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HomeMy WebLinkAbout2014-08-19 E-PacketREGULAR MEETING OVERSIGHT BOARD FOR THE SUCCESSOR AGENCY TO THE CITY OF 1P'0 SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 CITY HALL LARGE CONFERENCE ROOM, TOP FLOOR 400 GRAND AVENUE TUESDAY, AUGUST 19, 2014 2:00 P.M. PEOPLE OF SAN MATEO COUNTY You are invited to offer your suggestions. In order that you may know our method of conducting Board business, we proceed as follows: The regular meetings of the South San Francisco Oversight Board for the Successor Agency to the City of South San Francisco Redevelopment Agency are held on the third Tuesday of each month at 2:00 p.m. in the in the Large Conference Room, Top Floor at City Hall, 400 Grand Avenue, South San Francisco, California. In accordance with California Government Code Section 54957.5, any writing or document that is a public record, relates to an open session agenda item, and is distributed less than 72 hours prior to a regular meeting will be made available for public inspection in the City Clerk's Office located at City Hall. If, however, the document or writing is not distributed until the regular meeting to which it relates, then the document or writing will be made available to the public at the location of the meeting, as listed on this agenda. The address of City Hall is 400 Grand Avenue, South San Francisco, California 94080. In compliance with Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the South San Francisco City Clerk's Office at (650) 877 -8518. Notification 48 hours in advance of the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. Chairperson: Neil Cullen Selected by: Largest Special District of the type in H &R Code Section 34188 Vice Chair: Patti Ernsberger Selected by: San Mateo County Superintendent of Schools Assistant Superintendent, Business Services South San Francisco Unified School District Alternate: Alejandro Hogan Superintendent, South San Francisco Unified School District Board Members: Mark Addiego Councilmember, City of South San Francisco Barbara Christensen Director of Community /Government Relations, San Mateo County Community College District Reyna Farrales Deputy County Manager, San Mateo County Paul Scannell Billy Gross Senior Planner, City of South San Francisco Counsel Craig Labadie Advisory: Selected by: Mayor of the City of South San Francisco Chancellor of California Community College San Mateo County Board of Supervisors San Mateo County Board of Supervisors (Public Member) Mayor of the City of South San Francisco Patrick O'Keeffe— Interim ECD Director, City of South San Francisco Jim Steele — Finance Director, City of South San Francisco Steve Mattas— City Attorney, City of South San Francisco Krista Martinelli — City Clerk, City of South San Francisco Armando Sanchez — Redevelopment Consultant, City of South San Francisco CALL TO ORDER ROLL CALL PLEDGE OF ALLEGIANCE AGENDA REVIEW OVERSIGHT BOARD REGU LAR M EET I N G AUGUST 19,2014 AGENDA PAGE 2 COMMUNICATIONS FROM STAFF PUBLIC COMMENTS Comments from members of the public on items not on this meeting agenda. The Chair may set time limit for speakers. Since these topics are non - agenda items, the Board may briefly respond to statements made or questions posed as allowed by the Brown Act (Government Code Section 54954.2). However, the Board may refer items to staff for attention, or have a matter placed on a future agenda for a more comprehensive action report. MATTERS FOR CONSIDERATION Motion to approve the Minutes of the Regular Meeting of April 15, 2014 2. Motion to cancel the Oversight Board Regular Meeting of September 16, 2014 and schedule a Special Meeting on September 23, 2014. Closed Session: Conference with Real Property Negotiators: (Pursuant to Government Code Section 54956.8) Properties: 401 & 315 Airport Boulevard, 405 Cypress and 216 Miller Avenue Agency Negotiators: Patrick O'Keeffe Negotiating Parties: Miller Cypress SSF, LLC (Sares- Regis) and South San Francisco Successor Agency Under Negotiations: Price and terms for disposition of the property. 4. Resolution authorizing the City Manager to enter into an Exclusive Negotiating Rights Agreement (ENRA) between the City of South San Francisco and Miller Cypress SSF, LLC for potential development of the properties at 401 & 315 Airport Blvd, 405 Cypress, and 216 Miller Ave. ECD (Armando Sanchez, Housing Consultant) Resolution approving the proposed terms of a Revenue Sharing Agreement for Commercial Space at 636 El Camino Real and directing staff to prepare for Oversight Board consideration draft Revenue Sharing Agreement with said terms upon approval of the terms by the Oversight Board and the California Department of Finance. ECD (Armando Sanchez, Housing Consultant) ADJOURNMENT OVERSIGHT BOARD REGU LAR M EET I N G AUGUST 19,2014 AGENDA PAGE 3 REGULAR MEETING OVERSIGHT BOARD FOR THE SUCCESSOR AGENCY TO THE CITY OF SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 CITY HALL LARGE CONFERENCE ROOM, TOP FLOOR 400 GRAND AVENUE TUESDAY, APRIL 15, 2.014 2:00 P.M. CALL TO ORDER Time: 2:07 p.m. , D) [2 F T ROLL CALL Present: Boardmembers Addiego, Christensen, Farrales, Scannell, Vice Chair Ernsberger and Chairperson Cullen. PLEDGE OF ALLEGIANCE Led by Boardmember Farrales AGENDA REVIEW Chairman Cullen requested that Item 3 be heard before Item 2. COMMUNICATIONS FROM STAFF Chairman Cullen asked for comments from staff on the replacement of former Boardmember Beaudin, who had left the City of South San Francisco. Economic and Community Development Consultant Pat O'Keeffe stated that the Mayor was working on designating a staff member to fill the seat. Staff would make a recommendation to the Mayor who would make the appointment to be confirmed by the City Council. This was scheduled for the first City Council meeting in May. PUBLIC COMMENTS Comments from members of the public on items not on this meeting agenda. The Chair may set time limit for speakers. Since these topics are non-agenda items, the Board may briefly respond to statements made or questions posed as allowed by the Brown Act (Government Code Section 54954.2). However, the Board may refer items to staff for attention, or have a matter placed on a future agenda for a more comprehensive action report. MATTERS FOR CONSIDERATION I. , Motion to approve the Minutes of the Regular Meeting of February 18�, 2014, Motion- Boardmember Scannell/Second- Boardmember Addiego- to approve the Minutes of the Regular Meeting of February 18, 2014 as submitted. Unanimously approved by voice vote. 1 Study Session " : Update on property disposition efforts for former Ford properties. (Armando Sanchez, Housing Consultant) Chairman Cullen suggested that the Board discuss the Cypress property first be-fore moving on to the Ford properties, ECD Consultant Pat O'Keeffe announced that Housing Consultant Armando Sanchez would present this item. Consultant Sanchez noted that staff was providing information on the properties to demonstrate to the Board that the City was aggressively pursuing the sale and disposition of properties as indicated in the Long Range Property Management Plan. Since it was possible that an Exclusive Negotiating Rights Agreement (ENRA) would need to be brought back to the Board for approval, this study session was required to keep the Board abreast of considerations, so as to make sure the projects would proceed efficiently. With an agreement in place, the City would be able to start negotiating in earnest with developers for a Purchase and Sale Agreement and also begin the design work on the properties. As stated in the staff report, when combined, the proposed projects would bring about 200 new units into the Downtown, with a valuation of $120 million. Therefore, the taxing agencies would receive roughly $1.2 million annually in property revenue. The taxing agencies would also receive the net proceeds from the sale of the properties. Due to the fact that there were many factors, such as enviroranental cleanup, that would affect the pricing of the properties, Consultant Sanchez could not provide a rough estimate of the potential sale revenues, However, the City's starting negotiating point would definitely be market-rate value which was roughly estimated at $90 per square foot. In summary, the developers are interested in the properties because of the City's future activity under the Downtown Specific Plan which would significantly increase the Downtown's density if approved, Without that approval, the projects proposed would not be permissible. The Grand Cypress project was a small assemblage that was probably indicative of some of the other sites in the Downtown