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Home My WebLink About011706 Further Consideration AA M Release Jt Escrow Inst Vinci Invest_REQUEST FOR AGENCY ACTION Qdssntiorn lee AGENCY BOARD MEETING DATE: AGENCY SECRETARY USE ONLY: JANUARY 17, 2006 TITLE: FURTHER CONSIDERATION OF ACQUISITION AGREEMENT, MUTUAL RELEASE AND JOINT ESCROW INSTRUCTIONS WITH VINCI INVESTMENT CO.. INC. RECOMMENDED ACTION APPROVED ❑ As Recommended ❑ As Amended ❑ Ordinance on 18` Reading ❑ Ordinance on 2ntl Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER Approve payment of $1,000,000 in satisfaction of claims for extraordinary expenses by Vinci Investment Co., Inc. DISCUSSION On January 3, 2006, the Community Redevelopment Agency of the City of Santa Ana adopted Resolution No. CRA 2006 -01 as amended (Exhibit 1). The actions by the Redevelopment Agency approved the Acquisition Agreement, Mutual Release and Joint Escrow Instructions with Vinci Investment Co., Inc., with the exception of the $1,025,000 identified as payment for a full and complete settlement and compromise of Vinci's claims for extraordinary expenses incurred in the Joher litigation and for all other disputes and potential claims against the Agency. During negotiations regarding this matter, Vinci Investment Co., Inc. agreed to removal of the consideration of $25,000 from the total $1,025,000. Also, the Agency Board directed the staff to review all of the supporting documentation for the claim of $1,000,000 for extraordinary expenses. Pursuant to direction of the Agency Board at its meeting of January 3, 2006, staff has reviewed receipts, invoices and other forms of documentation submitted by Vinci Investment Co., Inc. in verification of the extraordinary expenses incurred as previously described above. A review to date shows that the actual amount of extraordinary expenses submitted exceeds the $1,000,000 claimed by Vinci Investment Co., Inc. These amounts include payment of $810,465 in legal fees ($433,715 to General Counsel, $346,750 to Bankruptcy Counsel, and $30,000 to Appellate Counsel), $162,500 in settlement fees to land owner, and $77,059 in trial experts and consultants. 5 -6 Further Consideration of Acquisition Agreement, Mutual Release and Joint Escrow Instructions with Vinci Investment Co., Inc. January 17, 2006 Page 2 Staff recommends that the Agency authorize payment in the amount of $1,000,000 to Vinci Investment Co., Inc. due as a result of extraordinary expenses incurred resulting from the Joher litigation and all other disputes and claims against the Agency by Vinci Investment Co. Inc. FISCAL IMPACT Funds are available in the South Main Tax Allocation Bond Capital Project account (account no. 552 - 936- 6611). Executive Director PCW /NE /mlr APPROVED AS TO FUNDS AND ACCOUNTS: Ir MAmt I Francisco Gutierrez Executive Director Finance & Management Services Agency H: \ACTIONS \2006 CRA \FurtherConsiderofAcquiAgree... Vinci 1- 17- 06.doc 5 -7 (JWF 1/10/05) RESOLUTION NO. CRA 2006 -001 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 close of the Vinci /Joher Agreement. C. The Agency's Executive Director and Vinci previously signed 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. EXHIBIT 1 5 _ Resolution No. CRA 2006 -001 Page 1 of 3 F. Vinci disagrees that the Agency properly terminated the Agency/Vinci Agreement. Additionally, the Agency and Vinci disagree as to the binding effect of the Term Sheet, insofar as the Agency contends that the Term Sheet is merely a non- binding letter of intent. G. Vinci has now settled the Joher Litigation and acquired the Joher Assets. H. The Agency and Vinci desire to resolve their differences and in doing so carry out the intent of the Agency/Vinci Purchase Agreement and the Term Sheet. Section 2. That certain Acquisition Agreement, Mutual Release And Joint Escrow Instructions, including all attachment and related documents, schedules and attachments, submitted to the Agency Board at the time of consideration of this resolution is hereby approved with exception of the provisions found in Paragraph 4 related to payment of $1,025,000 in satisfaction of claims for Extraordinary Expenses. Consideration of such payment shall be brought back to the Agency Board at its regular meeting of January 17, 2006 after confirmation of supporting documentation of such costs. The Agency's Executive Director and General Counsel are hereby authorized to make such non - substantive changes to the documents as they may deem necessary or advisable in order to carry out the intent of the agreement and this resolution. Section 3. The Negative Declaration, Environmental Review No, 2003 -149 was previously approved. Section 4. This Resolution shall take effect immediately upon its adoption by the Agency Board, and the Secretary of the Agency shall attest to and certify the vote adopting this Resolution. ADOPTED this 3rd day of January, 2006. Miguel A. Pulido Chair APPROVED AS TO FORM: Joseph W. Fletcher Agency General Counsel Resolution No. CRA 2006 -001 Page 2 of 3 5-9 AYES: Boardmembers: Bist, Bustamante,Garcia, Pulido, Solorio (5) NOES: Boardmembers: Alvarez (1) ABSTAIN: Boardmembers: Christy (1) NOT PRESENT: Boardmembers: None (0) CERTIFICATE OF ATTESTATION AND ORIGINALITY I, PATRICIA E. HEALY, Secretary of the Agency, do hereby attest to and certify the attached Resolution No. CRA 2006 -001 to be the original resolution adopted by the Community Redevelopment Agency of the City of Santa Ana on January 3, 2006. Date: Recording Secretary Community Redevelopment Agency City of Santa Ana 5 -10 Resolution No. CRPage 3 of