum receipts from inheritances, lottery winnings, capital gains, insurance settlements, etc. S. Cash gifts. This limit was established to ensure that applicants who may qualify due to their annual income do not have substantial assets that they could access after purchasing a home. The developer of the Watercolors project initially requested that the Agency waive this requirement, in that the $50,000 liquid assets limit would unduly eliminate many senior households (55 years or older) who had saved assets valued at greater than $50,000 in an effort to plan for their retirement. Agency staff has determined that a waiver of the existing asset limitation is appropriate for a senior project. The reason is that California law already requires assets to be considered in determining whether an applicant qualifies for affordable housing. Section 6914 of Title 25 of the California Code of Regulations provides that if an applicant has more than $5,000 in net family assets, the applicant's gross income includes either the income received from the applicant's assets or 10% of the value of the assets (whichever is greater). The regulation provides that the following are considered net family assets a. Checking account funds b. Savings account funds C. Certificate of deposits, savings bonds, and the reported value of mutual funds, stocks and bonds d. 401 K, IRA and Keogh accounts. Agency Staff has determined that with certain modifications, this "imputation" requirement provides adequate assurance that an applicant with substantial assets will not qualify for an affordable home. The asset imputation requirement exempts several types of assets, including capital gains and the applicant's equity in a principal residence. Staff recommends that there be a limit on the capital gains that may be exempted from the imputation requirement, since many senior households will be selling an existing home to purchase an affordable unit and may realize substantial capital gains that would otherwise not be taken into account when determining their eligibility. Staff recommends that the exemption be limited to the first $200,000 in capital gains from the sale of the senior applicant's home within the past 12 months. Staff also recommends that the down payment the senior household will be making 0t.,7 C:\Documents and Settings\bsawyer\Local Setting s\Temporary Internet Files\OLK7\Staff Report prepared by Frank for Asset Limitation.DOC 3 on the senior housing unit will be exempt from, and not included in, the imputation calculation. This approach will limit the possibility of wealthy individuals purchasing these homes but will not unduly penalize households who may by retaining their home sale assets to fund unexpected future events (illnesses, loss of income, etc.). Staff has prepared a proposed amendment to the La Quinta Housing Program Implementation Manual ("Implementation Manual") which is attached hereto and incorporated herein as Attachment 1. If approved by the Agency, the text of Exhibit 1 will be added to the end of the Implementation Manual, as a new section. It should be noted that the effectiveness of the second trust deed loan program has significantly declined as La Quinta home values have increased. Housing prices have dramatically increased over the past few years. According to The Desert Sun, median housing prices in La Quinta grew 19.9% from January 2004 to January 2005. With rising prices for new and significantly refurbished homes, fewer people are qualifying for second trust deed loans without increasing the second trust deed loan amounts to a level where they will exceed the value of the first trust deed loans. In previous discussions with the Agency Board, the Board indicated that it did not want second trust deed loans to exceed first trust deed mortgages. Doing so would expose the Agency to first trust deed mortgage loan defaults. In addition, many current second trust deed mortgage holders are petitioning to repay their loans and remove the resale restrictions so they may sell their units at current market values. If this occurs, the Agency must replace these lost affordable units within 3 years or be penalized by the State. While the Agency continues to appropriate funds to underwrite second trust deed loans, these funds remain unexpended at the end of each fiscal year. In anticipation of the declining effectiveness of the second trust deed loan program, the Agency's Third Five -Year Implementation Plan envisions that this program will be phased out by the 2008-09 budget cycle. The increasing focus will be on securing affordability covenants through funding the development and preservation of multi -family rental dwellings. This approach often requires less Agency financial assistance and significantly reduces the Agency's exposure to losing affordable units due to sales. FINDINGS AND ALTERNATIVES: Alternatives available to the Agency Board include: 1. Approve an Amendment (Attachment 1) to the La Quinta Housing Program Implementation Manual that waives the Agency's general asset limitation for senior affordable units, but limits the capital gains exemption set forth in State law regarding the inclusion in an applicant's gross income of 10% of C,1�8 C:\Documents and Settings\bsawyer\Local Settings\Temporary Internet Files\OLK7\Staff Report prepared by Frank for Asset Limitation.DOC 4 the value of the applicant's assets to the first $200,000 generated from the sale of an applicant's home within the past 12 months and the applicant's down payment; or 2. Do not approve the Amendment; or 3. Provide staff with alternative direction. Respectfully