area. At current estimated rents this project would not really be feasible so the City Council agreed to consider using some of its Housing Funds to make 20 percent of the units affordable. This would be enough of an enticement to get the developer to pursue the project. The current proposal would create 37 to 40 units on that site with about 7,000 square feet of retail. There was one private property that separated another Successor Agency property and so another attempt would be made to acquire that property which would allow for 55 to 60 units at the site. The developers interested in the Ford properties, as indicated in the staff report, were Thompson- Dorfman and a partnership consisting of Sares-Regis and Roger Stuhlmuller. They were interested in acquiring all 5 former Ford properties. As proposed by both developers, 150 to 160 units would be created. The lynchpin to this development would be the large I acre site on Airport Boulevard. The OVERSIGHT BOARD REGUIAR MEETM; APRIL T5,2014 AGENDA PAGE City had indicated it would look more favorably towards a proposal that would include all former Ford properties. Each developer had a variety or proposals in mind, one including a 2 level parking garage and others proposing a combination of condominiums and rentals. Both developers were interested in moving as quickly as possible which could require the Board's and Department of Finance's (DOF) approval on an ENRA. In response to Chairman Cullen's query as to the City's preference between condominiums and rentals, Consultant Sanchez clarified that although the stability of long-term community investment by having ownership was always preferred, the market would dictate what would be possible and any development would be welcomed. Boardmember Christensen stated that she would have to recuse herself if an ENRA was brought to the Board since Thompson-Dorfman built both housing projects for the Community College District's faculty and staff. 3. Resolution approving a License Agreement PG&E to temporarily use a vacant property on Antoinette Lane for a contractor office, a staging area and employee parking. (Pat O'Keeffe, Economic and Community Development Consultant) ECD Consultant Pat O'Keeffe asked Economic Development Coordinator Mike Lappen to present the item since he was part of the negotiating group. In summary, Economic Development Coordinator Lappen explained this was the third time the City entered into an agreement with the Public Utilities Commission to use a portion of the PUC properties on Antoinette Lane near Chestnut Avenue. This work was related to gas line upgrades to Line 132. PG&E planned to do a permanent replacement of the line through South San Francisco including Antoinette Lane to Mission Road. Thus, a construction laydown site near the project would be needed. Staff was proposing PG&E use the former Ron price parking lot which is a fenced-off area on Antoinette Lane near the Pet Club, This site was less than two acres. In keeping with past practice, the City would be charging a rate of $0.13 per square foot, which amounted to a monthly rent of $9,386. PG&E would enter the property on June 1", 2014 and the project would be finished on December 31't, 2014. At this point, he indicated that there was a representative of PG&E present to answer any of the Board's questions. When this item was presented to the Successor Agency, there were a number of questions related to the timing as well as conditions for securing the site so that it was not a nuisance in the area. As a result, there would be significant amount of screening onsite, noise and dust controls would be in place and there would be a limit on hours of operation to remain consistent with the City's Municipal Code. PG&E would be accepting any community complaints and its Community Representative would be addressing any of the neighborhood's concerns. In response to a query by Boardmember Christensen as to whether this would require the approval of the Department of Finance, Coordinator Lappen noted that their review period would be 45 days. He added that the DOF had never opposed such short-term contracts. In response to City Manager Mike Futrell's inquiry as to the size of the PG&E pipeline and whether it would have a bypass line, PG&E's representative, Janice Berman, stated that it was 30 inches and OWRSIGHT BOARD REGULAR MEFTING APRIL 15, 2014 AGENDA PAGE 3 there would definitely be a bypass line in place. City Manager Futrell further questioned where the bypass would be located but PG&E's representative noted she would have to get back to him on that point. Motion- Boardmember Scannell/Second- Boardmember Farrales- to approve Resolution 2-2014. Unanimously approved by voice vote. 4. Future Agenda Items: a) Consideration of revenue sharing agreement related to assignment of the Master Commercial Lease at 636 El Camino Real. ADJOURNMENT Chairperson Cullen adjourned the meeting at 2:34 p.m. Submitted: K yn Reodica, Deputy Clerk versight Board for the Successor Agency to the South San Francisco Redevelopment Agency OVERSIGHT BOARD REGUIAR MEETING AGENDA , W=' Neil Cullen, Chairperson Oversight Board for the Successor Agency to the South San Francisco Redevelopment Agency APRIL 15,2014 PAGE 4 DATE: August 19, 2014 TO: Members of the Oversight Board.. FROM: Patrick O'KeefTe, Community and Economic Development Consultant SUBJECT:. RESOLUTION AUTHORIZING THE EXECUTIVE DIRECTOR. TO ENTER INTO AN EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT (ENRA) BETWEEN THE SUCCESSOR AGENCY AND MILLER CYPRESS SSF, LLC (SARES- REGIS) FOR THE POTENTIAL DEVELOPMENT OF THE PROPERTIES AT 401 & 315 AIRPORT BLVD, 405 CYPRESS, AND 216 MILLER AVE. It is recommended that the Oversight Board adopt a resolution authorizing the Executive Director to enter into an Exclusive Negotiating Rights Agreement (ENRA) between the Successor Agency and Miller Cypress SSF, LLC (Sares- Regis) for the potential development of the properties at 401 & 315 Airport Blvd, 405 Cypress, and 21.6 Miller Ave. B ACK GROUNDIDIS CUS SION In an effort to take advantage of favorable development conditions the Successor Agency considered development proposals by two housing developers and one hotel operator for the development of the former Ford properties. After reviewing the proposals, the Successor Agency Board directed staff to prepare an Exclusive Negotiating Rights. Agreement (ENRA) with Sares -Regis (see Exhibit A). On August 13, 2014, the Successor Agency Board reviewed the ENRA and voted to recommend to the Oversight Board that it adopt a resolution authorizing the Successor Agency Executive Director to execute the ENRA with Miller Cypress SSF, LLC (S arcs-Regis) that will lead to a Disposition and Development Agreement. The purpose of this report is to review the project, the ENRA and the negotiating process that will lead to a Disposition and Development Agreement (DDA) with Miller Cypress SSF, LLC. Ford Property Description The former Ford properties (as described in 'Table 1 below and Exhibit B) consist of four development sites totaling approximately 2.18 acres. I n, ral Site ID Address Acmes 2.1 401 -421 Airport Blvd. 1.06 2.2 315 Airport Blvd. 0.51 2.4 405 Cypress Ave. 0.20 3.5 216 Miller Ave. 0.41 Staff Report Subject: Exclusive Negotiating Rights Agreement for 401, 411, 421 & 315 Airport Blvd, 405 Cypress Ave, and 216 Miller Ave. Page No 2 Development Proposal Attached as Exhibit C is a description of the Sares-Regis' proposed development including preliminary price offered for the property, the number of units and unit type composition, the project's amenities and other pertinent information. In summary Sares-Regis will develop all of the sites with approximately 266 units (see concept plans attached as Exhibit D). Sares-Regis's preliminary purchase price offer is $11.5 million. Based on the discussion with Sares-Regis and the review of their preliminary budgets, staff believes Sares-Regis has: • A strong team capable of successfully developing the sites • Extensive experience developing similar projects • Strong financial capacity and access to equity capital and debt financing • Proposed feasible preliminary development concepts for the sites Development Schedule To ensure all of the sites are developed in a timely manner, the FNRA includes language stating that the properties will be entitled as one project and constructed as one project per a construction phasing schedule that will be established in the development agreement. In addition, the Developer must have (1) approved project financing and (2) obtained building permits for all units prior issuance of certificate of occupancy for any units. The