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HomeMy WebLinkAboutCC Resolution 11808 (Realign DeBois St.)RESOLUTION NO.11808 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL APPROVING EXECUTION BY THE CITY MANAGER OF THE CITY OF SAN RAFAEL OF AN ACQUISITION AGREEMENT AND A PUBLIC IMPROVEMENTS DEVELOPMENT AGREEMENT FOR THE REALIGNMENT OF DEBOIS STREET (RE: BEST BUY) BE IT RESOLVED by the Members of the City Council of the City of San Rafael as follows: WHEREAS, Best Buy Stores, L.P., a Virginia limited partnership ('Best Buy") has obtained from the City of San Rafael (the "City") an Environmental and Design Review Permit (the "Permit") for development of a retail facility (the "Development") on real property located at 632 Irwin Street, also sometimes identified by the alternative address of 700 DuBois Street, in the City of San Rafael, County of Marin (the "Property"); and WHEREAS, Best Buy has subleased the Property from CAJAN, LLC, a California limited liability company (the "Lessee"), which has leased the Property from Rudolph L. Tulipani and Donna Tulipani, as trustees of the Tulipani Family Trust, and Georgia A. Stapleton, as trustee of the Georgia A. Stapleton 1998 Family Trust (collectively, the "Owners"); and WHEREAS, the City has plans to realign DuBois Street and construct certain public improvements in connection with such realignment (the "Realignment Improvements") adjacent to the Property; and WHEREAS, in order to facilitate the construction of the Realignment Improvements, the Owners, Lessee and Best Buy desire to convey to the City, and the City desires to acquire, a portion of the Property that is adjacent to DuBois Street and is needed for the Realignment Improvements (the "Acquisition Parcel") pursuant to an Acquisition Agreement (the "Acquisition Agreement") the form of which is on file with the City Clerk; and WHEREAS, the Acquisition Agreement provides for the City, in consideration for the conveyance of the Acquisition Parcel, to provide the Owners, Lessee and Best Buy credit against the traffic mitigation fees that are payable in connection with the development of the Property; and WHEREAS, the City desires for Best Buy to design and construct the Realignment Improvements in conjunction with the development of the Property, pursuant to a Public Improvements Development Agreement (the "Public Improvements Development Agreement") the form of which is on file with the City Clerk, because the City expects cost savings from constructing the Realignment Improvements in conjunction and integrated with the construction of the Development and because Best Buy has agreed to be compensated for the construction of 141\01\258959.11 rLf , p 6L- � the Realignment Improvements in the form of credits against City traffic mitigation fees that are required to be paid in connection with the Development; and WHEREAS, advertising the public improvement portion of this project for bids would not produce any financial advantage to the City due to the integral nature of the improvements with the Best Buy development and advertisement for competitive bid would thus be undesirable, impractical, or impossible; and WHEREAS, on May 24, 2005, pursuant to the California Environmental Quality Act, the Planning Commission of the City found that the Development conforms to the City's General Plan and adopted a Mitigated Negative Declaration for the Development and the Realignment Improvements in connection with the approval of the Permit; NOW, THEREFORE, IT IS HEREBY RESOLVED as follows: Section 1. The City Council hereby approves the Acquisition Agreement and the Public Improvements Development Agreement and authorizes the City Manager to execute the Acquisition Agreement and the Public Improvements Development Agreement on behalf of the City in substantially the form on file with the City Clerk, with such changes as are approved by the City Manager and City Attorney, such approval to be conclusively evidenced by the execution of the Acquisition Agreement and the Public Improvements Development Agreement. Section 2. The City Council finds that, because the public improvements described in the Public Improvements Agreement are an integral part of the Best Buy development, public bidding pursuant to the City's Public Works Contract Policy would afford no financial advantage to the City and, accordingly, the Council waives the bidding requirement for the public improvements referenced herein. Section 3. This Resolution shall take immediate effect from and after its passage and approval. I, JEANNE M. LEONCINI, City Clerk of the City of San Rafael, hereby certify that the foregoing was duly and regularly introduced and adopted at a regular meeting of said City Council held on the eighteenth day of July, 2005 by the following vote: AYES: MEMBERS: Cohen, Heller, Miller, Phillips and Mayor Boro NOES: MEMBERS: None ABSENT: MEMBERS: None JEAN9t"M. LEONCINI, City Clerk 141\01\258959.1 ACQUISITION AGREEMENT This Agreement is made as of , 2006, by and among the City of San Rafael ("City"), Rudolph L. Tulipani and Donna Tulipani, as trustees of the Tulipani Family Trust, and Georgia A. Stapleton, as trustee of the Georgia A. Stapleton 1998 Family Trust (collectively "Owners"), CAJAN, LLC, a California limited liability company ("Lessee"), and Best Buy Stores, L.P., a Virginia limited partnership ("Best Buy") with reference to the following: A. Owners own certain real property in the City of San Rafael located at 632 Irwin Street (the "Property") and lease the Property to Lessee. The Property is also sometimes identified by the alternative address of 700 Dubois Street in the City of San Rafael. Lessee has in turn subleased the Property to Best Buy. B. Lessee and Best Buy desire that the Property be developed with a retail store for Best Buy's use. To that end, the City has approved an Environmental and Design Review Permit for development of the Property. C. The City has plans to realign Dubois Street adjacent to the Property and the Environmental and Design Review Permit authorizes that realignment. In order to facilitate those realignment improvements, Owners desire to convey to the City and the City desires to acquire a portion of the Property that is adjacent to Dubois Street and is needed for the