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HomeMy WebLinkAbout2014-09-24 e-packet AGENDA it A SUCCESSOR AGENCY CITY OF SOUTH SAN FRANCISCO REGULAR MEETING MUNICIPAL SERVICES BUILDING COUNCIL CHAMBERS 33 ARROYO DRIVE SOUTH SAN FRANCISCO, CA WEDNESDAY, SEPTEMBER 24, 2014 6:30 P.M. PEOPLE OF SOUTH SAN FRANCISCO You are invited to offer your suggestions. In order that you may know our method of conducting Agency business,we proceed as follows: The regular meeting of the Successor Agency is held on the fourth Wednesday of each month at 6:30 p.m. in the Municipal Services Building, Council Chambers, 33 Arroyo Drive, South San Francisco, California. Public Comment: For those wishing to address the Board on any Agenda or non-Agendized item, please complete a speaker card located at the entrance to the Council Chambers and submit it to the Clerk. Please be sure to indicate the Agenda Item # you wish to address or the topic of your public comment. California law prevents the Successor Agency from taking action on any item not on the Agenda(except in emergency circumstances). Your question or problem may be referred to staff for investigation and/or action where appropriate or the matter may be placed on a future Agenda for more comprehensive action or a report. When your name is called, please come to the podium, state your name and address for the Minutes. COMMENTS ARE LIMITED TO THREE (3) MINUTES PER SPEAKER. Thank you for your cooperation. The Clerk will read successively the items of business appearing on the Agenda. As she completes reading an item,it will be ready for Board action. KARYL MATSUMOTO Chair RICHARD A. GARBARINO MARK N. ADDIEGO Vice Chair Boardmember PRADEEP GUPTA LIZA NORMANDY Boardmember Boardmember FRANK RISSO KRISTA MARTINELLI Investment Officer Clerk MIKE FUTRELL STEVEN T. MATTAS Executive Director Counsel PLEASE SILENCE CELL PHONES AND PAGERS HEARING ASSISTANCE EQUIPMENT IS AVAILABLE FOR USE BY THE HEARING-IMPAIRED AT SUCCESSOR AGENCY MEETINGS In accordance with California Government Code Section 54957.5, any writing or document that is a public record, relates to an open session agenda item, and is distributed less than 72 hours prior to a regular meeting will be made available for public inspection in the City Clerk's Office located at City Hall. If however,the document or writing is not distributed until the regular meeting to which it relates, then the document or writing will be made available to the public at the location of the meeting, as listed on this agenda. The address of City Hall is 400 Grand Avenue,South San Francisco, California 94080. CALL TO ORDER ROLL CALL AGENDA REVIEW PUBLIC COMMENTS CONSENT CALENDAR 1. Motion to approve the minutes from the meetings of September 10, 2014. 2. Motion confirming payment registers for Redevelopment Obligation Retirement Fund Payments for September 24, 2014. ADMINISTRATIVE BUSINESS 3. Resolution authorizing the Executive Director to enter into an Exclusive Negotiating Rights Agreement (ENRA) amongst the City of South San Francisco, the South San Francisco Successor Agency and Brookwood Development, LLC for potential development of the properties at 201, 207, 217-19 and 227 Grand Avenue and 418 Linden Avenue. ECD (Armando Sanchez, Housing Consultant). ADJOURNMENT REGULAR SUCCESSOR AGENCY MEETING SEPTEMBER 24,2014 AGENDA PAGE 2 SPECIAL MEETING C1 MINUTES d c 1"r 0 JOINT CITY COUNCIL AND SUCCESSOR AGENCY OF THE CITY OF SOUTH SAN FRANCISCO) P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 Meeting to be held at: MUNICIPAL SERVICES BUILDDINCs Council Chambers 33 ARROYO DRIVE SOU'T'H SAN FRANCISCO, CA WEDNESDAY, SEPTEMBER 10, 2014 1. Call to Order. TIME: 5:32 p.m. 2. Roll Call. PRESENT: Councilmembers Addiego, Gupta and Normandy, Vice Mayor Garbarino, Mayor Matsumoto.* *for purposes of these minutes City Councilmembers and Agency Boardmernbers are referred to by their respective Council title. ABSENT: None.. 3. Public Comments—comments are limited to items on the Special Meeting Agenda. None. 4. Agenda Review No changes. 5. Closed Session: Conference with Labor Negotiators. (Pursuant to Government Code § 54957.6) Agency designated representative: Deborah Glasser Employee organizations: AFSCME, Local 829, AFL-CIO Confidential Unit, Teamsters Local 856 International Association of Firefighters, Local 1507 Mid-management Unit International Union of Operating Engineers, Local 39 South San Francisco Police Association Public Safety Managers Executive Management Unit. 6. Closed Session: Conference with Real Property Negotiators: (Pursuant to Government Code Section 54956.8) Properties: 201-219 Grand Avenue, 223-225 Grand Avenue and 418 Linden Avenue. Agency Negotiator: Patrick O'Keeffie Negotiating Parties: Brookwood Equities, City of South San Francisco and South San Francisco Successor Agency Under Negotiations: Price and terms for disposition of the property. 7. Closed Session: Conference with Real Property Negotiators: (Pursuant to Government Code Section 54956.8) Properties: 223-225 Grand Avenue Agency Negotiator: Patrick O'Keeffe Negotiating Parties: Olga Romo and City of South San Francisco Under Negotiations: Price and terms for disposition of the property, Enter Closed Session: 5:35 p.m. Meeting Recessed: 6:30 p.m. Closed Session resumed: 6:41 p.m. Open Session resumed: 7:02 p.m. Report out of Closed Session: No reportable action. Item No. 7 continued. 8. Adjournment. Being no further business, Mayor Matsumoto adjourned the meeting at 7:0!3 p.m. Submitted by: Approved by: Joy s Joy Martine 1, City k-Aerk Karyl Matsumoto, Mayor Martine ' 'Francisco erk City of South San Francisco/Chairperson City 0 So 'n XFr Successor Agency Successor Agency SPECIAL JOINT MEETING SEPTEMBER 10,2014 MINUTES PAGE 2 MINUTES, S DRA UCCESSOR AGENCY CITY OF SOUTH SAKI FR.ANCISCO �ZIFO SPECIAL MEETING MUNICIPAL SERVICES BUILDING COMMUNITY ROOM WEDNESDAY, SEPTEMBER 10, 2014 CALL TO ORDER TIME: 6:30 p.m. ROLL CALL, PRESENT:. Boardmembers Addiego, Gupta and Normandy, Vice Chairperson Garbarino and Chairperson Matsumoto. AGENDA REVIEW No changes. PUBLIC COMMENTS None. CONSENT CALENDAR 1. Motion to approve the Successor Agency Minutes for the meetings of August 13, 2014. 2. Motion confirming payment registers for Redevelopment Obligation Retirement Fund Payments for September 10, 2014. 