BURBANK REDEVELOPMENT AGENCY
Tuesday, November 23, 2004
AGENDA
CITY COUNCIL CHAMBER - 275 EAST OLIVE AVENUE
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5:00 P.M. CLOSED SESSION IN CITY HALL BASEMENT LUNCH ROOM/CONFERENCE ROOM:
a. Conference With Real Property Negotiator:
Pursuant to Govt. Code �54956.8
Agency Negotiator: Assistant Executive Director, Susan Georgino
Property: Burbank Entertainment Village Project Phase II (bounded by Palm Avenue, First Street, the back of businesses along San Fernando Boulevard, and a portion of the block where the AMC 14 was formerly located next to the Orange Grove parking structure).
Parties With Whom Agency is Negotiating: Bob Champion (Champion Development), 11601 Wilshire Boulevard, Suite 1650, Los Angeles, California 90025. Chuck Stilley, American Multi Cinema (AMC), 920 Main Street, Kansas City, Missouri 64105.
Name of Contact Person: Jennifer Mack, Redevelopment Project Manager.
Terms Under Negotiation: Purchase of property (potential exercise of option).
b. Conference with Real Property Negotiator:
Pursuant to Govt. Code �54956.8
Agency Negotiator: Assistant Executive Director, Susan Georgino
Property: A new advertising sign (billboard) is being proposed on City property at the Recycling Center located at 500 South Flower Street which is bounded by Verdugo Avenue and Providencia Avenue.
Parties with Whom Agency is Negotiating: Ken Spiker and Associates, Inc. representing Clear Channel Outdoor, Inc.
Name of Contact Person: Ruth Davidson-Guerra, Assistant Community Development Director/Housing and Redevelopment.
Terms Under Negotiation: Possible lease of City property to Clear Channel.
c. Conference With Real Property Negotiator:
Pursuant to Govt. Code �54956.8
Agency Negotiator: Assistant Executive Director/Susan M. Georgino.
Properties: 3606 and 3614 West Magnolia Boulevard and 946 North Hollywood Way at the corner of Magnolia Boulevard and Hollywood Way (Fisher). 920 North Hollywood Way (Wallace).
Parties With Whom Agency is Negotiating: Kenneth Fisher, 2313 West Burbank Boulevard, Burbank, California, and Bruce W. Wallace, 1340 North Niagara Street, Burbank, California.
Name of Contact Person: Jack Lynch, Senior Redevelopment Project Manager.
Terms Under Negotiation: Purchase of properties.
d. Conference With Legal Counsel � Anticipated Litigation:
Initiation of litigation pursuant to Govt. Code �54956.9(c)
Number of potential case(s): 1
When the Agency reconvenes in open session, the Agency may make any required disclosures regarding actions taken in Closed Session or adopt any appropriate resolutions concerning these matters.
6:30 P.M.
INVOCATION:
The Courts have concluded that sectarian prayer as part of City Council meetings is not permitted under the Constitution.
FLAG SALUTE:
ROLL CALL:
JOINT PUBLIC HEARING WITH THE CITY COUNCIL:
1. AMC PHASE II SITE � JOINT PUBLIC HEARING FOR AN AMENDED AND RESTATED OWNER PARTICIPATION AGREEMENT, (CHAMPION DEVELOPMENT, INC.), A SECOND IMPLEMENTATION AGREEMENT TO THE OWNER PARTICIPATION AGREEMENT (BURBANK ENTERTAINMENT VILLAGE, LLC. � AMC), DEVELOPMENT AGREEMENTS, PLANNED DEVELOPMENT AND RELATED DOCUMENTS:
The purpose of this report is to present the information necessary for Council and Redevelopment Agency Board (Board) consideration of the proposed development of the former AMC 14 Site by Champion Development, Inc. (Champion). The subject site is the Phase II site of the Burbank Entertainment Village Project (AMC Project). The specific land use applications for the mixed-use residential project include a Second Amendment to Planned Development No. 98-2; Planned Development No.2003-2; Development Review No. 2003-50; a Mitigated Negative Declaration; Development Agreement; and, the associated legal documents. The terms of the proposed development of the Phase II site are documented in the Amended and Restated Owner Participation Agreement (Amended and Restated OPA) between the Redevelopment Agency (Agency) and Champion and a Second Implementation Agreement to the Owner Participation Agreement (OPA) between the Agency and Burbank Entertainment Village, L.L.C. (AMC).