proposed improvements to Dubois Street. The portion of the Property that is to be acquired is shown generally on the map attached to this Agreement as Exhibit A and will be more particularly defined and described pursuant to this Agreement. The part of the Property that the City will acquire is referred to in this Agreement as the "Acquisition Parcel." D. In consideration for the conveyance and improvement of the Acquisition Parcel to the City, the City will provide to Lessee and Best Buy credit against the traffic mitigation fees that are payable in connection with the development of the Property. E. Pursuant to a separate agreement between the City and Best Buy (the "Public Improvements Development Agreement"), Best Buy will, subject to the approval of the City, construct the improvements for the Dubois Street realignment when constructing the development on the Property. THEREFORE, the parties hereto hereby agree as follows: 1. Parcel Descriution. In conjunction with the design of the Dubois Street realignment improvements, Best Buy shall cause to be prepared a legal description and map showing the location and square footage of the Acquisition Parcel and submit the map and legal description to the City for review and approval. The map and legal descriptions shall be generally consistent with the map attached as Exhibit A hereto and shall conform to the City's technical requirements and requirements for the Dubois Street realignment improvements in all respects. The map shall also delineate the portion 1 (1951) MP2 15234105.5 of the Acquisition Parcel where the frontage improvements consisting of the sidewalk, driveway, curb and gutter and drainage improvements will be located. If the City rejects the submitted map and legal description, it shall provide Best Buy with the reason(s) for the rejection. Best Buy shall then promptly revise the map and legal description as necessary to remove the City's objections. The parties anticipate that the Acquisition Parcel will be between approximately 8700 and 9000 square feet. 2. Environmental Assessment. Prior to entering into this Agreement, Best Buy obtained a Phase I Environmental Assessment for the Property from Twining Laboratories, Inc dated April 20, 2005 (the "Phase I") and a Phase II Environmental Assessment of the Property also from Twining Laboratories dated May 19, 2005 (the "Phase II"). Best Buy provided copies of the Phase I and the Phase II to the City. Pursuant to the Public Improvements Development Agreement, Best Buy shall be responsible for mitigating or removing from the Acquisition Parcel any hazardous or toxic materials on the Acquisition Parcel to the satisfaction of the City as is reasonably necessary for the intended uses of the Acquisition Parcel. 3. Close of Escrow. Promptly following execution of this Agreement, the parties shall establish an escrow for the conveyance of the Acquisition Parcel with the Greenbrae office of First American Title Company (the "Escrowholder"). The parties shall provide the Escrowholder with escrow instructions consistent with this Agreement. The escrow shall close within ten (10) days following the date on which the conditions set forth in Section 6 below have been satisfied or waived by the City. If the conditions to close of escrow set forth in Section 6 have not been either satisfied or waived by the City by that date which is six (6) months from and after the date of this Agreement, then the City may terminate this Agreement by giving written notice of termination to the other parties. If the conditions to the close of escrow have been satisfied, the escrow shall close even if Best Buy has not yet received a building permit for the retail store it will build on the Property or if Best Buy is otherwise not yet prepared to begin construction of that retail store. 4. Convevances at Close of Escrow. At the close of escrow, Owner shall convey its interest in the Acquisition Parcel to the City by Grant Deed in a form acceptable to the City. Lessee and Best Buy shall convey their respective interests in the Acquisition Parcel to the City by Quitclaim Deed in a form acceptable to the City. 5. Condition of Title. At the close of escrow, the Acquisition Parcel shall be free and clear of all liens, encumbrances, rights of possession or other clouds on title other than those approved in writing by the City, and the Escrowholder shall be prepared to issue to the City an ALTA policy of title insurance insuring title to the Acquisition Parcel in the City in said condition. The title insurance 2 (1951) MP2 15234105.5 policy shall be for an amount equal to Forty Dollars ($40.00) multiplied by the number of square feet in the Acquisition Parcel. 6. Conditions to Close of Escrow. The following are conditions to close of escrow for the benefit of the City which conditions the City may waive in its sole discretion: a. The City has approved the map and legal description of the Acquisition Parcel pursuant to Section 1 above. b. Title to the Acquisition Parcel is in the condition set forth in Section 5 above and the Escrowholder is prepared to issue the title insurance specified in Section 5 above. C. Best Buy and the City have entered into the Public Improvements Development Agreement. d. The City has determined that either (i) the credit against payment of traffic mitigation fees pursuant to Section 10 below plus the credit against payment of traffic mitigation fees to be provided pursuant to the Public Improvements Development Agreement does not exceed the amount of traffic mitigation fees payable in connection with the development of the Property as contemplated by the Environmental and Design Review Permit for the Property, or (ii) in the event that the foregoing credits do exceed the amount of traffic mitigation fees payable in connection with the development of the Property, the City approves the costs in excess of the amount of traffic mitigation fee credits, subject to the City's obtaining funding to pay such additional development costs pursuant to Section 1.3 of the Public Improvements Development Agreement. In no event shall any credit or cost payment be paid to or otherwise inure to the benefit of the Owners. 