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Agenda Item 27.

City Council Meeting

Meeting Date:	07/17/2018
FROM:	Bill Gallardo

Subject:

Approval of a First Amendment to Sublease (Loftus Diversion Channel) and a Second Amendment to Joint Community Facilities Agreement Relating to City of Brea Community Facilities District No. 2008-2 (Brea Plaza Area Public Improvements) and Taking Certain Related Actions

RECOMMENDATION

By minute action:

Approve a First Amendment to Sublease
Approve a Second Amendment to Joint Community Facilities Agreement
Authorize the City Manager to execute amending documents

BACKGROUND/DISCUSSION

By request of the owner of the Brea Plaza, the City formed Community Facilities District No. 2008-2 (Brea Plaza Area Public Improvements) (the “CFD”), and issued CFD bonds in 2009, to finance the cost of certain public improvements in conjunction with a major renovation of the Plaza. The financed projects included improvements to the Loftus Diversion Channel (the “Flood Channel”), which is adjacent to the Plaza, to allow the use of the surface of the Flood Control Channel for parking, landscaping and ingress and egress to the shopping center.

The Flood Channel is owned by the Orange County Flood Control District. In March 2009, the City and Flood Control District entered into a Joint Community Facilities Agreement (the “JCFA”), with respect to the use of the CFD bond proceeds for the proposed Flood Channel improvements.

Upon completion of the improvements in 2010, approximately 2.34 acres were added to the site for public parking, landscaping and pedestrian walkways. The Flood Control District leased the surface of the Flood Channel to the Plaza owner. The Plaza owner and the City, in turn, entered into a sublease (the “Sublease”, see Attachment C), under which the Plaza owner subleased the surface of the Flood Channel to the City for use as public sidewalk and parking. The sublease generally provides that it will terminate at the expiration of the lease, subject to the extension and renewal provisions of the lease.

DISCUSSION

The Flood Channel lease has an initial 30 year term (expiring on October 31, 2040), but grants the Plaza owner two optional 10-year extensions. The Plaza owner and the Flood Control District have recently completed negotiation to execute an amendment to the lease (the “Lease Amendment”, see Attachment D), to provide for the early exercise of the optional extensions and, thereby, extending the term to October 31, 2060.

The County Board of Supervisors is expected to approve the Lease Amendment at the Board’s upcoming July 31st meeting.

The Plaza owner has requested the City to execute: (i) a First Amendment to Sublease (see Attachment A), and (ii) a Second Amendment to Joint Community Facilities Agreement Relating to City of Brea Community Facilities District No. 2008-2 (see Attachment B). These amendments will provide for the early exercise of the previously optional two, 10 year, extensions. The amendments of the sublease will not become effective until the Lease Amendment between the owner and the County takes effect. The documents serve the limited purposes of recognizing and incorporating the amendments of the lease, and updating the notice provisions.

FISCAL IMPACT/SUMMARY

Exercising the two, 10 year, extensions will realize a $20 impact to the City General Fund ($1 per each year of the sublease extension).

RESPECTFULLY SUBMITTED:

William Gallardo, City Manager
Prepared by: David Crabtree, Community Development Director
Concurrence: Cindy Russell, Administrative Services Director

Attachments
Attachment A - First Amendment to Sublease
Attachment B - 2nd Amendment to JCFA
Attachment C - City of Brea Sublease OCFCD
Attachment D - 1st Amendment to Lease A06-203