HomeMy WebLinkAboutOB Reso 04-2017 City of South San Francisco
P.O. Box 711 (City Hall,
400 Grand Avenue)
South San Francisco, CA
__tea Oversight Board
`�z7071: " Resolution: RES 04-2017
File Number: 17-710 Enactment Number: RES 04-2017
RESOLUTION APPROVING THE FINAL SALE PRICE OF
$3,500,000 FOR THE DISPOSITION OF THE PROPERTIES
LOCATED AT 200 LINDEN, 212 BADEN, AND 216 BADEN
AVENUE (APNS 012334130, 012334160, 012334030 AND
012334040), PURSUANT TO THE APPROVED LONG RANGE
PROPERTY MANAGEMENT PLAN AND HEALTH AND SAFETY
CODE SECTION 34191.5, WITH THE PROCEEDS TO BE
DISTRIBUTED TO THE LOCAL TAXING ENTITIES.
WHEREAS, on June 29, 2011, the Legislature of the State of California ( "State") adopted Assembly
Bill xl 26 ("AB 26"),which amended provisions of the State's Community Redevelopment Law(Health
and Safety Code sections 33000 et seq.) ("Dissolution Law"), pursuant to which the former
Redevelopment Agency of the City of South San Francisco was dissolved on February 1,2012; and
WHEREAS, the City became the Successor Agency to the Redevelopment Agency of the City of South
San Francisco ("Successor Agency"); and
WHEREAS,pursuant to Health and Safety Code Section 34191.5(c)(2)(C),property shall not be
transferred to a successor agency, city, county or city and county,unless a Long Range Property
Management Plan("LRPMP")has been approved by the Oversight Board and the California Department
of Finance ("DOF"); and
WHEREAS, in accordance with the Dissolution Law, the Successor Agency prepared a Long Range
Property Management Plan ("LRPMP"),which was approved by a resolution of the Oversight Board for
the Successor Agency to the Redevelopment Agency of the City of South San Francisco ("Oversight
Board") on May 21, 2015, and was approved by the Department of Finance ("DOF") on October 1,
2015; and
WHEREAS, consistent with the Dissolution Law and the LRPMP, certain real properties located in the
City of South San Francisco, that were previously owned by the former Redevelopment Agency was
transferred to the Successor Agency("Agency Properties"); and
WHEREAS, on October 18, 2016, the City entered into an Amended and Restated Master Agreement for
Taxing Entity Compensation ("Compensation Agreement") with the various local agencies who receive
shares of property tax revenues from the former redevelopment project area("Taxing Entities"),which
City of South San Francisco Page 1
File Number: 17-710 Enactment Number: RES O4-2017
provides that upon approval by the Oversight Board of the sale price, and consistent with the LRPMP,
the proceeds from the sale of any of the Agency Properties will be distributed to the Taxing Entities in
accordance with their proportionate contributions to the Real Property Tax Trust Fund for the former
Redevelopment Agency; and
WHEREAS, on February 8, 2017, the City adopted Resolution 16-2017 approving the transfer of the
Agency Properties from the Successor Agency to the City and in accordance with the requirements set
forth in the LRPMP, and on February 21, 2017, the Oversight Board adopted a resolution approving the
transfer of the Redevelopment Properties from the Successor Agency to the City; and
WHEREAS, consistent with the LRPMP and the Oversight Board resolution, the Successor Agency and
City executed and recorded grant deeds transferring the Agency Properties to the City; and
WHEREAS, the real property located at 200 Linden Avenue, 212 Baden Avenue, and 216 Baden Avenue
("200 Linden") located in the City of South San Francisco, California, known as Assessor Parcel
Numbers ("APNs") 012334130, 012334160, 012334030 and 012334040 are Agency Properties and are
subject to the provisions of the LRPMP and the Compensation Agreement; and
WHEREAS, City Council selected Hisense REUS, LLC ("Developer")to develop the properties located
at 200 Linden in a manner consistent with the LRPMP; and
WHEREAS, the City and the Successor Agency approved an Exclusive Negotiating Rights Agreement
(ENRA) between the Successor Agency, the City of South San Francisco ("City"), and Developer in
order to negotiate a disposition agreement consistent with the LRPMP; and
WHEREAS, the City has been working closely with Developer to negotiate a Disposition and
Development Agreement(DDA) for the sale and disposition of the properties; and
WHEREAS, the City and the Developer now wish to enter into a DDA for the disposition and
development of 200 Linden, attached hereto and incorporated herein as Exhibit A; and
WHEREAS, because the City is obligated to dispose of the Agency Properties in accordance with the
LRPMP and to satisfy goals, objectives and purposes of the Redevelopment Plan and the Redevelopment
Dissolution Statutes, the Agency Properties are not "surplus" property of the City and are not subject to
the disposition requirements and procedures of the Surplus Lands Act(Government Code Section 54220
et seq.); and
WHEREAS, the disposition of the Properties in accordance with the LRPMP and to satisfy goals,
objectives and purposes of the Redevelopment Plan and the Redevelopment Dissolution Statutes
City of South San Francisco Page 2
File Number: 17-710 Enactment Number: RES O4-2017
constitutes a "common benefit" that may take place under authority of California Government Code
Section 37350 and/or other disposition authority deemed appropriate by the City; and
WHEREAS, on January 28, 2015, the City Council certified an Environmental Impact Report (EIR),
State Clearinghouse number 2013102001, in accordance with the provisions of the California
Environmental Quality Act (Public Resources Code, §§ 21000, et seq., CEQA) and CEQA Guidelines,
which analyzed the potential environmental impacts of the development within the Downtown Station
Area Specific Plan(DSASP); and
WHEREAS, on January 28, 2015, the City Council also adopted a Statement of Overriding
Considerations (SOC) in accordance with the provisions of the California Environmental Quality Act
(Public Resources Code, §§ 21000, et seq., CEQA) and CEQA Guidelines, which carefully considered
each significant and unavoidable impact identified in the EIR and found that the significant
environmental impacts are acceptable in light of the Downtown Station Area Specific Plan's economic,
legal, social,technological and other benefits; and
WHEREAS, CEQA allows for limited environmental review of subsequent projects under a program
EIR when an agency finds that a project would not create any new environmental effects beyond those
previously analyzed under a program EIR and would not require any new mitigation measures; and
WHEREAS, the development of the Property was contemplated in the DSAP EIR, and the execution of
a Disposition and Development Agreement for development consistent with the DSAP would not result
in any new significant environmental effects or a substantial increase in the severity of any previously
identified effects beyond those disclosed and analyzed in the Downtown Station Area Specific Plan
Program EIR certified by the City Council,nor would any new mitigation measures be required; and
WHEREAS, on September 6, 2017,the City Council adopted a resolution approving the execution of the
Disposition and Development Agreement with Hisense REUS,LLC; and
WHEREAS, the approval of the final sale price and the implementation of the amended LRPMP through
this Resolution itself does not commit the Oversight Board to any action that may have a significant
effect on the environment; and
WHEREAS, therefore, no subsequent or supplemental environmental review is required pursuant to
CEQA Guidelines § 15162.
NOW, THEREFORE, BE IT RESOLVED that the Oversight Board for the Successor Agency to the
Redevelopment Agency of the City of South San Francisco does hereby resolve as follows:
City of South San Francisco Page 3
File Number: 17-710 Enactment Number: RES O4-2017
The foregoing recitals are true and correct and made a part of this Resolution.
Finds that the proposed actions in this Resolution are consistent with the Long Range Property
Management Plan.
Approves a final sale price of$3,500,000 as set forth in the Disposition and Development Agreement
between the City of South San Francisco and Hisense REUS, LLC for the sale and development of the
properties located at 200 Linden Avenue, 212 Baden Avenue, and 216 Baden Avenue, attached hereto as
Exhibit A. The sale proceeds from the disposition of the properties will be distributed to the taxing
entities according to Section 5 of the Amended and Restated Master Agreement for Taxing Entity
Compensation.
Approves of the City Manager, or his designee, executing the Disposition and Development Agreement,
attached hereto as Exhibit A, and any necessary documents related to the Disposition and Development
Agreement, and take all actions necessary to implement this intent of this Resolution, subject to approval
as to form by the City Attorney.
* * * *
At a meeting of the Oversight Board to the Successor Agency to the former Redevelopment Agency on
9/19/2017, a motion was made by Mark Addiego, seconded by Paul Scannell, that this Resolution be
approved.The motion passed.
Yes: 6 Cullen,Addiego, Christensen, Farrales, Scannell, and Friedman
Absent: 1 Krause
Attest by
ri•ta M:rti -Ili
City of South San Francisco Page 4
Exhibit A: Disposition and Development Agreement
1
DISPOSITION AND DEVELOPMENT AGREEMENT
by and between
THE CITY OF SOUTH SAN FRANCISCO
and
HISENSE REUS,LLC
Dated ________, 2017
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THIS DISPOSITION AND DEVELOPMENT AGREEMENT (this “Agreement”) is
entered into effective as of ____________, 2017 (“Effective Date”) by and between the City of
South San Francisco, a municipal corporation (“City”) and Hisense REUS, LLC, a California
limited liability company (“Developer”). City and Developer are hereinafter collectively
referred to as the “Parties.”
RECITALS
A. The City of South San Francisco is the owner of certain real property located in
the City of South San Francisco, California, known as County Assessor’s Parcel Numbers
(“APN”) 012-334-130 (200 Linden Avenue), 012-334-160 (216 Baden Avenue), 012-334-040
and 012-334-030 (212 Baden Avenue), as more particularly described in Exhibit A attached
hereto and incorporated herein by this reference (the “Property”).
B. 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 State’s Community
Redevelopment Law (Health and Safety Code sections 33000 et seq)(the “Dissolution Law”),
pursuant to which the former Redevelopment Agency of the City of South San Francisco was
dissolved on February 1, 2012. The City became the Successor Agency to the Redevelopment
Agency of the City of South San Francisco (“Successor Agency”), and in accordance with the
Dissolution Law, the Successor Agency prepared a Long Range Property Management Plan
(“LRPMP”), which was approved by a resolution of the Oversight Board for the Successor
Agency to the Redevelopment Agency of the City of South San Francisco (“Oversight Board”)
on May 21, 2015, and was approved by the Department of Finance (“DOF”) on October 1, 2015.
C. Consistent with the Dissolution Law and the LRPMP, certain real properties
located in the City of South San Francisco, that were previously owned by the former
Redevelopment Agency were transferred to the Successor Agency (“Agency Properties”). On
October 18, 2016, the City entered into an Amended and Restated Master Agreement for Taxing
Entity Compensation (“Compensation Agreement”) with the various local agencies who receive
shares of property tax revenues from the former redevelopment project area (“Taxing Entities”),
which provides that upon approval by the Oversight Board of the sale price, and consistent with
the LRPMP, the proceeds from the sale of any of the Agency Properties will be distributed to the
Taxing Entities in accordance with their proportionate contributions to the Real Property Tax
Trust Fund for the former Redevelopment Agency.
D. On February 8, 2017, the City adopted Resolution 16-2017 approving the transfer
of the Agency Properties from the Successor Agency to the City and in accordance with the
requirements set forth in the LRPMP, and on February 21, 2017, the Oversight Board adopted a
resolution approving the transfer of the Agency Properties from the Successor Agency to the
City.
E. Consistent with the LRPMP and the Oversight Board resolution, the Successor
Agency and City executed and recorded grant deeds transferring the Agency Properties to the
City. The Property is one of the Agency Properties and is subject to the provisions of the LRPMP
and the Compensation Agreement.
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F. The City is interested in selling the Property to Developer for the construction of a
97 residential condominium units and approximately 6,,200 square feet of commercial retail space
on the Property (“Project”).
G. On November 30, 2016, City of South San Francisco and Agency and Developer
entered into an Exclusive Negotiation Rights Agreement (“ENRA”) that provided the Developer
the exclusive right to collaborate and negotiate with the Agency and 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 the Property
and the development of the Property.
H. This Agreement sets forth the understanding of the Parties with respect to the
conveyance and development the Property. The City Council has determined that the disposition
and development of the Property pursuant to this Agreement will be of benefit to the community
and to the taxing entities that will share in the property taxes assessed against the Property
I. City seeks development of the Property in a manner consistent with: (i) the
LRPMP, (ii) the Downtown Station Area Specific Plan, and (iii) the Redevelopment Plan
adopted by the former Redevelopment Agency.
J. Upon satisfaction of the conditions precedent set forth in this Agreement and
subject to the terms and conditions set forth in this Agreement the City will convey the Property
to Developer.
K. A material inducement to City to enter into this Agreement is the agreement by
Developer to develop the Project within the time periods specified herein and in accordance with
the provisions hereof, and the City would be unwilling to enter into this Agreement in the
absence of an enforceable commitment by Developer to take such actions and complete such
work in accordance with such provisions and within such time periods.
L. Concurrent with City Council approval of the ENRA, Developer delivered to the
City Three Hundred Thousand Dollars ($300,000) (the “Deposit”) as a deposit towards the
Purchase Price (as defined in Section 3.2 below).
NOW, THEREFORE, in consideration of the mutual covenants contained herein and
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties agree as follows.
ARTICLE I
DEFINITIONS
1.1. Definitions. The following terms shall have the meanings set forth in the
Sections referenced below whenever used in this Agreement and the Exhibits attached
hereto. Additional terms are defined in the Recitals and text of this Agreement.
“Approved Partnership Agreement” is defined in Section 7.3.
“Certificate of Completion” is defined in Section 5.11.
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“City Council” means the City Council of the City of South San Francisco.
“City Manager” means the City Manager of the City of South San Francisco.
“Claims” is defined in Section 5.13.
“Closing Date” or “Close of Escrow” shall be the date that escrow closes for
conveyance of the Property to Developer.
“Conditions of Approval” is defined in Section 5.4.
“Construction Plans” is defined in Section 5.6.
“Deposit” is defined in Recital L.
“Environmental Laws” is defined in Section 4.9.2.
“Financing Plan” is defined in Section 3.4.1.
“Grant Deed” is defined in Section 3.1.
“Hazardous Material” is defined in Section 4.9.l.
“Improvements” is defined in Section 2.3.
“lndemnitees” is defined in Section 5.13.
“Memorandum” is defined in Section 2.2.
“Official Records” means the Official Records of San Mateo County.
“Project” is defined in Recital F.
