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HomeMy WebLinkAboutReso 46-2016 (16-306)File Number: 16 -306 City of South San Francisco Resolution: RES 46 -2016 P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA Enactment Number: RES 46 -2016 RESOLUTION AUTHORIZING THE CITY MANAGER TO ENTER INTO AN EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT (ENRA) BETWEEN THE CITY OF SOUTH SAN FRANCISCO AND MIDPEN HOUSING FOR A POTENTIAL DISPOSITION AND DEVELOPMENT AGREEMENT AND GROUND LEASE AND DEVELOPMENT OF AFFORDABLE WORKFORCE HOUSING AT THE CITY OWNED MILLER/MAPLE PARKING LOT (APN 012311330). WHEREAS, the City of South San Francisco (City) is the owner of certain real property (the Property) located in the City, known as County Assessor's Parcel Number 012- 311 -330; and WHEREAS, the City is interested in conveying an interest in the Property to MidPen Housing (Developer), contingent upon Developer preparing all appropriate environmental review documents, and applying for land use entitlements from the City and if such entitlements are granted, constructing a development of affordable residential units on the Property; and, WHEREAS, Developer anticipates expending funds to prepare environmental review documents, architectural and design drawings and conduct certain studies that are needed to assess the feasibility of the Project and seek land use entitlements and therefore, requires a grant of exclusive negotiating rights in order to be willing to make such expenditures; and WHEREAS, City desires to grant Developer the exclusive right to negotiate with City with regard to development of the Property; and WHEREAS, staff has prepared an Exclusive Negotiation Rights Agreement (Agreement) with Developer to reflect the terms and conditions of such exclusive collaboration and negotiation, attached hereto and incorporated herein. 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. City of South San Francisco Page 1 Printed on 4129116 File Number: 16 -306 Enactment Number: RES 46 -2016 2. The Agreement, substantially in the form attached hereto, is hereby approved, and the City Manager or his designee is hereby authorized to execute it on behalf of the City; to make revisions to the Agreement, 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. At a meeting of the Joint Special Meeting City Council and Successor Agency on 4/27/2016, a motion was made by Pradeep Gupta, seconded by Liza Normandy, that this Resolution be approved. The motion passed. Yes: 4 Addiego, Normandy, Matsumoto, and Gupta Absent: 1 Garbarino r Attest ' ist •Martin i City of South San Francisco Page 2 Printer! on 4129116 EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT (MILLER/MAPLE AFFORDABLE WORKFORCE HOUSING DEVELOPMENT) This Exclusive Negotiating Rights Agreement (this "Agreement ") is entered into as of this _ day of April, 2016 (the "Effective Date "), by and between the City of South San Francisco, a municipal corporation (the "City "), and MidPen Housing Corporation, a nonprofit public benefit corporation (the "Master Developer "), on the basis of the following facts: RECITALS A. On December 22, 2016 the City of South San Francisco (the "City ") a issued a Request for Qualifications ( "RFC ") to select a developer to develop a mixed - income, affordable and workforce housing development (the "Development ") on certain real property, APN 012311330, a parking lot located on the corner of Miller Avenue and Maple Avenue, as more particularly described in Exhibit A to this Agreement (the "Site "). B. Through a competitive process, the Master Developer was selected as the developer of the Site. C. The purpose of this Agreement is to establish procedures and standards for the negotiation by the City and the Master Developer of a disposition and development agreement (a "DDA ") pursuant to which, among other matters: (1) if specified preconditions are satisfied, the City would ground lease the Site to the Master Developer for a rental rate to be negotiated that would enable a financially feasible development; (2) the scope and terms of any affordability restrictions, applicability of any leasing preferences and the unit type and unit mix for the Development, (3) the terms, if any, under which the City may provide financial assistance to the Master Developer for the acquisition of a leasehold interest in the Site, and construction of the Development (the "City Assistance "); and (4) the Master Developer would develop the Development on the Site. As more fully set forth in Section 3.1, the Master Developer and City acknowledge and agree that this Agreement in itself does not obligate any party to acquire or convey any property, does not grant the Master Developer the right to develop the Development, and does not obligate the Master Developer or the City to any activities or costs to develop the Development, except for the preliminary analysis and negotiations contemplated by this Agreement. