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2010-09-07 Joint 4-A ENA - Not ApprovedEXCLUSIVE NEGOTIATION AGREEMENT THIS EXCLUSIVE NNEGOTIATION AGREEMENT (the "Agreement is entered into this day of September, 2010 by and between the COMMUNITY IMPROVEMENT COMMISSION OF THE CITY of ALAMEDA, a public body corporate and politic, "Commission and warmington Residential California, a California corporation. THIS AGREEMENT is entered into on the basis of the following facts, intentions and understandings of the parties: A PURPOSE OF THE AGREEMENT The purpose of this Agreement is to initiate and provide a roadmap for negotiations exclusively between the Commission and the Developer related to ultimately entering into a Disposition and Development Agreement ("DDA") for the acquisition and development of certain City owned property located at 1616 Fortrnann way and 1590 Fortmann way. (the "City Sites This Agreement will also address funding and reimbursement understandings between the parties, including terms and conditions for reimbursement whereby the Developer agrees to reimburse the Commission for certain Commission staff and consultant costs and the Commission agrees to reimburse Developer for certain Developer funded studies related to the City Sites in the event Developer elects not to enter into a DDA. B SUBJECT OF THE DDA NEGOTIATIO NS GE NERALLY 1) Identify the components of the development plan and the public benefits. The components include: a) Site Acquisition and Relocation b) Market Rate Housing C) Affordable Housing d) Public Infrastructure and Amenities e) Phasing 2) The tinning and assurances that the current City uses on the City Sites can be relocated in a timely manner and the tinning related to the Commission's acquisition of the City Sites from City. 3) The tinning, scope, and method for providing site related studies, constraints analysis, consideration and financing commitments; 4) The process for ensuring compliance with applicable environmental laws; 1 wc- 143824 v4 5) The tinning and manner the Developer will provide drawings, elevations, and other depictions of the design and construction details for the development; 6) The timing, scope, and method for securing all required regulatory approvals; and 7) The timing and method by which completion of the development will be secured. The City Sites are currently used for a corporation yard and an animal shelter. Immediately to the east of the City Sites, Developer is in the process of developing a multi -phase project redeveloping and converting former industrial lands to residential and open space uses in furtherance of the City's Northern waterfront General Plan amendment and the Grand Marina Master Plan (the"Grand Marina Project The City and Con plaiming documents adopted during 2006 -2007 contemplate the removal of the current uses on the City Sites and the removal of the current industrial uses on the Pennzoil facility located adjacent to and immediately westerly of the City Sites. The Staff Report dated .April 20, 2010 for a Special Joint Session of the Commission, the City Council and the Alameda Reuse and Redevelopment .Authority (ARRA) states "The success of the [Grand Marina] project will strengthen the local economy by generating construction jobs and increasing property values, and is likely to have a positive effect on the viability and tuning of redevelopment of the adjacent Shell/Pennzoil property and Chipman Warehouse site, as well as other properties such as the Del Monte building and Encinal Terminals site." Recently, Developer commenced site work and residential development of the Grand .Marina Project and the parties have been working cooperatively to improve this area for the past several years. Both the Commission and Developer desire to continue on the path of facilitating high quality, residential development within redevelopment areas. The Developer is proposing to build both new market rate and affordable housing on the City Sites, as well as public infrastructure and certain amenities (the "Project The parties acknowledge that the Conceptual Site Plan attached hereto in Exhibit 1 and incorporated by reference (which identifies approximately 25-27 single family detached bonzes), has been prepared prior to Developer conducting due diligence of the City Sites and is for illustrative and preliminary discussion purposes only, as further described in Section 8. r The Commission and City would realize potential public benefits by entering into this Agreement, and ultimately entering into the DDA for the sale and conversion of the City Sites for residential uses. Economic development and fiscal benefits would include land sale proceeds, public infrastructure improvements, new tax revenues from placing new and higher value residential units on the tax rolls, utility user taxes, solid waste fees; one -time construction improvement taxes; and real estate transfer taxes from the initial and future sale of homes. In 2 wc- 143 820 v4 addition, the conversion of fanner industrial and municipal uses to residential and mixed uses proximate to