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Staff Report
City Council
Item No. 3.K
Meeting Date: January 11, 2023
From: John Corella, Director of Engineering/Public Works Title: Escena Tracts 32557 and 32558: Approval of Termination, Release and Assumption (TRA) Agreements with Palm Springs Classic LLC (Lennar Homes) and EMP1, LLC, approval of new Subdivision Improvement Agreements for Completion of
Improvements with EMP1, LLC, and approval of Amendment
No. 9 to Subdivision Agreement for Tract 32558 with Palm Springs Classic LLC
City Council
RECOMMENDATION:
To approve the Subdivision Improvement Agreements with EMP1, LLC, for the completion of improvements in Tracts 32557 and 32558; approve the Transfer, Release and Assumption Agreements (TRA) with EMP1, LLC and Palm Springs Classic, LLC for Tract 32557 and portions of Tract 32558; approve Amendment No. 9 to the original Subdivision Agreement for Tract 32558 with Palm Springs Classic LLC; and, authorize the execution of all the above agreements by the City Manager and City Clerk, on behalf of the City.
BACKGROUND:
Tentative Tracts 32557 and 32558 were approved by the City Council in January 2005, for two small residential subdivisions located north of the Dream Homes area. Tract 32557 consists of 11 residential lots, and Tract 32558 consists of 41 residential lots. Both tracts are proposed to be a part of the Escena Country Club development in Palm Springs, with access directly connected to the Escena community. A vicinity map is attached.
The subdivider in 2005 was Palm Springs Class ic, LLC, a subsidiary of Lennar Homes. Both maps were approved by City Council and were recorded on December 5, 2005.
Work was started on the two tracts . Rough grading was completed, walls surrounding the two tracts were constructed, a large Riverside County Flood Control District storm drain was extended through each tract, and Diamond Road was extended north from the Dream Homes area to provide access to the vacant land between the two tracts.
No building permits were issued for new homes in either of the two tracts, and work stopped for a lengthy period. The original subdivider, Palm Springs Classic, LLC, cited financial difficulties
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and declining market conditions, and requested an extension of the Subdivision Agreements for the two tracts. As p rovided in the Agreements, the extension s were allowed, subject to City Manager approval by means of an amendment to each Subdivision Agreement.
The two tracts remained uncompleted, and Palm Springs Classic , LLC, continued to request extensions of the subdivision agreements.
In April 2009, New Valley PS, LLC, took ownership of the two tracts through foreclosure, but by agreement, Palm Springs Classic , LLC retained the construction obligations under the existing Subdivision Agreements and the obligatio n to keep the subdivision securities and bonds in force.
Eventually, eight separate extension amendments were approved for the tracts , the last one, Amendment No. 8, being approved in June 2021. The Subdivision Agreements were kept in force by means of the amendments and the respective surety bonds posted to guarantee completion of the work.
DISCUSSION:
New Valley PS, LLC, the successor owner of the two tracts, finally sold both tracts to EMP1 , LLC, of Newport Beach, in October of 2021. As part of the sale agreement, EMP1, LLC, was to take over the subdivision agreements from Palm Springs Classic and build the homes and private street improvements in each tract. Since Diamond Road was never finished or accepted, Palm Springs Classic retained resp onsibility to complete the Diamond Road improvements to City standards.
Termination, Release and Assumption Agreements for each tract have been drafted and executed by all parties. In these agreements, EMP1 , LLC agrees to assume the obligations under th e original Subdivision Agreements from Palm Springs Classic, LLC and agrees to execute new Subdivision Improvement Agreements for each tract, respectively, secured by new surety bonds. Upon execution of the new Subdivision Agreements and posting new bonds, the City agrees to release the old securities posted by Palm Springs Classic, LLC and release Palm Springs Classic, LLC from their previous Subdivision Agreement obligations.
Notwithstanding, Palm Springs Classic, LLC will retain the obligation to comple te the Diamond Road construction improvements as part of its Tract 32558 obligations . Amendment No. 9 has been prepared to amend the original Subdivision Agreement to cover only the Diamond Road work and requires new bonds be posted by Palm Springs Classic, LLC specifically for this work.
Palm Springs Classic, LLC and EMP1, LLC have executed the required agreements and have posted the required improvement bonds and securities , respectively . All missing survey monuments will be installed in the two tracts and this work is secured by posted cash bonds.
Copies of both the Termination, Release and Assumption Agreements , the new Subdivision Agreements with EMP1, and reduced copy of each tract map, respectively are attached.
Environmental Summary:
Both Ten tative Tracts 32557 and 32558 were reviewed and received approval of Mitigated Negative Declarations when originally processed . Since the original approval of these maps, there have been no substantial changes to the overall project, no new significant en vironmental 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 Declarations.
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FISCAL IMPACT:
There are no fiscal impacts related to approving these agreements.
ATTACHMENTS:
Escena Tracts 32557 and 32558 Vicinity Map
Map of Tract 32557
Map of Tract 32558
Tract 32557 Termination, Release and Assumption Agreement Tract 32558 Terminaton, Release and Assumption Ageement Tract 32557 EMP1 New Subdivision Improvement Agreement and Bonds Tract 32558 EMP1 New Subdivision Improvement Agreement and Bonds Tract 32558 Amendment No 9 and Bonds