The AMC Phase II site is located on the block bounded by Palm Avenue, First Street, Orange Grove Avenue, the back of businesses along San Fernando Boulevard and more specifically on the site where the former AMC 14 theaters were located. The site is also located within the City Centre Redevelopment Project Area.
On August 28, 2001, the Council and Board approved an Implementation Agreement to the OPA which allowed AMC to fund the Phase I improvements directly by assigning the rights of the developer entity directly to American Multi-Cinema, Inc. while contemplating that a future developer, subject to Agency approval, would construct the Phase II improvements. The Implementation Agreement also included modifications to the proposed project design and a reduction in the scope of the project due to changes in market trends and to improve pedestrian flow while maintaining provisions to help ensure that both phases would be completed.
The Phase I improvements were completed in June 2003, including completion of the 4,200-seat, state-of-the-art AMC 16 theaters. This theater has consistently ranked in the top ten of all theaters nationwide since its opening. Additional improvements included retail and restaurant uses and a parking structure. Improvements approved for Phase II included additional retail and restaurant uses and a parking structure. The former AMC 14 theater was demolished in July 2003 and the Phase II site is currently vacant.
AMC selected Champion as the Phase II developer in May 2003. AMC subsequently entered into a purchase and sale agreement to sell Phase II of the AMC Project site to Champion. However, Champion�s purchase offer is subject to receiving approvals from the Board and Council for proposed Phase II modifications to the executed OPA and land use entitlements.
The Phase II project, as proposed, involves the construction of 50,000 square feet of ground level retail and restaurant space with 118 for-sale condominium units to be located above. Based on the results of a parking study, the proposed project would also include the construction of a 734-space multi-level subterranean and above grade parking structure which is designed to provide private, gated parking for the residential uses and parking for the retail/restaurant uses as well as accommodate 276 additional public parking spaces, above and beyond the required parking demand for the project, which was a specific requirement under the originally-approved agreement with AMC.
The purpose of the Planned Development process is to provide an alternate process to accommodate unique developments for residential, commercial, professional or other similar activities, including modified development standards which would create a desirable, functional and community environment under controlled conditions of a development plan. The proposed mixed-use project meets the requirements of this process.
The Planning Board, by a vote of five to zero, recommended approval of the proposed Planned Development project on October 11, 2004. The Planning Board discussed issues related to site circulation and project design including proposed architecture, landscaping, signage and parking structure circulation.
A Second Implementation Agreement to the approved OPA and an Amended and Restated OPA have been negotiated to separate the obligations and responsibilities of AMC for the Phase I project, as currently approved and built, from the obligations and responsibilities of Champion for the proposed Phase II project.
Some of the salient provisions of the proposed Amended and Restated OPA include the following:
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The Developer must acquire the Phase II site from AMC;
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The Agency�s approval of the conveyance of the Phase II site from AMC to the Developer is contingent upon the following:
The Agency�s review and approval of the Developer�s evidence of financing which must close or be ready to close prior to transfer approval;
The Community Facilities District shall have been formed and approved to finance the public parking spaces in the Phase II project;
The Developer shall submit a complete set of construction drawings to the City and Agency for approval;
Additional Developer Responsibilities:
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The Developer shall construct a mixed-use project consisting of a maximum of 118 for-sale condominium units located above a maximum of 50,000 square feet of ground level retail/restaurant space in accordance with Planned Development No. 2003-2;
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Up to 40 percent of the retail/restaurant component can be used for restaurants. The project shall have at least two sub-anchor 5,000 square foot retail tenants or one 10,000 square foot retail tenant;
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The Developer shall construct a 734-space parking structure that includes:
236 private spaces (residential component);
222 unreserved public spaces (commercial component); and,
276 additional public parking spaces (public component).
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The Developer shall pay for all costs to construct the improvements on the Phase II site (except for the Agency�s contribution towards the construction of the 276 public parking spaces). The new Phase II parking structure will connect to the existing Orange Grove parking structure;
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Once the Phase II parking structure is completed, the Developer must convey the parking structure parcel to the Agency for $1;
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The Developer will sell fifteen (15) or 12.5 percent of the units to moderate-income households earning less than 120 percent of the Los Angeles County median income;
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The Developer shall complete the project in a timely manner as described in the Schedule of Performance; and,
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The Developer must comply with State prevailing wage law regarding the construction of Phase II improvements.