submitted, Douglas Evans Community Development Director Approved for submission: Thomas P. Genovese, Executive Director Attachment: 1. Amendment to La Quinta Housing Program Implementation Manual CADocuments and Setting s\bsawyer\Local Settings\Temporary Internet Files\OLK7\Staff Report prepared by Frank for Asset 5 Limitation.DOC Attachment 1: Amendment to La Quinta Housing Program Implementation Manual Asset Limitation Requirements for Senior Units In lieu of the liquid asset maximum set forth above, the following requirements shall apply to affordable housing units designated for senior citizens (i.e., persons who are (i) 62 years of age or older, or (ii) 55 years of age or older in a "senior citizen housing development" (as that term is defined in California Civil Code Section 51.3(b)(1)) [hereafter, "Senior Units"]. For Senior Units, "net family assets" shall be considered in calculating an applicant's gross income, pursuant to Section 6914 of Title 25 of the California Code of Regulations ("CCR"), for purposes of determining the applicant's income eligibility. Net family assets shall include the assets the applicant intends to apply towards the closing costs associated with the purchase of the Senior Unit, but shall not include the assets the applicant intends to apply towards the down payment for the Senior Unit. Notwithstanding the exclusion in Section 6914 of Title 25 of the CCR for capital gains, however, an applicant's "net sales proceeds" from the sale, within one (1) year of the date of the purchase of the Senior Unit, of another primary or secondary residence, shall be considered in determining the applicant's income to the extent the net sales proceeds exceed two hundred thousand dollars ($200,000). As used herein, the term "net sales proceeds" shall mean the sales price of the applicant's other primary or secondary residence less the sum of (a) the purchase price originally paid by the applicant for the residence, (b) any "qualified capital improvements," and (c) all transaction costs incurred by the applicant in conducting the sale of the residence. As used herein, the term "qualified capital improvement shall mean an individual improvement to the residence with a cost in excess of Two Thousand Five Hundred Dollars ($2,500) made while the applicant owned and occupied the property. Improvements shall only constitute qualified capital improvements if the applicant provides reliable evidence (x) that the improvement was made, and (y) of the cost of the improvement. C10 C:\Documents and Settings\bsawyer\Local Setting s\Temporary Internet Files\OLK7\Staff Report prepared by Frank for Asset Limitation.DOC s Tity/ 4 44Q" AGENDA CATEGORY: BUSINESS SESSION: COUNCIL/RDA MEETING DATE: November 1, 2005 CONSENT CALENDAR: 3 11113460" Vil STUDY SESSION: Adoption of a Resolution Approving Amendment PUBLIC HEARING: No. 3 to the Disposition and Development Agreement Entered into by and Between the La Quinta Redevelopment Agency and CP Development La Quinta, LLC to Modify the Permitted Land Uses and the Schedule of Performance RECOMMENDATION: Adopt a Resolution approving Amendment No. 3 to Disposition and Development Agreement (Attachment 1) entered into by and between the La Quinta Redevelopment Agency and CP Development La Quinta, LLC to modify the permitted land uses and the Schedule of Performance. FISCAL IMPLICATIONS: None. BACKGROUND AND OVERVIEW: In June 2003 the Agency Board approved a Disposition and Development Agreement ("DDA") with CP Development La Quinta, LLC (the "Developer") that facilitated the sale of a 45-acre property located southeast of the intersection of Miles Avenue and Washington Street, and development of the following: • An approximately 134 room Homewood Suites by Hilton ("Suites Hotel"); • Approximately 136 one- and two-story casitas hotel condominium units to be rented as vacation rental units ("Casitas"); • A boutique hotel with approximately twenty-six, 1,200 square foot villas and a spa ("Sanctuary Villas"); • A 120,000 square foot medical office and surgical facility comprised of three 40,000 square foot buildings ("MOB"); • Two sit-down restaurants (the "Restaurants"); • 13 courtyard cluster villa homes that would be sold at market sales prices ("Villas"); oil • 54 one-story Single -Family and Courtyard Homes of which 40 would be sold at prices affordable to moderate -income households ("Affordable Homes"), with the remaining 14 sold at market sales prices ("Market Homes"); and • A 2.68-acre park ("Park"). The DDA has since been amended to: • Substitute Lennar Homes for the Ehline Company, for development of the Casitas, Villas, Affordable Homes, and the Market Homes. • Modify the Schedule of Performance to reflect current site and building plan preparation and processing schedules. • Modify the language related to the Agency's property repurchase option rights to accommodate lender concerns regarding their ability to cure potential defaults prior to having the Agency exercise its property repurchase option. This action afforded the Developer the opportunity to secure lower cost property acquisition and construction loans. In May 2005, the Developer submitted a request to modify the DDA, to accommodate changing market opportunities, as follows: • Substitute additional medical/surgical facility space for the Sanctuary Villas boutique hotel. The Developer is securing a larger medical facility at this location and desires to accommodate this use on the Sanctuary Villas site. • Substitute 32 Casitas units for the 13 Villas that were proposed for a 2.17-acre site located southwest of the