7. Costs of Closing and Escrow. Subject to Article 10 hereof, Lessee and Best Buy shall pay all the costs of escrow and the close of escrow including the cost of the title insurance the City is to obtain pursuant to Section 5 above. Lessee and Best Buy shall determine among themselves the allocation of the escrow and closing costs among those parties. 8. Possession. Owners, Lessee and Best Buy shall deliver possession of the Acquisition Parcel to the City at the close of escrow. Pursuant to the Public Improvements Development Agreement, the City shall provide to Best Buy a right of entry on the Acquisition Parcel following the close of escrow so as to allow Best Buy to construct the Dubois Street realignment improvements. 9. Prorations. 3 (1951) MP2 15234105.5 Property taxes shall be prorated at the close of escrow based on the most current real property tax bill available and the size of the Acquisition Parcel relative to the size of the Property, including any escaped property taxes which may be assessed after the close of escrow pertaining to the period prior to transfer of title to City, regardless of when notice thereof is delivered or who receives such notice. All installments of any bond or assessment that is a lien (determined as of the close of escrow) which installments become due before close of escrow shall be paid by Lessee or Best Buy on or before close of escrow. In no event shall Lessee or Best Buy be required to prepay any bonds or assessments on the Acquisition Parcel. 10. Credit Against Traffic Mitigation Fee. The City's land use regulation and the conditions for approval of the Environmental and Design Review Permit that the City has issued for development of the Property require payment of a traffic mitigation fee. Upon close of escrow, the City shall provide credit against payment of the traffic mitigation fee in the amount of Forty Dollars ($40.00) for each square foot of the Acquisition Parcel as that square footage is determined by the legal description that Best Buy will prepare pursuant to Section 1 above. Upon the close of escrow, the City shall provide a credit against payment of the traffic mitigation fee an amount equal to one-half ('/z) of the reasonable closing costs incurred by Lessee and Best Buy pursuant to Section 7 above. In no event shall such closing costs include the costs of causing title to be in the condition specified in Section 5 or attorneys' fees incurred by Lessee or Best Buy in connection with this Agreement or the close of escrow. Owners, Lessee and Best Buy understand and agree that the consideration to Lessee and Best Buy for the conveyance of their interest in the Acquisition Parcel, and the improvements thereto, to the City and the improvements thereto is the right to make use of credits against the traffic mitigation, that Owners, Lessee and Best Buy are taking the risk that the Property will be developed and credits against the traffic mitigation fees used, and that Owners, Lessee and Best Buy will have no right to rescind or cancel the conveyance of the Acquisition Parcel or to receive any other consideration from the City in the event that Lessee and Best Buy do not use the credits against the traffic mitigation fees. 11. Miscellaneous. a. This Agreement and the Public Improvements Development Agreement contain the entire agreement of the parties with regard to the subject matters thereof; any previous understandings of the parties regarding those subject matters are expressly declared null and void and are superseded hereby. b. If any term or provision of this Agreement shall, to any extent, be held invalid or unenforceable, the remainder of this Agreement shall not be affected thereby. C. No waiver or any breach of any covenant or provision herein contained shall be deemed a waiver of any other covenant or provision herein contained, and no waiver shall be valid unless in writing and executed by the waiving party. No extension of time for performance of any obligation or act shall be deemed an extension of the time for performance of any other obligation or act. 4 (1951) MP2 15234105.5 d. Headings at the beginning of each paragraph and subparagraph are solely for the convenience of the parties and are not a part of and shall not be used to interpret this Agreement, the singular form shall include plural and the masculine shall include the feminine and vice versa. This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if all parties have prepared the same. Unless otherwise indicated, all references to sections are to the sections of this Agreement. All exhibits referred to in this Agreement are attached hereto and incorporated herein by this reference. f. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instrument. The execution of this Agreement shall be deemed to have occurred, and this Agreement shall be enforceable and effective, only upon the complete execution of this Agreement by the City, Owners, Lessee and Best Buy. g. Time is of the essence of each and every condition herein, and of each term and provision herein. h. In any litigation arising under, related to or in connection with this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees from the other parties. i. This Agreement shall be governed and construed in accordance with California law. j. If the day for performance under any time period specified in this Agreement shall fall on a Saturday, Sunday or holiday observed by the federal government or the State of California, then the time for performance under such time period shall automatically be extended to the next business day; provided, however, that the term "days" as used to compute time periods in this Agreement shall not be construed to mean "business days." [SIGNATURES ON NEXT PAGE.] 5 (1951) MP2 15234105.5 WHEREFORE, the parties have executed this Agreement as of the date first set forth above. ATTEST: City Clerk G (1951) MP2 15234105.5 CITY OF SAN RAFAEL, a chartekeeth By: �• / ) A. Nordhoff,nager OWNERS: TULIPANI FAMILY TRUST DATED JUNE 22, 1995, by its trustees: Rudolph L. Tulipani Donna E. Tulipani GEORGIA A. STAPLETON 1998 FAMILY TRUST DATED NOVEMBER 18, 1998, by its trustee: Georgia A. Stapleton 01/24/2006 15:40 FAX 4158581M BARTKO JANKEL....... Q010/013 �`-L 7ORE, the parties have executed this Agreement as of the date first fvt forth above. ATTEST: Ci,.y Clerk AF PROVED AS TO FORM: City Attorney CITY OF SAN RAFAEL, a charter city By: Kenneth A. Nordhoft; City Manager DID Z10:7•�1 State of Colorado TULIPANI FAMILY TRUST County of Pitkin DATED JUNE 22,1995, by its trustees: KA Notary Public:4-19 Rudolph L.1ti Commission Expires: -,:w3--o,7 Donna E. Tuli ani�� . p /,PSG.