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HomeMy WebLinkAboutReso 31-2020 (50-54)City of South San Francisco P.O. Box 711 (City Hall, • 400 Grand Avenue) South San Francisco, CA City Council Resolution: RES 31-2020 File Number: 20-54 Enactment Number: RES 31-2020 RESOLUTION APPROVING THE FOURTH AMENDMENT TO THE 418 LINDEN PURCHASE AND SALE AGREEMENT WITH ROEM DEVELOPMENT CORPORATION. WHEREAS, the City of South San Francisco ("Seller") and ROEM Development Corporation ("Buyer") entered into that certain Purchase and Sale Agreement dated November 14, 2017 (the "Agreement") with respect to that certain real property located at 418 Linden Avenue, South San Francisco, California (Assessor's Parcel Numbers 012-314-010) (the "Property"); and, WHEREAS, on March 28, 2018, Seller and Buyer entered into that certain First Amendment to Purchase and Sale Agreement ("First Amendment"), whereby the parties agreed to adjust the deadlines within the Buyer's Schedule of Performance as set forth in Section 5 of the Agreement. On August 22, 2018, Seller and Buyer entered into that certain Second Amendment to Purchase and Sale Agreement ("Second Amendment"), whereby the parties agreed to further adjust the deadlines within Buyer's Schedule of Performance, as set forth therein; and, WHEREAS, on March 21, 2019, Seller and Buyer entered into that certain Third Amendment to Purchase and Sale Agreement ("Third Amendment") based upon Buyer's proposal to modify the number of below market rate units within the Project which was desirable to the Seller and whereby the parties agreed to adjust the deadlines within the Buyer's Schedule of Performance for an additional 12 -month period to allow Buyer to seek additional financing for such proposal; and, WHEREAS, on December 3, 2019, Developer requested a fourth amendment to the Purchase and Sale Agreement ("Fourth Amendment") to further extend the deadlines Buyer's Schedule of Performance contained in the Third Amendment to the Purchase and Sale Agreements for the Project by 200 days in order to secure the necessary affordable housing funding sources; and, WHEREAS, the Seller and Buyer have determined that Buyer's Schedule of Performance does not provide sufficient time to secure the necessary affordable housing funding sources and now desire to amend certain provisions of the Agreement, as amended by the First and Second and Third Amendment, to reflect this understanding, as set forth in the Fourth Amendment, attached hereto as Exhibit A; and, WHEREAS, at the time the PSA was negotiated, Buyer offered Five Hundred Thousand Dollars ($500,000) for the purchase of the property and Seller committed grant funding of One Million Two Hundred and Twenty Five Thousand Dollars ($1,225,000.00) from the City's Affordable Housing Asset Fund to assist in the construction of the affordable housing units ("City Grant"); and, WHEREAS, Buyer has requested that the City Grant be converted to a loan in order to leverage other funding; and, City of South San Francisco Page 1 File Number: 20-54 Enactment Number: RES 31-2020 WHEREAS, Seller has agreed to a One Million and Fifty Thousand Dollars ($1,050,000.00) loan from the City's Affordable Housing Trust Fund; and, WHEREAS, Buyer has increased the number of Below Market Rate ("BMR") units from eight to thirty-six and requested a City donation of the land ("Land Donation"); and, WHEREAS, in order to offset the loss of the Land Donation, Seller has agreed to forgive Five Hundred and Fifty Thousand Dollars ($550,000) with Five Hundred Thousand Dollars ($500,000) being repaid within five years; and, WHEREAS, Buyer and Seller wish to amend the Schedule of Performance that provides additional time to secure the necessary affordable housing funding sources and adjusts the overall Project completion date by 200 days., NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of South San Francisco as follows: 1. The foregoing recitals are true and correct and incorporated herein as part of this Resolution. 2. The Fourth Amendment to the Purchase and Sale Agreement is attached hereto as Exhibit A, and is incorporated herein and hereby approved. 3. The City Manager, or his designee, is authorized to execute the Fourth Amendment and any necessary related documents. 