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CITY COUNCIL AGENDA REPORT
City of Anaheim
PLANNING AND BUILDING DEPARTMENT
DATE: DECEMBER 5, 2023
FROM: PLANNING AND BUILDING DEPARTMENT
SUBJECT: ANNUAL REVIEW OF DEVELOPMENT AGREEMENT
NO. 99-01 FOR THE ANAHEIM GARDENWALK PROJECT
ATTACHMENT (Y/N): YES ITEM # 08
GOVERNMENT CODE § 84308 APPLIES: NO
RECOMMENDATION:
That the City Council, by Motion, determine, on the basis of the evidence submitted by STC GardenWalk LLC; GardenWalk Hotel I, LLC; and, Westgate Resorts Anaheim, LLC, that the Anaheim GardenWalk Project is not in compliance with the terms and conditions of Development Agreement No. 99-01 for the 2023 review period, and direct staff to provide notice of City Council’s intent to establish new development timeframes at a noticed public hearing.
DISCUSSION:
A Development Agreement is a contract between the City and property owner that provides certainty to the developer that the approved project will be exempt from future changes to zoning laws and requires the developer to provide benefits to the City in exchange for that certainty. In June 1999, the City of Anaheim and Pointe Anaheim, LLC executed Development Agreement No. 99-01 (Agreement), which governs the development of the Anaheim GardenWalk Project. The Agreement is included as Attachment 5.
The Anaheim GardenWalk Project is a specialty retail, dining, and entertainment center integrated with multiple hotels and a transportation center, on approximately
20.3-acres, located between Katella Avenue and Disney Way, west of Clementine Street. At full build-out, the project would consist of up to 439,600 square feet of retail, dining, and entertainment uses; a 3,200-space parking structure and transportation center; three hotels with up to 1,266 hotel rooms (including up to 400 vacation ownership units); and up to 216,820 square feet of hotel accessory uses.
Attachment 1 provides a Map Exhibit identifying the project area and each component of the project.
Anaheim GardenWalk Development Agreement (Annual Review) December 5, 2023
Following the execution of the Agreement, the original developer, Pointe Anaheim, LLC, and its successors in interest, subsequently assigned the Agreement to other responsible parties: STC GardenWalk LLC; GardenWalk Hotel I, LLC; and Westgate Resorts Anaheim, LLC. These three parties are each the property owner for their respective components of the Anaheim GardenWalk Project. In addition, the City Council approved subsequent amendments to the Agreement in February 2002, December 2004, January 2006, April 2006, March 2010, July 2011, August 2011, June 2013, and June 2019. In general, the amendments include modifications to the scope of development based on market realities and extended performance dates to reflect anticipated construction timetables.
Pursuant to the Agreement, the City Council is required to determine annually if the property owners have complied in good faith with the terms and conditions of the Agreement.
Demonstration of good faith compliance includes conformance with all terms and timing schedules set forth in the Agreement. If the Council finds that the property owner has demonstrated good faith compliance, the review for that period is complete. City staff has received Annual Review letters, which summarize each property owner’s status or activities undertaken to maintain good faith compliance with the obligations of the Agreement for the 2023 review period (Attachment Nos. 2, 3, and 4).
STC GardenWalk, LLC is responsible for the retail, dining, and entertainment center, the transportation center, and the parking structure components of the Anaheim GardenWalk project.
The public benefits provided by the Agreement included traffic improvements within The Anaheim Resort and a Police Substation within the Project, which were completed with the construction of the retail concourse. There are no outstanding obligations under the Agreement for STC GardenWalk, LLC.
GardenWalk Hotel I, LLC is responsible for the development of two hotels within the Anaheim GardenWalk Project. Construction of the first hotel, the 466-room JW Marriott Anaheim Resort, was completed and opened in August 2020. The Agreement, which the City Council previously extended by one year due to the COVID-19 pandemic, requires the second hotel to commence construction by November 12, 2023, and open by May 12, 2026. GardenWalk Hotel I, LLC indicates in their letter of request (Attachment No. 3) that they have been diligently working with potential hotel brands and have completed potential layouts for the proposed hotel. However, due to the current financing market, they will not be able to commence construction at this time. In order to continue compliance with the Agreement, the applicant has submitted an application to amend the timeframes for performance by two additional years.
Westgate Resorts Anaheim, LLC is responsible for the development of a 399-unit vacation ownership resort, which the developer will construct on top of the existing parking structure. The Agreement required the developer to obtain a building permit for construction of the timeshare resort by December 31, 2019; the developer did obtain a building permit on December 27, 2019.
The Agreement, which the City Council previously extended by two years due to the COVID-19 pandemic, requires that the developer complete construction and open for business by December 27, 2023. Westgate Resorts Anaheim, LLC submitted a letter to the City (Attachment No. 4) on October 23, 2023 requesting additional time under the force majeure clause due to the COVID- Anaheim GardenWalk Development Agreement (Annual Review) December 5, 2023
19 pandemic. The applicant subsequently submitted an application to amend the Agreement to amend the timeframes for performance by one additional year.
Staff confirmed that STC GardenWalk, LLC has complied with their obligations under the Agreement. Staff acknowledges that GardenWalk Hotel I, LLC is recently out of compliance, and Westgate Resorts Anaheim, LLC is soon to be out of compliance, with the development timeframes stipulated in the Agreement; however, both parties have submitted applications to amend the Agreement to extend the timing associated with the development milestones. The City’s Development Agreement Procedures Resolutions (Resolution No. 82R-565) provides that, in this instance, the City Council may, in lieu of amending the Agreement, establish a new time schedule for compliance. Therefore, staff recommends that the City Council determine that the property owners have not complied with the terms and conditions of the Agreement for this review period and direct staff to provide notice of City Council’s intent to establish new development timeframes at a subsequently-noticed public hearing to be held within 45 days after such notice is provided.
IMPACT ON BUDGET:
There is no budgetary impact. The property owners are paying the cost of this annual review.
Respectfully submitted,
Ted White
Director of Planning and Building
Attachments:
1. Map Exhibit
2. STC Management Annual Review Letter
3. GardenWalk Hotel Annual Review Letter
4. Westgate Resorts Anaheim Annual Review Letter
5. Development Agreement No. 99-01 and Amendments