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HomeMy WebLinkAbout18 - Marinapark Lease Committee ReportE CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. is October 12, 2004 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Mayor Tod Ridgeway & Council Member John Heffernan SUBJECT: Ad Hoc Marinapark Lease Committee Report ISSUE: A report from the City Council Ad Hoc Committee regarding the status and substance of pre- election Marinapark lease discussions and issues. RECOMMENDATION: Receive and file the report. BACKGROUND: The Committee was appointed on May 23, 2003 to engage in pre- election lease discussions with Sutherland Talla Hospitality (STH) in an attempt to provide the voters — prior to November 2, 2004 - with information about the possible terms and conditions of an option to lease and a ground lease between the City and STH pertaining to the Marinapark property (Project). The Committee has, during the pre- election discussions with STH, relied heavily on Cal Hollis of Keyser Marston, an • experienced real estate adviser, for advice relative to the economics of the option and ground lease and Kim Thompson of Rutan & Tucker, an experienced real estate attorney, for advice on legal issues related to the structure of an option and lease. This report provides the City Council and the public with accurate information about: (a) the terms and conditions of an option and ground lease that the Committee has discussed with STH and in the future would, assuming full agreement on all terms and the resolution of numerous issues, consider recommending to the City Council; (b) the key issues that were identified during the discussions; and (c) the fractional units. The Committee and the City Council have received significant information — via email and during public meetings — regarding STH and its principals as well as the nature and extent of any City obligation with respect to STH. The Committee has asked Kim Thompson and Rutan & Tucker to review all of this information and, assuming voter approval of Measure L on November 2, 2004, to advise the City Council of its obligations, if any, with respect to STH. The Committee has also asked staff to provide a rough estimate of the cost of the park redevelopment proposed by Mr. Billings at a prior City Council meeting and will make that available to the public when complete. STATUS OF PRE - ELECTION DISCUSSIONS: Based on the pre- election discussions and input from our experts, the Committee • would, subject to voter approval of Measure L and the resolution of numerous other Marinapark Resort and Community Plan October 12, 2004 Page 2 • issues described in this report, recommend the City Council consider an option and ground lease with the following terms: Option • Term — Five (5) year option term if Measure L approved. • Option Consideration — Payment of option consideration with the amount and timing of payments calculated to minimize any City cost of delivering possession of the Property and ensuring diligent processing of applications for permits as well as preparation of plans and specifications. • Conditions to Exercise Ground Lease — Option may be exercised only if (a) construction funding is committed; (b) agreement with luxury resort operator is executed; (c) all permits have been issued; (d) City approval, as landlord, of plans that are in compliance with all lease criteria and Project conditions. Lease • Term - 50 year term. • Use — Tenant construction, on -going maintenance and operation of a 110 • guest unit luxury resort with up to 12 fractional "units" (intervals of 4 week s of more) if all issues, including those related to the fractional units, are resolved. • Base Rent - $1.1 million annually as base (minimum) rent plus percentage rent based on 7% of room revenue, 3% of food revenue, 5% of beverage revenue and 10% of miscellaneous revenue derived from the resort operations (percentage rent is paid to the extent it exceeds Base Rent which the Committee assumers will occur after hotel resort operations stabilize). • Community Center — Tenant construction of a 6200 square foot combined use Community Center /Girl Scout house, tennis courts and other recreation facilities at no cost to City. • Profit Participation — City participation in any profit derived from any Tenant sale of the Project within a specified period of time and the profit (above a specified threshold) derived from the sale of any fractional unit. • Supplemental Rent — City receipt of supplemental rent equal to (a) the hotel tax the City would have received if a fractional unit (assuming eventually permitted at the site) were rented on a nightly basis; and (b) rent and hotel tax the City would have received from guest units at the resort used during any fractional marketing program. • • Madnapark Resort and Community Plan October 12, 2004 Page 3 • Triple Net — City has no Lease obligations that reduce the Rent paid