A RESOLUTION TO APPROVE A SECOND AMENDMENT TO THE ASSIGNMENT AND ASSUMPTION AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY, RYAN COMPANIES, U.S., INC., AND PIEMONTE BUSINESS PARK, LLC

SUBJECT:

A RESOLUTION TO APPROVE A SECOND AMENDMENT TO THE ASSIGNMENT AND ASSUMPTION AGREEMENT BETWEEN THE CITY OF ONTARIO REDEVELOPMENT AGENCY, RYAN COMPANIES, U.S., INC., AND PIEMONTE BUSINESS PARK, LLC

RECOMMENDATION: That the Redevelopment Agency Board adopt a Resolution approving a Second Amendment to the Assignment and Assumption Agreement between the City of Ontario Redevelopment Agency, Ryan Companies, U.S., Inc., and Piemonte Business Park, LLC and authorize the Executive Director to execute all other documents necessary for the implementation of the Agreement.

COUNCIL GOALS: Invest In The Growth And Evolution Of The City’s Economy · Promote the creation of mixed-use urban centers at Guasti Plaza, in the Civic Center and at Ontario Center.

FISCAL IMPACT: The recommended amendment includes provisions to return $850,000 of the Good Faith Deposit to the Ryan Companies while retaining $150,000. These funds are held in City/Agency accounts during the terms of the respective agreements.

BACKGROUND: The Redevelopment Agency entered into a Disposition and Development Agreement (“DDA”) on November 9, 2004 with Panattoni Development Company, LLC for the project referred to as Piemonte located in Redevelopment Project Area No.1. The Piemonte project is a mixed-use urban center planned around the recently completed Citizen’s Business Bank Arena. Subsequent assignments and related implementation agreements have resulted in Piemonte Business Park, LLC now being the fee title owner of the property on which a full-service hotel is planned to be developed as part of the Piemonte project (“Development Parcel”).

A full-service, first-class hotel (located immediately adjacent to the Arena) has always been viewed as an integral component of the vision for the Piemonte project. Following approval of the DDA and after extensive efforts, Panattoni and Agency staff identified the Ryan Companies U.S., Inc. (“Ryan”) as the preferred developer for the hotel. Ryan has developed many hotel projects with flags such as Radisson, Sheraton and Westin and has completed projects in more the 150 U.S. cities.

On October 16, 2007, the Agency Board approved an Assignment and Assumption Agreement (“Assignment Agreement”) between the Redevelopment Agency, Piemonte Business Park and Ryan which provides for Ryan to assume Panattoni’s obligation to develop the hotel and releases Panattoni from various requirements related to that development. A subsequent First Amendment to the Assignment Agreement was approved by the Agency Board on May 30, 2008. Pursuant to the terms of the Assignment Agreement, Piemonte Business Park and Ryan entered into a Purchase and Sale Agreement (subsequently amended in March 2008 and May 2008) for the Development Parcel, which establishes a date for close of escrow for conveyance of the Development Parcel of February 15, 2009.

In light of the current condition of the financing markets, Ryan has made a request of the Agency to revise the Schedule of Performance and to return to Ryan a portion of the Good Faith Deposit, which was originally transmitted to the Agency pursuant to the terms of the Assignment Agreement. This Second Amendment to the Assignment and Assumption Agreement (“Second Amendment”) provides that the Agency retain $150,000 and return $850,000 of the Good Faith Deposit amount and revises the Schedule of Performance establishing the date for the close of escrow as December 31, 2009. In consideration for these provisions, the Agency shall have the right to solicit proposals and negotiate with other hotel developers for the Development Parcel. Second, the Agency shall, in the event of a termination under the Assignment Agreement or if close of escrow on the Development Parcel does not take place by December 31, 2009, assume Ryan’s right, title and interest in and to the plans, specifications and related agreements for the Development Parcel. The subject Amendment has been approved as to form by Agency Special Counsel.

STAFF MEMBER PRESENTING: John Andrews, Redevelopment Director