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HomeMy WebLinkAboutReso 101-2021 (21-402)City of South San Francisco P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA City Council Resolution: RES 101-2021 File Number: 21-402 Enactment Number: RES 101-2021 RESOLUTION APPROVING THE SECOND AMENDMENT TO THE EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT WITH FIREHOUSE WORK LLC AND EDEN HOUSING FOR THE OLD FIREHOUSE PROPERTY LOCATED AT 201 BADEN AVENUE. WHEREAS, The City owns certain real property located at 201 Baden (the "Property"), where an old firehouse is located, and the size of the lot is approximately 22,460 square feet (0.51 acres) and consists of three parcels (APN 012-335-100, 012-335-110 and an unnamed parcel); and WHEREAS, the City Council previously selected Firehouse Live, LLC ("FHL") and Firehouse Work, LLC ("FHW") (formerly Fire House Live/Work), were selected by Council as the developers for the Property; and WHEREAS, on March 4, 2019, pursuant to City Council approval, the City entered into an Exclusive Negotiating Rights Agreement ("Original ENRA") with FHL and FHW, which authorized the parties to commence negotiating the terms of purchase agreements relating to the rehabilitation of the Old Firehouse and developing a mixed-use residential and commercial project ("Project") on the Property; and WHEREAS, on October 3, 2019, the City, FHW, and Habitat for Humanity Greater San Francisco, Inc. ("HGSF") entered into a subsequent ENRA ("Second ENRA" and "Agreement"), to replace FHL with HGSF as the developer for the residential component of the Project, and to set the term of the Agreement for one hundred and eighty (180) days with two administrative extensions of ninety (90) days each; and WHEREAS, the Agreement was administratively extended on March 26, 2020 to June 29, 2020 with respect to both FHW and HGSF, and again on June 23, 2020 to December 26, 2020 with respect to FHW only; and WHEREAS, the term of the Agreement with respect to HGSF expired on June 29, 2020, and FHW secured a new housing developer Anton DevCo; and WHEREAS, the City and FHW executed a First Amendment to the Agreement to replace HGSF with Anton DevCo as the developer for the residential component of the Project; and WHEREAS, the First Amendment to the Agreement provided for an initial 180 -day negotiation period and three (3) ninety (90) day extensions; and City of South San Francisco Page 1 File Number: 21-402 Enactment Number: RES 101-2021 WHEREAS, as described in the Agreement, the Project would have consisted of FHW rehabilitating the existing Old Firehouse structure into a 9,200 square foot commercial space to preserve its historical significance, and Anton DevCo pursued plans to construct approximately eighty-two (82) residential units that will all be deed restricted as Below Market Rate on the Property, which is to be bifurcated into two separate parcels that will be sold to each Developer in separate transactions and each Developer would be responsible for entitling and developing their respective portions of the Project; and WHEREAS, in April 2021, Anton DevCo opted not to pursue the development further; and WHEREAS, FHW secured a new housing partner, Eden Housing, who will pursue Anton DevCo's project plans; and WHEREAS, City and FHW have pursued such negotiations diligently and in good faith, have formulated proposed terms and conditions of the Project, but have determined that additional time is necessary to discuss Project details including to engage in discussions with Eden Housing for the residential development component of the Project; and WHEREAS, the City, FHW and Eden Housing wish to amend the ENRA by entering into a Second Amendment, attached hereto as Exhibit A, which relays Anton DevCo's obligations and site control to Eden Housing; and WHEREAS, it is the intent of both developers to continue assuming the obligations in the Agreement and to continue working cooperatively and in good faith to meet the performance milestones set forth in the Agreement and negotiate the terms of purchase and sale agreements, which are material considerations to the City in executing this Second Amendment; and WHEREAS, by approval of the Second Amendment to the Agreement, City has no legal obligation to grant any approvals or authorizations for a purchase and sale agreement or development thereon until such agreement has been separately approved by the City Council. NOW, THEREFORE, the City Council of the City of South San Francisco does hereby resolve as follows: 1. The Recitals set forth above are true and correct, and are incorporated herein by reference. 2. The Second Amendment to the Exclusive Negotiating Rights Agreement, attached hereto and incorporated herein as Exhibit A, is hereby approved. 3. The City Manager is hereby authorized to execute the Second Amendment on behalf of the City Council; to make revisions to the Second Amendment, with review and approval by the City Attorney, which do not materially or substantially increase the City's obligations thereunder; to sign all documents; to make all approvals and take all actions necessary or appropriate to carry out and implement the intent of this Resolution. City of South San Francisco Page 2 File Number.