by Tenant. • Unsubordinated Ground Lease — the City's rights would not be subordinate to lenders although lenders would have right to cure a default. • Public Programs, Uses and Funding — Preserve and enhance sailing program by Tenant providing storage on Project bay front for up to 20 sabots and 8 lidos to replace current supply storage area at 19th street and contribute $25,000 (5,000 per year for first 5 years) for kids sailing program. Key Issues • Possession of Property — the nature, timing and extent of the City's obligation to deliver possession of the property and when City commences closure of the existing mobile home park and removal of the mobile homes. • Fractional Units — assuming they are permitted, the method by which the City can be assured it will not be obligated to provide services or amenities to the fractional unit owners if the hotel operator defaults under the ground lease. • "Parcelization" - the advantages and disadvantages of establishing three parcels — one for the hotel/resort, one for fractional units and one for the Community Center /Girl Scout House and other public recreational facilities. FRACTIONAL UNITS The Committee believes the issue of fractional units deserves discussion because of the contention advanced by some that permitting those units would be a gift to STH of millions of dollars. The EIR and Measure L would allow no more than twelve (12) fractional units. However, neither the City nor the Committee have committed to the use of part of the Property for fractional units. Moreover, the Committee believes that there are significant and unresolved issues related to the proposed fractional units, some of which are identified in this report. The Committee has been advised by Cal Hollis that fractional units are becoming a relatively common component of luxury resorts because they represent a vehicle for the proponent to recover predevelopment and construction costs before those costs could or would be supported by hotel revenue. Assuming the City was to approve fractional units, the Committee would recommend a lease that provides for City participation in the profit derived from the sale of fractional units and also require on -going ground rent be paid on the fractional units. However, the profit would not, as some have suggested, equal the total sales revenue, rather, the total sales revenue less predevelopment costs, • construction and financing costs and marketing costs. The Committee members have substantial experience in real estate transactions and the City has retained recognized Marinapark Resort and Community Plan October 12, 2004 Page 4 11 experts to advise it on all of these issues to ensure that any option and /or lease represent a fair business deal for the City and its residents. POST - ELECTION PROCESS If the voters approve Measure L, the Committee may, after consideration of input and advice from Mr. Thompson and Mr. Hollis, recommend that the City Council proceed in the following manner: ■ Ask Mr. Sutherland to identify all persons and entities that would be involved as Tenant or otherwise involved in any other aspect of the Project and provide all information about those persons or entities that is reasonably necessary to verify that they have the particular skill, experience or financial ability to perform their respective functions, are respected in their fields and are of good moral character. ■ Assuming Mr. Sutherland has complied with the request, for the City to then conduct a thorough investigation of all identified persons and /or entities to confirm their capability, reputation and moral character. ■ Upon completion of this review and confirmation that the background information is accurate, ask the City Manager and City Attorney, with the advice and • assistance of Mr. Hollis and Mr. Thompson, to draft appropriate documents that would allow this Committee to commence formal negotiations consistent with this report. Submitted by: Tod Ridgew Mayor J n Heffem , C uncil Member F_ IL 0 • CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT COUNCAL AGENDA N0. o -%a-Oq Agenda Item No. 20 September 28, 2004 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Robin Clauson, Acting City Attorney 644 -3131; rclausonCa)city .newport- beach.ca.us Robert Burnham, Contract Attorney 644 -3131; rburnhamCcbcity.newport- beach.ca.us SUBJECT: Marinapark Resort & Community Plan Memorandum of Understanding —Term Sheet ISSUE: Should the City Council approve a Memorandum of Understanding and Term Sheet (MOU) that would: (a) guide future negotiations relative to a ground lease of Marinapark if the voters approve Measure L; and (b) provide the voters with additional information about the likely terms and conditions of the ground lease if Measure L is approved? RECOMMENDATION: If desired, authorize Mayor Ridgeway to execute the MOU as proposed or as amended. BACKGROUND: Redevelopment of Marinapark has been