03-12-2002 RA RPT 02 - Laserfiche WebLink

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CITY OF RIVERSIDE Riverside ~ mr AGENCy/COUNCIL MEMORANDUM People Serving People 1998 HONORABLE MAYOR, CITY COUNCIL AND AGENCY MEMBERS DATE: March 12,2002 SUBJECT: ITEM NO: 2 JOINT PUBLIC HEARING TO CONSIDER APPROVAL OF LEASE AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY AND RIVERSIDE COMMUNITY COLLEGE FOR RIVERSIDE SCHOOL FOR THE ARTS PROJECT -- PROPERTIES LOCATED AT 3845 AND 3855 MARKET STREET AND 3847 AND 3907 WHITTIER PLACE - MERGED DOWNTOWN/AIRPORT INDUSTRIAL REDEVELOPMENT PROJECT BACKGROUND: Since the mid-1990s, Riverside Community College (RCC) has worked in collaboration with the University of California, Riverside (UCR), Riverside County Office of Education, the University of Redlands, and City of Riverside officials regarding the development of a performing and media arts school in Downtown Riverside. As proposed, the eight-year curriculum would offer high school, community college and university education to approximately 750 students. Members from the aforementioned organizations toured the two other schools in the country that offer a similar curriculum: Miami-Dade, New World School of the Arts and the North Carolina School of the Arts. Subsequently, the properties bounded by Market Street to Brockton Avenue and 10'h Street to University Avenue were recommended to become the site for the multi-year, multi-million dollar School for the Arts project. Further, key properties located at 3845 and 3855 Market Street and 3847 and 3907 Whittier Place were identified for the first phase of the development, and will serve as the catalyst for the project. Those properties are currently under the ownership of James O. Heiting and Cindy E. Heiting. A direct purchase of the subject properties by RCC would jeopardize State funding of other RCC development projects that are currently underway. Consequently, RCC officials requested that the Redevelopment Agency purchase the property, at which time both parties would enter into a 15-year lease. On November 21,2000, the Redevelopment Agency entered into a Memorandum of Understanding (MOU) with RCC memorializing the following deal points: Redevelopment Agency Obligations under the MOU: 1) The Agency to use best efforts to acquire the property located at 3845 and 3855 Market Street and 3847 and 3907 Whittier Place (Heiting properties). 2) The Agency to lease the premises to RCC for a period of 15 years The Lease rate would be equal to the Agency's acquisition price, factored over a 15-year term. In addition to the base rent, RCC would pay a semi-annual payment equal to the Net Tax Increment the Agency received from the property when it was on the commercial tax roll (estimated at $8,000 annually). 3) The lease to commence concurrently with the closing of the Agency's acquisition escrow. As the lease is structured to recapture the cost to acquire the property, the lease revenue will pay for the debt service the cost of property acquisition, as well as related and miscellaneous due diligence and legal costs. The security for the financing was expected to be the property and the fifteen-year lease between the Agency and RCC. 2-1