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HomeMy WebLinkAbout122705 RESO AA Mutal Release Jt Escrow Inst Vinci Invest Co.,IncREQUEST FOR AGENCY ACTION AGENCY BOARD MEETING DATE: DECEMBER 27, 2005 TITLE: Edsscavon lat AGENCY SECRETARY USE ONLY: Ma: (blao 2a4_: 40r/0 RESOLUTION APPROVING ACQUISITION AGREEMENT, MUTUAL RELEASE AND JOINT ESCROW INSTRUCTIONS WITH VINCI INVESTMENT CO.. INC. NOr /9PMV45,�,o: 3.•a APPROVED &ST, N0; G''h "i3- �,6arcia Wb-ent) ❑ As Recommended ❑ As Amended ❑ Ordinance on 1" Reading ❑ Ordinance on 2ntl Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO /FILE NUMBER EXECUTIVE DIRECTOR RECOMMENDED ACTION Adopt Resolution No. CRA 2005 -008 approving Acquisition Agreement, Mutual Release And Joint Escrow Instructions with Vinci Investment Co., Inc. DISCUSSION Vinci Investment Co., the owner of the Honda Santa Ana dealership, notified the Agency in late 2003 that they had an agreement to acquire the leasehold interest in the adjacent property occupied by Mr. J's Nightclub. They sought an Agency agreement to assist with the purchase of the property (if successfully acquired) and expansion of the Honda Santa Ana dealership. On March 15, 2004, the Agency Board approved an acquisition agreement and license agreement with Vinci calling for transfer of the Mr. J's properties, assets, etc. to the Agency for $4,247,897 immediately upon Vinci's acquisition from the Johers. These agreements would allow for Honda's temporary use of the site while a Disposition and Development Agreement (DDA) was being negotiated, based on a non - binding Term Sheet Honda had previously outlined with staff. Under the Term Sheet, the Agency would proceed with the potential acquisition of the underlying fee interest in the property. The entire property would then be conveyed back to Vinci in exchange for Vinci's agreement to expand and redevelop the Honda Santa Ana dealership. However, the Johers breached their agreement with Vinci, triggering over a year of litigation. As a result, no negotiations were ever undertaken and no DDA has yet been approved by the parties. Further, when it appeared that Vinci would be unable to consummate their agreement with the Joher family, the Agency chose to terminate the March 2004 Resolution Approving Acquisition Agreement, Mutual Release and Joint Escrow Instructions with Vinci Investment Co., Inc. December 27, 2005 Page 2 acquisition agreement. Vinci disputed the legality of the Agency's action. Vinci has concluded its litigation with the Johers and has successfully acquired the Mr. J's property. The Agency and Vinci desire to resolve their differences and, in doing so, carry out the intent of the Purchase Agreement and the Term Sheet. Under the proposed Acquisition Agreement, the Agency will purchase the Mr. J's Assets including the lease, buildings & business goodwill for $4,247,897 and then license the property back to Vinci for two years. During that time, Vinci is willing to integrate the premises into the Honda Dealership and make substantial improvements to bring it into full compliance with the Santa Ana Auto Mall specific development standards. To assist in that, the Agency will contribute $367,000 to Vinci to partially offset those costs, plus pay to Vinci $385,103 as an advance against the rental subsidy proposed in the Term Sheet. Finally, the Agency will pay Vinci $1,025,000 as a full and complete settlement and compromise of Vinci's claim for extraordinary expenses incurred in the Joher litigation and for all other disputes and potential claims against the Agency by Vinci. At the end of the two years, if all of the improvements are made, the Agency will re- assign the lease back to Vinci. In the meantime, Vinci and the Agency will sign a new Term Sheet to guide negotiations on a DDA. FISCAL IMPACT Total payments by the Agency will be $6,025,000. Funds are available in the South Main Tax Allocation Bond Capital Project account (account no. 552 - 936- 6611). Patricia C. Whitaker Executive Director PCW /JF /mlr APPROVED AS TO FUNDS AND ACCOUNTS: Francisco Gutierrez Executive Director Finance & Management H: \ACTIONS \2005 CRA \Honda Settlement -Short 12- 27- 05.doc Services Agency NOT ADOPTED (JWF 12/21/05) RESOLUTION NO. CRA- 2005 -008 A RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA APPROVING AN ACQUISITION AGREEMENT, MUTUAL RELEASE AND JOINT ESCROW INSTRUCTIONS WITH VINCI INVESTMENT CO., INC., A CALIFORNIA CORPORATION, DOING BUSINESS AS HONDA SANTA ANA. BE IT RESOLVED BY THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA AS FOLLOWS: Section 1, The Board of the Community Redevelopment Agency of the City of Santa Ana hereby finds, determines and declares as follows: A. In December 2003, Vinci Investment Co., Inc., Inc, dba Honda Santa Ana, ( "Vinci ") entered into an Agreement of Purchase with various members of the Joher family (the "Vinci /Joher Agreement ") for the purchase of the business and related assets at 2101 East Edinger Avenue known as the Mr. J's Night Club and Cabaret (the "Joher Assets "). B. On March 15, 2004, the Agency approved an Agreement for Acquisition of Leasehold and other interests related to the Joher Assets under which the Agency would acquire most of the Joher Assets immediately after the close of the Vinci /Joher Agreement. C. The Agency's Executive Director and Vinci previously signed a term sheet dated January 21, 2004 (the "Term Sheet ") outlining the terms and conditions of a potential Disposition and Development Agreement ( "DDA ") to be negotiated between the Agency and Vinci following acquisition of the Joher Assets. The term sheet contemplated, among other things, acquisition of the fee interest in the property underlying the Joher Assets (the "Erickson Property. ") D. The Joher Sellers breached the Vinci /Joher Agreement. Vinci initiated and successfully prosecuted litigation against the Joher Sellers to compel performance of the Joher Sellers' contractual obligations to Vinci under the Vinci /Joher Agreement (the "Joher Litigation "). E. Due to the delays and expenses created by the Joher Litigation, the Agency terminated the Agency/Vinci Agreement on August 19, 2005. AYES: Boardmembers NOES: Boardmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers CERTIFICATE OF ATTESTATION AND ORIGINALITY I, PATRICIA E. HEALY, Secretary of the Agency, do hereby attest to and certify the attached Resolution No. CRA 2005 -008 to be the original resolution adopted by the Community Redevelopment Agency of the City of Santa Ana on Date: Recording Secretary Community Redevelopment Agency City of Santa Ana