3. Recommend Oversight Board adopt a resolution approving an amendment to the lease agreement with Sitike Counseling Center at 306 Spruce Avenue. (Armando Sanchez, Housing Consultant) 4. Recommend Oversight Board adopt a resolution approving an amendment. to the lease agreement with the County of San Mateo for the facility at 306 Spruce Avenue. (Armando Sanchez,Housing Consultant) Item 3-- Chairwoman Matsumoto noted she supported the approach and was interested in learning more about the market rate in a Friday Memo. Motion--Boardmember Addiego/Second—Vice Chairman Garbarino: to approve the Consent Calendar. Unanimously approved by rail call vote. ADMINISTRATIVE BUSINESS 5. Resolution No. 3-2014 reviewing and approving the submittal to the Successor Agency Oversight Board of a Recognized Obligation Payment Schedule (ROPS) for the period January through June 2015. (Bertha Aguilar, Management Analyst and Jim Steele, Finance Director) Interim Assistant City Manager O'Keeffe presented the staff report recommending the Board approve the submittal to the Oversight Board of the ROPS for the period January through June 2015. He stated the ROPS must be adopted and submitted to the Board for approval every six (6) months to permit collection of tax increment funds that previously flowed to the former Redevelopment Agency of the City, which was dissolved along with all such agencies by the state. While most of the expenditures on the ROPS were routine, he noted that staff provided information regarding 1.2 million in excess cash accumulation that was due to differences in reserve accounting. This amount was reflected on the ROPS and the total amount of tax increment would be reduced by the same. Motion— Vice Chairman Garbarino/Second— Boardmember Gupta: to approve Resolution No. 3- 2014. Unanimously approved by roll call vote. ADJOURNMENT Being no further business, Chairperson Matsumoto adjourned the meeting at 6:41 p.m. Subtfiift d: Approved: Joy Clerk Karyl Matsumoto, Chairperson SPECIAL SUCCESSOR AGENCY MEETING SEPTEMBER 10,2014 MINUTES PAGE 2 Listing of Redevelopment Obligati:on, Retirement Fund Payments for Successor Agency Review S rA C) IFO I certify that the payments shown on this payment register are accurate and sufficient funds were available for payment.* DATED: 911812014 FINAObE DIRECTOR *Note: Items below do not include payroll related payments Checks: Date Amount 09/08114 13,235.05 09110114 20.58 Electronic Payments: Date Amount To Description 'Total' Payments $ 13,255.63 LL LL LL LL U- tea_ w w w w w w cy m w Cv �s U w - - � ;— tv �r uj o C) C> 00 co co O � C) CD CD ua N N N 0 0 o A , U) (n000 �p w w CL dl �L w w M M ro LL 1L .r w >- `r Cn Cn U) w � rr 0 Cr LL Q W o o U) U) U! 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T w ,. q 0 � 3: 4 ° z w CL x s,�;, ac� Staff Report DATE: September 24, 2014 TO: Mayor and City Council Chair, 'Vice Chair and Boardmembers PROM: Patrick O'Keeffe, Assistant City Manager SUBJECT: RESOLUTION AUTHORIZING THE CITY MANAGER TO ENTER INTO A EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT(ERA)BETWEEN THE CITY GE SOUTH SAN FRANCISCO AND BROOKWOOD EQUITIES,LLC FOR POTENTIAL DEVELOPMENT OF THE PROPERTIES AT 201-227 GRAND AVENUE AND 418 LINDEN AVENUE, RECOMMENDATION It is recommended that the City Council and Successor Agency Board review an Exclusive Negotiating Rights Agreement (ENRA) with Brookwood :Equities (Brookwood) for the development of 418 Linden Avenue and 201-227 Grand Avenue and 1) that the City Council adopt a resolution directing the City Manager to execute the ENRA with Brookwood for 41,8 Linden Avenue that will lead to a Disposition and Development Agreement and provides predevelopment funding for both projects, and 2) that the Successor Agency Board recommend that the Oversight Board adopt a resolution authorizing the Successor Agency Executive Director to execute the ENRA with Brookwood Equities for 201-227 Grand Avenue that will lead to a Disposition and Development Agreement. BACKGROUND/DISCUS.SION On July 3,2014,the Housing Subcommittee reviewed Brookwood's development proposal for 418 Linden Avenue and Grand Cypress and forwarded a recommendation to the City Council to.. 1. Direct staff to prepare a Disposition and Development Agreement(DDA)with Brookwood for 418 Linden Avenue an Exclusive Negotiating Rights Agreement (ENRA), and 2. Recommend to the Successor Agency Board and Oversight Board that the Successor Agency enter into an ENRA with Brookwood for the Grand-Cypress properties (201-227 Grand Avenue). On July 7 and September 10,2014,the City Council reviewed Brookwood's proposal and agreed to direct staff to carry out the Housing Subcommittee's recommendations and to: 1. Prepare an ENRA for City Council review and approval that will serve as a predevelopment agreement that will lead to a DDA. 2. Continue with efforts to negotiate the acquisition of 223-225 Grand Avenue to create a larger development site for the Grand-Cypress project. The acquisition of 223-225 Grand would also allow the project to include an additional parcel owned by the Successor Agency (see Staff Report Subject: Exclusive Negotiating Rights Agreement with Brookwood Equities, LLC for Properties at 418 Linden Avenue and 201-227 Grand Avenue Page 2 Exhibit A). The addition of these parcels would increase the size of the proposed Grand- Cypress development from 40 units to 60 units. 3. As a result of bond counsel informing the City that it could not lend the bond funds as this would violate the bond's tax-exempt status,the bond funds will be granted to the developer as a subsidy-for the development of the affordable units at Grand-Cypress and 418 Linden, The City Council also directed staff to structure the land contributions and the $435,000 subsidy from the Myer's Development housing in-lieu fee for 418 Linden Avenue as an interest bearing loan. Of the City's total contribution, the City will contribute $921,600 during the entitlement period for predevelopment costs for both sites as described in the ENRA. Therefore, staff recommends the City Council fund the Grand-Cypress and 418 Linden projects as reviewed by the City Council on September 10 as follows: Grand-CXgress 418 Linden Total Loan Financing* City: 418 Land (est.) $700,000 $700,000 Successor Agency: Grand-Cypress $1,185,000 $1,185,000 Land (est.) City Loan $435,000 $435,000 Sub-Total $1"185,000 $1, 35,000 $2,320,000 Grant Financing(Housing Bonds) 223-225 Grand Acquisition $1,000,000 $1, (est.) Affordable Housing Assistance $920,000 $480,000 $1,400,000 (est.) Sub-Total $1,920,000 $480,000 $2,400,000 Total City/SA $3,105,000 $1,615,000 $4,720,000 Other Sources $32,466,771 $14,723,350 $47,190,121 Total Pr2ject Cost $35,571,771 $16,338,350 $51,910,121 *Loan Financing will be repaid to the City/Successor Agency with interest. All other aspects that the Housing Subcommittee recommended and that the Council approved on July 7, 2014 will remain in place including: 1. The City Council will have the right to review and have input in the design of the proposed developments. 