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HomeMy WebLinkAboutRES. SA 2015-01 Termination of DDA with the Pomona Fox Theater, LLC RESOLUTION NO. SA 2015-1 A RESOLUTION OF THE CITY COUNCIL SITTING AS THE SUCCESSOR AGENCY TO THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF POMONA APPROVING THE TERMINATION OF THE DISPOSITION AND DEVELOPMENT AGREEMENT; ALL AMENDMENTS AND ALL OPERATING MEMORANDUMS PREVIOUSLY ENTERED INTO BETWEEN THE FORMER REDEVELOPMENT AGENCY AND POMONA FOX THEATER, LLC WHEREAS, City of Pomona serves as the Successor Agency to the former Redevelopment Agency of the City of Pomona, pursuant to California Health and Safety Code Sections 34171, 34173, 34175 and 34177 ("Successor Agency"); WHEREAS, the former Redevelopment Agency of the City of Pomona (the "Agency") entered into a Disposition and Development Agreement (the "DDA") dated February 5, 2007 with Pomona Fox Theater, LLC for the disposition and rehabilitation of the Pomona Fox Theater (the "Developer")property located at 114 West Third Street, Pomona, CA; WHEREAS, the Agency subsequently entered into several amendments and operating memorandums with the Developer to carry-out the intent of the DDA, including the following: the First Operating Memorandum and Consent to Assignment, dated August 6, 2007; the Second Amendment to DDA, dated December 3, 2007; the Third Amendment dated January 7, 2008; the Consent and Subordination Agreement, dated February 19, 2008; and the Fourth Amendment to DDA, dated December 15, 2008; and the Second Operating Memorandum to DDA, dated October 4, 2010; WHEREAS,the DDA and subsequent agreements include an obligation of the Successor Agency to make an annual Operating Subsidy payment to the Developer for community use of the Fox Theater in the amount of$201,466, due and payable in and around February of each year through 2038; WHEREAS, the Second Operating Memorandum to the DDA provided for an Agency loan of$1,150,000 for the purchase of concert audio and visual equipment for the Fox Theater with the provision that the Agency annual Operating Subsidy payments will cease for the years 2016 to 2027 as the form of repayment of the Agency loan of$1,150,000; WHEREAS, the DDA establishes a Purchase Price Note of $1,300,000 that the Developer owes to the Agency, of which, payment of the Purchase price Note is paid by a $1 surcharge on all ticket sales above $15 at the Fox Theater; WHEREAS, due to a weak economy in recent years that resulted in low ticket sales, the $1 ticket surcharge revenue to pay down the Purchase Price Note were insufficient, therefore, the Purchase Price Note amount, including interest,has increased to $1,452,719; WHEREAS, the Agency obligation for the Operating Subsidy assistance has a current principal balance value of$2,270,000; WHEREAS, the approval of the Termination Agreement will mutually relieve the Developer and the Agency from their respective future payment obligations; WHEREAS, staff has analyzed the Termination Agreement and determined that it is mutually beneficial and in the interest of the Successor Agency and Pomona Fox Theater, LLC to terminate the Fox Theater DDA; and WHEREAS, the parties to the Fox Theater DDA are aware that the Termination Agreement will require the approval of the Pomona Oversight Board and the State's Department of Finance. NOW, THEREFORE, the Successor Agency of the Redevelopment Agency of the City of Pomona hereby resolves as follows: SECTION 1. The above recitals are true and correct and are a substantive part of this resolution. SECTION 2. This Resolution is adopted pursuant to Health and Safety Code Section 34177. SECTION 3. The Successor Agency hereby approves the Termination Agreement in substantially the form submitted and attached hereto as Exhibit A. SECTION 4. The City Manager is authorized to present the Termination Agreement to the Oversight Board for approval. SECTION 5. Once approved by the Oversight Board and approved by State Department of Finance, the City Manager, or designee, is authorized to execute and record all documents necessary to effectuate the terms of the Termination Agreement. SECTION 6. The City Clerk in her capacity as the Clerk to the City Council, sitting as the Successor Agency to the Redevelopment Agency of the City of Pomona, shall certify to the passage and adoption of this Resolution and it shall thereupon take effect and be in full force. APPROVED AND ADOPTED THIS 26T" DAY OF JANUARY 2015. ATTEST: POMONA CITY COUNCIL SITTING AS SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF POMONA, CALIFORINA, PURSUANT TO CALIFONIA#WALTH AND F COD SE 1 4173 Eva M. Buice, MMC, Clerk Elliott Rothman, Mayor APPROVED AS TO FORM: Arnold . Alvarez-Glasman,, Successor Agency Counsel V1-Wj2'SA C+41\ 0 1 TATE OF CALIFORNIA COUNTY OF LOS ANGELES A3n k CITY OF POMONA I, EVA M. BUICE, MMC, CLERK of the CITY OF POMONA CITY COUNCIL sitting as the SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF