10-19-2010 - Exclusive Negotiating Agreement with CGM Developme - ENA report (2).docCity of West Covina
Memorandum
A G E N D A
ITEM NO. D-3a
DATE October 19, 2010
TO: Andrew G. Pasmant, City Manager
and the City Council
FROM: Christopher J. Chung
Community Development Commission Director
SUBJECT: EXCLUSIVE NEGOTIATING AGREEMENT WITH CGM DEVELOPMENT
RECOMMENDATION:
It is recommended that the City Council approve a 180-day Exclusive Negotiating Agreement with two (2) 60-day option periods with C.G.M. Development, Inc, (“Developer”) in order to negotiate
the terms of sale and development of approximately 2.2 acres portion of the Civic Center site.
DISCUSSION:
On September 27, 2010 the Community Development Commission (“CDC”) received a request from C.G.M. Development, Inc. (“CGM”) for the potential development of an upscale 5 story, 50,000
square feet of commercial condominium office development (Attachment No. 1). The proposed site is to be located on City-owned Civic Center property located at West Covina Parkway and
West Garvey Avenue (southwest corner). The upscale commercial condominium offices would be for sale units offered to business professionals. In addition, CGM is exploring having restaurant/lounges
on the top floor and rooftop of the office building. Since the units will be for sale units, CGM would need to purchase a portion of the Civic Center property from the City.
CGM is requesting entering into a 180 day Exclusive Negotiating Agreement (“ENA”) with two (2) 60-day extension options with the City in order to develop site plans, secure tenants and
analyze project feasibility (Attachment No. 2). CGM has indicated that they are committed towards developing a project at the Civic Center, but in order for CGM to proceed, they require
site control for tenants to consider the project a possibility and open to discussions.
The proposed development would utilize the library parking area, which is owned by the City. The City is obligated by a lease agreement to provide 436 parking spaces to L.A. County
of which a designated area of approximately 99 parking spaces for the library would be displaced by the proposed project. The original County parking lease expired in May 31, 1998.
The County, however, has five (5) extensions of five (5) years each. As such, the lease will not expire until 2023. The City currently receives $243.65 per month from the County
to lease the 99 library parking spaces. The developer believes she may be able to replace the 99 library parking spaces on the County’s parking area adjacent to the library and on
the City’s property currently leased to the County for the library.
At the October 5, 2010 Closed Session meeting, the City Council considered the Developer’s proposal and directed staff to prepare an ENA to be brought back for the City Council’s consideration.
CDC staff subsequently met with the Developer to negotiate terms of the ENA. The Developer requested a 180-day ENA period with two (2) 60-day option terms in order to perform its
due diligence and start the entitlement process, including the precise plan, conditional use permit, variance, zone change, and general plan amendment applications. Also during the
ENA period, the Developer will submit to the CDC site plans and elevations, proforma, evidence of financing, and other information needed to evaluate the feasibility of the project.
The Developer will also submit a $5,000 good faith deposit in order to ensure that the project will proceed diligently, expeditiously and in good faith under the proposed ENA.
The ENA is not an agreement to sell the property. It is a standard real estate agreement, which allows the parties to negotiate exclusively on the terms of sale, which would be formalized
in the
form of a Disposition Development Agreement (“DDA”). The ENA also provides the parties with the opportunity to analyze the feasibility of developing the project while addressing the
various issues related to development of the site. Over the ENA 180-day period, CDC staff and the Developer will work to address several necessary elements such as; project entitlements,
environmental review, site design and aesthetics, project economics, and obtain an appraisal of the property. The 60-days option periods are at the sole discretion of the Executive
Director and based on the Developer showing substantial progress. As this project will require public hearings at the Planning Commission for entitlements, West Covina residents will
be able to provide input at the public hearings. The public may also provide comments during the CDC Board’s review of the General Plan Amendment, Change of Zone and DDA.
ALTERNATIVES:
The City Council has the following alternatives:
Approve the requested 180-day ENA with C.G.M. Development, Inc, with
two (2) 60 day options;
Approve the ENA with C.G.M. Development, Inc, with different terms;
Do not authorize the ENA with C.G.M. Development, Inc;
Direct staff to release a Request For Proposal (“RFP”) on the site; or
Provide staff with an alternative direction.
FISCAL IMPACT:
There is no fiscal impact to the CDC in approving the ENA.
Prepared by: Mike Lee Reviewed/Approved by: Christopher J. Chung
Assistant CDC Director CDC Director
Finance
Reviewed & Approved by:
General Counsel to the CDC
Attachments: No. 1 – C.G.M. Development, Inc Proposal Letter Dated September 27, 2010
No. 2 – Proposed ENA with C.G.M. Development, Inc