the City's attractive waterfront will accelerate additional economic activity and create a more sustainable and livable community favorably impacting nearby properties. F INTERESTS OF THE PARTIES l) Commission Interests are to a) Facilitate the orderly redevelopment of the Grand Marina Master flan in accordance with the desires of the citizens of Alameda, and the Commission's planning goals and rules; b) Increase the potential for new revenues to the Commission's plan areas by redeveloping key properties consistent with the Commission's Redevelopment Plans and the City's Northern waterfront General flan Amendment; c) Facilitate the relocation of the City Corporation Yard and Animal Shelter to other more appropriate locations within the City; d) Upon acquisition of the City Sites by the Commission, dispose of Commission land at values as part of a DDA. which are consistent with and in furtherance of California's redevelopment laws and its redevelopment rules; and e) Improve local infrastructure within Commission areas, such as streets and landscaping, without generating additional costs to the Commission or City. 2) Developer Interests are to. a) Conduct and fund "up front" preliminary due diligence investigations and studies of environmental and geotechnical constraints of the City Sites during the term of this Agreement to better assist the parties in reducing Project risks, formulating feasible project tinting benchmarks and structuring the terms of the DDA to address updated site constraint and f cost information. b) Establish a successful business plan that is based on and achieves an industry accepted rate of return on the investment for the development and construction of a high quality residential neighborhood. C) Provide for the improvement of public infrastructure to enhance the value of the property for the benefit of the proposed residential neighborhood, waterfront visitors, and the residents of the City of Alameda. d) Achieve certain timing assurances that the City will be able to relocate the current municipal uses on the City Sites and convey the City Sites to the Commission within a reasonable timefra u.e. 3 vie 143820 v4 e) Initiate its own efforts to negotiate its private party acquisition of the Pennzoil site, as part of its assessment of the viability of a more comprehensive conversion of the current industrial uses proximate to its Grand Marina Project. THE COMMISSION AND DEVELOPED AGREE as follows: Section 1. Good Faith Negotiations The Commission and the Developer, acknowledging that time is of the essence, agree to the Negotiation Period set forth in Section Z of this Agreement and to negotiate diligently and in good faith within that Negotiation Period. Section 2. The Ne otiating Period (a) Initial Term The initial term of this Exclusive Negotiation Agreement (the "Initial Negotiation Period shall be eighteen (18) months commencing on the date of full execution of the Agreement. (h) Extensions of the Initial Negotiating Period. If upon expiration of the Initial Negotiation Period, the Developer and the Commission have not executed a DDA, then the Commission's Executive Director may, at the written request of the Developer, or at her sole discretion, approve a first administrative extension of the Initial Negotiating Period for a period of ninety (90) days. Such administrative extension may be granted, if and only if, in the sole determination of the Executive Director sufficient progress has been made. Any extension of the Initial Negotiating Period shall be in writing. The Negotiation Period, as it may be extended pursuant to the First Extension, if applicable, is referred to in this Agreement as the "Negotiation Period." (c) Termination. Consistent with Section 14, this Agreement shall automatically terminate upon the expiration of the Negotiation Period, unless the parties mutually agree to an additional extension period, the second extension of which must be approved by the Commission. Section 3. Roles of the Parties During the Negotiation. Period, Developer and Commission shall negotiate the terms of a DDA in accordance with a performance milestone schedule ("Milestone Schedule attached hereto in Exhibit 2 and incorporated by reference. The Developer shall complete the due diligence necessary to enter into the proposed DDA in accordance with this Milestone Schedule. Section 4. Good Faith Payment (a) P a ment Timing. On or before December 13, 2010, unless this Agreement has been previously terminated by Developer, the Developer shall submit to the Commission a good faith payment (the "Good Faith Payment in the amount of Twenty Five Thousand Dollars ($25,000) to ensure that the Developer will proceed diligently and in good 4 wc- 143 820 v4 faith to perform all of the Developer's obligations under this Agreement. This Good Faith Payment is in the form of cash, certified or cashier's check. (b) Uses The Good Faith Payment can be used by the Commission/City to underwrite community events aimed in part at furthering economic development and for which Developer, if it so elects, will receive corporate