Developer will complete project entitlement 8 months after the approval of Downtown Station Area Plan and construction will take an additional 24 months. Exclusive Negotiating Rights Agreement (ENRA) The purpose of the ENRA is to give the Successor Agency and Sares-Regis time to negotiate a Purchase Agreement that will describe the terms and conditions governing the purchase of the properties and a Development Agreement that will set forth requirements and entitlements for the Project. During the ENRA term, Sares-Regis will perform its due diligence on the properties including environmental reviews, surveys, soils reports, market studies and zoning requirements. These studies will enable the developer to more accurately determine the development potential of the site and any conditions it needs to remediate. An ENRA is necessary during this period because the developer is spending a significant amount of money conducting these studies and wants to be assured the Successor Agency is not in discussions with other developers for the property. Upon completion of its due diligence, Sares-Regis and the Successor Agency will negotiate a final purchase price for the property that takes into account the developer's due diligence results as well as other requirements imposed by the City as a condition of development. Key components of the ENRA are: The ENRA includes language that recognizes that the adoption of the Downtown Station Area Plan (DSAP) and related Environmental Impact Report (EIR) are critical to the developer's ability to advance the project. Therefore, the term of the ENRA shall end eight (8) months from the date the City Council approves the Station Area Plan (,and related EIR and Rezoning). The ENRA can be extended 90 days, The developer will submit to the Successor Agency a deposit of $50,000 that will provide -for Successor Agency costs in preparing the purchase and sale agreement. Any funds remaining Staff Report Subject: Exclusive Negotiating Rights Agreement for 401, 411, 421 & 315 Airport Blvd, 405 Cypress Ave, and 216 Miller Ave, Page No 3 will be applied to the purchase price. To extend the ENRA 90 days the developer must make an additional $25,000 deposit. 0 Require the developer to make progress reports to the Successor Agency every 90 days.. Require the developer to provide the Successor Agency its development pro forma, evidence of financing and development schedules. o Give the Successor Agency the right to terminate the agreement if the developer is not performing its obligations. • As a condition of development by the City, the ENRA includes language that the Developer will make a contribution for offsite improvements in an amount to be determined during negotiation of purchase agreement. • As a condition of development by the City, the Developer agreed to make eight out of the projected 266 units affordable. This requirement will be incorporated into the purchase agreement. Approvals Because the Successor Agency owns the Ford properties and the California Department of Finance (DOF) has oversight review of Successor Agency properties, the Successor Agency faces additional steps and coordination in the disposition of the properties. This includes a condition that prior to transferring the Ford properties to the City for disposition, the City and the Taxing Entities will enter into a Compensation Agreement pursuant to Section 34180(f) of the dissolution statutes. Table 2 below outlines the steps the Successor Agency Board, Oversight Board and DOF will need to take to advance this project. "able 2 — Disposition Process Ford Properties Disposition Scluedule Successor Agency Approves ENRA Oversight Board approves ENRA DOF approves ENRA DOF approves Successor Agency's bong Mange Property Management Plan authorizing transferring the properties to the City City Council approves Compensation Agreement with Taxing Agencies • Taxing Agencies approve Compensation. Agreement • .DOF Approves Compensation Agreement City Approves DDA CONCLUSION It is recommended that the Oversight Board adopt a resolution authorizing the Executive Director to enter into an Exclusive Negotiating Rights Agreement (ENRA) between the Successor Agency and Staff Report Subject: Exclusive Negotiating Rights Agreement for 401, 411, 421 & 315 Airport Blvd, 405 Cypress Ave, and 216 Miller Ave. Miller Cypress S SF, LLC (Sares-Regis) for the potential development of the properties at 401 & 315 Airport Blvd, 405 Cypress, and 216 Miller Ave. Approved: i Futrell Executive Director Attachment: Resolution Exhibit A — Exclusive Negotiating Rights Agreement (ENRA) Exhibit B — Map of Ford Properties Exhibit C — Sares-Regis Proposed Development Exhibit D — Concept Plans mm• • = OVERSIGHT BOARD FOR THE SUCCESSOR AGENCY TO THE CITY OF SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY APPROVING AN EXCLUSIVE NEGOTIATION RIGHTS AGREEMENT WITH MILLER-CYPRESS SSF, LLC FOR POTENTIAL DISPOSITION AND DEVELOPMENT OF FORMER FORD PROPERTIES WHEREAS, the Successor Agency ("Agency") is the owner of certain real property (the "Property") located in the City of South San Francisco, California, known as County Assessor's Parcel Numbers 012-317-110 (401 Airport Boulevard), 012-317-100 (411 Airport Boulevard), 012-317-090 (421 Airport Boulevard), 012-318-030 (315 Airport Boulevard), 012-314-100 (405 Cypress Avenue), and 012 -314 -220 (216 Miller Avenue parking lot); and WHEREAS, the Property was transferred from the City of South San Francisco to the Agency pursuant to Grant Deeds; and WHEREAS, on June 29, 2011 the legislature of the State of California (the "State") adopted Assembly Bill xl 26 ("AB 26"), which amended provisions of the Redevelopment Law; and WHEREAS, pursuant to AB 26 and the California Supreme Court decision in California Redevelopment Association, et al. v. Ana Matosantos, et al., which upheld AB 26 (together with AB 1484, the "Dissolution Law"), the Redevelopment Agency was dissolved on February 1, 2012; and WHEREAS, pursuant to the Dissolution Law, the Agency has prepared and the Oversight Board has approved a Long Range Property Management Plan ("LRPMP") which is presently under review by California Department of Finance ("DOF"); and, WHEREAS, the LRP,MP being reviewed by the DOF includes development plans for the Property; and, WHEREAS, DOF approval of a LRPMP authorizing a process for conveyance of the Property is required prior to conveyance of the Property, and, WHEREAS, the Agency is interested in selling the Property to Miller Cypress SSF, LLC, a Delaware limited liability company ("Developer") contingent upon Developer preparing all appropriate environmental review documents, and applying for land use entitlements from the City of South San Francisco and if such entitlements are granted constructing approximately 266 multi- family residential units ("Project") on the Property; and, WHEREAS, the Developer has requested the exclusive right to collaborate with City to develop the Project and negotiate with the Agency for the purpose of reaching agreement on a 1 _v_ 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; and WHEREAS, City desires to grant Developer the exclusive right to collaborate and negotiate with City with regard to development of the Property; and WHEREAS, the Successor Agency Counsel has prepared an Exclusive Negotiation Rights Agreement ("Agreement") with Developer to reflect the terms and conditions of such exclusive collaboration and negotiation. NOW, THEREFORE, the Oversight Board to the fon-ner Redevelopment Agency of the City of South San Francisco does hereby resolve as follows: 1. The Recitals set forth above are true and correct, and are incorporated herein by reference. 