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SR-05-24-1988-6B . f/O-Ot23 . '-6 C/ED:PB:ljw Council Mtg: MAY 2 4 1988 Santa Monica, california May 24, 1988 [I .. l-' - c' ! j TO: Mayor and City Council city Staff FROM: SUBJECT: Second Reading and Findings for National Medical Enterprises Development Agreement Amendment At the city council meeting of May 10, 1988, the Council introduced for first reading the Ordinance adopting the Third Amendment to the Development Agreement for the National Medical Enterprises development at 2600 Colorado Boulevard. In presenting the Third Amendment, staff neglected to include recommended findings for city Council consideration in its approval of the agreement amendment. As part of the adoption of the Ordinance, the City Council should adopt the following findings as part of its action: 1. The Third Amendment is consistent with the obj ecti ves , policies, general land uses and programs specified in the general plan. 2. The Third Amendment is compatible with the uses authorized in the district in which the real property is located. 3. The Third Amendment is in conformity with the public necessity, public convenience, general welfare, and good land use practices. - 1 - 6-B MAY 2 4 1~~8 . . 4. The Third Amendment will not be detrimental to the health, safety and general welfare. 5. The Third Amendment will not adversely affect the orderly development of the property. 6. The Third Amendment will have a positive fiscal impact on the city. RECOMMENDATION It is recommended that the City Council adopt the attached Ordinance amending the Development Agreement as indicated in the attachment. Attachments: A) B) Ordinance Amending Development Agreement Third Amendment to Development Agreement Prepared by: Paul V. Berlant, Director of Planning City Planning Division Community and Economic Development Department reading 5/16/88 - 2 - . . CA:RMM:lld320/hpc City Council Meeting 5-24-88 Santa Monica, Ca1ifornla ORDINANCE NU~BER (City Council Series) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA APPROVING THE THIRD AHENDMENT TO THE DEVELOPMENT AGREEHENT BETWEEN THE CITY OF SANTA MONICA AND NATIONAL MEDICAL ENTERPRISES, INC. THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES ORDAIN AS FOLLOWS: SECTION 1. The Third Amendment to Development Agreement attached hereto and incorporated by reference between the City of Santa Monica, a municipal corporation, and National Medical En~erprises, Inc., a Nevada corporation, is hereby approved. SECTION 2. Each and every term and condition of the Third Amendment to the Development Agreement approved in Section 1 of this ordinance shall be and is made a part of the Santa Monlca Municipal Code and any appendices thereto. The City Council of the City of Santa Monica flnds that the publlC necessity, public convenience, and general welfare require that any provislon of ~he Santa Monica Municipal Code or appendices t:'ereto lnCOnS1.stent with the provisions of thls Second Amendment to Development Agreement, to the extent of such inconsistencies and no further, is hereby repealed or modified to that extent - 1 - . . necessary to make fully effective the provisions of this Second Amendment to Development Agreement. SECTION 3. Any provision of the Santa Monica Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, are hereby repealed or modified to that extent necessary to affect the provisions of this Ordinance. SECTION 4. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of any competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City council hereby declares that it would have passed this Ordinance, and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the Ordinance would be subsequently declared invalid or unconstitutional. - 2 - . . SECTION 5. The Mayor shall sign and the City Clerk shall attest to the passage of this Ordinance. The City Clerk shall cause the same to be published once in the official newspaper within 15 days after its adoption. This Ordinance shall become effective after 30 days from its adoption. APPROVED AS TO FORM: ROBE~E~ Q---~ City Attorney - 3 - f::;'J,r I. t>"IL ' ,r.. . . THIRD AMENDMENT TO DEVELOPMENT AGREEMENT Between THE CITY OF SANTA MONICA, CALIFORNIA and NATIONAL MEDICAL ENTERPRISES (2600 Colorado Avenue) That certain Development Agreement entered into as of April 16, 1982, between Colorado Place Associates, a California general partnership (the "First Prior Owner"), and the City of Santa Monica, a charter city organized and existing under the laws of the state of California, and its various agencies (collectively, the "ci ty") and governing the development of the real property located in the city and described