SECOND AMENDMENT TO THE MASTER DISPOSITION AND DEVELOPMENT AGREEMENT
This Second Amendment to Master Disposition and Development Agreement
("Second Amendment") is entered into as of this 5th day of September 2000, by
and among the South Tahoe Redevelopment Agency, a public body, corporate and
politic ("Agency"), the City of South Lake Tahoe, a municipal corporation
("City") and American Skiing Company Resort Properties, Inc., a Maine
corporation ("ASCRP"), Heavenly Resort Properties, LLC, a Nevada limited
liability company ("Heavenly Resort Properties"), Heavenly Valley, Limited
Partnership, a Nevada limited partnership ("Heavenly Valley"), Trans-Sierra
Investments, a Nevada Corporation ("TSI"), and Cecil's, LLC, a limited
liability company ("Cecil's Market"), (collectively, ASCRP, Heavenly Resort
Properties, Heavenly Valley, TSI and Cecil's Market, Inc. shall be referred
to as the "Developers"). This Second Amendment amends that Master Disposition
and Development Agreement executed on October 28, 1999 as amended by the First
Amendment to the Master Disposition and Development Agreement executed on April
18, 2000(the "Agreement").
RECITALS
A. The Agency, the City and the Developers entered into the Master
Disposition and Development Agreement on October 28, 1999, which agreement was
amended by the First Amendment to the Disposition and Development Agreement
dated April 18, 2000. The Agreement provides for the development of an
approximately 17 acre parcel located in the South Tahoe Redevelopment Project
No. 1 with a Gondola, Hotel Resort and retail uses.
B. Due to delays in the project , the time periods in the Agreement
cannot be met.
C. The Parties to the Agreement now desire to amend the Agreement in
accordance with the terms of this Second Amendment in order to account for the
project delays.
NOW, THEREFORE, in consideration of the covenants and conditions
contained herein, the Agency and the Developers hereby agree as follows:
1. Letter of Credit. Section 2.01(b)(3)of the Agreement is hereby
amended in its entirety to read as follows:
(3) The existing letter of credit posted by ASCRP must be
extended or replaced with a new letter of credit which expires no
earlier than March 25, 2003; provided, however, the amount of the
letter of credit may be reduced in accordance with the provisions
of this Section upon receipt of written notice from the Agency to
the Developers that the conditions for reduction in the letter of
credit have been met. This Second Amendment shall not be
effective until Developers have delivered a new letter of credit
or an extension of the existing letter of credit to the Agency
and the Agency has deemed the terms of the letter of credit
satisfactory.
The Letter of Credit shall provide that the Agency can
draw upon the letter of credit to pay costs associated with the
Agency's obligations under this Agreement under the following
conditions:
(i) If Heavenly Resort Properties has not commenced construction
of the Grand Summit Hotel and the Grand Summit Annex by May 15,
2001, the Agency may draw down the full amount of the letter of
credit. In order to draw down the full amount of the letter of
credit, the Agency shall provide the issuer of the letter of
credit written notice in the form set forth in subsection 4
below.
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(ii) If Heavenly Resort Properties does not complete construction
of the Grand Summit Hotel on or before October 31, 2002, the
Agency can draw down on the letter of credit to pay any Delay
Damages (as defined in Section 8.03 below)owed to the Agency that
remain unpaid by March 17, 2003, by providing the issuer of the
letter of credit written notice in the form set forth in
subsection 4 below.
(iii) If Heavenly Resort Properties has not paid the Agency the
sum of Five Hundred Thousand Dollars ($500,000)owed to the Agency
pursuant to Section 10.19 below on or before March 17, 2003, the
Agency can draw down $500,000 on March 17, 2003 by providing the
issuer of the letter of credit written notice in the form set
forth in subsection 4 below.
