PURPOSE:

The purpose of this report is to request that the City Council, Redevelopment Agency Board and Parking Authority consider the Final Map No. 62742 and various documents related to the Collection Project.

BACKGROUND:

On November 23, 2004, the City Council and Redevelopment Agency Board approved an Amended and Restated Owner Participation Agreement (Champion Development, Inc.), a Second Implementation Agreement to the Owner Participation Agreement (Burbank Entertainment Village, LLC-AMC), and other documents relating to the proposed development of the Phase II site of the Burbank Entertainment Village Project by Burbank Collection, LTD., a California limited partnership formed by Champion Development, Inc.

Under the Champion Owner Participation Agreement, the Developer is required to purchase the Phase II site from Burbank Entertainment Village, LLC (AMC) contingent upon the simultaneous closing of approved bonds to help finance the Phase II parking structure.  The Developer is then required to construct a mixed-use project which includes 118 residential units, approximately 40,000 square feet of commercial uses and a six-level parking structure on the Phase II site.  The parking structure will consist of parking spaces required for the residential condominium and commercial components of the project and 278 public parking spaces. Because of its design, the parking structure will include two more public parking spaces than the 276 spaces required by the Owner Participation Agreement. The parking structure will be subdivided into three legal components: 1) a component to be owned by residential condominium owners; 2) a component to be owned by the commercial owner of the project; and 3) the public parking component to be owned by the City. Once construction of the project is completed, the Developer is required to convey the public parking component to the City. The commercial component of the parking structure, despite its private ownership, is required to be open to the public on a non-reserved, non-exclusive basis for those hours designated for public parking in accordance with Downtown parking standards. While the new parking structure will not physically connect to the existing Orange Grove parking structure, access to the new Phase II parking structure will occur from Orange Grove Avenue and through the existing Orange Grove parking structure.

Under the Champion Owner Participation Agreement, the Developer is required to pay the costs of all improvements on the Phase II site, including the new parking structure. However, the Redevelopment Agency is required to provide Community Facilities District (�CFD�) financing that will generate $5 million in net proceeds  (exclusive of reserve funds, issuance costs and capitalized interest) to finance a portion of the costs of constructing the public parking component. Following the completion of the public parking component, annual debt service and annual administrative expenses in connection with the CFD financing will be paid from 75% of the tax increment generated by the Phase I and Phase II improvements. 

On October 25, 2005, a joint public hearing was conducted where the City Council approved the actions required to: 1) form the City of Burbank Community Facilities District No. 2005-1; 2) levy the special tax on property owners in the District; and 3) issue and sell special tax bonds in an amount not-to-exceed $6,400,000 to finance certain costs of The Collection Public Parking Facility. At this hearing, the Redevelopment Agency Board also adopted a resolution approving certain documents related to such bonds.  The sole property owner in the CFD is Burbank Entertainment Village, LLC, an AMC entity, who voted for the CFD and will sell the property to the Developer for the development of the project on the day before the bond closing, which is now expected on February 9, 2006. As part of this hearing, an Acquisition Agreement pertaining to the construction and required transfer of the public parking component was approved by the City.  In addition, construction of this project is expected to begin in early March 2006 and be completed within 27 months (by June 2008) including the completion of the Phase II parking structure within 20 months (by November 2007).

ANALYSIS:

As previously stated, under the Champion Owner Participation Agreement, the Developer�s purchase of the Phase II site from AMC is contingent upon the close of escrow for the approved Community Facilities District bonds to help finance construction of the Phase II parking structure.  In preparation for the close of escrow and start of construction, various legal and construction-related documents are required for the implementation of the project and subsequent sale of the public parking component to the City.  These documents are attached as exhibits to this report and are outlined below.

Champion Owner Participation Agreement Implementation Documents

Pursuant to Section 203.7 of the Champion Owner Participation Agreement, certain requirements need to take place prior to the close of escrow for the Phase II parking structure which include: 1) approval of Final Map No. 62742 and a related Subdivision Improvement Agreement (because certain public improvements remain outstanding, a subdivision improvement agreement is legally required); and 2) a proposed Reciprocal Easement Agreement regarding the obligations of the Developer and City for the repair and maintenance of the Phase II parking structure as well as provisions relating to joint access to shared parking spaces and reciprocal and shared access within the structure.  Each of these documents requires City Council actions which are summarized below.