a topic of discussion for at least 30 years. In 1997, the City Council began soliciting proposals for redevelopment of the Mobilehome Park and, after extensive public review and analysis, accepted the Sutherland Talla Hospitality (STH) proposal to develop a luxury resort on a portion of the site and to redevelop the community center and public recreation facilities. In 2000, the City and STH entered into an agreement that, in summary, required STH to obtain — at its cost — all of the approvals necessary to construct the luxury resort and committed the City, assuming all approvals were granted, to negotiate with STH in good faith to reach agreement on the terms and conditions of a ground lease (2000 Agreement). In 2003, the City Council approved an amended agreement (2003 Agreement) that committed the City Council to submit the project to the voters and modified the process contemplated in the 2000 Agreement. According to the 2003 Agreement, the City and STH are to, "assuming STH receives all Project Approvals necessary to obtain building permits for construction of the Project, commence exclusive negotiations regarding the terms and conditions of a long -term ground lease and /or option for the property... no later than thirty (30) days after any voter approval of the... amendments related to the Project and provided STH satisfies the provisions of Subsection B." (which requires STH to provide, among other things, financial information and construction estimates). Marinapark Resort and Community Plan September 28, 2004 Page 2 • The 2003 Agreement also authorizes the Parties to "commence discussions regarding the terms and conditions of a ground lease and /or option at any time after the date of this Amended Agreement" and states that "the primary purpose of these discussions would be to provide voters with additional information regarding the impacts and benefits of the Project prior to the election." DISCUSSION In 2004, the City Council appointed Mayor Ridgeway and Council Member Heffernan as an Ad Hoc Committee to meet with representatives of STH and discuss the basic terms and conditions of an option to lease and ground lease that would be approved by the City Council assuming, among other things, that Measure L is approved on November 2, 2004. The Ad Hoc Committee is recommending City Council approval of the MOU and Term Sheet with the understanding that there are a number of issues which are still unresolved and others on which there is only "conceptual agreement. During the negotiations, the Parties agreed that the most appropriate structure of the transaction would be the approval of an "Option Agreement" that would give STH the right to enter into a ground lease at such time as the they received all necessary approvals, had funds sufficient to construct all project components (including the Community Center) and a contract with an operator of luxury resorts. The MOU states that the Parties have reached agreement on the issues identified in the Term Sheet and will execute an "Option Agreement" and related ground lease assuming (1) the voters approve Measure L on November 2 "d; (b) the Parties are able to reach agreement on the outstanding issues such as option consideration. The following is a summary of the key provisions of the "Term Sheet" that is attached to the MOU: Resolved Issues Option Agreement • 5 year term; • Exercised only if proponent has all approvals, funding and hotel operator under contract; Ground Lease • 50 year term; • Base rent of $1.1 million per year when construction is complete or two years after option exercised — whichever comes first; • Percentage rent — based on resort revenue (7% of room, 5% beverage, 3% food and 10% miscellaneous) • Base rent is credited against percentage rent; • Supplemental rent equal to the amount of "Hotel Tax" City would • have received if fractional units were hotel units; • • n U Marinapark Resort and Community Plan September 28, 2004 Page 3 • Construct and maintain all public improvements — including tot lot, tennis courts and new 6200 square foot Community Center — at no cost to City; • City receives 20% of "profit" if resort sold within 30 months after open for business; • All construction will be first class and consistent with height limits specified in the EIR. Unresolved Issues • No agreement yet on option consideration or extent to which that consideration would be "credited" against construction rent. • Have not agreed on amount of "in lieu" percentage rent for fractional units. • Have not agreed on method of ensuring that the City is not obligated to provide services or amenities to fractional units in the event of a default by the hotel owner. We have attached information provided by Mr. Sutherland relative to his background and experience. We have been advised by Mr. Sutherland, but can't confirm at this time, that Michael Talla is no longer associated with STH. Mr. Talla was