In the event Heavenly Resort Properties commences
construction of the Grand Summit Hotel on or before May 15, 2001,
the letter of credit shall be reduced by the amount of Three
Million Five Hundred Thousand Dollars ($3,500,000). In the event
Heavenly Resort Properties completes construction of the Grand
Summit Hotel and the Grand Summit Annex on or before October 31,
2002, the letter of credit shall be further reduced by the amount
of Seven Hundred Thousand Dollars ($700,000) upon completion of
construction. In the event Heavenly Resort Properties does not
complete construction of the Grand Summit Hotel and the Grand
Summit Annex by October 31, 2002, but does complete construction
of the Grand Summit Hotel and the Grand Summit Annex on or before
November 30, 2002, the letter of credit shall be reduced by the
amount of Five Hundred Fifty Thousand Dollars ($550,000) upon
completion of construction. In the event Heavenly Resort
Properties does not complete construction of the Grand Summit
Hotel by October 31, 2002, but does complete construction of the
Grand Summit Hotel on or before December 31, 2002, the letter of
credit shall be reduced by Four Hundred Thousand Dollars
($400,000) upon completion of construction. In the event Heavenly
Resort Properties does not complete construction of the Grand
Summit Hotel and the Grand Summit Annex by October 31, 2002, but
does complete construction of the Grand Summit Hotel and the
Grand Summit Annex on or before January 31, 2003, the letter of
credit shall be reduced by the amount of Two Hundred Thousand
Dollars ($200,000) upon completion of construction.
The letter of credit shall be reduced by $300,000 at such
time as Performance and Payment Bonds are posted for the full
amount of the construction contract for Phase 2.
(4) Draw on Letter of Credit. The Agency shall be entitled to
draw on the letter of credit by providing the issuer of the
letter of credit with a written notice containing the following
language:
We hereby certify that the Agency is entitled to draw on
the letter of credit pursuant to the terms of that certain
Disposition and Development Agreement dated October 28, 1999 as
amended by the First Amendment to the DDA dated April 18, 2000
and as further amended by the Second Amendment to the DDA dated
September 5, 2000.
2. Phase 2 Acquisitions. Section 3.01(e) of the Agreement is amended
in its entirety to read as follows:
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(e) Phase 2 Acquisitions. The Agency shall not begin
acquisition of the Phase 2 Development Site until such time as ASCRP has
provided the Agency with a notice in writing of its intent to construct Phase 2;
provided however, the Agency may proceed with the acquisition of the property
occupied by the Red Carpet Inn. ASCRP must give a notice of intent to construct
Phase 2 no later than September 1, 2001; provided, however, if ASCRP desires to
begin construction of Phase 2 during the year 2001 building season, ASCRP must
give the Agency a notice of intent to build Phase 2 no later than November 8,
2000. If ASCRP gives the Agency a notice of intent to build Phase 2 on or before
November 8, 2000 the Agency's obligation to commence acquisition of the Phase 2
Development Site shall be contingent on ASCRP presenting and implementing a
financial plan satisfactory to the Agency that provides the Agency with a source
of Three Million One Hundred Fifty Thousand Dollars ($3,150,000 ) ("Phase 2
Loan") available by November 8, 2000, to be used for acquisition costs
associated with the Phase 2 Development Site and repayment of the Phase 2 Loan
on terms acceptable to the Agency, in its sole discretion.
If ASCRP fails to give the Agency a notice of intent to build on or
before September 1, 2001, the Agency may terminate this Agreement pursuant to
Section 12.05 and exercise any remedies the agency may have pursuant to Article
12, unless on or before September 1, 2001, ASCRP delivers to the Agency a letter
of credit meeting all of the requirements set forth in Section 2.01(b)(1) and
(2) in the amount of One Million Six Hundred Sixty-Three Thousand Dollars
($1,663,000). The letter of credit may be drawn on by the Agency to cover costs
associated with Phase 2 Site Acquisition at any time after the letter of credit
is posted and the Agency shall have no obligation to repay any amounts drawn on
the Letter of Credit for these purposes.
3. Conditions Precedent to Transfer of Phase 1 Property to
Developers. The references to Heavenly Resort Properties and Heavenly Valley in
Subsections 6.01(c), 6.01(h) and 6.01(i) are hereby deleted in their entirety.