Subdivision Improvement Agreement. Final Map No. 62742 authorizes the subdivision of the Collection @ Downtown Burbank Project, previously approved as Planned Development No. 2003-2, into condominium units.  The map subdivides the project into five (5) modules including a residential component, commercial component, public and private parking components, and common area.  The map shall have a maximum of 118 residential condominium units.  Pursuant to the Burbank Municipal Code #27-323, (approval of Tentative Map for Condominiums by the Director of Community Development) the Vesting Tentative Tract Map was approved on April 21, 2005.

In order for Final Tract Map No. 62742 to be approved (prior to start of construction for the Phase II project), the Council must find that all conditions of the tentative map have been substantially met.  Since all of the conditions, except for public improvements, have been substantially met, a Subdivision Improvement Agreement is required.  Burbank Collection, Ltd. (as the new property owner) must enter into a Subdivision Improvement Agreement with the City and deliver a bond in an amount as determined by the Public Works Director to guarantee the completion of all off-site improvements placed on this development (BMC 27-604).  The amount is estimated at $517,634, which guarantees the faithful performance of the requirements under the agreement and secures payment to the contractors, their subcontractors, and to persons furnishing labor, materials and equipment and guarantees the work for a period of one year following completion, in accordance with BMC 27-1601 and Government Code Section 66499.9. Offsite improvements include storm drain, sanitary sewer, water and electrical utility work, and traffic and street improvements.  All work shall be completed by June 30, 2008, subject to force majeur provisions and approved extensions to the construction timeline.  This Subdivision Agreement assures the satisfactory completion of these improvements for this project.  

Reciprocal Easement and Shared Maintenance Agreement.  This is an agreement between the City and Burbank Collection, Ltd. which describes the responsibilities of both parties regarding the joint use, operation, management and maintenance of the Phase II parking structure upon its completion.  The Agreement includes provisions for reciprocal easements for access, ingress and egress for pedestrian and vehicular traffic. It also includes requirements for the maintenance and repair of improvements in the Phase II parking structure along with shared responsibility by each party for the payment of associated maintenance and operational costs. 

In order to facilitate this process, one maintenance contractor is proposed to clean the entire parking structure.  However, the City retains the right to assume maintenance obligations for the public parking component of the structure at anytime, as well as all rights to require rules and regulations in the public parking component which are consistent with the rules and regulations imposed in other downtown parking structures.  The maintenance contract will be approved on an annual basis so that fiscal implications can be analyzed.  Based on an allocation of parking spaces, the agreement requires the City and other parties to pay their pro rata share of maintenance costs and maintain liability insurance for the entire parking structure.  The agreement terminates if the garage is destroyed and any portion is not rebuilt within a specified time period. In addition, the agreement is not effective until the City takes title to the Phase II parking structure upon its completion.

The only conditions remaining under the Champion Owner Participation Agreement include the Developer�s obligation to complete the new Phase II parking structure and the City�s approval of title as well as receipt of a title insurance policy and acceptance of the completion Phase II parking structure, which is anticipated to take place by November 2007.

Construction-Related Documents

Given the constraints of the Phase II project site, the Developer submitted a written request regarding the use of the entire lower level and a portion of the upper level of the Orange Grove parking structure for construction staging and storage purposes as well as a construction trailer and limited parking for about 20 to 30 construction workers.  This request would have involved the loss of about 65 parking spaces in the Orange Grove parking structure for at least a 20-month period. 

Staff informed the Developer of the importance of continued availability and use of parking spaces in this structure, which is well utilized by the public based on its proximity to the AMC theatre project and its central location in the Downtown.  In addition, the Developer was informed that the availability of public parking is an important component to the continued success of businesses in the immediate area and in Downtown in general and the loss of public spaces in this structure was not a viable option.   The Developer indicated that the inability to utilize a portion of the Orange Grove Parking (because of its close proximity to the project site) for construction storage, staging and parking would cause about a 60-day delay in the completion of construction because of the inefficiency of an off-site location (primarily involving the double handling of construction materials by the workers) and increased foot and vehicular traffic between the project site and offsite staging location.