-sfP� "Z2. - GEORGIA A. STAPLETON 1998 t ilt //GGSfC� FAMILY TRUST DATED GV71ke NOVEMBER 18,1998, by its trustee: Georgia A. Stapleton MARION GARDNEli.-­ —! - NOTARY PUBLIC State of Colorado My Commission Expires 12--2007 6 (1951) MPI 15234.1:•° 5 01/241ZOU6 15 41 hAX bAlSihu,cnnnt� �� �, WHEREFORE, the parties have executed this Agreement as of the date first set forth above. ATTEST: City Clerk APPROVED AS TO FORM: City Attorney 6 (1051) MPI 15234105.5 CITY OF SAN RAFAEL, a charter city U -z Kenneth A. Nordhoff, City Manager OWNERS: TULIPANI FAMILY TRUST DATED JUNE 22, 1995, by its trustees: Rudolph L. Tulipani Donna E. Tulipani GEORGIA A, STAPLETON 1998 FAMILY TRUST DATED NOVEMBER 18, 1998, by its steer J Georata A. St 0 te—t on LESSEE: CAJAN, LLC, a California limited liability company, by its managing me ber: ame: J itle: _- r BEST BUY: BEST BUY STORES, L.P., a Virginia limited partnership By: BBC Property Co., a Minnesota corporation Its: General Partner By: Name: Title: (1951) N92 15234105.5 LESSEE: CAJAN, LLC, a California limited liability company, by its managing member: Name: Title: BEST BUY: BEST BUY STORES, L.P., a Virginia limited partnership By: BBC Property Co., a Minnesota corporation Its: eneral P r By: Nam Title: z - /d BOG 7 (1951) MP2 15234105.5 EXHIBIT A (Map Showing Property and Acquisition Parcel) [See attached.] (1951) MP2 15234105.5 f PUBLIC IMPROVEMENTS DEVELOPMENT AGREEMENT THIS PUBLIC IMPROVEMENTS DEVELOPMENT AGREEMENT ("Agreement") is entered into this[ �`"` day of �-1Yw tA, 2006, by and between the City of San Rafael, a charter city (the "City"), and Best Buy Stores, L.P., a Virginia limited partnership ("Best Buy") with reference to the following: RECITALS A. Best Buy has obtained an Environmental and Design Review Permit from the City for development of a retail facility on the real property shown on the map attached to this Agreement as Exhibit A (the "Property"). Best Buy subleases the Property. B. The City has plans to realign Dubois Street adjacent to the Property and the Environmental and Design Review Permit authorizes that realignment. In order to facilitate those realignment improvements, the City, the owners of the Property, the lessee of the Property and Best Buy have entered into the Acquisition Agreement providing for the City to acquire a portion of the Property that is adjacent to Dubois Street and is needed for the proposed improvements to Dubois Street. The portion of the Property that the City is to acquire is shown generally on the map attached to this Agreement as Exhibit A and will be more particularly defined and described pursuant to the Acquisition Agreement. The part of the Property that the City will acquire pursuant to the Acquisition Agreement is referred to in this Agreement as the "Acquisition Parcel." C. The City desires for Best Buy to construct the improvements associated with the Dubois Street realignment (the "Street Improvements" as defined with greater specificity in Section 1.1) in conjunction with development of the Property because the City expects cost savings from constructing the Street Improvements in conjunction and integrated with the construction of the other improvements on the Property and because Best Buy has agreed to compensation for the construction of the Street Improvements in the form of credits against City traffic mitigation fees that are required to be paid in connection with development of the Property. D. Best Buy will have responsibility for the design and construction of the Public Improvements. This Agreement sets out the process for that design, architectural coordination, hazardous materials mitigation and/or removal and construction and for Best Buy to receive credits against the traffic mitigation fee. THEREFORE, the City and Best Buy hereby agree as follows: ARTICLE 1. DESIGN OF PUBLIC IMPROVEMENTS. Section 1.1 Preparation of Construction Plans. Within sixty (60) days following the date of the Agreement, Best Buy shall prepare and submit to the City for review and approval detailed plans and specifications for the Public (1951) MP2 15212158.6 Improvements (the "Construction Plans"). The Construction Plans shall conform in all respects to the City's design, engineering, materials and other relevant requirements for the "Public Improvements" (as hereinafter defined). The Construction Plans shall provide for all the Public Improvements to be constructed on the Acquisition Parcel including "frontage improvements" such as sidewalk, driveway, curb, gutter, and drainage improvements relating to the Property (but specifically excluding those improvements that are necessitated by the realignment of Dubois Street), etc. (the "Frontage Improvements"), for which Best Buy will not receive credits against traffic mitigations fees. The balance of the improvements that Best Buy shall construct which are necessitated by the realignment of Dubois Street, and which are specifically excluded from the Frontage Improvements, are referred to in this Agreement as the Street Improvements, as previously defined. The costs associated with the Street Improvements which shall be a credit to Best Buy against the traffic mitigation fee and shall include those costs and expenses incurred in: the design of the road realignment, demolition, grading, paving, street lighting, "island" construction, drainage improvements, any environmental assessments, remediation, removal and/or disposal of hazardous materials, fifty percent (50%) of the cost of the curb and gutter construction, and procurement of any permits or approvals required for any of the foregoing elements of design or construction. The City hereby represents and warrants that Best Buy's payment of the traffic mitigation fee shall not be a condition of the City's issuance of any permits or approvals necessary for the commencement or completion of either the Frontage Improvements or Street Improvements. However, if upon completion of the work pursuant to this Agreement, Best Buy does not receive