Agency Responsibilities:
The Agency�s responsibilities remain substantively unchanged pursuant to the provisions of the approved OPA dated August 3, 1999 as amended by the Implementation Agreement dated August 29, 2001 and include the following:
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The Agency shall assist with funding of the Phase II public parking structure from the tax increment generated from both Phases I and II (new Property Tax revenues). The Agency will be required to reimburse the Developer the amount sufficient to pay the Community Facilities District Special Tax attributable to $5 million in net bond proceeds. The Agency�s assistance will be limited to 75 percent of the tax increment generated from the Phase I and Phase II sites (The remaining 25 percent of tax increment is earmarked for 20% Set Aside Affordable Housing uses and five percent for the Youth Endowment Service Fund).
Pursuant to the California Community Development Law, the Amendment to the OPA, Second Implementation Agreement to the OPA and 33433 Report have been made available for public review immediately following the initial publication (November 6, 2004) of the public notice.
The estimated costs to be incurred by the Agency for Phase I and Phase II of the AMC Project have not changed since the original OPA and Implementation Agreement to the OPA was executed. The original agreements provided the Agency with $1.16 million in land sales proceeds, which the Agency has already received. In addition, the Phase I and Phase II Projects will produce Property Tax increment revenue through 2022 (the last year in which the Agency can collect tax increment revenue in the City Center Redevelopment Project Area), totaling about $23.7 million in nominal terms or $13.2 million in present value terms (using a six percent discount rate). These two revenue components yield a total anticipated Agency revenue projection of approximately $24.9 million in nominal terms and $14.3 million in present value terms.
When comparing the total Agency costs associated with the proposed project (approximately $10.4 million) with anticipated Agency revenue (approximately $14.3 million), the net revenue to the Agency is projected at $3.9 million in present value terms.
Assuming the proposed AMC Phase II project is approved on November 23, 2004, the developer will proceed with design development drawings and construction plans. The project is scheduled for completion in approximately 24 months or Fall 2007.
The proposed Collection at Downtown Burbank (AMC Phase II Project) will help fulfill the goals of the Downtown revitalization strategy by building upon the desired 24-hour, seven-days a week Downtown population, which will further enhance the Downtown area and help support existing businesses and Agency investments. It will also build upon the entertainment synergism created by the new AMC 16 theaters as part of the AMC Project. The proposed project, as a component of the entire block�s master plan, will redevelop an underutilized and blighted block into a mixed-use, in-fill development that helps strengthen the economic viability of the Downtown. Furthermore, the proposed project supports the goals of the City Centre Redevelopment Plan as well as provides additional units to the City�s affordable housing inventory. Additionally, the proposed project will help improve the financial strength of the City and Agency by generating approximately $350,000 in new Sales Tax revenues each year.
Recommendation:
1. Adoption of proposed City Council resolution entitled:
A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK ADOPTING A MITIGATED NEGATIVE DECLARATION (AMENDMENT TO PLANNED DEVELOPMENT NO. 98-2 AND ADOPTION OF PLANNED DEVELOPMENT NO. 2003-2).
2. Introduction of proposed City Council ordinances entitled:
AN ORDINANCE OF THE COUNCIL OF THE CITY OF BURBANK APPROVING AN AMENDMENT TO PLANNED DEVELOPMENT NO. 98-2 AND AN AMENDMENT TO THE DEVELOPMENT AGREEMENT RELATED THERETO. (BURBANK ENTERTAINMENT VILLAGE, L.L.C. AND AMERICAN MULTI-CINEMA, INC., APPLICANTS).
AN ORDINANCE OF THE COUNCIL OF THE CITY OF BURBANK APPROVING PLANNED DEVELOPMENT NO. 2003-2 AND A DEVELOPMENT AGREEMENT RELATED THERETO (CHAMPION REALTY, LTD., APPLICANT).
3. Adoption of proposed City Council resolution entitled:
A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK APPROVING AND AUTHORIZING THE EXECUTION OF THE SECOND IMPLEMENTATION AGREEMENT TO THE OWNER PARTICIPATION AGREEMENT BY AND AMONG THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK, BURBANK ENTERTAINMENT VILLAGE, L.L.C., AND AMERICAN MULTI-CINEMA, INC. AND AN AMENDED AND RESTATED OWNER PARTICIPATION AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK AND CHAMPION REALTY, LTD.