In order to address this important issue to avoid construction delays and  facilitate the timely completion of this project, several discussions and meetings were conducted with the Developer over the past few months to identity potential offsite locations within close proximity to the project site.  As a result, the temporary use of a portion of First Street (adjacent to the project site), as well as the lease of Agency and City-owned properties (located within approximately 200 feet of the site) were proposed for this purpose.  The Developer has agreed to these locations, but emphasized the importance of the use of about six parking spaces in the Orange Grove parking structure for construction storage only.  Although staff was reluctant to allow the use of any public parking spaces in this structure, the use of six spaces on a temporary basis was considered a viable option. These proposed uses require approval of the Parking Authority.  Additionally, the Developer requests agreements with the Parking Authority and City to encroach into the subterranean area of the Orange Grove parking structure and certain areas along First Street for shoring tie backs during construction.  The agreements required to facilitate this process are discussed below.

Right of Entry Agreement (Six Spaces in the Orange Grove Structure).  In order to help facilitate the timely construction of the Phase II parking structure, Burbank Collection, Ltd. is proposing to utilize six (6) parking spaces in the lower level of the Orange Grove parking structure until the Phase II parking structure is completed.  These spaces would be fenced off, secured and used for the storage of tools and other smaller items that would otherwise need to be carried to the site from off-site parking areas.  Due to the height of the garage access, all items would be brought in utilizing a standard pick-up truck.  This agreement between the Parking Authority and Burbank Collection, Ltd includes restrictions on the hours during which off-loading can occur as well as penalties (ranging from fines to revocation of the agreement) for failure to meet the terms of the agreement, but does not charge a fee for the use of the structure.  These provisions also include the absolute prohibition of construction workers from parking in the Orange Grove structure and requirements for keeping the facilities properly maintained.  This agreement will terminate upon the completion of the Phase II parking structure (about 20 months).

Encroachment Agreement (First Street Construction Staging).  During the construction of Phase II improvements, the developer proposes to utilize three travel lanes on First Street as a construction staging area (approximately 70-72 feet wide) including the location of the construction trailer. The developer will also utilize the sidewalk area (along First Street) located adjacent to the site.  This has been identified as the only available area for staging adjacent to the construction site since there are existing improvements surrounding the remaining portions of the project.

Since this work will involve the temporary closure of portions of First Street and adjacent sidewalk area, the developer is required to enter into a temporary Encroachment Agreement with the City for this purpose. The fee resolution requires one cent per square foot per day as an encroachment fee. The developer is also required to provide a traffic control plan that identifies necessary signing, striping and incidental traffic control on First Street, including waiting areas for truck staging and delivery of concrete and other construction materials. This plan must be approved by the Public Works Department.  Furthermore, if street lighting becomes an issue, the developer will be required to pay for any temporary street lighting required by the Public Works Director.

Leases for 57 E. Palm and Lot O (Construction Storage and Staging). These are two separate lease agreements between Burbank Collection, Ltd., the Parking Authority and Redevelopment Agency which allow the developer to utilize Agency-owned property located at 57 E. Palm Avenue and Lot O, a City-owned parking lot located at 30 E. Palm Avenue (along the I-5 freeway at the end of Palm Avenue) for construction-related office, design and staging uses as well as limited parking for construction trade workers. The Agency-owned property located at 57 E. Palm Avenue is 7,750 square feet and is currently improved with a 3,000 square foot storage building.  This property is located approximately 200 feet from the Phase II project site and would be used for construction-related office, design and staging purposes.  It would be leased to the developer for $2,325 per month.  The City-owned property (parking Lot O) is currently striped for 13 parking spaces and would be used by the developer for limited construction parking only.  This property would be leased to the developer for $1,530 per month.  Both lease rates are based on the cost of an encroachment permit at one cent per square foot of land area per day since these areas are being used by the developer based on the limited availability of construction staging and storage area located adjacent to the project site. The lease rates are also within fair market value and the agreements would terminate upon the completion of construction (unless they are mutually terminated earlier by either party).