intersection of Miles Avenue and the Seeley Drive extension. The Developer is doing so to capitalize on strong condominium hotel market demand and to off -set the revenue loss associated with eliminating the Sanctuary Villas. • Incorporate the land area designated for the roadway that would provide access to the Sanctuary Villas into the adjoining 8.99 acres designated for Affordable Homes, and the Market Homes. This land will accommodate 6 additional homes for a total of 60 versus 54 homes. • Modify the Schedule of Performance to permit completion of the Suites Hotel by December 31, 2006 versus the current June 30, 2006. They requested this change to reflect the delay in securing their grading plans and building permits. Staff has reviewed these changes and concluded that they did not change the business or financial aspects of the DDA. Further, these Amendments required modifications to the Specific Plan and Development Agreement. They were reviewed and approved by the Planning Commission, and are scheduled for City Council consideration concurrently with this DDA Amendment. C► I FINDINGS AND ALTERNATIVES: The alternatives available to the Agency Board include: 1. Adopt a Resolution approving Amendment No. 3 to Disposition and Development Agreement entered into by and between the La Quinta Redevelopment Agency and CP Development La Quinta, LLC to modify the permitted land uses and the Schedule of Performance; or 2. Do not adopt a Resolution approving Amendment No. 3 to Disposition and Development Agreement entered into by and between the La Quinta Redevelopment Agency and CP Development La Quinta, LLC to modify the permitted land uses and the Schedule of Performance; or 3. Provide staff with alternative direction. Respectfully submitted, Douglas V Evans Community Development Director Approved for Submission by: Thomas P. Genovese, Executive Director Attachment: 1 . Amendment No. 3 to Disposition and Development Agreement RESOLUTION 2005- A RESOLUTION OF THE LA QUINTA REDEVELOPMENT AGENCY APPROVING A THIRD AMENDMENT TO THE DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE LA QUINTA REDEVELOPMENT AGENCY AND CP DEVELOPMENT LA QUINTA, LLC FOR THE PROPERTY LOCATED AT THE SOUTHEAST CORNER OF WASHINGTON STREET AND MILES AVENUE WHEREAS, the La Quinta Redevelopment Agency ("Agency") is a public body, corporate and politic, organized and existing under the California Community Redevelopment Law (Health & Safety Code Section 33000 et seq.) ("CRL"); and WHEREAS, pursuant to the CRL, the City Council of the City of La Quinta ("City" or "City Council", as applicable) approved and adopted the Redevelopment Plan ("Redevelopment Plan") for Project Area No. 2 ("Project Area") on May 16, 1989, by Ordinance No. 139, and amended the Redevelopment Plan on December 20, 1994, by Ordinance No. 259, on February 3, 2004, by Ordinance No. 399, and on March 16, 2004, by Ordinance No. 403; and WHEREAS, on or about December 18, 2003, the Agency entered into that certain Disposition and Development Agreement ("Original Agreement") with CP Development La Quinta, LLC, a California limited liability company ("Developer"), pursuant to which the Agency conveyed to the Developer certain real property located within the Project Area (the "Property") for the Developer's development thereon of a commercial project containing a medical office/clinic, a boutique hotel, a mid -price suites hotel, a resort -style condominium/casitas development, two sit-down restaurants, and two single-family residential developments, with forty of the single- family homes restricted for sale to moderate -income buyers at an affordable housing cost, all as more particularly described in the Agreement (collectively, the "Project"); and WHEREAS, on or about October 28, 2004, Agency and Developer entered into an amendment to the Original Agreement which revised (i) certain timeframes in the Schedule of Performance attached to the Original Agreement; (ii) certain conditions that had to be satisfied prior to the Agency's conveyance to Developer of the Property; and (iii) the transfer and assignment provisions in the Original Agreement ("Amendment No. 1 "); and WHEREAS, on or about December 7, 2004, Agency and Developer entered into a second amendment to the Original Agreement which revised the Option Agreement attached thereto to provide for the Agency's agreement to subordinate "Repurchase Option 1 " in the same manner, and subject to the same terms and conditions, as the Agency had agreed to subordinate "Repurchase Option III" (as those 614 Resolution No. RA 2005- Disposition and Development Agreement CP Development La Quinta, LLC Adopted: November 1, 2005 terms are defined in the Option Agreement) in order to accommodate Developer's acquisition and development lender ("Amendment No. 2"); and WHEREAS, the Original Agreement, as modified by Amendment No. 1 and Amendment No. 2, is hereinafter referred to as the "Agreement"; and WHEREAS, the Developer now wishes to revise the Agreement to change the description of the Project to, among other things, omit the boutique hotel, increase the number of casitas units that may be developed on the Property, and extend the timeframe for the Developer's completion of the Suites Hotel; and WHEREAS, the Agency and the Developer have negotiated a third amendment to the Agreement to address the modifications desired by the Developer ("Amendment No. 3"); and WHEREAS, concurrently with the Developer's negotiations with the Agency regarding Amendment No. 3, the Developer is processing through the City an amendment to the Developer's Specific Plan; and WHEREAS, Amendment No. 3 is in accordance with the Redevelopment Plan and is of benefit to the Project Area and the City of La Quinta. NOW, THEREFORE, BE IT RESOLVED BY THE LA QUINTA REDEVELOPMENT AGENCY AS FOLLOWS: 1 . That the above recitals are true and correct and incorporated herein. 