HomeMy WebLinkAbout2016-04-27 e-packet @6:00City of South San Francisco
P.O. Box 711 (City Hall, 400 Grand Avenue)
South San Francisco, CA
Special Meeting Agenda
Wednesday, April 27, 2016
6:00 PM
Municipal Services Building, Council Chambers
33 Arroyo Drive, South San Francisco, CA
Joint Special Meeting City Council and Successor Agency
Joint Special Meeting City Council Special Meeting Agenda April 27, 2016
and Successor Agency
NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of California,
that the Successor Agency to the City of South San Francisco Redevelopment Agency and the City Council will
hold a Joint Special Meeting on Wednesday, April 27, 2016, at 6:00 p.m., in the Municipal Services Building,
Council Chambers, 33 Arroyo Drive, South San Francisco, California.
Purpose of the meeting:
1. CALL TO ORDER
2. ROLL CALL
3. AGENDA REVIEW
4. PUBLIC COMMENTS
CLOSED SESSION
5. Closed Session: Conference with Real Property Negotiators: (Pursuant to
Government Code Section 54956.8)
Properties: 201 -219 Grand Avenue (APN: 012 - 316 -110; 012 - 316 -100; 012 - 316 -090)
and 418 Linden Avenue (APN: 012 - 314 -010)
Agency Negotiators: Alex Greenwood
Negotiating Parties: Brookwood Equities, LLC, the City of South San Francisco, and
the Successor Agency to the Redevelopment Agency of the City of South San
Francisco
Under Negotiation: Price and terms for the disposition of the property.
(Ron Gerber, Housing and Redevelopment Manager).
6. Closed Session: Conference with Legal Counsel - Anticipated Litigation (Pursuant to
Government Code Section 54956.9)
Initiation of Litigation and Significant Exposure to Litigation: One Case
CITY COUNCIL ONLY
7. Closed Session: Public Employee Performance Evaluation (Pursuant to Government
Code Section 45957)
Title: City Manager.
City of South San Francisco Page 2 Printed on 7/26/2016
Joint Special Meeting City Council Special Meeting Agenda April 27, 2016
and Successor Agency
ADMINISTRATIVE BUSINESS
8. Report regarding Resolution authorizing the City Manager to enter into an Exclusive
Negotiating Rights Agreement (ENRA) between The City of South San Francisco
and MidPen Housing Corporation 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) (Alex Greenwood:
ECD Director)
8a. 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).
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y
City of South San Francisco
v1 0 Staff Report
c'�LIFO �l� File Number:
Agenda Date: 4/27/2016
Version: 1
In Control: Joint Special Meeting City Council and Successor Agency
Agenda Number: 1
P.O. Box 711 (City Hall, 400
Grand Avenue)
out San Francisco, CA
Status: Agenda Ready -
Administrative Business
File Type: Staff Report
Closed Session: Conference with Real Property Negotiators: (Pursuant to Government Code
Section 54956.8)
Properties: 201 -219 Grand Avenue (APN: 012 - 316 -110; 012 - 316 -100; 012 - 316 -090) and 418
Linden Avenue (APN: 012 - 314 -010)
Agency Negotiators: Alex Greenwood
Negotiating Parties: Brookwood Equities, LLC, the City of South San Francisco, and the
Successor Agency to the Redevelopment Agency of the City of South San Francisco
Under Negotiation: Price and terms for the disposition of the property.
(Ron Gerber, Housing and Redevelopment Manager).
City of South San Francisco Page 1 Printed on 7/26/2016
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City of South San Francisco
v1 0 Staff Report
c'�LIFO �l� File Number:
Agenda Date: 4/27/2016
Version: 1
In Control: Joint Special Meeting City Council and Successor Agency
Agenda Number: 2
P.O. Box 711 (City Hall, 400
Grand Avenue)
out San Francisco, CA
Status: Agenda Ready -
Administrative Business
File Type: Staff Report
Closed Session: Conference with Legal Counsel - Anticipated Litigation (Pursuant to
Government Code Section 54956.9)
Initiation of Litigation and Significant Exposure to Litigation: One Case
City of South San Francisco Page 1 Printed on 7/26/2016
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City of South San Francisco
�o Staff Report
c'QLIFO �l� File Number:
Agenda Date: 4/27/2016
Version: 1
In Control: Joint Special Meeting City Council and Successor Agency
Agenda Number: 7
P.O. Box 711 (City Hall, 400
Grand Avenue)
out San Francisco, CA
Status: Withdrawn
File Type: Staff Report
Closed Session: Public Employee Performance Evaluation (Pursuant to Government Code
Section 45957)
Title: City Manager.