2. Funding by HEART is a critical component of Brookwood's proposal. If HEART does not commit its funds, the City has the right to terminate the ENRA and all other related agreements, Staff Report Subject: Exclusive Negotiating Rights Agreement with Brookwood Equities, LLC for Properties at 418 Linden Avenue and 201-227 Grand Avenue Page 3 3. The DDA and all agreements will stipulate a fixed maximum arnount of funds (including land value)that the City and the Successor Agency will contribute to the development of the projects. 4. The DDA and all agreements will stipulate a fixed loan interest rate for City and Successor Agency loan funds. S. The land will not be conveyed until the developer has secured all of the funding and project entitlements necessary to complete the project. The terms are set forth in more detail in the ENRA. The above five terms will be put into the DDA, and are included in the ENRA in Exhibit B. If the revised ENRA terms are acceptable to the City Council, the City can execute the ENRA for 418 Linden to fund the projects' design work. Concurrently, staff will forward the ENRA to the Oversight Board for the Grand-Cypress properties.The Oversight Board will review the ENRA and if it agrees with the terms,adopt a resolution authorizing the Successor Agency Executive Director to execute the ENRA. Staff will then submit the ENRA to the California Department of Finance(DOF) for review. If DOF or the Oversight Board do not approve the ENRA for Grand-Cypress, the City will have the right to terminate the project at Grand-Cypress.Table 2 below summarizes the actions every entity needs to take to advance this project to completion. Table 2—Disposition Process Properties Disposition Approvals • City approves and executes ENRA. Successor Agency recommends ENRA to Oversight Board. • Oversight Board approves ENRA. • DOF approves ENRA. • Successor Agency Executive Director executes ENRA. Project design work commences. • DOF approves Successor Agency's Long Range Property Management Plan authorizing transferring the properties to the City • City Council approves Compensation Agreement with Taxing Agencies • Taxing Agencies approve Compensation Agreement • DOF Approves Compensation Agreement • City Approves DDA CONCLUSION It is recommended that the City Council and Successor Agency Board review an Exclusive Negotiating Rights Agreement(ENRA)with Brookwood Equities(Brookwood)for the development of 418 Linden Avenue and 223-227 Grand Avenue and 1) the City Council adopt a resolution directing the City Manager to execute the ENRA with Brookwood for 418 Linden Avenue that will Staff Report Subject: Exclusive Negotiating Rights Agreement with Brookwood Equities, LLC for Properties at 418 Linden Avenue and 201-227 Grand Avenue Page 4 lead to a Disposition and Development Agreement and provides predevelopment funding for both projects, and 2) that the Successor Agency Board recommend that the Oversight Board adopt a resolution authorizing the Successor Agency Executive Director to execute the ENRA with Brookwood Equities for the 223-227 Grand Avenue that will lead to a Disposition and Development Agreement. By: Approved: e 7"' P trick 0 e :FdZ Ike Futrell t City M Assistant anager City Man Attachment: Exhibit I —Map of Properties Exhibit 2 —ENRA RESOLUTION NO. CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA APPROVING AN EXCLUSIVE NEGOTIATION RIGHTS AGREEMENT WITH BROOKWOOD EQUITIES, LLP FOR POTENTIAL DISPOSITION AND DEVELOPMENT OF 201-227 GRAND AVENUE AND 418 LINDEN AVENUE WHEREAS, the City of South San Francisco ("City") is the owner of certain real property located in the City of South San Francisco, California, known as County Assessor's Parcel Number 012-314-010 ("418 Linden Avenue"); and WHEREAS, the Successor Agency ("Agency") is the owner of certain real property (the "Successor Agency Property") located in the City of South San Francisco, California, known as County Assessor's Parcel Numbers 012-316-110 (201 Grand Avenue), 012-316-100 (207 Grand Avenue), 012-316-090 (217-219 Grand Avenue), 012-316-070 (227 Grand Avenue); and WHEREAS, the Successor Agency Property was transferred from the City of South San Francisco to the Agency pursuant to Grant Deeds-, and WHEREAS, on June 29, 2011 the legislature of the State of California (the "State") adopted Assembly Bill xI 26 ("AB 26"), which amended provisions of the Redevelopment Law; and WHEREAS, pursuant to AB 26 and the California Supreme Court decision in California Redevelqpment Association, et al. v, Ana Matosantos, et al., which upheld AB 26 (together with AB 1484, the "Dissolution Law"), the Redevelopment Agency was dissolved on February 1, 2012; and WHEREAS, pursuant to the Dissolution Law, the Agency has prepared and the Oversight Board has approved a Long Range Property Management Plan ("LR-PMP") which is presently under review by California Department of Finance ("DOF"); and, WHEREAS, the LRPMP being reviewed by the DOF includes development plans for the Successor Agency Property; and, WHEREAS, DOF approval of a LR.PMP authorizing a process for conveyance of the Successor Agency Property is required prior to conveyance of the Successor Agency Property, and, WHEREAS, the City is interested in selling 418 Linden to Brookwood Equities, LLP, a Delaware limited liability company ("Developer") contingent upon Developer securing all of funding for the Project and obtaining any applicable land use entitlements from the City of South San Francisco and if such funding is secured and entitlements are granted constructing approximately 90 multi-family residential units ("Project") of which approximately 18 will be I affordable to low- and moderate-income households on 418 Linden Avenue and the Successor Agency Property; and, WHEREAS, the Developer has requested the exclusive right to negotiate with City to develop the Project and negotiate with the City for the purpose of reaching agreement on a project description, appropriate land uses, economic feasibility, and a definitive agreement whose terms and conditions would govern any conveyance of 418 Linden and the development of 418 Linden; and WHEREAS, City desires to grant Developer the exclusive right to negotiate with City with regard to development of the 418 Linden and the Successor Agency Property; and WHEREAS, the City Attorney has prepared an Exclusive Negotiation Rights Agreement ("Agreement") with Developer to reflect the terms and conditions of such exclusive collaboration and negotiation. NOW, THEREFORE, the City Council of the City of South San Francisco does hereby resolve as follows. 1, The Recitals set forth above are true and correct, and are incorporated herein by reference. 