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HomeMy WebLinkAboutReso 30-2020 (20-22)City of South San Francisco P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA City Council Resolution: RES 30-2020 File Number: 20-22 Enactment Number: RES 30-2020 RESOLUTION APPROVING THE FOURTH AMENDMENT TO THE DEVELOPMENT AGREEMENT FOR 201-219 GRAND AVENUE AND 418 LINDEN AVENUE PROPERTIES WITH ROEM DEVELOPMENT CORPORATION. WHEREAS, the City of South San Francisco ("City") is the owner of certain real property located in the City of South San Francisco, California, with the address of 418 Linden Avenue, known as County Assessor's Parcel Numbers ("APN") 012-314-010 ("418 Linden"); and WHEREAS, the City is also the owner of former Redevelopment Agency property located in the City of South San Francisco, California, with the address of 201-219 Grand Avenue, known as APNs 012-316-100, 012-316-110, 012-316-080 and 012-316-090 (collectively, "201 Grand Avenue"); and WHEREAS, in December 2015 the City approved entitlements for a residential project at 418 Linden Avenue and a mixed-use project at 201 Grand Avenue ("Project"); and, WHEREAS, in December 2016, following a competitive process, the City and Agency selected a developer, ROEM Development Corporation ("Developer"), to develop the 418 Linden Avenue and 201 Grand Avenue Projects; and, WHEREAS, pursuant to City Council Ordinance No. 1541-2017 ("DA Ordinance"), the City entered into a Development Agreement between City and Developer ("Development Agreement") for the development of a residential project at 418 Linden Avenue and a mixed-use project at 201-219 Grand Avenue (together, the "Project"). WHEREAS, on March 28, 2018, Developer and City entered into that certain First Administrative Amendment to Development Agreement ("First Amendment"), whereby the parties agreed to adjust the deadlines within the Performance Schedule contained within the Development Agreement by 120 days in order to provide sufficient time to undertake the complex demolition presented at 201-219 Grand Avenue. On August 23, 2018, Developer and City entered into a Second Amendment to the Development Agreement ("Second Amendment") to further adjust the deadlines within the Schedule of Performance contained in the First Amendment to the Development Agreement and First Amendment to the Purchase and Sale Agreements for the Project by 90 days. WHEREAS, on March 21, 2019, Developer and City entered into that certain Third Amendment to the Development Agreement ("Third Amendment"), whereby the parties agreed to adjust the deadlines within the Performance Schedule contained in the Development Agreement in order to secure the necessary affordable housing funding sources and modify the number of below market rate units within the Project to City of South San Francisco Page 1 File Number. 20-22 Enactment Number. RES 30-2020 render the Project one -hundred percent (100%) affordable conditioned upon Developer's completion of certain pre -construction activities, specifically causing improvements and structures located on the Grand Property to be demolished. The parties agreement regarding Developer's completion of pre -construction activities was set forth in that certain Pre -Construction Activity Right of Access Agreement ("Pre -Construction Agreement") attached as Exhibit A to the Third Amendment which Exhibit C thereto governed the Schedule of Performance of such pre -construction activities. WHEREAS, because the additional time requested adjusted the overall Project completion date by one year, the City determined that the Third Amendment required notice and public hearing, and approval by ordinance pursuant to Section 7.2(b) of the Development Agreement. WHEREAS, therefore, on January 13, 2019, following a duly noticed public hearing, the Planning Commission adopted Resolution No. 2841-2019 recommending that the City Council approve the Third Amendment. With the Planning Commission's recommendation set forth in its Resolution No. 2841-2019, the City Council, after conducting a duly noticed public hearing, found that the Third Amendment was consistent with the General Plan and Zoning Ordinance and conducted all necessary proceedings in accordance with the City's rules and regulations for the approval of the Third Amendment. In accordance with SSFMC section 19.60.120, the City Council, at a duly noticed public hearing, adopted Ordinance No. 1571-2019, approving and authorizing the execution of the Third Amendment. WHEREAS, on October 1, 2019, Developer requested an extension of the deadline to demolish the existing buildings on 201-219 Grand Avenue by