4. Adoption of proposed Redevelopment Agency resolution entitled:
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK APPROVING AND AUTHORIZING THE EXECUTION OF THE SECOND IMPLEMENTATION AGREEMENT TO THE OWNER PARTICIPATION AGREEMENT BY AND AMONG THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK, BURBANK ENTERTAINMENT VILLAGE, L.L.C., AND AMERICAN MULTI-CINEMA, INC. AND THE AMENDED AND RESTATED OWNER PARTICIPATION AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK AND CHAMPION REALTY, LTD.
ORAL COMMUNICATIONS
JOINT MEETING WITH THE CITY COUNCIL:
2. Old Thrifty Site � 3606 and 3614 West Magnolia Boulevard - Porto�s Bakery Commercial Rehabilitation Loan Agreement and Reciprocal Easement Agreement:
The purpose of this report is for the Council to consider a request from Raul Porto of Porto�s Bakery (Porto�s) for financial assistance to locate a bakery and restaurant at the Old Thrifty site located at 3606 and 3614 West Magnolia Boulevard, as well as enter into a Reciprocal Easement Agreement that would affect the proposed bakery parking lot and the adjacent public parking lot.
The Old Thrifty site has been vacant for more than six years, and is a blighting condition for the Magnolia Park area. The current owner of the property, Ken Fisher, has considered different plans since purchasing the property in 2001. Recently, Ken Fisher and Raul Porto have reached agreement for Porto�s to purchase the property. The owner has requested that escrow close as soon as possible. At the same time, Raul Porto has requested the City to provide $790,000 in assistance to help pay for base building and tenant improvements. This assistance has been requested due to the high cost of purchasing and renovating the building and providing a more pedestrian-friendly environment. Keyser-Marston Associates, the City�s economic consultant, has reviewed the request for assistance in the amount of $790,000 and determined it is warranted.
The following are the major terms for the proposed loan to Porto�s:
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Porto�s must purchase the property at a minimum cost of $3.5 million with a minimum 25 percent equity down payment.
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A minimum of 25 percent of the base building and tenant improvement costs shall be paid by Porto�s or related Porto�s entity.
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Porto�s will be required to improve the property to the general level of the Porto�s Bakery in Glendale and as generally outlined in the Contractor�s Estimated Cost.
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The City shall make progress payments to Porto�s as the improvements are completed based on 90 percent of the costs that are billed by Porto�s contractor up to the $790,000 loan amount through a pre-approved payment schedule. The loan shall earn interest at the prime rate plus two percent amortized over ten years.
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The City shall place a second trust deed on the property as security for its promissory note behind the funding for the purchase and improvement of the property by Porto�s. In addition, the City shall receive a loan guarantee placed on the Porto�s Bakery business in Glendale.
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The bakery and caf� shall be opened for business within nine months after beginning improvements on the building, and in any case within 12 months after the close of escrow.
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For each year Porto�s remains open, one-tenth of the loan amount shall be forgiven.
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If after the third year of operation, Porto�s gross revenue exceeds $5,500,000, Porto�s shall pay the City one-half of the revenues over this amount up to the total amount of the loan due for that year ($79,000 plus interest).
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Porto�s shall agree to participate in a Business Improvement District should one be formed for the Magnolia Park Area.
If approved, staff proposes the funding be structured similar to how the Redevelopment Agency (Agency) provides assistance through the Downtown Tenant Assistance Program. This program was developed to provide financial assistance for structural and tenant improvements for underutilized and vacant properties in an effort to revitalize Downtown.
While the proposed bakery and caf� has sufficient on-site parking, a Reciprocal Easement Agreement is also proposed to improve circulation between the Porto�s parking lot and adjacent public parking lot. Over time, this may allow the opportunity to reconfigure the public parking lot in a way to gain more parking spaces.
As part of the development of the Magnolia Park Action Plan, several focus group meetings were undertaken to determine, among other things, the type of retailers that residents would like to see in Magnolia Park. This was followed by a survey of the area residents to receive their opinion. The responses received called for more restaurants and cafes with outdoor seating, one-of-a-kind retailers, as well as a desire for a bakery. They also indicated that they wanted to eliminate vacant retail space and improve building facades. A Porto�s Bakery and Caf� at the vacant Old Thrifty site appears to be a perfect fit in this regard.
The Old Thrifty site is not located within a Redevelopment Project Area. However, the Agency can provide funding by reimbursing a portion of one of its loans with the City. This would allow the City to execute the proposed loan agreement with no impact on the General Fund.