2. The Agreement, substantially in the form attached hereto, is hereby approved, and the Executive Director or his designee is hereby authorized to execute it on behalf of the Successor Agency; to make revisions to the Agreement, with review and approval by the Agency Counsel, which do not materially or substantially increase the Agency'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, PASSED AND ADOPTED this l9th day of August, 2014, by the following vote, AYES: NOES: ABSTAIN: ABSENT: ATTEST: M, a me] M "I Successor Agency Clerk Chair 2312642.1 N, M 2312414 rpm.,, EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT by and between MILLER-CYPRESS SSF, LLC and SOUTH SAN FRANCISCO SUCCESSOR AGENCY EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT MILLER-CYPRESS SSE, LLC THIS EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT (this " Agreement") is entered into by and between the SOUTH SAN FRANCISCO SUCCESSOR AGENCY, a public agency ( "Agency ") and MILLER CYPRESS SSF, LLC, a Delaware limited liability company ( "Developer ") dated as of (the "Effective ate'''), which is the date this Agreement was approved by the South San Francisco Oversight. Board and the South San Francisco Oversight Board ( "Oversight Board ") and the California Department of Finance ("DOF"). Agency and Developer arc each referred to as "Party" or collectively referred to as the "Parties." WHEREAS, the Agency is the owner of certain property certain real property (the "Property ") located in the City of South San Francisco, California, known as County Assessor's Parcel Numbers 012- 317 -110 (401 Airport Boulevard), 012 - 317 -100 (411 Airport Boulevard), 012 - 317 -090 (421 Airport Boulevard), 012 - 318 -030 (315 Airport Boulevard), 012 - 314 -100 (405 Cypress Avenue), and 012 -314 -220( 216 Miller Avenue parking lot), as more particularly described in Exhibit A attached hereto and incorporated herein by this reference, and WHEREAS, the Property was transferred from the City of South San Francisco to the Agency pursuant to Grant Deeds recorded on , ;and WHEREAS, on June 29, 2011 the legislature of the State of California (the "State ") adopted Assembly Bill x 26 ( "AB 26"), which amended provisions of the Redevelopment Law; and WHEREAS, pursuant to AB 26 and the California Supreme Court decision in California Redevelopment Association, et al. v. Ana Matosanto,s, et al., which upheld AB 26 (together with AB 1484, the "Dissolution Law"), the Agency was dissolved on February 1, 2012; . and WHEREAS, pursuant to the Dissolution Law, the Agency has prepared and the Oversight Board has approved a Long Range Property Management Plan ( "L,RPMP"') which is presently under review by DOF; and, WHEREAS, the LRPP being reviewed by the DOF includes development plans for the sites in this Agreement which are consistent with this Agreement; and, WHEREAS, DOF approval of a LRPMP authorizing a process for conveyance of the Property is required prior to conveyance of the Property, and, WHEREAS, the Oversight Board approved this Agreement on , 2014 and DOF approved the Agreement on , 2014, and, WHEREAS, the Agency is interested in selling the Property to Developer contingent upon Developer preparing all appropriate environmental review documents, and applying for 2190181.2 EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT GATEWAY EAST .I_ -4- land use entitlements from the City of South San Francisco and if such entitlements are granted . constructing approximately 266 multi- family residential units ( "Project ") on the Property, and, WERAS, the City of South San Francisco ( "City ") is currently processing the Downtown Station Area Plan ( "DSA Plan"), including related Environmental :Impact Report ( "EIR ") under the California Environmental Quality Act ( "CEQA") and related rezoning ( "Rezoning ") that includes the Property and is anticipated, if approved by the City Council, to allow for the development of Project on the Property, or similar type high density, transit- oriented multi - family residential project. The DSA Plan is currently anticipated to be considered . by the City Council for final action by the end of 2014, and, WHEREAS, Developer anticipates expending funds to prepare environmental review documents, architectural and design drawings and conduct certain studies that are needed to assess the feasibility of the Project, consistent with the pending DSA Plan, EIR and Rezoning, and requires a grant of exclusive negotiating rights in order to be willing to snake such expenditures; and WHEREAS, at its meeting on August 13, 2014 the Agency approved this Agreement and directed staff to negotiate a Purchase Agreement for the Property with Developer. NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows. I w Good Faith Efforts to Ne >o late. The Parties will use their best efforts to successfully negotiate (1) a Purchase Agreement which will describe the terms and conditions governing the purchase of the Property by Developer, and (ii) a Development Agreement between the City of South San Francisco ( "City ") and Developer that will set forth requirements and entitlements for the Project. The Parties will diligently and in good faith pursue such negotiations. Furthermore, the Parties will use their best efforts to obtain any third -party consent, authorization, approval, or exemption required in connection with the transactions contemplated hereby. This Agreement does not impose a binding obligation on Agency to convey any interest in the Property to Developer, nor does it obligate City to grant any approvals or authorizations required for the Property or any project or improvements constructed thereon. 231241.4 a. If Developer has not continued to negotiate diligently and in good faith, Agency will give written notice thereof to Developer who will then have ten (1.0) business days to commence negotiating in good faith. Following the failure of Developer to thereafter commence negotiating in good faith within such ten (10) business day period, this Agreement may be terminated by Agency. If this Agreement is terminated by Agency pursuant to the above sentence, Developer acknowledges and agrees that Agency will suffer damages, including lost opportunities to pursue other development alternatives for the Property and delayed receipt of property tax EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT MILLER - CYPRESS SSP, LLC ..s_ revenues from the Property, and that it is impracticable and infeasible to fix the actual amount of such damages. Therefore, the Parties agree that if this Agreement is terminated as provided above, Agency will retain the Payment (as defined in Section 5 of this Agreement, hjfra), plus any interest thereon, as fixed and liquidated damages and not as a penalty, and following such tennination neither Party will have any further rights against or liability to the other under this Agreement. b,. If Agency has not continued to negotiate diligently and in good faith, Developer will give written notice thereof to Agency which will then have ten (10) business days to commence negotiating in good faith. Following the failure of Agency to thereafter commence negotiating in good faith within such ten (1 ©) business-day period, this Agreement may be tenninated by Developer. In the event of such termination by Developer, Agency will return the unused portion of the Payment to Developer in accordance with the provisions of Section .5 of this Agreement and neither Party will have any further rights against or liability to the other under this Agreement, C. If, notwithstanding Agency's and Developer's mutual diligent, good faith negotiations, the Parties have not entered into a Purchase Agreement on or before expiration of the Tenn of this Agreement (as defined in Section 3 of this Agreement) or any extension thereof, Agency will return the Payment after taking into account any expenditures made for costs incurred by the Agency pursuant to this Agreement, and neither Party will have any further rights against or liability to the other under this Agreement, d. If performance of this Agreement results in execution of a Purchase Agreement, the Agency will apply any unused portion of the Payment to either the agreed- upon deposit or purchase price requirement of the Purchase Agreement. 2. Developer's Exclusive Right to Negotiate With Agency. Agency agrees that it will not, during the term of this Agreement, directly or indirectly, through any officer, employee, agent, or otherwise, solicit, initiate or encourage the submission of bids, offers or proposals by any person or entity with respect to the acquisition of any interest in the Property or the development of the Property, and Agency will not engage any broker, financial adviser or consultant to initiate or encourage proposals or offers from other parties with respect to the disposition or development of the Property or any portion thereof. 