involved in a business in Las Vegas that Mr. Sutherland believes could tarnish the image of the resort and was asked to withdraw from this project. According to Mr. Sutherland, Michael Rosenfeld has withdrawn as financial partner because Newport Beach residents contacted — and harassed - references that Rosenfeld provided at the request of the City Council and which were identified in the July 27, 2004 staff report. Submitted by: Robin Mauson Acting City Attorney Robert Burnham Contract Attorney MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding (MOU) between the City of Newport Beach (City) and Sutherland Talla Hospitality (STH), dated the 28th of September 2004, is made with reference to the following: RECITALS A. City is the owner and /or grantee of certain property in the City of Newport Beach that is commonly known as Marinapark (Property); B. The Property is currently improved with a mobilehome park, improvements • leased to the American Legion and the Girl Scouts and various recreational facilities including four tennis courts and a small basketball court. C. In 1999, the City issued a Request for Proposals (RFP) to determine private sector interest in redevelopment of the Property and, after publicly reviewing and evaluating 8 responses to the RFP, selected the STH proposal to construct a luxury resort on the Property (Project). D. In 2000, the Parties entered into an agreement (2000 Agreement) designating STH as the entity with which the City would engage in exclusive negotiations for a long -term ground lease assuming the Project received all required approvals. E. In 2003 the Parties amended the 2000 Agreement to, among other things, submit the Project to the voters in November 2004 (Measure L) and authorize the • • Parties to engage in pre - election lease discussions to provide voters with information about the likely terms and conditions before they cast a ballot; F. The Parties have engaged in pre - election lease discussions and, while certain issues remain unresolved, the Term Sheet attached as Exhibit A represents the Parties' agreement on the key provisions of an option agreement and ground lease the City Council would approve if the voters approve Measure L. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: 1. PURPOSE & INTENT The purpose and intent of this MOU is: (a) to confirm the Parties' progress in pre- election discussions regarding the terms and conditions of an option agreement and a ground lease for Marinapark if the voters approve Measure L; and (b) provide the voters • with accurate information regarding the probable terms and conditions of the option agreement and lease so they are fully informed when they cast ballots.. 2. UNDERSTANDING The Parties agree that the Term Sheet shall serve as a basis for a mutually agreeable option agreement and ground lease that would be negotiated after November 2, 2004 if the voters approve Measure L. The Parties agree that the Term Sheet accurately reflects those issues, such as the term of the option agreement and ground lease, the base rent and percentage rent, supplemental rent equal to the amount of hotel tax the fractional units would generate if they were resort units and the obligation of the proponent to construct a new community center and renovated recreational facilities, at no cost to the City on which the Parties have reached agreement. The Parties also agree that the Term Sheet accurately represents those issues, such as option consideration, the parcelization of the property and the precise method by which the . Parties will ensure that the City's ability to control the use of the Property other than that 2 on which the fractional units are located will not be significantly impacted by the rights of • the fractional owners. Finally, the Parties acknowledge that the unresolved issues are complex and material and that the failure, after good faith efforts by each Party, to resolve all issues renders this MOU null and void. 3. FUTURE NEGOTIATIONS The Parties agree that, in the event the voters approve Measure L, they will use their respective best efforts to reach agreement on an option agreement and ground lease consistent with the Term Sheet. IN WITNESS WHEREOF, the parties have executed this MOU on the day of , 2004. APPROVED AS TO FORM: CITY OF NEWPORT BEACH • A Municipal Corporation By: By: Robin Clauson Tod Ridgeway, City Attorney Mayor SUTHERLAND TALLA HOSPITALITY LLP By: Stephen Sutherland, STH 3 • I . Term — 50 years from date that option is exercised unless State Lands Commission determines that term may commence from date City issues certificate of occupancy 2. Option — 5 year option to lease with the terms to be negotiated consistent with this Term Sheet assuming voter approval of Measure L. 2.1 Option - Consideration: The Parties have not reached agreement relative to the amount or timing of Option Consideration or the extent to which Proponent would be given credit for option consideration against construction rent. The parties have agreed, conceptually, that Proponent would pay substantial Option Consideration with a significant percentage credited against construction rent. The Parties have also agreed that the Option Consideration for the last two years of the Option Term should be substantially higher than for the initial three years if the City delivers possession of the Property on or before the date specified and that all or a substantial portion of the Option Consideration should be returned to Proponent if the City is unable to deliver possession of the property on the date specified. The Parties acknowledge that this is a material unresolved issue. 