Item Coversheet

Agenda Item - 7.a.

City of Garden Grove


To:Scott C. Stiles

From:Lisa Kim
Dept.:City Manager 

Dept.: Economic Development 
Subject:Approval of Assignment of Grove District Resort Hotel Development Agreement (Site C) From Land & Design, Inc. to Investel Garden Resorts, LLC. (Continued from the June 14, 2016, meeting) (Action Item)Date:6/28/2016


To obtain City Council approval of the proposed assignment of the Grove District Resort Hotel Development Agreement pertaining to Site C from Land & Design, Inc. to Investel Garden Resorts, LLC, a joint venture of Land & Design, Inc. (“L&D”) and SCG America Group, Inc. (“SCG America”).


Impact of Redevelopment Dissolution

In June 2011, shortly before the dissolution of redevelopment agencies by the State, the former Agency for Community Development approved a Disposition and Development (“DDA”) with L&D pertaining to the development of a project consisting of a combination of hotels, retail, restaurant, and entertainment venues, and related parking facilities on Site C.  In November 2012, after holding public hearings and receiving public input, the City Council approved the General Plan Amendment No. GPA-2-12(B), Planned Unit Development PUD-128-12, and Mitigated Negative Declaration and Mitigation Monitoring Report, which, together, authorize the development of the contemplated hotel resort development project on Site C.  In December 2012, however, the State Department of Finance ("DOF") determined the DDA between the former Agency and L&D to not be an “Enforceable Obligation” of the former Agency.   Thus, on April 9, 2013, the City Council approved an agreement between the City and L&D, which is substantially similar to the DDA, called the Grove District Resort Hotel Development Agreement (“GDRHD Agreement”). A copy of the 2013 GDRHD Agreement is provided as Attachment 1.


Transfer of former Agency parcels to the City

A condition to the City’s obligations under the GDRHD Agreement is that the City acquire title to the portion of Site C that was owned by the former Agency at no cost.  The DOF would not approve transfer of these former Agency parcels to the City until the City reached “compensation agreements” with each of the other local taxing entities.  The City completed negotiations and obtained approvals of the compensation agreements with all of the affected taxing entities in March 2015. In June 2015, all Site C properties were transferred from the former Agency to the City. (See Attachment 2 - Chronology of Site C Project History)


Proposed Assignment of the GDRHD Agreement

Pursuant to the terms of the GDRHD Agreement, City approval is required in order for L&D to assign its rights under the Agreement to another entity.  To facilitate financing and construction of the Project, L&D is proposing to assign certain rights and interest in the GDRHD Agreement to Investel Garden Resorts, LLC, which is a joint venture between L&D and SCG America and has requested the City’s approval of the proposed assignment.  L&D’s request for the City’s approval of the assignment is included as Attachment 3, and a proposed Assignment and Assumption Agreement between L&D and Investel Garden Resorts, LLC is included as Attachment 4.


At its June 14, 2016 meeting, the City Council continued its consideration of the proposed assignment to the June 28, 2016 meeting.


SCG America possesses core technologies in the construction of mega-tall high rise buildings, bridges, light railways, public culture and sport facilities, industrial establishments, environment protection projects and more. SCG America was established in the U.S. more than 25 years ago.


City staff has concluded SCG America is a well-capitalized investment and development company that has the development qualifications and experience and financial commitments to finance and construct the Project.  Accordingly, staff supports the proposed assignment to the new joint venture entity.  


Pursuant to Section 605 and 612 the GDRHD Agreement, the City Manager is authorized to administer the GDRHD Agreement, extend time limits, and enter into certain amendments on behalf of the City so long as such actions do not substantially change the uses or development permitted on the Site or add to the costs to the City. Provided the City Council approves the assignment, and in conjunction therewith, the City Manager intends to approve certain minor amendments to the GDRHD Agreement, including modification of the Schedule of Performance to reflect an achievable development schedule and the addition of additional “pre-approved” hotel brands.  A proposed Letter Agreement amendment, including the modified Schedule of Performance and list of additional “pre-approved” hotel brands, is included as Attachment 5.  These minor amendments will not change the uses or development that are currently permitted on the Site or add to the City’s costs under the Agreement.


There is no direct financial impact to the City in conjunction with the assignment. Based on the report prepared in March 2013 by the City’s consultant, Horwath HTL, if the proposed Project is built, it is anticipated to generate significant revenues to the City’s General Fund. (See Attachment 6 detailing the Projected Hotel Revenues)


Staff recommends the City Council take the following actions:


  • Approve assignment of the Grove District Resort Hotel Development Agreement from Land & Design, Inc. to Investel Garden Resorts, LLC pursuant to the attached Assignment and Assumption Agreement, and authorize the City Manager to execute the Consent of City to Assignment on the City’s behalf; and


  • Authorize the City Manager to amend the GDRHD Agreement on behalf of the City as specified in the attached Letter Agreement. 

DescriptionUpload DateTypeFile Name
Attachment 16/22/2016Backup MaterialAttachment_1__Development_Agreement_-_Land___Design.pdf
Attachment 26/21/2016Backup MaterialAttachment_2_Site_c_History_Cron.docx
Attachment 36/22/2016Backup MaterialAttachment_3_Letter_to_CM.pdf
Attachment 46/22/2016Backup MaterialAttachment_4_Assignment_Agreement.pdf
Attachment 56/22/2016Backup MaterialAttachment_5_DDA_Amendment.pdf
Attachment 66/22/2016Backup MaterialAttachment_6_Projected_Hotel_Revenues.pdf