in Exhibit "An attached hereto (the "Property"), as recorded on April 21, 1982, as Instrument No. 82-413680 in the office of the County Recorder of Los Angeles County, California, as amended by the Covenant and Agreement thereto dated August 30, 1984, between the City and Campeau/Sedgwick Properties, a general partnership organized under the laws of the State of California, and Campeau Corporation California, a California corporation, and Grant SedgwiCk, an individual, as further amended by the First Amendment thereto dated February 20, 1987, between the City and 2600 Colorado Associates, a California limited partnership and Campeau Corporation of California, a California corporation, the successors-in-interest of the First Prior Owner (collectively, the "Second Prior Owners"), as recorded on February 26, 1987, as Instrument No. 87-287297 in the office of the County Recorder of said County, as further amended by a Second Amendment thereto - 1 - . . dated April 8, 1987, between the City and National Medical Enterprises, Inc., a Nevada corporation (the "Successor Owners.'), as successor-in-interest of the First Prior Owner and the Second Prior Owners to the Property and with respect to and under such Development Agreement, as so amended, as recorded on April 16, 1987, as Instrument No. 87-592069, is hereby amended in the following particulars by the city and the Successor Owner: l. Deletion of Earlier Provisions. Paragraphs 6, 7 and 9 of the Development Agreement and Paragraph 2ee) of the First Amendment are hereby deleted and the provisions of this Amendment are substituted in their place. 2. Definitions. Capitalized terms that are used in this Amendment that are defined in this Amendment shall be defined as set forth in this Amendment. Capitalized terms that are used but not defined in this Amendment shall be defined in the same manner as they are defined in the Development Agreement, the Covenant and Agreement thereto, the First Amendment thereto, or the Second Amendment eas the case may be), except wherever the context of this Amendment indicates otherwise. 3. Paragraph 6 shall read as follows: 6. Day Care Center. (a) Preparation of Center Space. (1) In connection with the space used as the Day Care Center (the IICenterU) , the Successor Owner agrees to provide such improvements, - 2 - . . interior and exterior, as may be required under all state, federal, and local laws, rules and regulations applicable to space utilized for day care centers, including, but not li~ited to, the following: (A) Finished perimeter walls including windows and doors. eB) Finished interior partition walls adequate to enclose the spaces required by California State Standards for day care centers (toilet rooms, office, staff rest area). eC) Toilet room fixtures and plumbing. (D) Carpeting, vinyl floor tile and wall base, acoustic tile ceiling and stubbing for natural gas cooking equipment. (E) Heating and ventilating system, electrical system, including fluorescent lighting, and fire sprinklers meeting Fire Department regulations, if required. (2) For purposes of this Section, "finished walls" shall mean qypsum board, taped, spackled, and painted. (3) The Successor Owner shall provide outdoor play equipment valued at no less than $3,000.00, or shall provide the sum of $3,000.00 to the City to purchase such outdoor play equipment. (4) The Successor Owner shall provide necessary furnishings and equipment for the - 3 - . . indoor area valued at no less than $2,000.00, or shall provide the sum of $2,000 to the City to purchase such furnishings and equipment for the indoor area. (5) The Center shall be provided and ready for occupancy no later than ninety (90) days after the issuance of the permanent Certificate of Occupancy for the Building. (6) The space and related facilities for the Center shall, under current California licensing standards, be sufficient to enab1 e the Center to be currently 1 icensed by the state of California as a day care center for a minimum of sixty {50} children. (7) The ireprovements comprising the Center shall not diminish the size of the portion of the property to be developed as the Park. (S) Except as otherwise provided in subparagraph (b) below, the space for the Center shall be provided for the life of the Building. (b) Use and operation of Day Care Center. (1) The space and improvements dedicated and intended for use as the Center (the nCenter Space") shall be used and operated as a day care center in accordance with the provisions of this subparagraph (b) as long as it is required to be used and operated as such under this subparagraph (b). (2) As long as the Center Space is operated as a day care center; - 