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HomeMy WebLinkAboutC-2402 - Fixing Fair Share Contribution regarding Hughes Aircraft ProjectCITY OF NEWPORT BEACH P.O. BOX 1768, NEWP0RT BEACH, CA 93663 -3884 OFFICE OF THE CITY CLERK (714) 640 -2251 T0: FINANCE DIRECTOR FROM: CITY CLERK DATE: July 11, 1983 i SUBJECT: Contract No. C -2402 Description of Contract Agreement Fixing Fair Share Contribution re Hughes Aircraft Project Effective date of Contract June. 29, 1983 Authorized by Minute Action, approved on June 27, 1983 Contract with Hughes Aircraft Company Address Solid State Products Division 500 Superior Avenue Newport Beach, CA 92663 Amount of Contract See Agreement 4�" Wanda E. Andersen City Clerk WEA:lr attach, 3300 Newport Boulevard, Newport Beach n 0 BY THE CM COUNCIL CITY OF NEWPORT BEACH OFFICE OF THE CITY ATTORNEY JUN 271983 June 21, 1983 Agenda Item No. F-3(g) To: Hon. Mayor & Members of the City Council From: Robert H. Burnham - City Attorney Re: BACKGROUND C- a►4oa. xe ;13aglie (m) On August 24, 1981, the City Council approved a Traffic Atudy and Use Permit authorizing the addition of 110,000 sq. ft. of floor area to the Hughes Aircraft facility located on Superior Avenue. One of the conditions to the approval of the Traffic Study required Hughes to contribute its fair share of the costs to be incurred by the City in improving the intersections at PCH /Superior, PCH /Prospect and PCH /Orange. City staff has reviewed all appropriate data, discussed the matter with representatives of Hughes, and have formulated an agreement which establishes $300,000 as the amount of the fair share contribution required of Hughes. A copy of the proposed agreement is attached to this memorandum. RECOMMENDATION It is recommended that the City Council authorize the Mayor and City Clerk to execute the agreement (Exhibit "A ") with Hughes Aircraft Company, fixing their fair share contribution as $300,000. Rdbert H. Burn1'fam RHB /pr :' _._.. ..... s.. .. .. ��. .: Ya ORIGINAL AGREEMENT THIS AGREEMENT, made this 29 day of TumE , 1983, by and between the CITY OF NEWPORT BEACH, a Municipal Corporation and Charter City (hereinafter "City "), and HUGHES AIRCRAFT COMPANY, a Corporation of the State of Delaware and having its principal place of business at 200 No. Sepulveda Blvd., E1 Segundo, California 90245, (hereinafter "Company ") is made with reference to the following facts, the materiality and existence of which is stipulated and agreed by and between the parties hereto: A. On or about May 1, 1981, Company applied to the City for approval to construct a structure of approximately 110,000 sq. ft., to be built on the site of an existing facility, with the new structure to house office and laboratory facilities (hereinafter project); B. Thereafter, the City determined that, prior to the issuance of permits, certain approvals were required including: 1. The approval of a Use Permit to allow the structure to exceed the basic height limits; 2. The approval of a traffic study conducted pursuant to the traffic phasing ordinance of the City of Newport Beach; and 3. The approval and certification of an environ- mental document; C. On or about July 9, 1981, the Planning Commission of the City of Newport Beach approved the Use Permit, Traffic Study and Environmental documentation, subject to certain condi- tions which are more fully discussed below: D. On or about August 24, 1981, the City Council of the City of Newport Beach reviewed, and approved, the action of the Planning Commission in authorizing construction of the pro- ject subject to conditions of approval; E. The conditions of approval of the project which are relevant to this Agreement relate to certain traffic system im- provements necessary to mitigate the adverse impact of the in- crease in traffic that could be generated by employees of Company that could occupy or use the new facilities. The conditions of approval that relate to traffic system improvements require Company to pay "its fair share" as determined by City to fund necessary traffic system improvements. These improvements must be completed prior to occupancy of the proposed structure, al- though Company can occupy the project prior to completion if a traffic management plan is implemented. The traffic system improvements which are conditions of approval are the following: 1. Pacific Coast Highway & Superior; 2 0 0 2. Pacific Coast Highway & Prospect; 3. Pacific Coast Highway & Orange; F. The parties, by this Agreement, wish to establish the sum of money which will satisfy the "fair share" contribu- tions required by conditions of approval to the project and pro- vide for prompt payment of this sum. The desire of the parties stems from a recognition that each will benefit by fixing the sum at this time and by prompt payment. The benefits accruing to both Company and City stem from the ability of City, if an im- mediate contribution is made by Company, to utilize County funds (appoximately $400,000) to defer expenses incurred in making the intersection improvements thus, reducing the costs to both Com- pany and City costs. The Company also benefits insofar as the costs and expenses that may be incurred in the construction of the required intersection improvements are likely to increase in the future. G. The parties recognize the certain inequities may result from efforts to fix the contribution of Company prior to the actual construction of the improvements, but each believes that the benefits described above far outweigh the possibility that the contribution established by this Agreement will not accurately reflect the "fair share" of Company. 