| ITEM #: 2. DATE: 10/04/2021 AI #:510 |
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COMMUNITY FACILITIES DISTRICT REPORT
| SUBJECT: | CONSENT TO ASSIGNMENT OF ESTRELLA AGREEMENTS |
| STAFF PRESENTER(S): | Jared Askelson, Deputy Finance Director |
SUMMARY
Approve and authorize execution of Consent to Assignment of various agreements related to development within Estrella (formerly known as Estrella Mountain Ranch).
Recommendation
Approve and authorize District Manager to execute a Consent to Assignment in the draft form attached as Exhibit 1, allowing a limited liability company that that includes as its members and/or managers, Harvard Investments, Toll Brothers and Varde Partners, that will be acquiring interests of NNP III — Estrella Mountain Ranch, a Delaware Limited Liability Company, NNP III – EMR 3, LLC, a Delaware limited liability company, NNP III – EMR 4, LLC, a Delaware limited liability company, and Special AZ Properties I, LLC, an Arizona limited liability (collectively the “NNP Entities”) in real property subject to the various agreement to assume the NNP Entities rights, title, interest, in, and obligations under various agreements with the District. (Jared Askelson, Deputy Finance Director)
FISCAL IMPACT
There will be no fiscal impact as a result of the assignment. The assignment will modify the parties entitled to the rights and interests and responsible for the obligations and liabilities under the various agreements.
BACKGROUND AND PREVIOUS ACTIONS
NNP III — Estrella Mountain Ranch, a Delaware Limited Liability Company, NNP III – EMR 3, LLC, a Delaware limited liability company, NNP III – EMR 4, LLC, a Delaware limited liability company, and Special AZ Properties I, LLC, an Arizona limited liability (collectively the “NNP Entities”) are currently parties to individually or collectively to a number of agreements with the District related to the development of a master planned community known as Estrella (formerly known as Estrella Mountain Ranch).
STAFF ANALYSIS
The NNP Entities are in the process of selling certain property located within Estrella to a limited liability company that has yet to be formed, but that will include as members and/or managers the following entities: Harvard Investments, which has served as a master developer of planned communities in Arizona similar in character as Estrella; Toll Brothers, which is a national home builder and developer; and Varde Partners, which is a global investment advisor. (The entity to be formed as described above is referred to as the “Newly Formed Entity.”) The NNP Entities are asking the District to consent to the assignment by the NNP Entities of their respective rights, title, interest in, and obligations under the agreements itemized in Exhibit 1, to the Newly Formed Entity’s upon the Newly Formed Entity’s acquisition of the property that is subject to such agreements. The execution of the consent will have the effect of releasing the NNP Entities from liability under these agreements with respect to the property that is acquired by the Newly Formed Entity.
Although the newly formed entity referred to above will be formed prior to closing, the only board meeting before the closing is the meeting on October 4, 2021. Accordingly, staff is asking the District to authorize the District Manager to execute a consent to assignment substantially in the form attached hereto as Exhibit 1 upon the formation of the Newly Formed Entity as described above. Based on communications with parties involved in the acquisition, the District will likely benefit from the assignment because the Newly Formed Entity is planning on the continued development of Estrella.
Although the newly formed entity referred to above will be formed prior to closing, the only board meeting before the closing is the meeting on October 4, 2021. Accordingly, staff is asking the District to authorize the District Manager to execute a consent to assignment substantially in the form attached hereto as Exhibit 1 upon the formation of the Newly Formed Entity as described above. Based on communications with parties involved in the acquisition, the District will likely benefit from the assignment because the Newly Formed Entity is planning on the continued development of Estrella.