2.2 Option - Conditions to Exercise: Proponent must satisfy all of the following conditions prior to exercising the option including payment of option consideration at the time and in the manner required by the option agreement: • (a) All discretionary and ministerial permits issued, provided that the City will expedite approval of plans and specifications without any waiver of Municipal code requirements. (b) City approval, as landlord, of site plan, final building and site improvement plans, building and material specifications and the design of and materials used in all public improvements (Community Center, tennis courts etc.). (c) Proponent has provided proof of financial ability to proceed with construction in accordance with cost estimates approved by the City. Proponent to provide Construction Loan Commitment for the entire project (including Community Center and other public improvements) from a Lender acceptable to the City and proof of sufficient equity, provided confidentiality of financial information is maintained to the extent permitted by law. The Proponent is required to defend any public records request for such information. (d) Proponent has demonstrated — through long -term management contracts with Regent or other recognized luxury hotel operator — the experience and ability to manage a luxury resort. The agreement will list operators of the standard contemplated for the development and operation of the resort, such as Four Seasons, Montage and Regent. Error! Unknown document property name./Error! Unknown document property name.-Error! Unknown document property name. Error! Unknown document property name..Errar! Unknown document property name. a09/22104 (e) Closure of the mobilehome park and removal of all mobilehomes. . City to use reasonable efforts to close mobile home park assuming voter approval of Measure L. City has 3 years, after the election, to close the mobilehome park. If the City fails to close within 3 years, the option term is extended accordingly and Proponent has no obligation to pay additional option consideration for the extended term. In the event the City fails to close the mobilehome park within 5 years after the election the option shall be considered null and void. (f) The option agreement shall also be automatically extended beyond the initial 5 year term and for a reasonable period if Proponent, in spite of diligent efforts, has been unable to obtain agreements, approvals and/or permits from other agencies necessary to develop the Property. 3. Base Rent. — $1.1 million/year. Assuming parcelization (see Section - -), Rent to be allocated $144,000 to fractional parcel and $956,000 to resort parcel. Base rent shall be adjusted every 5 years to reflect an amount equal to 75% of the percentage rent during the prior 3 years but in no event shall base rent be reduced. 3.1 Abatement: - 50% abatement for 24 months after Option exercised or issuance of temporary certificate of occupancy whichever occurs first. 3.2 Construction Delay: - Full base rent and additional rent equal to 50% of estimated TOT (based upon PKF projection) for each 30 days hotel is not open after construction • deadline, subject to force majeure. 3.4 Reappraisal: - City shall commission an appraisal of the resort property as a resort after 25 years if the base and percentage rent is not within a specified percentage of comparable hotels on the basis of a "per room" comparison. Base rent shall be adjusted to reflect the appraisal or the adjustment pursuant to Paragraph 3, whichever is greater. 4. Percentage rent 4.1: Room Income: - 7% as to the hotel parcels. 4.2: Food/Beverage Income: 5% beverage; 3% food. 43: Miscellaneous: 10 %. 