BACKGROUND:
Tentative Tract Map No. 28561, for the development of a 276 single family lot Planned Unit Development (PUD 97-4) in the Rio Del Sol Development, was approved by City Council in September 1997. The planned development was on a 50-acre parcel of Indian allottee land, located south of Gerald Ford Drive, opposite Plumley Road.
The first increment of this map, Tract 28561-1, which consisted of 127 lots, was recorded in September 2002 by the lessee subdividers, DME LLC, and RDS Villages, LLC. In October 2003, the same subdividers recorded the second and final increment of this tentative map, Tract 28561, of 159 lots. This second map re-subdivided several lots within the first map, and after a number of lot line adjustments and mergers, a total of 270 lots were available for development.
Subdivision Agreements and improvement securities were posted to guarantee completion of all public and private improvements in both Tracts.
The original subdividers experienced financial difficulties and market problems, and construction stopped. As a result, the required street and infrastructure improvements were only partially completed, and the original subdividers eventually were foreclosed upon and lost the property.
The remaining vacant lots of the unfinished tracts went through several bank ownerships, and respectively, several private developers made attempts to revive the development, but none were successful in moving a project forward. A total of 56 lots were eventually completed with single family homes.
Over a period of time, Holt Opportunity Fund (Parallel-1), 2013, LP, a Delaware limited partnership (“Holt”), eventually assumed the subleases on all the vacant lots, and have been working diligently on plans to complete the original PUD development by building out the vacant lots in four phases, which they refer to as Montecito (57 lots), Palazzo (73 lots), Espana (28 lots) and Elements (56 lots).
Holt submitted an amendment to the original PUD plan, to allow changes in some property line to structure setbacks, which were approved by the Planning Commission in June 2018. The proposed floor plans and building elevations for the four (4) new phases were found to be consistent in material and scale and complimentary to the existing Rio Del Sol homes.
Holt executed two Improvement Agreements, one for the Montecito area and one for the Palazzo area, which were approved by City Council in October 2019. In these Agreements, Holt agreed to complete the missing public and private improvements in each phase within 24 months of the Council approval and prior to issuance of occupancy permits on any of the new homes proposed within each phase. Those improvements consist generally of the capping, repair or construction of private streets, installation of sewer and water systems, utilities, drainage systems, and landscaping and irrigation, and the setting of final survey monuments and property corners.
As was done for the DR Horton Project in Rio Vista/Verano area, the two Improvement Agreements provided that improvement securities were to be posted prior to the City’s issuance of a Certificate of Occupancy on any of the lots in either phase. The two Agreements were very similar to the City’s standard Subdivision Agreement, except that the Tract Maps have already been recorded.
Holt’s efforts to move ahead were further delayed, however, due to difficulty in finding a builder and difficulty clearing title to the many subleases involved through the Bureau of Indian Affairs. As a result, although both Agreements are still in effect, no building permits in either the Montecito or Palazzo areas, or any other phases have been issued.
DISCUSSION:
Assignment and Assumption Agreements:
Holt Opportunity Fund made a business decision to transfer all its holdings in Rio Del Sol to RDS Development, LLC, a California limited liability company (RDS), a wholly owned subsidiary of Holt. Since this involved Indian allottee land, approval of this transfer and modification of the Indian business leases required the approval of the Bureau of Indian Affairs (BIA). This transfer and approval also took some time and was finally approved by the BIA.
Since ownership of the land has changed, respectively, the principal on each of the Improvement Agreements must be changed from Holt to RDS. Per the terms of the Agreements, when such a change in ownership occurs, an Assignment and Assumption must be executed and approved by the new owner.
Two separate Assignment and Assumption Agreements (Assignment Agreements) have been prepared and executed by both parties: Holt and RDS. In these Assignment Agreements, Holt assigns all of its rights and obligations under the Improvement Agreements to RDA, and RDA accepts and assumes those obligations in place of Holt.
Also in the two Assignment Agreements, the terms of the original Assignment Agreements have been extended by another two (2) years. This requires the new principal, RDS, to complete the required improvements in each phase within two (2) years of the date of approval of these Assignment Agreements by the City Council.
As in the existing Improvement Agreements, RDS agrees that prior to the final inspection of any new dwelling unit in either phase or approval of an occupancy permit, RDS will post improvement securities in the amounts specified in the Assignment Agreements, as a guarantee of the completion of the required improvements.
Environmental Summary:
During previous plan and time extension reviews and the current action today, it has Commented [KF1]: Isn't this dependent on
Council approval first?
Commented [JC2R2]: Good catch, deleted
City in sentence.
been determined that since the approval of the original CEQA Negative Declaration for the Tentative Tract and PUD, there have been no substantial changes to the overall Project, no new significant environmental effects, no substantial increase in the severity of any previously identified impacts, and no new information of substantial importance which would modify the conclusions reached in the original Negative Declaration.
Staff is requesting that the City Council approval an Assignment of the Improvement Agreement with Holt Opportunity Fund, LP, executed on December 12, 2019, for improvements in the Montecito village portion of the Rio Del Sol development, to RDS Development, LLC; and, to approve the Assignment of the Improvement Agreement with Holt Opportunity Fund, LP, executed on December 12, 2019, for improvements in the Palazzo village portion of the Rio Del Sol development, to RDS Development, LLC; and, to authorize the City Manager and City Clerk to execute the Assignments on behalf of the City in a form approved by the City Attorney.
FISCAL IMPACT:
There is no fiscal impact to the City as a result of this action.
Commented [KF3]: This is a very well
written staff report, I am just wondering if it will not lead to various Council questions on the project.
Do we plan to do a presentation that will answer
these questions, or can we add this project
update here to avoid the questions altogether?
For example, we end the background section by
saying no building permits have been issued, I
think this might lead Council to ask, well when will
this project move forward? Can the City do
anything to help?