2. The Agreement, substantially in the form attached hereto, is hereby approved, and the City Manager or his designee is hereby authorized to execute it on behalf of the City; to make non- substantive revisions to the Agreement, with review and approval by the City Attorney; to sign all documents; to make all approvals and take all actions necessary or appropriate to carry out and implement the intent of this Resolution. PASSED AND ADOPTED this 24th day of September, 2014,by the following vote: AYES: NOES: ABSENT: ABSTAIN: ATTEST: APPROVED: City Clerk Chair 2333648.1 2 RESOLUTION NO. SUCCESSOR AGENCY, FORMER REDEVELOPMENT AGENCY FOR THE CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA APPROVING AN EXCLUSIVE NEGOTIATION RIGHTS AGREEMENT WITH BROOKWOOD EQUITIES, LLP FOR POTENTIAL DISPOSITION AND DEVELOPMENT OF 201, 207, 217-19 AND 227 GRAND AVENUE AND 418 LINDEN AVENUE WHEREAS, the City of South San Francisco ("City") is the owner of certain real property located in the City of South San Francisco, California, known as County Assessor's Parcel Number 012-314-010 ("418 Linden Avenue"); and WHEREAS, the Successor Agency ("Agency") is the owner of certain real property (the "Successor Agency Property") located in the City of South San Francisco, California, known as County Assessor's Parcel Numbers 012-316-110 (201 Grand Avenue), 012-316-100 (207 Grand Avenue), 012-316-090 (217-219 Grand Avenue), 012-316-070 (227 Grand Avenue); and WHEREAS, the Successor Agency Property was transferred from the City of South San Francisco to the Agency pursuant to Grant Deeds; and WHEREAS, on June 29, 2011 the legislature of the State of California (the "State") adopted Assembly Bill xl 26 ("AB 26"), which amended provisions of the Redevelopment Law; and WHEREAS, pursuant to AB 26 and the California Supreme Court decision in California Redevelopment Association, et al. v. Ana Matosantos, et al., which upheld AB 26 (together with AB 1484,the "Dissolution Law"), the Redevelopment Agency was dissolved on February 1, 2012; and WHEREAS, pursuant to the Dissolution Law, the Agency has prepared and the Oversight Board has approved a Long Range Property Management Plan ("LRPMP") which is presently under review by California Department of Finance("DOF"); and, WHEREAS, the LRPMP being reviewed by the DOF includes development plans for the Successor Agency Property; and, WHEREAS, DOF approval of a LRPMP authorizing a process for conveyance of the Successor Agency Property is required prior to conveyance of the Successor Agency Property, and, WHEREAS, the Successor Agency is interested in selling the Successor Agency Property to Brookwood Equities, LLP, a Delaware limited liability company ("Developer") contingent upon Developer receiving approval of a Disposition and Development Agreement by the Successor Agency, the Oversight Board and DOF, securing all of funding for the Project, obtaining any 1 applicable land use entitlements from the City of South San Francisco and if such funding is secured and entitlements/approvals are granted constructing approximately 90 multi-family residential units ("Project") of which approximately 18 will be affordable to low- and moderate- income households on 418 Linden Avenue and the Successor Agency Property; and, WHEREAS, the Developer has requested the exclusive right to negotiate with the Successor Agency to develop the Project and negotiate with the Successor Agency for the purpose of reaching agreement on a project description, appropriate land uses, economic feasibility, and a definitive agreement whose terms and conditions would govern any conveyance and development of the Successor Agency Property; and, WHEREAS, Successor Agency desires to grant Developer the exclusive right to negotiate with Successor Agency with regard to development of the Successor Agency Property; and WHERE-AS, the City Attorney has prepared an Exclusive Negotiation Rights Agreement ("Agreement") with Developer to reflect the terms and conditions of such exclusive collaboration and negotiation. NOW, THEREFORE, the Board of the South San Francisco Successor Agency does hereby resolve as follows: 1. The Recitals set forth above are true and correct, and are incorporated herein by reference. 2. The Agreement, substantially in the form attached hereto, is hereby approved, and the Executive Director is hereby authorized to execute it on behalf of the Successor Agency following approval by the Oversight Board and DOF; to make non-substantive revisions to the Agreement, with review and approval by the City Attorney; to sign all documents; to make all approvals and take all actions necessary or appropriate to carry out and implement the intent of this Resolution. PASSED AND ADOPTED this 24th day of September, 2014, by the following vote: AYES: NOES: ABSENT: ABSTAIN: ATTEST: APPROVED: City Clerk Chair 2333692.1 2 CU I w 1b'tJo'a!fOS�° ��- y ry M m N W V 1 NE I � co zi kz Gt acs '� ocr N mr � I� I Tg' '✓^ kCY x� 4 w, rut` x.. �� .a Jr]„JBl /,11' `• w �.✓ w 1 a I _._ a ti zt It ..gyp ° ,,,� �.. 4 '•' m V '1'_ d yy N-yffA/yak rA Y� .� f ;rv9uki,l A+r+' .o-r .ate c�v �.p•' ,mkt ,� a, y;, tu AMA eIFG x*Jhf fw PY aal ,.... ,plot Oat DRAFT EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT by and amongst BROOK'WOOD EQUITIES, LLC, CITY OF SOUTH SAN FRANCISCO and SOUTH SAN FRANCISCO SUCCESSOR AGENCY Page 10 DRAFT THIS EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT (this "Agreement") is entered into by and between the CITY OF SOUTH SAN FRANCISCO, a municipal corporation ("City"),, the SOUTH SAN FRANCISCO SUCCESSOR AGENCY, a public agency ("Agency"), and BROOK WOOD EQUITIES LLC, a limited liability company, ("Developer") dated as of (the "Effective Date"), which is the date this Agreement was approved by the South San Francisco Oversight Board. Agency and Developer are each referred to as "Party" or collectively referred to as the "Parties." WHEREAS, the City is the owner of certain real property ( "418 Linden") located in the City of South San Francisco, California, known as County Assessor's Parcel Numbers 012-314- 010 (418 Linden Avenue), and the Agency is the owner of certain real property ("Grand- Cypress") located in the City of South San Francisco, California, known as County Assessor's Parcel Numbers 012-316-110, 012-316-100, 012-316-090 and 012-316-070 (201-227 Grand Avenue - excluding 223-225 Grand Avenue); as More particularly described in Exhibit attached hereto and incorporated herein by this reference; and WHEREAS, Developer intends to create two special purpose entities: Brookwood Cypress Venture LLC ("BCV") for Grand-Cypress and Brookwood Linden Venture LLC ("BLV") for 418 Linden to serve as the ownership entities for the Projects; and WHEREAS, Grand-Cypress was