sponsorship credit, and for other appropriate Commission/City purposes. Section 5. Failure of Developer to Negotiate in Good Faith In the event the Developer fails to negotiate in good faith, the Commission shall give written notice thereof to the Developer specifying in reasonable detail the grounds for the Commission's determination that the Developer has failed to negotiate in good faith. Following the receipt of such notice, the Developer and the Commission shall have ten (10) working days to resume good faith negotiations. If the Developer is not then negotiating in good faith in the determination of the Executive Director, the Commission may terminate this Agreement. In the event of such termination by the Commission, none of the parties shall have any further rights against or liability to the other under this Agreement. Section 6. Failure of Commission to Ne otiate in Good Faith In the event the Commission fails to negotiate in good faith, the Developer shall give written notice thereof to the Commission specifying in reasonable detail the grounds for the Developer's determination that the Commission has failed to negotiate in good faith. Following the receipt of such notice, the Commission and the Developer shall have ten (10) working days to resume good faith negotiations. If the Commission is not then negotiating in good faith, the Developer may terminate this Agreement. In the event of such termination by the Developer, none of the parties shall have any further rights against or liability to any other party or parties under this Agreement. Section 7. Commission Cost Recover reimbursement (a) Developer-Funding of Studies Investigations. Consistent with the Milestone Schedule, the parties contemplate that Developer shall initially undertake, at its own cost and expense, 1) preliminary geotechnical and soils studies, including but not limited to an assessment of the bay mud liquefaction feasibility of constructing on the City Sites, and 2) a phase 1 environmental site assessment, and if needed, a phase 2 environmental assessment, covering the City Sites ("Developer Funded Studies (h) Developer Funding of Staff and Consultant Costs. Consistent with the Milestone Schedule, the parties contemplate that DDA negotiations will substantially occur subsequent to the Developer's completion of its Developer Funded Studies. Accordingly, concurrent with and independent of its payment of the Good Faith Payment described in Section 4, but in no event later than December 13, 2010, the Developer shall make an initial deposit in the amount of twenty --five thousand dollars ($25,000) to reimburse the Commission for a limited scope of identified Commission and City staff and consultant costs, as provided in this Section 7 "Negotiating Costs Deposit Subject to receipt of notice from Commission, Developer shall within five (S) working days, replenish the cost recovery account "Negotiating Costs Account WC-14.'3820 v4 whenever it falls below five thousand dollars ($5,000), but in no event shall Developer be obligated to deposit into the Negotiating Costs Account a total sum in excess of fifty thousand dollars ($50,000) for the reimbursement covered by this Section 7. (c) Scope of Funded Staff and Consultant Services. The Negotiating Costs Account shall be applied to certain Commission/City staff and consultant services covering: 1) meetings with Developer to negotiate the DDA, and 2) processing of environmental review or processing in furtherance of the City's consideration of the DDA, or 3) allowable consultant services. Specifically, the Commission/City costs Incurred pursuant to this Agreement are limited to actual and reasonable costs of staff salary and benefits for the Deputy City Manager, the Assistant City Attorney and the Planning Services Manager, and do not include other staff officials, including but not limited to the City Attorney or City Manager. The all owable consultant services shall be limited to the services for special redevelopment counsel and an economic consultant to assist Commission with the DDA. Also, Developer's costs of processing land use entitlements and environmental review are costs are to be fiinded by Developer outside of this Agreement. Commission/City staff are under no obligation to perform obligations under this Agreement until Developer has made the Negotiating Costs Deposit. (d) Account Dis ute Resolution. The Developer's Negotiating Costs Account shall be exclusively used by the Commission to pay the actual costs incurred by the Commission /City identified in subsection (c) above. Upon reasonable prior notice to Commission, Developer may review the Negotiating Costs Account Ledger to determine whether invoices and charges to the Negotiating Costs Account reflect actual permissible staff CommissionlCity Costs. If the Developer disputes any invoice or charge to the Negotiating Cost Account, Developer shall notify Commission, and if the parties so agree that an invoice or charge has been inappropriately charged against the account, Commission shall deduct the amount of the inappropriate invoice(s) or