“Property” is defined in Recital A.
“Repurchase Option” is defined in Section 9.9.
“Successor Agency” is defined in Recital B.
“Transfer” is defined in Section 7.2.
1.2. Exhibits. The following exhibits are attached hereto and incorporated into
this Agreement by this reference:
A Legal Description of Property
B Form of Memorandum
C Form of Affordable Housing Agreement
D Development Schedule
E Form of Grant Deed
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F Building Permit Submittal Requirements
G Form of Certificate of Completion
H Form of Subordination Agreement
ARTICLE II
REPRESENTATIONS; EFFECTIVE DATE;
PROJECT SCOPE
2.1. Developer’s Representations. Developer represents and warrants to City as
follows, and Developer covenants that until the expiration or earlier termination of this
Agreement, upon learning of any fact or condition which would cause any of the warranties
and representations in this Section 2.1 not to be true, Developer shall immediately give
written notice of such fact or condition to City. Developer acknowledges that City shall rely
upon Developer’s representations made herein notwithstanding any investigation made by or
on behalf of City.
2.1.1. Authority. Developer is a limited liability company, duly organized
and in good standing under the laws of the State of California. Developer has the full right,
power and authority to undertake all obligations of Developer under this Agreement and all
other documents and instruments to be executed and delivered by Developer pursuant to this
Agreement. The execution, performance and delivery of this Agreement and all other
documents and instruments to be executed and delivered by Developer pursuant to this
Agreement have been duly authorized by all requisite actions. The persons acting on behalf
of Developer to execute this Agreement and all other documents and instruments to be
executed by Developer pursuant to this Agreement have been duly authorized to do so. This
Agreement constitutes, and when executed, all other documents and instruments to be
executed by Developer pursuant to this Agreement will constitute, valid and binding
obligations of Developer, enforceable in accordance with their respective terms.
2.1.2. No Conflict. Developer’s execution, delivery and performance of its
obligations under this Agreement and the documents and instruments to be executed by
Developer pursuant to this Agreement, will not constitute a default or a breach under any
contract, agreement or order to which Developer is a party or by which it is bound.
2.1.3. No Litigation or Other Proceeding. No litigation or other proceeding
(whether administrative or otherwise) is outstanding or has been threatened which would
prevent, hinder or delay the ability of Developer to perform its obligations under this
Agreement.
2.1.4. No Developer Bankruptcy. Developer is not the subject of a
bankruptcy or insolvency proceeding.
2.2. Effective Date: Memorandum. The obligations of Developer and City
hereunder shall be effective as of the Effective Date which date is set forth in the preamble
to this Agreement. A Memorandum of this Agreement substantially in the form attached
hereto as Exhibit B (the “Memorandum”) will be recorded against the Property on the
Closing Date.
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2.3. Scope of Development. The Project will include the construction of: (i)
approximately 97 residential condominium units which may be subject to change during the
entitlement process; (ii) subject to Section 2.4 below, at least one on-site parking space for each
residential unit; and (iii) approximately 6,200_ square feet of commercial retail space (all of
the foregoing are collectively referred to herein as the “Improvements”).
2.3.1. Retail Space. The commercial retail space shall be constructed in a
manner that is consistent with all applicable zoning regulations. Further, Developer shall
employ Good Faith Efforts to occupy ground floor retail space with a pharmacy or small
market. If a pharmacy or small market is not feasible, Developer shall employ Good Faith
Efforts to occupy ground floor retail space with restaurants or other active retail tenant s.
Personal and financial services, offices, medical clinics and other similar uses are not
permitted. For the purposes of this section, Good Faith Efforts shall constitute detailed
progress reports from Developer’s broker that outline the companies contacted, contact
name, dates and times of meetings, and any follow-up outreach. These reports are required
every 60 days beginning with the execution date of this Agreement. If, after Good Faith
Efforts by Developer, securing one of the foregoing preferred uses with a signed lease or
Letter of Intent for the ground floor retail space is shown to be infeasible, Developer and
City agree to meet and confer regarding the additional permissible uses for the ground floor
retail space.
The City shall not issue Certificates of Occupancy for the Project’s residential
units until Developer provides executed retail leases for the foregoing preferred uses of
ground floor retail space, or until Developer provides Basic Improvements to ground floor
retail space. For the purposes of this section, Basic Improvements shall be defined as acc ess
to mechanical, electrical and plumbing connections, which must include access to drain and
waste; to heating, ventilation and air conditioning (HVAC); to electrical subpanels; and to
floor slabs, at four locations throughout the retail space for future use.
2.4. Conditions of Approval. Developer has submitted a formal planning
application to City for entitlements required for the Project. Developer agrees that it will
develop the Project in accordance with the requirements resulting from the City’s review and
approval of the planning application, including but not limited to all applicable Conditions of
Approval adopted by the City for the Project.
2.5. Inclusionary Housing Requirements. Developer shall be subject to the City’s
inclusionary affordable housing requirement as set forth under City Municipal Code Chapter
20.380. The Parties shall negotiate and execute an Affordable Housing Agreement, in a form
similar to the Form of Affordable Housing Agreement, attached hereto as Exhibit C, which
will also be a condition of approval of Developer’s entitlements. The Affordable Housing
Agreement shall satisfy the requirements set forth under Chapter 20.380 of the South San
Francisco Municipal Code , and the State Density Bonus Law, as applicable , and will
include, among other terms, the selection method for qualifying prospective homeowners
for affordable units will include a local preference to individuals who work and/or reside
within City.
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2.6. Residential Unit and Bedroom Count. The Parties agree that the number of
residential units and the mix of bedroom count will be determined during the entitlement
period.
ARTICLE III
DISPOSITION OF THE PROPERTY; CONDITIONS PRECEDENT TO CLOSING
3.1. Purchase and Sale of Property. The City represents that as of the Effective
Date, the City holds fee simple absolute title to the Property, and is authorized to convey the
Property for development consistent with this Agreement pursuant to the LRPMP. Provided
that all conditions precedent set forth in this Agreement have been satisfied or waived, City
shall sell to Developer, and Developer shall purchase, the fee simple absolute interest in the
Property in accordance with and subject to the terms, covenants and conditions of this
Agreement, free and clear of all exceptions to title except: (a) applicable building and
zoning laws and regulations, (b) taxes and assessments accruing subsequent to recordation
of the Grant Deed, (c) exceptions as shown on the preliminary title report for the Property
(“Title Report”) as reasonably approved by Developer, and (d) such other conditions, liens,
encumbrances, restrictions, easements and exceptions as Developer may approve in writing,
which approval shall not be unreasonably withheld. All of the foregoing are collectively
hereinafter referred to as “Developer’s Permitted Exceptions.” Conveyance of the
Property shall be effectuated by grant deed substantially in the form attached hereto as
Exhibit E (the “Grant Deed”).
3.2. Purchase Price. City agrees to sell the Property to Developer for the sum of
Three Million, Five Hundred Thousand Dollars ($3,500,000) (the “Purchase Price”).
3.3. Deposit. Developer has submitted a $300,000 Deposit directly to the City in
connection with the execution of the ENRA. This Deposit will be retained by the City and
shall not be deposited into escrow. Pursuant to the ENRA, $15,000 of the Deposit was
applied for Successor Agency staff costs. Additionally, twenty thousand dollars ($20,000)
from the Deposit will be applied toward payment for Economic Development & Housing
Division (“EDH”) staff and City Attorney time. The remainder amount of the Deposit
($265,000) will be applied toward the Purchase Price upon conveyance of the Property from
City to Developer at Closing. Within five days of the opening of escrow, Developer shall
place escrow the remaining balance of the Purchase Price, in available U.S. funds.
3.3.1. Forfeiture of Deposit. In the event that Developer does not meet the
requirements, conditions, and/or timelines set forth in this Agreement, or that Developer
opts not to proceed with Closing, the Deposit will be retained by the City in its entirety. In
the event that City’s non-performance results in the termination of the Project, the Deposit
shall be refunded to Developer in its entirety less any fees associated with the ENRA and
with this Agreement.
3.4. Conditions Precedent. City’s obligation to sell the Property to Developer is
conditioned upon the satisfaction of all of the requirements set forth in each subsection of
this Section 3.4, unless any such condition is waived by City acting in the discretion of its
City Manager. Prior to the opening of escrow and the conveyance of the Property:
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3.4.1. Financing Plan. Developer shall submit for City’s review and approval
an updated financing plan detailing Developer’s plans for financing the acquisition of the
Property and the construction and permanent financing of the Project (hereinafter the
“Financing Plan”). The City acknowledges and agrees that the Financing Plan may change
depending on, among other things, available financing sources and terms. The Financing Plan
shall indicate all sources of funds necessary to pay, when due, the estimated costs of Project
development, including without limitation acquisition costs and hard and soft construction
costs, and shall be accompanied by evidence that all such funds have been firmly committed by
Developer, equity investors or lending institutions, subject only to commercially reasonable
conditions. The Financing Plan shall include development and operating pro formas which set
out in detail Developer’s plan for financing the costs of acquisition, construction and operation
of the Project. City staff shall promptly review the proposed Financing Plan (and proposed
modifications thereto), and acting through the City Manager, the City shall approve such plan in
writing within fifteen (15) business days following receipt provided that the plan conforms to
the requirements of this Article. If the City does not approve the Financing Plan (or any
modification), the City shall set forth its objections in writing and notify Developer of the
reasons for its disapproval. Developer shall thereafter submit a revised Financing Plan that
addresses the reasons for disapproval, and the City shall grant Developer a reasonable extension
of the time deadlines set forth in this Agreement as required to restructure the Financing Plan,
subject to the outside time limit for completion set forth the Project Development Schedule,
attached as Exhibit D. The City’s review of the Financing Plan (and modifications thereto)
shall be limited to determining if the contemplated financing will be available, if the financing
contemplated in the Financing Plan would provide sufficient funds to undertake and complete
the development and construction of the Improvements, and determining if it is consistent with
the terms of this Agreement. City approval of the Financing Plan shall be a condition precedent
to City’s obligation to convey the Property to Developer. However, the City’s approval of the
Financing Plan shall not be unreasonably withheld.
3.4.2. Permits and Approvals; Cooperation. Unless specifically stated
otherwise in this Agreement, Developer shall have obtained all local and state entitlements,
permits, licenses and approvals required for the construction of the Project on the Property,
including without limitation, design review and use permit approval. City staff shall work
cooperatively with Developer to assist in coordinating the expeditious processing and
consideration of all permits, entitlements and approvals necessary for construction of the
Project on the Property as contemplated by this Agreement.
3.4.3. Demolition and Grading Permit Submittal. Developer shall have
submitted complete applications for both a demolition permit and a grading permit to the
City’s Building Division.
3.5. Escrow. Escrow shall not open until Developer has satisfied all conditions
precedent set forth in Section 3.4 of this Agreement. City and Developer shall open escrow
at the office of Chicago Title Company (“Title Company” or “Escrow Agent”) in order to
consummate the conveyance of the Property to Developer and the closing of escrow for the
transactions contemplated hereby.
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3.5.1. Costs of Closing and Escrow. Developer shall pay all title insurance
premiums, cost and expenses for policies Developer elects to purchase in connection with the
acquisition of the Property and the financing of the Project If Developer elects to purchase
title insurance policy, City will provide the standard owner affidavits regarding tenants,
work on site, and other standard terms to permit the Title Company’s issuance of an ALTA
policy. Developer shall pay all applicable conveyance and recording fees, transfer taxes, city
and county taxes, escrow fees and closing costs incurred in connection with the conveyance
of the Property and the Closing.
3.6. Escrow Instructions; Deposit of Funds; Recordation of Documents. City shall
provide Escrow Agent with a copy of this Agreement, which together with such
supplemental instructions as City or Developer may provide and which are consistent with
the intent of this Agreement or which are otherwise mutually agreed upon by City and
Developer, shall serve as escrow instructions for the conveyance of the Property.
3.7. Closing. Unless the Parties agree otherwise, subject to force majeure, escrow
shall not close, and the Property shall not transfer from City to Developer, until Developer
has satisfied all conditions precedent outlined in this Agreement. Close of Escrow shall
occur within ten (10) business days following the Developer’s satisfaction or City’s written
waiver of all conditions precedent to conveyance of the Property as set forth in Section 3.9.
Provided that all conditions precedent to conveyance of the Property have been satisfied or
waived in writing, City shall deposit into escrow the executed Grant Deed and executed
copies of all documents to which each is a party. On the Closing Date the Escrow Agent
shall cause the Grant Deed, the Memorandum, and the Deed of Trust to be recorded in the
Official Records.
3.8. Review of Title. Developer shall obtain a preliminary title report for the
Property within sixty (60) days following the Effective Date and shall provide a copy of the
Title Report to City. Developer shall notify City of any objections Developer has to
exceptions to title (“Title Exceptions”) within ten (10) business days following Developer’s
receipt of the Title Report. Developer’s failure to object within such period shall be deemed
to be approval of the condition of title to the Property. If Developer objects to any Title
Exception, City shall use reasonable efforts at City expense to remove from title or
otherwise satisfy each such exception in a form that is reasonably satisfactory to Developer
no later than fourteen (14) days prior to the Closing Date.
3.9. City’s Conditions to Closing. City’s obligation to convey the Property to
Developer and close of escrow is conditioned upon Developer’s satisfaction, or City’s
written waiver, of the following conditions:
3.9.1. No Default. There shall exist no condition, event or act which would
constitute a material breach or default under this Agreement, or which, upon the giving of
notice or the passage of time, or both, would constitute such a material breach or default.
3.9.2. Representations. All representations and warranties of Developer
contained herein or in any certificate delivered in connection with the transactions
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contemplated by this Agreement shall be true and correct in all material respects as of the
Close of Escrow.
3.9.3. Due Authorization and Good Standing. Developer shall have
delivered to City of each of the following: (i) certificate of good standing, certified by the
Secretary of State indicating that Developer is properly organized and authorized to do
business in the State of California, (ii) a certified resolution indicating that Developer’s
manager or managing member, as applicable, has authorized the transactions contemplated
by this Agreement and that the persons executing this Agreement have been duly authorized
to do so, and (iii) certified copies of Developer’s LLC-1 and operating agreement, certified
as accurate and complete by Developer’s manager or managing member, as applicable.
