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HomeMy WebLinkAbout10/05/2004AGENDA WHEAT RIDGE URBAN RENEWAL AUTHORITY October 5, 2004 Notice is hereby given of a Public Meeting to be held before the City of Wheat Ridge Urban ' Renewal Authority on Tuesday, October 5, 2004, at 5:30 p.m., in the City Council Chambers of the Municipal Building at 7500 West 29th Avenue, Wheat Ridge, Colorado. 1. Calt the Meeting to Order 2. Roll Call of Members 3. Approval of Minutes - September 21, 2004 4. Public Forum (This is the fime for any person to speak on any subject not appearing on the agenda. Public comments may be limited to 3 minutes.) 5. New Business A. Adoption of Resolution 03-2004, A resolution setting forth the basis for the termination of the Disposition and Development Agreement with Cornerstone Group. B. Discussion regarding 3718 Ames property. 6. Adjoumment ~ NIINUTES OF WHEAT RIDGE URBAN RENEWAL AUTHORITY September 21, 2004 5:30 p.m. 1. 2. 3. 4. CALL THE MEETING TO ORDER Due to Chair Hashem's absence, it was necessary to select an acting chair for the meeting. It was moved by Pete Zeimke and seconded by Elwyn Kiplinger to appoint Terrell Williams as acting chair for the September 21, 2004 meering. T6e motion passed unanimously. The Wheat Ridge Urban Renewal Authority meeting was called to order by Acting Chair Williams at 5:40 p.m. in the council chambers of the Municipal Building, 7500 West 29th Avenue, Wheat Ridge, Colorado. ROLL CALL OF MEMBERS Commissioners present: Commissioners Absent: Elwyn Kiplinger Tom Mallinson Terrell Williams Pete Ziemke Mary Hashem Janet Leo Also attending: Alan White, WRURA Executive Director Corey Hofhnann, WRURA Attorney Terry McFadden, Pazadise Billiazds Chazles Durbin, 3703 Ames St. Danica Filonowich, Kitchen Masters Ann Lazzeri, Recording Secretary APPROVAL OF MINUTES It was moved by Pete Zeimke and seconded by Elwyn Kiplinger to approve the minutes of September 7, 2004 as presented. The motion passed unanimously. PUBLIC COMMENT Terry McFadden spoke from the audience. He asked if a response had been received from the developers regazding the notice of default previously sent by the Authority. WRURA Minutes Page 1 09-21-04 Chau Williams informed Mr. McFadden that a response had been received; however, it would be necessary for the Authority to receive legal advice regazding that response during executive session. He announced that the public meeting would be reconvened following executive session. 5. EXECUTIVE SESSION It was moved by Pete Ziemke and seconded by Tom Mallinson that the Wheat Ridge Urban Renewal Authority enter into an executive session to confer with the Authority's attorney pursuant to CRS Section 24-6-402(4)(b) for the purpose of receiving legal advice regarding sgecific legal questions related to acquisition and relocaHon issues at the 38~ Avenue and Sheridan Boulevard redevelopment project and the status of the Development Agreement with Cornerstone Development. The motion passed unanimously. The regulaz meeting was adjourned at 5:44 p.m. Executive session was convened in the lobby conference room at 5:45 p.m. Those present for the executive session were as follows: Elwyn Kiplinger, Tom Mallinson, Terrell Williams, Pete Ziemke, Alan White, Corey Hof&nann, and Ann Lazzeri. The executive session was adjoumed at 6:14 p.m. The regulaz meeting was reconvened at 6:18 p.m. 6. NEW BUSINESS • Pete Ziemke explained that the Authority provided opportunity to the developer to cure various defaults in the project documents. The developer's response was that they would not cure because they do not believe a default exists. Therefore, it is evident that the Authority has gone as faz as possible with the project. It was moved by Pete Ziemke and seconded by Elwyn Kiplinger to authorize termination of the agreement with the Cornerstone Group for the 38th Avenue and Sheridan Boulevard project consistent with previous notice to Cornerstone, to authorize general and special counsel to take appropriate acfion to send all required nofices under the DDA and loan agreement, and to terminate the pending eminent domain proceedings. The motion passed unanimously. • Chair Williams invited public comment and questions. Terry McFadden asked about possible compensation to cover losses incurred during consideration of the 38`~ and Sheridan project. Chair Williams advised that property owners and tenants should meet individually with Alan White to express -their concerns. Those concerns would then be forwarded to the Authority for consideration. He also requested that owners and tenants put their concerns in writing. WRURA Minutes Page Z 09-21-04 In light of completion of the streetscape project along 38h Avenue, Terry McFadden asked for some assurance that the designation of blight would be removed from the 38`h and Sheridan azea. Chair Williams requested staff and counsel to take Mr. McFadden's comments under consideration. He also requested that letters be sent to all affected property owners and tenants advising them of the Authority's action and infonning them that they may d'uect their questions and concerns to Alan White. 