2312414 Furthermore, Agency will not, directly or indirectly, through any officer, employee, agent or otherwise, engage in negotiations concerning any such transaction with, or provide information to, any person other than Developer and its representatives with a view to engaging, or preparing to engage, that person with respect to the disposition or development of the Property or any portion thereof EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT MILLER-CYPRESS SSE, LLC 3. Ten-n. a. The term of this Agreement ("Term") commences on the Effective Date, and will teirninate eight (8) months from the date the City Council approves the Station Area Plan (and related EIR and Rezoning), unless extended or earlier terminated as provided herein. b. During the Term, Developer will provide Agency with progress reports a minimum of every ninety (90) days with respect to Developer's due diligence review of the Property, commencement of environmental requirements under CEQA, preparation of architecture and construction plans, and general progress toward development of the Property. C. During the Term, Agency will provide Developer with progress reports a minimum of every ninety (90) days with respect to the Agency's progress with the DOF approval of a LRPMP and the conveyance of the Property to the Developer and the City's progress with respect to processing and approval of the DSA Plan, FIR and Rezoning. d. The Tenn of this Agreement may be extended for up to a maximum of ninety (90) additional days upon the mutual written agreement of Developer and Agency acting through and in the discretion of its Agency Executive Director, or his/her designee ("Agency Executive Director") and the payment by Developer of $25,000. Developer understands that the Agency will only consider an extension of the Tenn of this Agreement where Developer has demonstrated, to the Agency's satisfaction, substantial progress towards development of the Property, by submittal of a permit application, the receipt of any City required environmental review documents necessary to satisfy CEQA, submittal of architecture and construction plans, payment of any applicable processing and plan check fees or undergoing City review of any necessary land use entitlements including a development agreement, 4. Relationship of the Parties. Nothing in this Agreement creates between the Parties the relationship of lessor and lessee, of buyer and seller, or of partners or joint venturers. S. PaMentfor Agency Costs. 2312414 a. In consideration for this Agreement and the costs the Agency has and will incur in furtherance of this Agreement and the negotiation of the Purchase Agreement, Developer will, within five (5) days of the Effective Date, submit to Agency a deposit ( "Paymcntl") in the amount of Fifty Thousand Dollars ($50,000) in immediately available funds. Agency will deposit the Payment in an interest bearing account of the Agency and any interest, when received by Agency, will become part of the Payment. M EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT MILLER-CYPRESS SSF, LLC b. Agency agrees to account for deposit, interest earnings, and any expenditures made related to the execution of this Agreement consistent with all reporting requirements of the DOF. C. On or before expiration of the Term of this Agreement, the Agency may, in accordance with the provisions of Section 1 c of this Agreement, draw on the Payment to reimburse the Agency's cost for third -party assistance and staff time in the negotiations for and preparation of the Purchase Agreement. The Agency will notify the Developer of the identity, qualifications, scope of work and budget for any third party consultants that will be paid for by the Payment prior to authorizing work under any such third party contract and will provide Developer a written account of such reimbursement, including copies of any third party invoices under approved scopes of work (not including any information subject to attorney client privilege) upon the request of Developer. d. Any amount remaining in the Payment after expiration of the Term of this Agreement or execution of a Purchase Agreement, whichever comes first, and taking into account expenditures authorized by Section 5(b) above, will be disposed of as provided in Section 1 of this Agreement. C. In addition to Agency Costs discussed herein, Developer shall be subject to all applicable fees imposed by the City for processing land use entitlements as set forth in the City's adopted Master Fee Resolution dated June , 2014 and any applicable cost recovery and indemnifications agreements. . Terms and Conditions of the Purchase Agreement. The Parties agree to use their best efforts to successfully negotiate a Purchase Agreement including, but not limited to, the lease terns, rental payments, terms of the purchase and the option price. The Parties agree the terms shall be generally based on those set forth herein and in Exhibit 1 attached hereto and incorporated herein by reference.. 7. Developer's Studies; Right of Entry, 2312414 a. During the Term of this Agreement, Developer will use its best efforts to prepare, at Developer's expense, any studies, surveys, plans, specifications and reports ( "Developer's Studies") Developer deems necessary or desirable in Developer's sole discretion, to complete its due diligence for the Property. Developer's Studies may include, without limitation, title investigation, marketing, feasibility, soils, seismic and environmental studies, financial feasibility analyses and design studies. The Developer will have rights of access to the Property to prepare the Developer's Studies. b. Developer hereby agrees to notify the Agency twenty -four (24) hours in advance of its intention to enter the Property. -8- EXCLUSIVE NEGOTLATING RIGHTS AGREEMENT MILLER- CYPRESS SSE, LLC C. Developer will provide the Agency with work plans, 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, d. Without limiting any other indemnity provisions set forth in this Agreement, Developer shall indemnify, defend (with counsel approved by Agency) and hold the Agency, its officials, officers, employees, consultants, contractors and volunteers ("Agency Indemnities") harmless from and against all claims resulting from or arising in connection with entry upon the Property by Developer or Developer's agents, employees, consultants, contractors or subcontractors pursuant to this Section 7; provided however, Developer will have no indemnification obligation with respect to the gross negligence or willful misconduct of any Agency Indemnities. Developer's indemnification obligations set forth in this Section 7 shall survive the termination of this Agreement and shall apply to any claims filed against the Agency within eighteen months of termination of this Agreement. e. If UPOD expiration of the Term of this Agreement the Parties have not successfully negotiated a Purchase Agreement, Developer will provide Agency within fifteen (15) days following said date of expiration copies of the Developer's Studies completed by such date, not including the intellectual property of Developer. Developer will also provide Agency with copies of any Developer's Studies completed after the expiration of the Tenn within fifteen (15) days following completion of such studies, or if Developer intends not to complete any Developer Studies, Developer will provide Agency with copies of such uncompleted studies. 8. Agency's Reports and Studies. Within twenty (20) days following the Effective Date, Agency will make available to Developer for review or copying at Developer's expense all nonprivileged studies, surveys, plans, specifications, reports, and other documents with respect to the Property that Agency has in its possession or control, which have not already been provided. Studies or documents prepared by Agency and its agents solely for the purpose of negotiating the terms of a Purchase Agreement are not required to be provided by Agency to Developer and are excluded from this requirement. 9. Developer's Pro Forma, Evidence of Financing—mid Schedule for Conveyance of Pro ty Following Potential Approval of a Purchase .Agreement. At least 45 days prior to Agency consideration of the Purchase Agreement, Developer will provide Agency with a pro forma for the Project that confirms the financial feasibility of Developer's proposed development of the Property and planned financing for the Project. The parties agree that the Purchase Agreement will contain language that provides that: (1) not later than forty-five (45) day prior to conveyance of the Property, Developer will provide evidence satisfactory to Agency that Developer has secured binding commitments, EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT MILLER-CYPRESS SSF, LLC 2312414 subject only to commercially reasonable conditions, for all funding necessary for the successful purchase of the Property and completion of the Project, and (2) prior to conveyance of the Property Developer shall obtain approval of final construction plans for Airport Boulevard properties, and issuance of building permits for the Airport Boulevard properties. Not later than forty five (45) prior to consideration of the Purchase Agreement, Developer shall provide a development schedule for all Property. 