Administrative
Report
H.8., File # 23-5615 Meeting Date: 2/21/2023
To: MAYOR AND CITY COUNCIL
From: TED SEMAAN, PUBLIC WORKS DIRECTOR
TITLE
APPROVE AMENDMENT NO. 3 TO THE EXCHANGE AND EASEMENT AGREEMENT WITH
SOUTH BAY CENTER SPE, LLC AND SOUTH BAY ASSOCIATES SPE, LLC (THE SOUTH BAY
GALLERIA) REFLECTING CHANGES TO THE REQUIREMENTS FOR COMPLETING THE
CLOSING OF ESCROW FOR THE TRANSIT CENTER PROPERTIES
EXECUTIVE SUMMARY
The City is party to a set of agreements with South Bay Center SPE, LLC and South Bay Associates SPE, LLC, the ownership group of the South Bay Galleria (Galleria), pertaining to the real estate exchange envisioned in conjunction with the completion and commissioning of the City’s new Transit Center. In the exchange, the Galleria will gain title to a City owned parcel adjacent to the Galleria parking structure along Kingsdale Avenue and the City will gain title to a Galleria owned parcel that underlies a portion of the new Transit Center facility.
The escrow conditions required to finalize the property exchange need modifications to allow the Galleria to finalize the tract map related to their approved redevelopment. The changes benefit the City in that they reduce the City’s obligations regarding demolition and restoration of the site used by the former transit center. There is no cost associated with the modifications to the Agreement and staff recommends approving Amendment No. 3 to the Exchange and Easement Agreement.
BACKGROUND
On June 1, 2013, the City Council approved an Exchange and Easement Agreement regarding the property exchange, which was amended on May 15, 2018, and again on March 16, 2021. The omnibus amendment, approved in 2021, amended the Exchange and Easement Agreement to reflect changes in the Galleria’s lender, loan documents and mortgage and to extend the Ground Lease term.
Amendment No. 3 to the Exchange and Easement Agreement reflects slight changes, which include a change to the date of the Step Two closing and conditions associated with said closing, most notably that the closing may take place prior to the City’s completion of Phase 2 of the project.
Phase 2 of the project includes demolition of the former transit center, restoration of the area for future use, and widening of the portion of Kingsdale Avenue adjacent to the former transit center.
The City’s obligations regarding demolition will be reduced to the portion of the former transit center west of the parking structure. Portions of the former transit center under the existing parking structure will be assumed by the Galleria when the Galleria commences work on its’ redevelopment
H.8., File # 23-5615 Meeting Date: 2/21/2023
project.
Pursuant to the terms of the proposed amendment, the City will install an interim sidewalk and landscaping, which the Galleria will replace with final pathway and landscaping after installation of required buried utility work. These changes will allow Phase 2 of the City project to be completed faster and with a slight reduction in cost. The Galleria is obliged to grant the City access to the newly exchanged parcel to complete this work.
COORDINATION
The preparation and review of Amendment No. 3 to the Exchange and Easement Agreement was coordinated between the Public Works Department and the City Attorney’s Office.
FISCAL IMPACT
There is no immediately measurable financial impact resulting from approval of Amendment No. 3 to the Exchange and Easement Agreement. The City’s portion of the (Phase 2) project costs for the demolition of the past transit center facility and the widening of Kingsdale Avenue are expected to be reduced as a result of the Amendment.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Agmt - Third Amendment to the Agreement with South Bay Associates SPE, LLC. · Agmt - Second Amendment to the Agreement with South Bay Associates SPE, LLC., March 16, 2021
· Agmt - First Amendment to the Agreement with South Bay Associates SPE, LLC., May 15, 2018
· Agmt - Original Exchange and Easement Agreement with South Bay Associates SPE, LLC., June 1, 2013