transferred from the City of South San Francisco to the Agency pursuant to Grant Deeds recorded on .; and WHEREAS, on June 29, 2011 the legislature of the State of California (the "State") adopted Assembly Bill x1 26 ("AB 26"), which amended provisions of the Redevelopment Law; and WHEREAS, pursuant to AB 26 and the California Supreme Court decision in Calffiornia Redevelopment Association, et al. v. Ana ✓atosantos, et al., which upheld AB 26 (together with AB 1484, the "Dissolution Law"), the Agency was dissolved on February 1, 2012; and WHEREAS, pursuant to the Dissolution Law, the Agency has prepared and the South San Francisco Oversight Board has approved a Long Range Property Management Plan ("LRPMP") which is presently under review by the State of California Department of Finance ("DO F"); and WHEREAS, the LRPMP being reviewed by the DOF includes development plans for Grand-Cypress which are consistent with this Agreement; and, WHEREAS, DOF approval of a LRPMP authorizing a process for conveyance of the Property is required prior to conveyance of the Property, and EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT BROOKWOOD EQUITIES 2331276 DRAFT WHEREAS, the Oversight Board approved this Agreement on 2014 and DOF approved the Agreement on , 2014. WHEREAS, the City is interested in selling 418 Linden and the Agency is interested in selling Grand-Cypress to Developer contingent upon Developer preparing all appropriate environmental review documents, and applying for land use entitlements from the City of South San Francisco and if such entitlements are granted constructing approximately 90 multi-family residential units ("Project") on the Properties; and WHEREAS, Developer anticipates expending funds to prepare environmental review documents, architectural and design drawings and conduct certain studies that are needed to assess the feasibility of the Project, and requires a grant of exclusive negotiating rights in order to be willing to make such expenditures; and WHEREAS, on , 2014 the City approved this Agreement and directed staff to negotiate a Disposition and Development Agreement ("DDA") for the Property with Developer; and WHEREAS, at its meeting on 2014 the Agency approved this Agreement and directed staff to negotiate a DDA for the Property with Developer, NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows. 1. 'Good Faith Efforts toNegotiate. The Parties will use their best efforts to successfully negotiate a DDA between the Parties which will (i) describe the terms and conditions governing the purchase of 418 Linden and Grand-Cypress by Developer (together "Property"), and (ii) set forth requirements and entitlements for the Project. The Parties will diligently and in good faith pursue such negotiations. Furthermore, the Parties will use their best efforts to obtain any third-party consent, authorization, approval, or exemption required in connection with the transactions contemplated hereby. This Agreement does not impose a binding obligation on the City or Agency to convey any interest in the Property to Developer, nor does it obligate City to grant any approvals or authorizations required for the Property or any project or improvements constructed thereon. a. If Developer has not continued to negotiate diligently and in good faith, Agency will give written notice thereof to Developer who will then have ten(10) business days to commence negotiating in good faith. Following the failure of Developer to thereafter commence negotiating in good faith within such ten(10) business day period, this Agreement may be terminated by Agency or City, b. If the City or Agency have not continued to negotiate diligently and in good faith, Developer will give written notice thereof to Agency which will then have ten (10) business days to commence negotiating in good faith. Following the failure Page 12 DRAFT of Agency to thereafter commence negotiating in good faith within such ten (10) business-day period,this Agreement may be terminated by Developer. 2. Developer's Exclusive Right to Negotiate With Agen . Agency and City agree that it will not, during the term of this Agreement, directly or indirectly, through any officer, employee, agent, or otherwise, solicit, initiate or encourage the submission of bids, offers or proposals by any person or entity with respect to the acquisition of any interest in the Property or the development of the Property, and Agency will not engage any broker, financial adviser or consultant to initiate or encourage proposals or offers from other parties with respect to the disposition or development of the Property or any portion thereof. Furthermore, City or Agency will not, directly or indirectly, through any officer, employee, agent or otherwise, engage in negotiations concerning any such transaction with, or provide information to, any person other than Developer and its representatives with a view to engaging, or preparing to engage,that person with respect to the disposition or development of the Property or any portion thereof. 3. Term, Prepare and Process CE QA Documents and Land Use Entitlements for the Project. a. The term of this Agreement ("Term") commences on the Effective Date, and will terminate seven (7) months from the date on which the City Council approves the Downtown Station Area Plan (and related EIR Rezoning), unless extended or earlier terminated as provided herein. b. Developer will prepare all documents necessary for complete application for the Project and will submit those documents to the City within ninety (90) days of the Effective Date of this Agreement. C. Developer will take all actions necessary to obtain all required City land use entitlements necessary for the Project prior to expiration of this Agreement. d. During the Term, Developer will provide Agency with progress reports every ninety (90) days with respect to Developer's due diligence review of the Property, commencement of environmental requirements under CEQA, preparation of architecture and construction plans, general progress toward development of the Property and obtaining all necessary land use entitlements from the City. e. During the Term, City and Agency will provide Developer with progress reports a minimum of every ninety (90) days with respect to the Agency's progress with the DOF ,approval of a LRPMP and the conveyance of the Property to the Developer and the City's progress with respect to processing and approval of the DSA Plan, EIR and Rezoning. f. The Term of this Agreement may be extended for up to a maximum of ninety (90) additional days upon the mutual written agreement of Developer, City and Agency acting through and in the discretion of its Agency Executive Director/City Page 13 DRAFT Manager or his/her designee ("Agency Executive Director"). Developer understands that the Agency and City will only consider an extension of the Term of this Agreement where Developer has demonstrated, to the City and Agency's satisfaction, substantial progress towards development of the Properties, by submittal of a permit application, the receipt of any City required environmental review documents necessary to satisfy CEQA, submittal of architecture and construction plans, payment of any applicable processing and plan check fees or undergoing City review of any necessary land use entitlements including a development agreement. 