2. That Amendment No. 3 effectuates the purposes of the CRL and of the Redevelopment Plan and is in the best interests of the citizens of the City of La Quinta. 3. That Amendment No. 3, a copy of which is on file with the Agency Secretary, is hereby approved, subject to (i) the City Council's adoption of a resolution approving the proposed amendment to the Specific Plan; and (ii) the City Council's adoption of an ordinance approving a proposed second amendment to Development Agreement 2003-006, both of which are being considered concurrently with the Agency's consideration of Amendment No. 3. 4. The Agency Executive Director and Agency Counsel are hereby authorized and directed to (i) make final modifications to Amendment No. 3 that are consistent with the substantive terms of Amendment No. 3 approved hereby, and to thereafter sign Amendment No. 3 on behalf of the Agency, and (ii) take such j C \D cu nt and Settings\bsawyer\Local Settings\Temporary Internet Files\OLK7\Agency Reso Approving CP Amendment C, 1 J Co. � VT�5o�` Resolution No. RA 2005- Disposition and Development Agreement CP Development La Quinta, LLC Adopted: November 1, 2005 other and further actions, and sign such other and further documents that require the Agency's signature, as may be necessary and proper to carry out the terms of Amendment No. 3. PASSED, APPROVED, AND ADOPTED at a regular meeting of the La Quinta Redevelopment Agency held this 1 st day of November, 2005, by the following vote: AYES: NOES: ABSENT: ABSTAIN: LEE M. OSBORNE, Agency Chair City of La Quinta, California ATTEST: JUNE S. GREEK, Agency Secretary City of La Quinta, California APPROVED AS TO FORM: M. KATHERINE JENSON, Agency Counsel City of La Quinta, California (116 �Tgc��B&and Settings\bsawyer\Local Settings\Temporary Internet Files\OLK7\Agency Reso Approving CP Amendment AMENDMENT NO.3 TO DISPOSITION AND DEVELOPMENT AGREEMENT THIS AMENDMENT NO. 3 TO DISPOSITION AND DEVELOPMENT AGREEMENT ("Amendment No. 3") is made and entered into as of , 2005 by and between LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), and CP DEVELOPMENT LA QUINTA, LLC, a California limited liability company ("Developer'). RECITALS: A. On or about December 18, 2003, the Agency and Developer entered into that certain Disposition and Development Agreement (the "Original DDA"), pursuant to which Agency agreed to sell to Developer, and Developer agreed to purchase from Agency that certain real property located southeast of the Miles Avenue and Washington Street intersection in the City of La Quinta, California 92253 (the "Property") and to construct, complete, and operate thereon a commercial project containing a medical office/surgical facility, a development containing sanctuary villas, a mid -price suites hotel, a resort -style condominium/casitas development, two (2) sit-down restaurants, and two (2) single-family residential .developments, with forty (40) of the single-family homes restricted for sale to Eligible Buyers at an Affordable Housing Cost (collectively, the "Project"). B. On or about October 28, 2004, Agency and Developer entered into that certain Amendment No. 1 to Disposition and Development Agreement ("Amendment No. 1") which amended the Original DDA to revise (i) certain timeframes in the schedule of performance attached to the Original DDA; (ii) certain conditions that had to be satisfied prior to the Agency's conveyance to Developer of the Property; and (iii) the transfer and assignment provisions. C. On or about December 7, 2004, Agency and Developer entered into that certain Amendment No. 2 to Disposition and Development Agreement ("Amendment No. 2") which amended the Original DDA, as amended by Amendment No. 1, to provide for the Agency's agreement to subordinate Repurchase Option I in the same manner, and subject to the same terms and conditions, as the Agency had agreed to subordinate Repurchase Option III in order to accommodate Developer's acquisition and development lender. Concurrently with the parties' execution of Amendment No. 2, Agency conveyed to Developer the Property. The Original DDA, as modified by Amendment No. 1 and Amendment No. 2, is hereinafter referred to as the "DDA." D. On or about April 4, 2005, Parcel Map No. 31116, in the City of La Quinta, was filed in the Official Records of the County of Riverside in Book 212 of Parcel Maps at pages 60- 66, inclusive (the "Parcel Map"). The Parcel Map created legal parcels within the Property that differ from the parcels depicted on the Site Map attached to the DDA. In particular: (i) the Parcel Map created one legal parcel for development thereon of the Casitas Development (identified thereon as "Parcel 2"), where the Site Map had depicted the Casitas Development on three parcels; (ii) the Parcel Map created one legal parcel for development thereon of the Sanctuary Villas (identified thereon as "Parcel 7"), where the Site Map had depicted the Sanctuary Villas on two parcels; and (iii) the Parcel Map created one legal parcel for 882/015610-0085 C, 17 617012.07 a10/28/05 development thereon of the Medical Office/Surgical Facility (identified thereon as "Parcel 6"), where the Site Map had depicted the Medical Office/Surgical Facility on four parcels. The Parcel Map also created "Parcel 1" and "Parcel 5" for development thereon of the two