3.9.4. Execution. Delivery and Recordation of Documents. Developer shall
have executed, acknowledged as applicable, and delivered to City this Agreement and all
other documents required in connection with the transactions contemplated hereby,
including without limitation a counter-signed original of the Grant Deed. Concurrently with
the Closing, the Grant Deed, the Memorandum, and the Deed of Trust shall be recorded in
the Official Records.
3.9.5. Final Pro Forma. Developer shall deposit into Escrow the final Pro
Forma acceptable to City at least five (5) days prior to Closing.
3.9.6. Evidence of Availability of Funds. At least five (5) days p rior to
Closing, Developer shall submit to City evidence reasonably satisfactory to City that (i) all
conditions to the release and expenditure of funds described in the approved Financing Plan as
the source of construction financing for the Project have been met and that such funds will be
available upon conveyance of the Property, (ii) all approvals, permits, and authorizations which
are conditioned upon conveyance will be received promptly after conveyance, and (iii) all
construction financing (including draws subsequent to the initial draw of funds) will be
available upon conveyance of the Property to Developer.
3.9.7. Construction Loan. Developer must provide evidence that any
construction loan secured for the Project has cleared at least five (5) days prior to Closing.
3.9.8. Construction Contract, Plans. Budget and Schedule. City shall approve
the general contractor, the construction budget and schedule, and the construction contract for
the Project, and City shall approve the final Construction Plans and specifications for the
Project. Such approvals shall not b e unreasonably withheld, provided that Developer
demonstrates the general contractor is licensed by the State of California as a general
contractor and has reputable experience with developments comparable to the Project .
Developer shall have executed and deposited into Escrow, at least five (5) days prior to
Closing, the full Construction Contract for the Project as approved and accepted by City.
3.9.9. Building Permit Submittal. Developer shall have submitted to City and
a building permit application which shall contain ninety percent (90%) complete
construction drawings. For purposes of satisfaction of this Section 3.9.9, the building permit
application shall meet the standards set forth in Exhibit F, Building Permit Submittal
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Requirements. Upon submittal of the building permit application, Developer shall also
deposit with the City an amount equal to one-half (½) of the estimated amount of all fees
applicable to the Project otherwise due at the time of building permit issuance. Such fees
shall be forfeited to City if Developer fails to satisfy any timing obligations as required
under this Agreement or Development Schedule set forth in Exhibit D. Developer shall also
have delivered evidence satisfactory to City that Developer has obtained any other permits
required to construct the Project, or that the receipt of such permits is subject only to such
conditions as City shall reasonably approve.
3.9.10. Insurance: Payment and Performance Bonds. Developer shall have
provided evidence reasonably satisfactory to City that Developer has obtained insurance
coverage meeting the requirements set forth in Article XI and shall have provided to City
performance bonds or other assurance of completion reasonably satisfactory to City pursuant to
the requirements set forth in Section 5.17.
3.10. Developer’s Conditions to Closing. Developer’s obligation to proceed with
the acquisition of the Property is subject to the City’s satisfaction or Developer’s waiver of
the following conditions:
(a) No Default. City shall not be in default under the terms of this
Agreement, and all representations and warranties of City contained herein shall be true and
correct in all material respects.
(b) Execution of Documents. City shall have executed and acknowledged
the Grant Deed, the Memorandum, and all other documents required hereunder, and shall
have delivered such documents into escrow.
ARTICLE IV
CONDITION OF THE SITE; ENVIRONMENTAL MATTERS
4.1. Access to Site: Inspections. Prior to the Close of Escrow, Developer and
Developer’s authorized representatives may enter upon and conduct further reviews and
assessments of the physical and environmental condition of the Property and the condition
of the existing improvements. Developer shall provide proof of liability insurance
acceptable to City. Developer’s inspection, examination, survey and review of the Property
shall be at Developer’s sole expense. Developer shall provide City with copies of all reports
and test results promptly following completion of such reports and testing. Developer
hereby agrees to notify the City twenty four (24) hours in advance of its intention to enter
the Property and will provide workplans, drawings, and descriptions of any intrusive
sampling it intends to do. Developer must keep the Property in a safe condition during its
entry. Developer shall repair, restore and return the Property to its condition immediately
preceding Developer’s entry thereon at Developer’s sole expense Developer will not permit
any mechanics liens, stop notices or other liens or encumbrances to be placed against the
Property prior to Close of Escrow. Without limiting any other indemnity provisions set
forth in this Agreement, Developer shall indemnify, defend (with counsel approved by City)
and hold the Indemnitees harmless from and against all Claims resulting from or arising in
connection with entry upon the Property by Developer or Developer’s agents, employees,
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consultants, contractors or subcontractors pursuant to this Section 4.1; provided, however,
that Developer will have no indemnification obligation with respect to gross negligence or
willful misconduct of any City Indemnitees Developer’s indemnification obligations set
forth in this Section 4.1 shall survive the Close of Escrow and the termination of this
Agreement.
4.2. Environmental Disclosure. To the extent the City has copies of
environmental investigation reports, City will provide copies to Developer upon request; but
the Parties acknowledge that City will not be conducting a public records search of any
regulatory agency files-although the City urges Developer to do so to satisfy itself
regarding the environmental condition of the Property. By execution of this Agreement,
Developer: (i) acknowledges that it will have an opportunity to conduct its own independent
review and investigation of the Property prior to the Close of Escrow; (ii) agrees to rely
solely on its own experts in assessing the environmental condition of the Property and its
sufficiency for its intended use; and (iii) waives any and all rights Developer may have to
assert that the City failed to disclose information about the environmental condition of the
Property.
4.3. Property Sold “AS IS.” Developer specifically acknowledges that the City
is selling and Developer is purchasing the Property on an “AS IS”, “WHERE IS” and
“WITH ALL FAULTS” basis and that Developer is not relying on any representations or
warranties of any kind whatsoever, express or implied, from City, or its employees, board
members, agents, or brokers as to any matters concerning the Property. City makes no
representations or warranties as to any matters concerning the Property, including without
limitation: (i) the quality, nature, adequacy and physical condition of the Property,
including, but not limited to, appurtenances, access, landscaping, parking facilities, (ii) the
quality, nature, adequacy, and physical condition of soils, geology and any groundwater, (iii)
the existence, quality, nature, adequacy and physical condition of utilities serving the
Property, (iv) the development potential of the Property, and the Property’s use,
merchantability, or fitness, suitability, value or adequacy of the Property for any particular
purpose, (v) the zoning or other legal status of the Property or any other public or private
restrictions on use of the Property, (vi) the compliance of the Property or its operation with
any Environmental Laws, covenants, conditions and restrictions of any governmental or
quasi-governmental entity or of any other person or entity, (vii) the presence or removal of
Hazardous Material, substances or wastes on, under or about the Property or the adjoining or
neighboring property; (viii) the quality of any labor and materials used in any improvements
on the Property, or (ix) the condition of title to the Property.
4.4. Developer to Rely on Own Experts. Developer understands that,
notwithstanding the delivery by City to Developer of any materials, including, without
limitation, third party reports, Developer will rely entirely on Developer’s own experts and
consultants and its own independent investigation in proceeding with the acquisition of the
Property.
4.5. Release by Developer. Effective upon the Close of Escrow, Developer
WAIVES, RELEASES, REMISES, ACQUITS AND FOREVER DISCHARGES the
Indemnitees and any person acting on behalf of the City, from any and all Claims, direct or
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indirect, known or unknown, foreseen or unforeseen, which Developer now has or which
may arise in the future on account of or in any way arising out of or in connection with the
physical condition of the Property, the presence of Hazardous Material in, on, under or
about the Property, or any law or regulation applicable thereto including, without limiting
the generality of the foregoing, all Environmental Laws.
DEVELOPER ACKNOWLEDGES THAT DEVELOPER IS FAMILIAR
WITH SECTION 1542 OF THE CALIFORNIA CIVIL CODE, WHICH
PROVIDES AS FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR
HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
BY INITIALING BELOW, DEVELOPER EXPRESSLY WAIVES THE
BENEFITS OF SECTION 1542 OF THE CALIFORNIA CIVIL CODE
WITH RESPECT TO THE FOREGOING RELEASE :
Developer’s initials: __________
4.6. Developer’s Post-Closing Obligations. Developer hereby covenants and
agrees that:
4.6.1. Developer shall not knowingly permit the Property or any portion
thereof to be a site for the use, generation, treatment, manufacture, storage, disposal or
transportation of Hazardous Material or otherwise knowingly permit the presence or release
of Hazardous Material in, on, under, about or from the Property with the exception of
limited amounts of cleaning supplies and other materials customarily used in construction,
rehabilitation, use or maintenance of residential properties similar in nature to the Property
and any commercial uses developed as part of the Project, and used, stored and disposed of
in compliance with Environmental Laws.
4.6.2. Developer shall keep and maintain the Property and each portion thereof
in compliance with, and shall not cause or permit the Project or the Property or any portion of
either to be in violation of, any Environmental Laws.
4.6.3. Upon receiving actual knowledge of the same, Developer shall
immediately advise City in writing of: (i) any and all enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or threatened against the Developer, or
the Property pursuant to any applicable Environmental Laws; (ii) any and all claims made or
threatened by any third party against the Developer or the Property relating to damage,
contribution, cost recovery, compensation, loss or injury resulting from any Hazardous
Material; (iii) the presence or release of any Hazardous Material in, on, under, about or from the
Property; or (iv) Developer’s discovery of any occurrence or condition on any real property
adjoining or in the vicinity of the Project classified as “Border Zone Property” under the
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provisions of California Health and Safety Code, Sections 25220 et seq., or any regulation
adopted in connection therewith, that may in any way affect the Property pursuant to any
Environmental Laws or cause it or any part thereof to be designated as Border Zone Property.
The matters set forth in the foregoing clauses (i) through (iv) are hereinafter referred to as
“Hazardous Materials Claims”). The City shall have the right to join and participate in, as a
party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous
Materials Claim.
4.6.4. Without the City’s prior written consent, which shall not be unreasonably
withheld or delayed, Developer shall not take any remedial action in response to the presence of
any Hazardous Material in, on, under, or about the Property (other than in emergency situations
or as required by governmental agencies having jurisdiction in which case the City agrees to
provide its consent), nor enter into any settlement agreement, consent decree, or other
compromise in respect to any Hazardous Materials Claim.
4.7. Environmental Indemnity. To the greatest extent allowed by law, Developer
shall indemnify, defend (with counsel approved by City with input from Developer) and hold
Indemnitees harmless from and against all Claims resulting, arising, or based directly or
indirectly in whole or in part, upon (i) the presence, release, use, generation, discharge, storage
or disposal of any Hazardous Material on, under, in or about the Property, or the transportation
of any such Hazardous Material to or from, the Property, or (ii) the failure of Developer,
Developer’s employees, agents, contractors, subcontractors, or any person acting on behalf of
or as the invitee of any of the foregoing to comply with Environmental Laws, unless caused by
the City’s active or passive negligence. The foregoing indemnity shall further apply to any
residual contamination in, on, under or about the Property or affecting any natural resources,
and to any contamination of any property or natural resources arising in connection with the
generation, use, handling, treatment, storage, transport or disposal of any such Hazardous
Material, and irrespective of whether any of such activities were or will be undertaken in
accordance with Environmental Laws. City shall use reasonable efforts to assign to Developer
any indemnities relating to the presence of Hazardous Materials that City has received from
Pacific Steel, Pacific Gas & Electric and any other prior owner of the Property.
4.8. No Limitation. Developer hereby acknowledges and agrees that
Developer’s duties, obligations and liabilities under this Agreement are in no way limited or
otherwise affected by any information the City may have concerning the Property and/or the
presence in, on, under or about the Property of any Hazardous Material, whether the City
obtained such information from the Developer or from its own investigations, unless such
information was known to the City at the time of execution of this Agreement and/or the
time of the close of escrow for the conveyance of the Property to the Developer but not
disclosed to Developer.
4.9. Definitions.
4.9.1. “Hazardous Material” means any chemical, compound, material,
mixture, or substance that is now or may in the future be defined or listed in, or otherwise
classified pursuant to any Environmental Laws (defined below) as a “hazardous substance”,
“hazardous material”, “hazardous waste”, “extremely hazardous waste”, “infectious waste’’,
15
“toxic substance’’, toxic pollutant”, or any other formulation intended to define, list or
classify substances by reason of deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, or toxicity. The term “hazardous material” shall also include
asbestos or asbestos-containing materials, radon, chrome and/or chromium, polychlorinated
biphenyls, petroleum, petroleum products or by-products, petroleum components, oil,
mineral spirits, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable
as fuel, perchlorate, and methy tert-butyl ether, whether or not defined as a hazardous waste
or hazardous substance in the Environmental Laws.
4.9.2. “Environmental Laws” means any and all federal, state and local
statutes, ordinances, orders, rules, regulations, guidance documents, judgments,
governmental authorizations or directives, or any other requirements of governmental
authorities, as may presently exist, or as may be amended or supplemented, or hereafter
enacted, relating to the presence, release, generation, use, handling, treatment, storage,
transportation or disposal of Hazardous Material, or the protection of the environment or
human, plant or animal health, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. § 9601), the
Hazardous Materials Transportation Act (49 U.S.C. § 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the
Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Oil Pollution Act (33 U.S.C. §
2701 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. §
11001 et seq.), the Porter-Cologne Water Quality Control Act (Cal. Water Code § 13000 et
seq.), the Toxic Mold Protection Act (Cal. Health & Safety Code § 26100, et seq.), the Safe
Drinking Water and Toxic Enforcement Act of 1986 (Cal. Health & Safety Code § 25249.5
et seq.), the Hazardous Waste Control Act (Cal. Health & Safety Code § 25100 et seq.), the
Hazardous Materials Release Response Plans & Inventory Act (Cal. Health & Safety Code §
25500 et seq.), and the Carpenter-Presley-Tanner Hazardous Substances Account Act (Cal.
Health and Safety Code, Section 25300 et seq.).
ARTICLE V
DEVELOPMENT OF THE PROPERTY
5.1. Development Schedule. Subject to Section 11.2, Developer shall
commence construction of the Project within sixty (60) days following conveyance of the
Property to Developer, and in no event later than June 3 0 , 20 18, and shall diligently
prosecute to completion the construction of the Project. Each party shall use diligent and
commercially reasonable efforts to perform the obligations to be performed by such party
pursuant to this Agreement within the times periods set forth herein, and if no such time is
provided, within a reasonable time, designed to permit issuance of a final certificate of
occupancy for the Project by the date specified in Exhibit D. Subject to Section 11.2 and the
City’s issuance of permits and approvals, Developer’s failure to commence or complete the
Project in accordance with the time periods specified in this Section 5.1 shall be an Event of
Default hereunder.