4. Relationship of the Parties. Nothing in this Agreement creates between the Parties the relationship of lessor and lessee, of buyer and seller, or of partners or joint venturers, 5. Terms and Conditions of the DDA . The Parties agree to use their best efforts to successfully negotiate a DDA including, but not limited to, the terms set forth in Exhibit B. . The Parties agree the terms shall be based on those set forth herein and in Exhibit B attached hereto and incorporated herein by reference. 6. Developer's Studies-, Right of Entry. a. During the Term of this Agreement, Developer will use its best efforts to prepare, at Developer's expense, any studies, surveys, plans, specifications and reports ("Developer's Studies") Developer deems necessary or desirable in Developer's sole discretion, to complete its due diligence for the Properties. Developer's Studies may include, without limitation, title investigation, marketing, feasibility, soils, seismic and environmental studies, financial feasibility analyses and design studies. The Developer will have rights of access to the Properties to prepare the Developer's Studies. b. Developer hereby agrees to notify the City and the Agency twenty-four (24)hours in advance of its intention to enter 418 Linden and Grand-Cypress, respectively. C. Developer will provide the City and the Agency with work plans, drawings, and descriptions of any intrusive sampling it intends to do. Developer must keep the Properties in a safe condition during its entry. Developer shall repair, restore and return the Properties to their condition immediately preceding Developer's entry thereon at Developer's sole expense. d. Without limiting any other indemnity provisions set forth in this Agreement, Developer shall indemnify, defend (with counsel approved by City and Agency) and hold the City and the Agency, their officials, officers, employees, and volunteers harmless from and against all claims resulting from or arising in connection with entry upon the Property by Developer or Developer's agents, employees, consultants, contractors or subcontractors pursuant to this Section 6. Developer's indemnification obligations set forth in this Section 6 shall survive the termination of this Agreement. Page 14 DRAFT If upon expiration of the Terrn of this Agreement the Parties have not successfully negotiated a DDA, Developer will provide City and Agency within fifteen(15) days following said date of expiration copies of the Developer's Studies completed by such date. Developer will also provide City and Agency with copies of any Developer's Studies completed after the expiration of the Term within fifteen (15) days following completion of such studies, or if Developer intends not to complete any Developer Studies, Developer will provide City and Agency with copies of such uncompleted studies. 7. City's Reports and Studies. Within twenty (20) days following the Effective Date, City will make available to Developer for review or copying at Developer's expense all nonprivileged studies, surveys, plans, specifications, reports, and other documents with respect to the Property that City has in its possession or control, which have not already been provided. Studies or documents prepared by City and its agents solely for the purpose of negotiating the terms of a DDA are not required to be provided by City to Developer and are excluded from this requirement. 8. Agency's Reports and Studies. Within twenty (20) days following the Effective Date, Agency will make available to Developer for review or copying at Developer's expense all nonprivileged studies, surveys, plans, specifications, reports, and other documents with respect to the Property that Agency has in its possession or control, which have not already been provided. Studies or documents prepared by Agency and its agents solely for the purpose of negotiating the terms of a DDA are not required to be provided by Agency to Developer and are excluded from this requirement. 9. Developer's Pro Forrna Eviden.ce of Financing and Schedule for Conveyance of ., Property Followinp-Potential Approval of a DDA. a. At least 45 days prior to Agency consideration of the DDA, Developer will provide City and Agency with a pro forma for the Project that confirms the financial feasibility of Developer's proposed development of the Property and planned financing for the Project. The parties agree that the DDA will contain language that provides that: (1) not later than forty-five (45) day prior to conveyance of the Property, Developer will provide evidence satisfactory to City and Agency that Developer has secured binding commitments, subject only to commercially reasonable conditions, for all funding necessary for the successful purchase of the Property and completion of the Project, and (2) prior to conveyance of the Property Developer shall obtain approval of final construction plans for Grand-Cypress and 418 Linden properties, and issuance of building permits for Grand-Cypress and 418 Linden properties. Not later than forty five (45) days prior to consideration of the DDA, Developer shall provide a development schedule for all Property. 10. Full Disclosure. Developer is required to make full disclosure to City and Agency of its principals; officers; major stockholders, partners or members;joint venturers; negotiators; development managers; consultants and directly involved managerial employees (collectively, "Developer Parties"); and all other material information Page 15 DRAFT concerning Developer. Any change in the identity of the Developer Parties will be subject to the approval of Agency,which will not be unreasonably withheld. Developer will make and maintain full disclosure to Agency of its methods of financing to be used in the acquisition and development of the Property. It. Cqpital Contributions During Entitlement Period. City shall contribute up to $921,600 of affordable housing funds during the entitlement period/lENRA Term for predevelopment costs. The advancement of any portion of these funds shall be based on a budget which shall be subject to approval by the City and upon submission of invoices by Developer which are consistent with the approved budget and which are subject to approval by the City. Developer shall contribute Fifty Thousand Dollars ($50,000) to each of two projects during the entitlement period/ERA Term (total $100,000). Developer shall make payments of $12,500 for each of the two projects every sixty (60) days until the $100,000 is fully paid, with the first payment due 60 days after ENRA execution. 