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Home My WebLink About2008-40 - Terminating the Purchase Option for Block 500 of Newport Center DriveRESOLUTION NO. 2008- 40 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH TERMINATING THE OPTION TO PURCHASE FROM THE IRVINE COMPANY A CITY HALL SITE IN BLOCK 500 OF NEWPORT CENTER DRIVE WHEREAS, on December 18, 2007, after holding two public hearings, the City Council of the City of Newport Beach adopted Ordinance No. 2007 -21, approving Development Agreement No. DA2007 -002, entitled the Zoning Implementation and Public Benerit Agreement Between the City of Newport Beach and The Irvine Company LLC Concerning North Newport Center (Fashion Island, Block 500, Block 600, and San Joaquin Plaza) (the "North Newport Center Development Agreement"). WHEREAS, under Section 4.8 of the North Newport Center Development Agreement, the City and The Irvine Company LLC ( "The Irvine Company") entered into an Option Agreement that gives the City the option to purchase a site in Newport Center Drive Block 500 for the purposes of constructing a new City Hall (the "Option "). Exhibit F to the North Newport Center Development Agreement contains the Option Agreement. WHEREAS, on February 5, 2008, in a special municipal election, a majority of the City's voters voted in favor of Measure B (the `City Hall in the Park" initiative). Measure B provides for adding a new Section 425 to the City's Charter to require City Hall, the City's administrative offices, and related parking to be located on the City property bounded on the north by San Miguel Drive, the east by MacArthur Boulevard, the south by the City's Central Library, and the west by Avocado Avenue. WHEREAS, on February 26, 2008, after holding a public hearing, the City Council adopted Resolution No. 2008 -13, declaring the results of the special municipal election for Measure B and stating that Measure B shall be deemed adopted and ratified. On the same day, the City Council adopted Resolution No. 2008 -14, stating that it wished to follow the will of the voters and develop a new City Hall on the site specified in Measure B. WHEREAS, after thoroughly considering the entire record, including the public testimony and written submissions, if any, of all interested persons desiring to be heard, the City Council finds the following facts, findings, and reasons to support terminating the Option: Dedication of Open Space Parcel 1. Voter approval of Measure B amended the City's Charter to require that City Hall be located on the site identified in the Initiative. 2. As part of Resolution No. 2008 -14, which the City Council adopted on February 26, 2008, the City Council stated that it wished to have professional advice on 1 issues related to design of the new City Hall and a master plan for 19.8 acres owned by the City between Corona Del Mar Plaza and the Orange County Transportation Authority's Transportation Facility. As part of the resolution, the City Council also established the City Hall Design Committee to oversee and conduct a design competition for City Hall and the master plan project, which includes the City Hall site specified in Measure B. 3. Section 4.6 of the North Newport Center Development Agreement provides that The Irvine Company shall dedicate to the City an approximately 3.18 -acre site in Newport Center for open space and public facility purposes within 30 days after the earliest of the following: (1) the City has awarded a construction contract for construction of City Hall at any location within the City or (2) the Option has terminated. The 3.18 -acre site is bounded on the north by the Orange County Transportation Authority site, the east by MacArthur Boulevard, the south by San Miguel Drive, and the west by Avocado Avenue. This site is known as the "Avocado Open Space Parcel." 4. The City can trigger The Irvine Company's obligation to dedicate the Avocado Open Space Parcel by awarding a construction contract for construction of City Hall on the site specified in Measure B. Given the City's plan to hold a design competition for City Hall and to develop a master plan for the area encompassing the site specified in Measure B, the City will not likely award a construction contract for construction of City Hall for some time. 5. Section 4.8.1 of the North Newport Center Development Agreement provides for a four -year duration for the Option. The four years is counted from the Effective Date of the development agreement, which was January 18, 2008. If the City does not take action to exercise or terminate the Option, then the Option will automatically terminate on January 18, 2012. In that case, The Irvine Company's obligation to dedicate the Avocado Open Space Parcel will not arise until that time. 6. The City can trigger The Irvine Company's obligation to dedicate the Avocado Open Space Parcel more quickly by taking action now to terminate the Option. Accelerated Dedication of Lower Castaways 7. Section 4.11 of the North Newport Center Development Agreement provides that The Irvine Company shall dedicate to the City the bay -front Lower Castaways site for certain municipal or municipally sponsored uses upon the City's issuance of The Irvine Company s First Building Permit, as defined by Section 1.13 of the development agreement. 