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Title:
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Approval of the Second Amendment to the Participation Agreement for 3535 Hayden Avenue.
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City of Culver City, California
Redevelopment Agency Agenda Item Report
Page 1 of 3
RECOMMENDATION:
Staff recommends the Culver City Redevelopment Agency (“The Agency”) approve
a proposed second amendment to the Participation Agreement with Frederick Smith
for 3535 Hayden Avenue.
BACKGROUND:
Mr. Smith owns the property at 3535 Hayden Avenue (the “Site”). On September 5,
1995, the Agency approved a Participation Agreement (the “Agreement”) with the
firm of Pittard Sullivan (“PS”) and Mr. Smith. The Agreement provided a loan from
the Agency to PS in the amount of $190,863.63, secured by a Deed of Trust
recorded against the site and signed by Mr. Smith.
The loan was an economic development effort used to attract this particular
business from its prior location in Los Angeles to Culver City. The Agreement
allowed repayment of the loan in the form of either: principal and interest payments,
or forgiveness of principal and interest, if certain employment and gross receipt tax
revenue targets were met by PS, as spelled out in the Agreement.
The Agreement was modified by the Agency on July 7, 2003 to substitute tenants,
because by then, PS had gone out of business, and the form of security was
changed from the Deed of Trust to a personal guarantee by Mr. Smith.
By 2005, the new tenants had also gone out of business, which according to the
terms of the Agreement, constituted a default. The responsible party for repayment
and curing the default was then Mr. Smith.
Meeting Date: 04/21/08 Item Number: A-2
AGENDA ITEM: Approval of the Second Amendment to the Participation
Agreement for 3535 Hayden Avenue.
Contact Person/Dept.: John Fisanotti Phone Number: (310) 253-5767
Fiscal Impact: Yes [X] No [] General Fund: Yes [] No [X]
Public Hearing: [] Action Item: [X] Attachments: [X]
Public Notification: Master Notification List on April 17, 2008.
Department Approval:
Sol Blumenfeld (04/16/08)
Executive Director Approval:
Jerry B. Fulwood (04/17/08)
Fiscal Impact Review:
Jeff Muir (04/17/08)
City of Culver City, California
Redevelopment Agency Agenda Item Report
Page 2 of 3
Recently, staff has negotiated terms of a proposed Second Amendment to
Participation Agreement (the “Second Amendment”) with Mr. Smith to resolve the
present default. A draft of the Second Agreement has been attached for review.
DISCUSSION:
The proposed Second Amendment makes the following changes to the Agreement:
• The time frame for repayment of the principal and interest has been shifted
from the years 2002-2009 to 2008-2012.
• The number of businesses that can contribute to meeting the employment
and revenue targets (which entitle the borrower forgiveness of the annual
principal and interest payment) has been expanded to include five additional
properties owned by Mr. Smith. The proposed eligible properties are listed in
Attachment “A” to the Second Amendment.
• A provision has been added that will allow a payment to the City for any
shortfall between the revenue target and the actual amount collected in the
event the businesses in Attachment “A” do not meet the collective revenue
target.
Although the original Agreement from 1995 was drafted specifically to draw a
particular tenant which has since gone out of business to the Hayden Tract, through
the cooperative efforts of the Redevelopment Agency and area landowners and
tenants, the Hayden Tract has benefitted from economic revitalization. The
revitalization of the Hayden Tract, which PS helped instigate, has brought many
major companies to the area. Therefore, staff believes the Second Amendment
represents a reasonable partnership between the Agency and Mr. Smith to achieve
the mutual goal of a thriving Hayden Tract.
FISCAL ANALYSIS:
The Second Amendment will help to cure the present default. As with the prior
Agreement, in lieu of principal and interest payments on the loan, it encourages
economic performance by measuring increases in local tax revenue and number of
employees in order to attain specified levels of achievement.
ATTACHMENTS:
1. Draft Second Amendment to the Participation Agreement Re: 3535 Hayden
Avenue. City of Culver City, California
Redevelopment Agency Agenda Item Report
Page 3 of 3
MOTION:
That the Redevelopment Agency:
1. Approve the Second Amendment to the Participation Agreement Re: 3535
Hayden Avenue; and
2. Authorize the Executive Director to execute the Second Amendment to the
Participation Agreement on behalf of the Agency.