4 - . . (A) It shall be licensed as such and shall be operated by a qualified licensed operator selected in the manner provided in this subparagraph eb} (tlOperator"). (B) The Priority children as hereinafter defined in subparagraph (6) shall have priority over all other children to be admitted and to attend the Center. (3) The Successor Owner shall have the right to lease the Center Space to an Operator selected by the Successor Owner, which may be owned edirectly or indirectly) by or ''Otherwise affiliated with the Successor Owner. However, such Operator is subject to approval by the City in accordance with the following: (A) Successor Owner shall notify the City in writing of the identity, qualifications, experience, and references of the Operator selected by Successor Owner. The city shall have a period of sixty (60) days from receipt of said notice to advise Successor Owner in writing of any reasonable objections the City may have to the Operator selected by Successor Owner. (B) The failure of the city to object in writing to the Operator selected by Successor owner within the prescribed sixty (60) day period shall be deemed to constitute the City's approval thereof. - 5 - . . (C) Notwithstanding the foregoing, it shall not be reasonable for the City to object to an Operator selected by Successor Owner if all of the fOllowing conditions exist: (1) The staff employed by the Operator possess the qualifications set forth in the Accreditation Criteria & Procedures manual of the National Academy of Early Childhood Programs (the "Criteria") published in 1984. (ii) The Operator has agreed to provide regular training opportunities for staff to improve skills in working with children and families and plans to provide such opportunities to staff at the Center. (iii) The program offered and administered by the Operator meets the group size and staff-child ratio in each age group set forth in the criteria. (iv) The program offered and administered by the Operator is developmentally appropriate in all areas: social, emotional, cognitive, physical, and language. (v) within three (3) years of the date the Center Space is ready for occupancy, the program offered by the Operator shall be accredited by the National Academy of Early Childhood Programs. - 6 - . . (vi) The Center Space is provided to the Operator at an annual cost of not to exceed One Dollar ($1.00). eD) Within forty-five (45) days of the date of the expiration of each three (3) year period during which the center is operated by an Operator selected by Successor owner, Successor Owner shall verify in writing to the city that the operations of the Center are in compliance with the provisions of subparagraphs (3) (e) (i) , (ii) , (iii), and (iv) above. In addition, upon reasonable notice to Successor Owner, City shall have the right to inspect books and records kept by Operator or Successor O~~er related to operation of the Center to ensure compliance with the criteria and with this Agreement. (4) So long as reasonably required by First Priority Children, the program offered by Operator shall include infant care. (5) If, after construction of the Center is completed and the Center is licensed and occupied, the Center is at any time not operated by the Successor Owner or a qualified licensed Operator selected by the Successor Owner for a continuous period of six (6) months, or Successor Owner elects not to operate the Center, Successor Owner shall immediately notify the City in writing. Within one year of the date of such notification by Successor - 7 - . . Owner, the city shall have the right to select an Operator to whom the Successor Owner has no reasonable objection. It shall not be reasonable for Successor Owner to object to an Operator selected by City if the conditions set forth in subparagraphs 6(b}(3)(C}ei) - (iv) exist. The Successor Owner shall be obligated to lease the Center Space to the Operator selected by the city within sixty (60) days after the date upon which the City provides the Successor Owner with written notice of the name, address, and description of the experience and financial qualifications of the proposed Operator and such other information on the proposed Operator as the Successor Owner may reasonably request. The failure of the Successor Owner to object in writing to the operator selected by city within said sixty (60) day period shall be deemed to constitute the Successor Owner's approval thereof. The Successor Owner shall be obligated to lease the Center Space to the Operator selected by the City at a rental rate specified by the City, which may be as low as $1.00 per year, with the Operator being obligated to pay all maintenance and repair costs, insurance premiums and taxes and for a rental term to be deternined by the City. If the rental term exceeds five (5) years under an option or other agreement, Successor Owner's approval must be obtained. If the rental rate specified by the City exceeds $1. 