4.4: Credit for Base Rent: Base Rent on both the fractional parcel and hotel parcel shall be credited against applicable Percentage Rent. 4.5 Fractional Percentage Rent: The Parties have agreed, in concept, to an "in lieu" percentage rent on the fractional parcel and have discussed an amount equal to 6% of annual budget of the fractional owners association and with a specified minimum in the range of $60,000. The Parties acknowledge that the actual amount of the "in lieu percentage rent," the method of collection and remedies in the event of a default are unresolved and material issues.. • Error! Unknown document property name./Error! Unknown document property name. Error! Unknown document property name. Error! Unknown document property uame..Error! Unknown document property name. a09/22/04 -2- • 5. Use of Property — General 5.1 General: Authorized for 110 unit luxury resort which may include no more than 12 fractional "units" (not less than 4 week intervals) subject to satisfaction of conditions including SLC approval if any fractional is located on tidelands. 5.2 Constraints: The Property must be developed in substantial compliance with the approved site plan, all related land use approvals and mitigation measures and the EIR. In no event shall overall building envelopes exceed building height and bulk assumptions in the EIR. 5.3 Parking: On -site parking in the 100 space subterranean garage is limited to employees and guests of the resort. Proponent shall construct and City shall manage a 42 space parking facility at the southwest comer of the Property. 5.4 Spa: Use of spa by public shall be permitted only if Proponent can demonstrate no parking or traffic impact resulting from such use and City, in its sole discretion, approves. Use of Property - Fractionals 6.1 General: Fractional interests to be managed by fractional owners • association. The relationship between the hotel and fractional units is an unresolved and material issue. The Parties acknowledge City's desire that the relationship be structured to eliminate any obligation on the part of the City to provide the fractional units with services or amenities in the event of a default on the part of the hotel owner. The Parties also acknowledge the Proponent's concern that State agencies approve the relationship insofar as the impact of a default of the hotel tenant with respect to a termination of the services and amenities fractional owners would otherwise enjoy. City shall have the right to review and approve all governing documents. 6.2 Location: Fractionals can't occupy more than some limited percentage of the overall parcel and a limited percentage of the bayfront — with the percentage reviewed and approved by the State Lands Commission staff. Boundary Line Adjustment described in Section 5.7 below will limit Fractional Parcel Beachfront area to 30% or less of total beach frontage, subject to SLC approval. 6.3 Parcelization & Boundary Line Agreement: The Parties have reached tentative conceptual agreement as to the benefits of dividing the Property into creating three parcels — one for the resort (tidelands), one for the fractional units (tidelands or uplands) and one for the Community Center and public recreational facilities (uplands). The Parties contemplate separate leases for the resort and fractional parcels and a sublease of the fractional parcel to the fractional owners association. The Parties have also identified the need for a boundary line agreement with the State Lands Commission and that the terms and conditions of that agreement have yet to be negotiated. The Parties acknowledge that these are material and unresolved • Error! Unknown document property nameJError! Unknown document property name. Errorl Unknown document property name. Error! Unknown document property name..Error! Unknown document property name. a0922/04 -3- issues, that this is simply a summary of the issues and that these issues are related to those . identified in Paragraph 6.1. Fractional /TOT Equivalent Rent: 7.1 TOT Equivalent. All rentals of fractional units shall be subject to standard Transient Occupancy Tax (TOT). City will receive annual additional rent equal to the TOT that the City would have received (based on actual room rates and occupancy for similar units in resort) if fractional units were available for short term occupancy less the actual TOT received for the unit. TOT equivalent shall be paid as additional rent under ground lease for Fractional Parcel. TOT Equivalent is due 120 days after the end of each calendar year. 7.2 Marketing Program TOT: City to receive "normal" TOT - based on actual room rates and occupancy for the same period from any resort or fractional unit for which less than normal rent is charged in conjunction with any fractional sales program. Construction. 8.1 The Lease shall establish construction milestones to ensure timely completion with penalties for failure to comply, subject to force majuere. The Lease shall specify that the resort and public facilities, including the Community Center shall be constructed within 2 years after the option is exercised. 8.2 The materials, treatments, furniture, fixtures and equipment shall be equal is to or better than specified luxury resorts such as the Montage, Four Seasons and Peninsula hotels. 8.3 City, as landlord, shall have the right to have qualified contractor /architect inspect to ensure materials and finishes are as approved subject to agreement on a procedure that will minimize any construction delay. 