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties mutually agree as follows: ARTICLE 1. EXCLUSIVE NEGOTIATIONS Section 1.1 Good Faith Negotiations. The City and the Master Developer shall negotiate diligently and in good faith, during the Negotiating Period described in Section 1.2, and subject to the terms and conditions of this Agreement, both City and Master Developer shall proceed diligently and in good faith regarding negotiation and documentation of the potential terms, conditions, covenants, restrictions and agreements of a DDA between them. City and Master Developer shall generally cooperate with each other and supply such documents and information as may be reasonably requested by the other to facilitate the conduct of the negotiations. During the Negotiating Period, the parties shall use good faith efforts to accomplish the respective tasks outlined in Article 2 to facilitate the negotiation of a mutually satisfactory DDA and shall exercise reasonable efforts to complete discussions relating to the terms, conditions, covenants, restrictions or agreements of a DDA, all as may be mutually acceptable to both City and Master Developer. The exact terms and conditions of a DDA, if any, shall be determined during the course of these negotiations. During the Negotiation Period, Master Developer shall also undertake and use commercially reasonable efforts to complete the actions described in the Schedule of Performance attached to this Agreement as Exhibit B (the "Schedule of Performance ") within the time period specified for each such action in the Schedule of Performance. During the Negotiation Period, the Schedule of Performance may be amended with the mutual consent of the City and Master Developer. Among the issues to be addressed in the negotiations are: (i) the terms of the ground lease of the Site to the Master Developer (the "Ground Lease "), (ii) the physical and land title conditions of the Site and remediation of any adverse conditions, (iii) the type of entitlements necessary for the Development, (iv) the design, density, mix and phasing of the Development; (v) the development schedule for the Development, and (vi) financing of the Development (including, without limitation, the terms of the City Assistance). Section 1.2 Negotiating Period. The negotiating period under this Agreement is 90 days, commencing on the Effective Date, subject to an additional 45 -day extension as provided below and as provided in Section 2.2. The Negotiating Period may be extended for an additional 45 -day period by the written mutual agreement of the parties, as provided below (the "Negotiating Period "). The City Manager has the authority to agree to such an extension on behalf of the City if, in the City Manager's judgment, sufficient progress toward execution of a mutually acceptable DDA has been made during the initial 45 day negotiating period to merit such extension, and shall be extended as reasonably needed for preparation of supplemental environmental documentation that may be required prior to approval of the DDA. If a DDA has not been executed by the City and the Master Developer by the expiration of the Negotiating Period, then this Agreement shall terminate and neither party shall have any further rights or obligations under this Agreement. If a DDA is executed by the City and the Master Developer then, upon such execution, this Agreement shall terminate, and all rights and obligations of the parties shall be as set forth in the executed DDA. Section 1.3 Exclusive Negotiations. During the Negotiating Period the City shall not negotiate with any entity, other than the Master Developer, regarding development of the Site, or solicit or entertain bids or proposals to do so. Section 1.4 Identification of Master Developer and City Reoresentatives. The Master Developer's representative to negotiate the DDA with the City is Jan Lindenthal. The City representative to negotiate the DDA is Mike Futrell, City Manager. Either party may designate a substitute representative by giving written notice to the other party. ARTICLE 2. NEGOTIATION TASKS Section 2.1 Overview. To facilitate negotiation of the DDA, the parties shall use reasonable good faith efforts to accomplish the tasks set forth in this Article 2 in a timeframe that will support negotiation and execution of a mutually acceptable DDA prior to the expiration of the Negotiating Period. Section 2.2 Financing and Costs of Development. Within the time set forth in the Schedule of Performance, the Master Developer will provide the City with a preliminary financial analysis for the construction of the Development. The financial analysis submitted shall be refined by the parties during the Negotiating Period and otherwise as provided in the DDA. Section 2.3 Terms of Ground Lease. The City and the Master Developer shall seek to agree upon the terms of the Ground Lease. Without limiting the generality of the foregoing, and among other terms, the Ground Lease shall include each of the following terms: (a) The parties to the Ground Lease shall be City, as landlord, and Master Developer, or its affiliate, as tenant. (b) The term of the Ground Lease shall (i) commence on the date the Ground Lease is executed (the "Commencement Date "), which is date is anticipated to be the closing of the construction financing for the Development; and (ii) expire on the term set forth on the Ground Lease (the "Termination Date "). (c) The terms for the payment of rent under the Ground Lease. (d) The Ground Lease shall provide that City will own fee title to the land comprising the Site, and tenant, will own fee title to all improvements constructed or otherwise