|
Agenda Item
ASR
Control 22-000104 |
||
|
MEETING DATE: |
04/26/22 |
|
|
legal entity taking action: |
Board of Supervisors and Orange County Flood Control
District |
|
|
board of supervisors
district(s): |
4 |
|
|
SUBMITTING
Agency/Department: |
County Executive Office (Approved) |
|
|
Department contact
person(s): |
Thomas A. Miller (714) 834-6019 |
|
|
|
James Treadaway (714) 647-3948 |
|
Subject: Loftus Diversion Channel
Lease Assignment and Encumbrance
|
ceo CONCUR |
|
Clerk of the Board |
||||||||
|
Concur |
Approved Agreement to Form |
Consent Calendar |
||||||||
|
|
|
3 Votes Board Majority |
||||||||
|
|
|
|
||||||||
|
Budgeted: N/A |
Current Year Cost:
N/A |
Annual Cost:
N/A |
||||||||
|
|
|
|
||||||||
|
Staffing Impact: |
No |
# of Positions:
|
Sole Source:
N/A |
|||||||
|
Current Fiscal Year Revenue: N/A
|
||||||||||
|
Prior Board Action: 07/31/2018
#16; 10/25/2011 #20; 06/29/2010 #26 |
||||||||||
RECOMMENDED ACTION(S):
|
1. |
Approve and execute the Assignment and Assumption of Lease Agreement allowing BPI Brea LLC to assign its rights and obligations under the Loftus Diversion Channel Surface Lease to California BP LLC. |
|
2. |
Approve and authorize the OC Public Works Director or designee to execute the Consent to Encumbrance of Lease among Orange County Flood Control District, California BP LLC, and American National Insurance Company, in substantially the same form as attached and approved by County Counsel, allowing the Lease to act as security for a loan to California BP LLC. |
|
3. |
Authorize the OC Public Works Director or designee to perform all activities specified to be performed by the Director under the Assignment and Assumption of Lease Agreement and the Consent to Encumbrance of Lease agreements. |
|
4. |
Authorize the OC Public Works Director or designee to execute future assignments and/or consents to encumbrance of Loftus Diversion Channel Surface Lease to California BP LLC, in substantially the forms as attached hereto, if approved by OC Public Works County Counsel, and the Auditor-Controller, where the proposed assignee is a single-asset entity formed solely for loan refinancing purposes. |
SUMMARY:
Approval of the Assignment and Assumption of Lease Agreement of the Loftus Diversion Channel Surface Lease and the Consent to Encumbrance of Lease will support continued operation of safe and aesthetically pleasing pedestrian walkways, public parking, and landscaping along Associated Road near Imperial Highway, a busy intersection in the City of Brea.
BACKGROUND INFORMATION:
On October 23, 2007, your Board approved Agreement D07-024 (Agreement) between the Orange County Flood Control District (OCFCD) and California Brea Partners, L.P. (CBP) to allow a segment of the Loftus Diversion Channel in the City of Brea (City) to be reconstructed to ultimate capacity as a box culvert. OCFCD planned to lease the surface over the box culvert to CBP for parking, landscaping, and pedestrian walkways in connection with the re-development of CBP's adjacent shopping center.
On June 29, 2010, your Board approved, among other things, an assignment of the Agreement from CBP to California BP, LLC and an Amendment of the terms of the future Channel surface Lease to accommodate CBP’s financing of the covered Channel project and re-development of CBP’s adjacent shopping center.
In accordance with the Agreement, the reconstructed Channel improvements were accepted by OCFCD, and a 30-year Lease with two 10-year options to extend (Lease) was entered into between OCFCD and California BP, LLC. for use of the Channel surface. CBP spent more than $3.2 million for Channel improvement construction, which constituted prepaid rent under the Lease and satisfied rent obligations through October 31, 2040.
On October 25, 2011, your Board approved an amendment of the Lease, whereby California BP, LLC transferred its rights, obligations and interest in the Lease to BPI Brea LLC. On July 31, 2018, a First Amendment to Lease was executed. BPI Brea LLC met all conditions precedent and recently exercised its two 10-year options, as provided for by the First Amendment to Lease, for $2,263,000. This satisfied rent obligations through the final day of the lease, October 31, 2060.
California BP, LLC, the original tenant and now proposed assignee (Assignee) desires to refinance its loan obligations with American National Insurance Company (Lender) for a total loan amount of $47 million, which assumes the previous infrastructure debt of $43.5 million and the $3.5 million new costs for adding EV charging stations, upgrading landscaping, resurfacing some buildings, repainting, and resurfacing parking areas.
To accommodate this process, BPI Brea LLC wishes to assign its rights, obligations and interest in the Lease back to California BP, LLC. Department staff have conducted due diligence on the vendor, and it will be a smooth transition to work again with the former original tenant, California BP, LLC. Under the proposed assignment, California BP, LLC agrees to unconditionally accept and assume all obligations of the Lease.
As part of the recommended Consent to Encumbrance of Lease, the Lender and California BP, LLC agree that the terms and conditions of the Lease shall prevail in the event of any conflict with the terms and conditions of the loan documents. As rent has been satisfied under the Lease through October 31, 2060, the proposed Consent to Encumbrance of Lease will not impact rent obligations during the entire Lease term.
The Board is also requested to delegate to the OC Public Works Director or his designee, the authority to execute future Lease assignments and consents to encumbrance for this project when (i) the transfer of the leasehold interest is to a related single-asset entity as required by a lender for refinancing purposes; (ii) the proposed assignment or consent is in conformance with the requirements under the Lease; and (iii) the proposed documents have been approved by the Auditor-Controller, County Counsel, and OC Public Works. Given the length of the Lease term, it is anticipated that the loan obligations may be refinanced a number of times. Delegation of the authority to execute assignments of the Lease under such circumstances will expedite the approval of the assignment and the loan.
Compliance with CEQA:
The proposed project was previously determined to be Categorically Exempt from CEQA pursuant to Section 15301 (Class 1) of the CEQA Guidelines, on July 31, 2018, when it was originally approved because it consists of a lease of existing public facilities involving negligible or not expansion of existing or former use. The proposed project is still consistent with this determination.
General Plan: The project is consistent with the City of Brea's General Plan.
FINANCIAL IMPACT:
N/A
STAFFING IMPACT:
N/A
REVIEWING AGENCIES:
OC Public Works
ATTACHMENT(S):
Attachment A - Assignment and Assumption of Lease
Agreement
Attachment B - Consent to Encumbrance