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5.2. Cost of Acquisition and Construction. Except as expressly set forth herein,
Developer shall be solely responsible for all direct and indirect costs and expenses incurred
in connection with the acquisition of the Property, including without limitation appraisal
fees, title reports and any environmental assessments Developer elects to undertake. Except
as expressly set forth herein, all costs of designing, developing and constructing the
Improvements and the Project and compliance with the Project approvals, including without
limitation all off-site and on-site improvements required by City in connection therewith,
shall be borne solely by Developer and shall not be an obligation of the City
5.3. Project Approvals. Developer acknowledges that the execution of this
Agreement by City does not relieve Developer from the obligation to apply for and to obtain
from City and all other agencies with jurisdiction over the Property, all necessary approvals,
entitlements, and permits for the development of the Project (including without limitation
approval of the Project in compliance with CEQA), nor does it limit in any manner the
discretion of the City or any other agency in the approval process. Developer shall pay the
actual cost of contract consultants that will be used by the City for all necessary planning
and processing activities of the Project, which have been reasonably approved by Developer,
including, but not limited to, permits, entitlements, and City staff time and legal fees
pursuant to a reimbursement agreement to be entered into by and between City and
Developer, which shall provide for Developer the right to audit all contrac ts and invoices.
Prior to the Closing, Developer shall have submitted a building permit application package
that is at least ninety percent (90%) complete complying with standards set forth in
Exhibit F, Building Permit Submittal Requirements, and shall have obtained all other
entitlements, permits, licenses and approvals required for the development and operation of
the Project.
5.4. Conditions of Approval. Developer shall develop the Property in
accordance with the terms and conditions of this Agreement and in compliance with the
terms and conditions of all approvals, entitlements and permits that the City or any other
governmental body or agency with jurisdiction over the Project or the Property has granted
or issued as of the date hereof or may hereafter grant or issue in connection with
development of the Project, including without limitation, all mitigation measures imposed in
connection with environmental review of the Project and all conditions of approval imposed
in connection with any entitlements, approvals or permits (all of the foregoing approvals,
entitlements, permits, mitigation measures and conditions of approval are hereafter
collectively referred to as the “Conditions of Approval”).
5.5. Fees. Developer shall be solely responsible for, and shall promptly pay
when due, all customary and usual fees and charges of City and all other agencies with
jurisdiction over development of the Property in connection with obtaining building permits
and other approvals for the Project, including without limitation, those related to the
processing and consideration of amendments, if any, to the current entitlements, any related
approvals and permits, environmental review, architectural review, and any subsequent
approvals for the Project.
5.6. Construction Pursuant to Plans. Developer shall develop the Project in
accordance with the approved Construction Plans, the Conditions of Approval, and all other
17
permits and approvals granted by the City pertaining to the Project. Developer shall comply
with all directions, rules and regulations of any fire marshal, health officer, building
inspector or other officer of every governmental agency having jurisdiction over the
Property or the Project. Each element of the work shall proceed only after procurement of
each permit, license or other authorization that may be required for such element by any
governmental agency having jurisdiction. All design and construction work on the Project
shall be performed by licensed contractors, engineers or architects, as applicable.
5.7. Change in Construction Plans. If Developer desires to make any material
change in the approved Construction Plans, Developer shall submit the proposed change in
writing to City for its written approval, which approval shall not be unreasonably withheld
or delayed if the Construction Plans, as modified by any proposed change, conform to the
requirements of this Agreement and any approvals issued by City after the Effective Date.
Unless a proposed change is approved by City within thirty (30) days, it
shall be deemed rejected. If rejected, the previously approved Construction Plans shall
continue to remain in full force and effect. Any change in the Construction Plans required in
order to comply with applicable codes shall be deemed approved, so long as such change
does not substantially nor materially change the architecture, design, function, use, or
amenities of the Project as shown on the latest approved Construction Plans. Nothing in this
Section is intended to or shall be deemed to modify the City’s standard plan review
procedures.
5.8. Rights of Access. For the purpose of ensuring that the construction of the
Project is completed in compliance with this Agreement, Developer shall permit
representatives of the City to enter upon the Property following 24 hours written notice
(except in the case of emergency in which case such notice as may be practical under the
circumstances shall be provided).
5.9. Disclaimer. Developer acknowledges that the City is under no obligation,
and City neither undertakes nor assumes responsibility or duty to Developer or to any third
party, to in any manner review, supervise, or inspect the progress of construction or the
operation of the Project. Developer and all third parties shall rely entirely upon its or their
own supervision and inspection in determining the quality and suitability of the materials
and work, the performance of architects, subcontractors, and material suppliers, and all other
matters relating to the construction and operation of the Project. Any review or inspection
undertaken by the City is solely for the purpose of determining whether Developer is
properly discharging its obligations under this Agreement, and shall not be relied upon by
Developer or any third party as a warranty or representation by the City as to the quality of
the design or construction of the improvements or otherwise.
5.10. Defects in Plans. City shall not be responsible to Developer or to any third
party for any defect in the Construction Plans or for any structural or other defect in any work
done pursuant to the Construction Plans. Developer shall indemnify, defend (with counsel
approved by City) and hold harmless the Indemnitees from and against all Claims arising out of,
or relating to, or alleged to arise from or relate to defects in the Construction Plans or defects in
any work done pursuant to the Construction Plans whether or not any insurance policies shall
18
have been determined to be applicable to any such Claims. Developer’s indemnification
obligations set forth in this Section shall survive the expiration or earlier termination of this
Agreement and the recordation of a Certificate of Completion. It is further agreed that City
does not, and shall not, waive any rights against Developer which they may have by reason of
this indemnity and hold harmless agreement because of City’s acceptance, or Developer’s
deposit with City of any of the insurance policies described in this Agreement. Developer’s
indemnification obligations pursuant to this Section shall not extend to Claims arising due
to the gross negligence or willful misconduct of the Indemnitees.
5.11. Certificate of Completion for Project. Promptly after completion of
construction of the Project, issuance of a final Certificate of Occupancy or equivalent by the
City and the written request of Developer, the City will provide an instrument (“Certificate
of Completion”) so certifying, provided that at the time such certificate is requested all
applicable work has been completed. The Certificate of Completion shall be substantially in
the form attached hereto as Exhibit G and shall constitute conclusive evidence that
Developer has satisfied its obligations regarding the construction of the Project and
development of the Property.
At Developer’s option the Certificate of Completion shall be recorded in the Official
Records. The Certificate of Completion shall not constitute evidence of compliance with or
satisfaction of any obligation of Developer to any holder of a deed of trust or mortgage securing
money loaned to finance the Project or any part thereof and shall not be deemed a notice of
completion under the California Civil Code, nor shall such Certificate provide evidence that
Developer has satisfied any obligation that survives the expiration of this Agreement.
5.12. Equal Opportunity. There shall be no discrimination on the basis of race,
color, religion, creed, sex, sexual orientation, marital status, ancestry or national origin in
the hiring, firing, promoting or demoting of any person engaged in construction work on the
Property, and Developer shall direct its contractors and subcontractors to refrain from
discrimination on such basis.
5.13. Prevailing Wage Requirements. To the full extent required by applicable
federal and state law, Developer and its contractors and agents shall comply with California
Labor Code Section 1720 et seq. and the regulations adopted pursuant thereto (“Prevailing
Wage Laws”), and shall be responsible for carrying out the requirements of such
provisions. If applicable, Developer shall submit to City a plan for monitoring payment of
prevailing wages and shall implement such plan at Developer’s expense. The Developer
shall reimburse the City for any costs incurred by the City in ensuring compliance with this
Section 5.13.
Developer shall indemnify, defend (with counsel approved by City) and hold the City,
and its elected and appointed officers, officials, employees, agents, consultants, and contractors
(collectively, the “lndemnitees”) harmless from and against all liability, loss, cost, expense
(including without limitation attorneys’ fees and costs of litigation), claim, demand, action, suit,
judicial or administrative proceeding, penalty, deficiency, fine, order, and damage (all of the
foregoing collectively “Claims”) which directly or indirectly, in whole or in part, are caused by,
arise in connection with, result from, relate to, or are alleged to be caused by, arise in connection
19
with, or relate to, the payment or requirement of payment of prevailing wages (including without
limitation, all claims that may be made by contractors, subcontractors or other third party
claimants pursuant to Labor Code Sections 1726 and 1781) in connection with the Project, the
failure to comply with any state or federal labor laws, regulations or standards in connection
with this Agreement, including but not limited to the Prevailing Wage Laws, or any act or
omission of Developer related to this Agreement with respect to the payment or requirement of
payment of prevailing wages, whether or not any insurance policies shall have been determined
to be applicable to any such Claims. It is further agreed that City does not and shall not waive
any rights against Developer which they may have by reason of this indemnity and hold
harmless agreement because of the acceptance by City, or Developer’s deposit with City of any
of the insurance policies described in this Agreement. The provisions of this Section 5.13 shall
survive the expiration or earlier termination of this Agreement and the issuance of a Certificate
of Completion for the Project. Developer’s indemnification obligations set forth in this Section
shall not apply to Claims arising solely from the gross negligence or willful misconduct of the
Indemnitees.
5.14. Compliance with Laws. Developer shall carry out and shall cause its
contractors to carry out the construction of the Project in conformity with all applicable
federal, state and local laws, rules, ordinances and regulations, including without limitation,
all applicable federal and state labor laws and standards, applicable provisions of the
California Public Contracts Code (if any), the City zoning and development standards,
building, plumbing, mechanical and electrical codes, all other provisions of the City’s
Municipal Code, and all applicable disabled and handicapped access requirements,
including without limitation, the Americans with Disabilities Act, 42 U.S.C. Section 12101,
et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq.,
and the Unruh Civil Rights Act, Civil Code Section 51, et seq.. Developer shall indemnify,
defend (with counsel approved by City) and hold harmless the Indemnitees from and against
any and all Claims arising in connection with the breach of Developer’s obligations set forth
in this Section whether or not any insurance policies shall have been determined to be
applicable to any such Claims. It is further agreed that City does not and shall not waive
any rights against Developer which they may have by reason of this indemnity and hold
harmless agreement because of the acceptance by City, or Developer’s deposit with City of
any of the insurance policies described in this Agreement. Developer’s indemnification
obligations set forth in this Section shall not apply to Claims arising solely from the gross
negligence or willful misconduct of the Indemnitees. Developer’s defense and
indemnification obligations set forth in this Section 5.14 shall survive the expiration or
earlier termination of this Agreement and the issuance of a Certificate of Completion for the
Project.
5.15. Liens and Stop Notices. Until the issuance of a Certificate of Completion,
Developer shall not allow to be placed on the Property or any part thereof any lien or stop
notice on account of materials supplied to or labor performed on behalf of Developer. If a
claim of a lien or stop notice is given or recorded affecting the Project or the Property,
Developer shall within twenty (20) days of such recording or service: (a) pay and discharge
(or cause to be paid and discharged) the same; or (b) effect the release thereof by recording
and delivering (or causing to be recorded and delivered) to the party entitled thereto a surety
20
bond in sufficient form and amount; or (c) provide other assurance satisfactory to City that
the claim of lien or stop notice will be paid or discharged.
5.16. Right of City to Satisfy Liens on the Property. If Developer fails to
satisfy or discharge any lien or stop notice on the Property pursuant to and within the time
period set forth in Section 5.15 above, the City shall have the right, but not the obligation, to
satisfy any such liens or stop notices at Developer’s expense and without further notice to
Developer and all sums advanced by City for such purpose shall be part of the indebtedness
secured by the Deed of Trust. In such event Developer shall be liable for and shall
immediately reimburse City for such paid lien or stop notice. Alternatively, the City may
require Developer to immediately deposit with City the amount necessary to satisfy such
lien or claim pending resolution thereof. The City may use such deposit to satisfy any claim
or lien that is adversely determined against Developer. Developer shall file a valid notice of
cessation or notice of completion upon cessation of construction work on the Property for a
continuous period of thirty (30) days or more, and shall take all other reasonable steps to
forestall the assertion of claims or liens against the Property. The City may (but has no
obligation to) record any notices of completion or cessation of labor, or any other notice that
the City deems necessary or desirable to protect its interest in the Property.
5.17. Performance and Payment Bonds. Prior to commencement of construction
work on the Project, Developer shall provide, or cause its general contractor to deliver, to
the City copies of payment bond(s) and performance bond(s) issued by a reputable insurance
company licensed to do business in California, each in a penal sum of not less than one
hundred percent (100%) of the scheduled cost of construction of the Project pursuant to the
Construction Contract to be executed by Developer. The bonds shall name the City as co-
obligee. In lieu of such performance and payment bonds, subject to City’s approval of the
form and substance thereof, Developer may submit evidence satisfactory to the City one of
the following:
5.17.1. Developer shall cause its general contractor to provide evidence of
Subcontractor Default Insurance covering one hundred percent (100%) of the Project
subcontract value. Contractor shall require those Subcontractors that do not enroll in the
Subcontractor Default Insurance Policy to furnish payment bond(s) and performance bond(s)
in forms acceptable to and approved by the City. General Contractor shall schedule the City
and Developer to the Subcontractor Default Insurance policy via a Scheduled Entity
Endorsement; or
5.17.2. the contractor’s ability to commence and complete construction of the
Project in the form of an irrevocable letter of credit, pledge of cash deposit, certificate of
deposit, or other marketable securities held by a broker or other financial institution, with
signature authority of the City required for any withdrawal, or a completion guaranty in a
form and from a guarantor acceptable to City. Such evidence must be submitted to City in
approvable form in sufficient time to allow for review and approval prior to the scheduled
construction start date.
5.18. Insurance Requirements. Developer shall maintain and shall cause its
contractors to maintain all applicable insurance coverage specified in Article X.