4. The City Manager, or his designee, is authorized take any and all other actions necessary to implement this intent of this Resolution, subject to approval as to form by the City Attorney. Exhibit A: Fourth Amendment to the 418 Linden Purchase and Sale Agreement At a meeting of the City Council on 3/11/2020, a motion was made by Vice Mayor Addiego, seconded by Councilmember Nicolas, that this Resolution be approved. The motion passed. Yes: 4 Mayor Garbarino, Vice Mayor Addiego, Councilmember Nagales, and Councilmember Nicolas No: 1 Councilmember Matsumoto Attest by �4m 117vw 4�4k �osa Govea Acosta, City Clerk City of South San Francisco Page 2 FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT This Fourth Amendment to Purchase and Sale Agreement (this “Fourth Amendment”) is made effective as of _________, 2020 (“Effective Date”) by and between CITY OF SOUTH SAN FRANCISCO, a municipal corporation (“Seller”) and ROEM Development Corporation, a California Corporation (“Buyer”). Seller and Buyer are sometimes individually referred to herein as a “party” and collectively as “the parties.” RECITALS A. Seller and Buyer entered into that certain Purchase and Sale Agreement dated November 14, 2017 (the “Agreement”) with respect to that certain real property located at 418 Linden Avenue, South San Francisco, California (Assessor’s Parcel Numbers 012-314-010) (the “Property”); B. On March 28, 2018, Seller and Buyer entered into that certain First Amendment to Purchase and Sale Agreement (“First Amendment”), whereby the parties agreed to adjust the deadlines within the Buyer’s Schedule of Performance as set forth in Section 5 of the Agreement. On August 22, 2018, Seller and Buyer entered into that certain Second Amendment to Purchase and Sale Agreement (“Second Amendment”), whereby the parties agreed to further adjust the deadlines within Buyer’s Schedule of Performance, as set forth therein. C. On March 21, 2019, Seller and Buyer entered into that certain Third Amendment to Purchase and Sale Agreement (“Third Amendment”) based upon Buyer’s proposal to modify the number of below market rate units within the Project which was desirable to the Seller and whereby the parties agreed to adjust the deadlines within the Buyer’s Schedule of Performance for an additional 12-month period to allow Buyer to seek additional financing for such proposal. D. On December 3, 2019, Developer requested a fourth amendment to the Purchase and Sale Agreement (“Fourth Amendment”) to further extend the deadlines Buyer’s Schedule of Performance contained in the Third Amendment to the Purchase and Sale Agreements for the Project by 200 days in order to secure the necessary affordable housing funding sources. E. The Seller and Buyer have determined that Buyer’s Schedule of Performance does not provide sufficient time to secure the necessary affordable housing funding sources and now desire to amend certain provisions of the Agreement, as amended by the First and Second and Third Amendment, to reflect this understanding, as set forth herein. AGREEMENT NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and incorporating all of the above as FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT – 418 LINDEN AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Page 2 of 8 though set forth in full herein and in consideration of all the recitals, conditions and agreements contained herein, the parties agree to amend the Agreement as follows: AMENDMENT TO AGREEMENT 1. Recitals. The foregoing recitals are true and correct and hereby incorporated herein. 2. Defined Terms. All capitalized terms not defined herein shall have the meanings ascribed to them in the Development Agreement. 3. Amendment to Recital B. Recital B of the Agreement is revised to read as follows, with additions in double underline and deletions in strikethrough: B. The City desires to sell the Linden Property to Buyer for the construction of a high density, 387-unit multi-family apartment building (the “Linden Project”), eight (8) thirty-six (36) units of which are required to be made available at below market rates as further described in the Linden Affordable Housing Agreement substantially in the form attached hereto as Exhibit B (the “AHA”). Development of the Linden Project is described and defined in the Development Agreement between the City and Buyer, substantially in the form attached hereto as Exhibit C (the “DA”). Upon Closing, the AHA and the DA will be recorded in the official records of San Mateo County. 4. Amendment to Recital C. Recital C of the Agreement is revised to read as follows, with additions in double underline and deletions in strikethrough: C. In order to assist in the construction of affordable units, upon Closing, Seller will provide Buyer a grant loan in the amount Five Hundred and Twenty Five Thousand Dollars ($525,000.00) One Million and Fifty Thousand Dollars ($1,050,000.00) from City Affordable Housing In-Lieu Fees, and a grant in the amount of One Million Two Hundred and Twenty Five Thousand ($1,225,000.00) from City Affordable Housing Bond Funds to partially finance the Project on the Linden Property (“City Grants Loan”), as set forth in this Agreement, the Loan Agreement between the City and Buyer substantially in the form attached hereto as Exhibit F (“Loan Agreement”) and the DA. The terms and conditions associated with Buyer’s use of the City Grant Loan after the Closing are set forth in the DA, the Loan Agreement and the AHA. 5. Amendment to Section 2.2. Section 2.2 of the Agreement is revised to read as follows, with additions in double underline and deletions in strikethrough: 2.2 The purchase price for the Property to be paid by Buyer to City is five hundred thousand dollars one dollar ($500,0001.00), payable in all cash at Closing. 