charge(s) from the sure it is entitled to draw from the Negotiation Cost Account, or if such inappropriate invoice or charge is identified after the termination of this Agreement, Commission shall promptly pay such amount to Developer. (e) Refunds and R.cirnbursements Upon the termination of this Agreement for any reason, the Commission shall refund to the Developer within sixty(60) days, the excess funds from the Negotiating Costs Account that are not needed to reimburse the Commission/City for permissible costs it has incurred pursuant to this Agreement. Furthermore, in recognition of the value to the Commission of obtaining the Developer Funded Studies covering the City Sites, upon the termination or expiration of this Agreement for any reason excepting a failure to negotiate in good faith pursuant to Section 5, the Commission shall, within sixty (60) days reimburse Developer for its actual costs of the Developer Funded Studies, in an amount not to exceed one Hundred Thousand dollars 100,000). Commission shall not be obligated to reimburse Developer unless and until it has previously been provided the written completed Developer Funded Studies, and in no event shall Developer be entitled to reimbursement for the Developer Funded Studies if the parties ultimately execute a DDA covering the City Sites. Section 8. Environmental Review It is understood that the development concept set forth in the Conceptual Site Plan is not being approved by or with the execution of this Agreement, nor has any aspect been approved or selected as a preferred alternative, but are the subject of negotiations described in this 6 we-143820 v4 Agreement. It is explicitly understood that environmental review of feasible project alternatives must be completed in accordance with applicable envirom laws before the Commission approves any development proposal or otherwise grants any discretionary approval with regard to development of the site. Section 9. No Change in Developer; No Assignments or Transfers The Parties agree there shall be no change in the Developer or any interest of Developer therein by transfer, assignment or otherwise, nor any transfer or assignment for the duration of this Agreement, or any interest therein or any part thereof, to any person or entity without the prior written consent of the Commission in its sole discretion, as authorized by its Community Improvement Commission; provided, however, that the entities constituting the development team may transfer to wholly -owned subsidiaries, entities or affiliates without the prior consent of the Commission as long as Developer or its subsidiaries or Affiliates retains a fifty one percent (51 interest. Developer shall promptly provide notice of any such transfer to Commission. Section. 10. Confidentialily of Inforrmation and Ne otiations The Commission and Developer enter this Agreement with the understanding that the Commission may require and, if so, then the Developer will have to provide, certain information of a privileged and confidential nature during the negotiation and other tasks outlined in this Agreement. Such information may be necessary for the Commission to verify information that is relevant to the negotiation of the DDA. Commission and Developer agree that they will keep confidential and not disclose any information submitted by Developer in the course of the negotiations or preliminary drafts of transactional documents or other negotiation preliminary draft documents, including financial analysis, that are identified as privileged or confidential under the law unless ordered to do so by a final order of court. Developer agrees to bear all costs of any litigation that is filed to determine the applicability of public records law to documents submitted by Developer in furtherance of negotiating a DDA, or any other related agreement contemplated in the Agreement. Notwithstanding the provisions of this Section, in no event shall any party be required to disclose to any other party information that is protected by the attorney_ client privilege. Notwithstanding anything in this Agreement to the contrary, in the event Developer is concerned about the public records status of potentially sensitive corporate, proprietary or financial information, it may elect to submit such information to a third party redevelopment advisor, satisfactory to Commission, which would instead submit a written summary report of such information to Commission. Section 11. Beal Estate Commissions The parties shall not be liable for any real estate commissions or brokerage fees that may arise from any transaction that takes place because of or in any way related to this Agreement. The Commission represents that it has engaged no broker, agent or finder in connection with this transaction,, and agrees that Developer shall not be liable for any such commission or fee arising from any transaction related to a conveyance of the City Sites, or portion thereof, from City to the Commission. Developer agrees to hold the Commission harmless from any claim by any broker, agent or finder retained by the Developer. 