10. Full Disclosure. Developer is required to make full disclosure to Agency of its principals; officers; major stockholders, partners or members; joint venturers; negotiators; development managers; consultants and directly involved managerial employees (collectively, "Developer Parties "); and all other material inforration concerning Developer. Any change in the identity of the Developer Parties will be subject to the approval of Agency, which will not be unreasonably withheld. Developer will make and maintain full disclosure to Agency of its methods of financing to be used in the acquisition and development of the Property, 11. Periodic Reportiny—to..Governing Bodies. Agency will report periodically to the Agency Board and/or the Oversight Board of the Successor Agency on the status of negotiations, and Developer may be asked to attend such meetings to provide those bodies with a status update of their development efforts related to this Agreement.. 12. Reserved. 13. Confidentiality, Dissemination of information. To the extent permitted by law, during the term of this Agreement, each Party will obtain the consent of the other Party prior to issuing or permitting any of its officers, employees or agents to issue any press release or other information to the press with respect to this Agreement; provided however, no Party will be prohibited from supplying any information to its representatives, agents, attorneys, advisors, financing sources and others to the extent necessary to accomplish the activities contemplated hereby so long as such representatives, agents, attorneys, advisors, financing sources and others are made aware of the terms of this Section. Nothing contained in this Agreement will prevent either Party at any time from furnishing any required information to any governmental entity or authority pursuant to a legal . requirement or from complying with its legal or contractual obligations. 14. Execution of Purchase Agreement. The Agency has no legal obligation to grant any approvals or authorizations for the sale of the Property or any development thereon until the Purchase Agreement has been approved by the Agency, the South San Francisco Oversight Board and the California Department of Finance, if necessary. Such consideration and potential approval shall not occur until the Agency has completed, considered and certified /approved any required CEQA environmental review documents. 1. Termination. 2312414 a. This Agreement may be terminated at any time by mutual consent of the Parties. M EXCLUSIVE NEGOTIATING RIGHTS .AGREEMENT MILLER - CYPRESS SSF, LLC b. Agency will have the right to terminate this Agreement upon its good faith determination that Developer is not proceeding diligently and in good faith to carry out its obligations pursuant to this Agreement. Agency will exercise such right in accordance with the provisions set forth in Section .1 of this Agreement. C. Developer will have the right to terminate this Agreement, in accordance with the provisions set forth in Section 1 of this Agreement, if the results of its investigation of the Property are unsatisfactory, in Developer's sole and absolute discretion, with respect to Developer's desired development activities or if Developer is unable to obtain other necessary approvals, rights or interests. d. Neither Party will have the right to seek an award of damages as a result of the termination of this Agreement pursuant to this Section. 16. Effect of Termination. Upon termination as provided herein, or upon the expiration of the Tenn and any extensions thereof without the Parties having successfully negotiated a Purchase Agreement, this Agreement will forthwith be void, and there will be no further liability or obligation on the part of either of the Parties or their respective officers, employees, agents or other representatives; provided however, the provisions of Section H (Expenses), Section 13 (Confidentiality; Dissemination of Information), Section 18 (Indemnification), and Section 22 (Brokers) will survive such termination. Provided further, that upon termination or expiration of this Agreement without the Parties having successfully negotiated a Purchase Agreement, Developer will deliver to Agency all of the Developers Studies pursuant to the provisions of Section 7 of this Agreement. n 17. Notices. Except as otherwise specified in this Agreement, all notices to be sent pursuant to this Agreement will be made in writing, and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other parties in accordance with this Section. All such notices will be sent by: 23➢2414 a. Personal delivery, in which case notice is effective upon delivery; b. Certified or registered mail, retuni receipt requested, in which case notice will be deemed delivered on receipt if delivery is confirmed by a return receipt; C. Nationally recognized overnight courier, with charges prepaid or charged to the sender's account, in which case notice is effective on delivery if delivery is confirmed by the delivery service; d. Facsimile transmission, in which case notice will be deemed delivered upon transmittal, provided that L A duplicate copy of the notice is promptly delivered by first-class or certified mail or by overnight delivery, or -11- EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT MILLER-CYPRESS SSF, LLC ii. A transmission report is generated reflecting the accurate transmission thereof. Any notice given by facsimile will be considered to have been received on the next business day if it is received after 5:00 p.m. recipient's time or on a nonbusiness day. Agency: South San Francisco Successor Agency 400 Grand Avenue South San Francisco, CA 94080 Attn: City Manager Tel (650) 877 -8501 Fax (650) 829 -6609 with a copy to: Meyers Nave Attn: Steve Mattas 575 Market Street, Suite 2080 San Francisco, CA 94105 Tel (415) 421 -3711. Fax (415) 421 -3767 Developer: Sares -Regis Group of Northern California 901 Mariner's Island Boulevard, 7th Floor San Mateo, CA 94404 Attention: Mark Kroll and Andrew Hudacek Telephone: (650) 378 -2800 Email: mkroll@sr c.corm ahudacek@srg_nc.coin Holland & Knight LLP 50 California Street, Suite 2800 San Francisco, CA 94109 Attention. Tamsen Plume Telephone. (415),743-6900 Email: tamsen.plumc @hklaw.com 18. Indemnification. Developer hereby covenants, on behalf of itself and its permitted successors and assigns, to indemnify, hold harmless and defend the Agency and the City of South San Francisco and their elected and appointed officials, officers, agents, representatives and employees ( "Indemnitees ") from and against all claims, costs (including without limitation reasonable attorneys' fees and litigation costs) and liability, arising out of or in connection with this Agreement and/or arising out of or in connection with the Developer's access to and entry on the Property pursuant to Section 7 of this EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT MILLER-CYPRESS SSF, LLC 231.2414 -12- Agreement; provided however, Developer will have no indemnification obligation with respect to the gross negligence or willful misconduct of any Indeamnitee. 19. Severability. If any term or provision of this Agreement or the application thereof will, to any extent, be held to be invalid or unenforceable, such tend or provision will be ineffective to the extent of such invalidity or unenforceability without invalidating or rendering unenforceable the remaining terms and provisions of this Agreement or the application of such terms and provisions to circumstances other than those as to which it is held invalid or unenforceable unless an essential purpose of this Agreement would be defeated by loss of the invalid or unenforceable provision. 20. Entire Agreement; e�ment; Amendments In Writing; Counterparts. This Agreement contains the entire understanding of the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, oral and written, between the Parties with respect to such subject matter. This Agreement maybe amended only by a written instrument executed by the Parties or their successors in interest. This Agreement may be executed in multiple counterparts, each of which will be an original and all of which together will constitute one agreement. 21. Successors and Assigns; No Third-Party Beneficiaries. This Agreement will be binding upon and inure to the benefit of the Parties and their respective successors and assigns; provided however, that neither Party will transfer or assign any of such Party's rights hereunder by operation of law or otherwise without the prior written consent of the other Party, and any such transfer or assignment without such consent will be void. Notwithstanding the foregoing, Developer is permitted to assign this Agreement without such written consent, provided that Developer assigns this Agreement to (i) an entity that is wholly controlled by Developer, or (ii) an entity in which the Developer is a member and has day to day management responsibilities for such entity. Subject to the immediately preceding sentence, this Agreement is not intended to benefit, and will not run to the benefit of or be enforceable by, any other person or entity other than the Parties and their permitted successors and assigns. 