Tie Back Agreement (Construction Shoring). The developer is requesting the right to construct tie-backs to shore the Phase II property during construction.  Although shoring (i.e. excavation, soldier piles, lagging, walls, waterproofing, foundation drains, sumps and backfill) is planned to lie completely within the Phase II property, shoring ties to stabilize the work will be required to be drilled beneath adjacent properties.  These shoring ties are required to stabilize the shoring by encroaching into public right-of-way and sometimes private property (There is a separate agreement with AMC for this encroachment along Palm Avenue).  Tie-backs are required to have a minimum of 10 feet vertical clearance at the property and right-of-way limits.  In addition, tie backs are tensioned during shoring and they must be detensioned and abandoned in place once the shoring is removed. This work requires a joint agreement between Burbank Collection Limited, Ltd., the City and Parking Authority.

Orange Grove Parking Structure Agreements

In 1991, a Mello-Roos District was formed and bonds were sold to help finance the costs to construct a portion of the five-level, 505-space Orange Grove Parking structure located at 133 East Orange Grove Avenue. Sixty percent (60%) of the costs were paid by the Redevelopment Agency and the remaining forty percent (40%) of the costs were paid by various property owners within the district including AMC Realty, Inc., Richard L. Henson (owner of the food court where Market City Caff� is located), Islands VIII, Ltd., and Panda.

A parking easement regarding the portion of the parking structure paid for by the Mello-Roos bond was entered into in 1991, which gave the aforementioned parties non-exclusive rights to parking and signage, and in turn, required payment by each party of its pro rata share of 40% of the maintenance costs. The agreement was amended in 1992 to include the Panda property owner.  The parking easement runs with the land of each of the parties.

The agreement anticipated that the City would create an assessment district to recoup the costs to maintain approximately 200 parking spaces within the structure, which occurred in 1993.  The Landscaping and Lighting Act allows local government agencies to utilize benefit assessment districts to pay for landscaping, lighting and other improvements and services in public areas.  The formula was based on the percentage of land area where all parties benefited by the use of the parking structure when it was created.  Downtown Public Parking Facility Maintenance District No. 1 provides for improvements to and maintenance of the City-owned Orange Grove parking structure.  Monthly costs to maintain this parking structure average about $20,000 ($240,000 annually).  Pursuant to the parking easement agreement between the Parking Authority and the original parcel owners, sixty percent (60%) of these costs are paid by the Parking Authority, and the remaining forty percent (40%) is distributed among the benefiting parcel owners based on the ratio of the parcel land area to the total land area as listed below and shown on the attached district boundary map:

Preservation of Rights Agreement (AMC).  Once Burbank Entertainment Village, LLC (AMC) sells the Phase II site to Burbank Collection, Ltd., the existing parking and signage rights AMC currently has under the 1991 Parking Easement agreement automatically transfers to Burbank Collection, Ltd., who will also become responsible for the payment of the proportional share of maintenance costs formerly paid by AMC, which is currently $6,490.95 per month ($77,900 annually).

However, AMC wants to maintain its existing parking and signage rights in the Orange Grove parking structure, particularly since they helped fund the original construction of the parking structure.  In order to facilitate this process, AMC will enter into a Preservation of Rights Agreement with the Parking Authority which allows AMC to retain existing parking and signage rights within the Orange Grove parking structure and to pay about $12,500 per month ($150,000 annually) towards maintenance costs.  These payments will commence upon the close of escrow for the Phase II project site and will continue for approximately 12 months.  

The 1991 Parking Easement Agreement for the Orange Grove parking structure will need to be modified and the annual assessments recalculated once the Phase II project is completed, to include the new Phase II commercial improvements as well as the existing AMC Phase I theater and commercial improvements. The revised formula will continue to require the property owners to pay for maintenance costs for forty percent (40%) of the Orange Grove parking structure. The residential component of the Phase II project will be eliminated from this assessment since the residential parking spaces will be maintained though the Homeowners Association.  The existing allocation for maintenance costs will continue until the parking easement is amended and a new distribution of the maintenance costs is established (based on building area).  Based on revised calculations, AMC�s new maintenance costs are estimated at $7,083 per month ($85,000 annually).

Parking Maintenance Agreement (Champion).  As previously stated, according to the 1991 Parking Easement Agreement for the Orange Grove parking structure, once the Phase II site is sold to Burbank Collection Ltd., (from Burbank Entertainment Village, LLC (AMC)), the maintenance assessment that is currently paid by AMC automatically transfers to Burbank Collection Ltd., (even though they would be paying a maintenance assessment without having any customers during construction that would benefit from parking).  Since AMC continues to derive benefit from the use of parking spaces in this structure, they will pay $12,500 per month towards the maintenance of this structure for approximately 12 months.  As a result, the portion of monthly maintenance costs to be paid by Burbank Collection, Ltd. would be temporarily waived during this time. To facilitate this process, Burbank Collection, Ltd. would enter into a Parking Maintenance Agreement with the Parking Authority.  

