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RESOLUTION NO. 2014-096 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE FORM OF THE RE-ASSIGNMENT OF THE MASTER DEVELOPER ON THE MILLENIA PROJECT PER THE CITY COUNCIL APPROVED DEVELOPMENT AGREEMENT
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RECOMMENDED ACTION
Recommended Action
Council adopt the resolution.
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SUMMARY
On September 19, 2009, the City Council approved the Millenia project (formerly the Eastern Urban Center). This mixed use, high intensity, transit-oriented project is the focal point for the Otay Ranch Community. As part of the project entitlements, the Council approved a Development Agreement for the project with the Master Developer, McMillin Otay Ranch, LLC and included a requirement that the City consent to any re-assignment of the role of Master Developer.
In February 2011, the City Manager approved a re-assignment of the Master Developer of the Millenia Project. Sponsored by the Dallas based Stratford Company, the private equity fund Stratford Land Fund IV (SLF IV) formed a joint venture with McMillin to take over the obligations of the Development Agreement. Based on staff’s review of their financial information at the time, the re-assignment was approved because the joint venture had enhanced financial capacity to fulfill the obligations of the Master Developer under the Development Agreement.
Recently, the City was approached by McMillin on behalf of the joint venture to request the re-assignment of the role of Master Developer to a new entity, AC Millenia Chula Vista Owner, L.P. (c/o Ambient Communities, L.L.C.), with the financial backing of the Walton Street Capital. The joint venture’s name, AC Millenia Chula Vista Owner, L.P., may change prior to deed recordation but the partners will remain the same.
Based on staff’s review of Walton Street’s Part 2A of Form ADV filing with the United States Securities and Exchange Commission (SEC) and the May 30, 2014 correspondence from Assignee to City Manager Jim Sandoval confirming commitments from its limited partners to make capital contributions, the new Master Developer appears to have the financial capacity to fulfill the obligations under the approved Development Agreement. Staff further believes that Ambient Communities and Walton Street will be beneficial to the realization of the Millenia plan for the following reasons:
• The Ambient Communities management team are all former McMillin executives with a proven track record of completing quality developments; and
• The financial support of Walton Street brings a financial partner with a long term approach to investing in quality communities.
ENVIRONMENTAL REVIEW
The Development Services Director has determined that approval of the re-assignment of the Master Developer under the Development Agreement is not a project as defined under Section 15378(b)(5) of the California Environmental Quality Act (CEQA) Guidelines because the action involves only an organizational or administrative activity of government that will not result in a direct or indirect physical change in the environmental; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA.
BOARD/COMMISSION RECOMMENDATION
Not Applicable
DISCUSSION
Based on City Staff’s review of the financial and performance capabilities of proposed the Master Developer team, we recommend City Council approval of the Development Agreement re-assignment.
In addition to the qualifications of the new development team, they have moved forward to retain key project managers, consultants, and field personnel from the current McMillin team to insure continuity in ongoing construction and permit processing. The new Master Developer has further proposed a more aggressive schedule to their plans for future development and expressed a desire to move into Phase II of their project grading and public improvement permitting and construction soon.
DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council and has found no property holdings within 500 feet of the boundaries of the property which is the subject of this action. Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter.
LINK TO STRATEGIC GOALS
The City’s Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. The reassignment of the Master Developer supports the Operational Excellence goal as it seeks the realization of the Millenia project with a management team that has a proven track record of completing quality developments and a financial partner with a long term approach to investing in quality communities.
CURRENT YEAR FISCAL IMPACT
There is no impact to the General Fund. Developer will cover all costs and fees associated with the re-assignment of the Master Developer.
ONGOING FISCAL IMPACT
There is no impact to the General Fund. Developers, its agents, or successor in interest, are responsible for any costs related to the execution of the re-assignment of the Master Developer.
ATTACHMENTS
1. Assignment of Development Agreement, Parks Agreement, Interim Desiltation Agreement, Subdivision Improvement Agreement, Supplemental Subdivision Improvement Agreement, Easement Agreement, and Three-Party Park Design Agreement.
2. Assignment of Affordable Housing Transfer Agreement
SUBMITTED BY: Kelly Broughton, Development Services Director
Maria Kachadoorian, Finance Director