Recommendation:
1. Adoption of proposed Redevelopment Agency resolution entitled:
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK APPROVING A COOPERATION AGREEMENT WITH THE CITY OF BURBANK AND AMENDING FISCAL YEAR 2004-2005 ANNUAL BUDGET IN THE AMOUNT OF $790,000 FOR THE PARTIAL PAYMENT OF A CITY CENTRE NOTE.
2. Adoption of proposed City Council resolution entitled:
(4/5 vote required)
A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK APPROVING VARIOUS AGREEMENTS RELATING TO 3606 AND 3614 WEST MAGNOLIA BOULEVARD/ PORTO�S BAKERY AND CAFE AND AMENDING FISCAL YEAR 2004-2005 ANNUAL BUDGET IN THE AMOUNT OF $790,000 FOR THE PORTO�S BAKERY AND CAFE COMMERCIAL REHABILITATION LOAN.
RECESS City Council meeting for Redevelopment Agency hearing.
HEARING:
3. ACQUISITION OF LEASEHOLD INTEREST IN PROPERTY LOCATED AT 700 SOUTH SAN FERNANDO BOULEVARD (JOHN�S WEST COAST AUTO RESALE):
The purpose of this report is for the Redevelopment Agency Board (Board) to consider the adoption of a Resolution of Necessity to acquire the leasehold interest in the property located at 700 South San Fernando Boulevard. The acquisition of the leasehold interest is necessary for the development of the San Fernando Walk Project located on the former Lance site.
On June 29, 2004, the Board and Council approved a Disposition and Development Agreement (DDA) and development entitlements for the development of a 33-unit residential project by the Olson Company. The project is located on the former Lance site which includes 700-722 South San Fernando Boulevard and 206 East Cedar Avenue.
Pursuant to the terms of the DDA, the Redevelopment Agency (Agency) is responsible for assembling the site as a condition to the Developer�s performance to acquire and develop the site. To date, the Agency has acquired two of the three properties necessary for the site which include 700-722 South San Fernando Boulevard. Agency staff is currently in negotiations with the remaining property owner to acquire the property located at 206 East Cedar Avenue.
While the Agency has assembled the majority of the real properties, the Agency has not yet acquired the leasehold interest in the property located at 700 South San Fernando Boulevard. This property is owned in fee by the Agency and occupied by a used auto sales business called John�s West Coast Auto Resale.
On September 22, 2004, the Agency sent an offer letter to John�s West Coast Auto Resale offering to pay a leasehold bonus value for the appraised value of $23,000. The Agency�s statutory offer of the leasehold bonus value was part of a larger all-inclusive offer relating to leasehold bonus value, goodwill and relocation. The Agency received no response to its offer and the offer terminated on its own. The business owner was provided with a 15-day notice on October 20, 2004, setting the hearing for the Resolution of Necessity on November 23, 2004.
While staff is still working with the business owner and will continue to do so, staff is recommending that the Agency take the next step in the condemnation process by conducting a hearing to consider a Resolution of Necessity to acquire the leasehold interest in the subject property. The Resolution of Necessity is part of the process to acquire the leasehold interest through eminent domain. If the Agency approves the Resolution, Agency legal counsel will institute an action of eminent domain and seek an Order of Possession to take possession of the property at the earliest possible time which is 90 days after the Order of Possession is served on the business owner. It is important to note that the business owner will also receive relocation benefits and goodwill compensation above and beyond the compensation for the leasehold interest. Again, Agency staff will continue negotiations with the business owner throughout this process to try to reach a settlement in the event that the Agency adopts a Resolution of Necessity.
Funds associated with the costs to file the condemnation action have been previously budgeted and appropriated from 20% Housing Set-Aside funds. If costs exceed the budgeted amount, staff will return with a budget appropriation request at the time of settlement.
Recommendation:
Adoption of proposed resolution entitled:
(4/5 vote required)
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK FINDING, DETERMINING AND RESOLVING THAT THE PUBLIC INTEREST, CONVENIENCE, AND NECESSITY REQUIRE AND AUTHORIZE THE CONDEMNATION OF THE LEASEHOLD INTEREST IN CERTAIN REAL PROPERTY SITUATED WITHIN THE CITY OF BURBANK FOR PUBLIC PURPOSES (700 SOUTH SAN FERNANDO BOULEVARD).
RECESS to conclude the City Council meeting.
ADJOURNMENT.