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HomeMy WebLinkAbout2019-12-20 e-packet@8:30Friday, December 20, 2019 8:30 AM City of South San Francisco P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA City Hall, City Manager's Conference Room 400 Grand Avenue, South San Francisco, CA Special City Council Special Meeting Agenda December 20, 2019Special City Council Special Meeting Agenda NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of California, the City Council of the City of South San Francisco will hold a Special Meeting on Friday, December 20, 2019, at 8:30 a.m., at City Hall, City Manager's Conference Room, 400 Grand Avenue, South San Francisco, California. Purpose of the meeting: Call to Order. Roll Call. Agenda Review. Public Comments - comments are limited to items on the Special Meeting Agenda. CLOSED SESSION Closed Session: Conference with Real Property Negotiators (Pursuant to Government Code Section 54956.8) Properties: 249 Grand Avenue (APN 012-316-030) Agency Negotiators: Nell Selander and Julie Barnard Negotiating Parties: City of South San Francisco and Keith Phillip Cattaneo, Kenneth Lynn Cattaneo, Lee Ray Cattaneo and Marty Dean Cattaneo Under Negotiation: Review of Price and Terms 1. ADMINISTRATIVE BUSINESS Report regarding a resolution approving a Purchase and Sale Agreement for 249 Grand Avenue (Julie Barnard, Economic Development Coordinator). 2. Resolution approving a Purchase and Sale Agreement for 249 Grand Avenue for $1,950,000 and approving budget amendment #20.028 appropriating $1,950,000 from the Affordable Housing Trust Fund for the property purchase 2a. Adjournment. Page 2 City of South San Francisco Printed on 1/27/2020 City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:19-1014 Agenda Date:12/20/2019 Version:1 Item #:1. Closed Session: Conference with Real Property Negotiators (Pursuant to Government Code Section 54956.8) Properties: 249 Grand Avenue (APN 012-316-030) Agency Negotiators: Nell Selander and Julie Barnard Negotiating Parties: City of South San Francisco and Keith Phillip Cattaneo, Kenneth Lynn Cattaneo, Lee Ray Cattaneo and Marty Dean Cattaneo Under Negotiation: Review of Price and Terms City of South San Francisco Printed on 12/18/2019Page 1 of 1 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:19-999 Agenda Date:12/20/2019 Version:1 Item #:2. Report regarding a resolution approving a Purchase and Sale Agreement for 249 Grand Avenue (Julie Barnard, Economic Development Coordinator). RECOMMENDATION Staff recommends that the City Council adopt a Resolution authorizing the City Manager to execute a Purchase and Sale Agreement for property located at 249 Grand Avenue and approving budget amendment number 20.028 appropriating $1,950,000 from the Affordable Housing Trust Fund for the property purchase. BACKGROUND/DISCUSSION The property at 249 Grand Avenue (APN 012-316-030)is located between City Parking Lot 4 and the mixed- use building at 257 Grand Avenue (currently occupied by Izanami Japanese Restaurant).The property is 3,900 square feet with Grand Avenue street frontage.A long-standing South San Francisco business,The Topper sports bar,occupies the ground floor,with one residential unit on the second floor (“the Topper Site”).The property is owned by the Cattaneo family,which is comprised of four brothers who hold equal shares in the ownership of the property (“the Sellers”).The Topper bar is owned and operated by one of the four Sellers with the residential unit occupied by another one of the four’s extended family. The Topper Site was listed for sale in September 2019 for $2 million.There were several interested parties wishing to purchase the building and business.Given that the Topper Site is located in a the prime location of the city’s downtown,the City of South San Francisco (“the City”)also considered the benefits of competing for the purchase of the site. The intent of purchasing the Topper Site would be to allow the City to retain site control for a future assemblage with the adjacent City-owned parking lot.The benefit of site control is that it would allow the City to determine the highest and best use of the property at the appropriate time and to further allow for greater input into the design of the future building. On December 3,2019,the City of South San Francisco submitted an initial offer (“City Offer”)to the Sellers and commissioned an appraisal (see Attachment 1).The City Offer included a price offer and a request for exclusive negotiation rights.A counter Letter of Intent dated December 5 (“First Counter LOI”)was received from the Sellers on December 9,2019 (see Attachment 2).The First Counter LOI stated that the Sellers were extending multiple counter offers to other prospective Buyers.The Sellers would not enter into an exclusive negotiation agreement and stated that only a fully executed Purchase and Sale Agreement (“PSA”)shall bind the parties. The City provided a second offer (“Second City Offer”)(see Attachment 3)on December 11,which met the First Counter LOI price offer of $1,950,000 cash and specified the following terms: ·Completion of an appraisal of the Property by the City; ·Purchase and Sale Agreement subject to City Council approval on January 8, 2020; City of South San Francisco Printed on 12/18/2019Page 1 of 3 powered by Legistar™ File #:19-999 Agenda Date:12/20/2019 Version:1 Item #:2. ·30-day Close of Escrow; ·Property inspection during escrow; ·The Topper owner-operator may maintain the bar for a term of 24 months at a rental rate of $3,000 per month, reverting to a month to month lease thereafter; ·The residential tenants may continue their lease for a term of 24 months at a rental rate of $1,800 per month, reverting to a month to month lease thereafter; and ·Upon the voluntary termination of The Topper business and vacation of the unit by the current owner- operator, the owner-operator will convey the business and liquor license to the City. On December 13,the Sellers provided a second counter (“Second Counter LOI”)that requested a special City Council meeting by no later than December 20,2019,and a request for The Topper owners to maintain the bar at a rate of $1500 per month (the current rental rate)for 24 months or until such time as the building is demolished,with the City to receive the liquor license (see Attachment 4).The counter offer was driven by the other prospective buyer, as relayed to us by the Sellers’ representative. Later that day (December 13),staff submitted a Third City Offer (“Third City Offer”)that conditionally agreed to these terms,contingent upon approval of a PSA by the City Council,and provided that the City received exclusivity in negotiating with the Sellers (see Attachment 5).This was accepted with a few minor amendments (see Attachment 6). Ultimately the business points that were negotiated as part of this purchase include: ·A price offer of $1,950,000; ·The residential tenants may continue their lease for a term of 24 months at a rental rate of $1,800 per month, reverting to a month to month lease thereafter; and ·The Topper owner-operator may maintain the bar for a term of 24 months at a rental rate of $1,500 per month, reverting to a month to month lease thereafter at the same rental rate; ·Upon the voluntary termination of The Topper business and vacation of the unit by the current owner- operator, the owner-operator will convey the business and liquor license to the City; ·Purchase and Sale Agreement ("PSA")subject to City Council approval on or before December 20, 2019. A $10,000 deposit (“the Deposit”)has been paid to the Sellers.The deposit secures the exclusive negotiation rights with the Sellers and,upon conveyance of the property,this is applied to the purchase price.If the City opts not to move forward with the sale,the Deposit is retained by the Sellers.The City will complete an appraisal of the Topper Site prior to completion of the sale. FISCAL IMPACT Funds are available from the Affordable Housing Trust Fund (Fund 205)to purchase the Topper Site.This fund collects money predominantly from the Commercial Linkage Fee and Developer In-Lieu Fees.The Fund presently has $4.3 million,of which,$2 million has been committed to Bridge Housing for the PUC project. The Fund allows money to be utilized for the acquisition of properties for the purposes of the construction of housing.If City Council opts not to move forward with the purchase,the above mentioned $10,000 would revert to the Sellers.The City’s on-call property management company would manage the building,with all utilities that supply the building being paid by the tenants. CONCLUSION It is recommended that the South San Francisco City Council adopt a Resolution authorizing the City Manager City of South San Francisco Printed on 12/18/2019Page 2 of 3 powered by Legistar™ File #:19-999 Agenda Date:12/20/2019 Version:1 Item #:2. It is recommended that the South San Francisco City Council adopt a Resolution authorizing the City Manager to execute a Purchase and Sale Agreement for property located at 249 Grand Avenue for $1,950,000 and approve budget amendment number 20.028,appropriating $1,950,000 from the Affordable Housing Trust Fund for the property purchase. Attachments: 1.City Offer (December 3, 2019) 2.First Counter LOI (December 5, 2019) 3.Second City Offer (December 11, 2019) 4.Second Counter LOI (December 12, 2019) 5.Third Offer (December 13, 2019) 6.Final Offer (December 16, 2019) City of South San Francisco Printed on 12/18/2019Page 3 of 3 powered by Legistar™ -...