2003 AGN MAY 06 I24 - Laserfiche WebLink

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Item #24 REDEVELOPMENT AGENCY FOR THE CITY OF COLTON For the Redevelopment Agency Board Meeting of May 6, 2003 TO: Honorable Agency Chairperson and Boardmembers FROM: Candace Cassel, Redevelopment Manage(J SUBJECT: Consideration and Approval of Escrow Agreement with Colton Nonprofit Senior Housing, Inc. and Appointment of Union Bank of California, N.A. as the Escrow Agent. DATE: April 28, 2003 Background On February 1, 1998, the Colton Non -Profit Senior Housing, Inc. (the "Non -Profit") and the Redevelopment Agency for the City of Colton (the "Agency") filed a lawsuit against Turner Construction Company, with the San Bernardino County Superior Court for construction defects to the Colton Palms building. On February 18, 2003, the Agency Board accepted a settlement amount of $5.5 million and announced the execution of the Settlement and Release Agreement at its April 1, 2003 meeting. Pursuant to the terms outlined in the Settlement and Release Agreement (attached hereto as Attachment "A"), Turner Construction deposited the settlement amount with legal counsel representing the Non -Profit and the Agency. The final deposit was made on April 21, 2003. Discussion/Analvsis Due to the amount of funds and the uncertainty as to the best course of action to address the construction defect issues surrounding the building, the Non -Profit and the Agency decided it prudent to deposit the settlement funds into an interest bearing escrow account, necessitating signatures from both parties. Attached hereto as Attachment "B" is a copy of the Escrow Agreement with Union Bank and its fees to administer an interest bearing escrow account. The agreement provides a one-time disbursement of funds and that monthly statements shall be mailed to both the Agency and the Non -Profit. Section 1.6 of the Escrow Agreement stipulates that in the event that the Agency and the Non -Profit have not reached an agreement with respect to the distribution of the funds on or before September 30, 2003, the matter will be submitted to Arbitration. The Non -Profit requested a change to the Escrow Agreement, adding a signature block for two members, the President and Vice -President, of the Non -Profit. The Escrow Agreement will be considered by the Non -Profit Board for final consideration the week of April 28, 2003. R:\ShareRDA\Mmtings\2003 MeetingsWay 6, 2003\Colton Palm F�w Agiremml staff report.doc