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Staff Report
File c'QLIFOR���
.11 ber: 16-355
Agenda Date: 4/27/2016
Version: 1
In Control: Joint Special Meeting City Council and Successor Agency
Agenda Number: 8
P.O. Box 711 (City Hall, 400
Grand Avenue)
out San Francisco, CA
Status: Passed
File Type: Staff Report
Report regarding Resolution authorizing the City Manager to enter into an Exclusive
Negotiating Rights Agreement (ENRA) between The City of South San Francisco and MidPen
Housing Corporation 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) (Alex Greenwood: ECD Director)
..label
RECOMMENDATION
That the City Council adopt a resolution authorizing the City Manager to enter into
an Exclusive Negotiating Rights Agreement (ENRA) between the City of South San
Francisco and MidPen Housing Corporation for the City -owned Miller /Maple Parking
Lot (APN 012311330).
BACKGROUND/ DISCUSSION
Introduction
Council is requested to provide direction to staff regarding key business points and policy
issues, which will be negotiated during the Exclusive Negotiating Period.
On December 16, 2015, the City Council held a study session on workforce housing. As a result
of that study session, the City Council directed staff to pursue several projects and initiatives to
promote workforce housing. As part of this overall strategy, the City Council directed staff to
issue a Request for Qualifications (RFQ) for a potential workforce housing project. The site is a
14,000 sq. ft., City -owned parcel located at the corner of Miller and Maple Avenues, commonly
known as the Miller/Maple Parking Lot (see Attachment 4: Site Map).
Staff issued the RFQ on December 22, 2015 and held a pre - submittal meeting and site visit on
January 15, 2016. The deadline for submissions was January 25, 2016, and the City received
four highly experienced affordable housing developers' responses to the RFQ solicitation.
On February 25, 2016, the Joint Housing Subcommittee (Subcommittee) interviewed all four of
the developers. Representing the Subcommittee are: Mayor Mark Addiego, Councilmember
Karyl Matsumoto, and Planning Commissioners Aris Ruiz and Norm Faria. All four developers
were interviewed and the Subcommittee's consensus was to recommend Bridge Housing and
MidPen Housing as the two preferred developers. These two developers were invited back for
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an in -depth discussion on March 1, 2016 and March 7, 2016. As a result of these meetings, the
Subcommittee members recommended MidPen Housing to the City Council as a potential
developer of the Miller /Maple Parking Lot Site.
On March 9, 2016, the City Council agreed to select MidPen Housing as the preferred
developer. City Council adopted a resolution authorizing the City Manager to negotiate an
ENRA between MidPen Housing and the City.
Exclusive Negotiating Rights Agreement
The purpose of the ENRA is to establish procedures and standards for the
negotiation
between
the City and MidPen Housing in order to reach a Ground Lease Agreement
(GLA). Matters
that
will be resolved in the ENRA include:
• Negotiating a Ground Lease Agreement with MidPen Housing and
the terms
of this
agreement.
• Resolving the scope and terms of any affordability restrictions.
This includes the
applicability of any leasing preferences and the unit type and
unit mix
for the
Development.
• If any financial assistance will be provided to MidPen for the acquisition
of a
leasehold
interest in the Site, and construction of the Development. If the
City does
provide
financial assistance, the terms will also be resolved during the term of the ENRA.
Some of the key action items that will be addressed during the Exclusive Negotiating Period
include:
• The physical and land title conditions of the Site and remediation of any adverse
conditions,
• The type of entitlements necessary for the Development,
• The design, density, mix and phasing of the Development;
• The development schedule for the Development, and
• Financing of the Development (including, without
Assistance, if any.
limitation, the terms of the City
The Negotiating Period is set for 90 days with a 45 day Extension Period. However, if the terms
of the Exclusive Negotiations are not met in the 135 days, an additional 45 day Extension
Period may be granted in writing by the City Manager.
Policy Issues
Identifying the unit sizes and mix, the target population as well as the affordability levels is
critical. Determination of the above has a great impact on the financial resources available to
fund the project. The lower the income levels, the more funding resources may become
available to the City, see Attachment 2.
Unit Sizes and Mix
Discussion items at the March 1, 2016 Subcommittee meeting included the types of units and
on -site parking permutations. The types of units (studios, one or two bedrooms) and parking
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ratios will affect the number of units that may be built and consequently household nature and
size. Studio and one - bedroom units would be suited to one to two person households, with two
and three bedroom units better suited for families.