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ARTICLE VI
USE OF THE PROPERTY
6.1. Maintenance. Following conveyance of the Property to Developer,
Developer shall at its own expense, maintain the Property, landscaping and common areas in
good physical condition, in good repair, and in decent, safe, sanitary, habitable and tenantable
living conditions in conformity with all applicable state, federal, and local laws, ordinances,
codes, and regulations. Without limiting the foregoing, Developer agrees to maintain the
Property (including without limitation, the landscaping, driveways, parking areas, and
walkways) in a condition free of all waste, nuisance, debris, unmaintained landscaping,
graffiti, disrepair, abandoned vehicles/appliances, and illegal activity, and shall take all
reasonable steps to prevent the same from occurring on the Property. Developer shall
prevent and/or rectify any physical deterioration of the Property and shall make all
repairs, renewals and replacements necessary to keep the Property and the improvements
located thereon in good condition and repair.
6.2. Taxes and Assessments. Following conveyance of the Property to
Developer, Developer shall pay all real and personal property taxes, assessments and
charges and all franchise, income, payroll, withholding, sales, and other taxes assessed
against the Property and payable by Developer, at such times and in such manner as to
prevent any penalty from accruing, or any lien or charge from attaching to the Property;
provided, however, that Developer shall have the right to contest in good faith, any such
taxes, assessments, or charges. In the event the Developer exercises its right to contest any
tax, assessment, or charge, the Developer, on Final Determination of the proceeding or
contest, shall immediately pay or discharge any decision or judgment rendered against it,
together with all costs, charges and interest. “Final Determination” for purposes of this
Section means and includes the Developer’s having exercised all appeal rights that it is
entitled to exercise and chooses to do so.
6.3. Obligation to Refrain from Discrimination. Developer shall not restrict the
rental, sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or
any portion thereof, on the basis of race, color, religion, creed, sex, sexual orientation,
disability, marital status, ancestry, or national origin of any person. Developer covenants
for itself and all persons claiming under or through it, and this Agreement is made and
accepted upon and subject to the condition that there shall be no discrimination against or
segregation of any person or group of persons on account of any basis listed in subdivision
(a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections
12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and
Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the Property or part thereof, nor shall Developer or any
person claiming under or through Developer establish or permit any such practice or
practices of discrimination or segregation with reference to the selection, location, number,
use or occupancy of tenants, lessees, subtenants, sublessees or vendees in, of, or for the
Property or part thereof. Developer shall include such provision in all deeds, leases,
contracts and other instruments executed by Developer, and shall enforce the same diligently
and in good faith.
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ARTICLE VII
LIMITATIONS ON CHANGE IN OWNERSHIP, MANAGEMENT AND CONTROL
OF DEVELOPER
7.1. Identity of Developer; Changes Only Pursuant to this Agreement.
Developer and its principals have represented that they possess the necessary expertise, skill
and ability to carry out the development of the Property pursuant to this Agreement. The
qualifications, experience, financial capacity and expertise of Developer and its principals
are of particular concern to the City. It is because of these qualifications, experience,
financial capacity and expertise that the City has entered into this Agreement with
Developer. No voluntary or involuntary successor, assignee or transferee of Developer shall
acquire any rights or powers under this Agreement, except as expressly provided herein.
7.2. Prohibition on Transfer. Prior to the issuance of a Certificate of
Completion, Developer shall not, except as expressly permitted by this Agreement, directly
or indirectly, voluntarily, involuntarily or by operation of law make or attempt any total or
partial sale, transfer, conveyance, assignment or lease (collectively, “Transfer”) of the
whole or any part of the Property, the Project, the Improvements, or this Agreement,
without the prior written approval of City, which approval shall not be unreasonably
withheld. Any such attempt to assign this Agreement without the City’s consent shall be
null and void and shall confer no rights or privileges upon the purported assignee. In
addition to the foregoing, prior to the issuance of a Certificate of Completion, except as
expressly permitted by this Agreement, Developer shall not undergo any significant change
of ownership without the prior written approval of City. For purposes of this Agreement, a
“significant change of ownership” shall mean a transfer of the beneficial interest of more
than fifty percent (50%) in aggregate of the voting control of Developer, taking all transfers
into account on a cumulative basis; provided however, neither the admission of investor
limited partners, nor the transfer of beneficial or ownership interests by an investor limited
partner to subsequent limited partners shall be restricted by this provision, nor shall the
admission of a Passive Investor Member nor the transfer of a beneficial or ownership
interest by a Passive Investor Member to another Passive Investor Member be restricted by
this provision. “Passive Investor Member” means a member who pursuant to Developer’s
operating agreement is not authorized to actively manage or otherwise operate the business
of the company.
7.3. Permitted Transfers. Notwithstanding any contrary provision hereof, the
prohibitions set forth in this Article shall not be deemed to prevent: (i) the granting of
temporary easements or permits to facilitate development of the Property; (ii) the dedication
of any property required pursuant to this Agreement; (iii) the lease or sale of individual
residences to tenants or homebuyers for occupancy as their principal residence or the lease
of any commercial space to individual tenants; (iv) assignments creating security interests
for the purpose of financing the acquisition, construction or permanent financing of the
Project or the Property in accordance with the approved Financing Plan as it may be updated
with City approval, and subject to the requirements of Article VIII, or Transfers directly
resulting from the foreclosure of, or granting of a deed in lieu of foreclosure of, such a
security interest; (v) a Transfer to a limited partnership or limited liability company in
which the managing general partner or manager or managing member is under the direct or
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indirect voting control of, or under common control, with Developer (“Approved
Partnership”); (vi) the admission of limited partners or Passive Investor Members and any
transfer of limited partnership interests or Passive Investor Member interests, as applicable,
in accordance with Developer’s agreement of limited partnership or operating agreement, as
applicable, provided that the partnership agreement or operating agreement, as applicable,
and/or the instrument of Transfer provides for development and operation of the Property
and Project in a manner consistent with this Agreement; (vii) the removal of the general
partner by the investor limited partner for a default under the Partnership Agreement,
provided the replacement general partner is reasonably satisfactory to City; (viii) the
transfer of the general partner’s interest to a nonprofit entity that is tax-exempt under
Section 501(c)(3) of the Internal Revenue Code of 1986 as amended, provided such
replacement general partner is reasonably satisfactory to City; or (ix) the transfer of any
partnership or membership interest to a trust controlled by the transferor for estate planning
interests.
7.4. Requirements for Proposed Transfers. The City may consent, which
consent shall not be unreasonably withheld, to a proposed Transfer of this Agreement which
is not a Permitted Transfer, the Property or portion thereof if all of the following
requirements are met (provided however, the requirements of this Section 7.4 shall not apply
to Transfers described in Section 7.3):
7.4.1. The proposed transferee demonstrates to the City’s satisfaction that it
has the qualifications, experience and financial resources necessary and adequate as may be
reasonably determined by the City to competently complete the Project and to otherwise
fulfill the obligations undertaken by the Developer under this Agreement.
7.4.2. The Developer and the proposed transferee shall submit for City
review and approval all instruments and other legal documents proposed to effect any
Transfer of this Agreement, the Property or interest therein together with such
documentation of the proposed transferee’s qualifications and development capacity as the
City may reasonably request.
7.4.3. The proposed transferee shall expressly assume all of the rights and
obligations of the Developer under this Agreement arising after the effective date of the
Transfer and all obligations of Developer arising prior to the effective date of the Transfer
(unless Developer expressly remains responsible for such obligations) and shall agree to be
subject to and assume all of Developer’s obligations pursuant to the Conditions of Approval
and all other conditions, and restrictions set forth in this Agreement.
7.4.4. The Transfer shall be effectuated pursuant to a written instrument
satisfactory to the City in form recordable in the Official Records.
Consent to any proposed Transfer may be given by the City Manager unless the
City Manager in his discretion, refers the matter of approval to the City Council. If a proposed
Transfer has not been approved in writing within thirty (30) days following City’s receipt of
written request by Developer, it shall be deemed rejected.
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7.5. Effect of Transfer without Consent.
7.5.1. In the absence of specific written agreement by the City, no Transfer
by Developer shall be deemed to relieve the Developer or any other party from any
obligation under this Agreement.
7.5.2. If, in violation of this Agreement, the Developer Transfers all or any
part of the Property or the Improvements prior to the recordation of the Certificate of
Completion for the Project, the City shall be entitled to receive from Developer the amount
by which the consideration payable for such Transfer exceeds the sum of (a) the Purchase
Price for the Property, and (b) the costs incurred by Developer in connection with the
improvement and development of the Property, including carrying charges, interest, fees,
taxes, assessments and escrow fees. Such excess consideration shall belong to and be paid
to the City by the Developer and until so paid, the City shall have a lien on the Property for
such amount. The provisions of this Section 7.5.2 have been agreed upon so as to discourage
land speculation by Developer; accordingly, these provisions shall be given a liberal
interpretation to accomplish that end. Following the recordation of the Certificate of
Completion, the provisions of this Section 7.5.2 shall have no further force and effect.
7.5.3. Without limiting any other remedy City may have under this
Agreement, or under law or equity, it shall be an Event of Developer Default hereunder
entitling City to terminate this Agreement if without the prior written approval of the City,
Developer assigns or Transfers this Agreement, the Improvements, or the Property prior to
the issuance of a Certificate of Completion. This Section 7.5.3 shall not apply to Transfers
described in clauses (i), (ii), (iii), (iv) and (vi) of Section 7.3).
7.6. Recovery of Costs. Developer shall reimburse City for all City costs,
including but not limited to reasonable attorneys’ fees, incurred in reviewing instruments
and other legal documents proposed to effect a Transfer under this Agreement and in
reviewing the qualifications and financial resources of a proposed successor, assignee, or
transferee within ten days following City’s delivery to Developer of an invoice detailing
such costs.
ARTICLE VIII
SECURITY FINANCING AND RIGHTS OF MORTGAGEES
8.1. Mortgages and Deeds of Trust for Development. Prior to issuance of the
Certificate of Completion, mortgages and deeds of trust, or any other reasonable security
instrument are permitted to be placed upon the Property or the Improvements only for the
purpose of securing loans for the purpose of financing the acquisition of the Property, the
design and construction of the Improvements, and other expenditures reasonably necessary
for development of the Property pursuant to this Agreement. Developer shall not enter into
any conveyance for such financing that is not contemplated in the Financing Plan as it may
be updated with City approval, without the prior written approval of the City Manager or his
designee. As used herein, the terms “mortgage” and “deed of trust” shall mean any security
instrument used in financing real estate acquisition, construction and land development.
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8.2. Holder Not Obligated to Construct. The holder of any mortgage, deed of
trust authorized by this Agreement shall not be obligated to complete construction of the
Improvements or to guarantee such completion. Nothing in this Agreement shall be deemed
to permit or authorize any such holder to devote the Property or any portion thereof to any
uses, or to construct any improvements thereon, other than those uses or improvements
provided for or authorized by this Agreement.
8.3. Notice of Default and Right to Cure. Whenever City delivers any notice of
default hereunder, City shall concurrently deliver a copy of such notice to each holder of
record of any mortgage or deed of trust secured by the Property or the Improvements,
provided that City has been provided with the address for delivery of such notice. City shall
have no liability to any such holder for any failure by the City to provide such notice to such
holder. Each such holder shall have the right, but not the obligation, at its option, to cure or
remedy any such default or breach within the cure period provided to Developer extended
by and additional sixty (60) days. In the event that possession of the Property or the
Improvements (or any portion thereof) is required to effectuate such cure or remedy, the
holder shall be deemed to have timely cured or remedied the default if it commences the
proceedings necessary to obtain possession of the Property or Improvements, as applicable,
within sixty (60) days after receipt of the City’s notice, diligently pursues such proceedings
to completion, and after obtaining possession, diligently completes such cure or remedy. A
holder who chooses to exercise its right to cure or remedy a default or breach shall first
notify City of its intent to exercise such right prior to commencing to cure or remedy such
default or breach. Nothing contained in this Agreement shall be deemed to permit or
authorize such holder to undertake or continue the construction of the Project (beyond the
extent necessary to conserve or protect the same) without first having expressly assumed in
writing Developer’s obligations to City under this Agreement. The holder in that event
must agree to complete, in the manner provided in this Agreement, the Project and the
Improvements and submit evidence reasonably satisfactory to City that it has the
development capability on staff or retainer and the financial capacity necessary to perform
such obligations. Any such holder properly completing the Project pursuant to this Section
shall assume all rights and obligations of Developer under this Agreement and shall be
entitled to a Certificate of Completion upon compliance with the requirements of this
Agreement.
8.4. Failure of Holder to Complete Improvements. In any case where, six (6)
months after default by Developer in completion of construction of the Improvements, the
holder of record of any mortgage or deed of trust has exercised its option to construct, but
then has not proceeded diligently with construction, City shall be afforded those rights
against such holder that it would otherwise have against Developer under this Agreement.
8.5. City Right to Cure Defaults. In the event of a breach or default by
Developer under a mortgage or deed of trust secured by the Property or the Improvements,
City may cure the default, without acceleration of the subject loan, following prior notice
thereof to the holder of such instrument and Developer. In such event, Developer shall be
liable for, and City shall be entitled to reimbursement from Developer for all costs and
expenses incurred by City associated with and attributable to the curing of the default or
breach.
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8.6. Holder to be Notified. Developer agrees to use best efforts to ensure that
each term contained herein dealing with security financing and rights of holders shall be
either inserted into the relevant deed of trust or mortgage or acknowledged by the holder
prior to its creating any security right or interest in the Property or the Improvements.
8.7. Modifications to Agreement. City shall not unreasonably withhold consent
to modifications of this Agreement requested by Project lenders or investors provided such
modifications do not alter City’s substantive rights and obligations under this Agreement.
8.8. Estoppel Certificates. Either Party shall, at any time, and from time to
time, within fifteen (15) days after receipt of written request from the other Party, execute
and deliver to such Party a written statement certifying that, to the knowledge of the
certifying Party: (i) this Agreement is in full force and effect and a binding obligation of the
Parties (if such be the case), (ii) this Agreement has not been amended or modified, or if so
amended, identifying the amendments, and (iii) the requesting Party is not in default in the
performance of its obligations under this Agreement, or if in default, describing the nature
of any such defaults.
