2005 AGN DEC 20 I23 - Laserfiche WebLink

Browse Search

Report to City Council and Redevelopment Agency Board regarding Colton Palms Settlement Agreement Page 2 of 4 On May 19, 2004, Colton Non-Profit filed a separate action against the City and the Agency entitled Colton Non-Profit Senior Housing, Inc. v. City of Colton, et al., Case No. SCV SS115619 (the "Colton Non-Profit Action"). Since that time, the parties have been engaged in mediation as an attempt to settle the dispute over the building, its future and the settlement funds. Although Relocation pursuant to California Redevelopment Law and construction of an alternative facility were offered, it was ultimately rejected by Colton Non-Pro�t in lieu of an alternative settlement. DISCUSSION/ANALYSIS The Settlement Agreement provides the 51 tenants of Colton Palms with a settlement amount in lieu of relocation benefits, as outlined pursuant to California Redevelopment Law. The residents will be permitted to remain in the building until July 1, 2007 (Operating Period). Upon the Effective Date of the Settlement Agreement, BB&K will release $1.4 million dollars to Colton Non-Profit. The funds will be held in trust by Inland County Legal Services and will be distributed pursuant to the Distribution Methodology, as outlined in the Settlement Agreement, which is attached to the City and Agency Resolutions. The $4.1 million balance of the funds will be released to the Redevelopment Agency to repay it for approximately $1.2 million it incurred as part of the original construction defect litigation, to be used as an operating subsidy to the Colton Palms during the Operating Period and to pay for the residents' relocation expenses. The balance will be deposited into the Agency's low-moderate income housing fund to be used for the replacement of the units that may be removed from the low-moderate income housing stock, as well as to fund additional low-moderate income housing expenses. Upon execution of a Release of Claims releasing the City and Agency from liability, each resident will receive $1,000. In addition, $1,500 will be paid to each resident for relocation expenses. Each resident will vacate Colton Palms no later than July 1, 2007, at which time they will receive the balance of their settlement proceeds pursuant to the Distribution Methodology. The Agency will provide comparable alternative housing options to the residents periodically during the Operating Period. Colton Non-Profit will retain the services of a professional management company during the Operating Period. The services of Investor Property Services, a company mutually agreed upon by Colton Non-Profit and the Agency was engaged in October 2005. The Agency will pay up to $120,000 to fund any deficits in the operating fund of the project until July 1, 2007 and may be subject to funding up to $75,000 in capital repairs to the buildings. Colton Non-Profit will also retain $25,000 for uses consistent with its governing corporate documents. Interest earned from the $5.5 million will be used to reimburse Inland County Legal Services for charges it incurred as part of the mediation and then will be used to pay delinquent utilities on the property. At the end of the Operating Period or at the time the building is vacated, whichever occurs first, the Agency will take title to the building and its assets. FINANCIAL IMPACT Approval of the Settlement Agreement will authorize BB&K to deposit $1.4 million of the $5.5 R:�AdministrationuVleetings�2005 MEETINGS�December 20, 2005\Colton Palms Settlement Agreement Staff Report.doc