Council is requested to provide direction regarding the target household size and unit size
configuration that should be studied during the Exclusive Negotiating Period.
Target Population
The Subcommittee noted at the March 1, 2016 meeting, some of the following groups:
• Veterans,
• City of South San Francisco Employees,
• County of San Mateo Employees,
• People who work in South San Francisco and live elsewhere,
• People who live in South San Francisco and work elsewhere,
• People who live and work in South San Francisco.
The above target groups would still need to meet the affordable housing household Area
Median Income (AMI) thresholds.
As mentioned earlier, Council directed Staff to pursue several projects and initiatives to
promote workforce housing for City employees. However, a preliminary salary survey revealed
that few City Staff employees would be eligible for housing at the Extremely Low and Very
Low income levels. Extending the preference to a wider population, would ensure that this
project is able to meet the lower affordability levels, if this is Council's preference.
Council is requested to provide direction regarding the target population for the development.
This will then be further studied during the Exclusive Negotiating Period with a final proposal
presented to the Council for consideration when the Ground Lease Agreement (GLA) is brought
back to the Council for approval in June.
Affordability Levels
In addition to establishing the target population, the level of affordability relating to household
income levels will need to be determined. Council is requested to provide direction regarding
the household income levels allowable for the units.
Table 1: AMI levels for San Mateo County
Source: Housing and Urban Development (2015)
FINANCING
One of the greatest challenges communities face in providing affordable workforce housing is
finding funding sources. Most funding resources require housing to meet the Extremely Low
and Very Low household AMI levels. South San Francisco is fortunate to have limited funding
options available at the median to moderate - income range.
The policy direction on the key issues, mentioned above, will also provide more clarity towards
determining a financing plan for the development of the Miller /Maple Parking Lot Site and
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securing appropriate funding sources.
The potential internal funding sources that may be available at Council's discretion are
summarized below:
Funding Source Income (AMI) Amount (if known)
Discounted long -term ground lease N/A To be negotiated
The City Fund 205 (Affordable housing mitigation fee) Under 120% (under $86,250 *) $1.6
million
City Housing Successor Agency Funds 30 -60% ($24,650- $43,260 *) $1.5 million **
0 -30% (Under $24,650 *) $1 million **
380 Alta Vista Sale N/A $1 million **
*Assumes a one - person household
* *Staffing costs estimated to be $150,000 per year
Potential external funding sources that may be available to the City are detailed in Attachment
2. These include tax credits, bonds, Section 8 Housing Vouchers, Cap and Trade, CDBG and
Measure A.
These potential funding sources, and others, will be further explored during Exclusive
Negotiating Period to arrive at a preferred financing plan for the development for final approval
by the Council in June. Staff seeks Council direction regarding which of the above City funding
sources Council may consider utilizing. These options will be explored in more detail during
the Exclusive Negotiating Period.
CONCLUSION
It is recommended that the City Council adopt a resolution authorizing the City Manager to
enter into an ENRA between the City of South San Francisco and MidPen Housing for the
City -owned Miller /Maple Parking Lot (APN 012311330).
Council is requested to provide policy direction for the affordable housing elements related to:
• Unit Sizes, Type, and Mix
• Target Population
• Affordability Levels
With this direction, staff will return to the Council in June with a final proposal for unit
configuration, affordability mix and financing plan for the development as part of the GLA
approval.
Approved:_
Alex Greenwood Director of Economic and Community Development Mike Futrell
City Manager
Attachments: Resolution
Attachment 1: Draft Exclusive Negotiating Rights Agreement (ENRA)
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Attachment 2: Potential Financing Tools
Attachment 3: Miller /Maple City Council PowerPoint
Attachment 4: Site Map
MF /AG /RG /JB: yp
2635115.1
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Attachment 1
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 ( "RF ") 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 Representatives. 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.
3
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
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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 ( "CEQA ") 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 ports. 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
5
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 Right 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.
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
R
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.
7
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
I:
Jan Lindenthal, Vice President
CITY:
CITY OF SOUTH SAN FRANCISCO
M.
Mike Futrell, City Manager
E
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
Attachment 2: Potential Financing Resources
Funding Source
Income (AMI)
Administered By
Description
Low - Income
Under 60% AMI
State - TCAC
Since 1986, the primary vehicle for financing affordable
Housing Tax Credits
housing in the nation has been the Low Income Housing
(9 %)
Tax Credit ( LIHTC) program. The LIHTC is by far the
largest funding source available for affordable housing.