7 vac -x.43 $20 v4 Section 12. Representatives of the Parties (a) The Commission Representative. For the purpose of administering the provisions of this Agreement, the Commission shall be represented by its Executive Director or such member of the Commission staff designated to act for a particular matter in writing by the Executive Director. (h) The Developer Representative. For the purpose of administering the provisions of this Agreement, the Developer shall be represented by Michael W. McClellan, or such other employee, employees, agent or agents of the Developer as are designated to act for a particular matter in writing. Section 13. Limitations of this Agreement By executing this Agreement, the Commission is not committing itself to or agreeing to undertake: (1) disposition of land to the Developer; or (2) any other acts or activities requiring the subsequent independent exercise of discretion by the Commission or any agency or department thereat. Section 14. Termination All of the provisions of this Agreement excluding Section 11, Section 18, and Section 19 shall terminate and be of no further force and effect upon the earlier of (i) execution of a DDA, or such other substantive agreements that documents the parties' agreement negotiated during the Negotiation Period, or (ii) termination of this Agreement and the Negotiation Period. If a DDA has not been executed by the respective parties by the expiration of the Negotiating Period or if this Agreement has otherwise been terminated in accordance with the provisions set forth herein, none of the parties shall have any further rights or obligations under this Agreement, except as set forth in Section. 7: Commission Cost Recovery /Reimbursement, Section 11: Real Estate Commissions, Section 17: Nona- liability of the Commission, Section 18: Hold Harmless and Indemnity. Developer may, in its discretion, elect to terminate this Agreement during the Negotiation Period if it determines that it is infeasible for it to proceed with the Protect, subject to providing ten (10) days notice to Commission in accordance with Section 19. Section 15. Approval of Disposition and Develoj2ment Agreement If negotiations culminate in a DDA between Developer and Commission, such actions become effective only after and upon the approval of the Community Improvement Commission of the City of Alameda and its execution by the Executive Director pursuant to direction of the Community Improvement Commission. Section 16. Commission Right to Obtain Information and to Consult with others The Commission reserves the right to obtain information concerning the transaction(s) described in this Agreement from any person., entity or group; however, that excepting consultants retained by Commission to assist in the negotiation process contemplated in this 8 we W- 43 820 v4 Agreement, Commission shall not reveal to any such persons or groups confidential or proprietary information or other information kept confidential as prodded in Section 10 of this Agreement. Section 17. Non-liability of the Commission (a) Developer warrants That He /She Has No Claim Against Commission. The Developer agrees that it does not now have and shall not at any time, whether before or after its execution of this Agreement, have or make any claim or claims against the Commission or against the City Sites, directly or indirectly, by reason of any or all of the causes set forth in paragraph (c) of this section. (b) Non of the Commission. The Developer agrees that the Commission shall not have any liability whatsoever of any kind or character, directly or indirectly, by reason of any or all of the causes set for in paragraph (c) of this section. (c) Causes to which Non- liabilit�p�ly. The causes to which the provisions of paragraphs (a) and (b) of this section apply include the following: (1 The rejection of any offer to enter into this Agreement, including this Agreement upon its presentation by the Developer; The acceptance by the Commission of any offer to enter into this Agreement, including this Agreement upon its presentation by the Developer; (3) Entering into and thereafter engaging in exclusive negotiations; extension thereof; result thereof; (4) The suspension or termination of exclusive negotiations; (5) The expiration of a Negotiating Period, whether Initial or an (6) Entering into any DDA, or other instrument or document or as a (7) Any statement, representations, acts or omissions of the Commission in connection with all or any of the foregoing, except for Commission's sole negligence or willful mis conduct; (S) The exercise of any Commission discretion, decision and judgment set forth in this Agreement, except for Commission's sole negligence or willful misconduct; Any and all other matters arising out of or directly or indirectly connected with any or all of the foregoing. (d) Claim. or Claims. The Developer further expressly and absolutely waives any and all Clain or Claims against the Commission, the City Sites, directly or indirectly arising out of or in any way connected with any or all of the matters set forth in paragraph (c) of this section. 