00 per year, such excess shall be paid to and divided equally - 8 - . . between the City and the Successor Owner. otherwise, such lease shall be on such reasonable other terms and conditions as may be appropriate. During any period that the Center is not being operated, Successor Owner may use the Center for its own limited purposes (e.g., storage or any silni1ar activity that does not intensify the use of the site). During any such period of use, Successor Owner shall make no structural changes to the Center- nor shall it place any encumbrances on the Center that would prevent Successor Owner from vacating the Center upon thirty (30) days' written notice. (6) If the City's right to select an Operator arises under the preceding subparagraph (4) and the City fails to select an Operator to whom the Successor Owner has no reasonable objection within the prescribed one year period, above, or the City fails to operate the Center for any continuous six month period, the Successor Owner shall be released from all obligations under this Paragraph 3 and all of the Center Space shall automatically revert to the Successor Owner. If such reversion occurs, Successor Owner may use the site for any activity which does not materially increase the intensity of use of the site or require additional on-site parking_ Such use may include storage or use as an ancillary facility by then-existing occupants of the Building. - 9 - . . (7) As used in this Amendment, the term "First Priority Children" means children of individuals employed in the Building, tenants of the Building, or employees of the Successor Owner or any of its subsidiaries or affiliates whose offices are located in the City of Santa Monica or who live within the City of Santa Monica or any future owner of the Property or employees of a future owner of any subsidiary or affiliate of a future owner of the Property whose offices are located on the Property. It is Successor owner's intent to benefit all of its employees, regardless of income level, by providing affordable chi1dcare services to First Priority Children. As used in this Amendment, the term "Second Priority Children" means children of residents of the Ci ty. The parent or guardian of a Second Priority child shall be required to show a driver's license or identification card and a recent utility bill in order to establish residency wi thin the City. If at any time vacancies exceed nine (9) spaces, Successor Owner shall notify the city in writing within thirty (30) days and shall conduct a reasonable outreach effort among residents in the City of Santa Monica to fill such vacancies. (8) When and if the Center has enrollment capacity in excess of the First Priority Children enrolled in the Center, such excess shall be offered for use by children who are Second Priority - 10 - . . Children, followed by non-priority children. The enrollment fees and tuition for the Second Priority and non-priority children shall be equal to or less than the fees charged to Priority Children and/or the equivalent value of such fees as an employee benefit. Once a Second Priority or non-priority child has been accepted for enrollment at the Center, such child shall not be displaced for a higher priority child who subsequently applies for enrollment. (c) Site Review. site and interior floor plans shall be subject to review and approval by the Planning Commission. Such review and approval shall take place within sixty (60) days of submission of plans by Successor Owner. 4. Paragraph 7 shall read as follows: 7. Cotr~unity Space. (a) Preparation of Community Space. The communi ty Space shall be provided and ready for use wi thin eighteen (18) months after a Certificate of Occupancy is issued for the Building, and shall be provided for the life of the Building, except as provided under subparagraph (c) below. The Successor Owner shall provide the following: finished perimeter walls including doors and windows, vinyl floor tile and wall base, acoustic tile ceiling, fluorescent liqht fixtures, roughed-in plumbing for toilet rooms, primary electrical service to the space, an allowance of up to $4,000 for the heatinq and ventilating - II - . . system, and fire sprinklers if required to meet Fire Oepartment regulations. Although the Community Space may be located contiguous to the Center Space, the co~~unity Space shall have its own separate entrance and shall share no common