22. Brokers. Each Party warrants and represents to the other that no brokers have been retained or consulted in connection with this transaction. Each Party agrees to defend, indemnify and hold harmless the other Party from any claims, expenses, costs or liabilities arising in connection with a breach of this warranty and representation. The terms of this Section will survive the expiration or earlier termination of this Agreement. 23. Approvals. Unless otherwise provided in this Agreement, the Agency Manager will be authorized to enter into all written approvals, consents or waivers by the Agency without further authorization by the Agency Council. Nothing herein, however, will be deemed to prevent the Agency Manager from requesting formal approval by the Agency Council if the Agency Manager, in his or her sole discretion, determines to seek such approval.. 2312414 .13_ EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT MILLER - CYPRESS SSF, LLC 24. Captions. The captions of the sections and articles of this Agreement are for convenience only and are not intended to affect the interpretation or construction of the provisions hereof. 25. QQ.veming Law, This Agreement will be governed by and construed in accordance with the laws of the State of California. IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above. AGENCY By: Mike Futrell Executive Director ATTEST: By: Agency Clerk APPROVED AS TO FORM: By: Craig Labadie Agency Counsel 2312414 -14- EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT MILLER-CYPRESS SSE, LLC FJJ�,, , #V: M. APPROVED AS TO FORM: RA 2312414 Tamsen Plume, Holland & Knight, Counsel for Developer -Is- EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT MILLER-CYPRESS SSE, LLC 2312414 Exhibit A PROPERTY (Attach legal description of Property) EXCLUSIVE NEGOTIATING RIGHTS_AGREFMENT MILLER-CYPRESS SSF, LLC 1u i gg �z ( 1 P l i ..II.. Criteria Sares -Regis Preliminary Land Purchase Price Offered $11,500,000 Prevailing Wages for Construction Yes Sites a 401 -421 Airport Blvd. 0 315 Airport Blvd. * 405 Cypress Ave. 0 Miller Ave. Site Development Type Market -rate rental. Decision on pursuing condos on any site subject to cost - benefit analysis in the future. Condos will be subject to inclusionary housing ordinance Height (floors) « 401 -421 Airport — 6 stories (4 residential over 2 parking) 0 315 Airport -- 6 stories (4 residential over 2 parking) 405 Cypress — 5 stories (4 residential over 1 parking) 0 Miller Avenue — 5 stories (4 residential over 1 parking) Proposed Number of Units 266 Total units a 401 -421 Airport -- 121 units 315 Airport — 68 units 405 Cypress -- 37 units ® Miller Avenue — 40 units Unit Size Composition a 48% One- bedroom 0 35% Two- bedroom 0 13% Junior -One a 4% Three - bedroom Affordable Units 20% BMR would be required per inclusionary 236.2414 M EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT MILLER - CYPRESS SSF, LLC 2312414.1. 231241.4 -t$- EXCUJSIVE NEGOTIATING RIGHTS AGREEMENT MILLER - CYPRESS SSE, LLC ordinance for condominiums Retail Space /Live Fork five -work units along Cypress and Miller Avenue for projects facing Airport-Blvd. Project Amenities As presented during project tour: Common work/meeting areas, gym, outdoor space Parking 399 parking spaces, with a potential reduction in spaces if financeable Developer's Equity Stake 35% during construction phase Project Entitlement/ Purchase Agreement 8 months after approval of Downtown Consideration and Construction Period Station Plan for consideration of approval of project entitlements including development agreement and purchase agreement 24 months for construction Project Phasing Project would be entitled as one project and constructed as one project per construction phasing schedule set forth in development agreement subject to force majeure provision. Developer must have (1) approved project financing and (2) obtained building permits for all units prior issuance of certificate of occupancy for any units. Offsite Public Improvements Make a contribution in an amount to be determined during negotiation of purchase agreement for offsite improvements (which will also be identified during project entitlement process and purchase agreement), 2312414.1. 231241.4 -t$- EXCUJSIVE NEGOTIATING RIGHTS AGREEMENT MILLER - CYPRESS SSE, LLC 2 �76 ol Ll N 4a� i A i Site 2.1 A r (Do 4o J 21-S Airpov-- - lgii4l ll - n - 7-7 z -2? q ato f 115� �jl 4 Site 2.4 r 7, 7' 7 �(,,i N 4a� i A i Site 2.1 A r (Do 4o J 21-S Airpov-- - lgii4l ll - n - 7-7 z P,4 ',,4P VOL hr \rk fl, I n. 115� 4 7, 7' 7 �(,,i P,4 ',,4P VOL hr \rk fl, I n. Criteria Sasres °aegis Preliminary Land Purchase Price Offered 0 $11,500,000 Prevailing Wages for Construction Yes Sites G 401 -421 _airport Blvd. 0 31.5 Airport Blvd. 405 Cypress Ave. a Miller Ave. Site Development Type Market -rate rental. Decision on pursuing condos on any site subject to cost - benefit analysis in the future. Condos will be subject to inclusionary Dousing ordinance Height (floors) 0 401 -421 Airport --- 6 stories (4 residential over 2 parking) 0 315 airport — 6 stories (4 residential over 2 parking) 405 Cypress — 5 stories (4 residential over 1 parking) Miller Avenue — 5 stories (4 residential over 1 parking) Proposed Number of Units 266 Total units 471 -421 Airport — 121 units * 315 Airport — 68 units * 405 Cypress — 37 units Miller I' venue — 40 units Unit Size 'Composition v 48% Cane- bedroom 35% Two - bedroom * 13% junior-One 4% Three - bedroom Affordable Units n 20 /� l3MR would be required per inclusionary ordinance for condominiums -20- 2309796.1 -21- Detail Space /Live Mork Live -work units along Cypress and :Miller _\venue for projects facing Airport -Blvd. Project amenities As presented during project tour: Common work /meeting areas, gyre, outdoor space Parking 399 parking spaces, with a potential reduction in spaces if financeable Developer's Equity Stake 35% during construction phase Prolect Entitlement/ Purchase chase Agreement a 8 months after approval of Downtown Consideration and Construction Period Station Plain for consideration of approval of project entitlements including development agreement and purchase agreement 0 24 months for construction Project Phasing Project would be entitled as one project and constructed as one project per construction phasing schedule set forth in development agreement subject to force majeure provision. Developer must have (1) approved project financing and (2) obtained building permits for all units prior issuance of certificate of occupancy for any units. Offsite Public Improvements flake a contribution in an amount to be determined during negotiation of purchase agreement for offsitc improvements (which will also be identified during project entitlement process and purchase agreement). 2309796.1 -21- El ME -22- I L I DATE: August 19, 2014 TO: Members of the Oversight Board FROM: Patrick O'Keeffe, Economic and Community Development Consultant SUBJECT: RESOLUTION ADOPTING THE TERMS OF A REVENUE SHARING AGREEMENT FOR COMMERCIAL SPACE AT 636 EL CAMINO REAL AND DIRECTING STAFF TO DRAFT AND ENTER INTO A REVENUE SHARING AGREEMENT WITH SAID TERMS UPON APPROVAL OF THE TERMS BY THE OVERSIGHT BOARD AND THE CALIFORNIA DEPARTMENT OF FINANCE. It is recommended that the Oversight Board adopt a resolution approving the terms of a Revenue Sharing Agreement for Commercial Space at 636 El Camino Real and directing staff to draft and enter into a Revenue Sharing Agreement with said terms upon approval of the terms by the Oversight Board and the California Department of Finance. The property at 636 El Camino Real contains a mixed-use affordable housing development constructed by Mid-Peninsula Housing Coalition (Mid-Pen) and sponsored by the Redevelopment Agency of the City of South San Francisco (RDA). Pursuant to the dissolution statutes, the California Department of Finance (DOF) authorized the transfer of the land and Mid-Pen's $9.9 million loan to the City as housing successor. Mid-Pen as developer owns the building improvements. However, because the housing project contains approximately 5,160 square feet of retail space, it is subject to Health and Safety Code section 34176 (f ): "If a development