restaurants to be constructed as part of the Project, "Parcel 3" and "Parcel 8" for the development thereon of two residential developments to be constructed as part of the Project, "Parcel 4" for the development thereon of the Suites Hotel, and "Parcel 9" for development thereon of a public park Developer agreed to develop pursuant to that certain Development Agreement entered into by the City and the Developer on or about December 18, 2003, and recorded in the Official Records of the County of Riverside on January 5, 2004, as Instrument No. 2004-0005256, as amended by that certain Amendment No. 1 to Development Agreement, executed on or about October 28, 2004, and recorded in the Official Records of the County of Riverside on November 8, 2004, as Instrument No. 2004-0885063 (the "Development Agreement"). A copy of the Parcel Map is attached hereto and incorporated herein as Exhibit "A". All subsequent references herein to a "Parcel" shall mean a parcel that has been created on the Parcel Map. E. Concurrently with the preparation and processing through the City hereof, Developer has prepared and is processing through the City (i) an amendment to the Center Point Specific Plan, also known as Specific Plan No. SP2001-055, as previously amended by City Council Resolution No. 2003-035, on June 3, 2003, to modify the uses permitted on certain portions of the Property (the "Specific Plan Amendment"), and (ii) an amendment to the Development Agreement, to modify the description of the Project and certain obligations of the Developer set forth therein (the "Development Agreement Amendment'). F. The parties now wish to amend the DDA to (i) modify certain components of the Project, and (ii) revise the timeframe for completion of the Suites Hotel in the Schedule of Performance, in accordance with the terms and conditions of this Amendment No. 3. The parties contemplate that the City Council will consider the Specific. Plan Amendment and the Development Agreement Amendment concurrently with its consideration of this Amendment No. 3. Unless defined herein to the contrary, all capitalized terms in this Amendment No. 3 shall have the meanings ascribed in the DDA. AGREEMENT: NOW, THEREFORE, in consideration of the foregoing recitals, which are incorporated herein by this reference, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. The DDA is hereby amended as follows: 1.1 To revise the description of the Project to mean a commercial development consisting of a medical office/surgical facility (the "Medical Office/Surgical Facility") containing no more than 195,000 square feet; a mid -price suites hotel containing one hundred thirty-three (133) guest rooms (the "Suites Hotel'); a resort -style condominium/casitas project containing approximately one hundred sixty four (164) condominium/casitas units (the "Casitas 882/015610-0085 6170E07 a10/28/05 (1 18 Development"); two (2) sit-down restaurants (the "Restaurants"); and a residential development containing up to sixty (60) single-family homes (the "Residential Development"), forty (40) of which shall be restricted for sale to Eligible Buyers at an Affordable Housing Cost (the "Affordable Housing Component"), and to make other conforming changes to the definitions in the DDA to make them consistent herewith and with the Parcels depicted on the Parcel Map, as described in Recital D. 1.2 To delete all of the references to the Parcel 5 Residential Development and the Sanctuary Villas. The parties hereby agree that the Parcel 5 Residential Development and the Sanctuary Villas are no longer components of the Project. 1.3 To provide that the Casitas Development will be constructed on Parcel 2 and Parcel 3. Developer acknowledges that it has transferred and assigned, or intends to transfer and assign, the rights and obligations under the DDA to develop the Casitas Development to Lennar Homes of California, Inc., a California corporation ("Lennar") and that Lennar intends to prepare a new tract map (the "New Tract Map") that merges Parcel 2 with Parcel 3. 1.4 To provide that the Medical Office/Surgical Facility will be constructed on Parcel 6 and Parcel 7. Developer intends to prepare a lot line adjustment that merges Parcel 6 with Parcel 7, and transfers a portion of Parcel 7 to Parcel 8 (the Lot Line Adjustment"). The Developer contemplates that the new Parcel created by merging Parcel 6 with Parcel 7 will consist of approximately 13.63 acres, and that Parcel 8 will, after the Lot Line Adjustment, consist of approximately 9.45 acres. Within thirty (30) days after the later of (i) the date the Lot Line Adjustment has been processed, or (ii) the date the New Tract Map has been approved by the La Quinta City Council, the Developer's engineers shall prepare and submit to the Agency a new site map (the "New Site Map") that reflects the changes effected by the New Tract Map and the Lot Line Adjustment. Upon confirmation by the Agency that the New Site Map accurately reflects said changes, the New Site Map shall automatically replace the Site Map currently attached to the DDA. 1.5 To replace Section 201.1 with the following: 201.1 Option "A". If Developer elects Option "A", Developer shall purchase the Property from Agency all at once, through one escrow (the "Property Escrow"), in accordance with the escrow provisions of Section 202 hereto. Notwithstanding the use of the term "Property Escrow" in this Section 201.1, all of the general requirements for each Escrow, as set forth in Section 202, shall apply to the Property Escrow, and every reference to an "Escrow" in this Agreement shall be deemed to