8. ADJOURNMENT The meeting was adjoumed at 6:23 p.m. Terrell Williams, Acting Chair Ann Lazzeri, Secretary WRURA Minutes Page 3 09-21-04 WBEAT RIDGE URBAN RENEWAL AUTHORPI'Y RESOLUTION NO. 03 -2004 A RESOLUTION OF THE BOARD OF COMIVIISSIONERS OF TBE WIIEAT RIDGE IJRBAN RENEWAL AVI'HORITY SETTING FORTH THE BASIS FOR THE TERMINATION OF THE DISPOSITION AND DEVELOPMENT AGREEMENT WITH THE CORNERSTONE GROUP, XXII, L.L.C. WHEREAS, the Wheat Ridge Urban Renewal Authority (the "Authority") entered into a Disposition and Development Agreement with The Comerstone Group XXII, L.L.C. (the "Redeveloper"), dated May l, 2003, subsequently amended August 1, 2003, September 1; 2003, October 15, 2003, and November 25, 2003 (collectively, the "DDA") in order to redevelop the Southwest corner of 38'h Avenue and Sheridan Boulevard (the "Project"); WHEREAS, the Authority further entered into a Loan Agreement with The Cornerstone Group XXII, L.L.C., dated November 25, 2003 (the "L,oan AgreemenY'), in an attempt to secure the necessary and satisfactory funding required by the DDA; WHEREAS, the Authority in good faith took numerous steps in furtherance of the Project and consi9tent with the DDA, including, but not limited to exercising its legislative authority to commence eminent domain actions when voluntary acquisition of the property could not be effectuated, and commencing relocation efforts in furtherance of the Project; WHEREAS; the Authority further scheduled immediate possession hearings in the eminent domain actions at the urging of the Redeveloper, in order to assemble the properties necessary for the Project; WHEREAS, the Redeveloper then indicated it could not fund the necessary deposits required to obtain immediate possession under the I,oan Agreement because title would not be obtained at an immediate possession hearing, and, according to the Redeveloper, the Redeveloper's lender would not provide the necessary funds without collateral; WHEREAS, the Redeveloper's demand for collateral pursuant to the Loan Agreement and the Note attached thereto as Exhibit A demonstrated and reinforced that the L,oan Agreement's granting of a"mortgage and/or deed of trust interest in each parcel of Property acquired with the proceeds of the Loan" was unenforceable as matter of Colorado law, and violative of Article 11, Section 6 of the Colorado Constitution. See Allardice v. Adams Counry, 476 P.2d 982 (Colo. 1970); WHEREAS, the Redeveloper's inability to fund the Project in accordance with the L,oan Agreement caused the Authority to be concemed about the leve] of commitment of the end user under the Project, Walgreen's, and the fact that the Authority had never received a binding and inevocable commitment from Walgreen's as required by the DDA; 0928AM CADOCUMENTS AND SElTINGSAWH]ML.OCAL SE7TINGSTEMPORARYINT£RNET FILESOLK56\TERMINATE-RES-I.DOC WHEREAS, the Authority determined that the Redeveloper's inability to fund the Project under the Loan Agreement caused the funding to be unsatisfactory within Yhe meaning of Section 5.1 of the DDA; WHEREAS, the Authority further deternuned that the lack of a binding and irrevocable commitment from Walgreen's similarly was a default pursuant to Section 5.6 of the DDA; WHEREAS, the Authority nonetheless attempted to give the Redeveloper an opportunity to cure both of the aforesaid defaults; notwithstanding the fact that Section 5.1 of the DDA allowed the Authority to terminate the DDA immediately, and without an opportunity to cure WHEREAS, the Authority therefore provided the Redeveloper with a Notice of Default dated August 18, 2004 (the "Notice of Default"), which provided said opportunity to cure; WHEREAS, the Redeveloper failed to cure the defaults identified in the Notice of Default; WHEREAS, the Authority has not waived in writing any of the conditions precedent to closing within the meaning of Section 5 of the DDA; WHEREAS, the Authority determined at its September 21, 2004 regulaz meeting to terniinate the DDA, and to take