3 0 • NOW, THEREFORE, the parties agree as follows: Costs of Improvements 1. The parties agree that the City's share of the current estimated costs of constructing the intersection improve- ments required of Company is the sum of $1.7 million dollars. This sum has the following components: a) Superior /Pacific Coast Highway $1,400,000. b) Orange /Pacific Coast Highway $150,000. C) Prospect /Pacific Coast Highway $150,000. The parties acknowledge that the estimated costs for intersection improvements include expenditures for right -of -way acquisition, actual construction, and all other costs and ex- penses normally incurred in the construction of intersection improvements. The parties also recognize that certain right -of- way and construction costs associated with the improvement of the Superior /Pacific Coast Highway intersection may be reduced by virtue of the deducation of right -of -way, however, the estimated costs of construction may in fact increase if right -of -way is not dedicated and labor and material costs increase. 2. Calculation of Fair Share Contribution /Payment in Full The parties agree that a precise determination of the "fair share" contribution by Company is impossible because 4 0 0 the extent to which other property owners may be required to contribute to these intersection improvements is unknown at this time and the precise costs to be incurred by City will fluctuate i according to the cost of the right -of -way, the cost of construc- tion materials, and the cost of labor necessary to build the improvements. In view of the difficulty in ascertaining the precise amount which would constitute the "fair share" contribu- tion, the parties have agreed that the sum of $300,000 con - stitutes an amount which, given current information, constitutes Company's fair share. This sum has been derived from information relating to construction costs, contributions from other deve- lopers, and the potential for increased traffic created by the project. City, in consideration of the payment of the sum referenced above, will require no further contributions from Company with respect to the project described above, this not- withstanding the fact that the actual costs of those improvements may exceed the estimates contained in this Agreement or that the City may not receive contributions from other developers whose projects will have an impact on the intersections described in this Agreement. 5 0 0 3. Complilance With Other Conditions The parties agree that, Company will remain obligated to comply with the conditions of approval of the traf- fic study and Use Permit No. 1994 which restrict occupancy of the structure until the traffic intersection improvements described in this Agreement are complete, or until a traffic management plan is successfully implemented by Company. Company may, however, apply for an amendment to Use Permit No. 1994 to allow occupancy prior to completion of the intersection improvements at Pacific Coast Highway /Orange and Pacific Coast Highway /Prospect, in the event that Company can demonstrate that, due to low staffing levels or other factors, the traffic impact of the project was less than anticipated. City does not, by this agreement, commit itself to approve any amendment proposed by Company. 5. Current Project The parties agree that the duties and obligations imposed by this Agreement relate only to the project described in this Agreement and in no way restrict or impair the ability of the City to condition any future project which requires the ap- proval of the City of Newport Beach. 3 ' i • 6. Assignment This Agreement shall be binding upon the assigns and successors -in- interest of City and Company. 7. Entire Agreement This Agreement constitutes the entire agreement of the parties hereto and may be amended only by writing executed by the party to be charged. Any promise, statement or representa- tion made by the parties, or any representative, agent, employer or officer thereof, not contained in this Agreement shall be of no force and effect. 7 Executed the day and year first above written. COMPANY: HUGHES AIRCRAFT COMPANY Solid State Products Division By: W. S. Walker Division Manager CITY: THE CITY OF NEWPORT BEACH By: AZ �4- '4 74 Eve y Har Mayor 1' APPROVED AS TO FORM: "4wk� — o ert H. Burnham City Attorney Im i ;�. .. FY. _ .a�.1. K.1.T: .. .. t ice.: � «. �.. il. } �r `�•.. «. .� .�...L. .L .�LS.��. � .. x. _ .._... .. ...... ...... ---------- - - - -•, -- �i�J //,'004441 i HUGHES ; SOLID STATE PRODUCTS DIVISION I I RUOR[{ AIIIC I�AfT COMPANY 500 SUPERIOR AVENUE • NEWPORT BEACH, CALIFORNIA 92663 • 714.759 -2411 • TWX: 910596 -1374 June 29. 1983 Mr. Robert H. Burnham City Attorney City of Newport Beach 3300 Newport Blvd., Newport Beach, CA 92663 Dear Mr. Burnham: Enclosed are duplicate originals of an Agreement between the City of Newport Beach ( "City ") and Hughes Aircraft Company ( "Company ") regarding the occupancy of a new structure on the Company's Newport Beach property. This Agreement has been duly executed on behalf of the Company by W. S. Walker, Division Manager. Would you please have this Agreement executed on behalf of the City and return one fully executed copy to us. Also enclosed is the Company's check for $300,000 as payment in full of the Company's obligation as set forth in the Agreement. You are authorized to deposit this check as soon as the Agreement has been fully executed by the City and one copy mailed to us. We thank you very much for your kind assistance in bringing this matter to a satisfactory conclusion and look forward to a long and pleasant relationship with the City of Newport Beach. Sincerely, HUGHES AIRCRAFT COMPANY Solid State Products Division W. K. Weakland Assistant Division Manager Encl. Check $300,000 E Agreement