9 wc 43 s2D v4 (c) Definitions For purposes of this section, the words defined in this paragraph shall have the meanings ascribed to them herein: "Commission" and "City of Alameda" includes their respective members, officers employees, agents, consultants, successors, and assigns. (2) "Claire or Glares" shall mean any and all protests, rights, remedies, interests, objections, claims, demands, actions or causes of action of every bind or character whatsoever, in law or in equity, for money or otherwise, including but not limited to Claims for injury, loss, expense or damage, Claims to property, real or personal, or rights or interest therein, and Claims to contract or development rights or development interests of any land or character, in any Commission and City Sites, or Claims that night be asserted against or cloud title to the City Sites. Section 18. Hold Harmless and Indem The Developer shall defend, hold harmless and indemnify the Commission from and against any and all Claims directly or indirectly arising out of this Exclusive Negotiation Agreement and including but not limited to Claims, if any, made by Developer or by anyone connected or associated through Developer, except to the extent that such Claire arises from the willful misconduct or sole and active negligence of Commission.. Section 19. Notices Formal notices, demands and communications between the parties shall be sufficiently given if, and shall not be deemed given. unless, dispatched by certified mail, postage prepaid, return receipt requested, or sent by an express delivery or overnight courier service that maintains written delivery records, to the office of the parties shorn as follows, or such other address as the parties may designate in writing from time to time: COMMISSION Community Improvement Commission of the City of Alameda 2263 Santa Clara Avenue, Room 320 Alameda, California 94501 Attention: Jennifer Ott, Deputy City Manager With copies to City of Alameda 22.63 Santa Clara Avenue, Room 280 Alameda, California 94501 Attention: Farirnah Faiz, Assistant General Counsel DEVELOPER Warmington Homes Northern California Division 2400 Camino Ramon, Suite 234 San Ramon, CA 94583 .Attention: Mile McClellan Such written notices, demands, and communications shall be effective on the date shown on the written delivery record as the date delivered or the date on which delivery was refused. 10 we --143 820 v4 Notwithstanding the foregoing, Commission may respond to Developer requests for information by delivering requested information to only the address of the requesting representative of the Developer. Section 20. Governing Law This Agreement shall be governed by and construed in accordance with the laws of the State of California. Section 21. Entire Agreement This Agreement contains the entire agreement of the parties. This Agreement may be modified only by written agreement signed by the parties hereto. Section 22. Captions Captions at the beginning of each section of this Agreement are for reference only and shall in no way define or interpret any provision hereof. Section 23. Construction The provisions of this Agreement have been jointly drafted by the parties and shall be constructed as to the fair meaning and not for or against any party based upon, any attribution of such party as the sole source of the language in question. Section 24. 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. 11 we-143820 v4 IN WITNESS WHEREOF,, the parties, who have had the opportunity to consult with their attorneys with respect hereto and who fully and completely understand the terms and provisions hereof, have executed this Agreement as of the date set opposite their signatures. The effective date of this Agreement shall be the date the Agreement is signed by the Commission. COMMISSION: Executive Director Date: RECOMMENDED FOR APPROVAL: JenniferI tt sit Deputy M nager Date: APPROVED AS TO FORM: Farirnah Faiz Assistant General Counsel Date: Exhibits: Exhibit 1: Conceptual Site flan Exhibit 2: .Milestone Schedule DEVELOPER.: B N Ti W 12 we- 143 820 vz1 EXHIBIT I CONCEPTUAL SITE PLAN r 4 A C-4 V1 C d 4 Pte. P-q r, Moll 4 C) 6 9 p oo� r MAI r=41 k�� i... Fi �r: •i- -ty` %J;z:Ss�r. s e �a lm.� rl 42 d �zl N-7 41 �.R S ��n3 r.�..• 6 .7. =F tc..� .+r�icr �Y. 13 T, wc- 143 820 v4 i i r 09107110 ENA approved by CIC 09110110 CIC/City to issue site access permits for testing 09113110 warrnington to commence site testing 0 11/12/10 Initial site investigation and testing completed 12/03/10 Reports and analysis of site testing provided to CIC 12110110 Project site plan and financial feasibility determined 12/13110 Negotiation of the DDA commences. CIC /City provides Warmington with assurances, timeline for both the relocation of City uses and conveyance from City to CIC. warmington deposits Good Faith Payment and Negotiating Costs Deposit with CIC. 0311 5111 New City yard and animal shelter relocation sites identified by City/CIC 05113111 City Council approves transfer of City Sites to CIC 0611 0111 CIC Approval of DDA 2 -1 wc- 143 s20 v4