8.4 If City contractor determines that quality of construction or materials fail to meet approved plans and materials, construction shall stop (or other appropriate sanctions will arise). 9. Transfer (Consideration) In the event of any transfer or sale of the hotel parcel within 54 months after the option is exercised, City shall receive 20% of the "purchase price" in excess of the lesser of a fixed amount or a capitalized value with the rate fixed upon transfer or assignment of Lease. The Parties acknowledge that the precise amount of the "fixed amount' and the "capitalized value" have not be agreed to and are material unresolved issues. City gets 20% of difference between hotel costs excluding timeshare costs and net sales proceeds. 10. Transfer (Conditions): No City consent required for a transfer or assignment to a recognized luxury hotel operator or to an entity that has no less than 20% equity (measured by • Error! Unknown document property name✓Error! Unknown document property name.-Error! Unknown document property name. Error! Unknown document property name..Error! Unknown document property name. a09/22/04 '4' the difference in the "purchase price" and the outstanding debt), and the transferee has either the • requisite luxury resort management experience or a contract with a management company or individual with the necessary experience. The Parties acknowledge that other criteria for a transfer that does not require City consent may be negotiated such as the assumption of all past and then current obligations under the lease(s) and the right of the transferee to assign or transfer without the City's consent.. . 11. Public Amenities: 11.1 General: Proponent will construct public improvements shown on the site plans, all at the time (within 2 years after exercise of the option) and in the manner described in the Lease. 11.2 Specific Public Improvements: Proponent shall, as material consideration for the Lease, construct and/or reconstruct, at its sole cost and expense and according to plans approved by the City and any other relevant agency the following: (a) A 6200 square foot Community Center; (b) All public recreation facilities including the tennis courts and the public parking area on the southwest comer of the property. (c) A public promenade along the bayfront; • (d) Areas along the promenade where residents /visitors can congregate; (e) A public restroom conveniently located for beach - goers; (f) Any public facilities required as conditions to permits issued by the Coastal Commission, the Santa Ana Regional Water Quality Control Board or other public agency; (g) Any facilities on the Property necessary to allow public access to a promenade across American Legion frontage. 12. Public Programs Proponent shall provide storage on bay front for up to 20 sabots and 8 lidos to replace current storage area at 19th street. Resort guests may use tennis court as available in the same manner as members of the public except when reserved for lessons by Community Services Department. City fully controls the public parking area on southwest comer of parcel. Proponent to contribute $25,000 (5,000 per year for first 5 years) to be used by City to administer or purchase sailing vessels for children's sailing program. 13. Marina: • Use of the Marina shall be limited to temporary tie -ups (less than 1 week) for guests of the resort hotel or restaurant. No charter boat activity or docking shall be permitted and no rental Error! Unknown document property nameJError! Unknown document property name.-Error! Unknown document property name. Error! Unknown document property name..Errar! Unknown document property mane. a09/22/04 -5- to third parties. Proponent is responsible for maintenance. All piers /floats will be within the . pierhead line unless obtain ACOE grants permission to extend beyond. City has no obligation to ensure adequate depth in channel 14. Noise: No noise shall be generated in violation of City's noise ordinance. 15. Hazardous Materials: No storage on site (except pool chemicals) and all pool chemicals stored pursuant to all applicable law. 16. Maintenance: Proponent shall maintain the Project as well as public improvements (such as the parking area and promenade) at its cost and expense. Proponent obligated to refurbish the Community Center whenever resort or any substantial portion thereof is painted or refurbished. All maintenance shall be to luxury resort standards. Replacement Reserve equal to the "flag" standard or fixed amount (4% of net income) if no flag operator. Resort reserves of 4% will be set aside and spent in accordance with annual plan submitted to City with verification protocol; fractional association will include Department of Real Estate approved reserves in annual budget. 