Palm Court Lodging, LLC, a California limited liability company (“Palm Court”) and the Garden Grove Agency for Community Development (“Former Agency”) entered into a Disposition and Development Agreement by and between the Garden Grove Agency for Community Development (“Former Agency”) and Palm Court dated as of June 26, 2001 (the “Original DDA”).  Under the Original DDA, Palm Court was to acquire land from the Former Agency and develop two hotels.  Although one hotel was built (the “First Hotel”) the 288 room Sheraton, the disposition of land for and development of a second hotel (the “Second Hotel”) as provided for under the Original DDA has not occurred.  Developer is the assignee of Palm Court with regard to the acquisition of land and development of the Second Hotel under the Original DDA.  The agreement is under an enforced delay due to actions from the RDA Dissolution.

The Developer owns and manages over a billion dollars in assets, and has developed and acquired millions of square feet of prime real estate, including hotel properties with major hotels brands, such as Marriott, Sheraton, Embassy Suites, Starwood, and Hilton.  Recent projects include the Garden Grove Brookhurst Triangle, currently in Phase 1; the acquisition of the Puente Hills Mall in the City of Industry, CA; and the construction of the Ritz Carlton in Rancho Mirage, CA.

The Developer has proposed expanding the current project site for the Second Hotel to include the original DDA Property, the Tamerlane Apartments, and the Single Family Properties all shown on the Site Map (collectively, the “Site”).  The Developer has chosen Nickelodeon as the Brand for the hotel and has a license agreement to use the company’s intellectual property. The Developer has also finalized brand standards for the development of the hotel, the hotels amenities and hotels attractions.  The Nickelodeon brand is iconic and its programming is aimed at children and adolescents ages 8–17. Nickelodeon programming consists of original first-run television series, along with occasional broadcasts of released and original made-for-cable movies.  The development will benefit from the marketing power of the Nickelodeon name, which reaches 500 million households.    

Proposal includes the following:

• Expanding project site from 2.5 acres to approximately 10 acres;
• Development of a AAA Four Diamond Nickelodeon Brand Hotel and Resort with approximately 600 rooms (total number of rooms to be determined with further planning);
• Meeting space ranging from 15,000 square feet to 30,000 square feet;
• Resort-style pool and spa;
• Retail, dining, and entertainment component of approximately 5,000 square feet to 15,000 square feet; and
• Subterranean, and/or structure parking, with additional amount of surface parking.

The ENA period is for one hundred eighty (180) days, with two (2) 30-day extensions if the Developer has provided evidence and the City has verified they are making substantial progress. General provisions of the ENA include:

• Developer will pay for costs incurred in connection with the acquisition of the Third Party Property, relocation of occupants of the Site and/or environmental review relating to the Project.
• Developer has the right to approve all costs prior to acquisition of any Third Party Property, or prior to engagement of consultant related to relocation of occupants of the Site, or related to any environmental review related to the Project.
• To this end, Developer will deliver to the City $100,000 once Developer is reasonable satisfied the expanded Site of Second Hotel will proceed.
• If Developer’s expenses incurred in connection with the acquisition of the Third Party Property, relocation of occupants of the Site and/or environmental review of the Project exceed the amount previously delivered to the City by the Developer, the City will notify the Developer and Developer shall promptly deliver additional monies in the amount of $50,000 to pay for such costs.
• If it is believed costs will exceed $150,000, then the Developer may either advance additional monies as necessary or terminate this agreement without any liability to either party.

The ENA will provide for the Developer to establish a period during which they shall have the exclusive right to negotiate with the City the terms of the DDA, which will include, without limitations, the economics of the development, the site plan, and the specific uses of the Development Project.

There is no impact to the City’s General Fund.  If the City decides to enter into a DDA with the Developer, the project would generate annual property tax revenues.  Additional financial impacts will be identified in the final DDA consideration.

It is recommended that the City Council:

• Consider approving the attached ENA with New Age Garden Grove, LLC, for the develoment of approximately 10 acres of real property in the city; and
  
  
• Authorize the City Manager to make minor modifications, execute pertinent documents and amend or extend the ENA period.

By:  Greg Blodgett, Sr. Project Manager