include the "Property Escrow". Notwithstanding Developer's ownership of all of the Property, Developer shall be required to comply with the following limitations regarding its construction of the Project (for purposes of this Section 201.1, the term "construction" shall not include grading the Property and/or installing wet and dry utilities, all of which activities Developer shall be entitled to undertake pursuant to the Early Entry Agreement, as described in Section 305 hereof): 882/015610-0085 �� 617012.07 a10/28/O5 (a) The First Permitted Phase of Construction. Upon Developer's acquisition of the Property, Developer may construct only the Suites Hotel, the Casitas Development, the Restaurants, and Seeley Drive (the "First Permitted Phase of Construction"). (b) The Second Permitted Phase of Construction. Upon Developer's completion of (i) the installation of the foundation for the Suites Hotel, as determined by City's Building Inspector, and (ii) the first pavement lift and the curbs and gutters of Seeley Drive, as verified by the City Engineer, Developer may construct, in addition to those items permitted to be constructed as part of the First Permitted Phase of Construction, (a) one of the buildings that comprise the Medical Office/Surgical Facility, containing not more than 75,000 square feet, and (b) twenty (20) of the Affordable Homes on Parcel 8 (the "Second Permitted Phase of Construction"). Notwithstanding anything herein to the contrary, Developer shall construct on Parcel 6 and/or Parcel 7 not less than one (1) parking space for each 250 square feet of the Medical Office/Surgical Facility to be developed thereon, whether such development occurs during this Second Permitted Phase of Construction or any subsequent phase of construction. (c) The Third Permitted Phase of Construction. Upon Developer's completion of the framing of all of the exterior walls of the Suites Hotel, as determined by the City's Building Inspector, Developer may construct, in addition to those items permitted to be constructed as part of the First Permitted Phase of Construction and the Second Permitted Phase of Construction, (i) the remaining twenty (20) Affordable Homes on Parcel 8, and (ii) one of the buildings that comprise the Medical Office/Surgical Facility, containing no more than 80,000 square feet (the "Third Permitted Phase of Construction"). (d) The Fourth Permitted Phase of Construction. Upon Developer's completion of the construction of the exterior walls and roof of the Suites Hotel, as verified by Developer's project architect for the Suites Hotel and confirmed by City's Building Inspector, Developer may construct, in addition to those items permitted to be constructed as part of the First Permitted Phase of Construction, the Second Permitted Phase of Construction, and the Third Permitted Phase of Construction, (i) the final building that comprises the Medical Office/Surgical Facility, containing no more than 40,000 square feet, and (ii) the Unrestricted Homes on Parcel 8. 1.6 To replace the Scope of Development, attached to the DDA as Attachment No. 8, with the Scope of Development attached hereto and incorporated herein as Exhibit `B". 1.7 To replace the Time for Completion in item 20 of the Schedule of Performance for Suites Hotel (Completion of Suites Hotel) with the following: "Before December 31, 2006, subject to the provisions of Section 702 of the DDA." 620 882/015610-0085 617012.07 a10/28/05 2. Developer is in the process of preparing a new site plan for the Residential Development (the "New Residential Site Plan"). Upon City's approval of the New Residential Site Plan, the Residential Parcel 7 Site Map that is attached to the DDA as Attachment No. 7 will be automatically replaced with the New Residential Site Plan. 3. Except as otherwise expressly provided in this Amendment No. 3, all of the terms and conditions of the DDA shall remain in full force and effect. 4. This Amendment No. 3 shall not be effective unless and until the City Council has approved the Specific Plan Amendment and the Development Agreement Amendment, and the Developer and City have executed the Development Agreement Amendment. 5. In the event of any action between Agency and Developer seeking enforcement of any of the terms and conditions to this Amendment No. 3, the prevailing party in such action shall be awarded, in addition to damages, injunctive or other relief, its reasonable costs and expenses, including without limitation its expert witness fees and reasonable attorney's fees. 6. This Amendment No. 3 shall be construed according to its fair meaning and as if prepared by both parties hereto. 7. This Amendment No. 3 shall be governed by the internal laws of the State of California and any question arising hereunder shall be construed or determined according to such law. The Municipal and Superior Courts of the State of California in and for the County of Riverside, or such other appropriate court in such county, shall have exclusive jurisdiction of any litigation between the parties concerning this Amendment No. 3. Service of process on Agency shall be made in accordance with California law. Service of process on Developer shall be made in any manner permitted by California law and shall be effective whether served inside or outside California. 8. Time is of the essence of this Amendment No. 3 and of each and every term and provision hereof. 9. A waiver of a provision hereof, or modification of any provision herein contained, shall be effective only if said waiver or modification is in writing, and signed by both Agency and Developer. No waiver of any breach or default by any party hereto shall be considered to be a waiver of any breach or default unless expressly provided herein or in the waiver. 