SR - AGR-4545.OC - DEVELOPMENT AGREEMENT 605 BUILDING SITE LEWIS STREET CITY PARKWAY WESTuc� AGENDA ITEM
October 14, 2014
AUN c�
TO: Honorable Mayor and
Members of the City Council
THRU: John W. Sibley
City Manager
FROM: Rick Otto, Asst. City Manager/
Interim Community Develop en
Director
Lisa L. Ki
Economic Development Manager
ReviewedNerVied By:
City Manager
fr
Finance Dire o
To Be Presen
Lisa Kim
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Plan /Environ
1. SUBJECT
Ordinance No. 6 -14 - An Ordinance of the City Council of the City of Orange approving an
Amended and Restated Development Agreement No. 0001 -12 by and between the City of
Orange and Orange County Health Authority for development project known as the "605
Building Site" located on the southeast corner of Lewis St. and City Parkway West.
2. SUMMARY
A Public Hearing of the City Council of the City Orange to consider approval of an Amended and
Restated Development Agreement with the Orange County Health Authority will have the effect
of extending vested rights of up to six (6) years to develop a 10- story, 200,000 square foot office
building and a 5 -level parking structure.
3. RECOMMENDATION
Adopt Ordinance No. 6 -14 for the first reading.
4. FISCAL IMPACT
There is no fiscal impact to the General Fund.
5. STRATEGIC PLAN GOAL(S)
Provide for a safe community
a. Provide staffing and resources to deliver services that ensure public safety.
2. Be a fiscally healthy community.
a. Expend fiscal resources responsibly.
ITEM // c"'-- 1 10/14/14
6. GENERAL PLAN IMPLEMENTATION
Goal 3.0: Strengthen the City's economic base and stimulate employment through new
commercial and industrial development and expansion.
Policy 3.1: Encourage public and private sector investments that promote commercial
development and expansion opportunities.
7. DISCUSSION and BACKGROUND
BACKGROUND
In 2001, the City Council approved entitlements for development of four properties around the
Outlets at Orange that collectively comprised of 1,157,000 square feet of future office
development and a new 137 -room hotel (the "Original Entitlements "). A one -year time extension
was granted by the City Council to extend approvals of the Original Entitlements from October
2003 to October 2004. In 2004, property owners Equity Office Properties requested a
Development Agreement for two of the four properties identified as the City Plaza Two and the
605 Building Site. The 2004 Development Agreement was approved and vested development
rights for City Plaza Two and the 605 Building Site for a period of ten years. The 2004 DA is
due to expire on October 28, 2014.
DISCUSSION
The Orange County Health Authority doing business as CalOptima, (the "Developer ") is
requesting approval to extend vested development rights through an Amended and Restated
Development Agreement. There has been a series of property ownership changes over the past
few years. In January 2011, the Developer acquired the 505 Building property including a
portion of the vested rights for the 605 Building Site that was part of the 2004 Development
Agreement.
The table below provides a summary of City approved entitlements that began in 2001 and the
anticipated expiration of the original 2OO4 Development Agreement in October 2014.
Table I — Entitlement Summary
ITEM 2 10/14/14
Proposed 2014
2001
2004
Amended and Restated
Locations
Approved Entitlements
Development Agreement
Development Agmt
(FEIR 1612 -01)
(30 -year term)
(Up to 6 -year term)
NWC of Chapman Avenue
CUP 2377 -01 /MJSP 105 -01
Not part of 2004 DA. Approved for
N/A
and Manchester Place
6- story, 132,000 SF Office Tower with a 5-
AMLI Residential Project
level, 528 parking structure
Westside of The City
CUP 2378 -01/ MJSP 106 -01
Not part of 2004 DA. Developed in 2004
Drive (500 feet south of
24- story, 465,000 SF Office Tower with a
as City Town Center anchored by Best
N/A
Chapman Avenue)
8- level, 2,360 parking structure
Buy
NWC of Lewis Street and
CUP 2379 -01/ MJSP 107 -01
10- story, 200,000 SF Office Tower with a
605 Building Site entitlements to expire.
605 Building Site
Metropolitan Drive
5- level, 1,528 parking structure
North of Metropolitan
CUP 2380 -01 /MJSP 1085 -01
City Plaza Two Site
Drive midway between
19- story, 360,000 SF Office Tower with a
The site's property owner is also
N/A
Lewis Street and The City
6- level, 2,720 parking structure
requesting an Amended and Restated
Drive
Development Agreement (DA 0002 -14)
ITEM 2 10/14/14
With the term of the 2004 Development Agreement due to expire on October 28, 2014, the
Applicant is requesting additional time to assess future office demands in the area as the real
estate market continues recovery. In order to approve a Development Agreement, OMC Section
17.440.100 requires that the land uses approved in the proposed 2014 Amended and Restated
Development Agreement conform to the City's Planning documents and regulations, provides a
public benefit and allows for orderly development in the City.