As mentioned earlier, once the Phase II project is completed, the 1991 Parking Easement Agreement for the Orange Grove parking structure will need to be modified and the annual assessments recalculated (based on building area) to include the new Phase II commercial improvements as well as the existing AMC Phase I theater and commercial improvements. The revised formula will continue to require the property owners to pay for maintenance costs for forty percent (40%) of the Orange Grove parking structure.  Following completion of the Phase II project, the recalculation of maintenance costs to be paid by Burbank Collection, Ltd. for the Phase II commercial component is estimated at $2,000 per month ($24,000 annually).  This item would be brought back to the City Council and Parking Authority for consideration. 

Parking Easement Agreement (Orange Grove Parking Structure Access).  The developer proposes at-grade vehicular and pedestrian access to the Phase II parking structure through the existing Orange Grove parking structure and in the area located directly between the two parking structures which will also be improved.  As a result, the developer will indemnify and defend the City and Parking Authority regarding these uses.  This requires an agreement between the Parking Authority and Burbank Collection, Ltd. which provides easements for pedestrian and vehicular access for this purpose. 

Other Related Items

Implementation of the Collection Project also involves items related to title, the assignment of the Phase II parking structure to the Parking Authority and early use of the Phase II parking structure by the public upon its completion.

Title Issues. Certain outdated agreements related to off-street parking, and similar items appear on title for the Phase II.  As a result, the developer has requested that they be removed by the City.

Assignment Authority.  Authority is being requested for the City to assign the Reciprocal Easement Agreement and title to the new Phase II parking structure to the Parking Authority after the structure is completed and conveyed to the City by the developer.   

Right of Entry Agreement (Phase II Parking Structure). It is the Agency�s intent to obtain use of the Phase II public parking component as soon as possible upon its completion.  To facilitate this process, a Right of Entry Agreement is proposed between Burbank Collection Ltd. and the City to allow the public parking structure to be open to the public for the approximate seven month period between the time the parking structure is completed and the remaining retail and residential improvements are completed.  Once the entire Phase II project is completed and the parking structure is conveyed to the City, this agreement will terminate.

ENVIRONMENTAL:

These actions were contemplated for this project and were part of the Mitigated Negative Declaration, dated October 7, 2004, which was prepared in accordance with the California Environmental Quality Act, and approved by the City Council in November 2004.

FISCAL IMPACT:

These agreements are required to implement the provisions approved under of the Champion Owner Participation Agreement and do not represent a cost to the City or Redevelopment Agency.  However, it is anticipated that the City and Redevelopment Agency will receive approximately $1,530 (parking Lot O) and $2,325 (57 E. Palm Avenue) in monthly rent revenues, respectively, from the lease of nearby properties to be used by the developer for construction storage and staging (for about 27 months). 

RECOMMENDATION:

Staff recommends that the City Council, Redevelopment Agency Board and Parking Authority adopt the proposed resolutions for the above-mentioned actions related to the Collection Project.

EXHIBITS:      

Exhibit A         Subdivision Improvement Agreement

Exhibit B         Reciprocal Easement and Shared Maintenance Agreement

Exhibit C        Right of Entry Agreement (Six Spaces in Orange Grove Structure)

Exhibit D        Encroachment Agreement (First Street Construction Staging)

Exhibit E         Leases for 57 E. Palm and Parking Lot O (Construction Storage and Staging)

Exhibit F         Tie Back Agreement (Construction Shoring)

Exhibit G        Orange Grove Parking Structure Maintenance District Map

Exhibit H         Preservation of Rights Agreement (AMC)

Exhibit I           Parking Maintenance Agreement (Champion)

Exhibit J         Parking Easement Agreement (Orange Grove Parking Structure

Access)

Exhibit K         Right of Entry Agreement (Phase II Parking Structure)

thecollectionprojectstaffrptescrowdocs1-31-06

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