17. Insurance: Casualty and general liability with City as an additional insured on both. Coverage limits are $25,000,000 per occurrence with no declining balance provision. 18. Lender Provisions: Resort and fractional leases to contain usual and customary institutional lender provisions not inconsistent with the basic economic provisions. • n U Error! Unknown document property nameJError! Unknown document property name.-Error! Unknown document property name. Error! Unknown document property name..Error! Unknown document property name. a09/22/04 -6- • to third parties. Proponent is responsible for maintenance. All piers /floats will be within the pierhead line unless obtain ACOE grants permission to extend beyond. City has no obligation to ensure adequate depth in channel 14. Noise: No noise shall be generated in violation of City's noise ordinance. 15. Hazardous Materials: No storage on site (except pool chemicals) and all pool chemicals stored pursuant to all applicable law. 16. Maintenance: Proponent shall maintain the Project as well as public improvements (such as the parking area and promenade) at its cost and expense. Proponent obligated to refurbish the Community Center whenever resort or any substantial portion thereof is painted or refurbished. All maintenance shall be to luxury resort standards. Replacement Reserve equal to the "flag" standard or fixed amount (4% of net income) if no flag operator. Resort reserves of 4% will be set aside and spent in accordance with annual plan submitted to City with verification protocol; fractional association will include Department of Real Estate approved reserves in annual budget. 17. Insurance: Casualty and general liability with City as an additional insured on both. Coverage limits are $25,000,000 per occurrence with no declining balance provision. 18. Lender Provisions: Resort and fractional leases to contain usual and customary institutional lender provisions not inconsistent with the basic economic provisions. • • Error! Unknown document property nameArror! Unknown document property name.-Error! Unknown document property name. Error! Unknown document property name..Error! Unknown documentproperty name. a0922 /04 -6- . -_U /41/�l.'CJ4 ;:�:_: 'a55�a_G27 F Dav- ._ Face e_ • 4500 Campus Drive Julie o50 Beach. CA 92660 STEPHEN R. SUTHERLAND Telephone E -Mail s.: 757 -1662 Designer and Developer of Worid -Class Hotels and Resort Facilities • Designed major facilities for Carlson Hospitality Worldwide, Hilton Hotels Corporation, Radisson Hotels, Hyatt Hotels, Wyndham Hotels, West Coast Hotels and Resorts, Sun Stone Hotels, Grupo Chartwell de Mexico and Grupo Casa de Mexico . • Design based on the economic viability of each project • Services include: Architecture, Interior Design, Construction Management, Purchasing and Interior Installations. • Responsible for client relations, budget development, project schedules, design concepts, project management, construction management Sutherland Talla Hospitality Managing Partner June 1999 - Present • Development of the Regent Newport Beach Resort Maneuvered through difficult negotiations to obtain consents and support for project, • Competed with nine independent proposais for the right to exclusive development of the proposed site granted by the City of Newport Beach. • Designed an economically viable and ecologically sensitive resort facility to meet the needs of neighbors, the City, and civic organizations_ • Created an organization of competent professionals to insure the best possible outcome. Siepnen R. Sutheriand Company Managing Director September 1990 - January 2000 • Designed numerous hotel and resort faciihies In North American Tor a variety of clients. • Supervised the activities of a team of architects, engineers, interior designers and other professionals. ... ... • Worked closely with orients to Develop rapport and a stronD working retationsnip to insure project completion within budget and in a timely manner, EDUCATION University of California, irvine - Schooi of 6ociai Ecology • Numerous in- service training programs and seminars re continuing education PROFESSIONAL "ACTIVITIES • Newport Beach Economic Deveiopmeni Committee - Vice - Chairman • Business Advisory Council - National Republican Congressional Committee Honorary Co- Chairman Re:_-ivev 2001 California Businessman of the Year Award • American Institute of Architects Associate Member (Retired) Craig Morissette, 949 -675 -2237 Questions for the council, or any staff member: Is Mr. Sutherland a licensed architect and/or contractor? Are you conducting city business with a verified legal entity, either Sutherland Talla Hospitality LLP or LLC? Has anyone seen a State LLP Certificate or Articles of Organization for an LLC for Sutherland Talla Hospitality? . Has anyone seen a Dunn and Bradstreet financial statement for either Sutherland Talla Hospitality LLC or LLP? Where in the MOU will the $20million oversight and Mr. Sutherland's resume be placed for voters to see? 0