Proposed 2014 Amended and Restated Development Agreement
The proposed 2014 Amended and Restated Development Agreement ( "2014 DA ") will provide
the following public benefits:
1. The project is and, at the completion of the Project, will continue to be benefit and
resource to the community;
2. The project will provide an expanded economic base for the City by generating
substantial property tax revenue;
3. The project will provide temporary construction employment and permanent office -based
jobs for a substantial number of workers; and,
4. The project will assign sales tax point of sales location to the City of Orange. This would
apply to office buildings and office equipment.
In addition, the proposed 2014 DA amends the terms of Public Benefit Fees. The Public Benefit
Fees would be paid to the City upon the anniversary(s) of the Effective Date of the 2014 DA and
made in three installments as follows:
The 2014 DA shall remain in effect for a period of up to six (6) years from the Effective
Date subject to the Developer payment(s) of certain Public Benefit Fees totaling Two
Hundred Thousand Dollars and No /100 ($200,000).
2. First Payment of Public Benefit Fees in the amount of Fifty Thousand Dollars ($50,000)
shall be paid upon execution of the 2014 DA by the Developer and remain in effect for a
period of two (2) years from the Effective Date.
Second Payment of Public Benefit Fees in the amount of Fifty Thousand Dollars
($50,000) shall be paid prior to expiration of the second anniversary of the Effective Date
and the 2014 DA shall be automatically extended for an additional two (2) years.
4. Final Payment of Public Benefit Fees in the amount of One Hundred Thousand Dollars
and No/ 100 ($100,000) shall be paid to the expiration of the fourth anniversary of the
Effective Date and the 2014 DA shall be automatically extended for an additional two (2)
years.
The 2014 DA has been structured to allow development flexibility for the Developer over the
next six years and to secure Public Benefit Fees for the City for the requested time extension.
The proposed 2014 DA does not involve any change in land uses or entitlements; therefore no
further environmental analysis is required.
ITEM 3 10/14/14
On September 3, 2014, the Staff Review Committee reviewed the project and recommended
approval. The Planning Commission considered this item at a noticed public hearing on
September 15, 2014 and has recommended approval of the 2014 DA by approval of Resolution
No 21 -14,
7. ATTACHMENTS
• Ordinance No. 6 -14
• Amended and Restated Development Agreement with CalOptima
• Planning Commission Staff Report dated September 15, 2014
NAEconomic Development Files \STAFF REPORTS\2014 \101414b_CalOptima DA_City.doc
ITEM 4 10/14/14
ORDINANCE NO. 6-14
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF ORANGE APPROVING AN AMENDED AND
RESTATED DEVELOPMENT AGREEMENT NO. 0001 -12
BY AND BETWEEN THE CITY OF ORANGE AND
ORANGE COUNTY HEALTH AUTHORITY FOR
DEVELOPMENT PROJECT KNOWN AS THE "605
BUILDING SITE" LOCATED ON THE SOUTHEAST
CORNER OF LEWIS ST. AND CITY PARKWAY WEST
APPLICANT: ORANGE COUNTY HEALTH AUTHORITY (Cafttima)
WHEREAS, Section 65864 et seq. of the California Government Code authorizes cities
to enter into Development Agreements with any person having a legal or equitable interest in
real property for the development of such property; and
WHEREAS, the City Council of the City of Orange has adopted Chapter 17.44 of the
Orange Municipal Code, which establishes procedures for the processing and approval of
Development agreements; and
WHEREAS, Orange County Health Authority doing business as CalOptima (the
"Developer "), a public agency, is the owner of certain real property located in the City of Orange
commonly referred to as "605 Building Site," which is more particularly described in the
Development Agreement attached to this Ordinance as Exhibit A. The 605 Building Site is
located on the southeast corner of Lewis St. and City Parkway West; and
WHEREAS, the City Council approved a Development Agreement on September 28,
2004, with a previous land owner for the development of the projects approved by the City
Council on October 9, 2001, through City Council Resolutions Nos. 9521 and 9522; and
WHEREAS, the Developer has a legal and equitable interest in the 605 Building Site
and has made application to the City to enter into such Amended and Restated Development
Agreement for the development of the projects approved by the City Council on October 9,
2001, and briefly summarized as a 10- story, 200,000 square foot office building and a five -level
parking structure; and
WHEREAS, an application was filed by the Developer to amend and restate the existing
Development Agreement; and
WHEREAS, the extension of Development Agreement No. 0001 -12 was processed in a
time and manner prescribed by State and local law; and