HomeMy WebLinkAboutAttachment 1: Background StatementAttachment 1
BACKGROUND STATEMENT
On August 30, 2005, the Community Development Commission (CDC) entered into a
Development Agreement (DDA) with Constellation Property Group (A Avenue) LP, for
the development of approximately 1.2 acres, mid -block between National City
Boulevard, B Avenue, 1 1th Street, and 12th Street (Site). The Site was sold by the CDC
to Constellation for construction on the Site of approximately 40 condominium
residential units (the "Centro" project), approximately 2,700 square feet of commercial
office space (the "R-2" site), and a new A Avenue trolley transit center. Due to the
economic recession and other reasons, neither the R-2 office project nor the trolley center
were built. A Note and Second Deed of Trust in the sum of $2,500,000, executed in
December of 2007, secured the transaction.
Later, through an amendment to the DDA, Constellation agreed to grant the CDC a
portion of the Centro property referred to as the "Condominium Unit", consisting of a
residential condominium unit (#401) and two parking spaces.
When East-West Bank foreclosed on the Centro parcel in 2011, they mistakenly attached
to the Notice of Sale and the Trustee's Deed a legal description that did not match the
legal description contained in the original East West Bank or CDC Deeds of Trust
recorded in 2007 by which action the "sliver" parcel was created. Attached to this staff
report is a letter from Blanchard, Krasner & French (Attorney for Focus Group- the
proposed buyer of Revolution 2), which further describes the sequence of events that
created the cloud on title to the R-2 site.
R-2 Site Resolution
The title company insuring title to the property, Lawyer's Title, has requested that the
National City Community Development Commission (now the Successor Agency)
reconvey its interest, secured by a Second Deed of Trust, to allow East West Bank to
provide clean title to the buyer (The Focus Group) of the R-2 site. With a County Tax
Assessor valuation of $504 on the "sliver" parcel, it can be assumed that the parcel has no
value.
Centro Project Condominium Resolution
During the due diligence by Successor Agency staff, it was discovered that Centro
condominium unit #401 (CDC -RA owned) had two existing liens (Deeds of Trust)
clouding the title. The first was dated 10/13/2005 in favor of East West Bank in the
amount of $5,230,000, and the second dated 12/13/2007 in favor of the CDC in the
amount of $2,500,000. As a condition of the removal of the lien against the R-2 site to
allow its sale, and as required under the DDA, as amended, staff has requested that East
West Bank remove its lien for $5,230,000 against the CDC -RA owned Centro
condominium unit to clear the title.