4. Sale of Property. Section 7.01 of the Agreement is amended in its
entirety to read as follows:
7.01 Sale of Property. Prior to the execution of the Second Amendment
the Agency has transferred to Heavenly Valley Lot 13 and the Gondola Right of
Way for construction of the Gondola. In addition, the Agency has granted the
Paul Kennedy Steakhouse Site to Cecil's Market in exchange for Cecil's Market's
conveyance of the Jovicich Property to the Agency. On or before November 15,
2000 the Agency shall sell and convey Lots 5, 8, and 9 (as shown on the
Preliminary Subdivision Map) to Heavenly Resort Properties for construction of
the Grand Summit Hotel and the Grand Summit Annex. The Agency shall convey the
Gondola Park and Lots 6 and 7 to TSI for construction of the Ice Rink and the
multi-plex cinema within thirty (30) days following the date that all conditions
set forth in 5.01 and 6.01 have been met or waived by TSI. Within thirty (30)
days following the date that all the conditions set forth in Sections 5.02 and
6.02 have been met or waived, the Agency shall sell and convey Parcel No. 1 to
Cecil's Market and Parcel 4 to ASCRP. The conveyance of Parcel 1 to Cecil's
Market shall include the rights, granted by ASCRP to Cecil's Market, Inc. to the
use of five parking spaces in the underground parking garage developed as part
of the Lake Tahoe Inn, provided the parking garage is developed as contemplated
in the Site Plan and provided, further, Cecil's Market, Inc., reimburses ASCRP
for the full cost of developing the five parking spaces. To accomplish the
conveyance of each Phase of the Development Site from the Agency to the
Developers, the Parties shall establish an Escrow with the Escrow Holder and
shall execute and deliver to the Escrow Holder written instructions that are
consistent with this Agreement. Heavenly Resort Properties, ASCRP and Heavenly
Valley, and the Agency acknowledge that as of the date of the execution of this
Second Amendment all conditions to the conveyance of the Phase 1 Development
Site set forth in Sections 5.01 and 6.01 are hereby deemed satisfied or waived.
5. Consideration. Section 7.02 of the Agreement is hereby amended by
adding the following paragraphs at the end of Section 7.02.
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As of the date of execution of this Agreement Heavenly Valley has
paid to the Agency Five Hundred Thousand Dollars ($500,000) as consideration
for the transfer of Parcel 13 and has paid an additional One Hundred Twenty
Eight Thousand Seven Hundred Dollars ($128,700)as consideration for the transfer
of the Gondola Right-of-Way. Upon conveyance of the remainder of the Phase 1
Site, Heavenly Resort Properties shall pay to the Agency the amount of One
Million Five Hundred Thousand Dollars ($1,500,000) as the remaining amount owed
pursuant to this Section 7.02 as consideration for the conveyance of the Phase 1
Development Site. Regardless of any payments previously made by Heavenly Valley,
Heavenly Valley shall continue to be obligated to pay to the Agency any costs
incurred by the Agency associated with the acquisition of the Gondola
Right-of-Way, including legal fees and any severance damages or special benefits
awarded any property owners as a result of a partial condemnation of property
for the Gondola Right-of-Way.
As additional consideration for the conveyance of the Phase 1
Development Site to the Developers and as security for the Developer's
obligation to commence construction of Phase 1 in a timely manner, Heavenly
Resort Properties, upon accepting transfer of the Lots 5, 8, and 9 shall fully
execute and deposit with the Escrow Holder a grant deed reconveying to the
Agency Parcels 5, 8, and 9 ("Heavenly Deed"). Heavenly Resort Properties and the
Agency shall also deposit with the Escrow Holder written instructions that the
Heavenly Deed is to be recorded on July 1, 2001 if the Agency provides the
Escrow Holder with a written notice stating that Heavenly Resort Properties has
not commenced construction on the Grand Summit Hotel and the Grand Summit Annex;
provided, however, the date for recordation of the Heavenly Deed shall be
subject to the provisions of Section 15.15. The instructions shall also provide
that if Escrow Holder does not receive any notice from the Agency by the end of
the day of July 1, 2001, or such date as applicable pursuant to Section 15.15,
the Heavenly Deed is to be returned to Heavenly Resort Properties.