10. This Amendment No. 3 may be executed in counterparts, each of which, when this Amendment No. 3 has been signed by all the parties hereto, shall be deemed an original, and such counterparts shall constitute one and the same instrument. 11. The person(s) executing this Amendment No. 3 on behalf of each of the parties hereto represent and warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Amendment No. 3 on behalf of said party, (iii) by so executing this Amendment No. 3 such party is formally bound to the provisions of this Amendment No. 3, and (iv) the entering into this Amendment No. 3 does not violate any provision of any other agreement to which such party is bound. 882/015610-0085 617012.07 a10/28/05 621 IN WITNESS WHEREOF, Agency and Developer each hereby represents that it has read this Amendment No. 3, understands it, and hereby executes this Amendment No. 3 to be effective as of the day and year first written above. "Developer" CP DEVELOPMENT LA QUINTA, LLC, a California limited liability company By: Oliphant Family Trust Its: Member Date: Date: 011ZIR Bv: Richard Oliphant Its: Trustee By: Oliphant Enterprises, Inc. Its: Manager 2005 Bv: Richard Oliphant Its: President "Agency" LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic Date: , 2005 By: Agency Chair ATTEST: June Greek, Agency Secretary APPROVED AS TO FORM: RUTAN & TUCKER, LLP By: M. Katherine Jenson, Agency Counsel 882/015610-0085 617012.07 a10/28/05 C? 2 2 EXHIBIT "A" PARCEL MAP [See following pages] 882/015610-0085 G 2 3 617012.07 a10/28/05 K wgouu �� o u a o��o�uxww p Fzwo UQaO C:�pz "o to�i�ao'" 7 €� �I p z `jW v pza�2 O h;N cia�i J`�uig10 n olQ �Oz �iW waF O w3 N cSo Q� o8ari� o-- x7 N Vao„ie D�O7p � N �� rIs¢S�O �z 5 p = .W �r.c W a ae Z �r z�0^w Q oarz OUa ui�4�a�w 21 z<Z�zw a �:on��a �a; S: u ip N� Woo rco G Zia pk' 1tu �i — _59a a o _ AEER ryb'igz 0 0 • in n W �'� yc o gg3 qS cxi i ''ZV o�W o gi��` p 3� �$_ o Z 40 _ as j j�-.Z Z i o��pm°a �gzo wigg 5 J CM, V m;W3�Cwm N W Lij le"ZVi a- 4 0 xt ~ ZVW) is<ZO O N<oo NW Up Hw W m iallo p LFgo z� m� Qs"Ew&Viz! �F Z� FT Oo.!il.d ¢ U�d FmU _ w6 a (o(ff�vi o ToZ <;WF� a ¢¢ Nw W SgF`KIJW U tpy�5 VC1 N S ((//11C W y� GC O F OO W �V S F-� F U Wp'ZWO>VI O �N�NUw� WaWWSS a 3 g oz �i ao Nw z.a i �'z"`Y �oom�y�g '� z5? �- oo°pWa pLLxiz g z ui �o O U g 3 wp o ��J ��`w' � sz of $��;~� i�'zaz zw Go�Yg= aW z �iiv � ? w z 'o 8 ozo rc Wvlg Zwz W I�iP.ovFu� o'� o pox wm� z xiHo$ go oo J=- ��t;. m��!,��!yn�yi 5? 5^ 5W 88 go! � Z OF�v�O o U' mU3w oP o o Z�z jj O FWoi UZO F gQ 1]1� r3 p0 oa igow cZ-i uN Q g0zo �ZO�U 1 ZW9 Oo W 0 m -< mo U �W Ww _� _ � , 5 Zg J w8 p�7t� 6 n=N� �w �N � � 0� wiw.p ! - w� 1VQ� W p i 3 ooZ ¢ 4-. o oFu of p Z<U om.- 33 uW W J%(j^4 Z ZZ =g Z 5 lh r 3p� a << << O �x F� e U �2 UO� LL �� Wpo WOK W 7 W¢ R QO O oo 1 a ��ovi zaLL oa �V W� O. 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GENERAL SUMMARY This document outlines the general requirements for the improvements to be constructed on the Property. Specific details are addressed in the Center Point Project Specific Plan SP2001- 055, as amended by Resolution No. 2003-35, which was duly adopted by the City Council on June 3, 2003, and as amended by the Specific Plan Amendment, which was duly adopted by the City Council on , by Resolution No. ("Specific Plan"), and in the construction plans that will be prepared for the development. The Property is identified as APN 604-04-12, APN 604-04-13, APN 604-04-23, and APN 604-04-37, located southeast of the intersection of Miles Avenue and Washington Street in the City of La Quinta, and is approximately 42.47 acres in size. The Specific Plan provides for the development of a commercial development project that contains all of the following: (i) a medical office/surgical facility ("Medical Office/Surgical Facility"), (ii) a mid -price suites hotel containing 133 guest rooms ("Suites Hotel"), (iii) a resort -style condominium/casitas project containing approximately 164 casitas units ("Casitas Development"), (iv) 2 sit-down restaurants (the "Restaurants"), and (v) a single family residential development containing approximately 60 units ("Residential Development"), all as further described below. II. PROJECT COMPONENTS A. Medical Office/Surgical Facility The Medical Office/Surgical Facility, which will be constructed on approximately 13.63 acres, will contain approximately 195,000 square feet, in the aggregate, and house a medical office and surgical center, which will provide an Ambulatory Surgery Center, GI Center, Imaging Center, Cancer Treatment Center, Physical and Occupational Therapy services, Industrial Rehabilitation services, Urgent Care Center, Draw Station and a Pharmacy. The facility will provide individual offices for physicians associated with the facility, as well as areas for patient treatment and diagnosis and beds for short term stays. The facility will not include emergency room facilities, and all patient care will be on a pre -arranged basis. The maximum height of the Medical Office/Surgical Facility buildings will be three (3) stories and forty five (45) feet in height on Parcel 6, and two (2) stories and thirty-three (33) feet in height on Parcel 7. B. Suites Hotel The Suites Hotel, which will be constructed on approximately 3.42 acres, will consist of a three-story, "extended stay" hotel having 133 units. The Suites Hotel will be branded as a Homewood Suites by Hilton, or another national brand which has a