September 11, 2019 as required by the Schedule of Performance contained in the Pre -Construction Agreement. On October 10, 2019, the City conditionally approved Developer's request to extend this deadline to April, 2020 via a response letter from the City Manager. WHEREAS, in particular, the City conditioned its approval on Developer's completion of accomplish certain tasks by November 11, 2019. In conformance with the City's conditional approval, Developer has now completed the tasks identified in the City's October 10, 2019 letter approving the extension of the demolish deadline to April, 2020. The proposed amendment to Exhibit E to the Development Agreement set forth herein reflects the City's prior approval of modification to this deadline. WHEREAS, on December 3, 2019, Developer requested a fourth amendment to the Development Agreement ("Fourth Amendment") to further extend the deadlines within the Schedule of Performance contained in the Third Amendment to the Development Agreement and Third Amendment to the Purchase and Sale Agreements for the Project by 200 days in order to secure the necessary affordable housing funding sources. WHEREAS, the City and the Developer have determined that the Schedule of Performance attached to the Third Amendment as Exhibit E does not provide sufficient time to secure the necessary affordable housing funding sources_ WHEREAS, the additional time requested in the Fourth Amendment to secure the necessary affordable housing funding sources adjusts the overall Project completion date by 200 days. Pursuant to Section 7.2 of City of South San Francisco Page 2 File Number: 20-22 Enactment Number: RES 30-2020 the Development Agreement, the City has determined that the amendment is minor and does not substantially affect the existing term and schedule of performance, and the Fourth Amendment does not require notice or public hearing and may be approved by City resolution. NOW THEREFORE IT BE RESOLVED that the City Council of the City of South San Francisco does hereby resolve as follows: 1. Determines that the recitals are true and correct. 2. Approves the Fourth Amendment to the Development Agreement for 201-219 Grand Avenue and 418 Linden Avenue properties with ROEM Development Corporation, attached hereto as Exhibit A. Exhibit A: Fourth Amendment to the Development Agreement between ROEM Development Corporation and the City of South San Francisco At a meeting of the City Council on 3/11/2020, a motion was made by Councilmember Nagales, 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 Rosa Govea Acosta, City Clerk City of South San Francisco Page 3 Recording Requested by and when Recorded, return to: City of South San Francisco 400 Grand Ave South San Francisco, CA 94080 EXEMPT FROM RECORDING FEES PER GOVERNMENT CODE §§6103, 27383 (SPACE ABOVE THIS LINE RESERVED FOR RECORDER’S USE) FOURTH AMENDMENT TO DEVELOPMENT AGREEMENT This Fourth Amendment to Development Agreement (“Fourth Amendment”) is entered into by and between ROEM Development Corporation, a California corporation (“Developer”) and the CITY OF SOUTH SAN FRANCISCO, a municipal corporation (“City”) on this _____ day of _________________, 2020. RECITALS A. Pursuant to City Council Ordinance No. 1541-2017 (“DA Ordinance”), the City entered into a Development Agreement between City and Developer (“Development Agreement”) for the development of a residential project at 418 Linden Avenue and a mixed-use project at 201-219 Grand Avenue (together, the “Project”). B. On March 28, 2018, Developer and City entered into that certain First Administrative Amendment to Development Agreement (“First Amendment”), whereby the parties agreed to adjust the deadlines within the Performance Schedule contained within the Development Agreement by 120 days in order to provide sufficient time to undertake the complex demolition presented at 201-219 Grand Avenue. On August 23, 2018, Developer and City entered into a Second Amendment to the Development Agreement (“Second Amendment”) to further adjust the deadlines within the Schedule of Performance contained in the First Amendment to the Development Agreement and First Amendment to the Purchase and Sale Agreements for the Project by 90 days. C. On March 21, 2019, Developer and City entered into that certain Third Amendment to the Development Agreement (“Third Amendment”), whereby the parties agreed to adjust the deadlines within the Performance Schedule contained in the Development Agreement in order to secure the necessary affordable housing funding sources and modify the number of below market rate units within the Project to render the