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HomeMy WebLinkAboutGrantor/Grantee Agreement Right of Reverter RDA and University of California Riverside (UCR)PALM DESERT REDEVELOPMENT AGENCY STAFF REPORT REQUEST: APPROVE THE GRANTOR AND GRANTEE AGREEMENT REGARDING THE RIGHT OF REVERTER BETWEEN THE PALM DESERT REDEVELOPMENT AGENCY AND THE UNIVERSITY OF CALIFORNIA AT RIVERSIDE SUBMITTED BY: CATHERINE WALKER, SENIOR MANAGEMENT ANALYST NEGOTIATING DAVID YRIGOYEN PARTIES: PALM DESERT REDEVELOPMENT AGENCY DATE: JUNE 9, 2005 CONTENTS: GRANTOR AND GRANTEE AGREEMENT REGARDING RIGHT OF REVERTER Recommendation: By Minute Motion, that the Agency Board: 1. Authorize and execute Grantor and Grantee Agreement Regarding the Right of Reverter; 2. No Appropriation Necessary. Executive Summary: Approval of the staff recommendation will allow for the execution of the attached Agreement Regarding the Right of Reverter as called for in the current Disposition and Development Agreement between the Palm Desert Redevelopment Agency and the University of California at Riverside. Approval of the Right of Reverter will allow for UCR to be reimbursed for construction of the Phase II Building. Discussion: Under the existing Disposition and Development Agreement, Phase II of the University of California at Riverside Palm Desert Campus is to be paid for with Lease Revenue Bonds, to be issued by the State of California. The current Disposition and Development Agreement calls for the Redevelopment Agency to subordinate its interest in the Heckmann Center and the Phase II Building in order for bonds to be issued and construction funds to be reimbursed by the University of California at Riverside for the Phase II building. Execution of the attached Right of Reverter Agreement relinquishes the Agency's reversionary interest in the Heckmann Center and in the Phase II Building to the interest of the bondholders pursuant to the Disposition and Development Agreement dated March 22, 2001. The Agency initially maintained its right of reversionary interest in the event that construction of the facility was not accomplished. Phase I (Heckmann Building) and Phase II have been completed. Without the execution of this Agreement, bond funds cannot be utilized to reimburse UCR for the construction of the Phase II Building. Staff recommends execution of the Agreement and acknowledges the completion of Phases I and II. Submitted by: 411, Catherine Walker Senior Management Analyst b /Carlos L. O Zt Director a Department Head: � 7 Dave Yngo en Director o sing/Redevelopment ale Paul S. Gibson, Director of Finance G RDA Beth Longman Staff Reports WalkerStaff UCR doc RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO Nixon Peabody LLP Two Embarcadero Center, 27�h Floor San Francisco, CA 94111 Attn: Gisele Rainer, Esq. GRANTOR AND GRANTEE AGREEMENT RE RIGHT OF REVERTER THIS GRANTOR AND GRANTEE AGREEMENT RE RIGHT OF REVERTER ("Agreement') is entered into as of , 2005 by and among PALM DESERT REDEVELOPMENT AGENCY, a public body, corporate and politic ("Grantor") and THE REGENTS OF THE UNIVERSITY OF CALIFORNIA, A CALIFORNIA CORPORATION, ON BEHALF OF ITS RIVERSIDE CAMPUS ("Grantee"), and the STATE PUBLIC WORKS BOARD OF THE STATE OF CALIFORNIA ("SPWB"), as the beneficiary of the covenants and agreements herein. RECITALS A. Reference is made to that certain Grant Deed dated February 7, 2003 and recorded February 10, 2003 in the Official Records of Riverside County, California, as Document No. 2003-095264 (the "Grant Deed") wherein Grantor granted and conveyed to Grantee certain real property located in the City of Palm Desert, County of Riverside, State of California described on Exhibit A attached hereto and incorporated herein by reference ("Parcel A"). Parcel A includes an approximate 4.17 acre area more particularly described on Exhibit B attached hereto and incorporated herein by reference (the "Phase II Parcel'). B. Grantor and Grantee have entered into that certain Disposition and Development Agreement dated as of March 22, 2001, as amended by that certain First Amendment to Disposition and Development dated as of December 12, 2002 (as so amended, the "DDA"). Capitalized terms used herein and not otherwise defined shall have the meanings given in the DDA. C. Section 2 of the Grant Deed contains a right of reverter pursuant to which, upon the occurrence of certain events as described therein, Grantor would have the right to reenter and repossess Parcel A, including without limitation the Phase II Parcel, and title to Parcel A, including without limitation the Phase II Parcel, could revert to and vest in Grantor (the "Reversionary Interest'). S484957.7 -2- D. Grantee intends to lease an approximately 0.391-acre portion of the Phase II Parcel (the "Site") to the SPWB pursuant to a site lease, dated as of June 1, 2005, on mutually agreeable terms and conditions (the "Site Lease"). The SPWB intends to construct certain improvements (the "Project") on the Site using funds from the sale of its tax-exempt lease revenue bonds (the "Bonds") in the maximum principal amount of Four Hundred Twenty Million Dollars ($420,000,000). Upon completion of construction and satisfaction of other conditions, the SPWB intends to lease the Project and the Site back to Grantee pursuant to a facility lease, dated as of June 1, 2005, on mutually agreeable terms and conditions (the "Facility Lease"). The SPWB's debt service obligations with respect to the Bonds will be secured by, among other things, the SPWB's leasehold estate under the Site Lease and the rental payments due from Grantee under the Facility Lease. The Site Lease and the Facility Lease are referred to collectively herein as the "Leases." The Bonds and all documents and instruments entered into by the SPWB, Grantee and any other person or entity in connection with the Bonds, including without limitation the 581h Supplemental Indenture, dated as of June 1, 2005, by and between the SPWB and the Treasurer of the State of California, are referred to herein as the "Bond Documents," and any and all references in the DDA to the "State Financing Documents" shall mean and refer to the Bond Documents. E. It is a condition to the effectiveness of the Bond Documents and the issuance of the Bonds that Grantor subordinate its Reversionary Interest with respect to the Phase II Parcel to the Leases and the Bond Documents and confirm its approval of