located on the Site. (e) The Ground Lease will permit tenant to encumber its leasehold interest in the Site to secure any loans deemed necessary or desirable by tenant and will include mortgagee protection provisions required by tenant's lender. Section 2.4 City Assistance. The City and the Master Developer shall negotiate the terms of the City Assistance, if any, which may include an acquisition component and a construction component. Section 2.5 Site and Conceptual Plans. Within the time set forth in the Schedule of Performance, the Master Developer shall submit to the City conceptual plans for the development of the entire Site ( "Conceptual Plans "). The City shall review and comment on the Conceptual Plans in a timely manner. Section 2.6 Schedule of Performance. The Master Developer and the City agree to negotiate an amended Schedule of Performance to be incorporated into the DDA, which shall include but not be limited to: the dates for obtaining Planning Approvals and financing commitments for the Development, and the dates for the commencement and completion of construction of the Development (including any proposed phasing thereof). Section 2.7 Due Diligence. During the Negotiating Period the Master Developer shall conduct due diligence activities, including but not limited to planning, soils report, hazardous materials report, financial feasibility and title adequacy. (a) Physical Adequacy Determination. The Master Developer shall conduct physical due diligence activities to determine whether the Site is suitable for the Development, taking into account the geotechnical and soils conditions, the presence or absence of toxic or other hazardous materials, the massing of the proposed Development improvements and the parking requirements imposed on developments of this type and the other environmental and regulatory factors that the Master Developer deems relevant. If, in the Master Developer's judgment based on such investigations and analyses, the Site is not suitable for development, the Master Developer may notify the City in writing prior to the expiration of the Negotiating Period of its determination (an "Unsuitability Notice "). Upon delivery of an Unsuitability Notice by the Master Developer, this Agreement shall be terminated without further action of any party, and thereafter no party shall have any further duties, obligations, rights, or liabilities under this Agreement. The parties acknowledge that any executed DDA shall provide a similar opportunity for the Master Developer to determine the physical suitability of the Site. (b) Title Adequacy Determination. Within thirty (30) days following the Effective Date, the City shall cause a reputable title company to issue a Preliminary Title Report (the "Report ") on the Site to the Master Developer. If the Master Developer objects to any exception appearing on the Report or should any title exception arise after the date of the Report, the Master Developer may object to such exception, provided such objection is made to the City in writing on or before the expiration of the Negotiating Period. If the Master Developer objects to any exception to title, the City, within thirty (30) days of receipt of Master Developer's objection shall notify the Master Developer in writing whether City elects to (1) cause the exception to be removed of record, (2) obtain a commitment from the title company for an appropriate endorsement to the policy of title insurance to be issued to the Master Developer, insuring against the objectionable exception, or (3) terminate this Agreement unless the Master Developer elects to take title subject to such exception. If any party elects to terminate this Agreement pursuant to this Section 2.8(b), no party shall thereafter have any obligations to or rights against the others hereunder. The parties acknowledge that any executed DDA shall provide a similar opportunity for the Master Developer to determine the title adequacy of the Site. Section 2.8 Reports. (a) The Master Developer shall provide the City with copies of all reports, studies, analyses, correspondence and similar documents, but excluding confidential or proprietary information, prepared or commissioned by the Master Developer with respect to this Agreement and the Development. The Master Developer makes no representation or warranty as to the accuracy or completeness of any such materials. (b) The City shall provide the Master Developer with copies of all reports, studies, analyses, correspondence and similar documents prepared or commissioned by the City with respect to this Agreement and the Development, promptly following execution of this Agreement with respect to documents then in its possession or under its reasonable control, and promptly upon their completion with respect to any subsequently prepared documents. Section 2.9 Environmental Review. During the Negotiating Period the City and the Master Developer shall review existing environmental documentation to ascertain whether it adequately addresses the - Development. Based on that analysis the City shall prepare or cause to be prepared the appropriate environmental documentation required by the California Environmental Quality Act ( "CEOA ") for consideration of approval of the DDA and any Planning Approvals required for the