all appropriate actions in furtherance of said ternunation; and WHEREAS, the Authority by this Resolution desires to specify the reasons for the ternunation of the DDA, and ratify the September 21, 2004 motion to terminate the DDA. BE IT RESOLVED BY THE WHEAT RIDGE URBAN RENEWAL AUTHORTTY, THAT: Section 1. The Motion to Ternunate the DDA of September 21, 2004, is hereby ratified by this Resolution, and the Authority hereby finds and determines that the temunation is necessary and appropriate for reasons including, but not limited to, the following: A. The factual recitations set forth above aze hereby incorporated herein by this reference; B. Satisfactory funding is not in place pursuant to SecUOn 5.1, subsection C of the DDA; C. The L,oan Agzeement, including the Note attached thereto as Exhibit A, is insufficient as a matter of fact and law; D. The Redeveloper was unable to fund the deposits necessary to obtain immediate possession in furtherance of the Project; and E. The Redeveloper was unable to provide a binding and inevocable commiunent from Walgreen's as required by Section 5.6 of the DDA. ` 0928A74 CADOCUM£M'S AND SE7TlNGSAWHITEUACAL SETTINGSTEMPOR9RY (MERNEI' F1LES0LK56\TERMINATE-RES-I.D0C Section 2. To the extent necessary, the Authority's approval of the Loan Agreement is hereby rescinded. Section 3. The Authority's staff is hereby directed to provide a copy of this Resolution to all persons who presently own or maintain an interest in the properties that aze pazt of the Froject, and to take necessary actions to implement this Resolution, and the Authority's legal counse] is directed to take the necessary actions to temunate the eminent domain actions commenced in furtherance of the Project. DATED this day of 12004. Mary B. Hashem, Chairman ATTEST: Secretary APPROVED AS TO FORM: Corey Y. Hoffmann, WRURA Attorney ' 09/LSA)4 C:\DOCUMENTSAND SETTINGS\AWHITE\LOCAL SETTfNGSTEMPORARY/N/'ERNEI FILES01,06VERM/NATE-RESJ.DOC HAYES, PHILLIPS, HOFFMANN & CARBERRY, P.C. Attorneys at Law Suite 450, The Market Center 1350 Seventeenth Street . Denver, Co]orado 80202-1576 Telephone: (303) 825-6444 Facsimile: (303) 825-1269 E-mail: cyhoffmann@hphclaw.com John E. Hayes Herbert C. Phillips . Corey Y. Hoffmann Kendra L. Carberzy September 24, 2004 The Cornerstone Group XXII, LLC c/o The Cornerstone Group I, Inc. Jeffrey W. Bailey 6500 S. Quebec St., Suite 300 Englewood, CO 80111 Tim Sullivan 225 W. Wacker, #2800 Chicago, IL 60606 /Cl 94 ~ Hilary Mogue Graham 7ohn Blakely Wilson Jefferson H. Parker Re: Disposition and Development Agreement Between the Wheat Ridge Urban Renewal Authority and the Cornerstone Group XXII, LLC - Notice of Terminatian Gentlemen: Please let this letter serve as a Notice of Termination pursuant to Section 16 of ihe Disposition and Development Agreement between the Wheat Ridge Urban Renewal Authority (the "Authority") and The Cornerstone Group XXII, LLC ("Cornerstone"), dated May 1, 2003, and as subsequently amended up through and including the four amendments, the last of which was approved on November 25, 2003 (collectively, the "DDA"). At the Authority's meeting of September 21, 2004, the Board of Directors specifically authorized me to provide this Notice of Termination and explain the basis for the Authority's termination of the DDA. As you know, the Authority provided you with a Notice of Default dated August 18, 2004. In response, rather than any indication of a desire on behalf of Cornerstone to cure the default, the Executive Director instead received correspondence from Cornerstone's legal counsel dated August 24, 2004 (the °Comerstone Response"), which inciuded a Notice of Default on behalf of Comerstone under the DDA, the Loan Agreement, and the Line of Credit Note. The Comerstone Response specifically demanded withdrawal of the August 18, 2004 Notice of 9/14/04 Q: I USERSI if'RURAI NOTICE OF TERMIT'ATION-I.DOC The Cornerstone Group XXII, LLC Tim Sullivan September 24, 2004 Page 2 Default, and a demand that the Authority provide assurance that it would perform under the various agreements. Subsequently, your legal counsel provided me with correspondence dated September 16, 2004, in response to my conespondence dated September 10, 2004, which reiterated your position that no default exists and accused the Authority of "gamesmanship" in response to the Authority's request that you cure the defaults referenced in the Notice of Default. The September 16, 2004 correspondence also purports to use eacerpts of a Lease between Cornerstone and Walgreen's as a basis for showing a binding