credits for the full amount of the traffic mitigation fee, Best Buy shall promptly pay to the City the balance of the traffic mitigation fee. It is the intent of the parties that the Frontage Improvements include those improvements that would be required for the development of the Property in the absence of the Dubois Street realignment and that the Street Improvements include those additional improvements that are required because of the Dubois Street realignment, and the costs associated therewith shall be set forth with specificity in the Construction Budget (as hereinafter defined). The Frontage Improvements and Street Improvements shall be collectively known as the "Public Improvements." The Construction Plans shall also provide for remediation, mitigation or removal of any Hazardous Materials on the Acquisition Parcel as required by the regulatory agency or agencies with jurisdiction over the Acquisition Parcel and to the satisfaction of the City as is reasonably necessary for the intended uses of the Acquisition Parcel. For the purposes of this Agreement, the term "Hazardous Materials" shall include, without limitation any hazardous or toxic materials, substances or wastes, such as (a) substances defined as "hazardous substances", "hazardous materials" or "toxic substances" in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 USC Section 9601, et seq.) and/or the Hazardous Materials Transportation Act (49 USC Section 1801, et seq.), as either of such acts are amended from time to time; (b) those materials identified in Sections 66680 through 66685 and Sections 66693 through 66740 of Title 22 of the California Administrative Code, Division 4, Chapter 30, as amended from time to time; (c) those materials defined in Section 255016) of the California Health and Safety Code, as amended from time to time, (d) any materials, substances, or wastes which are toxic, ignitable, corrosive, or reactive and which are regulated by any local governmental authority, any agency of the State of California or any agency of the United States Government; (e) asbestos, petroleum, and petroleum based products, urea formaldehyde foam insulation, polychlorinated biphenyls (PCBs), and freon and other chlorofluorocarbons; and (f) (1951) MP2 15212158.6 2 those substances defined as any of the foregoing in the regulations adopted and publications promulgated pursuant to each of the aforesaid laws. Section 1.2 Preparation of Budget. (a) At the time Best Buy submits the Construction Plans to the City, it shall also submit a detailed construction budget for the design and construction of the Public Improvements (the "Construction Budget") showing the costs of constructing the Public Improvements. The map and legal description of the Acquisition Parcel will identify the portion of the Acquisition Parcel where the Frontage Improvements will be constructed and the portion of the Acquisition Parcel where the Street Improvements will be constructed. The Construction Budget, shall identify separately the costs for the construction of the Frontage Improvements and the Street Improvements. The Construction Budget shall also include the costs of: (i) preparing the maps and legal descriptions of the Acquisition Parcel pursuant to the Acquisition Agreement; (ii) obtaining any and all necessary construction bonds, permits and approvals; (iii) obtaining any and all insurance required under Section 2.5 hereof; and (iv) preparing post -construction "As - Built" construction plans as required under Section 2.8(a). Where costs shown in the Construction Budget are allocated between the Frontage Improvements and the Street Improvements or among the Frontage Improvements, Street Improvements and the remaining development on the Property, such allocations of costs shall be reasonable allocations. The Construction Budget shall also separately state the costs for remediation, mitigation or removal of any Hazardous Materials on the Acquisition Parcel. Section 1.3 ON Review of Construction Plans and Construction Budget. The City shall review the Construction Plans and the Construction Budget. Within thirty (30) days following submittal, the City shall either approve or disapprove in writing the Construction Plans and the Construction Budget. If disapproved, the City shall provide Best Buy with a detailed explanation of the reasons for disapproval. Best Buy shall thereafter make good faith and diligent efforts to make such changes to the Construction Plans and/or Construction Budget as are necessary to remove the City's basis for disapproval and submit such changes to the City for review. If the City has not approved the Construction Plans and the Construction Budget within sixty (60) days following the City's disapproval of the initially submitted Construction Plans and Construction Budget, then either party may terminate this Agreement by giving written notice of intent to terminate to the other party. Best Buy understands and agrees that the City expects that the sum of the Construction Budget for the Street Improvements and the consequential credit against traffic mitigation fees for the costs of constructing the Street Improvements and the amount of credit against the traffic mitigation that will be given pursuant to the Acquisition Agreement will not exceed the amount of the traffic mitigation fees payable in connection with the development of the Property in accordance with the Environmental and Design Review Permit for development of the Property; if such sum exceeds the amount of the traffic mitigation fees payable in connection with the development of the Property in accordance with the Environmental and Design Review Permit for development of the Property, the City may either disapprove the Construction Budget or approve the Construction Budget subject to obtaining the funding to pay the costs in excess of the amount of the traffic mitigation fee credits. If the City approves the Construction Budget subject to the City obtaining funding, Best Buy (1951) MP2 15212158.6 shall not go forward with construction of the Public Improvements until the City has notified Best Buy that it has obtained the funding, and the City and Best Buy have agreed to a payment process for the City funding of the costs in excess of the traffic mitigation