Project one-hundred percent (100%) affordable conditioned upon Developer’s completion of certain pre-construction activities, specifically causing improvements and structures located on the Grand Property to be demolished. The parties agreement regarding Developer’s completion of pre-construction activities was set forth in that certain Pre-Construction Activity Right of Access Agreement (“Pre-Construction Agreement”) attached as Exhibit A to the Third Amendment which Exhibit C thereto governed the Schedule of Performance of such pre- construction activities. D. Because the additional time requested adjusted the overall Project completion date by one year, the City determined that the Third Amendment required notice and public hearing, and approval by ordinance pursuant to Section 7.2(b) of the Development Agreement. E. Therefore, on January 13, 2019, following a duly noticed public hearing, the Planning Commission adopted Resolution No. 2841-2019 recommending that the City Council approve the Third Amendment. With the Planning Commission’s recommendation set forth in its Resolution No. 2841-2019, the City Council, after conducting a duly noticed public hearing, found that the Third Amendment was consistent with the General Plan and Zoning Ordinance and conducted all necessary proceedings in accordance with the City’s rules and regulations for the approval of the Third Amendment. In accordance with SSFMC section 19.60.120, the City Council, at a duly noticed public hearing, adopted Ordinance No. 1571-2019, approving and authorizing the execution of the Third Amendment. F. On October 1, 2019, Developer requested an extension of the deadline to demolish the existing buildings on 201-219 Grand Avenue by September 11, 2019 as required by the Schedule of Performance contained in the Pre-Construction Agreement. On October 10, 2019, the City conditionally approved Developer’s request to extend this deadline to April, 2020 via a response letter from the City Manager. G. In particular, the City conditioned its approval on Developer’s completion of accomplish certain tasks by November 11, 2019. In conformance with the City’s conditional approval, Developer has now completed the tasks identified in the City’s October 10, 2019 letter approving the extension of the demolish deadline to April, 2020. The proposed amendment to Exhibit E to the Development Agreement set forth herein reflects the City’s prior approval of modification to this deadline. H. On December 3, 2019, Developer requested a fourth amendment to the Development Agreement (“Fourth Amendment”) to further extend the deadlines within the Schedule of Performance contained in the Third Amendment to the Development Agreement and Third Amendment to the Purchase and Sale Agreements for the Project by 200 days in order to secure the necessary affordable housing funding sources. I. The City and the Developer have determined that the Schedule of Performance attached to the Third Amendment as Exhibit E does not provide sufficient time to secure the necessary affordable housing funding sources. J. The additional time requested in the Fourth Amendment to secure the necessary affordable housing funding sources adjusts the overall Project completion date by 200 days. Pursuant to Section 7.2 of the Development Agreement, the City has determined that the amendment is minor and does not substantially affect the existing term and schedule of performance, and the Fourth Amendment does not require notice or public hearing and may be approved by City resolution. NOW, THEREFORE, in consideration of the mutual covenants and promises of the parties herein contained, the City and Developer agree 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 Section 3.6. Section 3.6 to the Development Agreement is revised to read as follows, with additions in double underline and deletions in strikethrough: 4. 3.6 Affordable Housing. Developer acknowledges that as required by density bonus requirements and the City’s provision of financial assistance, upon Developer's acquisition of the Properties, the Properties will be subject to recorded covenants that will restrict use of the Properties for a term of not less than fifty-five (55) years, commencing upon the issuance of a final certificate of occupancy for the Project, as further set forth in the Linden Affordable Housing Agreement (“Linden AHA”) and the Grand Affordable Housing Agreement (“Grand AHA''), each substantially in the forms attached hereto as Exhibits C and D (the “AHAs''), each of which shall be recorded in the Official Records on the date that Developer acquires the Project Site. The