facilities with the Center Space. (b) Use and operation of Community Space. The Successor Owner shall lease the Community Space to the City on a long-term triple net lease at the rate . of $1.00 per year. The community Space shall be used and operated by the Cityts Recreation and Parks Oepartment for public meetings and other public recreational and civic activities. The use of the Communi ty Space shall not unduly interfere with the operation of the Center and shall be compatible with the operation of the Center. (c) Release of community Space. If at any time after completion of the Community Space the City fails to use the Community Space on a continuous basis for a one (1) year period, the Community Space shall be released from all conditions herein and shall revert to Successor Owner for any use selected by Successor Owner that is compatible with the Building and the Center. (d) site Review. Site and interior floor plans shall be subject to review and approval by the Planning Commission. Such review and approval shall - 12 - . . take place within sixty (60) days of submission of plans by Successor Owner. 5. Paragraph 9 shall read as follows: 9. Arts and Social Services Fee. (a) Off-Site Art. Successor Owner shall pay to the Santa Monica Arts Foundation (the t'Foundation") Twenty-Five Thousand Dollars ($25,000.00) for the acquisition of artwork which will be placed in public places within the city at the discretion of the Foundation, the Santa Monica Arts Commission (the "Arts commission"), and the City Council. Such sum shall be paid not later than 45 days following the date of final action by the City on the Ordinance approving the Third Amendment to the Development Agreement. Successor Owner shall have no ownership interest in any artworks acquired by the Foundation with such donated funds. (b) On-site Art. Successor Owner shall consult with the Arts Commission concerning the selection and placement of artworks within the proj ect. Final selection and placement of artworks within the Project shall be in the sole discretion of Property Owner. Neither the Arts Commission nor the Foundation shall have any ownership interest in any artworks within the Project. (c) Homeless Services. Successor Owner shall pay to the City not later than forty-five (45) days following the date of final action by the City on - 13 - . . the ordinance approving the Third Junendment to the Development Agreement, the sum of Twenty-Five Thousand Dollars e$2S,OOO.OO), which sum shall be used by the City only for services to homeless persons or families, or for the acquisition, construction, rehabilitation, or operation of a facility to provide services or temporary shelter for homeless persons or families. 6. Status of Development Agreement. Except as amended by this Amendment, the Development Agreement, as amended by the First Amendment and Second Anlendment, shall remain in full force and effect in accordance with its terms and conditions. Notwithstanding the foregoing, in the event of any inconsistency between this Al'llendment and the Development Agreement, as amended by the First and Second Amendments thereto, the applicable provisions of this Amendment shall govern. - 14 - . . Signed at Los Angeles County, California, as of , 1988. CITY OF SANTA MONICA, a municipal corporation By JOHN JALILI City Manager APPROVED AS TO FORM: ROBERT M. MYERS city Attorney NATIONAL MEDICAL ENTERPRISES, INC. a Nevada corporation By RICHARD K. EAMER Chief Executive Officer and Chairman of the Board of Directors By Its: 11d3l0/hpc - 15 - ... . . COl:NTY OF LOS ANGELES ) ) ) ss. STATE OF CALIFORNIA On , 1988, before me, the undersigned, a Notary Public in and for said State, personally appeared John Jali1i, known to me to be the City Manager of the C~ty of Santa Monica, a charter city, organized and existing under the laws of the State of California, known to me to be the city that executed the within Instrument, known to me to be the person who executed the within Instrument on behalf of the City therein named, and acknowledged to me that such City executed the within Instrument pursuant to its Charter or ordinance of its City Council. WITNESS MY HAND AND OFFICIAL SEAL. Notary Public - 16 - t. . . STATE OF CALIFORNIA ss. COUNTY OF LOS ANGELES On J 1988, before roe, the undersigned, a Notary Public in and for said state, personally appeared , personally known to me or proved to me on the basis of satisfactory evidence to be the person who executed the within instrument at of the partners of the partnership that executed the within instrument, and acknowledged to me that such partnership executed the same. WITNESS MY HAND AND OFFICIAL SEAL. Notary Public - 17 -