fee credit. ARTICLE 2. CONSTRUCTION OF PUBLIC IMPROVEMENTS. Section 2.1 Construction Process. Once the City has approved the Construction Plans and the Construction Budget, Best Buy shall proceed to construct the Public Improvements in accordance with the provisions of this Article 3. Section 2.2 Construction Contract. Best Buy shall enter into a construction contract with a reputable contractor approved by the City (which approval shall not be unreasonably withheld), providing for the contractor to construct the Public Improvements in accordance with this Agreement. The construction contract shall contain the provisions required by this Agreement and shall be submitted to the City for review and approval to determine if the contract conforms to this Agreement. The construction contract shall be only for the construction of the Public Improvements and shall not include any other work of construction on the Property. Section 2.3 Construction Bonds. Best Buy shall provide, or cause its contractor to provide, to the City, for the benefit of the City payment and performance bonds in an amount equal to one hundred percent of the cost of construction of the Public Improvements as shown in the Construction Budget. Such bonds shall be from a reputable bonding company, admitted in California and approved by the City which approval shall not be unreasonably withheld if the bonding company has sufficient financial strength to provide and make payments on bonds of the size required under this section. Section 2.4 Permits and Approvals. Best Buy shall obtain all governmental permits and approvals necessary to construct the Public Improvements. Section 2.5 Insurance. Best Buy shall obtain and provide evidence to the City of the following insurance: (a) Builders Risk (Course of Construction) Insurance. Builders' risk (course of construction) insurance coverage shall be provided on a special form basis, including the perils of flood, on the work and all property to be incorporated therein. Such coverage shall be in an amount not less than the full replacement value of the Public Improvements, and shall not contain any co-insurance provisions. This coverage shall include an endorsement naming the City as additional insured and a copy of this endorsement shall be provided to the City. (1951) MP2 15212158.6 4 (b) Statutory Workers' Compensation Insurance,. Statutory workers' compensation and employer's liability insurance for not less than one million dollars ($1,000,000) per occurrence for all employees engaged in construction of the Public Improvements with an insurer's waiver of subrogation against the City. Such insurance shall include broad form all states/other states coverage. (c) Liabilitv Insurance. Liability insurance as follows: (i) Commercial general liability insurance for bodily injury (including death), personal injury and property damage that provides limits of not less than three million dollars ($3,000,000). (ii) Liability insurance coverage shall include: (A) Premises and operations; (B) Contractual liability; (C) Broad form property damage liability; (D) Personal injury liability; (E) Explosion, collapse and underground hazards; (F) Independent contractors; (G) Cross liability and severability of interests clauses providing that the insurance applies separately to each insured except with respect to the limits of liability; and (H) The following endorsements, copies of which shall be provided to City: 1. Inclusion of City and its directors, officers, representatives, agents and employees as additional insureds; and 2. Stipulation that the insurance is primary insurance and that neither the City nor its insurers be called upon to contribute to a loss. (iii) SPECIAL NOTICE - CLAIMS MADE COVERAGE: If any such liability coverage is written on a claims made basis, the certificate of insurance must clearly so state and the following additional information must be provided: (I) Is defense coverage included in the limit (yes or no); (J) Aggregate limitations; 1. General aggregate; and 2. Products/completed operations aggregate; (K) Retroactive date; (1951) MP2 15212158.6 5 (L) Length of time for extended reporting period; (M) Limitations on invoking reporting period (if other than nonpayment); and (N) Is "Notice of Circumstances" allowed (yes or no). (d) Notice of Cancellation. All policies must contain a provision providing not less than thirty (30) days' prior written notice to City of any cancellation, reduction or material change in coverage. (e) Oualifvina Insurers. All policies required by this section shall be issued by companies that hold a current policyholder alphabetic and financial size category rating of not less than A:VIII according to Best's Insurance Reports. (f) Waiver of Subrogation. To the extent permitted by law and without affecting the coverage provided by insurance required to be maintained hereunder, City waives any right to recover against Best Buy (a) damages for injury or death of persons, (b) damage to property, (c) damage to the improvements or any part thereof, or (d) claims arising by reason of any of the foregoing, to the amount and extent that such damages and/or claims are covered (and only to the extent of such coverage) by insurance actually carried by either Best Buy or the City. This provision is intended to restrict each party (as permitted by law) to recovery against insurance carriers to the extent of such coverage, and waive fully, and for the benefit of each, any rights and/or claims that might give rise to a right of subrogation in any insurance carrier. (g) Proceeds. With respect to builders' risk (course of construction) and all- risk property insurance, Best Buy shall adjust the loss and the proceeds shall be used to construct or reconstruct the Public Improvements in accordance with the provisions of this Agreement. Section 2.6 Commencement of Construction. Once Best Buy has completed the tasks set forth in Sections 3.2 through 3.5 and provided the City has acquired the Acquisition Parcel, the City shall give Best Buy a right of entry to the Acquisition Parcel and Best Buy shall promptly commence construction of the Public Improvements. Best Buy shall thereafter proceed diligently to construct the Public Improvements and complete them within six (6) months