12/18/2001 RA RPT 13 - Laserfiche WebLink

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CITY OF RIVERSIDE Riverside ~ Al~America c; , 1111. AGENCY MEMORANDUM People Serving People 1998 HONORABLE MAYOR AND AGENCY MEMBERS DATE: DECEMBER 18, 2001 ITEM NO: 13 SUBJECT: AMENDMENT TO PURCHASE OPTION AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY AND MISSION DISTRICT ASSOCIATES DOWNTOWN/AIRPORT PROJECT AREA BACKGROUND: On December 15, 1992, the Redevelopment Agency approved a Disposition and Development Agreement between the Redevelopment Agency and the Historic Mission Inn Corporation (HMIC). Under the terms of the lease agreement, the Agency agreed to lease to HMIC 350 of the approximately 525 parking spaces in the Orange Tree Parking Garage for a period of 7 years at a monthly rent of $10 per space or an annual payment of $42,000. HMIC also had the right to an 8-year extension of the lease, subject to "market-rate" rents. The option to extend could be exercised at any time during the initial lease period. HMIC also had the option at any time during the lease to purchase the 350 spaces at a fixed price of $8,500/space for a total of $2,975,000. In addition, HMIC was provided with a Right of First Refusal to purchase the balance of available spaces andlor the parking structure at market rate. HMIC's option to purchase either a portion of or the entire garage was further delineated by periodic increases in the purchase price over time, and an inability to acquire the air rights above the garage. Although the original Disposition and Development Agreement (DDA) contemplated that the parking structure could be purchased during the lease term, the limiting aspects of the agreement, such as the rapidly increasing purchase price and air rights limitations, made it impractical to implement. Therefore, on February 23, 1999, the Redevelopment Agency approved a modification to the lease agreement, which allowed HMIC to continue leasing the existing 350 spaces for up to six years, with the option to purchase the entire garage (525 spaces) at any time during the six years. The modified lease agreement provided for the following monthly and annual rental rates: . Year 1 - $15/space/month or $63,000/year . Year 2 - $20/space/month or $84,OOO/year . Year 3 - $25/space month or $105,000/year . Year 4 - $30/space/month or $126,000 year . Year 5 - Fair Market Rental Rate . Year 6 - Fair Market Rental Rate It should be noted that HMIC has the right to assign the Lease to any entity which is affiliated with, owns, controls or is under common ownership or control with HMIC, Entrepreneurial Capital Corporation or any other entity owned or controlled by Duane R. Roberts, the majority owner of Entrepreneurial Capital Corporation; provided that the Agency is notified in writing within 30 days following such assignment. 13-1