and agreement to the terms and conditions of the Bond Documents and the Leases, notwithstanding anything to the contrary in the DDA. AGREEMENT NOW THEREFORE, in consideration of the covenants of the Grantor and Grantee herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows. Consent to Leases and Bond Documents. Grantor represents and warrants that it has read and understands the terms and conditions of the Leases and the Bond Documents and the rights and obligations of the parties thereunder and hereby consents to all of the terms and conditions therein, and the rights granted to the holders of the Bonds or the beneficiary or holder of any mortgage, deed of trust or other security instruments securing the Bonds or the obligations thereunder, notwithstanding anything to the contrary in the DDA. Without limitation on the generality of the foregoing, Grantor and Grantee agree that: (a) The execution, delivery and performance of the Leases and the Bond Documents shall not constitute a Transfer pursuant to Section 3.5 of the DDA; and (b) The Facility Lease fully satisfies the requirements of Section 3.4.2(b) of the DDA. 54S4957.7 -3- Subordination. Grantor hereby subordinates the Reversionary Interest and its right to reenter, repossess and revest the Phase II Parcel as provided in the Grant Deed and the DDA to the Leases and the Bond Documents, and shall remain in all respects and for all purposes subject and subordinate thereto and the right to reenter, repossess and revest the Phase II Parcel as provided in the Grant Deed and the DDA shall not defeat, render invalid or limit: (a) Any of the Leases or the Bond Documents or other security instrument permitted in any of them; and (b) Any rights provided in the Leases or the Bond Documents for the protection of the holders of the Bonds or other security instruments securing the Bonds or the obligations thereunder, or any successor owners of any of the foregoing. This subordination shall remain effective until such time as all amounts due and payable under the Bonds and the Bond Documents have been paid in full and all other obligations under the Bond Documents have been fully satisfied. If at the time this subordination shall cease to be effective SPWB has previously exercised some or all of its remedies under the Leases or the Bond Documents such that Grantee following such exercise has no right to occupy or operate the Project, then, at the written request of Grantor, SPWB shall convey all of its right, title and interest in and to the Project and the Site to Grantor. 3. Grantor Estoppel. Grantor hereby represents and warrants that Grantee is not in default of any obligation under the Grant Deed or the DDA, nor has any event occurred which would, with notice, the passage of time or both, would constitute any such default. Without limitation on the generality of the foregoing, Grantor acknowledges and agrees that all of the terms and conditions of Section 3.4.1 of the DDA have been fully performed and satisfied by Grantee and, accordingly, irrespective of any other provision of this Agreement, Grantor has no right of reverter thereunder and all such rights are extinguished and terminated. 4. Conflict between this Agreement and the Grant Deed or DDA. If there is a conflict between any of the provisions of this Agreement and any of the provisions of the Grant Deed or the DDA, the provisions of this Agreement shall control. 5. SPWB a Beneficiarv. Grantor and Grantee acknowledge and agree that the SPWB is a beneficiary of the covenants made herein, and that they have entered into this Agreement to induce the SPWB to issue the Bonds and construct the Project. 6. No Other Modifications. Except as expressly modified by this Agreement, all of the terms and conditions of the Grant Deed and DDA shall remain unchanged and in full force and effect. 7. Further Assurances. Grantor and Grantee shall at any time or from time to time upon the request of the SPWB or any other party promptly execute, acknowledge, and deliver such further documents and do such other acts and S484957.7 -4- things as shall be necessary or advisable, in the reasonable judgment of such other party, in order to effect fully the purposes of this Agreement. 8. Successors and Assigns. This Agreement shall be binding on and inure to the benefit of the legal representatives, heirs, successors and assigns of the parties and shall run with the land and be binding on the Grantor for the benefit of Grantee and the SPWB and their successors and assigns during the term hereof and regardless of whether Grantee or the SPWB has any interest therein. 9. Governina Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 10. Attornev's Fees. If any party hereto shall institute any action to enforce this Agreement or any provision hereof, the prevailing party shall be entitled to recover its reasonable attorney's fees and costs, as determined by the court. 11. Authority. The persons executing this Agreement on behalf of Grantor, Grantee and the SPWB, respectively, hereby represent and warrant that they are duly authorized to execute and deliver the same on behalf of such party, and that upon such execution and delivery it shall be the legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms. 12. Section Headinas. All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Agreement. 13. Amendment. This Agreement may only be amended by a written instrument duly authorized and executed by the Grantor, the Grantee and the SPWB; provided, however, that no such amendment shall materially adversely affect the owners of the Bonds. 14. Execution. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all together shall constitute but one and the same Agreement. It is also agreed that separate counterparts of this Agreement may separately be executed by the Grantor, the Grantee and the SPWB, all with the same force and effect as though the same counterpart had been executed by all of the Grantor, the Grantee and the SPWB. S434957.7 -5- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. GRANTOR: PALM DESERT REDEVELOPMENT AGENCY, a public body, corporate and politic am Name: Buford A. Crites Title: Chairman Attest: om Name: Rachelle D. Klassen Title: Secretary SPWB: STATE PUBLIC WORKS BOARD OF THE STATE OF CALIFORNIA By: Name: Title: GRANTEE: THE REGENTS OF THE UNIVERSITY OF CALIFORNIA By: Name: Title: Approved as to form: By: Name: Title: S484957.7