+ ,~~ • -. •~ t= ~'M..~~ December 3, 2019 Cattaneo Family c/o Alex Lehr 1641 Laurel St San Carlos, CA 94070 CITY COUNCIL 2019 KARYL MATSUMOTO, MAYOR RICHARD A. GARBARINO, VICE MAYOR MARK ADDIEGO, COUNCILMEMBER MARK NAGALES, COUNCILMEMBER BUENAFLOR NICOLAS, COUNCILMEMBER MIKE FUTRELL, CITY MANAGER Re: Offer to Purchase 249 Grand Avenue, South San Francisco, California, APN 012-316-030 Dear Cattaneo Family: The City of South San Francisco (the "City") respectfully requests that you consider the City's offer to purchase your property located at 249 Grand Avenue and referred to by Assessor's Parcel Number 012-316-030 (the "Property"), which is currently publicly listed for sale. The City wishes to offer $1,500,000 for the purchase of the Property, subject to an appraisal to be completed at the City's risk by December 20, 2019. In addition to the price offered, the City is open to discussing the continuation of the residential and commercial tenancies at their current rental rates, adjusted only for inflation, for a period of two to three years. To this end, the City is prepared to offer a $10,000 nonrefundable deposit (the "Deposit") in exchange for your agreeing not to enter into any contracts to sell or lease the Property prior to completion of the appraisal on December 20, 2019. The purpose of the appraisal is to confirm that the City's price offer is not materially inconsistent with the Property's fair market value. Conducting the appraisal now will expedite the City's ability to complete the purchase of the Property. If, after receiving the appraisal, the City completes the purchase of the Property, the Deposit would be credited against the purchase price. If the City does not complete the purchase of the Property, the Deposit will be remitted to you directly. Page 2 Your building and, along with it, the Toppers Bar, have contributed to the success of the Downtown. It is a thriving commercial district that welcomes community members and visitors, alike. The City's desire —subject to final approval of the City Council of the City of South San Francisco — to redevelop the property along with the publicly-owned, adjacent parking lot, into a mixed-used building with vibrant, ground-floor retail and housing above that will be affordable to a range of incomes. We hope to continue improving on the legacy you have helped establish here in South San Francisco. If this proposal is acceptable to you, please so indicate by signing at the bottom of this letter and returning the letter to Alex Greenwood at the City of South San Francisco, 400 Grand Avenue, South San Francisco, CA 94080. The City will then immediately deposit $10,000 into an escrow account at First American Title Company with instructions to either disburse that amount to you upon completion of an appraisal or at the close of escrow. In making this offer, the City is not represented by any real estate professionals or brokers. Please do not hesitate to call Alex Greenwood at (650) 829-6620 or me at 510-808-2000 with any questions. Sincerely, V~ Sky Woodruff City Attorney, City of South San Francisco Accepted by: Printed Name: Dated: c: Mike Futrell, City Manager Alex Greenwood, Economic and Community Development Director Nell Selander, Economic and Community Development Deputy Director Julie Barnard, Economic Development Coordinator 3446091.1 S INCE 1976 December 5, 2019 City Council of The City of South San Francisco Attn: Sky Woodruff – City Attorney, City of South San Francisco Re: Multiple Counter – Non-Binding Seller Response to Letter of Intent to Purchase – 249 Grand Avenue, South San Francisco dated December 3, 2019. Dear The City of South San Francisco/ Sky Woodruff: Thank you for your Letter of Intent to Purchase 249 Grand, dated December 3, 2019 (“LOI”). On behalf of Keith Phillip Cattaneo, Kenneth Lynn Cattaneo, Lee Ray Cattaneo, Marty Dean Cattaneo, (“Seller”), Lehr Real Estate has been authorized to provide the following response to the LOI (“Seller Response”). BINDING EFFECT: Seller is making Multiple Counter Offers to other prospective Buyers on terms that may or may not be the same as in this Multiple Counter Offer. This Multiple Counter Non-Binding Seller Response shall be non-binding on either part and only a fully executed Purchase and Sale Agreement (“PSA”) shall bind the parties. x Purchase price to be $1,950,000 (One million nine hundred fifty thousand dollars) x 90 day close of escrow x The Topper shall have the option to rent the property for an additional 24 months after the close of escrow at the rate of $1450/month with a month to month rental term after the 24 months. x Buyer shall have until 1:00pm on Monday December 9,2019 with which to respond to Seller Response, after which time, Seller Response shall be null and void. Should you have any questions regarding the Seller’s Multiple Counter – Non-Binding Response, please feel free to contact me. Respectfully, Lehr Real Estate /s/ Alexander E. Lehr Principal/Broker BRE Lic. 00867442 DocuSign Envelope ID: 95355773-61CF-4E8B-82C9-7AE86B264DDD 5:00 pm on Tuesday, December 10, 2019 H H ~ J Q c'~L1FOR~1~ December 11, 2019 Cattaneo Family c/o Alex Lehr 1 641 Laurel St San Carlos, CA 94070 CITY COUNCIL 2019 RiCHAI2U GAR[3ARIN0, MAYOR MARK ADDIGGO, VICE MAYOR K ARYL MATSUMOTO, COUNCILMEMBER M ARK NAGALGS, COUNCILMEMBER B UENAFLOR NICOLAS, COUNCILMEMBGR MIKE FUTRELL, CITY MANAGER Re: Response to Multiple Counter-Offer Letter of Intent to Purchase 249 Grand Avenue, South San Francisco, California dated December S, 2019 and Exclusive Negotiating Agreement Dear Mr. Lehr: Thank-~-ou for your Non-Binding Seller Response to the City's Letter of Intent to Purchase ("Sellet~ Response"), dated December 5, 2019. The City of South San Francisco (the "City") maintains very interested in the purchase of the property located at 249 Grand Avenue (the "Property"), which is currently publicly listed for sale. Terms of our counter to your Seller Response include $1,950,000 cash price offer, with the following conditions: • Completion of an appraisal of the Property by the City; • Purchase and Sale Agreement subject to City Council approval on January 8, 2020; • 30-day Close of Escrow; • Property inspection during escrow; • The Topper owner-operator may maintain the bar far a term of 24 months at a rental rate of $3,000 per month, reverting to a month to month lease thereafter; • The residential tenants may continue their lease for a term of 24 months at a rental rate of $1,800 per month, reverting to a month to month lease thereafter; and • Upon the voluntary termination of The Topper business and vacation of the unit by the c~irrent owner-operator, the owner-operator will convey the business and liquor license to the City. The City shares an interest in entering into a fully executed Purchase and Sale Agreement ("PSA'') promptly;_hQwever, we are bound by certain Council and administrative procedures before the agreement can be executed. These procedures include: Council approval of the PSA, which can only occur in a Council meeting and (as mentioned in our Letter of Intent ("LOI") Page 3 dated December 3) the completion of an appraisal. These procedures prohibit the City from finalizing the PSA sooner than the next City Council meeting which is scheduled for January 8, 2020. We hope that the Sellers remain interested in negotiating with the City despite our procedural obligations. To this end, as an interim measure, the City hopes that the Sellers are willing to counter-sign