and irrevocable commitment on behalf of Walgreen's. In addition, the September 16, 2004 conespondence blatantly ignores much of the language in the DDA and the Loan Agreement by stating that Comerstone stands ready to perform, yet you have acknowledged that Comerstone (or its lender) is unwilling to fund under the Loan Agreement until title is obtained and thus can be collateralized. If title is required, performance under any of the agreements is quite simply impossible. Moreover, to the extent that your counsel in his September 16, 2004 correspondence seeks Yo reinvent what occurred regarding the discussions concerning the various agreements, he erroneously suggests that I, on behalf of the Authoriry, should have been suggesting amendments to the Loan Agreement. This suggestion is made despite the fact we had previously agreed that your client needed to consult with its lender before any amendments were proposed, and despite the fact Mr. Lubitz continued to represent to me over the course of a number of telephone conversations that Comerstone was still having difficulry with the Bank, and that the process was taking longer than had been contemplated. Mr. Lubitz also indicated that he was not optimistic about the Bank getting comfortable with the deai as drafted without collateral for immediate possession. Accordingly, why would the Authority be suggesting amendments to an agreement when the Bank and Cornerstone couldn't even decide how to proceed? Mr. Lubitz even indicated that while Cornerstone remained committed, it was not sure how to proceed. Appazently, Cornerstone never determined how best to proceed, or it would have attempted to cure the identified defaults. Finally, the tone of the September 16, 2004 correspondence only serves to reinforce that termination of the DDA is necessary. Rather than seeking to cure the defaults identified in the Notice of Default, the correspondence provided to the AuthoriTy in response to the Notice of Default shows that Cornerstone has no real desire to work together with the Authoriry and instead insists on "bullying" both the Authority (and the potentially affected property owners) by seeking to enforce a contract that is unenforceable as a matter of law, and void ab initio. Thus, please let this letter serve as notice that the DDA is terminated, effective the date of this No#ice. More specifically, pursuant to Section 5.1, subsection C. and Section 16 (Sections 16.3 and 16.4), the DDA is hereby terminated effective immediately based on the fact that 9/24/04 Q:I USERSIWRURAINOTICE OF TERMINATION-I.DOC The Cornerstone Group XXII, LLC Tim Sullivan September 24, 2004 Page 3 necessary and adequate financing is not in place. More particularly, the Authority has determined that "the funding is not satisfactory" pursuant to Section 5.1, subsection C of the DDA. The Loan Agreement is both unenforceable as matter of law as set forth above, and based on the fact that Comerstone has acknowledged that it is unable to fund its obligations pursuant to the Loan Agreement until title, as opposed to possession, to the various properties has been assembled. This is inconsistent with the plain language of the vazious agreements, the Schedule of Performance, and the course of conduct of the parties, and demonstrates that the funding contemplated by the DDA is simply not in piace. In addition, while the Loan Agreement contains no default or notice provision appiicable to the Authority as Lender, to the exfent necessary, and to the extent the Loan Agreement is not void ab initio, please also let this letter serve as notice that the Authority hereby rescinds its approval of the Loan Agreement. Likewise, based on the continued failure of Cornerstone to provide a binding letter of intent and irrevocable commitment from Walgreen's as required by Section 5.6 of the DDA after you received the Notice of Default dated August 18, 2004, please also let this letter also serve as a Notice of Termination pursuant to Section 5.6 and Section 16 (Sections 163 and 16.4) regarding the failure to provide the required commitment from Walgreen's. Please note that absolutely nothing in the Lease excerpts you provided indicates a binding letter of intent and irrevocable commitment within the meaning of the DDA. Accordingly, the DDA is hereby terminated as of the date of this letter. Very truly yours, 7~~ corey . xoffrnann cc: Alan White, Executive Director Wheat Ridge Urban Renewal Authority Allan L. Hale, Esq. John G. Lubitz, Esq. Alan B. Roth, Esq. vnaioa Q: I USERSIWR (IRAWOT/CE OF TERMIhATfON-I.DOC