6. Amendment to Section 3.2. Section 3.2 of the Agreement is revised to read as follows, with additions in double underline and deletions in strikethrough: FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT – 418 LINDEN AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Page 3 of 8 3.2 Opening of Escrow; Effective Date. Within three (3) business days of the date that Seller has obtained approval of this executed Agreement by the City Council, approval of the sale price by the Oversight Board, and approval of the executed DA and the executed AHA by the City Council, Seller shall open an escrow account with Escrow Holder by depositing this executed Agreement, the executed DA and the executed AHA into Escrow. The date the executed Agreement, DA and AHA are received by Escrow Holder, as established and confirmed by Escrow Holder, shall be deemed the “Effective Date.” By such deposit Escrow Holder is authorized and instructed to act in accordance with the provisions of this Agreement, which Agreement shall constitute Escrow Holder’s escrow instructions. 7. Further Amendment to Section 5.1. Section 5.1 of the Agreement is revised to read as follows, with additions in double underline and deletions in strikethrough: 5.1 Buyer’s Schedule of Performance. Subject to Force Majeure Delays (as defined in Section 8.4) and Buyer and Seller’s closing conditions (as set forth in Section 6.2 and 6.3), Buyer shall complete the following milestones in furtherance of the Closing, in accordance with the following schedule: FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT – 418 LINDEN AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Page 4 of 8 Deadline Milestone (a) May 15, 2018 Buyer shall have completed 50% of the Construction Drawings and submitted the Financial Proforma to Seller (Completed) (b) July 14, 2018 Buyer shall have completed all Final Plans and submitted 100% construction drawings to the City for building permits, and submitted an Updated Proforma to Seller (Completed) (c) June 18, 2020 November 30, 2019 Buyer shall have secured Construction Financing and executed a contract with a general contractor for demolition and construction of the Project in accordance with the final plans (d) By July 8, 2020 December 21, 2019 Within 10 days from satisfaction of all contingencies on December 11, 2019 Buyer and Seller shall have satisfied (or waived in writing) all contingencies to Closing set forth in this Agreement, and be prepared to Close Escrow 8. Amendment to Section 6.1. Section 6.1 of the Agreement is revised to read as follows, with additions in double underline and deletions in strikethrough: 6.1 Closing. The close of escrow (the “Closing” or “Close of Escrow”) shall be deemed to occur on the date the Grant Deed is recorded and Buyer’s funds are released to Seller and the City Grants Loan are is released to Buyer, which shall occur within ten (10) days of the date that all of Buyer’s contingencies to Closing set forth in Section 6.2 and Seller’s contingencies to Closing set forth in Section 6.3 have been satisfied, or waived in writing, or such other date that the Parties agree in writing, each in their sole discretion. FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT – 418 LINDEN AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Page 5 of 8 9. Amendment to Section 6.2(e). Section 6.1(e) of the Agreement is revised to read as follows, with additions in double underline and deletions in strikethrough: 6.2 (e) Seller has deposited the City Grants Loan into Escrow with instructions to release the City Grants Loan to Buyer, only upon the Closing. 10. Amendment to Section 6.4.1.1. Section 6.4.1.1 of the Agreement is revised to read as follows, with additions in double underline and deletions in strikethrough: 6.4.1.1 Deliveries by Seller. At or before Closing, Seller shall deposit the following into escrow: (i) one (1) original executed and acknowledged Grant Deed; (ii) one (1) duly executed non-foreign certification for the Property in accordance with the requirements of Section 1445 of the Internal Revenue Code of 1986, as amended; (iii) one (1) duly executed California Form 593-W Certificate for the Property or comparable non- foreign person affidavit to satisfy the requirements of California Revenue and Taxation Code Section 18805(b) and 26131; (iv) title to all Bridging Documents; and (v) funds in the total amount of One Million Seven Hundred Fifty Thousand Dollars ($1,7050,000.00) for the City Grants Loan. 11. Amendment to Section 6.4.1.2. Section 6.4.1.2 of the Agreement is revised to read as follows, with additions in double underline and deletions in strikethrough: 6.4.1.2 Condition to disbursement of City GrantsLoan. City’s obligation to provide Seller with City Grants Loan in the total amount of One Million Seven Hundred Fifty Thousand Dollars ($1,7050,000.00) at the Closing Date is conditioned upon Close of Escrow. If the Closing does not occur, for any reason whatsoever, the City has no obligation to deliver the City Grants Loan to Buyer. 