City Council Memorandum
TO: HONORABLE MAYOR AND CITY COUNCIL DATE: DECEMBER 12, 2023 FROM: PUBLIC UTILITIES DEPARTMENT WARDS: ALL
SUBJECT: FIRST AMENDMENT TO NON-EXCLUSIVE LICENSE AGREEMENT WITH GRAND CANAL TOWNHOMES ASSOCIATION, AS SUCCESSOR IN INTEREST TO DULCE VIDA, A CALIFORNIA LIMITED LIABILITY COMPANY FOR USE OF CITY OWNED PROPERTY LOCATED EAST OF CANAL STREET NORTH OF TERRACE PINES DRIVE, GRAND TERRACE, CALIFORNIA ISSUE:
Approval of a First Amendment to Non-Exclusive License Agreement with Grand Canal Townhomes Association, as Successor in Interest to Dulce Vida, a California limited liability company for use of City owned property located East of Canal Street, North of Terrace Pines Drive, Grand Terrace, California.
RECOMMENDATIONS:
That the City Council:
Approve the First Amendment to Non-Exclusive License Agreement with Grand Canal Townhomes Association, as Successor in Interest to Dulce Vida, a California limited liability Company for use of City owned Property located East of Canal Street, North of Terrace Pines Drive, Grand Terrace, California; and Authorize the City Manager, or designee, to execute the agreement, including making minor non-substantive changes, and to sign all documents necessary to complete the transaction.
BOARD RECOMMENDATION:
On October 23, 2023, the Board of Public Utilities, with two Board members absent, unanimously voted to recommend that City Council approve the First Amendment to Non-Exclusive License Agreement with Grand Canal Townhomes Association, as Successor in Interest to Dulce Vida, a California limited liability Company for use of City owned Property located East of Canal Street, North of Terrace Pines Drive, Grand Terrace, California.
BACKGROUND:
The City, through its Public Utilities Department, owns the Gage Canal (“Canal”), operated by the Gage Canal Company. A Developer formerly known as Dulce Vida, the previous owner of property adjacent to the Canal constructed a 42-townhome development and was granted a License Agreement with the City for a term of twenty-five years beginning on the effective date of the License, which is November 8, 2006 to October 31, 2031. The License Agreement will automatically extend for an additional period of three 10-year terms for the use of approximately 16,500 square feet of the Canal for the construction of utilities and as ingress and egress onto the otherwise landlocked development.
In July 2008, Temecula Valley Bank, the Developer’s lender, foreclosed and took possession of the development and the Grand Canal Townhomes Associations (“HOA”), assigning bank personnel as officers of the HOA. The previously recorded Covenant Agreement and Declaration of Maintenance and Use Obligations advise current and future HOA property owners of their obligation to maintain the Canal property and that the Canal cannot be redesigned for another use without City and Gage Canal Company approval.
In June 2022, staff performed an audit of all Public Utilities License Agreements and reviewed the monthly rental rate of $300.98 for Grand Canal Townhomes. It was discovered that Grand Canal Townhomes had not been invoiced for the annual 5% increase per the Non-Exclusive License Agreement since 2009.
On June 27, 2022, City staff contacted Grand Canal Townhomes Association through their Property Management firm Equity Management and based on the review of annual increase adjustments, City staff requested Grand Canal Townhomes Association to pay the correct monthly payment amount beginning in August 2022 and a total underpaid amount of $10,093.47.
In February 2023, City Attorney staff began negotiations with Grand Canal Townhomes Association general counsel to address the total underpaid amount. A First Amendment to the Non-Exclusive License Agreement was proposed to memorialize the amended terms of the License Agreement and the amended monthly license fee.
DISCUSSION:
Staff has reviewed the proposed First Amendment to the Non-Exclusive License Agreement and recommends approval. The basic deal points of the First Amendment are summarized below:
Section 4: Consideration will be amended in its entirety as follows:
As consideration for use of the licensed Premises Licensee will pay to City a license fee in the amount of Five Hundred Sixty-Seven Dollars and Thirteen Cents ($567.13) per month. Licensee will have a one-time credit of Nine Thousand Two Hundred Ninety-Five Dollars and Seventy-One Cents ($9,295.71) which will be applied to its monthly license fee payments until expended.
Section 4(a), the monthly rent will be increased on each year with the payment due on November 1 by an amount equal to five percent (5%) of such monthly rent.
The monthly license fee will be paid by check made payable to the City of Riverside and sent to the City of Riverside, Central Cashiering City Hall, 3900 Main Street, Riverside California 92522.
If Licensee fails to pay the monthly license fee by the tenth 10th day of the month in which it is due Licensee agrees that the actual damage to the City would be impracticable or extremely difficult to determine. Therefore, Licensee agrees to pay a late fee equal to ten percent (10%) of the monthly license fee which amount shall be added to the license fee due and considered part of the license fee due City hereunder.
It is agreed that this First Amendment embodies the entire agreement between the parties hereto on the subject matter hereof and that their agreement or understanding, verbal or otherwise, relative to this subject matter exists between the parties hereto at the time of execution.
All other terms and conditions of the Agreement between the parties, which are not inconsistent with the terms of this First Amendment, shall remain in full force and effect as if fully set forth herein.
STRATEGIC PLAN ALIGNMENT:
This item contributes to Strategic Priority 5 – High Performing Government, specifically Goal 5.4 – Achieve and maintain financial health by addressing gaps between revenues and expenditures and aligning resources with strategic priorities to yield the greatest impact.
The item aligns with each of the five Cross-Cutting Threads as follows:
Community Trust – The City is transparent and makes decisions based on sound policy, inclusive community engagement, involvement of City Boards & Commissions, and timely and reliable information. By approving the Amendment, the City serves the public interest and benefits the City’s diverse populations within and outside the City limits which results in greater public good.
Equity – The City supports racial, ethnic, religious, sexual orientation, identity, geographic, and other attributes of diversity and is committed to advancing the fairness of treatment, recognition of rights, and equitable distribution of services to ensure every member of the community has equal access to share the benefits of community progress. Approving the Amendment shows that the City is fair and equitable.
Fiscal Responsibility – The City is a prudent steward of public funds and ensures responsible management of the City’s financial resources while providing quality public services to all. Approving the Amendment will continue to generate revenue for the City.
Innovation – The City is inventive and timely in meeting the community’s changing needs and prepares for the future through collaborative partnerships and adaptive processes. Approving the Amendment ensures that the property will be available in the future.
Sustainability & Resiliency – The City is committed to meeting the needs of the present without compromising the needs of the future and ensuring the City’s capacity to persevere, adapt and grow during good and difficult times alike.
FISCAL IMPACT:
The total fiscal impact of the license revenue over the remaining license term of September 1, 2023, through October 31, 2031, is estimated to be $60,074.95 (total revenue $69,370.66 minus credit of $9,295.71). All revenue will be deposited into the Water Fund, Land & Building Rental Revenue Account No. 0000520-373100.
Prepared by: Todd M. Corbin, Utilities General Manager
Certifies availability
of funds: Kristie Thomas, Finance Director/Assistant Chief Financial Officer Approved by: Rafael Guzman, Assistant City Manager
Approved as to form: Phaedra A. Norton, City Attorney
Attachments:
First Amendment to Non-Exclusive License Agreement
Presentation
First Amendment, Grand Canal Townhomes Association - Page 1