this letter, entering into a period of exclusivity with the City prior to contemplation of approval of the PSA on January 8, 2020. As outlined in our LOI, the City is still prepared to offer a $10,000 nonrefundable deposit (the "Deposit") in exchange for your agreeing not to enter into any contracts to sell or lease the Property prior to completion of the appraisal and Council approval of the PSA. If the City completes the purchase of the Property, the Deposit would be credited against the purchase price. If the City does not complete the purchase of the Property, the Deposit will be remitted to you directly. We would like to reiterate the value that your building and The Topper have contributed to the success and legacy of the Downtown. We hope that the competing value of our offer is strengthened by the social value created by City's future control of the site. This would ensure that any future development of the property will be to the public benefit of maintaining the Downtown's character and vision. We hope to continue improving on the legacy you have helped establish here in South San Francisco. The acquisition of the business and liquor license would be for the purpose of potential ground-floor commercial uses in a redeveloped site, which as previously mentioned, is the City's vision for the site but is subject to final approval by the City Council. If this proposal is acceptable to you, please so indicate by signing at the bottom of this letter and returning the letter to Alex Greenwood at the City of South San Francisco, 400 Grand Avenue, South San Francisco, CA 94080. The City will then immediately deposit $10,000 into an escrow account at First American Title Company with instructions to either disburse that amount to you upon completion of an appraisal or at the close of escrow. In making this offer, the City is not represented by any real estate professionals or brokers. Please do not hesitate to call Alex Greenwood at (650) 829-6620 or me at 510-808-2000 with any questions. Sincerely, Sky oodruff City Attorney, City of South San Francisco [SIGNATURE BLOCK FOR ACCEPTANCE ON FOLLOWING PAGE) Page 3 Accepted by: Printed Name: Dated: cc: Mike Futrell, City Manager Alex Greenwood, Economic and Community Development Director N ell Selander, Economic and Community Development Deputy Director J ulie Barnard, Economic Development Coordinator 3449585.2 1 Barnard, Julie From:Alex Lehr <[email protected]> Sent:Thursday, December 12, 2019 3:05 PM To:Selander, Nell Cc:Futrell, Mike; Woodruff, Sky [Oakland]; Greenwood, Alex; Barnard, Julie; Gabriella Lehr Subject:Re: Confidential Real Property Negotiations: 247 Grand Avenue Hi everyone,  I spoke with the sellers and these are the sticking points that would cause them to move forward with the  other offer. Do you feel these are topics that can be bridged? They are worried about losing the other buyer  with the timing of things and may want to move forward with them. I can call you shortly to discuss in greater  detail.  Is there an option to call a special City Council Meeting early than 1/8/20 Property inspection during escrow to be 15 days from ratification of contract. One of the two options: o Option A: The Topper may maintain the bar for 24 months at a rate of $1500/month or until such time as the building demolition. City to receive the liquor license. o Option B: The Topper may maintain the bar for 24 months at a rate of $2500/month with a month to month rental agreement after and seller to keep the liquor license. All the best,  ALEX LEHR  Broker/Owner of Lehr Real Estate A 1641 Laurel Street, San Carlos, Ca 94070  O 650.595.5500 M 650.766.5300 F 650.595.5039  E [email protected]   W www.LehrRealEstate.com  BRE# 00867442  Thank you for your referrals!  From: Selander, Nell <[email protected]>  Sent: Tuesday, December 10, 2019 4:36 PM  To: Alex Lehr <[email protected]>  Cc: Futrell, Mike <[email protected]>; Woodruff, Sky [Oakland] <[email protected]>; Greenwood, Alex  <[email protected]>; Barnard, Julie <[email protected]>; Gabriella Lehr <[email protected]>  Subject: RE: Confidential Real Property Negotiations: 247 Grand Avenue 0 n ~ ~ v o cALiFOR~1~ December 13, 2019 Cattaneo Family c/o Alex Lehr 1641 Laurel St San Carlos, CA 94070 CITY COUNCIL 2019 RICHARD GARBARINO, MAYOR MARK ADDIEGO, VICE MAYOR KARYL MATSUMOTO, COUNCILMEMBER MARK NAGALES, COUNCILMEMBER BUENAFLOR NICOLAS, COUNCILMEMBER MIKE FUTRELL, CITY MANAGER Re: Response to Multiple Counter-Offer Letter of Intent to Purchase 249 Grand Avenue, South San Francisco, California dated December 5, 2019 and Exclusive Negotiating Agreement Dear Mr. Lehr: Thank-you for your Non-Binding Seller Response to the City's Letter of Intent to Purchase ("Seller Response"), dated December 5, 2019 and updated by email on December 13, 2019. The City of South San Francisco (the "City") remains very interested in the purchase of the property located at 249 Grand Avenue (the "Property"), which is currently publicly listed for sale. Terms of our counter to your Seller Response include a $1,950,000 cash price offer, with the following conditions: • Completion of an appraisal of the Property by the City, including a property inspection by the appraiser; • Purchase and Sale Agreement ("PSA") subject to City Council approval on or before December 20, 2019; • 30-day Close of Escrow; • Property inspection within 15 days of execution of the PSA; • The Topper owner-operator may maintain the bar for a term of 24 months at a rental rate of $1,500 per month, reverting to a month to month lease thereafter; • The residential tenants may continue their lease for a term of 24 months at a rental rate of $1,800 per month, reverting to a month to month lease thereafter; and • Upon the voluntary termination of The Topper business and vacation of the unit by the current owner-operator, the owner-operator will convey the business and liquor license to the City. Page 2 The City shares an interest in entering into a fully executed PSA promptly; however, we are bound by certain Council and administrative procedures before the agreement can be executed. These procedures include: Council approval of the PSA, which can only occur in a Council meeting and (as mentioned in our Letter of Intent ("LOI") dated December 3) the completion of an appraisal. To this end, as an interim measure, the Sellers have expressed a willingness to counter-sign this letter, entering into a period of exclusivity with the City prior to contemplation of approval of the PSA on or before December 20, 2019. As outlined in our LOI, the City is still prepared to offer a $10,000 nonrefundable deposit (the "Deposit") in exchange for your agreeing not to enter into any contracts to sell or lease the Property prior to completion of the appraisal and Council approval of the PSA. If the City completes the purchase of the Property, the Deposit would be credited against the purchase price. If the City does not complete the purchase of the Property, the Deposit will be remitted to you directly. We would like~to reiterate the value that your building and The Topper have contributed to the success and legacy of the Downtown. We hope that the competing value of our offer is strengthened by the social value created by City's future control of the site. This would ensure that any future development of the property will be to the public benefit of maintaining the Downtown's character and vision. We hope to continue improving on the legacy you have helped establish here in South San Francisco. The acquisition of the business and liquor license would be for the purpose of potential ground-floor commercial uses in a redeveloped site, which as previously mentioned, is the City's vision for the site but is subject to final approval by the City Council. If this proposal is acceptable to you, please so indicate by signing at the bottom of this letter and returning the letter to Alex Greenwood at the City of South San Francisco, 400 Grand Avenue, South San Francisco, CA 94080. The City will then immediately deposit $10,000 into an escrow account at First American Title Company with instructions to either disburse that amount to you upon completion of an appraisal or at the close of escrow. In making this offer, the City is not represented by any real estate professionals or brokers. Please do not hesitate to call Alex Greenwood at (650) 829-6620 or me at 510-808-2000 with any questions. Sincerely, V v Sky Woodruff City Attorney, City of South San Francisco [SIGNATURE BLOCK FOR ACCEPTANCE ON FOLLOWING PAGE) Page 3 Accepted by: Printed Name: Dated: cc: Mike Futrell, City Manager Alex Greenwood, Economic and Community Development Director Nell Selander, Economic and Community Development Deputy Director Julie Barnard, Economic Development Coordinator 3451568.2 ~o~ZH SA~y.