following commencement of construction. Notwithstanding the foregoing, Best Buy may delay commencement of construction of the Public Improvements so as to allow coordination of construction of the Public Improvements with the construction of the other development on the Property. (1951) MP2 15212158.6 0 Section 2.7 Construction of Public Improvements. Best Buy shall, or shall require its contractor for the Public Improvements, to do the following; (a) Furnish all labor and materials and perform, in a good and workmanlike manner, all the work for construction of the Public Improvements in accordance with the approved Construction Plans. (b) Supervise and direct the construction of the Public Improvements. (c) Resolve, in consultation with the City any questions involving the interpretation of any the Construction Plans; (d) Maintain at the construction site, all documents relating to construction of the Public Improvements, and maintain a record set of drawings showing all changes and alterations that have been made to the original construction plans. (e) Comply with all governmental regulations, including safety regulations, in constructing the Public Improvements. (f) Take all necessary steps to ensure that the prevailing wages and apprenticeship provisions of the Labor Code Sections 1720 et seq. are fully met in connection with construction of the Public Improvements. (g) Keep adjoining real property not being used for the construction free from accumulation of waste materials and rubbish caused by construction operation. (h) Be responsible for collecting, from time to time, all paper, cartons and other debris caused by the construction. (i) Assure that all materials furnished shall be as new unless stated otherwise in the approved Construction Plans or when materials are specified to conform to any standard, the materials delivered to the construction site shall bear the manufacturer's label setting for the specifications of the materials. In the construction of the Public Improvements, the City may at no cost to Best Buy, furnish a representative to review and inspect the construction of the Public Improvements, if it so desires. Said representative shall have the right to enter the Acquisition Parcel to inspect the construction of the Public Improvements on behalf of the City to ensure compliance with the Construction Plans, design specifications and City standards. The representative shall cooperate and consult with Best Buy and discuss all problems and issues arising out of the work. In the event that work is reasonably deemed unsatisfactory per industry standards and needs to be corrected, the decision of the City's representative will be final. Construction of the Public Improvements may involve alterations, deviations and changes to the Construction Plans. No (1951) MP2 15212158.6 changes will be made unless they have been discussed and approved in writing by the City's representative. Section 2.8 Completion. (a) When Best Buy believes the Public Improvements has been substantially completed in accordance with the Construction Plans, Best Buy shall so notify the City and shall provide the City with a set of reproducible "As Built" Construction Plans and an electronic file of same in AutoCad format, identifying all changes that have been made to the plans. Within ten (10) days following the receipt of the notice from Best Buy and receipt of "As Built" Construction Plans, the City shall perform an inspection of the Public Improvements in question and take all other action necessary to determine that: (i) The Public Improvements has been completed in accordance with the approved Construction Plans; (ii) Any permits, licenses, or other authorizations required for use of the Public Improvements shall have been issued by the governmental authorities having jurisdiction over the Public Improvements and; (iii) No stop notices or other liens or encumbrances have been filed in connection with the Public Improvements, or property on which it is located, as the case may be, or any of the materials incorporated therein or purchased in connection therewith other than any stop notice or other lien for which Best Buy or its contractor has posted a bond or other security satisfactory to the City. (b) The City shall complete its inspection and review within thirty (30) days of receipt of Best Buy's notice delivered pursuant to subsection (a) and promptly thereafter notify Best Buy in writing whether the Public Improvements have been completed in accordance with the approved Construction Plans. If the Public Improvements have been completed in accordance with the approved Construction Plans, the City shall provide Best Buy a certificate so stating. If the Public Improvements have not been completed in accordance with the approved Construction Plans, the City shall notify Best Buy with particularity the grounds upon which it is unwilling to certify completion. Best Buy shall then act promptly to correct any deficiencies that prevent the certification of completion. The certification of completion shall not relieve Best Buy of its obligations under Section 2.9 below. Section 2.9 Warranties. If the City determines, at any time prior to the expiration of the applicable warranty period, as set forth below in this section, that there are defects in any part of the construction of the Public Improvements, the City shall notify Best Buy in writing and Best Buy shall cause the contractor or subcontractors to correct or cause the defect or failure to be corrected within forty- five (45) days after receipt of such written request to Best Buy (unless such correction cannot, in the exercise of reasonable diligence, be completed within that period, in which event that period shall be extended for so long as it shall be reasonably required to complete or cause to be (1951) MP2 15212158.6 completed such corrections). The applicable warranty period shall mean one year from the date of completion unless a longer warranty period is obtained from any subcontractor or supplier with respect to the part of the construction performed. Best Buy shall make good faith and diligent efforts to obtain warranties from the contractor, subcontractors and suppliers in accordance with the specifications included in the approved Construction