ARTICLE IX
DEFAULTS, REMEDIES AND TERMINATION
9.1. Event of Developer Default. The following events shall constitute an event of
default on the part of Developer (“Event of Developer Default”):
9.1.1. Developer fails to commence or complete construction of the Project
within the times set forth in Section 5 .1 and Exhibit D, or subject to force majeure, abandons
or suspends construction of the Project prior to completion for a period of sixty (60) days or
more;
9.1.2. A Transfer occurs, either voluntarily or involuntarily, in violation of
Article VII;
9.1.3. Developer fails to maintain insurance as required pursuant to this
Agreement, and Developer fails to cure such default within ten (10) days;
9.1.4. Subject to Developer’s right to contest the following charges pursuant
to Section 6.2, if Developer fails to pay prior to delinquency taxes or assessments due on the
Property or the Project or fails to pay when due any other charge that may result in a lien on
the Property or the Project, and Developer fails to cure such default within thirty (30) days
of date of delinquency
9.1.5. Upon the imposition of any lien as a result of failure to pay taxes or
assessments due on the Property or Project;
9.1.6. A default arises under any loan secured by a mortgage, deed of trust or
other security instrument recorded against the Property and remains uncured beyond any
applicable cure period such that the holder of such security instrument has the right to
accelerate repayment of such loan;
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9.1.7. Any representation or warranty contained in this Agreement or in any
application, financial statement, certificate or report submitted to the City in connection with
this Agreement proves to have been incorrect in any material and adverse respect when
made and continues to be materially adverse to the City;
9.1.8. If, pursuant to or within the meaning of the United States Bankruptcy
Code or any other federal or state law relating to insolvency or relief of debtors
(“Bankruptcy Law”), Developer or any manager, managing member or general partner
thereof (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order
for relief against Developer or any general partner, managing member, or manager thereof in
an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee,
liquidator or similar official for Developer or any manager, managing member or general
partner thereof; (iv) makes an assignment for the benefit of its creditors; or (v) admits in
writing its inability to pay its debts as they become due;
9.1.9. A court of competent jurisdiction shall have made or entered any
decree or order (1) adjudging the Developer to be bankrupt or insolvent, (2) approving as
properly filed a petition seeking reorganization of the Developer or seeking any arrangement
for Developer under bankruptcy law or any other applicable debtor’s relief law or statute of
the United States or any state or other jurisdiction, (3) appointing a receiver, trustee,
liquidator, or assignee of the Developer in bankruptcy or insolvency or for any of its
properties, or (4) directing the winding up or liquidation of the Developer;
9.1.10. Developer shall have assigned its assets for the benefit of its creditors
(other than pursuant to a mortgage loan) or suffered a sequestration or attachment of or
execution on any substantial part of its property, unless the property so assigned,
sequestered, attached or executed upon shall have been returned or released within sixty
(60) days after such event (unless a lesser time period is permitted for cure under any other
mortgage on the Property, in which event such lesser time period shall apply under this
subsection as well) or prior to any sooner sale pursuant to such sequestration, attachment, or
execution;
9.1.11. The Developer shall have voluntarily suspended its business or
Developer shall have been dissolved or terminated;
9.1.12. A default arises under a Note or Deed of Trust that Developer obtains
after close of es crow, but prior to a certificate of occupancy is issued and remains
uncured beyond any applicable cure period; or
9.1.13. Developer defaults in the performance of any term, provision,
covenant or agreement contained in this Agreement other than an obligation enumerated in
this Section 9.1 and unless a shorter cure period is specified for such default, the default
continues for ten (10) days in the event of a monetary default or thirty (30) days in the event
of a nonmonetary default after the date upon which City shall have given written notice of
the default to Developer; provided however, if the default is of a nature that it cannot be
cured within thirty (30) days, a Developer Event of Default shall not arise hereunder if
Developer commences to cure the default within thirty (30) days and thereafter prosecutes
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the curing of such default with due diligence and in good faith to completion and in no event
later than ninety (90) days after receipt of notice of the default.
9.2. City Default. An event of default on the part of City (“Event of City
Default”) shall arise hereunder if City fails to keep, observe, or perform any of its
covenants, duties, or obligations under this Agreement, and the default continues for a
period of thirty (30) days after written notice thereof from Developer to City, or in the case
of a default which cannot with due diligence be cured within thirty (30) days, City fails to
commence to cure the default within thirty (30) days of such notice and thereafter fails to
prosecute the curing of such default with due diligence and in good faith to completion.
9.3. City Right to Terminate Agreement. If an Event of Developer Default
shall occur and be continuing beyond any applicable cure period, then City shall, in addition
to other rights available under law or this Agreement, have the right to terminate this
Agreement. However, if a nonmonetary breach is of a nature that it cannot be cured within
the applicable cure period, Developer shall commence to cure within said cure period and
diligently complete such cure within a reasonable time thereafter but in no event later than
one hundred twenty ( 120) days. If, after the expiration of the applicable cure period, City
elects to terminate this Agreement, City shall give written notice to Developer and to any
mortgagee entitled to such notice specifying the nature of the default and stating that this
Agreement shall expire and terminate on the date specified in such notice, and upon the date
specified in the notice, this Agreement and all rights of Developer under this Agreement,
shall expire and terminate.
9.4. City Remedies and Rights Upon an Event of Developer Default. Upon the
occurrence of an Event of Developer Default and the expiration of any applicable cure
period, City shall have all remedies available under this Agreement or under law or equity,
including, but not limited to the right to bring an action for equitable relief seeking the
specific performance of the terms and conditions of this Agreement, and/or enjoining,
abating, or preventing any violation of such terms and conditions, and/or seeking to obtain
any other remedy consistent with the purpose of this Agreement.
9.5. Developer’s Remedies Upon an Event of City Default. Upon the
occurrence of an Event of City Default, in addition to pursuing any other remedy allowed at
law or in equity or otherwise provided in this Agreement, Developer may bring an action for
equitable relief seeking the specific performance of the terms and conditions of this
Agreement, and/or enjoining, abating, or preventing any violation of such terms and
conditions, and/or seeking to obtain any other remedy consistent with the purpose of this
Agreement, and may pursue any and all other remedies available under this Agreement or
under law or equity to enforce hereunder.
9.6. Remedies Cumulative; No Consequential Damages. Except as otherwise
expressly stated in this Agreement, the rights and remedies of the Parties are cumulative, and
the exercise by either Party of one or more of such rights or remedies shall not preclude the
exercise by it, at the same or different time, of any other rights or remedies for the same or
any other default by the other Party. Notwithstanding anything to the contrary set forth
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herein, a Party’s right to recover damages in the event of a default shall be limited to actual
damages and shall exclude consequential damages.
9.7. Inaction Not a Waiver of Default. No failure or delay by either Party in
asserting any of its rights and remedies as to any default shall operate as a waiver of such
default or of any such rights or remedies, nor deprive either Party of its rights to institute and
maintain any action or proceeding which it may deem necessary to protect, assert or enforce
any such rights or remedies in the same or any subsequent default.
9.8. Right of Reverter. If following conveyance of the Property to Developer,
Developer (i) fails to begin construction of the Project within the time specified in Section
5.1 as such date may be extended pursuant to the terms hereof, (ii) abandons or suspends
construction work for a period of thirty (30) days after written notice from City, (iii) fails to
complete construction of the Project by the time specified in Section 5.1 and Exhibit D as
such date may be extended pursuant to the terms hereof, or (iv) directly or indirectly,
voluntarily or involuntarily Transfers the Property or this Agreement in violation of Article
VII, the City may re-enter and take possession of the Property or any portion thereof with all
improvements thereon without payment or compensation to Developer, and revest in the
City the estate theretofore conveyed to the Developer. The interest created pursuant to this
Section 9.8 shall be a “power of termination” as defined in California Civil Code Section
885.010, and shall be separate and distinct from the City’s option to purchase the Property
under the same or similar conditions specified in Section 9.9. City’s rights pursuant to this
Section 9.8 shall not defeat, render invalid or limit any mortgage or deed of trust permitted
by this Agreement or any rights or interests provided in this Agreement for the protection of
the holders of such mortgages or deeds of trust.
Upon revesting in the City of title to the Property or any portion thereof as provided in
this Section 9.8, the City shall use best efforts to resell the Property or applicable portion thereof
and as soon as possible, in a commercially reasonable manner to a qualified and responsible party
or parties (as determined by the City) who will assume the obligation of making or completing
the Project in accordance with the uses specified for such property in this Agreement and in a
manner satisfactory to the City. Upon such resale of the Property or any portion thereof the sale
proceeds shall be applied as follows:
(a) First, to reimburse the City for all costs and expenses incurred by City,
including but not limited to salaries of personnel and legal fees incurred in connection with
the recapture and resale of the Property; all taxes and assessments payable prior to resale, and
all applicable water and sewer charges; any payments necessary to discharge any
encumbrances or liens on the Property at the time of revesting of title thereto in the City or to
discharge or prevent from attaching any subsequent encumbrances or liens due to
obligations, defaults, or acts of the Developer, its successors or transferees; any expenditures
made or obligations incurred with respect to the completion of the Project or any part thereof
on the Property; and any other amounts owed to the City by Developer and its successors or
transferee.
(b) Second, to reimburse the City for damages to which each is entitled
under this Agreement by reason of the Developer’s default.
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(c) Third, to reimburse the Developer, its successor or transferee, up to the
amount equal to:
(1) The payment made to the City for the Property; plus
(2) The fair market value of the improvements Developer has placed
on the Property or applicable portion thereof; less
(3) Any gains or income withdrawn or made by the Developer from
the Property or applicable portion thereof or the improvements thereon.
Notwithstanding the foregoing, the amount calculated pursuant to this subsection (c) shall
not exceed the fair market value of the Property or applicable portion thereof, together with the
improvements thereon as of the date of the default or failure which gave rise to the City’s
exercise of the right of reverter.
(4) Any balance remaining after such reimbursements shall be retained
by the City.
The rights established in this Section 9.8 are to be interpreted in light of the fact that the
City will convey the Property to the Developer for completion of the Project as specified herein
and not for speculation.
9.9. Option to Purchase. Enter and Possess. The City shall have the additional
right at its option to purchase, enter and take possession of the Property with all
improvements thereon (the “Repurchase Option”), if after conveyance of the Property,
Developer (i) fails to begin construction of the Project within the time specified in Section
5.1 and Exhibit D as such date may be extended pursuant to the terms hereof, (ii) abandons
or suspends construction of the Project for a period of thirty (30) days after written notice
from City, (iii) fails to complete construction of the Project by the time specified in Section
5.1 and Exhibit D as such date may be extended pursuant to the terms hereof, or (iv) directly
or indirectly, voluntarily or involuntarily Transfers the Property or this Agreement in
violation of Article VII.
To exercise the Repurchase Option, the City shall pay to the Developer cash in an amount
equal to:
1. The City’s distribution of the net proceeds of the Purchase Price in
accordance with their proportionate contributions to the Real Property Tax Trust Fund for
the former Redevelopment Agency pursuant to the Compensation Agreement; plus
2. The fair market value of any new improvements constructed by
Developer and existing on the Property at the time of exercise of the Option; plus
3. Any gains or income withdrawn or made by the Developer from the
applicable portion of the Property or the improvements thereon; less
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4. The value of any liens or encumbrances on the applicable portion of
the Property which the City assumes or takes subject to; less
5. Any damages to which the City is entitled under this Agreement by
reason of Developer’s default.
In order to exercise the Repurchase Option, City shall give Developer notice of such
exercise, and Developer shall, within thirty (30) days after receipt of such notice, provide
City with a summary of all of Developer’s costs incurred as described in this Section.
Within thirty (30) days of City’s receipt of such summary, City shall pay into an escrow
established for such purpose cash in the amount of all sums owing pursuant to this Section
9.9, and Developer shall execute and deposit into such escrow a grant deed transferring to
City all of Developer’s interest in the Property, or portion thereof and the improvements
located thereon.
9.10. Future Sale of Property. If the City exercises the Repurchase Option
pursuant to Section 9.9, the City will make reasonable efforts to remarket the property for
development consistent with the LRPMP. In the event that the City sells the property
following exercise of the Repurchase Option, the City shall pay to the Developer cash in an
amount equal to:
1. Sale proceeds from the sale of the Property, or Three Million, Five Hundred
Thousand Dollars ($3,500,000), whichever is lower; minus
2. The amount paid to the Developer pursuant to Section 9.9; minus
3. The City’s costs incurred in selling the property, including but not limited to
staff time, attorney’s fees and any third party consultants.
9.11. Memorandum of Right of Reverter/Option to Purchase. The parties shall
cause a memorandum or memoranda of the rights granted the City in Sections 9.8 and 9.9 of
this Agreement to be recorded in the Official Records at the time of the Close of Escrow for
conveyance of the Property to Developer. In lieu of such memorandum, in City’s and
City’s discretion, the rights afforded City pursuant to Sections 9.8 and 9.9 may be described
in the Grant Deed. The City will not withhold consent to reasonable requests for
subordination of the Repurchase Option to deeds of trust provided for the benefit of
construction lenders identified in the Financing Plan provided that the instruments effecting
such subordination include reasonable protections to the City in the event of default,
including without limitation, extended notice and cure rights. A subordination agreement
substantially in the form of Exhibit H shall be deemed reasonable.
9.12. Construction Plans. If this Agreement is terminated pursuant to Section
9.3, or otherwise, the Developer, at no cost to the City, shall be entitled to take possession of
all construction plans and studies in the Developer’s possession or in the possession of the
Developer’s consultants related to development of the Project on the Property, including
without limitation, the Construction Plans, subject only to the rights of senior construction
lenders identified in the Financing Plan as it may be updated with City approval, which shall
32
not be unreasonably withheld. The Developer shall deliver to the City electronic and hard
copies of such plans, including but not limited to the CAD files, and have the full right to
use them as the City deems appropriate. In the event the City utilizes the construction plans
or studies, the City shall indemnify the Developer for any claims arising from the use of
construction plans or studies by the City pursuant to this Section 9.11.
9.13. Rights of Mortgagees. Any rights of the City under this Article I X shall
not defeat, limit or render invalid any mortgage or deed of trust permitted by this Agreement
or any rights provided for in this Agreement for the protection of holders of such
instruments. Any conveyance or reverter of the Property to the City pursuant to this Article
I X shall be subject to mortgages and deeds of trust permitted by this Agreement.
9.14. Assignment. The City shall have the right to assign the Repurchase Option
to any other governmental entity.
