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