6. Transfer of Units of Use. The first paragraph of Section 7.09 is
hereby amended to read as follows:
Prior to Close of Escrow on the Phase 1 development site, the
Agency shall deposit into escrow a Bill of Sale transferring to the Heavenly
Resort Properties a maximum of 294 TAUs, 43,712 square feet of CFA and the Sewer
Units the Agency acquired when the Agency acquired the Phase 1 Development Site
and the drainage basin area located at the corner of Pine Boulevard and Park
Avenue. Upon transfer of the Phase 2 Development Site to the Developers, the
Agency shall also transfer to ASCRP a maximum of 456 TAUs, 8,154 square feet of
CFA and the Sewer Units the Agency acquired when the Agency acquired the Phase 2
Development Site and the 15,990 CFA to Cecil's Market, Inc. In the event the
Developers do not require the full number of TAUs set forth above to develop the
Project in accordance with approved plans and permits, the number of TAUs to be
transferred by the Agency for Phase 1 shall be reduced to the number actually
required and any unneeded TAUs from Phase 1 shall be retained by the Agency.
With respect to each Phase, the Agency shall transfer the Sewer Units to the
Developers at no cost to the Developers; provided, however, if the STPUD charges
any fees for the transfer of the Sewer Units, the Developers shall be
responsible for the payment of any such fees. The Agency shall cooperate with
the Developers in all efforts to minimize or eliminate any fees associated with
the transfer of Sewer Units.
7. Conditions to Commencement of Construction. Section 8.01 as set
forth in the First Amendment is hereby amended to add the following subsections:
(d) Permits and Approvals. Heavenly Resort Properties shall
have obtained and acknowledged all permits and approvals necessary for the
construction of Phase 1 from any federal, state and local agencies having
jurisdiction over the construction of the Project and shall be in compliance
with all such permits.
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(e) Water Permits. Heavenly Resort Properties shall have
applied for and obtained binding commitment from STPUD for adequate domestic and
fire sprinkler water supplies for the operation of Phase 1 of the Project.
(f) Waste Discharge Permit. Heavenly Resort Properties shall
have obtained waste discharge permits from Lahotan for Phase 1 of the Project.
8. Commencement of Construction. Section 8.01 of the Agreement as
renumbered to Section 8.02 in the First Amendment to the Agreement is hereby
amended in its entirety to read as follows:
Heavenly Resort Properties shall commence or cause to be commenced
construction of Phase 1 of the Project on or before May 15, 2001. Commencement
of construction means the Developers are fully mobilized on the Development Site
and have begun excavation of the Development Site. In the event Heavenly Resort
Properties does not commence construction of the Grand Summit Hotel and the
Grand Summit Annex on or before May 15, 2001, the Agency shall be entitled to
draw down the full amount of the letter of credit pursuant to Section 2.01(b) to
cover costs incurred by the Agency in complying with the DDA.
9. Completion of Construction. Section 8.03 (formerly Section 8.02
prior to the First Amendment) is hereby amended in its entirety to read as
follows:
Completion of Construction. The Developers shall diligently
prosecute or cause to be prosecuted to completion the construction of each Phase
of the Project, and shall complete or cause to be completed the construction of
each Phase of the Project no later than the time specified in the Schedule of
Performance. Completion of construction shall mean the issuance of a Temporary
Certificate of Occupancy from the City or the issuance of a Certificate of
Completion pursuant to Section 8.08. In the event Heavenly Resort Properties
fails to complete construction of the Grand Summit Hotel and the Grand Summit
Annex on or before October 31, 2002, Heavenly Resort Properties shall pay to the
Agency the sum of One Hundred Fifty Thousand Dollars ($150,000) for each month
that completion of construction is delayed through December 31, 2002.