12. Reserved. 13. Confidentiality; Dissemination of Information. To the extent permitted by law, during the term of this Agreement, each Party will obtain the consent of the other Parties prior to issuing or permitting any of its officers, employees or agents to issue any press release or other information to the press with respect to this Agreement; provided however, no Party will be prohibited from supplying any information to its representatives, agents, attorneys, advisors, financing sources and others to the extent necessary to accomplish the activities contemplated hereby so long as such representatives, agents, attorneys, advisors, financing sources and others are made aware of the terms of this Section.Nothing contained in this Agreement will prevent any Party at any time from furnishing any required information to any governmental entity or authority pursuant to a legal requirement or from complying with its legal or contractual obligations. 14. Execution of DDA. Neither the City nor the Agency has a legal obligation to grant any approvals or authorizations for the sale of 418 Linden and Grand-Cypress, respectively, or any development thereon until the DDA for 418 Linden has been approved by the City and the DDA for Grand Cypress has been approved by the city and the Agency, the South San Francisco Oversight Board and the California Department of Finance, if necessary. Such consideration and potential approval shall not occur until the City and the Agency have completed, considered and certified/approved any required CEQA environmental review documents. 15. Termination. a. City or Agency shall have the right to terminate this Agreement with thirty (30) days' written notice. b. Developer has the right to cure within a sixty(60) day period. Page 8 6 DRAFT C. Developer shall have the right to terminate this Agreement with cause, upon sixty (60) days' written notice to City and Agency, if funding cannot be obtained. d. City has the right to cure within a sixty (60) day period. e. This Agreement may be terminated at any time by mutual consent of the Parties, L City and Agency will have the right to terminate this Agreement upon its good faith determination that Developer is not proceeding diligently and in good faith to carry out its obligations pursuant to this Agreement. Agency will exercise such right in accordance with the provisions set forth in Section I of this Agreement. 9. Neither Party shall have the right to seek an award of damages as a result of termination pursuant to this section. h. With Termination prior to the Commencement of Construction, City and Agency retains ownership of the Properties. 16. Effect of Termination. Upon termination as provided herein, or upon the expiration of the Tenn and any extensions thereof without the Parties having successfully negotiated a DDA, this Agreement will forthwith be void, and there will be no further liability or obligation on the part of either of the Parties or their respective officers, employees, agents or other representatives; provided however,the provisions of Section 13 (Confidentiality; Dissemination of Information), Section 18 (Indemnification), and Section 22 (Brokers) will survive such termination. Provided further, that upon termination or expiration of this Agreement without the Parties having successfully negotiated a DDA, Developer will deliver to the City and the Agency all of the Developer's Studies pursuant to the provisions of Section 6 of this Agreement. 17. Notices, Except as otherwise specified in this Agreement, all notices to be sent pursuant to this Agreement will be made in writing, and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other parties in accordance with this Section. All such notices will be sent by: a. Personal delivery, in which case notice is effective upon delivery; b. Certified or registered mail,return receipt requested, in which case notice will be deemed delivered on receipt if delivery is confirmed by a return receipt; C. Nationally recognized overnight courier, with charges prepaid or charged to the sender's account, in which case notice is effective on delivery if delivery is confirmed by the delivery service; d. Facsimile transmission, in which case notice will be deemed delivered upon transmittal, provided that Page 17 DRAFT i. A duplicate copy of the notice is promptly delivered by first-class or certified mail or by overnight delivery, or fi. A transmission report is generated reflecting the accurate transmission thereof. Any notice given by facsimile will be considered to have been received on the next business day if it is received after 5:00 p.m. recipient's time or on a nonbusiness day. City/Agency: City of South San Francisco and South San Francisco Successor Agency 400 Grand Avenue South San Francisco, CA 94080 Attn: City Manager Tel (650) 877-8501 Fax (650) _ with a copy to: Meyers Nave Attn: Steve Mattas 575 Market Street, Suite 2080 San Francisco, CA 94105 Tel (415) 421-3711 Fax (415) Developer: Brookwood Equities, LLC two Embareadero Center, Suite 2910 San Francisco, CA 94111 Attn: S. Shephard Heery Phone: (415) 402-0800 Facsimilie: (415) 399-9367 With a copy to: Brookwood Group, Inc. 1819 Peachtree Road NE Atlanta, GA 30309 Attn: Linda C. Simon Phone: (404) 350-9988 Facsimile: (404) 605-8906 Indemnification. Developer hereby covenants, on behalf of itself and its permitted successors and assigns, to indemnify, hold harmless and defend the Agency and the City of South San Francisco and their elected and appointed officials, officers, agents, representatives and employees ("Indemnitees") from and against all claims, costs (including without limitation reasonable attorneys' fees and litigation costs) and liability, arising out of or in connection with this Agreement and/or arising out of or in connection with the Developer's access to and entry on the Property pursuant to Section 6 of this Agreement; provided however, Developer will have no Page 6 8 DRAFT indemnification obligation with respect to the gross negligence or willful misconduct of any Indemnitee. 