POMONA, California, pursuant to California Health and Safety Code Section 34173 do hereby certify that the foregoing Resolution was adopted at a regular meeting of the Successor Agency held on the 26`" day of January 2015 by the following vote: AYES: Nolte, Robledo, Carrizosa, Lantz, Escobar, Martin, Mayor Rothman NOES: None ABSENT: None ABSTAIN: None IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Pomona, California, this 27"' day of January 2015. C5�-�w6_ Eva M. Buice, MMC, Clerk TERMINATION OF THE DISPOSITION AND DEVELOPMENT AGREEMENT This TERMINATION OF THE DISPOSITION AND DEVELOPMENT AGREEMENT ("Termination Agreement"), dated , 2015, is entered into by and among THE SUCCESSOR AGENCY OF THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF POMONA, a public body corporate and politic (the "Agency"), and POMONA FOX THEATER, LLC, a California limited liability company (the "Developer"), collectively referred to herein as the "Parties." WHEREAS, the Agency and the Developer have entered into that certain Disposition and Development Agreement, dated as of February 5, 2007, and subsequently amended by the First Operating Memorandum and Consent to Assignment, dated as of August 6, 2007 (the "First Operating Memorandum and Consent to Assignment"), the Second Amendment to Disposition and Development Agreement, dated December 3, 2007 (the "Second Amendment"), the Second Operating Memorandum to Disposition and Development Agreement, dated October 4, 2010 (the "Second Operating Memorandum"), the Consent and Subordination Agreement, dated February 19, 2008 (the "Third Amendment"), and the Fourth Amendment to Disposition and Development Agreement, dated December 15, 2008 (the "Fourth Amendment"), cumulatively referred to herein as the "DDA;" WHEREAS, the DDA provided for the disposition of that certain real property commonly referred to as the Pomona Fox Theater located at 114 W. 3rd Street, Pomona, CA (the "Property"); WHEREAS, the Agency is the rightful successor to the Redevelopment Agency of the City of Pomona, a public body corporate and politic; WHEREAS, the Developer is the rightful successor to Gerald Investment, Inc., pursuant to the First Operating Memorandum and Consent to Assignment; WHEREAS, the Agency and the Developer are parties to that certain Promissory Note Secured by Deed of Trust, dated March 14, 2008, in the amount of One Million Three Hundred Thousand Dollars ($1,300,000) (the"Purchase Price Promissory Note"); WHEREAS, the Agency and the Developer are parties to that certain Promissory Note, dated October 4, 2010, in the amount of One Million One Hundred and Fifty Thousand Dollars ($1,150,000) (the "Second Promissory Note", and, together with the Purchase Price Promissory Note, the "Promissory Notes"); WHEREAS, the Agency, the Developer, and First American Title Insurance Company (the '`Trustee") are parties to that certain Deed of Trust , dated March 13, 2008, which serves as security for the Purchase Price Promissory Note (the "Deed of Trust"); WHEREAS, the Agency and the Developer intend to terminate the DDA, including all of its amendments, and release the Agency and the Developer from any liability thereunder on the terms more fully set forth herein; Resolution No. SA 2015-1 January 26, 2015 Page 1 of 4 WHEREAS, the Agency and the Developer intend to terminate the Purchase Price Promissory Note and release all parties thereto from any liability thereunder on the terms more fully set forth herein; WHEREAS, the Agency and the Developer intend to terminate the Second Promissory Note and release all parties thereto from any liability thereunder on the terms more fully set forth herein; WHEREAS, the Agency and the Developer intend to terminate the Deed of Trust and release all parties thereto from any liability thereunder on the terms more fully set forth herein; NOW THEREFORE, in consideration of the premises and the mutual agreements set forth herein, and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Parties hereto hereby agree as follows: Section 1. Termination The Agency and the Developer hereby agree that on the Termination Date, the DDA shall be terminated and of no further force or effect. The Agency and the Developer hereby agree that on the Termination Date, the Purchase Price Promissory Note shall be terminated and of no further force or effect. The Agency and the Developer hereby agree that on the Termination Date, the Second Promissory Note shall be terminated and of no further force or effect. The Agency and the Developer hereby agree that on the Termination Date, the Deed of Trust shall be terminated and of no further force or effect. The Termination Date shall be the later of the date on which (i) the Developer has obtained the written consent of all of Developer's finance parties with the right to consent or approve of the termination of the DDA, Promissory Notes and/or Deed of Trust and the