~~0 n ~ y v o c9LIFOR~1~ December 16, 2019 Cattaneo Family c/o Alex Lehr 1641 Laurel St San Carlos, CA 94070 CITY COUNCIL 2019 RICHARD GARBARINO, MAYOR MARK ADDIEGO, VICE MAYOR KARYL MATSUMOTO, COUNCILMEMBER M ARK NAGALES, COUNCILMEMBER B UENAFLOR NICOLAS, COUNCILMEMBER MIKE FUTRELL, CITY MANAGER Re: Response to Multiple Counter-Offer Letter of Intent to Purchase 249 Grand Avenue, South San Francisco, California dated December 5, 2019 and Exclusive Negotiating Agreement Dear Mr. Lehr: Thank-you for your Non-Binding Seller Response to the City's Letter of Intent to Purchase ("Seller Response"), dated December 5, 2019 and updated by email on December 13, 2019. The City of South San Francisco (the "City") remains very interested in the purchase of the property located at 249 Grand Avenue (the "Property"), which is currently publicly listed for sale. Terms of our counter to your Seller Response include a $1,950,000 cash price offer, with the following conditions: • Completion of an appraisal of the Property by the City, including a property inspection by the appraiser, with the inspection completed by December 20, 2019; • Purchase and Sale Agreement ("PSA") subject to City Council approval on or before December 20, 2019; • 30-day Close of Escrow; • Property inspection within 15 days of execution of the PSA; • The Topper owner-operator may maintain the bar for a term of 24 months at a rental rate of $1,500 per month, reverting to a month to month lease thereafter at the same rental rate until the tenant vacates; • The residential tenants may continue their lease for a term of 24 months at a rental rate of $1, 800 per month, reverting to a month to month lease thereafter; and • Upon the voluntary termination of The Topper business and vacation of the unit by the current owner-operator, the owner-operator will convey the business and liquor license to the City; Page 2 • Purchase to be "as-is," subject to the City's inspections. The City shares an interest in entering into a fully executed PSA promptly; however, we are bound by certain Council and administrative procedures before the agreement can be executed. These procedures include: Council approval of the PSA, which can only occur in a Council meeting and (as mentioned in our Letter of Intent ("LOI") dated December 3) the completion of an appraisal. To this end, as an interim measure, the Sellers have expressed a willingness to counter-sign this letter, entering into a period of exclusivity with the City prior to contemplation of approval of the PSA on or before December 20, 2019. As outlined in our LOI, the City is still prepared to offer a $10,000 nonrefundable deposit (the "Deposit") in exchange for your agreeing not to enter into any contracts to sell or lease the Property prior to completion of the appraisal and Council approval of the PSA. If the City completes the purchase of the Property, the Deposit would be credited against the purchase price. If the City does not complete the purchase of the Property, the Deposit will be remitted to you directly. We would like to reiterate the value that your building and The Topper have contributed to the success and legacy of the Downtown. We hope that the competing value of our offer is strengthened by the social value created by City's future control of the site. This would ensure that any future development of the property will be to the public benefit of maintaining the Downtown's character and vision. We hope to continue improving on the legacy you have helped establish here in South San Francisco. The acquisition of the business and liquor license would be for the purpose of potential ground-floor commercial uses in a redeveloped site, which as previously mentioned, is the City's vision for the site but is subject to final approval by the City Council. If this proposal is acceptable to you, please so indicate by signing at the bottom of this letter and returning the letter to Alex Greenwood at the City of South San Francisco, 400 Grand Avenue, South San Francisco, CA 94080. The City will then immediately deposit $10,000 into an escrow account at First American Title Company with instructions to either disburse that amount to you upon completion of an appraisal or at the close of escrow. In making this offer, the City is not represented by any real estate professionals or brokers. Please do not hesitate to call Alex Greenwood at (650) 829-6620 or me at (510) 808-2000 with any questions. Sincerely, Sky oodruff City Attorney, City of South San Francisco [SIGNATURE BLOCK FOR ACCEPTANCE ON FOLLOWING PAGEJ Page 3 Accepted by: Printed Name: Dated: cc: Mike Futrell, City Manager Alex Greenwood, Economic and Community Development Director Nell Selander, Economic and Community Development Deputy Director Julie Barnard, Economic Development Coordinator 3451568.3 City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:19-1010 Agenda Date:12/20/2019 Version:1 Item #:2a. Resolution approving a Purchase and Sale Agreement for 249 Grand Avenue for $1,950,000 and approving budget amendment #20.028 appropriating $1,950,000 from the Affordable Housing Trust Fund for the property purchase WHEREAS,249 Grand Avenue (APN 012-316-030)(the “Property”)is found in a prime location in the City of South San Francisco’s downtown,between City Parking Lot 4 and the mixed-use building at 257 Grand Avenue (which is occupied by the Izanami Japanese restaurant); and, WHEREAS, the Property is 3,900 square feet with Grand Avenue street frontage; and, WHEREAS,a long standing South San Francisco business,The Topper,and one residential unit on the second floor are found in the building on the Property; and, WHEREAS,the Cattaneo family is comprised of four brothers (“Sellers”)who hold equal shares in the ownership of the Property; and, WHEREAS,The Topper bar is owned and operated by one of the four Sellers with the residential unit occupied by another one of the four’s extended family; and, WHEREAS, the Property was listed for sale for $2 million; and, WHEREAS, the City of South San Francisco (“City”) wishes to purchase the Property; and, WHEREAS,ownership of the Property will allow the City better site control to determine future development of the Property; and, WHEREAS,the City submitted an initial offer (“City Offer”)to Sellers on December 3,2019 which included an offer price and a request for exclusive negotiating rights for a period sufficient for the City to obtain an appraisal of the Property; and, WHEREAS,a counter Letter of Intent (“First Counter LOI”)was received from Sellers on December 5,2019, which included a counter price offer of $1,950,000 and refusal of exclusive negotiation rights because they were negotiating with another interested buyer; and, WHEREAS,City considered the First Counter LOI and provided a second offer (“Second City Offer”)on December 11 which met the First Counter LOI price offer of $1,950,000 and included other proposed deal points,including the need for City Council approval and the offer being contingent upon completion of an appraisal of the Property; and, WHEREAS,Sellers provided a second counter (“Second Counter LOI”)that requested a special City Council meeting before January 8,2020;the ability for The Topper owner-operator to maintain the bar for 24 months at a rental rate of $1500 per month (the current rental rate)or until such time as the building is demolished;andCity of South San Francisco Printed on 1/27/2020Page 1 of 3 powered by Legistar™ File #:19-1010 Agenda Date:12/20/2019 Version:1 Item #:2a. a rental rate of $1500 per month (the current rental rate)or until such time as the building is demolished;and the City to receive The Topper liquor license; and, WHEREAS,City agreed to these terms,with minor modifications,and submitted a Third City Offer (“Third City Offer”) on December 13, which was accepted by Sellers with minor amendments; and, WHEREAS,the Third City Offer included the following business points:$1,950,000 price offer;retention of the residential tenants for a term of 24 months at a rental rate of $1,800 per month,reverting to a month to month lease thereafter;The Topper owner-operator may maintain the bar for a term of 24 months at a rental rate of $1,500 per