ARTICLE X
INDEMNITY AND INSURANCE
10.1. Indemnity. Developer shall indemnify, defend (with counsel approved by
City) and hold Indemnitees harmless from and against any and all Claims, including without
limitation, Claims arising directly or indirectly, in whole or in part, as a result of or in
connection with Developer’s or Developer’s contractors, subcontractors, agents or
employees development, construction, improvement, operation, ownership or maintenance
of the Project or the Property, or any part thereof or otherwise arising out of or in connection
with Developer’s performance under this Agreement. Developer’s indemnification
obligations under this Section 11.1 shall not extend to Claims resulting from the gross
negligence or willful misconduct of Indemnitees. The provisions of this Section 11.1 shall
survive the issuance of a Certificate of Completion for the Project and the expiration or
earlier termination of this Agreement. It is further agreed that City does not and shall not
waive any rights against Developer that they may have by reason of this indemnity and
hold harmless agreement because of the acceptance by City, or the deposit with City by
Developer, of any of the insurance policies described in this Agreement.
10.2. Liability and Workers Compensation Insurance.
(a) Prior to initiating work on the Project and continuing through the
issuance of the Certificate of Completion, Developer and all contractors working on behalf
of Developer on the Project shall maintain a commercial general liability policy in the
amount of Five Million Dollars ($5,000,000) each occurrence, Ten Million Dollars
($10,000,000) annual aggregate, together with Five Million Dollars ($5,000,000) excess
liability coverage including coverage for bodily injury, property damage, products,
completed operations and contractual liability coverage. Such policy or policies shall be
written on an occurrence basis and shall name the Indemnitees as additional insureds.
(b) Until issuance of the Certificate of Completion, Developer and all
contractors working on behalf of Developer shall maintain a comprehensive automobile
liability coverage in the amount of Five Million Dollars ($5,000,000), combined single limit
33
including coverage for owned and non-owned vehicles and shall furnish or cause to be
furnished to City evidence satisfactory to City that Developer and any contractor with whom
Developer has contracted for the performance of work on the Property or otherwise pursuant
to this Agreement carries workers’ compensation insurance as required by law. Automobile
liability policies shall name the Indemnitees as additional insureds.
(c) Upon commencement of construction work and continuing until
issuance of a Certificate of Completion, Developer and all contractors working on behalf of
Developer shall maintain a policy of builder’s all-risk insurance in an amount not less than
the full insurable cost of the Project on a replacement cost basis naming City as loss payee.
(d) Developer shall maintain property insurance covering all risks of loss
(other than earthquake), including flood (if required) for 100% of the replacement value of
the Project with deductible, if any, in an amount acceptable to City, naming City as loss
payee.
(e) Companies writing the insurance required hereunder shall be approved
to do business in the State of California. Insurance shall be placed with insurers with a
current A.M. Best’s rating of no less than A: VII. The Commercial General Liability and
comprehensive automobile policies required hereunder shall name the Indemnitees as
additional insureds. Builder’s Risk and property insurance shall name City as loss payee.
(f) Prior to commencement of construction work, Developer shall furnish
City with certificates of insurance in form acceptable to City evidencing the required
insurance coverage and duly executed endorsements evidencing such additional insured
status. The certificates shall contain a statement of obligation on the part of the carrier to
notify City of any material adverse change, cancellation, termination or non-renewal of the
coverage at least thirty days in advance of the effective date of any such material adverse
change, cancellation, termination or non-renewal.
(g) If any insurance policy or coverage required hereunder is canceled or
reduced, Developer shall, within ten (10) days after receipt of notice of such cancellation or
reduction in coverage, but in no event later than the effective date of cancellation or
reduction, file with City a certificate showing that the required insurance has been reinstated
or provided through another insurance company or companies. Upon failure to so file such
certificate, City may, without further notice and at its option, procure such insurance
coverage at Developer’s expense, and Developer shall promptly reimburse City for such
expense upon receipt of billing from City.
(h) Coverage provided by Developer shall be primary insurance and shall
not be contributing with any insurance, or self-insurance maintained by City, and the
policies shall so provide. The insurance policies shall contain a waiver of subrogation for
the benefit of the City. Developer shall furnish the required certificates and endorsements to
City prior to the commencement of construction of the Project, and shall provide City with
certified copies of the required insurance policies upon request. If Developer maintains
broader coverage and/or higher limits than the minimum shown above, the City shall be
entitled to the broader coverage and/or higher limits maintained. Any available insurance
34
proceeds in excess of the specified minimum limits of insurance and coverage shall be
available to the City.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. No Brokers. Each Party warrants and represents to the other that no person
or entity can properly claim a right to a real estate commission, brokerage fee, finder’s fee,
or other compensation with respect to the transactions contemplated by this Agreement.
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 shall survive the close of escrow and the expiration
or earlier termination of this Agreement.
11.2. Enforced Delay: Extension of Times of Performance. Subject to the
limitations set forth below, performance by either Party shall not be deemed to be in default,
and all performance and other dates specified in this Agreement shall be extended where
delays are due to: war, insurrection, strikes, lockouts, riots, floods, earthquakes, fires,
casualties, acts of God, , epidemics, quarantine restrictions, freight embargoes,
governmental restrictions or priority, litigation, including court delays, unusually severe
weather, acts or omissions of the other Party, acts or failures to act of any public or
governmental agency or entity (provided that the acts or failures to act of City shall not
excuse performance by City), or any other cause beyond the affected Party’s reasonable
control. An extension of time for any such cause shall be for the period of the enforced
delay and shall commence to run from the time of the commencement of the cause, if notice
by the Party claiming such extension is sent to the other Party within thirty (30) days of the
commencement of the cause and such extension is not rejected in writing by the other Party
within ten (10) days of receipt of the notice. Neither Party shall unreasonably withhold
consent to an extension of time pursuant to this Section.
Times of performance under this Agreement may also be extended in writing by the
mutual agreement of Developer, City (acting in the discretion of the City Manager unless he or
she determines in his or her discretion to refer such matter to the City Council).
City and Developer acknowledge that adverse changes in economic conditions, either of
the affected Party specifically or the economy generally, changes in market conditions or
demand, and/or inability to obtain financing to complete the Project shall not constitute grounds
of enforced delay pursuant to this Section. Each Party expressly assumes the risk of such
adverse economic or market changes and/or financial inability, whether or not foreseeable as of
the Effective Date.
11.3. Notices. Except as otherwise specified in this Agreement, all notices to be
sent pursuant to this Agreement shall 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
shall be sent by: (i) personal delivery, in which case notice is effective upon delivery; (ii)
certified or registered mail, return receipt requested, in which case notice shall be deemed
35
delivered on receipt if delivery is confirmed by a return receipt; or (iii) 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; or (iv) email
transmission to the email addresses noted below, in which case notice will be deemed
delivered upon transmittal, provided that a duplicate hard copy of the email is promptly
delivered by first-class or certified mail or by overnight delivery.
City: City of South San Francisco
400 Grand Ave.
South San Francisco, CA 94080
Attn: City Manager
Email: [email protected]
cc: [email protected]
with a copy to: Meyers Nave
555 12th Street, Suite 1500
Oakland, CA 94607
Attn: Jason Rosenberg
Email: [email protected]
Developer: Hisense Real Estate (USA), LLC
235 Grand Ave. # 203
South San Francisco, CA 94080
Attn: Kenneth Cui
Email: [email protected]
with a copy to:
James Braden Law Offices
44 Montgomery Street, Suite 1210
San Francisco, CA 94104
Attention: James M. Braden
Telephone: (415) 398-6865
Email: [email protected]
11.4. Attorneys’ Fees. If any Party fails to perform any of its obligations under
this Agreement, or if any dispute arises among the Parties concerning the meaning or
interpretation of any provision hereof, then the prevailing Party in any proceeding in
connection with such dispute shall be entitled to the costs and expenses it incurs on account
thereof and in enforcing or establishing its rights hereunder, including, without limitation,
court costs and reasonable attorneys’ fees and disbursements.
36
11.5. Waivers: Modification. No waiver of any breach of any covenant or
provision of this Agreement shall be deemed a waiver of any other covenant or provision
hereof, and no waiver shall be valid unless in writing and executed by the waiving Party.
An extension of time for performance of any obligation or act shall not be deemed an
extension of the time for performance of any other obligation or act, and no extension shall
be valid unless in writing and executed by the Party granting the extension. This Agreement
may be amended or modified only by a written instrument executed by the Parties.
11.6. Binding on Successors. Subject to the restrictions on Transfers set forth in
Article VI, this Agreement shall bind and inure to the benefit of the Parties and their
respective permitted successors and assigns. Any reference in this Agreement to a
specifically named Party shall be deemed to apply to any permitted successor and assign of
such Party who has acquired an interest in compliance with this Agreement or under law.
11.7. Survival. All representations made by Developer hereunder and
Developer’s obligations pursuant to Sections 4.1. 4.5. 4.7, 5.10. 5.13, 5.14, 9.12. 10.1. 11.1
and 11.18 shall survive the expiration or termination of this Agreement and the issuance and
recordation of a Certificate of Completion. None of the provisions, terms, representations,
warranties and covenants of this Agreement are intended to or shall be merged by any grant
deed conveying the Property to Developer or any successor in interest, and neither such
grant deed nor any other document shall affect or impair the provisions, terms,
representations, warranties and covenants contained herein.
11.8. Construction. The section headings and captions used herein are solely for
convenience and shall not be used to interpret this Agreement. The Parties acknowledge
that this Agreement is the product of negotiation and compromise on the part of all Parties,
and the Parties agree, that since all Parties have participated in the negotiation and drafting
of this Agreement, this Agreement shall not be construed as if prepared by one of the
Parties, but rather according to its fair meaning as a whole, as if all Parties had prepared it.
11.9. Action or Approval. Whenever action and/or approval by City is required
under this Agreement, the City Manager of the City of South San Francisco or his designee
may act on and/or approve such matter unless specifically provided otherwise, or unless the
City Manager determines in his discretion that such action or approval requires referral to
City Council for consideration.
11.10. Entire Agreement. This Agreement, including Exhibits A through H,
attached hereto and incorporated herein by reference, contains the entire agreement between
the Parties with respect to the subject matter hereof, and supersedes all prior written or oral
agreements, understandings, representations or statements between the Parties with respect
to the subject matter hereof.
11.11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which taken together shall
constitute one instrument. The signature page of any counterpart may be detached therefrom
without impairing the legal effect of the signature(s) thereon provided such signature page is
attached to any other counterpart identical thereto having additional signature pages
37
executed by the other Party. Any executed counterpart of this Agreement may be delivered
to the other Party by facsimile or by email with PDF format attachment, and shall be deemed
as binding as if an originally signed counterpart was delivered.
11.12. Severability. If any term, provision, or condition of this Agreement is held
by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this
Agreement shall continue in full force and effect unless an essential purpose of this
Agreement is defeated by such invalidity or unenforceability.
11.13. No Third Party Beneficiaries. Nothing contained in this Agreement is
intended to or shall be deemed to confer upon any person, other than the Parties and their
respective successors and assigns, any rights or remedies hereunder.
11.14. Parties Not Co-Venturers. Nothing in this Agreement is intended to or
shall establish the Parties as partners, co-venturers, or principal and agent with one another.
11.15. Non-Liability of Officials, Employees and Agents. No officer, official,
employee or agent of City shall be personally liable to Developer or its successors in interest
in the event of any default or breach by City or for any amount which may become due to
Developer or its successors in interest pursuant to this Agreement.
11.16. Time of the Essence: Calculation of Time Periods. Time is of the essence
for each condition, term, obligation and provision of this Agreement. Unless otherwise
specified, in computing any period of time described in this Agreement, the day of the act or
event after which the designated period of time begins to run is not to be included and the
last day of the period so computed is to be included, unless such last day is not a business
day, in which event the period shall run until the next business day. The final day of any
such period shall be deemed to end at 5:00 p.m., local time at the Property. For purposes of
this Agreement, a “business day” means a day that is not a Saturday, a Sunday, a federal
holiday or a state holiday under the laws of California.
11.17. Dispute Resolution. Any controversy, dispute or claim related to or arising
from this Agreement or in any way arising from the dealings of the parties with one another,
shall be resolved by the following steps in the following sequence:
(A) By non-binding Mediation before, and in accordance with the rules of, the
Judicial Arbitration and Mediation Services ("JAMS"), conducted by a mutually agreed to
retired Judge, who has experience either as a Court Judge or as a private Mediator or
Arbitrator in the fields of both Land Use and Municipal Law, with exclusive venue in San
Francisco, California and in no other place.
(B) If that Mediation fails to resolve the dispute, then by binding Arbitration
before, and in accordance with the rules of, JAMS, conducted by a mutually agreed to
retired Judge, who has experience either as a Court Judge or as a private Mediator or
Arbitrator in the fields of both Land Use and Municipal Law, with exclusive venue in San
Francisco, California and in no other place. In any such arbitration, the prevailing party shall
be entitled to an award of reasonable attorney's fees and costs.
38
11.18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to principles of conflicts
of laws.
11.19. General Indemnification. Developer shall indemnify, defend (with counsel
approved by City) and hold harmless the Indemnitees from all Claims (including without
limitation, attorneys’ fees) arising in connection with any claim, action or proceeding to
attack, set aside, void, or annul any approval by the City or any of its agencies, departments,
commissions, agents, officers, employees or legislative body concerning the Project or this
Agreement. The City will promptly notify Developer of any such claim, action or
proceeding, and will cooperate fully in the defense. The City may, within its unlimited
discretion, participate in the defense of any such claim, action or proceeding, and if the City
chooses to do so, Developer shall reimburse City for reasonable attorneys’ fees and
expenses incurred.
11.20. Inspection of Books and Records. Upon request, Developer shall permit
the City to inspect at reasonable times and on a confidential basis those books, records and
all other documents of Developer necessary to determine Developer’s compliance with the
terms of this Agreement.
SIGNATURES ON FOLLOWING PAGE(S ).
39
IN WITNESS WHEREOF, the Parties have entered into this Agreement effective as of the
date first written above.
CITY
By: _________________________
City Manager
ATTEST:
By: ___________________________
City Clerk
APPROVED AS TO FORM:
By: _______________________________
City Attorney
DEVELOPER:
Hisense Real Estate (USA), LLC,
a California limited liability company
By: __________________________
Its: Managing Member
EXHIBIT A
LEGAL DESCRIPTION
PROPERTY
The land referred to is situated in the County of San Mateo, City of South San Francisco, State of
California, and is described as follows:
PARCEL ONE:
Lot 8, Block 140, as delineated upon that certain Map entitled "South San Francisco, San Mateo
County, California", filed for record in the office of the Recorder of the County of San Mateo,
State of California, on March 1st, 1892 in Book "B" of Maps, at Page 6, and a copy entered in
Book 2 of Maps at Page 52.