12. Amendment to Section 6.4.3(d) Section 6.4.3(d) of the Agreement is revised to read as follows, with additions in double underline and deletions in strikethrough: 6.4.3(d) Disburse to Buyer the City Grants Loan. 13. Amendment to Section 7.1(b). Section 7.1(b) of the Agreement is revised to read as follows, with additions in double underline and deletions in strikethrough: 7.1(b) Encumbrances. Other than the approval and recordation of the DA, the Loan Agreement, Deed of Trust, Note and AHA at Closing, Seller has not alienated, encumbered, transferred, mortgaged, assigned, pledged, or otherwise conveyed its interest in the Property or any portion thereof, nor entered into any Agreement to do so, and there are no liens, encumbrances, mortgages, covenants, conditions, reservations, restrictions, easements or other matters affecting the Property, except for the Permitted Exceptions. Seller will not, directly or indirectly, alienate, encumber, transfer, mortgage, assign, pledge or otherwise convey its interest prior to the Close of Escrow, as long as this Agreement is in force. FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT – 418 LINDEN AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Page 6 of 8 14. Amendment to Section 7.3(c). Section 7.3(c) of the Agreement is revised to read as follows, with additions in double underline and deletions in strikethrough: 7.3(c). Buyer accepts and acknowledges that after the Closing, the Property will be subject to the DA, Loan Agreement, Deed of Trust, Note and AHA, which will be recorded against the Property at Closing. GENERAL PROVISIONS 1. No Interpretation Against Drafter. Each party has received independent legal advice from its attorneys with respect to the advisability of executing this Fourth Amendment and the meaning of the provisions hereof. The provisions of this Fourth Amendment shall be construed as to the fair meaning and not for or against any party based upon any attribution of such party as the sole source of the language in question. 2. Effect of Fourth Amendment. Except as expressly modified by this Fourth Amendment, the Agreement shall continue in full force and effect according to its terms, and Buyer and Seller hereby ratify and affirm all their respective rights and obligations under the Agreement, including but not limited to Buyer’s indemnification obligations as set forth in Sections 11 and 15.5 of the Agreement. In the event of any conflict between the Fourth Amendment or the Agreement, the provisions of this Fourth Amendment shall govern. 3. Binding Agreement. This Fourth Amendment shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors in interest, and assigns of each of the parties hereto. Any reference in this Fourth Amendment to a specifically named party shall be deemed to apply to any successor, administrator, executor, or assign of such party who has acquired an interest in compliance with the terms of this Fourth Amendment or under law. 4. Recordation. The City shall record a copy of this Fourth Amendment together with recordation of the Agreement. 5. Counterparts. This Fourth Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, when taken together, shall constitute the same document. 6. California Law. This Fourth Amendment shall be governed by and interpreted in accordance with the laws of the State of California. Any action to enforce or interpret this Agreement shall be filed and heard in the Superior Court of San Mateo County, California. 7. Invalidity. Any provision of this Fourth Amendment that is determined by a court of competent jurisdiction to be invalid or unenforceable shall be deemed severed from this Fourth Amendment, and the remaining provisions shall remain in full force and effect as if the invalid or unenforceable provision had not been a part hereof FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT – 418 LINDEN AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Page 7 of 8 8. Headings. The headings used in this Fourth Amendment are for convenience only and shall be disregarded in interpreting the substantive provisions of this Fourth Amendment. [SIGNATURES ON THE FOLLOWING PAGE] FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT – 418 LINDEN AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Page 8 of 8 IN WITNESS WHEREOF, the parties have executed this Fourth Amendment as of the Effective Date. BUYER: ROEM Development Corporation, a California corporation By: ______________________ Name: Alex Sanchez Its Executive Vice President SELLER: CITY OF SOUTH SAN FRANCISCO, a municipal corporation By: __________________________ Name: Charles Michael Futrell Its City Manager The Title Company has executed this Fourth Amendment to acknowledge its agreement to act in accordance with the terms of this Fourth Amendment. Chicago Title Insurance Company By: Name: Sherri Keller Title: Escrow Officer 3463896.1