The IRS allocates federal tax credits to state agencies
that award them to affordable housing developers.
Affordable housing developers use the equity generated
from the sale of these tax credits to cover a portion of
the cost to construct the affordable housing. The most
valuable federal tax credits are the "9 %" credits which
provide a relatively deep subsidy (typically funding
between 50 -65% of the project's development costs
excluding land). Unfortunately, the federal supply of
9% tax credits provided to each state is severely limited,
and TCAC has had to create an elaborate and highly
competitive selection process to allocate these
oversubscribed 9% credits.
Low - Income
Under 60% AMI
State - TCAC
An alternative for projects that may not qualify for or be
Housing Tax Credits
able to win the 9% credits are the non - competitive "4 %"
(4 %)
federal tax credits which provide a much shallower
subsidy, typically funding only about 30 -40% of project
development costs excluding land. These 4% credits are
awarded automatically to projects that rely on tax -
exempt bond financing.
Tax Exempt Bonds
Under 60% AMI
State - CDLAC
Although the issuance of tax exempt bonds is subject to
an allocation process as well, this process has rarely
been competitive because the statewide bond allocation
has historically been ample to fund all projects meeting
relatively low threshold requirements. The bonds
provide a shallow subsidy by providing for lower
interest rates on construction and permanent financing.
Multi - Family
Under 60% AMI
State - HCD
California Department of Housing and Community
Housing Program
Development's Multifamily Housing Program (MHP)
which provides 55 -year "soft loans" that allow loan
repayments to be deferred if the cash flow is not
adequate. MHP funds were provided primarily via
voter - approved bond initiatives, with an infusion last
year from the state's general fund. Funds for the
program are currently largely depleted, with
replenshiment needed either from additional general
fund allocations, future bond issuance or the adoption of
a new permanent state source.
Funding Source
Income (AMI)
Administered By
Description
Project Based
Under 50% AMI
Local Housing
Federal rent - subsidy program under Section 8 of the
Section 8 Vouchers
Authority
U.S. Housing Act, which issues rent vouchers to eligible
households. The voucher payment subsidizes the
difference between the fair market rent and the tenant's
contribution of 30% of their adjusted income. There are
two Section 8 programs, Project Based Vouchers, which
are allocated to a specific building, and Tenant Based
Vouchers, which are portable and allocated to a
household. Project Based Vouchers increase the rental
income of the affordable housing development enabling
the property to support more conventional debt and thus
need less subsidy. Generally, Housing Authorities can
allocate Project -Based Vouchers for up to 25% of the
units, but with senior properties this can be up to 100 %.
Cap and Trade
Under 80% AMI
State - HCD and
The Affordable Housing and Sustainable Communities
(AHSC)
SGC
Program (AHSC) is an extremely promising new source
of state funds which, unlike MHP, will be replenished
annually from the State's Cap- and -Trade auction
proceeds. This program funds housing and
transportation projects to support infill and compact
developments that reduce greenhouse gas ( "GHG ")
emissions. Early competition has been fierce for this
new funding source which is designed to pair well with
non - competitive 4% credits and favors projects in dense,
urban centers close to high quality transit. The program
has $320 million available in the 2016 round. The
maximum funding level is $20 million per project. We
expect the program to continue to evolve, with changes
to the scoring system, funding levels and eligibility
requirements.
HOME
Under 80% AMI
HOME
San Mateo County has annual HOME funding. In 2016-
(90% of assisted
Jurisdiction
2017, there were approximately $2M in HOME funds
units at 60%
(County, City or
available for housing development. Other cities in the
AMI, 20% of
State)
County with CDBG funding are Daly City, South San
assisted units at
Francisco, San Mateo and Redwood City.
50% AMI)
CDBG
51% of Project
CDBG
San Mateo County has annual CDBG funding. In 2016 -
Units serving
Jurisdiction
2017, there were approximately $1M in CDBG funds
Low and
(County or City)
available for housing development. Other cities in the
Moderate
County with CDBG funding are Daly City, South San
Income
Francisco, San Mateo and Redwood City.
households
Housing Impact
Set by Locality;
Locality
A per square foot impact fee levied on market rate
Fees
normally under
housing that can be used to build affordable homes. The
80% AMI
fees are based on the idea that every person who moves
into a market -rate home generates a need for services
typically provided by employees paid less than the
median income.
Funding Source
Income (AMI)
Administered By
Description
Commercial
Set by Locality;
Locality
CLFs are a type of impact fee assessed on new
Linkage Fees
normally under
commercial developments or major employers based on
80% AMI
the need for workforce housing generated by new and
expanding businesses. Revenues generated by the fee
are then used to help fund the development of affordable
housing opportunities within accessible commuting
distance to the employment center.