Development; provided, that nothing in this Agreement shall be construed to compel the City to approve or make any particular findings with respect to such CEQA documentation. The Master Developer shall provide such information about the Development as may be required to enable the City to prepare or cause preparation and consideration of any CEQA - required document, and shall otherwise generally cooperate with the City to complete this task. Section 2.10 Progress ss Reports. From time to time as reasonably agreed upon by the parties, each party shall make oral or written progress reports advising the other party on studies being made and matters being evaluated by the reporting party with respect to this Agreement and the Development within ten (10) days of a request from the other party. ARTICLE 3. GENERAL PROVISIONS Section 3.1 Limitation on Effect of Agreement. This Agreement shall not obligate either the City or the Master Developer to enter into a DDA or to enter into any particular DDA. By execution of this Agreement, the City is not committing itself to or agreeing to undertake acquisition, disposition, or exercise of control over any parcels in the Site. Execution of this Agreement by the City is merely an agreement to conduct a period of exclusive negotiations in accordance with the terms hereof, reserving for subsequent City action the final discretion and approval regarding the execution of a DDA and all proceedings and decisions in connection therewith. Any DDA resulting from negotiations pursuant to this Agreement shall become effective only if and after such DDA has been considered and approved by the City and executed by duly authorized representatives of the City and the Master Developer. Until and unless a DDA is signed by the Master Developer, approved by the City and executed by the City, no agreement drafts, actions, deliverables or communications arising from the performance of this Agreement shall impose any legally binding obligation on either party to enter into or support entering into a DDA or be used as evidence of any oral or implied agreement by either party to enter into any other legally binding document. Section 3.2 Notices. Formal notices, demands and communications (other than day to day routine communications) between the City and the Master Developer shall be sufficiently given if, and shall not be deemed given unless: (i) dispatched by certified mail, postage prepaid, return receipt requested, (ii) sent by express delivery or overnight courier service with a delivery receipt, (iii) personally delivered with a delivery receipt, or (iv) sent by facsimile with a copy delivered by one of the previous three methods, to the office of the parties shown as follows, or such other address as the parties may designate in writing from time to time: City: City of South San Francisco 400 Grand Avenue South San Francisco, CA 94080 Attn: Mike Futrell Master Developer: MidPen Housing Corporation 303 Vintage Park Drive, Suite 250 Foster City, CA 94404 Attn: Jan Lindenthal Such written notices, demands and communications shall be effective on the date shown on the delivery receipt as the date delivered or the date on which delivery was refused. Section 3.3 Rieht of Entry. The Master Developer and its consultants shall have the right to enter upon the Site during normal business hours to conduct investigations in accordance with this Agreement. In connection with such entry and investigation, the Master Developer shall: (i) give the City or its designee reasonable advance notice; (ii) repair and restore any damage it may cause; (iii) carry liability insurance covering the right of entry naming the City as an additional insured; and (iv) deliver to the City, within ten (10) days of receipt thereof, a complete copy of any investigation, test, report or study which the Master Developer conducts, or causes to be conducted, with respect to the Site. Section 3.4 Costs and Expenses. Except as explicitly set forth in this Agreement, each party shall be responsible for its own costs and expenses in connection with any activities and negotiations undertaken in connection with this Agreement, and the performance of each party's obligations under this Agreement. 0 Section 3.5 No Commissions. Each party represents to the other that is has not retained the services of any broker, agent or finder with respect to the Site or in connection with any matters relating to this transaction of the subject discussions, and agrees to hold the other party harmless from and against any claim for commission, fee, or other remuneration by any broker, agent, or finder under any claimed retainer for services with respect thereto. The City shall not be liable for any real estate commissions or brokerage fees that may arise from this Agreement or any DDA that may result from this Agreement, unless the City retains a broker, agent or finder. Section 3.6 Defaults and Remedies. (a) Default. Failure by either Party to negotiate in good faith as provided in this Agreement shall constitute an event of default under this Agreement. The non - defaulting Party shall give written notice of a default to the defaulting Party, specifying the nature of the default and the required action to cure the default. If a default remains uncured fifteen (15) days after