On November 23, 2010, the Garden Grove Agency for Community Development (“Former Agency”) and Palm Court Lodging, LLC (“Developer”) now succeeded by New Age Brookhurst, LLC, entered into a Disposition and Development Agreement (“DDA”) establishing the terms and conditions for the development of a mixed-use retail, commercial, and residential development on Successor Agency owned property, commonly referred as the “Brookhurst Triangle,” (the “Site”). The Site is located at 10151 Garden Grove Boulevard, 12863 and 12865 Brookhurst Street, Garden Grove.

On March 7, 2014, the Revised Long Range Property Management Plan (“LRPMP”) was approved by the State Department of Finance. The LRPMP, among other things, designates the Site (identified in lines 8 through 20 on the matrix attached to the LRPMP) (composed of “Phase I Property” and “Phase II Property.”) as property to be conveyed to New Age in accordance with the DDA.  The Successor Agency has conveyed all Phase I Property to New Age in accordance with the DDA and the LRPMP. Developer has completed Phase I Property development with construction of 180 new apartment Homes.

The DDA provides that the Phase II Purchase Price (defined in the DDA) shall be $24,400,000; provided that Section 510 of the DDA allowed New Age to elect to increase the number of Affordable Rental Units from 60 to 120, in which case the DDA requires the Successor Agency to pay to New Age $6,400,000 at the closing of the Phase II Property from its Housing Set Aside Fund (defined in the DDA). New Age has expressed its commitment to build 120 Affordable Rental Units in accordance with Section 510 of the DDA and is requesting the Successor Agency to pay to New Age $6,400,000 at the closing of the Phase II Property.

Due to the implementation of Assembly Bill x1 26 (“AB x1 26”) added Parts 1.8 and 1.85 to Division 24 of the California Health & Safety Code and which laws were modified, in part, and determined constitutional by the California Supreme Court in the petition California Redevelopment Association, et al. v. Ana Matosantos, et al., Case No. S194861 (“Matosantos Decision”), all cash balances in the Housing Set Aside Fund were distributed to the affected taxing entities upon dissolution of the former Agency.

The Successor Agency is now proposing that the Phase II Purchase Price be $18,000,000, composed of the Phase II Purchase Price of $24,400,000 less the $6,400,000 payment due to the Developer required by Section 510. 

There is no impact to the General Fund. The Successor Agency credit against the Phase II Purchase Price of $6,400,000 has the same economic effect on the taxing entities as if the Successor Agency had retained such Housing Set Aside Funds and paid the same to New Age at the closing of the Phase II Property.

It is recommended that the Successor Agency:

• Adopt the Resolution approving the transfer of certain real property to New Age Brookhurst, LLC in accordance of certain real property with the Long Range Property Management Plan and dissolution law for the Brookhurst Triangle site located at 10151 Garden Grove Boulevard, 12863 and 12865 Brookhurst Street, Garden Grove; and

• Authorize the Executive Director to execute all closing documents.