includes both low- and moderate-income housing that meets the definition of a housing asset under subdivision (e) and other types of property use, including, but not limited to, commercial use, governmental use, open space, and parks, the oversight board shall consider the overall value to the community as well as the benefit to taxing entities of keeping the entire development intact or dividing the title and control over the property between the housing successor and the successor agency or other public or private agencies. The disposition of those assets may be accoMplished.by a revenue-sharing arrangement as Wroved by the oversight board on behalf of the affected taxing _e entities." Pursuant to a Master Lease Agreement, the RDA leased back from Mid-Pen the retail space for a term of 75 years. The Oversight Board and DOF authorized the assignment of the lease to the City. The City has entered into sub-leases agreements for two of the three commercial spaces and is in the process of completing the tenant improvements for these spaces. With occupancy expected to occur in August, 2014, it is necessary for the City and the Oversight Board to settle matters with respect to Health and Safety Code Section 34176 (f) requiring a shared revenue agreement. On August 13, 2013, the City Council approved the terms of the Shared Revenue Agreement and directed staff to present them to the Oversight Board and DOF. Staff Report Subject: Revenue Sharing Agreement Terms for Commercial Space at 636 El Camino Real Page 2 of 2 DISCUSSION The City and Oversight Board need to determine how to proportionately distribute the commercial rent revenue between the housing fund and the taxing agencies (the "Parties"). With the City Council's concurrence, staff is proposing to present to the Oversight Board the following terms for a shared revenue agreement: 1. The amount of revenue shared by the Parties shall be revenues net of operating expenses and reserves. Annual rent at stabilization in year 3 will be $111,703 with 3% annual increases. At stabilization, operating expenses are estimated at $34,954 per year and reserves at $18,981 for a total of $53,935. This means $57,768 will be available annually for sharing between the City's affordable housing fund and the taxing agencies (see attached 636 ECR Retail Pro-forma). 2. To calculate how the net revenue is divided, the agreement shall dictate that the share each Party receives shall be based on the percentage of commercial square footage versus total project square footage. The property contains 5,160 square feet of commercial space and a total project built area of 229,776 square feet (see 636 ECR El Camino Project Data exhibit). The commercial space .represents 2.25% of the total built area, therefore the taxing agencies will receive 2.25% of net revenue. Based on the figures above, at stabilization the taxing agencies will receive approximately $1,300 per year (2.25% x $57,768) and increase 3% annually. Upon approval of the terms by the City, Oversight Board and DOF the City Attorney will draft one agreement to be signed by each of the taxing entities that sets forth the overall formula and the percentage going to each taxing entity. The proceeds from the rent will be distributed to all of the taxing entities on a pro rata basis in proportion to each taxing entity's share of the base property tax revenues, as determined by the County Auditor-Controller. CONCLUSION It is recommended that the Oversight Board adopt a resolution approving the terms of a Revenue Sharing Agreement for Commercial Space at 636 El Camino Real and directing staff to draft and enter into a Revenue Sharing Agreement with said terms upon approval of the terms by the Oversight Board and the Califo a Department of Finance. RESOLUTION NO. OVERSIGHT BOARD FOR THE SUCCESSOR AGENCY TO THE CITY OF SOUTFI SAN FRANCISCO REDEVELOPMENT AGENCY A RESOLUTION APPROVING THE TERMS OF A REVENUE SHARING AGREEMENT WHEREAS, the property at 636 El Camino Real (the "Property',) contains a mixed-use affordable housing development constructed by Mid-Peninsula Housing Coalition and sponsored by the former Redevelopment Agency of the City of South San Francisco (the "RDA"); and WHEREAS, the Property was transferred to the City of South San Francisco (the "City") as Housing Successor to the farmer RDA, pursuant to Health and Safety Code Section 34176; and WHEREAS, the Property contains approximately 5,160 square feet of retail space: and WHEREAS, pursuant to a Master Lease Agreement for the Property, the RDA leased the retail space back from Mid-Pen pursuant to a 75-year lease; and WHEREAS, pursuant to Health and Safety Code Section 34176(0, the Oversight Board for the Successor Agency to the RDA (the "Oversight Board"), and the State Department of Finance ("DOF"), authorized the assignment of the lease to the City, on the condition that the disposition of lease revenue be accomplished by a revenue sharing agreement with the affected taxing entities, as approved by the Oversight Board; and WHEREAS, pursuant to two subleases for three of the commercial spaces, with occupancy expected to occur this month, a revenue sharing agreement must be prepared and presented to the Oversight Board; and WHEREAS, based upon projections, at rent stabilization in year 3, of net revenue for the commercial square footage at the Property, City staff calculates that $1,300 will be available annually for distribution to the taxing entities, and will increase by 3% annually thereafter; and WHEREAS, the net rental revenue for the commercial space square footage will be distributed to the taxing entities on a pro rata basis in proportion to each taxing entity's share of the base property tax revenues, as determined by the San Mateo County Auditor-Controller, NOW, THEREFORE, the Oversight Board to the former Redevelopment Agency of the City of South San Francisco does hereby resolve as follows: (1) approves the terins, of a revenue sharing agreement with the City as set forth herein and in the accompanying staff report; (2) authorizes Successor Agency staff to prepare a revenue sharing agreement with the affected taxing entities for the net rental revenue from the commercial space square footage at 636 El Camino Real; and (3) authorizes Successor Agency staff to submit the terms thereof and the subsequent revenue sharing agreement to the DOF for approval, I hereby certify that the foregoing is a full, true, and correct copy of a resolution duly and regularly adopted by the Oversight Board for the Successor Agency to the City of South San Francisco Redevelopment Agency at a Regular Meeting held on the 19 "' day of August, 2014 by the following vote: AYES: NOES: ABSTAIN: ABSENT: ATTEST: APPROVED: 2312981,1 Successor Agency Clerk Chair 636 ECR Retail Pro-foirma Calculation Monthly lBase Factors 1 2 3 Income - Gross Rents Unit 1 1600 SF $ 3,000 3% $36,000 $37,080 $ 38,192 Unit 2 1387 SF $ 2,000 3% $ 24,000 $24,720 $ 25,462 Unit 3 2360 SF $ 4,000 3% $ - $ - $ 48,000 Soft Costs Management Fee Security Deposits Held Gross Income $ 9,000 $60,019 $61,830 $111,703 Expenses Service Contracts Property Management (3rd party) 10.0% $ 6,000 $ 6,180 $ 11,165 Grounds/Parking (3rd party) 3.0% $ 1,800 $ 1,854 $ 3,350 Repairs/Maintenance 0.0% $ - $ - $ - Janitorial/Common Areas (3rd party) 2,0% $ 1,200 $ 1,236 $ 2,233 Extermination 0,0 %® $ - $ - $ - Fire Detection System Monitoring (3rd party) 1.0% $ 600 $ 618 $ 1,117 Fire Extinguishers (3rd party) 0,5% $ 300 $ 309 $ 558 Security 0.0% $ - $ - $ - Utilities Gas/Electric Common Areas $ 300,00 5% $ 3,600 $ 3,780 $ 3,969 WaterlSewor $ - 5% $ - $ - $ Gargbage $ 5% $ - $ $ Tax & Insurance Possessory Tax 0% $ - $ $ - Property Liabifity Insurance 2% $ 1,200 $ 1,237 $ 1,261 City Operating and Admin Fees Operating (Staff) 5.0% $ 3,000 $ 3,090 $ 5,583 Overhead 0.0% $ - $ - $ - Accounting (Staff) 5.0% $ 3,000 $ 3,090 $ 5,583 Management Fee 0.0% $ - $ - $ - Security Deposits Security Deposits Held Interest 1,5% $ 135 $ 135 $ 135 Reserves Vacancy 2.0% $ 1,200 $ 1,236 $ 2,233 Operating 0,0% $ - $ - $ - Re lacement 15.0% $ 9,000 $ 9,270 $ 16,748 Total Operating Expenses $31,035 $11,035 $ 53,935 Net Operating Income $28,984 $50,795 $ 57,768 a bE m55 t2 S-2 ro CL E m kD M Q0 L Ir 1 t4 vy, op s 7 LU 12 0 5 e EF ik 45 Z, 1-0 ro CL E m kD M Q0 L Ir 1 9 ww Gs t4 vy, op s 7 LU S a ag iB 9 ww Gs t4 iB tit bP 4 LB t!l LZ 61 2R ;Q ES . . . . < ui p 6 tz r- � 2 3 2 S 5 -3 < < -43 ra -�E 53 QfO 7 2 z 0 t A 9 C uj 9 S 9 ce .2 Lf IO T ff ff ff f? ff I ff ff rr ff, If, ff, It, ff 9 ww Gs - 2 G 13��15 8 CL cm co ED � r 16 W AILS v � rTl C7 "SS} n , v R� zm i I C Oil P-4 v 1. �....�.. � o Y - r y � I 1I mx