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Agenda Item
ASR
Control 24-000469 |
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MEETING
DATE: |
06/25/24 |
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legal entity taking action: |
Orange
County Flood Control District |
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board of supervisors district(s): |
All
Districts |
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SUBMITTING Agency/Department: |
County
Executive Office (Approved) |
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Department contact person(s): |
Thomas
A. Miller (714) 834-6019 |
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Nardy
Khan (714) 647-3906 |
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Subject: Approve
Agreements for the Majestic Chino Heritage Project
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ceo CONCUR |
County Counsel Review |
Clerk of the
Board |
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Concur |
Approved Agreement to Form |
Consent Calendar |
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3 Votes Board Majority |
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Budgeted: N/A |
Current
Year Cost: N/A |
Annual
Cost: N/A |
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Staffing
Impact:
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No |
#
of Positions: |
Sole
Source: N/A |
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Current Fiscal Year Revenue: N/A
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Prior Board Action: 2/27/2024 #S46C; 2/28/2023 #S41C;
9/25/2018 #36; 10/25/2016 #S49G |
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RECOMMENDED
ACTION(S):
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1. |
Find that the subject activity is not a
project within the meaning of CEQA guidelines Section 15378 and is therefore
not subject to review under CEQA. |
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2. |
Authorize the Chief Real Estate Officer
or designee to execute the Agreement between the Department of the Army and
the Orange County Flood Control District, permitting the construction of two
commercial warehouses at the southeast corner of Mountain Avenue and Bickmore
Avenue in the City of Chino within the Prado Flood Control Basin, in substantially the form attached with
minor modifications that do not increase the liability or cost to the County,
upon approval by County Counsel. |
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3. |
Authorize the Chief Real Estate Officer
or designee to execute the Easement for storm drain purposes between the
Department of the Army and the Orange County Flood Control District within
the Prado Flood Control Basin, necessary for storm drain purposes for the
Majestic Chino Heritage Project, in substantially the form attached with
minor modifications that do not increase the liability or cost to the County
upon approval by County Counsel. |
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4. |
Approve and authorize the Chief Real
Estate Officer or designee to execute the revised Ground Lease Agreement
between the Orange County Flood Control District and Majestic Realty Co., for
an approximately 95 acre property in the City of Chino, at such time as
Majestic Realty Co. exercises its Option to lease, originally approved by the
Board of Supervisors on October 25, 2016, for the development of industrial
warehouse buildings, in substantially the form attached with minor
modifications that do not increase the liability or cost to the County, upon
approval by County Counsel. |
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5. |
Authorize the Chief Real Estate Officer
or designee to execute Certificates of Acceptance on behalf of the Orange
County Flood Control District for Disposal Deeds from the Department of the
Army which eliminate two historical flowage easements placed on the subject
property, in 1941 and 1944, as the easements are no longer needed or required
by the Department of the Army, upon approval by County Counsel. |
SUMMARY:
Approval
and execution of the Agreement between Orange County Flood Control District and
the Department of the Army, the corresponding Easement for storm drain purposes
and disposal of surplus Department of the Army flowage easements, will allow
Majestic Realty Co. to exercise its existing Option and enter into the revised
Ground Lease Agreement for the development of two industrial warehouse
buildings on approximately 95 acres of Orange County Flood Control District
property in the City of Chino, also known as the Majestic Chino Heritage
Project.
BACKGROUND
INFORMATION:
The
Orange County Flood Control District (District) owns an approximately 95 acre
vacant parcel located in the City of Chino, California (Property). The Property is located at the southeast
corner of Mountain Avenue and Bickmore Avenue, in an industrial area within the
Prado Flood Control Basin. The Property was acquired by the District for the
Prado Dam element of the Santa Ana River Mainstem Project, to provide for the
storage of floodwaters within the planned expansion of the Prado Dam Reservoir.
On October 25,
2016, in response to a Request for Qualifications, the Board of Supervisors
(Board) selected Majestic Realty Co. (Majestic) to option, lease and develop
the site and authorized the Chief Real Estate Officer or designee to execute an
Option Agreement (Option), Fill Dirt License, and Ground Lease Agreement
(Ground Lease) with Majestic, upon satisfaction of conditions to the Option. On
September 25, 2018, the Board approved a First Amendment to Option Agreement,
which allowed Majestic an additional 36 months on its Option term, to obtain
all entitlements necessary for development of the Property.
Due to COVID-19,
litigation, and a delay by the United States Corps of Engineers (Corps),
Majestic’s Option term has been extended through a Second, Third, Fourth, Fifth
and Sixth Amendment to the Option, with approval of the Board. Majestic’s current Option term, as amended,
ends on August 28, 2024. Once the Option
conditions are fulfilled, the District and Majestic will enter into the
previously Board-approved Ground Lease and Fill Dirt License Agreement, which
will allow for the development of the Property.