In the event Heavenly Resort Properties fails to complete construction
by December 31, 2002, Heavenly Resort Properties shall pay to the Agency Two
Hundred Thousand Dollars ($200,000) per month for each month that construction
is delayed beyond December 31, 2002, continuing until a Certificate of
Completion is issued. The payments owed pursuant to this Section 8.03 shall be
prorated appropriately in the event the delay in completion of construction is
less than a full month. The amounts to be paid pursuant to this Section 8.03
shall be referred to as "Delay Damages." In the event Heavenly Resort Properties
fails to pay to the Agency the "Delay Damages" owed pursuant to this Section
8.03 on or before March 17, 2003, the Agency may draw the appropriate amount
owed from the letter of credit pursuant to Section 2.01(b) to the extent there
are sufficient funds available under the letter of credit. If the Delay Damages
exceed the letter of credit amount, the Agency shall be entitled to take any
action necessary to recover any shortfall in the amounts received.
10. Right of Entry for Parking Garage Site. Section 8.17 of the
Agreement as renumbered to Section 8.18 in the First Amendment is hereby amended
to change the reference in the first sentence to the 2000 building season to the
2001 building season.
11. Mello-Roos District. Section 9.05 (a) is amended in its entirety
to read as follows:
(a) No later that March 1, 2002, Agency shall cause to be formed,
and the Developers will facilitate the formation of, a community facilities
district pursuant to the Mello-Roos Community Facilities Act (California
Government Code Section 5334 and following) (the "Mello-Roos District") to
encompass the Phase 1 Property which will levy a Mello-Roos Special Tax in
accordance with this Section 9.05.
The first sentence of Section 9.05 (f) is amended in its
entirety to read as follows:
(f) The Mello-Roos Bonds shall be issued no later than April 1,
2002 provided the following conditions are met:
12. Reimbursement for Agency Costs. A new Section 10.19 is hereby
added to the Agreement to read as follows:
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Reimbursement of Agency Costs. Heavenly Resort Properties and the
Agency recognize and acknowledge that delays in the construction of the
Grand Summit Hotel and the Grand Summit Annex will delay the collection
of tax increment revenue and transient occupancy tax projected to be
received by the Agency and to be used to pay interest on the BANS. The
result of this delay in the receipt of projected revenues to the Agency
will cause the Agency to have to fund interest payments on the BANS
from other revenue sources. Heavenly Resort Properties hereby agrees to
pay to the Agency the sum of Five Hundred Thousand Dollars ($500,000)
on or before March 17 , 2003 in order to compensate the Agency for a
portion of lost revenue resulting in the delay of construction of the
Grand Summit Hotel and the Grand Summit Annex. ("Heavenly
Reimbursement"). The Heavenly Reimbursement is in addition to Delay
Damages that may become due from Heavenly Resort Properties as a result
of delays in the completion of construction pursuant to Section 8.03
above. The Heavenly Reimbursement shall be repaid to Heavenly Resort
Properties in accordance with the terms of Section 10.20 below.
13. Repayment of Reimbursements. A new Section 10.20 is hereby added
to the Agreement to read as follows:
10.20 Repayment of Reimbursements. For purposes of this Section 10.20
the following terms shall have the following meanings:
(a)"Excess Revenues" shall be as calculated pursuant to Exhibit M
attached hereto between fiscal years 2002-2003 through and including 2012-13.
(b) "Prior Obligations" shall mean the following:
(1) The 1995 Series A and B and 1999 Series A Bonds;
(2) The 1999 Series A and B BANS or any refunding bonds or
debt issuance issued by the STJPFA
(3) Certificates of Participation issues for the
construction of Fire Station No. 1;
(4) State Revolving Fund Loans for the Stateline Erosion
Control Project and the Ski Run Water Quality Project.
(5) Any annual obligation due to the Developers for
reimbursement of expenses related to the preparation of
the EIR/EIS in accordance with Section 10.13 of the
Agreement.
Beginning in Fiscal Year 2002-03 and continuing each year thereafter
through fiscal year 2012-13 the Agency and Heavenly Resort Properties
or Heavenly Valley shall on an annual basis determine whether there are
any Excess Revenues by performing the calculation set forth in Exhibit
M. Each year's comparison shall also cumulate the Excess Revenue from
the prior years, if any and if the Excess Revenue calculation
determines that there is a deficit in Excess Revenue, this deficit
shall be subtracted from any prior or future year Excess Revenue. The
Agency shall provide Heavenly Resort Properties with the determination
of the amount of Excess Revenues, as well as the background information
used to determine the Excess Revenue on or before April 1 of each
Fiscal Year.