Developer has provided written notice to the Agency of the same, and (ii) the Agency has received approval from the Pomona Successor Agency Oversight Board and State of California Department of Finance to terminate the DDA, Promissory Notes, and Deed of Trust and has provided written notice to the Developer of the same . If no Termination Date is delivered in writing to the Agency by January 1, 2016, then this Termination Agreement shall be deemed void as of the date herein. In no event shall the Termination Date occur before the Agency has executed this Termination Agreement. Following the date of this Agreement, the Agency agrees to use best efforts to obtain any required approvals necessary to terminate the DDA, Promissory Notes, and the Deed of Trust, including, without limitation, approval from the Pomona Successor Agency Oversight Board and State of California Department of Finance. Immediately after the Termination Date, the Agency agrees to record this Termination Agreement and execute and/or record such reconveyances of the Promissory Notes and the Deed of Trust as Developer shall reasonably require to evidence the termination and release hereunder. Resolution No. SA 2015-1 January 26, 2015 Page 2 of 4 Until the Termination Date, any and all sums to be paid or obligations to be performed by the Agency or the Developer under the DDA, Promissory Notes, or the Deed of Trust shall remain due and payable or require performance, as applicable. If any amounts shall have accrued but not be due as of the Termination Date, then, within thirty (30) days after the later of (i) the Termination Date, and (ii) the recording of this Termination Agreement and the reconveyance of the Promissory Notes and the Deed of Trust, any and all such amounts shall be paid in full. If any future lender of the Developer shall require an estoppel or other written confirmation of the validity of this Termination Agreement and the release of Promissory Notes or reconveyance of the Deed of Trust, then the Agency shall be required to provide the same in a farm reasonably acceptable to the Agency within a reasonable amount of time following written request by Developer. Section 2. Release Each of the Parties agrees that, upon the Termination Date, such party irrevocably and unconditionally, fully and completely, releases and forever discharges the other party from and against any claims, causes of actions, and suits and any and all damages, liabilities, Losses or costs, whether existing or contingent, known or unknown of whatsoever kind or nature arising under the DDA, the Promissory Notes, the Deed of Trust, or the performance of obligations thereunder, whether arising before or after the Termination Date. Section 3. Governing Lave. This Termination Agreement constitutes the entire undertaking of the parties hereto concerning the subject matter hereof. This Termination Agreement shall be governed and interpreted by the laws of the State of California and any action to enforce or interpret the terms of this Termination Agreement shall be brought in any court of competent jurisdiction in the United States. Section 4. Counter Parts This Agreement may be executed in several counterparts and all so executed shall constitute one agreement binding on all parties, notwithstanding that all parties have not signed the original or the same counterpart. A facsimile or other reproduction of a signature of a party to this Agreement shall bind such party to the same extent as the manual signature of such party. Section 5. Binding on successors and assigns Wherever any of the parties to this Agreement is referred to, such reference is deemed to include the successors and assigns of such party, and this Agreement shall be binding upon and inure to the benefit of the successors and assigns of each party hereto. Resolution No. SA 2015-1 January 26, 2015 Page 3 of 4 Section 6. Attorney fees In any action between the Parties to interpret, enforce, reform, modify, rescind, or otherwise in connection with any of the terms or provisions of this Agreement, the prevailing party in the action shall be entitled, in addition to damages, injunctive relief, or any other relief to which it might be entitled, reasonable costs and expenses including, without limitation, litigation costs and reasonable attorneys' fees. Section 7. Integration This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. IN WITNESS WHEREOF, each of the parties hereto has caused its duly authorized representative to execute this Termination Agreement as of the date first set forth above. AGENCY: THE SUCCESSOR AGENCY OF THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF POMONA, a public body and corporate politic By: Linda C. Lowry, City Manager BORROWER: POMONA FOX THEATER, LLC, a California limited liability company By: Pomona Fox Theater Manager, LLC By: Gerald V. Tessier, Its Manager Resolution No. SA 2015-1 January 26, 2015 Page 4 of 4