8. The Irvine Company has indicated that it does not plan to request the First Building Permit as defined by Section 1.13 of the North Newport Center Development Agreement for at least one year from now. Under the terms of the development agreement, The Irvine Company's obligation to dedicate Lower Castaways would therefore not arise until that time. 2 9. The Irvine Company has agreed to accelerate its dedication of Lower Castaways if the City terminates the Option. Specifically, The Irvine Company has agreed to deliver to the City the grant deed for Lower Castaways within 60 days of the City's termination of the Option. Accelerated Cooperation to Allow for City Hall on Site Specified in Measure 8 10. Section 4.10 of the North Newport Center Development Agreement provides that The Irvine Company will cooperate in good faith with the City to allow for construction of City Hall on the site specified in Measure B "[i]f the City elects to construct a new City Hall" on that site. Under Section 4.10, The Irvine Company specifically agreed "to release and terminate the use restrictions contained in the deed for the [site specified in Measure B] to allow for and accommodate construction of a new City Hall on that site." 11. The Irvine Company had previously dedicated the site specified in Measure B to the City, and the grant deed included a reference to Planned Community District regulations that authorized open space and park uses, and that would have required amendment to construct a City Hall on the site. The City is currently only in the planning and design stages for construction of City Hall on the site specked in Measure B. The Irvine Company nevertheless agreed to enter into a Grant Deed (Amended and Restated) (the "Amended Grant Deed ") that revises the language of the deed to authorize construction of City Hall on the site specified in Measure B. 12. The Irvine Company has already executed and delivered the Amended and Restated Grant Deed. The construction of City Hall on the site specified in Measure B is now consistent with the open space and public facilities uses contained in the Amended Grant Deed. Termination of Option Terminates City Obligations 13. Section 1.3 of the Option Agreement provides for the City's right to terminate the Option. Section 1.3 states that termination is effective by "delivery of written notice of termination to [The Irvine Company], which notice City shall have the right to deliver at any time during the Option Period prior to City's exercise of the Option." Section 4.8.1 of the North Newport Center Development Agreement contains the same language providing for the City's right to terminate the Option. 14. The City's termination of the Option terminates the rights and obligations of the City and The Irvine Company that are established in the Option Agreement. The City's termination of the Option also terminates the rights and obligations of the City and The Irvine Company that are established in Section 4.8 of the North Newport Center Development Agreement. These rights and obligations relate to the City Hall site in Newport Center Drive Block 500 and the associated parking structure. K Conclusion 15. Termination of the Option will allow The Irvine Company to go forward with their plans to design and pull permits to build a parking structure in Block 500 by mid - 2009 and as a result accelerate the following benefits under the agreement: (1) payment of %: ($13,545,000) of the public benefit fees for construction of City Hall, when the permit for the Block 500 parking structure is issued, (2) dedication of the Avocado Open Space Parcel, (3) accelerated dedication of Lower Castaways, and (4) the amended grant deed to allow for City Hall on the site specified in Measure B. 16. Given the City Council's commitment to comply with new Charter Section 425 and develop a new City Hall on the site specified in Measure B, and based on the public benefits triggered by the City's termination of the Option, termination of the Option is in the best interests of the health, safety, and general welfare of the City, its residents, and the public. NOW, THEREFORE, BE IT RESOLVED by the City Council, as follows: That the preceding recitations are true and correct and constitute the findings of the City Council for termination of the Option. 2. That the City Council terminate the Option for the reasons set forth in this resolution. 3. That the City Manager timely deliver written notice of the termination to The Irvine Company, consistent with the notice requirements under Section 24 of the North Newport Center Development Agreement. 4. That the City Manager accept and record the Amended & Restated Grant Deed. ADOPTED on the 27th day of May 2008 ATTEST: n STATE OF CALIFORNIA } COUNTY OF ORANGE CITY OF NEWPORT BEACH } I, LaVonne M. Harkless, City Clerk of the City of Newport Beach, California, do hereby certify that the whole number of members of the City Council is seven; that the foregoing resolution, being Resolution No. 2008 -40 was duly and regularly introduced before and adopted by the City Council of said City at a regular meeting of said Council, duly and regularly held on the 27th day of May 2008, and that the same was so passed and adopted by the following vote, to wit: Ayes: Henn, Rosansky, Daigle, Webb, Curry, Gardner, Mayor Selich Noes: None Absent: None Abstain: None IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of said City this 28th day of May 2008. (Seal) City Clerk Newport Beach, California