SR-08-02-1978-6QSanta Monica, California, August 9, 1978
TO: Mayor and City Council
AUG 2 2 1978
FROM: City Staff
C7/1 /(/CI ;10i
SUBJECT: Proposed Agreement on Ocean Towers Cooperative Project
Introduction e � �L
This report recommends the City Council approve an agreement
with the owners of the Ocean Towers buildings whereby they
agree to pay the $317,000 which would be due in cooperative
conversion taxes in exchange for the City's agreement that they
will not be compelled to process an application for conversion
to a cooperative project when the procedures are subsequently
established.
Background
In February the City enacted a moratorium on stock cooperatives
pending adoption of ordinances establishing standards and pro-
cedures for cooperative projects and imposing a one time $1,000
tax per unit on them. The moratorium ended August 7th and while
the tax measures have been adopted the standards and procedures
will not be effective until September 20th. Prior to the mora-
torium the owners of the 317 unit Ocean Towers complex at 201
Ocean Avenue had commenced proceedings to convert the buildings
to cooperatives and have all but completed the process, the
buildings being sold out with 50% of the present tenants having
purchased the apartments in which they reside. The owners,
AUG 2 2 1978
Mayor and City Council - 2 - August 9, 1978
seeking to cooperate with the City and avoid possible liti-
gation as to the City's power to restrict cooperative activi-
ties, have offered to pay the $317,000 in exchange for an
agreement that the City will not attempt to compel them to go
through the process of being approved by the Planning Commission.
The building meets the standards proposed by the Planning Com-
mission for conversion and there is little doubt on the staff's
part that approval would be granted were an application filed.
Advantages to the City include substantial savings in litigation
costs, immediate receipt of the $317,000 which would be due in
taxes, an annual increase of $39,000 in City property taxes over
those now produced, assurance that the $317,000 would not have
to be returned in the event that the cooperative tax were ever
overturned by the Courts and avoidance of possible misunderstand-
ing with the 317 purchasers of the project.
Recommendation
In view of the immediate and ongoing fiscal benefits to the City,
the fact that the process has all but been completed and the ab-
sence of any substantial public purpose to be served by compelling
compliance with procedures not technically yet in force, it is
respectfully recommended that the offer be accepted and the Acting
City Manager authorized to execute the agreement.
Prepared by: James Lunsford
JL:bt Richard Knickerbocker
AGREEMENT
THIS AGREEMENT made this day of
1978, between the CITY OF SANTA MONICA, a municipal corporation
hereinafter referred to as "City," and Ocean Towers Group,
a California Partnership, Ocean Towers, Ltd., a California
Limited Partnership and Ocean Towers Housing Corporation,
a California Corporation (all of which are hereinafter
referred to as "Ocean Towers ").
Whereas Ocean Towers owns a 317 unit apartment
development constructed on Lots 22 through 26 of Block'
M in the Palisades Tract all of which is situated within
the corporate limits of the City of Santa Monica community
being known as the Ocean Towers Apartments, 201 Ocean
Avenue, Santa Monica.
Whereas the City declared a moratorium on
activities leading to the development of stock cooperative
apartment projects between the dates of February 14,
1978 and August 7, 1978.
Whereas certain of the Ocean Towers parties
initiated certain activities leading to the development
of the Ocean Towers Apartments as a stock cooperative
apartment project prior to the effective date of the
City's moratorium and the major portion of all necessary
actions have now been completed, a Preliminary Subdivision
Public Report was issued by the California Department
of Real Estate on May 19, 1978 and pursuant thereto reser-
vations have been received on all 317 units in the Ocean
Towers Apartment.
Whereas the City enacted an ordinance No. 1092,
1093, 1094, 1095 and 1097 establishing a one time tax of One
Thousand ($1,000) Dollars per unit on all stock cooperative
developments within the corporate limits of the City in
June 1978.
Whereas the City Council has enacted, on August 22,
1978, an Ordinance No. 1100 (CCS) regulating the creation of
stock cooperative projects.