centralized reservation system, such as a Hawthorne Suites or a Staybridge Suites Hotel by Holiday Inn, and will offer both parlor and one bedroom suites, all of which will include fully equipped kitchens. The Suites Hotel will also have a public lobby area, a pool and an exercise facility. The Suites Hotel 882/015610-0085 632 617012.07 a10/28/05 will be one of the components of the Project that will be constructed in the first phase of development of the overall Project. The Suites Hotel will have 134 parking spaces for hotel guests, and the parking area landscaping will provide shading. C. Casitas Development The Casitas Development, which will be constructed on approximately 10.81 acres, will consist of the construction of approximately 164 condominiums, which will be located adjacent to the Suites Hotel. The buildings within the Casitas Development will be one and two stories in height. Each of the condominium units is expected to contain two bedrooms. The Casitas Development will also contain pool areas for the use of condominium owners and guests. Each condominium unit will be individually sold, fully furnished, to a private owner. All owners will be encouraged to make their unit available for transient rentals when not in use, and all such transient uses will be subject to the City's transient occupancy tax ordinance. The Casitas Development is expected to be constructed in approximately nine (9) phases, with the first phase including approximately 24 units. This first phase will be constructed concurrently with the Suites Hotel, as part of the first phase of the overall Project. The Casitas Development will have approximately 262 parking spaces, and the parking area landscaping will provide shading in accordance with the Specific Plan. D. Restaurants The overall Project includes two Restaurant pads, with one pad on approximately .91 acres, and the other pad on approximately 1.10 acres. One of the pads will be used for the construction of a "dinner house" Restaurant to provide a quality dining experience for owners and guests within the Project. The second Restaurant will be a full -service, sit-down style Restaurant offering, at a minimum, breakfast and lunch. The individual design and construction of the Restaurants will be determined when the operators are identified. Neither Restaurant will be of the "fast food" or "quick serve" type, and neither will be permitted to have a drive through. E. Single Family Development The Project will contain one single family development (the "Residential Development"). The Residential Development will be constructed on approximately 9.45 acres, and will consist of up to 60 one- and two-story single-family homes. The eastern perimeter of the development, which is adjacent to the existing residential development, will be developed with one-story single-family homes. Forty (40) of the homes in the Residential Development will be restricted for sale to moderate -income families at an affordable housing cost. The residential units within the Residential Development will range in size from 1250 square feet to 2800 square feet. All units will have a two car garage. The Residential Development will include common area with pools, barbeque areas and passive play areas. F. Development Concept The Property shall be improved by the Developer in accordance with the provisions of this Agreement, the Specific Plan, and all applicable codes, ordinances, and statutes including 882/015610-0085 f 1 617012.07 a10/28/05 ' 1 v requirements and procedures set forth in the La Quinta Municipal Code, and the Redevelopment Plan regulations adopted in conjunction with or subsequent to execution of this Agreement. G. On -Site Development and Improvements Developer shall prepare such plans, reports, and studies, and obtain such permits and approvals as required, including, but not limited to, grading plans for construction of the Project. Plans shall be prepared by a licensed civil engineer in good standing and subject to the approval of the Director of Public Works. Developer shall grant and permit all necessary and appropriate utility easements and rights for the development of the Project, including but not limited to sanitary sewers, storm drains, water, electrical power, telecommunications, natural gas, cable television, etc. H. Landscaping Developer shall be responsible to fully landscape the Project in accordance with the Specific Plan and landscape plans approved by the City. Developer shall also be responsible for the maintenance obligations set forth in the Easement Agreement that pertain to Landscape Parcel C, Landscape Parcel E, Landscape Parcel H, Landscape Parcel I, and the Parkway Areas. I. Public Improvements Developer shall be responsible for the construction of Seeley Drive, the interim street through the Project, and all other public improvements that may be identified per the Specific Plan including, but not limited to, all required internal utilities. All such construction shall be done to City specification. Additionally, Developer shall be responsible for obtaining and delivering to the City such bonds or other improvement security as City may require in accordance with applicable law, including but not limited to payment and performance bonds. Upon Developer's completion of Seeley Drive, Developer shall dedicate the same to the City for use as a public street. J. Development Standards All development on the Property shall conform to the development standards set forth in the Specific Plan, and other applicable City codes and development standards. 882/015610-0085 3 617012.07 a10/28/O5 I J