• 21-402 Enactment Number. RES 101-2021 At a meeting of the City Council on 5/26/2021, a motion was made by Councilmember Nicolas, seconded by Vice Mayor Nagales, that this Resolution be approved. The motion passed. Yes: 5 Mayor Addiego, Vice Mayor Nagales, Councilmember Nicolas, Councilmember Coleman, and Councilmember Flores Attest by 4 0 L ik--" fosa Govea Acosta, City Clerk City of South San Francisco Page 3 SECOND AMENDMENT TO EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT This Second Amendment to the Exclusive Negotiating Rights Agreement dated October 3, 2019 (“Second Amendment”) is entered into by and between the City of South San Francisco, a California municipal corporation (the “City”), Firehouse Work, LLC, a California Limited Liability Company (“FHW”), and Eden Housing Inc., a California nonprofit public benefit corporation, (“Eden”; each a “Developer” and both collectively described as “Developers”) dated as of ____________, 2021 (the “Effective Date”). City and Developers are each referred to as “Party” or collectively referred to as “Parties”. RECITALS A. The City is the owner of certain real property located at 201 Baden Avenue, South San Francisco, known as County Assessor’s Parcel Numbers (“APN”) 012-335-100, 012-335-110, and the portion of Cypress Street that is to be vacated, with a combined lot size of 22,500 square feet, collectively and commonly known as the Old Firehouse (“Property”). B. On March 4, 2019, pursuant to a solicitation process, the City entered into an Exclusive Negotiating Rights Agreement (“First ENRA”) with FHW and Firehouse Live, LLC (“FHL”), which authorized the parties to commence negotiating the terms of purchase agreements relating to the rehabilitation of the Old Firehouse and developing a mixed-use residential and commercial project (“Project”) on the Property. C. After the First ENRA expired on August 31, 2019, the City, FHW, and Habitat for Humanity Greater San Francisco, Inc. (“HGSF”) entered into a subsequent ENRA on October 3, 2019 (“Second ENRA” and “Agreement”), attached hereto and incorporated as Exhibit A, to replace FHL with HGSF as the developer for the residential component of the Project, and to extend the term of the Agreement. D. The Agreement was administratively extended on March 26, 2020 to June 29, 2020 with respect to both FHW and HGSF, and again on June 23, 2020 to December 26, 2020 with respect to FHW only. E. When the term of the Agreement with respect to HGSF expired on June 29, 2020, the Parties executed a First Amendment to the Agreement to replace HGSF with Anton DevCo as the developer for the residential component of the Project and further extended the term of the Agreement for an initial 180-day negotiation period and three (3) ninety (90) day extensions. F. In April 2021, Anton DevCo advised that it no longer desired to participate in the Project and FHW has now secured Eden Housing to pursue the project component plans that were originally contemplated by Anton DevCo, and the Parties now desire to replace Anton DevCo with Eden as the developer for the residential component of the Project subject to the terms and conditions of the Agreement, and further extending the term of the Agreement. F. As described in the Agreement, the Project will consist of FHW rehabilitating the existing Old Firehouse structure into a 9,200 square foot commercial space to preserve its historical significance, and Eden constructing approximately eighty-two (82) deed-restricted affordable housing residential units along with a commercial condo on the ground floor, which is to be bifurcated into two separate parcels that will be sold to each Developer in separate transactions and each Developer would be responsible for entitling and developing their respective portions of the Project. G. City and FHW have pursued such negotiations diligently and in good faith, have formulated proposed terms and conditions of the Project, but have determined that additional time is necessary to discuss Project details including to engage in discussions with Eden for the residential development component of the Project, and it is the intent of the Developers to continue working cooperatively and in good faith to meet the performance milestones set forth in the Agreement and negotiate the terms of purchase and sale agreements, which are material considerations to the City in executing this Second Amendment. H. At its meeting on ______________, the City Council approved this Second Amendment and directed staff to continue negotiating the terms of two separate purchase agreements in order for the Developers to pursue land use entitlements for the Projects and acquire the Property. NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows. 1. Parties to the Agreement. The Agreement is amended to include Eden as a Party and replacing Anton DevCo as the developer for the residential component of the Project, for the Parties to continue negotiating the terms of purchase agreements relating to the Project as described herein and in the Agreement. 2. Extension of Term. The Term of the Agreement pursuant to Section 3 of the Agreement is hereby extended for an additional one hundred eighty (180) days from the Effective Date. The extended Term may be administratively extended for up to a maximum of two (2) separate ninety (90) day periods for each Developer or both Developers upon the request of either Developer. 3. Notices. Notices to HGSF per the original Agreement Section 15, shall be updated to notice to Eden Housing as follows: Eden Housing Inc. Attn: Andrea Osgood 22645 Grand Street Hayward, CA 94541 Tel (415) 846-2823 aosgood@edenhousing,org With a copy to: Cox Castle Attn: Lisa Weil 50 California Street, Suite 3200 San Francisco, CA 94111 Tel (415)262-5175 [email protected] 4. Schedule of Performance. The Schedule of Performance under the Agreement is here by amended as set forth in Exhibit B, attached hereto and incorporated herein. 5. No Modification or Waiver. Except as otherwise expressly set forth herein, all other terms, provisions, and conditions of the Agreement remain unmodified and shall continue in full force and effect. 