Housing Successor Agency
MEETING DATE: 4/26/2017
TITLE:
Title
Revised Purchase Agreement for the Downtown Mixed Use Project
End
FROM:
Curt Watts, Economic Development Director
RECOMMENDATION:
Recommendation
Staff recommends the City Council, as the Housing Successor Agency, authorize the City Manager to execute a revised Purchase and Sale and Escrow Instructions Agreement between Cathedral Canyon Development, LLC and the City of Cathedral City as the Housing Successor Agency of the Former Redevelopment Agency of the City of Cathedral City.
Body
BACKGROUND:
On February 22, 2017 the Housing Successor Agency of the Former Redevelopment Agency of the City of Cathedral City ("City") approved a Purchase Agreement with Cathedral Canyon Development, LLC ("CCD") for the future sale of an approximate two-acre site located at the southeast corner of East Palm Canyon Drive and West Buddy Rogers Avenue for development of a mixed use project. As a result of CCD's recent change in legal counsel for the project, a number of wording changes have been requested prior to execution of the Agreement to better match CCD legal counsel's preferred language for certain sections of the Agreement and the escrow and closing process for this transaction. The business deal points for the transaction have not changed.
DISCUSSION:
The attached Agreement reflects requested changes that have been reviewed and accepted by the City Attorney. The accepted revisions do not alter the previously approved deal points of the transaction which still include:
1) Purchase Price of $331,000;
2) Completion of Due Diligence Period within 90 days after Effective Date of Purchase Agreement;
3) Approval of Performance Agreement to be negotiated and approved by all parties within 60 days after close of Due Diligence.
4) Close of Escrow by March 30, 2018 (extendable by 6 months to September 30, 2018 with increase in CCD’s deposit to 50% of the $331,000 Purchase Price (i.e. $165,500). Close of Escrow requires completion of the entitlement process.
5) Completion of Construction within 18 months after Close of Escrow (i.e. September 30, 2019, if Close of Escrow is extended by 6 months, March 30, 2020).
The revised Agreement will guide the administration of the future land sale and the monitoring of the development project as it proceeds through entitlement processing, close of escrow and construction. The most significant language changes can be summarized as follows:
1) Clarification in language describing initial and subsequent monetary deposits by Buyer;
2) Requirement to process certain street vacations following expiration of Due Diligence Period;
3) Clarification of Buyer and Seller responsibilities for items to be submitted in advance of Close of Escrow;
4) Clarification of process for prorating taxes, assessments, invoices, bills, etc.
5) Clarification of Seller's covenants, agreements, representations and warranties related to the Agreement;
6) Clarification of future approval by City Manager of any routine amendments to the Agreement;
7) Clarification in language related to calculation of time periods, construction of the Agreement, and no recording or filing of the Agreement by either Seller or Buyer.
The revised Purchase Agreement retains a provision for the parties to negotiate and execute a Performance Agreement that will provide a description of the future proposed project, time requirements for processing entitlements and eventual development of the Project, and post-closing obligations.
FISCAL IMPACT:
Upon Close of Escrow the Housing Successor Agency will receive $331,000 and will also be relieved of its current obligation to pay remaining sewer district assessments of approximately $148,000 ($13,000 in annual principal and interest payments through 2035) as these will become the future responsibility of the Buyer following Close of Escrow.
ATTACHMENTS:
1. Revised Purchase and Sale and Escrow Instructions Agreement