month,reverting to a month to month lease thereafter at the same rental rate;upon the voluntary termination of The Topper business and vacation of the unit by the current owner-operator,the owner-operator will convey the business and liquor license to the City;a Purchase and Sale Agreement ("PSA")subject to City Council approval on or before December 20,2019;and final purchase subject to completion of an appraisal of the Property by the City; and, WHEREAS,if the purchase is completed,the Escrow Deposit will be applicable to the purchase price but if the purchase is not completed the Sellers will retain the Escrow Deposit; and, WHEREAS,Budget Amendment #20.028 will appropriate money from Fund 205 for the acquisition of the Property; and, WHEREAS,the City Manager will have the authority to make substantial amendments to the PSA on behalf of the City Council, unless the purchase price exceeds $1,950,000; and, WHEREAS,the purchase of the Property will provide public benefits in terms of future economic and housing development in the downtown that justify the purchase at the purchase price. NOW THEREFORE IT BE RESOLVED that the City Council of the City of South San Francisco does hereby take the following actions: (1)Finds and determines that the recitals are true and correct; (2)Authorizes the payment of a $10,000 deposit into escrow to secure the exclusive negotiation rights with Seller prior to closing, if necessary; and, (3)Approves the PSA in substantially the same form attached hereto as Exhibit A; and, (4)Authorizes the City Manager to enter into and execute the PSA on behalf of the City,in substantially the same form as attached hereto as Exhibit A;to make any revisions,amendments,or modifications,subject to review and approval of City Attorney,deemed necessary to carry out the intent of this Resolution and which do not materially alter or increase the City’s obligations thereunder. (5)Approves Budget Amendment number 20.028 appropriating $1,950,000 from the Affordable Housing Trust Fund for the purchase of the Property. City of South San Francisco Printed on 1/27/2020Page 2 of 3 powered by Legistar™ File #:19-1010 Agenda Date:12/20/2019 Version:1 Item #:2a. Exhibit A: Purchase and Sale Agreement for the purchase of the Topper Site City of South San Francisco Printed on 1/27/2020Page 3 of 3 powered by Legistar™ - 1 - 219\3220028.3 PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (“this Agreement”) is entered into as of __________, 20__ (the “Effective Date”), by and between the City of South San Francisco, a municipal corporation, (“Buyer”) and Keith Phillip Cattaneo, Kenneth Lynn Cattaneo, Lee Ray Cattaneo, Marty Dean Cattaneo, (collectively “Seller”). Seller and Buyer are collectively referred to herein as the “Parties.” RECITALS A. Seller is owner of certain real property with an address of 249 Grand Avenue, South San Francisco, California, also known as San Mateo County Assessor’s Parcel Number 012-316- 030 as more particularly described in Exhibit A attached hereto and incorporated herein (“Property”). B. Buyer agrees to purchase the Property, and Seller agrees to sell the Property to Buyer, subject to the terms and conditions of this Agreement. NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged by the parties, Seller and Buyer hereby agree as follows: 1. INCORPORATION OF RECITALS AND EXHIBITS. The Recitals set forth above and the Exhibits attached to this Agreement are each incorporated into the body of this Agreement as if set forth in full. 2. PURCHASE AND SALE. 2.1 Agreement to Buy and Sell. Subject to the terms and conditions set forth herein, Seller agrees to sell the Property to Buyer, and Buyer hereby agrees to acquire the Property from Seller. 2.2 Purchase Price. The purchase price for the Property to be paid by Buyer to Seller (the “Purchase Price”) is one million nine hundred and fifty thousand dollars ($1,950,000.00). The Purchase Price shall be paid in cash at the Closing to the Seller. 3. ESCROW. 3.1 Escrow Account. Buyer has opened an interest-bearing escrow account (the “Escrow”) maintained by North American Title Company in San Mateo (the “Escrow Holder”), with interest accruing to the benefit of Buyer. Escrow Holder shall perform all escrow and title services in connection with this Agreement. 3.2 Opening of Escrow. Within seven (7) business days after the Effective Date, the Parties will deposit into Escrow the fully executed Agreement, or executed counterparts thereto. The date such fully executed Agreement is received by Escrow Holder will be deemed the - 2 - 219\3220028.3 “Opening of Escrow” and Escrow Holder will give written notice to the Parties of such occurrence. 3.3 Buyer’s Deposit. If Buyer provided a deposit in the amount of ten thousand dollars ($10,000) to Seller (“Deposit”) to secure exclusive negotiation rights through Seller’s acceptance of the terms of the Exclusive Negotiating Agreement dated December 16, 2019 and, in the event that Buyer terminates this Agreement in accordance with Section 3.4 below, Seller shall retain the Deposit; in the event that Buyer does not terminate this Agreement as aforesaid, the Deposit, provided on ___________ shall be applied to the Purchase Price at Closing. 3.4 Satisfaction of Due Diligence Contingency. Buyer shall have the right, in its sole discretion, to terminate this Agreement for any reason prior to the expiration of the Due Diligence Contingency Period (as defined in Section 5(a) below). Buyer hereby agrees to provide written notice to Seller prior to the expiration of the Due Diligence Contingency Period if Buyer disapproves any due diligence items or approves all due diligence items (“Approval Notice”). If Buyer disapproves any items through the delivery of the Approval Notice to Seller before 5:00 p.m. on the last day of the Due Diligence Contingency Period, this Agreement shall terminate, and all amounts that may be deposited by Buyer into escrow, together with interest thereon, if any, will be returned to Buyer, and neither party shall have any further rights or obligations hereunder except those which expressly survive the termination hereof. If Buyer fails to timely deliver the Approval Notice to Seller, it will be conclusively presumed that Buyer has approved all such items, matters or documents. 4. PROPERTY DISCLOSURE REQUIREMENTS. 4.1 Condition of Title/Preliminary Title Report. Escrow Holder shall deliver a Preliminary Title Report for the Property (the “Preliminary Report”) to Buyer within three (3) days after the Opening of Escrow. Buyer shall have until the end of the Due Diligence Contingency Period to approve the condition of title to the Property. If Buyer delivers the Approval Notice, Buyer agrees to take title to the Property subject to the following “Permitted Exceptions”: (a) standard printed exceptions in the Preliminary Report; (b) general and special real property taxes and assessments constituting a lien not yet due and payable; and (c) the Schedule B exceptions to the title referenced in the Approval Notice. 4.2 Environmental Condition of Property. Seller has provided Buyer with all documents reasonably known to Seller pertaining to the environmental condition of the Property. Seller, at Buyer’s expense, agrees to cooperate with Buyer to obtain regulatory approval of any necessary environmental work for the Property. 4.3 Environmental and Natural Hazards Disclosure. California Health & Safety Code section 25359.7 requires owners of non-residential real property who know, or have reasonable cause to believe, that any release of hazardous substances are located on or beneath the real property to provide written notice of same to the buyer of real property. Other applicable laws require Seller to provide certain disclosures regarding natural hazards affecting the Property. Pursuant to Section 4.2, Seller agrees to make any necessary disclosures required by law. - 3 - 219\3220028.3 5. CLOSING AND PAYMENT OF PURCHASE PRICE. 5.1 Closing. The closing (the “Closing” or “Close of Escrow”) will occur no later than ninety (90) calendar days after the Effective Date (“Closing Date”) or such other date that the Parties agree in writing. 