6. Construction; General Provisions. Each Party hereto has received independent legal advice from its attorneys with respect to the advisability of executing this Second Amendment and the meaning of the provisions hereof. The provisions of this Second Amendment shall be construed as to the fair meaning and not for or against any party based upon any attribution of such party as the sole source of the language in question. Each Party hereby ratify and affirm all their respective rights and obligations under the Agreement. Any capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In the event of any conflict between this Second Amendment, the First Amendment and the Agreement, this Second Amendment shall govern. The terms and provisions of this Second Amendment, together with the Agreement and the First Amendment, shall constitute all of the terms and provisions to which the Parties have agreed with respect to the transaction governed hereby, and there are no other terms and provisions, oral or written, that apply to the Agreement and/or the Property other than as set forth in the Agreement as modified by the First Amendment and this Second Amendment. The provisions of this Second Amendment shall apply to, be binding upon, and inure to the benefit of the parties hereto and to their respective successors and assigns. This Second Amendment may be executed by electronic means and in multiple counterparts, all of which shall constitute an original, and all of which together shall constitute a single instrument. Counterparts of this Second Amendment executed and delivered by facsimile, email or other means of electronic delivery shall constitute originals for all purposes. [Signatures on Next Page] IN WITNESS WHEREOF, City and Developer have executed this Second Amendment as of the date first written above. CITY By: _______________________________ Mike Futrell City Manager ATTEST: By: _______________________________ Rosa Acosta City Clerk APPROVED AS TO FORM: By: _______________________________ Sky Woodruff City Attorney FHW By: _______________________________ Dawn Merkes, member Firehouse Work, LLC Eden By: _______________________________ Name: Andrea Osgood Title: Vice President of Real Estate Development EXHIBIT A [Second ENRA and First Amendment] EXHIBIT B Schedule of Performance Term / Performance Milestone Description Term of ENRA • 180 days Parties Involved • Firehouse Work, LLC (FHW) • Eden Housing, Inc. (Eden) Proposed Project • Rehabilitation of existing Old Firehouse structure into a 9,200 square foot commercial space • Preserve historical significance of Old Firehouse structure • Construct an approximate 82-unit affordable senior rental project, of which 100% of the units will be affordable Price Offer • Purchase price for the parcels to be: o FHW parcel – TBD o Eden parcel -- $1.00 Deposit • $50,000 Deposit made by FHW to be credited against future purchase price for the FHW parcel Payment • $30,000 for reimbursement of staff time expended towards FHW; if exhausted, FHW will be required to provide additional funds. City will waive Payment for staff time expended towards Eden 100% affordable portion, but will track these costs so Eden can use the value of these donated services as leverage for other funding sources. Entitlements • Begin pursuing during the ENRA period by filing a joint Pre-application • Separate entitlements for FHW and Eden Lot Line Adjustment and ROW Vacation • City shall vacate Cypress Street Right of Way • Lot Line Adjustment creating two separate parcels shall occur prior to execution of Purchase Agreements. Purchase Agreements • Separate Purchase Agreements for FHW and Eden • Execution of Purchase Agreements after submittal of a joint pre-application and completion of Lot Line Adjustment creating two separate parcels. Separate Projects • Purchase Agreements shall include provisions to be negotiated to allow the FHW and Eden components of the Project to proceed independent of each other. Escrow • Separate Close of Escrows for FHW and Eden to occur concurrent with issuance of respective Building Permits • City has a deadline to transfer the sites by 12/31/2022. o FHW will purchase their site by this deadline. o Eden can also purchase their site by this deadline, however the funding for the affordable component will not likely be fully secured by this time. Therefore, Eden will provide an option to the City that would allow the City to purchase the site back for $1 if Eden is not performing under the performance expectations to be defined in the PSA and/or DDA. Development Schedule • To be determined during the ENRA and will be included as a Schedule of Performance in the Purchase Agreements Prevailing Wage • Eden can commit to paying prevailing wages on the residential component, but would seek to exempt the commercial condo and any tenant improvements therein.. • FHW portion will be exempt from prevailing wage or union labor requirements. Eden Financing Progress Reports • Once entitled, to be provided to the City every 60 days. These should outline any and all sources of financing the Developer has pursued in the previous 60 days and a schedule for upcoming funding applications. Progress Reports • To be provided to the City every 60 days. Performance Milestones • Negotiation of Purchase Agreements • Pro forma showing anticipated sources and uses of funds for the Project • Show evidence of how the Project is pursuing entitlements by providing a joint pre-application Due Diligence During the term of the ENRA the City and Developers shall further define and evaluate the project parameters: • The City shall provide Developers with any and all reports, studies and other documentation including any existing title policies, surveys, leases, structural reports, hazardous material reports, appraisals and other documents relating to the Property, Baden Avenue, and Airport Boulevard that are in City’s possession and control. • Developers shall have the opportunity to conduct due diligence in which to inspect the Property and to conduct any engineering, environmental, physical inspection and any other kind of investigation or study deems necessary. • Developers may at their own expense, conduct structural or hazardous material investigations of the existing improvements on the Property and City will allow access to the Property for this purpose. • Developers may at their own expense, conduct a subsurface investigation to confirm the findings in the Phase I environmental site assessment report provided by the City. • If a particular Developer is not satisfied with the results of any information it learns during this Due Diligence phase they may terminate their involvement in the ENRA without affecting the rights and obligations of the other Developer. In the case of FHW, the Deposit will be refunded to FHW, in accordance with Sections 5 and 13 of the Agreement. 3767744.1