receipt by the defaulting Party of such notice, the non - defaulting Party may exercise the remedies set forth in subsection (b). (b) Remedies. (1) In the event of an uncured default by the City, the Master Developer may elect the following remedies: (i) terminate this Agreement} in which case following such termination, neither Party shall have any further right, remedy or obligation under this Agreement; or (ii) seek specific performance of the exclusive negotiating obligations of the City under this Agreement. Master Developer's remedy of specific performance shall mean only that if the City breaches its duty of negotiating in good faith or negotiating exclusively with Master Developer, that Master Developer may seek appropriate order requiring the City to cease or refrain from negotiating with any such third party until the end of the Negotiating Period. (2) In the event of an uncured default by the Master Developer, the City's sole remedy shall be to terminate this Agreement. Following such termination, neither Party shall have any right, remedy or obligation under this Agreement Except as expressly provided above, no Party shall have any liability to any other Party for damages or otherwise for any default, nor shall any Party have any other claims with respect to performance under this Agreement. Each Party specifically waives and releases any such rights or claims it may otherwise have at law or in equity. Section 3.7 Attorneys' Fees. The prevailing party in any action to enforce this Agreement shall be entitled to recover attorneys' fees and costs from the other party. Section 3.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Section 3.9 Entire Agreement. This Agreement constitutes the entire agreement of the parties regarding the subject matters of this Agreement. Section 3. 10 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same agreement. Section 3.11 Assignment. The Master Developer may not transfer or assign any or all of its rights or obligations hereunder except with the prior written consent of the City, which consent shall be granted or withheld in the City's reasonable discretion, and any such attempted transfer or assignment without the prior written consent of City shall be void. Notwithstanding the foregoing, Master Developer shall have the right to assign its rights and obligations under this Agreement to an affiliated entity, pursuant to a form of assignment agreement approved by the City. Section 3.12 Non - Recourse to Agents. No member, official, employee, agent, or consultant of any party to this Agreement shall be personally liable to any other party, or any successor in interest or person claiming by, through or under any party, in the event of any default or breach, or for or on account of any amount which may be or become due, or in any claim, cause or obligation whatsoever under the terms of this Agreement. Section 3.13 No Third Party Beneficiaries. This Agreement is made and entered into solely for the benefit of the City and the Master Developer and no other person shall have any right of action under or by reason of this Agreement. Section 3.14 Actions by the City. Whenever this Agreement calls for or permits the approval, consent, authorization or waiver of the City, the approval, consent, authorization, or waiver of the City Manager of the City shall constitute the approval, consent, authorization or waiver of the City without further action of the City Council. Section 3.15 Relationship of the Parties. The subject of this Agreement is a private development with neither party acting as the agent of the other party in any respect. None of the provisions in this Agreement shall be deemed to render the City a partner in the Master Developer's business, or joint venturer or member in any joint enterprise with the Master Developer. Section 3.16 Cooperation. In connection with this Agreement, the Master Developer and the City shall reasonably cooperate with one another to achieve the objectives and purposes of this Agreement. In so doing, the Master Developer and the City shall each refrain from doing anything that would render its performance under this Agreement impossible and each shall do everything that this Agreement contemplates that the party shall do to accomplish the objectives and purposes of this Agreement. IN WITNESS WHEREOF, this Agreement has been executed by the parties on the date first above written. MASTER DEVELOPER: MIDPEN HOUSING CORPORATION By: Jan Lindenthal, Vice President CITY: CITY OF SOUTH SAN FRANCISCO By: Mike Futrell, City Manager EXHIBIT A SITE DESCRIPTION The land referred to is situated in the County of San Mateo, City of South San Francisco, State of California, and is described as follows: Lots 12 and 13 in Block 126, as delineated upon that certain Map entitled "South San Francisco San Mateo Co. Cal. Plat No. 1 ", filed for record in the Office of the Recorder of the County of San Mateo, State of California, on March 1st, 1892 in Liber "B" of Maps, at Page 6, and a copy thereof in the Liber 2 of Maps at page 52. A.P.N. 012- 311 -330 -0 A -1 EXHIBIT B SCHEDULE OF PERFORMANCE City Council Meeting — ENRA Approved by City Council & April 27, 2016 Signed by both parties Expiration of 90 Day Exclusive Negotiating Period for DDA & July 26, 2016 Ground Lease A -2