Majestic
received City entitlement approvals for the project in June 2021, which
included two industrial buildings, totaling 2,082,174 square feet, pursuant to
the Option (Project). Majestic has been
working with the Corps on the scope of the required permits, if any, including
coordination with the local Corps staff and lobbying efforts in Washington, D.C.,
with congressional officials and the Assistant Secretary of the Army. As a result of this work, on December 20,
2023, the Assistant Secretary of the Army for Civil Works (ASA-CW) issued a
Memorandum, attached hereto as Attachment A, which reconsiders the requirement
for the project to receive a Section 408 Permit and directs the Corps to
complete certain action items for the Project to move forward. Majestic continues to coordinate with the
Corps and County/District staff on those action items consistent with the
Memorandum.
Through discussions
with Majestic and the Corps, in lieu of the previously required 408 Permit the
ASA-CW Memorandum directed the District to enter into a memorandum of agreement
the District and the Department of the Army (Agreement), which is attached
hereto as Attachment B, along with an easement for storm drain purposes
(Easement), which is attached hereto as Attachment C. In addition, the Ground Lease, which is
attached hereto as Attachment D, has been updated to ensure that the
obligations contained in the Agreement are applicable to Majestic as part of
their development and operation of the Project.
Finally, the Department of the Army will be issuing Disposal Deeds to
the District which will eliminate flowage easement encumbrances placed on the
Property in 1941 and 1944, which are no longer needed or required by the
Department of the Army. The flowage
easements are at a lower elevation than the current Prado Dam spillway project
and thus are no longer necessary for the operation of the dam or for any flood
control purpose. CEO Real Estate and
District staff request the Board's consideration and approval of the following
agreements:
Agreement Between
the Department of the Army and The District
The Agreement
between the Department of the Army and the District sets out the history of the
Project and establishes certain conditions and measures that are required and
will be binding upon the District and Majestic, the lessee of the Property and
developer of the Project. These include
evidence that the Property will remain in public ownership, and that its uses
are, and will remain, compatible with the Prado Dam, which includes a
limitation to a warehouse use with a finished floor at or above the 567-feet
elevation. The Agreement also includes
provisions limiting human habitation, including overnight sleeping, and the
requirement to provide the Corps with as-built plans within 60 days of
certification of occupancy. Finally,
several conditions limit the Corps responsibilities with the Project and
confirm that maintenance of the Property will be addressed in the Ground Lease
between the District and Majestic, through the revisions proposed herein.
Storm Drain
Easement from the Department of the Army
In order to
construct and maintain a drainage facility that is necessary for the Project,
which consists of a 48-inch storm drain line and outlet structure, the
Department of the Army is granting an easement to the District over the federal
government property just south of the Property.
This Easement conditions the District to gain approval from the Corps'
District Engineer prior to construction, operation, maintenance, repair, or
replacement of said facilities and requires that upon completion of any of
these activities, the surface of the Property be restored to the satisfaction
of the Corp. Since the Property will
remain under District ownership, this Easement is being granted to the District
to run with the Property. However, the
responsibility for the maintenance, repair, or replacement of the storm drain
and the Easement is Majestic's obligation pursuant to the Ground Lease.
Revised Ground
Lease Agreement Between the District and Majestic
The existing
Ground Lease with Majestic has been revised to incorporate the specific
Agreement requirements, referenced above, to ensure compliance by Majestic
during the entirety of the 65-year Ground Lease. All other terms of the Ground Lease remain
consistent to what was approved by the Board on October 25, 2016.
Compliance
with CEQA:
The proposed project was previously
determined not to be a project within the meaning of CEQA Guidelines Section
15378 and is therefore not subject to CEQA since it does not have the potential
for resulting in either a direct physical change in the environment, or
reasonably foreseeable indirect physical change as determined on October 25,
2016, when the original option and lease agreement was approved by the Board of
Supervisors.
FINANCIAL IMPACT:
N/A
STAFFING IMPACT:
N/A
REVIEWING
AGENCIES:
Orange County Public Works
ATTACHMENT(S):
Attachment A - Memorandum from the
Assistant Secretary of the Army, dated December 20, 2023
Attachment B - Agreement between Orange County Flood Control District and the
Department of the Army
Attachment C - Easement from the Secretary of the Army to the Orange County
Flood Control District
Attachment D - Revised Ground Lease between the Orange County Flood Control
District and Majestic Realty Co.