19. Severabili1y, If any term or provision of this Agreement or the application thereof will, to any extent, be held to be invalid or unenforceable, such term or provision will be ineffective to the extent of such invalidity or unenforceability without invalidating or rendering unenforceable the remaining terms and provisions of this Agreement or the application of such terms and provisions to circumstances other than those as to which it is held invalid or unenforceable unless an essential purpose of this Agreement would be defeated by loss of the invalid or unenforceable provision. 20. Entire Agreement.• Amendments In Writing; Counterparts. This Agreement contains the entire understanding of the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, oral and written, between the Parties with respect to such subject matter. This Agreement may be amended only by a written instrument executed by the Parties or their successors in interest, This Agreement may be executed in multiple counterparts, each of which will be an original and all of which together will constitute one agreement. 21. Successors and Assigns.• No Third-Party Beneficiaries. This Agreement will be binding upon and inure to the benefit of the Parties and their respective successors and assigns; provided however, that neither Party will transfer or assign any of such Party's rights hereunder by operation of law or otherwise without the prior written consent of the other Party, and any such transfer or assignment without such consent will be void. Notwithstanding the foregoing, Developer is permitted to assign this Agreement without such written consent, provided that Developer assigns this Agreement to an entity that is wholly controlled by Developer. Subject to the immediately preceding sentence,this Agreement is not intended to benefit, and will not run to the benefit of or be enforceable by, any other person or entity other than the Parties and their permitted successors and assigns. 22. Brokers. Each Party warrants and represents to the other that no brokers have been retained or consulted in connection with this transaction. Each Party agrees to defend, indemnify and hold harmless the other Party from any claims, expenses, costs or liabilities arising in connection with a breach of this warranty and representation. The terms of this Section will survive the expiration or earlier termination of this Agreement. 23. Captions. The captions of the sections and articles of this Agreement are for convenience only and are not intended to affect the interpretation or construction of the provisions hereof. 24. Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of California. Page 19 DRAFT IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above. CITY By: Mike Futrell City Manager AGENCY By: Mike Futrell Executive Director ATTEST: By: Agency Clerk APPROVED AS TO FORM: By: Steven Mattas Agency Counsel DEVELOPER By: S. Shepard Heery Chairman and Chief Executive Officer Page 10 DRAFT Exhibit A PROPERTY (Attach legal description of Property) Page I I I DRAFT EXHIBIT A 'Farm Sheet Term Description City's Right to Review 0 The City Council will have the right to review and have input in the design of the proposed developments HEART Funding e Funding by HEART is a critical component of Brookwood's proposal. If HEART does not commit its funds, the City or Agency has the right to terminate the ENRA and all other related agreements Amount of Funds The DDA and all agreements will stipulate a fixed maximum amount of funds, including land value, that the City and the Successor Agency will contribute to the development of the projects Loan Interest Rate 0 The DDA and all agreements will stipulate a fixed loan interest rate for City and Successor Agency loan funds Project Financing 0 Total Project Cost is $51,910,121. City and Successor Agency will advance $4,720,000 of Project Costs;the remaining $47,190,121 will come from other sources, City and Successor Agency will fund.the Projects through Loan and Grant Financing 0 Loan Financing o Successor Agency will loan $1,185,000 for the Grand- Cypress Project in the form of a land dedication secured by a promissory note and deed of trust in favor of the Successor Agency In addition, the loan will be Page 12 DRAFT subject to a compensation agreement between the Successor Agency and the taxing entities which itself is subject to approval by the Oversight Board and DOR For the 418 Linden, City will finance $435,000 in the form of a City Loan, subject to a promissory note and deed of trust in favor of the City, and an estimated $700,000 in the form of the 418 Linden Land dedication o Loan Financing will be repaid to City/Successor Agency with interest Grant Financing * An estimated $1,000,000 grant will be used to acquire 223-225 Grand. Grand-Cypress will also receive an estimated$920,000 Grant Financing through Affordable Housing Assistance * 418 Linden will receive an estimated $480,000 Grant Financing through Affordable Housing Assistance 0 Conveyance of Land 0 Land will not be conveyed until the developer has secured all of the funding commitments and project entitlements necessary to complete the project Time to Acquire Project Entitlements a Developer will obtain project entitlements of both projects by the end of the ENRA period Deferred Fees Developer will defer collection Developer fees in the amount of $121,550 for I..,inden and $296,250 for Grand ($417,80,0 total) for development fees earned during the entitlement period. In the event the Project is not entitled and constructed, City and Successor shall have no obligation to pay the deferred fees and Page 13 DRAFT Developer shall waive any right on behalf of itself or any successors or assignees to collect the deferred fees. Project Delay 0 One Project may proceed independently should the other Project be delayed Development Processing Fees 0 Developer shall be subject to all applicable fees imposed by the City for processing land use entitlements as set forth in the City's adopted Master Fee Resolution dated June—, 2014 and any applicable cost recovery and indemnifications agreements Prevailing Wages for Construction Yes Sites 0 Grand-Cypress (201-227 Grand Avenue excluding 223-225 Grand Avenue) 0 418 Linden Avenue Development Type Market-rate rental units and affordable units Height(floors) 0 Grand Cypress –three to six stories 0 418 Linden–four stories Proposed Number of Units 94 Total units * Grand Cypress –60 units ® 418 Linden–30 units Unit Size Composition 0 40% One-,bedroom * 60% Two-bedroom Market-rate Residential Units Approximately 72 units Affordable Units Approximately 18 units Construction Period • Six (6) months for bridging contract documents and contractor bidding • Six (6) months for construction documents • Sixteen (16) months for construction 2331276.2 Page u 14