Beginning in fiscal year 2004-2005 and continuing in each fiscal year
until fiscal year 2012-13 the Agency shall distribute the Excess Revenue as
follows; provided however, the Agency's obligation to pay Excess Revenue
pursuant to this Section 10.20 shall be subordinate to the Prior Obligations and
the Agency shall first use the Excess Revenue to pay the Prior Obligations to
the extent the Agency does not have sufficient other funds to pay the Prior
Obligations.
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(a) First, to the City in the amount of Three Hundred
Thousand Dollars ($300,000) representing a portion of the amount the
City advanced to the Agency to cover lost revenue as a result of delay
in the construction of the Grand Summit Hotel and the Grand Summit
Annex, plus interest on the $300,000 at the rate of seven and thirty
five one hundredths percent (7.35%) compounded annually and accruing as
of March 20, 2003.
(b) Second, to the Agency and Heavenly Resort Properties
in equal amounts until the Agency and Heavenly Resort Properties
have each received Five Hundred Thousand Dollars plus interest at
the rate of seven and thirty-five one-Hundredths percent (7.35%)
compounded annually and accruing as of March 20, 2003.
(c) Third, to the Agency.
14. Developer Performance. Section 12.05 (a)(2) is hereby amended in
its entirety as follows:
(2) Heavenly Resort Properties fails to deliver performance and
payment bonds in the time period required pursuant to Section 8.01.
15. Exhibits. Exhibit G, the Schedule of Performance, is hereby
replaced in its entirety with the Schedule of Performance attached hereto and
incorporated herein.
16. Cecil's Market. Cecil's LLC has succeeded to the interest of
Cecil's Market, Inc., to the Agreement as Amended. The Agency hereby approves
the transfer of Cecil's Market, Inc's. interest in the Agreement to Cecil's
LLC and all references in the Agreement to Cecil's Market, Inc.shall hereinafter
refer to Cecil's LLC.
17. Effect of Amendment. This Amendment shall be effective as of the
effective date of the Agreement. Unless otherwise amended herein, all provisions
of the Agreement shall continue in full force and effect. In the event of a
conflict between this First Amendmen and the Agreement, this First Amendment
shall control. All defined terms not otherwise defined herein shall have the
meaning given in the Agreement.
AS OF THE DATE FIRST WRITTEN ABOVE, the Parties evidence their
agreement to the terms of this Agreement by signing below:
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Approved As To Form: AGENCY:
By: /s/Catherine L. DiCamillo SOUTH TAHOE REDEVELOPMENT AGENCY,
------------------------- a public body, corporate and politic
Agency Counsel
By: /s/Hal Cole
--------------------------------
Its: Chair
Dated: 9/13/00
Approved As To Form: CITY:
By: /s/Catherine L. DiCamillo CITY OF SOUTH LAKE TAHOE,
------------------------- a municipal corporation
City Attorney
By: /s/Tom Davis
--------------------------------
Its: Mayor
Dated: 9/13/00
DEVELOPER:
AMERICAN SKIING COMPANY RESORT
PROPERTIES, a Maine corporation
By: /s/Stan Hansen
--------------------------------
Its: Senior Vice President ASCRPI
Dated: 9/12/2000
HEAVENLY RESORT PROPERTIES, LLC,
a Nevada limited liability company
By: /s/Stan Hansen
--------------------------------
Its: Senior Vice President ASCRPI
Managing Member
Dated: 9/12/2000
HEAVENLY VALLEY,Limited Partnership,
a Nevada limited partnership
By: /s/Dennis J. Harmon
--------------------------------
Its: President
Dated: 9/13/00
TRANS-SIERRA INVESTMENTS,
a Nevada corporation
By: /s/Gary B. Casteel
--------------------------------
Its: President
Dated: 9/12/00
CECIL'S LLC, a California limited
liability company
By: /s/John Jovicich
--------------------------------
John Jovicich
Its: Managing Member
Dated: 9/12/00