County of San
Under 60% AMI
County
In November 2012, San Mateo County voters approved
Mateo - Measure A -
Measure A, a 10 -year half -cent general sales tax, to
Affordable Housing
maintain the quality of life for all County residents. San
Funds
Mateo County's Affordable Housing Funds originally
came from a one -time disbursement of "boomerang"
housing trust funds. The most recent funding round was
a combination of Measure A funding and Housing
Authority funds. For the next round in 2016 -17, —$9
million is being proposed.
Infill Infrastructure
Under 60% AMI
State - HCD
The Infill Infrastructure Grant Program was funded by
Grant (IIG)
for rental
Proposition 1C. Its primary objective is to promote infill
projects
housing development. The program seeks to accomplish
this objective by providing financial assistance in the
form of grants for infrastructure improvements
necessary to facilitate new infill housing development.
This program does not currently have resources
available.
Veterans Housing
Under 60% AMI
State - HCD
Collaboration between California Department of
and Homelessness
(at least 45% of
Veteran Affairs, California Department
Prevention (VHHP)
assisted units
of Housing and Community Development and
restricted to
California Housing Finance Agency to
30% AMI)
provide $600 million in Proposition 41 general
obligation bonds to fund affordable
multifamily rental, supportive and transitional housing.
Goal to make $75M available annually. Maximum loan
for a single project in 2015 was $I OM.
Federal Home Loan
For rental
FHLB
The FHLB grant program is run through Bank members
Bank Affordable
projects, at least
who sponsor developer applications. In the 2015
Housing Program
20% of units
competition the FHLB awarded $44.7M in AHP grants
(FHLB AHP)
under 50% AMI
to 64 projects across the country. Maximum subsidy
with this program is $10,000 per affordable unit and up
to $2M per project. As a practical matter, at least 60% of
the units should be under 50% of AMI to be competitive
for an award.
Attachment 3
Miller Maple Affordable
Workforce Housing
City Council
April 27, 2016
Project Location
Project Overview
Dec 16, 2015:
City Council Study Session on Affordable Workforce Housing
Dec 22, 2015 -fan 15, 2016:
RFQ issued with 4 submissions received
Feb 25, Mar 1 &Mar 7:
Joint Housing Subcommittee met to review submissions and
interview developers
Mar 9:
City Council adopted a resolution authorizing the City Manager
to neaotiate an ENRA between the City and MidPen Housing
Exclusive Negotiating flights
Agreement (ENRA)
Negotiate Ground Lease with MidPen
Housing Corporation
Resolve the scope and terms of
development
Resolve Financing of the development
Resolve Policy Issues
Policy Issues
Unit Size and Mix
Types of units (studios, one -, two- or three - bedroom
units)
Size of units determines household size (singles,
couples /families)
Target Population
SSF Employees
County of San Mateo Employees
Veterans
People who live and work in SSF
Affordability Levels
Household income levels of future residents
5
Financing
Policy issues inform financing resources
City funding sources available at Council's
Discretion includes:
Discounted long -term ground lease
City Fund 205
City Housing Successor Agency Funds
San Mateo Measure A
380 Alta Vista sale
Other sources of funding includes State and
Federal Grants /Loans
141,
Recommendation
Approve:
Adopt a resolution authorizing the City
Manager to enter into an ENRA between
the City of South San Francisco and
MidPen Housing.
Provide policy direction:
Unit Sizes, Type, and Mix
Target Population
Affordability Levels
Attachment 4: Site Map
���SK =NSA of South •
0
Staff Report
File
c'QLIFOR���
.u.- 1.
Agenda Date: 4/27/2016
Version: 1
In Control: Joint Special Meeting City Council and Successor Agency
Agenda Number: 8a.
P.O. Box 711 (City Hall, 400
Grand Avenue)
out San Francisco, CA
Status: Passed
File Type: Resolution
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).
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.
City of South San Francisco Page 1 Printed on 7/26/2016
File Number: 16 -306
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.
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.
City of South San Francisco Page 2 Printed on 7/26/2016
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 ( "RF ") 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 Pte. 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 Representatives. 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
3
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.
11
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 ( "CEQA ") 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 ports. 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
5
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 Right 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.
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
R
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.
7
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
I:
Jan Lindenthal, Vice President
CITY:
CITY OF SOUTH SAN FRANCISCO
M.
Mike Futrell, City Manager
E
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