1 STAFF REPORT
DATE: August 8, 2023
TO: Justin Hess, City Manager
FROM: Patrick Prescott, Community Development Director VIA: Fred Ramirez, Assistant Community Development Director, Planning Scott Plambaeck, Planning Manager
BY: Greg Mirza-Avakyan, Associate Planner
SUBJECT: Adoption of a Resolution Consenting to the Transfer of the Development Agreement (PD 94 -8) from Warner Bros. Entertainment Inc. to Ranch Lot Studios Owner, LLC for the Warner Brothers Ranch Lot at 3701 Oak Street
RECOMMENDATION
Adopt A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK CONSENTING
TO THE TRANSFER OF THE RANCH LOT DEVELOPMENT AGREEMENT FROM WARNER BROS. ENTERTAINMENT INC. TO RANCH LOT STUDIOS OWNER, LLC FOR THE WARNER BROTHERS RANCH LOT AT 3701 OAK STREET (Attachment 1).
BACKGROUND
On August 25, 2023, Ranch Lot Studios Owner, LLC (“Assignee”), a joint venture of Stockbridge Real Estate Fund III and M. David Paul Ventures, LLC (“Worthe”) will complete the purchase and sale transactions of the Warner Brothers Ranch Lot (“Ranch Lot”) located on 3701 Oak Street (Attachment 6). The transfer of the Ranch Lot to the Assignee will include all development rights and obligations under the Ranch Lot Development Agreement (DA) and the property’s Planned Development ( PD) 94-8 zoning. Warner Bros. submitted a letter to the City of Burbank on June 26, 2023, requesting consent from the City to transfer the property and entitlements to Ranch Lot Studios Owner, LLC (Attachment 2).
The DA does not allow War ner Bros. to transfer the entirety of the ent itlements without consent of the City . Also, the DA indicates that the City is limited in withholding its consent. Specifically, on page 5 the DA (Attachment 3) reads as follows:
COMMUNITY
DEVELOPMENT
2 §1.4 Developer may assign less than the entirety of its interests, rights , or obligations hereunder without prior written consent of the City. However, the Developer shall not assign or transfer the entirety of its interests, rights, or obligations under this Agreement to any unrelated third party without the prior written consent of the City, which consent shall not be withheld or delayed if both the financial condition and credit of the proposed assignee or transferee are reasonably satisfactory to the City and the Developer is not in default under this Agreement. Express assumption of the Developer’s obligations under this Agreement by any such third- party assignee shall relieve the Developer from such obligations.
DISCUSSION
The Assignee has submitted documentation addressing their financial conditions , credit, and ability to complete the project as outlined in the Master Plan (Attachment 5). Staff has reviewed the qualifications and is familiar with work they have already completed within the City, including, but not limited to the projects at The Pointe (2900 W Alameda Avenue), The Pinnacle (3400 W. Olive Avenue), Media Studios North (3101 Empire Avenue), and the Frank Gehry designed Second Century Project (100-200 South California Street). The Assignee develops high-quality commercial projects, including those in the media and entertainment industry . Based on the City’s review, it is apparent that the Assignee possesses ample experience and financial resources as required for the assignment of the DA.
As §1.4 of the DA also requires, Warner Bros. may not be in default under this Agreement before transfer of the DA can be made. Council reviews development agreements annually; the Warner Brothers Ranch lot DA was part of this review on April 4, 2023. At that ti me, the report did not indicate that Warner Bros. was in default of the DA.
Circumstances have not changed in the last four months, nor has staff issued a notice of default of the DA, and therefore, Warner Bros. is not in default of the DA. This representation has already been made to Warner Bros. through an E stoppel Certificate, which they requested in accordance with §7.15 of the DA (page 27 of Attachment 3). Part of that administrative obligation was for the Community Development Director to confirm that the DA is in full force (Attachment 4), that the agreement has not been modified, and that the requesting party, Warner Bros., was not in default of the DA. This certificate was required to be provided within 15 days of the receipt of the request, which was submitted on July 25, 2023.
Use of Property
Warner Bros. states that they intend on leasing the property back from the Assignee for the foreseeable future.
The DA approved 749,000 square feet of net new office-equivalency gross square feet of development on the Ranch Lot site. The DA limits the use of the property to studio office uses, p roduction-related studio uses (including sound stage, storage, workshop, and operations), as well as related parking lots and structures (page 40 of Attachment 3). The DA for PD 94 -8 is a component of the Warner Bros. Studios Master Plan, which also includes the Warner Brothers Main Lot (PD 94- 7). The purpose of the Master Plan is to 3 meet Warner Bros.’ immediate and critical need for more sound stage, production , and media office facilities.
In 2022, the City received an application for the redevelopment of the Ranch Lot with 16 sound stages totaling 311,958 square feet, 131,928 square feet of studio operations space, 62,445 square feet of back lot support/mill structures, and 295,971 square feet of creative office space. Warner Bros. is currently in the process of finalizing the plan check process in anticipation of building permit issuance before the end of 2023, with an anticipated completion in late 2025/early 2026.
ENVIRONMENTAL IMPACT
The assignment of the DA is not a “Project” under California Environmental Quality Act (CEQA) Guidelines Section 15378, subs ection(b)(5). The organization or administrative activities of government that will not result in direct or indirect physical changes in the environment are not considered “Projects,” and therefore are not subject to the requirements of the California Environmental Quality Act (CEQA). The Assignee will be assuming all obligations under the DA, including all mitigation measures included therein.
FISCAL IMPACT
There is no General Fund fiscal impact by adopting the Resolution to transfer the DA (PD 94-8) from Warner Bros. Entertainment Inc. to Ranch Lot Studios Owner, LLC for the Ranch Lot at 3701 Oak Street.
CONCLUSION
The City is contractually required to act reasonably in consideration of the request for assignment of the DA. Staff believes all the requirements for a transfer are met and therefore recommends that Council adopt a resolution approving the assignment of the DA from Warner Bros. to Ranch Lot Studios Owner, LLC. If approved, the Assignee will assume all the obligations and responsibilities under the DA and PD. Specifically, the Assignee will be required to meet all the conditions of approval, construct all required mitigation measures during development of the project, and construct the project in accordance with the original Master Plan approval.
ATTACHMENTS
Attachment 1 – Resolution
Attachment 2 – Letter from Warner Brothers Entertainment, Inc. Requesting Assignment of Development Agreement to Ranch Lot Studios Owner, LLC
Attachment 3 – Development Agreement
Attachment 4 – City Council Ordinance No. 3808 Extending Development Agreement Attachment 5 – Documentation from Worthe Real Estate Group Regarding Qualifications and Financial Condition
Attachment 6 – Aerial Map