HomeMy WebLinkAbout2008-40 - 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
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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.
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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.
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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:
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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