5.2 Buyer’s Conditions to Closing. Buyer's obligation to purchase the Property is subject to the satisfaction of all of the following conditions or Buyer's written waiver thereof (in Buyer’s sole discretion) on or before the Closing Date: (a) Buyer has approved the condition of the Property. Buyer will have forty-five (45) calendar days from Opening of Escrow (the “Due Diligence Contingency Period”) to complete physical inspections of the Property and due diligence related to the purchase of the Property. Seller shall provide to Buyer copies of all reasonably available and known documents relating to the ownership and operation of the Property, including but not limited to plans, permits and reports (environmental, structural, mechanical, engineering and land surveys) that Seller has in its possession not later than two (2) business days following the execution and delivery of this Agreement. All physical inspections must be coordinated with Seller’s representative. Seller shall cause the Property to be made available to Buyer and Buyer’s agents for inspection within fifteen (15) days of the Effective Date. Buyer hereby agrees to indemnify and hold Seller harmless for any damage to the Property caused by Buyer’s inspections. (b) Buyer has approved the Purchase Price. Seller shall provide to Buyer copies of all reasonably available and known documents relating to the value of the Property that Seller has in its possession not later than two (2) business days following the execution and delivery of this Agreement. Buyer has obtained a written appraisal of the Property by a licensed or certified appraiser indicating that the value of the Property is no less than the Purchase Price. (c) Seller has performed all obligations to be performed by Seller pursuant to this Agreement. (d) Seller’s representations and warranties herein are true and correct in all material respects as of the Closing Date. (e) The Title Company is irrevocably committed to issue an ALTA standard coverage title insurance policy to Buyer, effective as of the Closing Date, insuring title to Buyer in the full amount of the Purchase Price. 5.3 Seller’s Conditions to Closing. The Close of Escrow and Seller’s obligation to sell and convey the Property to Buyer are subject to the satisfaction of the following conditions or Seller’s written waiver (in Seller’s sole discretion) of such conditions on or before the Closing Date: (a) Buyer has performed all obligations to be performed by Buyer pursuant to this Agreement before Closing Date. - 4 - 219\3220028.3 (b) Buyer's representations and warranties set forth herein are true and correct in all material respects as of the Closing Date. 5.4 Conveyance of Title. Seller will deliver marketable fee simple title to Buyer at the Closing, subject only to the Permitted Exceptions. 5.5 Deliveries at Closing. (a) Deliveries by Seller. Seller shall deposit into the Escrow for delivery to Buyer at Closing: (i) a grant deed, substantially in the form attached hereto as Exhibit B (“Grant Deed”); (ii) an affidavit or qualifying statement which satisfies the requirements of paragraph 1445 of the Internal Revenue Code of 1986, as amended, any regulations thereunder (the “Non-Foreign Affidavit”); (iii) a California Franchise Tax Board form 590 (the “California Certificate”) to satisfy the requirements of California Revenue and Taxation Code Section 18805(b) and 26131. (b) Deliveries by Buyer. No less than one (1) business day prior to the close of escrow, Buyer shall deposit into escrow immediately available funds in the amount, which, together with the Deposit, is equal to: (i) the Purchase Price as adjusted by any prorations between the Parties; (ii) the escrow fees and recording fees; and (iii) the cost of the Title Policy. (c) Closing. Upon Closing, Escrow Holder shall: (i) record the Grant Deed; (ii) disburse to Seller the Purchase Price, less Seller’s share of any escrow fees, costs and expenses; (iii) deliver to Buyer the Non-Foreign Affidavit, the California Certificate and the original recorded Grant Deed; (iv) pay any commissions and other expenses payable through escrow; and (vi) distribute to itself the payment of escrow fees and expenses required hereunder. (d) Closing Costs. Buyer will pay all escrow fees (including the costs of preparing documents and instruments), and recording fees. Buyer will also pay title insurance and title report costs. Seller will pay all transfer taxes and governmental conveyance fees, where applicable. (e) Pro-Rations. At the close of escrow, the Escrow Agent shall make the following prorations: (i) property taxes will be prorated as of the close of escrow based upon the most recent tax bill available, including any ad valorem or property taxes which may be assessed after the close of escrow but which pertain to the period prior to the transfer of title to the Property to Buyer, regardless of when or to whom notice thereof is delivered; and (ii) any bond or assessment that constitutes a lien on the Property at the close of escrow will be assumed by Buyer. 5.6 Post-Closing Obligations. (a) Commercial Lease. Buyer shall enter into a commercial lease with Lee R. Cattaneo, the owner of the existing business at the Property, the entity doing business as The Topper (“The Topper”), for a twenty-four (24) month term (“Initial Term”) which shall revert to a month to month tenancy at the end of the Initial Term at a rental rate of $1500.00 per month (“Commercial Lease”) which Commercial Lease shall attach as an exhibit incorporated therein an agreement between Buyer and Lee R. Cattaneo to take all steps necessary to convey The - 5 - 219\3220028.3 Topper and transfer its associated liquor license to Buyer at no additional cost upon the termination of the Commercial Lease by Lee R. Cattaneo. (b) Residential Lease. Buyer shall enter into a residential lease with, Loretta Hoffman, the existing residential tenant of the Property at the time of Closing for a twenty-four (24) month term (“Initial Term”) which shall revert to a month to month tenancy at the termination of the Initial Term at a maximum rental rate of $1800.00 per month for the Initial Term and then be subject to rental rate increases at Buyer’s sole discretion in accordance with applicable law (“Residential Lease”). The Initial Term monthly rental rates, up to the maximum stated herein, shall be set at the sole discretion of the Buyer and such Initial Term maximum rental rate shall be subject to Buyer’s confirmation of Seller’s existing leasehold and rental rates with Loretta Hoffman. 6. REPRESENTATIONS, WARRANTIES AND COVENANTS. 6.1 Seller’s Representations, Warranties and Covenants. In addition to the representations, warranties and covenants of Seller contained in other sections of this Agreement, Seller hereby represents, warrants and covenants to Buyer that the statements below in this Section 6.1 are each true and correct as of the Closing Date provided however, if to Seller’s actual knowledge any such statement becomes untrue prior to Closing, Seller will notify Buyer in writing and Buyer will have three (3) business days thereafter to determine if Buyer wishes to proceed with Closing. If Buyer determines it does not wish to proceed, then the terms of Section 3.4 will apply. (a) Authority. Seller has the full right, capacity, power and authority to enter into and carry out the terms of this Agreement. This Agreement has been duly executed by Seller, and upon delivery to and execution by Buyer is a valid and binding agreement of Seller. (b) Encumbrances. Seller has not alienated, encumbered, transferred, mortgaged, assigned, pledged, leased or otherwise conveyed its interest in the Property or any portion thereof, nor entered into any Agreement to do so, and there are no liens, encumbrances, mortgages, covenants, conditions, reservations, restrictions, easements or other matters affecting the Property, except with regard to the existing commercial lease with Lee R. Cattaneo and residential lease with Loretta Hoffman and as disclosed in the Preliminary Report. Seller will not, directly or indirectly, alienate, encumber, transfer, mortgage, assign, pledge, lease or otherwise convey its interest prior to the Close of Escrow, as long as this Agreement is in force. (c) There are no agreements affecting the Property except those which have been disclosed by Seller. There are no agreements which will be binding on the Buyer or the Property after the Close of Escrow, which cannot be terminated on thirty (30) days prior written notice. The truth and accuracy of each of the representations and warranties, and the performance of all covenants of Seller contained in this Agreement are conditions precedent to Buyer’s obligation to proceed with the Closing hereunder. The foregoing representations and warranties shall survive the expiration, termination, or