This report reviews seven agreements involving American Mall Properties (AMP), the owners of Town Center, and the City and Redevelopment Agency. These agreements describe the exchange of land, the upgrade to portions of the existing parking structure, the demolition of the center section of the parking structure, the development of two new parking structures and additional retail space at the Mall, and the operation and maintenance of the new parking structures. The report summarizes and highlights the essential elements of each agreement. Staff is recommending approval of the agreements by the City and Redevelopment Agency and approval of the resolutions authorizing the exchange of land for development of the parking structures.

At meetings on March 11, 1999, the City Council and the Redevelopment Agency approved the land exchange between the Agency and American Mall Properties (AMP), and approved the Special Development Permit and the Tentative Map for AMP’s remodeling of the Town Center. AMP is planning to develop a 20-screen theatre and additional retail to extend the Town Center to Mathilda Avenue, as well as add retail along Washington Avenue and connect Murphy Avenue to the front door of Town Center. This report summarizes the various agreements related to the development that are necessary to enable the project to proceed.

The Socio-Economic Sub-Element of the General Plan states an objective:

The Redevelopment Plan includes:

This report reviews seven agreements involving AMP and the City and the Redevelopment Agency. These agreements describe the upgrade to the existing parking structure, the exchange of land, the demolition of the center section of the existing parking structure, the development of two new parking structures and additional space at the Mall, and the operation and maintenance of the new parking structures. These agreements are necessary for and entirely consistent with the approvals granted by the City Council and RDA on March 11, 1999. The following summarizes and highlights the essential elements of each agreement. All the agreements refer to Sunnyvale, LLC, as the entity with whom the City or the Redevelopment Agency is entering into agreements. Sunnyvale LLC and American Mall Properties are synonymous. Sunnyvale LLC is the legal name for the company that owns Town Center.

The documents are consistent with the Special Development Permit that was approved by Council on March 11, 1999.

• Existing Parking Improvement Agreement is between the Redevelopment Agency, the City and AMP. The Redevelopment Agency has had capital project funds budgeted for a number of years to repair the existing parking structure. However, with the potential change in ownership of Town Center, the project was delayed until it was known what was going to happen with Town Center. With this Agreement the Agency shall contribute up to $550,000 to repair the structure. This is within the capital project budget. The total cost to add new shear walls and upgrade the structure, excluding the demolition of the center section, will be approximately $1,000,000.

• Agreement of Exchange and Development of Properties Agreement describes the land exchange between the City, Redevelopment Agency and AMP. The City and the Redevelopment Agency will exchange: the center section of the parking structure, the properties on Mathilda Avenue and McKinley Avenue, for the two properties on Sunnyvale Avenue where the parking structures will be built. The Redevelopment Agency will own the two parcels and the City will receive $1,495,000 from AMP. Council approved this action on March 11, 1999.

• Parking Demolition Agreement is between the Redevelopment Agency and AMP. This Agreement states that after AMP acquires the middle section of the existing parking structure, the Reciprocal Easement Agreement is signed, and the two remaining parts of the structure are secure, then the middle section can be demolished.

• Second Amendment of Parking Sublease. The parking sublease is an agreement between the City and American Mall Properties regarding the operation and maintenance of the existing parking structure. The center section of the existing parking structure will be demolished and the new theatres and additional retail will be built in that location. This will remove approximately 800 spaces from the existing structure and the sublease has to be amended to reflect this new condition.

• Public Improvements Development Agreement is the agreement between AMP and the City and Redevelopment Agency that describes the construction and payment process for the two new parking structures. This agreement outlines a schedule by which the Developer must complete the different phases of construction and ties the new parking structure construction to the theater and retail additions that AMP is undertaking. It also requires coordinated openings of the theatres and the parking structures, and outlines the events that will occur if AMP does not construct the theatres or only constructs partial improvements.
• It is anticipated that the demolition of the center of the existing parking structure will occur in July or August 1999. Construction of the theatre and retail underneath will begin after demolition.
• The parking structures will not begin construction until January 2000. This is to prevent disruption of the holiday shopping season for both Town Center merchants, as well as surrounding merchants who are dependent on Town Center parking. The estimated completion date for the theatres, retail, and parking structures is Labor Day 2000.
• The cost of construction of the new parking structure will be paid for by the Bond Anticipation Notes, but will be based on a guaranteed maximum price construction contract.

• Operation and Maintenance Agreement. The Redevelopment Agency will own two parcels of land on Sunnyvale Avenue and lease them to the City for the two new parking structures. The City will own these parking structures and will execute an Operation and Maintenance Agreement with AMP that outlines AMP’s responsibilities in operating and maintaining the structures. The Operation and Maintenance Agreement is only concerned with the two new parking structures on Sunnyvale Avenue. AMP will be responsible for all costs and expenses of operating these new structures.

AMP is undertaking all the construction for the improvement to Town Center. Because of this, it is most efficient and cost effective for AMP to manage the construction of the new parking facilities since they will be integrated and connected to buildings at Town Center and AMP will be paying the special taxes that will provide the debt service for the bonds. The parking structures will provide a benefit to the project area by providing parking for Town Center, as well as for the surrounding businesses in the redevelopment project area. It will assist in elimination of blight in that area by providing additional parking to serve the businesses in the area and facilitating additional retail and theatre

uses that will draw additional business to the area. The structures are also consistent with the Agency’s implementation Plan. There is no other reasonable means of financing the parking structures on Parcel E and Parcel F other than through the Mello-Roos mechanism to be paid by special taxes levied on the center since the Agency does not have sufficient tax increment revenue to construct the structures and the City does not have sufficient unallocated capital funds to construct the structures.

The project is consistent with the Redevelopment Agency’s Implementation Plan in that the Agency’s role includes land assembly to stimulate surrounding private reinvestment, to increase business retention and attraction, tax generation and reestablishment of a vital downtown core.

The attached resolutions authorize the City Manager/Executive Director of the Redevelopment Agency to execute the agreements outlined above with any necessary administrative changes. The resolutions also make the following findings consistent with Section 33445 of California Revelopment Law that the parking structures are of benefit to the project area, that no other reasonable means of financicng the structures are available, and that the Agency’s contribution to the cost will assist in the elimination of one or more blighting conditions in the project area. Staff is recommending approval of the resolutions.

Capital Project No. 803100 has sufficient funds budgeted to pay up to $550,000 toward the upgrade to the existing parking structure. The land exchange will result in a payment of $1,495,000 to the City.

This report was noticed through the publication of the City Council and Redevelopment Agency agenda.

1. City Council approve the Resolution authorizing City Manager to execute the agreements outlined above with any necessary administrative changes and approve the following findings.
2. The Board of the Redevelopment Agency authorize the Executive Director of the Redevelopment Agency to execute the agreements outlined above with any necessary administrative changes.
3. Decide to modify or not to approve the resolutions.

Staff recommends that the City Council approve Alternative 1 and that the Board of the Redevelopment Agency approve Alternative 2.

Prepared by:

Dyane Matas, Housing and
Neighborhood Preservation Officer

Reviewed by:

David S. Boesch, Jr.
Director, Community Development

Approved by:

Robert S. LaSala
City Manager

Resolution A
Resolution B