APN: 012-334-030 JPN: 012-033-334-03
PARCEL TWO:
Lots 6 and 7, Block 140, as delineated upon that certain Map entitled "South San Francisco, San
Mateo County, California", filed for record in the office of the Recorder of the County of San
Mateo, State of California, on March 1st, 1892 in Book "B" of Maps, at Page 6, and a copy
entered in Book 2 of Maps at Page 52.
APN: 012-334-040 JPN: 012-033-334-04
PARCEL THREE:
Lots 11, 12, 13 and 14 in Block 140, as shown on that certain Map entitled "South San Francisco,
San Mateo Co. Cal., Plat No. 1", filed for record in the office of the Recorder of the County of
San Mateo on March 1, 1892 in Book "B" of Maps, at Page 6, and copied into Book 2 of Maps at
Page 52.
APN: 012-334-130 JPN: 012-033-334-13
PARCEL FOUR:
Lots 9 and 10 in Block 140, as shown on that certain Map entitled "South San Francisco San
Mateo Co. Cal. Plat No. 1", filed in the office of the County Recorder of San Mateo County,
State of California, on March 1, 1892, in Book "B" of Maps, at Page 6 and copied into Book 2 of
Maps, at Page 52.
APN: 012-334-160 JPN: 012-033-334-16
EXHIBIT B
FORM OF MEMORANDUM
[to be provided upon execution]
EXHIBIT C
FORM OF AFFORDABLE HOUSING AGREEMENT
RECORDING REQUESTED BY:
COMMUNITY DEVELOPMENT DEPARTMENT
CITY OF SOUTH SAN FRANCISCO
400 GRAND AVENUE
SOUTH SAN FRANCISCO, CA 94080
WHEN RECORDED MAIL TO:
ECONOMIC AND COMMUNITY DEVELOPMENT
CITY OF SOUTH SAN FRANCISCO
400 GRAND AVENUE
SOUTH SAN FRANCISCO, CA 94080
Documentary Transfer Tax $
EXEMPT
County of San Mateo
City of South San Francisco
_____________________________
Right of Way Agent
AFFORDABLE HOUSING AGREEMENT
FOR BELOW MARKET RATE PROPERTY
This Affordable Housing Agreement for Below Market Rate Property (“Agreement”) is entered
into as of this _____ day of _____________, 2017, by and between the City of South San
Francisco (“City”) and Hisense REUS LLC (“Developer”). City and Developer are hereinafter
collectively referred to as the “Parties.”
RECITALS
WHEREAS, Chapter 20.380 of the South San Francisco Municipal Code sets forth the
requirements for Inclusionary Housing (“Inclusionary Housing Ordinance”); and
WHEREAS, the Developer is, or will become, the fee simple owner of that certain real
property (“Property”) located in the City of South San Francisco, State of California, and more
particularly described in Exhibit A attached hereto.
WHEREAS, the Developer intends to construct ninety-seven (97) for-sale housing units
and approximately 6,200 square feet of commercial retail space on the Property (the “Project”)
and has submitted site development plans for the Project; and
WHEREAS, as a condition of development of the Project, Developer must comply with
the City of South San Francisco’s housing policies and programs as set forth in the City’s
Inclusionary Housing Ordinance first adopted by the City Council on December 12, 2001, as it
applies to the provision of affordable housing.
WHEREAS, the Developer proposes meeting these requirements by selling the required
number of Below Market Rate Units (defined below); and
NOW THEREFORE, the City and the Developer agree as follows:
AGREEMENT
1. As a condition of developing and constructing ninety-seven (97) condominiums
on the Property, Developer shall designate twenty (20) units as Below Market Rate Units and
shall make these units available for sale as Below Market Rate Units (the “Below Market Rate
Units”). The number of Below Market Rate Units shall be equal to twenty percent (20%) of the
total number of condominiums to be built upon the Property and identified in Exhibit B. The
Below Market Rate Units shall be affordable to low- and moderate- income households
guaranteed by deed restrictions or other enforceable covenants running with the land. Developer
shall sell:
(i) ___ (_) two -bedroom housing unit(s) and ___ (_) one-bedroom unit(s) in
the Project to a household whose annual gross income does not exceed sixty percent
(60%) of the unadjusted median income (“Low-Income Household”) for a San Mateo
County household in the San Francisco Primary Metropolitan Statistical Area, published
annually by the Department of Housing and Urban Development (as adjusted annually,
the “Base Median Income”);
(ii) ___ (_) two-bedroom unit and ______ (_) one-bedroom unit(s) to a
household whose annual gross income does not exceed seventy percent (70%) of the
unadjusted median income;
(iii) ___ (_) three-bedroom unit, ____ (_) two-bedroom unit(s) and _____ (_)
one-bedroom unit(s) to a household whose annual gross income does not exceed eighty
percent (80%) of the unadjusted median income;
(iv) ____ (_) two-bedroom unit(s) and _____ (_) one-bedroom unit(s) to a
household whose annual gross income does not exceed ninety percent (90%) of the
unadjusted median income;
(v) ____ (_) two-bedroom unit(s) and _____ (_) one-bedroom unit(s) to a
household whose annual gross income does not exceed one hundred percent (100%) of
the unadjusted median income; and
(vi) ____ (_) three-bedroom unit, ____ (_) two-bedroom unit(s) and ____(_)
one-bedroom unitsto a household whose annual gross income does not exceed one
hundred ten percent (110%) of the unadjusted median income,
(jointly “Low and Moderate-Income Households”).
2. Developer shall sell the Below Market Rate Units at a price that will result in an
allowable housing expense for a for-sale unit (as defined in Section 20.380.002 of the
Inclusionary Housing Ordinance) that does not exceed thirty percent (30%) of the gross monthly
income for Low- and Moderate-Income Households, adjusted for household size.
3. The Below Market Rate Units shall be located within the Downtown Station Area
Specific Plan area. The Developer and the City acknowledge this is an ideal area for such Below
Market Rate Units as it is in close proximity to and has access to employment opportunities,
urban services and transportation facilities.
4. Occupancy of the Below Market Rate Units shall be established concurrently with
occupancy of the market rate units located on the Property. This requirement shall be effective
as of the date the first unit is occupied on the Property. This requirement for the Below Market
Rate Units shall remain in effect even in the event all market rate units on the Property become
unoccupied.
5. Developer shall require the buyer of the Below Market Rate Units to execute a
Resale Restriction and Option to Purchase Agreement substantially in the form attached hereto as
Exhibit C (“Resale Restriction Agreement”). The Resale Restriction Agreement shall be
recorded against the parcel containing the Below Market Rate Units upon close of escrow of sale
for such Below Market Rate Units. The Below Market Rate Units shall remain restricted and
affordable to Low- and Moderate Income Households for a term of fifty-five (55) years,
commencing on the date each Below Market Rate Unit is sold. The restrictions shall apply to all
subsequent buyers.
6. Developer shall sell the Below Market Rate Units to eligible Low- and Moderate-
Income Household pursuant to Section 2. Developer shall work with the City and/or the City’s
First Time Homebuyer Administrator to identify and qualify eligible buyers for said units. At the
time of sale, Developer shall pay an administrative fee to reimburse the City for all
administrative and processing costs and fees incurred in processing the sale of the Below Market
Rate Units, which may include the First Time Homebuyer Administrator fees.
7. The Below Market Rate Units shall remain owner-occupied units.
8. Developer shall indemnify, defend with counsel selected by the City in
consultation with Developer, and hold harmless the City and its officials, officers, employees,
agents, and volunteers from and against any and all losses, liability, claims, suits, actions,
damages, and causes of action arising or allegedly arising out of or relating in any manner to
Developer’s performance or nonperformance under this Agreement, except to the extent arising
from the gross negligence or willful misconduct of the City. The provisions of this section shall
survive the expiration or other termination of this Agreement or any release of part or all of the
Property from the burdens of this Agreement.
9. Developer shall reimburse the City for all administrative/processing costs and fees
incurred in processing the Agreement, which may include reasonable attorney’s fees and cost,
and implementing the requirements of the Inclusionary Housing Ordinance.
10. Developer hereby subjects the Property to the covenants, conditions and
restrictions set forth in this Agreement. The Parties hereby declare their express intent that all
such covenants, conditions and restrictions shall be deemed covenants running with the land and
shall pass to and be binding upon Developer’s successors in title to the Property. All covenants
without regard to technical classification or designation shall be binding for the benefit of the
City, and such covenants shall run in favor of the City. Each and every contract, deed or other
instrument hereafter executed applicable to or conveying the Property or any portion thereof shall
conclusively be held to have been executed, delivered and accepted subject to such covenants,
conditions and restrictions, regardless of whether such covenants, conditions and restrictions are
set forth in such contract, deed or other instrument. This Agreement shall be recorded on the
Property upon final map recordation or, if a map is not being processed, prior to the issuance of
building permits for the Property.
11. Prior to the sale of the Below Market Rate Units to eligible Low- and Moderate-
Income Households, the Developer may not transfer the whole or any part of the Property, the
Project or this Agreement unless (i) such transfer is to a limited liability company or limited
partnership or corporation formed for purposes of carrying out the Project and which takes title to
the Property, (ii) the Developer first notifies the City of the proposed transfer or assignment and
delivers to the City the organizational documents of the transferee or assignee (the
"Transferee"), and (iii) the Developer causes the Transferee to execute an agreement, in form and
substance approved in writing by the City, accepting and assuming (and releasing Developer
from) the obligations of the Developer under this Agreement.
Developer shall reimburse City for all City costs, including but not limited to reasonable
attorneys’ fees, incurred in reviewing instruments and other legal documents proposed to effect a
permitted transfer or assignment under this Agreement within ten (10) days following City’s
delivery of an invoice detailing such costs.
12. Provided that Developer has complied with all of the terms and conditions set
forth herein, upon the sale by Developer of the Below Market Rate Units, Developer shall be
released from, and shall have no further obligations under this Agreement. Such release shall be
effective upon the sale and shall not require any further action or documentation by any party to
this Agreement.
13. Any amendments to this Agreement shall be processed in the same manner as an
original application for approval pursuant to Section 20.380.014 of the South San Francisco
Municipal Code. Nothing, however, shall prevent the body granting final approval of the project
development, from modifying the location and phasing of the Below Market Rate Units as a
condition of approval for the Project.
14. The laws of the State of California shall govern this Agreement without regard to
principles of conflicts of laws. In the event that either party brings any action against the other
under this Agreement, the parties agree that trial of such action shall be vested exclusively in the
state courts of California in the County of San Mateo or in the United States District Court for
the Northern District of California.
15. If a party to this Agreement brings any action, including an action for declaratory
relief, to enforce or interpret the provision of this Agreement, the prevailing party shall be
entitled to reasonable attorneys’ fees in addition to any other relief to which that party may be
entitled. The court may set such fees in the same action or in a separate action brought for that
purpose.
16. If a court of competent jurisdiction finds or rules that any provision of this
Agreement is invalid, void, or unenforceable, the provisions of this Agreement not so adjudged
shall remain in full force and effect. The invalidity in whole or in part of any provision of this
Agreement shall not void or affect the validity of any other provision of this Agreement.
17. Any notice or demand shall be made by certified or registered mail, return receipt
requested, or reliable overnight courier to the address of the respective parties set forth below:
Developer: ______________________________
______________________________
______________________________
City: City of South San Francisco - City Clerk
400 Grand Avenue
South San Francisco, CA 94080
18. Notwithstanding any previous provision of this Agreement, the terms of this
Agreement shall be interpreted in accordance with the provisions of Chapter 20.380 of the South
San Francisco Municipal Code.
IN WITNESS THEREOF, the parties have executed this Agreement as of the date first
written above.
DEVELOPER :
By: ________________________________
Name Printed: _______________________
Its: _________________________________
CITY:
CITY OF SOUTH SAN FRANCISCO
By: ___________________________
Mike Futrell
City Manager
APPROVED AS TO FORM:
______________________________
Jason Rosenberg, City Attorney
SIGNATURES MUST BE NOTARIZED
EXHIBIT D
DEVELOPMENT SCHEDULE
Deadline Obligation
60 days from DDA
execution
City Council approves all entitlements for the Project
60 days from
entitlements
Open Escrow
60 days from
entitlements
Demo and grading permit submitted to City
60 days from
entitlements
First draft of Financing Plan submitted to City
180 days from
entitlements
Building permit submittal
5 days before Close of
Escrow
Final Financing Plan (includes final proforma and funding
sources
Final Construction Contract Executed
Developer to provide construction contract,
evidence of insurance, performance and payment bonds,
permits Bonds, guarantees etc
payment of ½ permit and impact fees
Close of Escrow 10 days after City determines that CDs are 90% complete
Within 60 days
following Closing Date
Developer to commence Project construction
Within 18 months
following project
construction
commencement
Developer to Complete Project Construction
EXHIBIT E
FORM OF GRANT DEED
[to be provided upon execution]
EXHIBIT F
BUILDING PERMIT SUBMITTAL REQUIREMENTS
To determine the completeness of a plan submittal, the City will vet the construction drawings
through the plan review process for the following purposes:
Identify non code compliant issues with the project.
Determine whether the non-code compliant issues are major or minor issues.
o Example of Major Issues - Footings are too small. Stairs are not wide enough. The
building is too tall for the type of construction, egress, etc.
o Example of Minor Issues - Millwork isn't the proper height, contrasting stripes are
not provided at stairs, door handle height is too tall, etc.
Repeat process until all major issues are resolved with a limited number of minor issues
remaining. This should be the milestone the City accepts as "90% CD"
Items that need to be included in the submittal package:
General items
o Conditions of approval
o Compliance Memorandum
Architectural Plans
o Accessibility
Structural
o Calculations
o Soil Reports
Electrical
Mechanical
Plumbing
Calgreen
Energy Documentation
EXHIBIT G
FORM OF CERTIFICATE OF COMPLETION
[to be provided upon execution]
EXHIBIT H
FORM OF SUBORDINATION AGREEMENT
[to be provided upon execution]
2840779.4