Whereas it is the opinion of the Director of
Planning that the Ocean Towers Apartments meet or exceed
the technical specifications and proposed standards set
forth for development of a stock cooperative project in
Ordinance No. 1100 (CCS) in all respects and he would
recommend approval under Ordinance No. 1100 (CCS).
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Whereas, because of the facts, and the opposing
positions of the City and Ocean Towers, there is a bona
fide dispute between the City and Ocean Towers as to
the City's authority and power to enact said ordinances
regulating and taxing the development of stock cooperatives
and declaring the moratorium between February 14, 1978
and August 7, 1978 and the applicability of any and all
such legislation to the activities of Ocean Towers up
to the date hereof and continuing hereafter to the com-
pletion of Ocean Towers Apartments as a Stock Cooperative
Project.
Whereas both parties desire to resolve this
dispute without the necessity of litigation in an amicable
and cooperative manner acceptable to all and in the best
interests of the City, Ocean Towers and the future stock-
holders of Ocean Towers Cooperative Housing Corporation
and all future owners of the Ocean Towers Apartments
real property.
IT IS THEREFORE RESOLVED AND AGREED between
the City of Santa Monica and each and everyone of the
parties constituting Ocean Towers, that in consideration
of (i) the payment to the City of Santa Monica in behalf
of all such parties of Three Hundred and Seventeen Thousand
($317,000) Dollars, (ii) and the agreement of all such
parties to abide by all other present or future applicable
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c c
city ordinances whose subject matter does not include the
creation and initial taxation (as opposed to regular annual
taxation uniformly applied to all condominium stock cooperative
corporations) of stock cooperative corporations, the City
hereby covenants and agrees that it will not at any time
hereafter, commence, maintain or prosecute any action at
law or otherwise, or assert any claim against Ocean Towers
(as defined herein) or their officers, directors or partners
based upon an alleged violation of City Ordinances Nos.
933, 1007, 1077, 1091, 1092, 1093, 1094, 1095, 1097, 1100, or
any ordinances subsequently enacted covering substantially
the same subject matter, in substitution or replacement thereof.
Time of Performance and Default
Ocean Towers shall pay said sum of Three Hundred
and Seventeen Thousand ($317,000) Dollars to the City of
Santa Monica within ten (10) days of execution of this
agreement by all parties. If_ Ocean Towers shall fail to pay
said sum in full to the City by the expiration of said ten
(10) day period, this Agreement shall become null and void.
Assiqnment and Transfer
Ocean Towers shall not, without the City's written
consent which shall not be unreasonably witheld or delayed,
assign or transfer its rights under this Agreement.
Independent Investigation
Each of the parties hereto has independently in-
vestigated the facts and the law, and in entering into
the Agreement is relying solely on such investigation
and is not relying on any statement or representation
of the other party.
Entire Contract
This instrument contains the entire Agreement
between the parties relating to the rights herein granted
and the obligations herein assumed. Any oral represen-
tations or modifications concerning this instrument shall
be of no force or effect except a subsequent modification
in writing, signed by the party to be charged.
Governing Law.
The validity of this Agreement and any of
its terms or provisions, as well as the rights and duties,
shall be interpreted and construed pursuant to the laws
of the State of California.
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Interpretation
The terms and conditions of this Agreement
shall be construed pursuant to their plain and ordinary
meaning and shall not be interpreted against the maker.
Parties, Officers, Directors and Partners
This Agreement is for the benefit of the parties
hereto, and their officers, directors and partners and
is also for the benefit of the future stockholders of
the Ocean Towers Housing Corporation.
Entered into this day of -- 1978.
CITY OF SANTA MONICA
A Municipal Corporation
By:
DAVID P. DOLTER,
Acting City Manager
ATTEST;
CITY CLERK
APPROVED AS TO FORM:
RICHARD L. KNICKERBOCKER,
City Attorney -
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OCEAN TOWERS GROUP
A California Partnership
OCEAN TOWERS, LTD.,
A California Limited Partnership
By L and S Operating Company, Its
General Partner
By:
DAVID A. PETERS, Vice President
OCEAN TOWERS HOUSING
CORPORATION, A California
Corporation
Vice- President
Reference:
Contract No. 3078
(CCS)