close of escrow of this Agreement and shall not be deemed merged into the deed upon closing. - 6 - 219\3220028.3 6.2 Buyer’s Representations and Warranties. In addition to the representations, warranties and covenants of Buyer contained in other sections of this Agreement, Buyer hereby represents, warrants and covenants to Seller that the statements below in this Section 6.2 are each true as of the Effective Date, and, if to Buyer’s actual knowledge any such statement becomes untrue prior to Closing, Buyer shall so notify Seller in writing and Seller shall have at least three (3) business days thereafter to determine if Seller wishes to proceed with Closing. (a) Buyer is a municipal corporation, lawfully formed, in existence and in good standing under the laws of the State of California. Buyer has the full right, capacity, power and authority to enter into and carry out the terms of this Agreement. This Agreement has been duly executed by Buyer, and upon delivery to and execution by Seller shall be a valid and binding agreement of Buyer. (b) Buyer is not bankrupt or insolvent under any applicable federal or state standard, has not filed for protection or relief under any applicable bankruptcy or creditor protection statute, and has not been threatened by creditors with an involuntary application of any applicable bankruptcy or creditor protection statute. The truth and accuracy of each of the representations and warranties, and the performance of all covenants of Buyer contained in this Agreement are conditions precedent to Seller’s obligation to proceed with the Closing hereunder. 7. REMEDIES In the event of a breach or default under this Agreement by Seller, if such breach or default occurs prior to Close of Escrow, Buyer reserves the right to either (a) seek specific performance from Seller or (b) to do any of the following: (i) to waive in writing the breach or default and proceed to close as provided herein; (ii) to extend the time for performance and the Closing Date until Seller is able to perform; or (iii) to terminate this Agreement upon written notice to Seller, whereupon Seller shall cause Escrow Holder to return to Buyer any and all sums placed into the Escrow by Buyer, and except for the rights and obligations expressly provided to survive termination of this Agreement, neither party shall have any further obligations or liabilities hereunder. IN THE EVENT OF A BREACH OR DEFAULT HEREUNDER BY BUYER AND THE CLOSING DOES NOT OCCUR DUE TO SUCH DEFAULT, SELLER’S SOLE REMEDY SHALL BE TO RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES. THE PARTIES AGREE THAT IN SUCH INSTANCE, THE DEPOSIT REPRESENTS A REASONABLE APPROXIMATION OF SELLER’S DAMAGES AND ARE NOT INTENDED AS A FORFEITURE OR PENALTY BUT RATHER AN ENFORCEABLE LIQUIDATED DAMAGES PROVISION PURSUANT TO CALIFORNIA CIVIL CODE SECTION 1671, ET SEQ. IN NO EVENT SHALL EITHER PARTY BE ENTITLED TO LOST PROFITS OR CONSEQUENTIAL DAMAGES AS A RESULT OF THE OTHER PARTY’S BREACH OF THIS AGREEMENT. Buyer’s Initials Seller’s Initials 8. BROKERS. Seller represents that they have retained a real estate broker in relation to the sale of the Property and negotiation of this Agreement. Buyer represents that no real estate broker has been retained by Buyer in the procurement of the Property or negotiation of this - 7 - 219\3220028.3 Agreement. Seller shall indemnify, hold harmless and defend Buyer from any and all claims, actions and liability and any commission, finder’s fee, or similar charges from Seller’s broker, and its respective employees, agents, consultants and contractors. 9. ASSIGNMENT. Absent an express signed written agreement between the Parties to the contrary, neither Seller nor Buyer may assign its rights or delegate its duties under this Agreement without the express written consent of the other. No permitted assignment of any of the rights or obligations under this Agreement shall result in a novation or in any other way release the assignor from its obligations under this Agreement. 10. PROPERTY TO BE SOLD “AS-IS”. Buyer acknowledges that Buyer is purchasing the Property solely in reliance on Buyer’s own investigation and that no representations or warranties of any kind whatsoever, express or implied, have been made by Seller, Seller’s agents, or brokers except those Seller representations and warranties in Section 6.1. Buyer further acknowledges that as of Close of Escrow, Buyer will pursue an understanding of all applicable zoning regulations, other governmental requirements, site and physical conditions, and other matters affecting the use and condition of the Property and Buyer agrees to purchase the Property in the condition in which it is at Close of Escrow. Buyer is purchasing the Property hereunder strictly on an “as-is” basis, and regardless of the Property’s topography, climate, air, water rights, utilities, water, present and future zoning, soil enlargements of roads or extensions thereof. All work in connection with preparing the Property for the use intended by Buyer, all costs incidental thereto, and all other costs, fees, studies, reports, approvals, plans, surveys, permits and expenses whatsoever necessary or desirable in connection with Buyer’s acquiring, developing, using and/or operating the Property shall be obtained and paid for by and shall be the sole responsibility of Buyer. 10.1 Environmental Investigation. Buyer shall conduct a Phase I and, if determined necessary in Buyer’s sole discretion, a Phase II Environmental Assessment of the Property and Seller shall take all steps necessary to facilitate such Environmental Assessments by Buyer. If the Phase I or Phase II Environmental Assessment identifies the presence, suspected presence, release, or suspected release, of any Hazardous Materials in, on or under the Property or in or into the air, soil, soil gas, groundwater, or surface water at, on, about, around, above, under or within the Property, or any portion thereof, the Parties acknowledge and agree that they shall enter into good faith negotiations to determine the appropriate reduction of the Purchase Price. 11. RELEASE BY BUYER. Effective upon the Close of Escrow, except with respect to the representations, indemnities and warranties of Seller under Section 6.1 of this Agreement, Buyer waives releases, remises, acquits and forever discharges Seller, and its officers, directors, board members, managers, employees and agents, and any other person acting on behalf of Seller, from any and all claims, actions, causes of action, demands, rights, damages, costs, expenses and compensation whatsoever, direct or indirect, known or unknown, foreseen or unforeseen, which Buyer now has or which may arise in the future on account of or in any way arising from or in connection with the physical condition of the Property or any law or regulation - 8 - 219\3220028.3 applicable thereto. This Section 11 shall survive the termination of this Agreement and the Close of Escrow. 12. HAZARDOUS MATERIALS; DEFINITIONS. 12.1 Hazardous Materials. As used in this Agreement, “Hazardous Materials” 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”, 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 Materials” 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, and synthetic gas usable as fuel, perchlorate, and methyl tert butyl ether, whether or not defined as a hazardous waste or hazardous substance in the Environmental Laws. 12.2 Environmental Laws. As used in this Agreement, “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 ma y be amended or supplemented, or hereafter enacted, relating to the presence, release, generation, use, handling, treatment, storage, transportation or disposal of Hazardous Materials, 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.). 13. MISCELLANEOUS. 13.1 Attorneys’ Fees. If any party employs counsel to enforce or interpret this Agreement, including the commencement of any legal proceeding whatsoever (including insolvency, bankruptcy, arbitration, mediation, declaratory relief or other litigation), the prevailing party shall be entitled to recover its reasonable attorneys’ fees and court costs (including the service of process, filing fees, court and court reporter costs, investigative fees, expert witness fees, and the costs of any bonds, whether taxable or not) and shall include the right to recover such fees and - 9 - 219\3220028.3 costs incurred in any appeal or efforts to collect or otherwise enforce any judgment in its favor in addition to any other remedy it may obtain or be awarded. Any judgment or final order issued in any legal proceeding shall include reimbursement for all such attorneys’ fees and costs. In any legal proceeding, the “prevailing party” shall mean the party determined by the court to most nearly prevail and not necessarily the party in whose favor a judgment is rendered. 