AHAs shall provide that not less than twenty percent (20%) of the residential units in the Project as a whole shall be rented at an affordable cost (as defined in the respective AHA) and also shall ensure that use of any city financial assistance shall be utilized by Developer in a manner consistent with those terms imposed on the use of said City financial assistance. The AHAs shall provide that one hundred percent (100%) of the residential units in the Project not used as a “manger unit” shall be rented at an affordable cost (as defined in the respective AHA).Amendment to Section 6.12. Section 6.12 to the Development Agreement is revised to read as follows, with additions in double underline and deletions in strikethrough: 6.2 No Condominium Conversion. City acknowledges and agrees that the residential component of the Project, other than the manager’s units the Below Market Rate (BMR) units, is proposed for, approved as, and will be constructed as market-rate rental Below Market Rate (BMR) housing. Developer shall not convert the residential units in the Project to condominium or cooperative ownership or sell condominium or cooperative rights to the residential portion of the Project or any part thereof unless Developer obtains the City's consent and meets the City’s affordability requirements in effect at the time. City prior written consent shall be required with respect to the sale or condominium conversion of the retail/commercial portion of the Project or any part thereof, and shall not be unreasonably withheld, conditioned or delayed provided that Developer meets all applicable requirements. 5. Further Amendment to Exhibit E. Exhibit E to the Development Agreement is revised to read as follows, with additions in double underline and deletions in strikethrough as set forth below. Upon request of the Developer, the City Manager may extend any of the dates set forth on Exhibit E in the City Manager’s reasonable discretion up to an additional 90 days: EXHIBIT E Developer’s Project Schedule of Performance Milestone Deadline 1 50% Construction Drawings (CDs) and Proforma May 15, 2018 (Completed) 2 100% CDs submitted for building permits and Updated Proforma July 14, 2018 (Completed) 3 Construction Financing Secured and Construction Contract Executed June 18, 2020 November 30, 2019 4 If building permit application and 100% CDs were completed in #2, building permit ready for issuance June 29, 2020 December 11, 2019 5 Close of Escrow and Property Conveyance By July 8, 2020 By December 21, 2019 Within Ten (10) Days from Satisfaction of All Contingencies 6a Grand Avenue Demolition Start May 14, 2019 (Completed) 6b Grand Avenue Demolition Complete on or before October 22, 2020 September 11, 2019 7 Construction Start October 22, 2020 April 5, 2020 8 Construction Completion March 17, 2022 August 31, 2021 6. Effect of Fourth Amendment. Except as expressly modified by this Fourth Amendment, the Development Agreement shall continue in full force and effect according to its terms, and Developer and City hereby ratify and affirm all their respective rights and obligations under the Development Agreement, including but not limited to Developer’s indemnification obligations as set forth in Section 13 of the Development Agreement. In the event of any conflict between the Fourth Amendment or the Development Agreement, the provisions of this Fourth Amendment shall govern. 7. 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. 8. Recordation. The City shall record a copy of this Fourth Amendment together with recordation of the Development Agreement. 9. 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. 10. 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. 11. 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 12. 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. IN WITNESS WHEREOF, this Fourth Amendment has been entered into by and between Developer and City as of the date and year first above written. [SIGNATURES ON THE FOLLOWING PAGE] ROEM Development Corporation, a California Corporation By: ROEM Development Corporation, a California Corporation, President By: ______________________________________________________________ Name: ____________________________________________________________ Title: _____________________________________________________________ Date: _____________________________________________________________ CITY OF SOUTH SAN FRANCISCO By: Name: Charles Michael Futrell Title: City Manager Date: APPROVED AS TO FORM: By: ___________________ Sky Woodruff, City Attorney ATTEST: By: ____________________ Rosa Govea Acosta City Clerk 3490952.1