13.2 Interpretation. This Agreement has been negotiated at arm’s length and each party has been represented by independent legal counsel in this transaction and this Agreement has been reviewed and revised by counsel to each of the Parties. Accordingly, each party hereby waives any benefit under any rule of law (including Section 1654 of the California Civil Code) or legal decision that would require interpretation of any ambiguities in this Agreement against the drafting party. 13.3 Survival. All indemnities, covenants, representations and warranties contained in this Agreement shall survive Close of Escrow. 13.4 Successors. Except as provided to the contrary in this Agreement, this Agreement shall be binding on and inure to the benefit of the Parties and their successors and assigns. 13.5 Governing Law. This Agreement shall be construed and interpreted in accordance with the laws of the State of California. 13.6 Integrated Agreement; Modifications. This Agreement contains all the agreements of the Parties concerning the subject hereof any cannot be amended or modified except by a written instrument executed and delivered by the parties. There are no representations, agreements, arrangements or understandings, either oral or written, between or among the part ies hereto relating to the subject matter of this Agreement that are not fully expressed herein. In addition there are no representations, agreements, arrangements or understandings, either oral or written, between or among the Parties upon which any part y is relying upon in entering this Agreement that are not fully expressed herein. 13.7 Severability. If any term or provision of this Agreement is determined to be illegal, unenforceable, or invalid in whole or in part for any reason, such illegal, unenforceable, or invalid provisions or part thereof shall be stricken from this Agreement, any such provision shall not be affected by the legality, enforceability, or validity of the remainder of this Agreement. If any provision or part thereof of this Agreement is stricken in accordance with the provisions of this Section, then the stricken provision shall be replaced, to the extent possible, with a legal, enforceable and valid provision this is in keeping with the intent of the Parties as expressed herein. 13.8 Notices. Any delivery of this Agreement, notice, modification of this Agreement, collateral or additional agreement, demand, disclosure, request, consent, approval, waiver, declaration or other communication that either party desires or is required to give to the other party or any other person shall be in writing. Any such communication may be se rved personally, or by nationally recognized overnight delivery service (i.e., Federal Express) which provides a receipt of delivery, or sent by prepaid, first class mail, return receipt requested to the party’s address as set forth below: - 10 - 219\3220028.3 To Seller: [address and phone number of Seller] To Buyer: City of South San Francisco 400 Grand Avenue South San Francisco, CA 94080 Attn: City Manager, Mike Futrell Telephone No.: (650) 829 6620 Fax (650) 829-6609 If to Escrow Holder: Katie Berggren North American Title Company 66 Bovet Rd, Suite 200 San Mateo, CA 94402 Any such communication shall be deemed effective upon personal delivery or on the date of first refusal to accept delivery as reflected on the receipt of delivery or return receipt, as applicable. Any party may change its address by notice to the other party. Each party shall make an ordinary, good faith effort to ensure that it will accept or receive notices that are given in accordance with this section and that any person to be given notice actually receives such notice. 13.9 Time. Time is of the essence to the performance of each and every obligation under this Agreement. 13.10 Days of Week. If any date for exercise of any right, giving of any notice, or performance of any provision of this Agreement falls on a Saturday, Sunday or holiday, the time for performance will be extended to 5:00 p.m. on the next business day. 13.11 Reasonable Consent and Approval. Except as otherwise provided in this Agreement, whenever a party is required or permitted to give its consent or approval under this Agreement, such consent or approval shall not be unreasonably withheld or delayed. If a party is required or permitted to give its consent or approval in its sole and absolute discretion or if such consent or approval may be unreasonably withheld, such consent or approval may be unreasonably withheld but shall not be unreasonably delayed. 13.12 Further Assurances. The Parties shall at their own cost and expense execute and deliver such further documents and instruments and shall take such other actions as may be reasonably required or appropriate to carry out the intent and purposes of this Agreement. 13.13 Waivers. Any waiver by any party shall be in writing and shall not be construed as a continuing waiver. No waiver will be implied from any delay or failure to take action on account of any default by any party. Consent by any party to any act or omission by another party shall not be construed to be consent to any other subsequent act or omission or to waive the requirement for consent to be obtained in any future or other instance. 13.14 Signatures/Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall - 11 - 219\3220028.3 constitute one and the same instrument. Any one of such completely executed counterparts shall be sufficient proof of this Agreement. 13.15 Date and Delivery of Agreement. Notwithstanding anything to the contrary contained in this Agreement, the Parties intend that this Agreement shall be deemed effective, and delivered for all purposes under this Agreement, and for the calculation of any statutory time periods based on the date an agreement between Parties is effective, executed, or delivered, as of the Effective Date. 13.16 Representation on Authority of Parties. Each person signing this Agreement represents and warrants that he or she is duly authorized and has legal capacity to execute and deliver this Agreement. Each party represents and warrants to the other that the execution and delivery of the Agreement and the performance of such party’s obligations hereunder have been duly authorized and that the Agreement is a valid and legal agreement binding on such party and enforceable in accordance with its terms. 13.17 Possession. At Closing, Seller shall deliver sole and exclusive possession of the Property to Buyer. 13.18 Approvals. Whenever this Agreement calls for Buyer approval, consent, extension or waiver, the written approval, consent, or waiver of the Buyer’s City Manager or his or her designee(s) shall constitute the approval, consent, extension or waiver of the Buyer, without further authorization required from the Buyer’s Council. Buyer hereby authorizes the City Manager and his or her designee(s) to deliver any such approvals, consents, or extensions or waivers as are required by this Agreement, or that do not otherwise reduce Buyer’s rights under this Agreement, and to waive requirements under this Agreement, on behalf of the Buyer. SIGNATURES ON FOLLOWING PAGE - 12 - 219\3220028.3 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above. BUYER: CITY OF SOUTH SAN FRANCISCO By: _______________________________ Mike Futrell City Manager ATTEST: By: _______________________________ City Clerk APPROVED AS TO FORM: By: _______________________________ Sky Woodruff City Attorney SELLER: [insert Seller names ] By: _______________________________ APPROVED AS TO FORM: By: _______________________________ Counsel for Seller - 13 - 219\3220028.3 LIST OF EXHIBITS Exhibit A Legal Description Exhibit B Grant Deed Exhibit C Permitted Exceptions - 14 - 219\3220028.3 Exhibit A LEGAL DESCRIPTION Real property in the City of South San Francisco, County of San Mateo, State of California, described as follows: LOT 18 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 ORIGINAL MAPS AT PAGE 6 AND COPIED INTO BOOK 2 OF MAPS AT PAGE 52. JPN: 12-31-316-3 APN: 012-316-030 - 15 - 219\3220028.3 Exhibit B GRANT DEED - 16 - 219\3220028.3 Exhibit C PERMITTED EXCEPTIONS 3453944.1