Plans. Section 2.10 Condition of Acquisition Parcel. City and Best Buy agree that City is making the Acquisition Parcel available for construction of the Public Improvements in an "as is" condition and that Best Buy is solely responsible for demolition, site preparation, and correction of any soils, subsurface or structural conditions on the Acquisition Parcel (including but not limited to removal, remediation or mitigation of hazardous and toxic materials) and for otherwise putting those parcels in a condition suitable for construction of the Public Improvements including the remediation, mitigation or removal of any Hazardous Materials. Best Buy represents that it has inspected the Acquisition Parcel and all data relating thereto, including, without limitation, soils test reports and data, locations and conditions of adjacent structures and utilities, and governmental requirements which may affect its activities in constructing the Public Improvements, and has satisfied itself as to the matters set forth in inspections and reports. The City has made no representation or warranty as to the condition of the Acquisition Parcel or its fitness for the reconstruction contemplated to be undertaken on that property under this Agreement. ARTICLE 3. OTHER CONSTRUCTION REQUIREMENTS Section 3.1 Prevailina Wanes. (a) Best Buy shall and shall require all contractors, subcontractors and materialpersons to pay prevailing wages in the construction of the Public Improvements, as those wages are determined pursuant to Labor Code Sections 1720 et seq. and implementing regulations of the Department of Industrial Relations and comply with the other applicable provisions of Labor Code Sections 1720 et seq. and implementing regulations of the Department of Industrial Relations, including but not limited to requirements for employment of apprentices and retention and production of wage records. Best Buy shall or shall cause the contractors and subcontractors to keep and retain such records as are necessary to determine if such prevailing wages have been paid as required pursuant to Labor Code Sections 1720 et seq. During the construction of the Improvements, Best Buy shall or shall cause the contractor to post at the construction site the applicable prevailing rates of per diem wages. Best Buy shall indemnify, hold harmless and defend (with counsel reasonably acceptable to the City) the City against any claim for damages, compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any person or entity (including Best Buy, its contractors and subcontractors) to pay prevailing wages as determined pursuant to Labor Code Sections 1720 et seq. and implementing regulation or comply with the other applicable provisions of Labor Code Sections 1720 et seq. and implementing regulations of the Department of Industrial Relations in connection with any construction. Best Buy's obligation to indemnify under this Section 4.1 shall be interpreted broadly to apply to any legal or administrative proceeding, arbitration, or enforcement action. (1951) MP2 15212158.6 9 Section 3.2 Fair EmDlovment Opportunity. Best Buy and its contractors and subcontractors and materialpersons their successors, assigns shall not discriminate against any employee or applicant for employment in connection with the construction of the Public Improvements because of race, color, religion, ethnic group identification, sex, sexual preference, marital status, ancestry or national origin. Each of the following activities shall be conducted in a non-discriminatory manner: hiring; upgrading; demotion and transfers; recruitment and recruitment advertising; layoff and termination; rate of pay and other forms of compensation; and selection for training including apprenticeship. Section 3.3 Liens and Claims. (a) Best Buy shall not permit any mechanic's, laborer's or materialperson's lien, stop notice or any security interest at any time to be filed against all or part of the Public Improvements or the Acquisition Parcel or any improvements thereon or interest therein, or any lien of any nature to be filed or permitted to be filed against the assets of or funds appropriated to the City arising out of any construction by Best Buy. If such lien notice or interest is filed, Best Buy shall promptly discharge it. (b) Best Buy agrees that if any of its contractors, subcontractors or suppliers performing work, or if anyone claiming directly or indirectly under or through Best Buy or any such contractor, subcontractor or supplier shall suffer, permit, file or cause to be filed any mechanic's or other lien, stop notice or security interest against the Public Improvements or Acquisition Parcel, or against any assets of or funds appropriated to the City within thirty (30) days after notice of filing thereof, Best Buy shall cause such lien, notice, or security interest to be discharged of record by payment, deposit, bond, order of court of competent jurisdiction or otherwise. If Best Buy shall fail to cause such lien, notice, or security interest to be discharged of record within the period aforesaid, and if such lien, notice or security interest shall continue for an additional ten (10) business days after notice by City to Best Buy, then, in addition to any other right or remedy, City may, but shall not be obligated to, discharge the same either by paying the amount claimed to be due or by procuring the discharge of record of such lien, notice, or security interest. Any amount so paid, including all reasonable costs and expenses incurred in connection therewith, together with annual interest rate of ten percent (10%) from the respective dates of the City's making of the payment or incurring of the reasonable costs and expenses, shall at the City's option be deducted from the amount of credit Best Buy receives pursuant to Section 4.1 below against the traffic mitigation fee payable in connection with development of the Property. Notwithstanding the foregoing, Best Buy shall not be required to discharge of record any such lien or security interest if Best Buy is in good faith contesting the same and has furnished a cash deposit, an irrevocable letter of credit, a security bond or such other security as may be reasonably satisfactory to the City. (1951) MP2 15212158.6 10 Section 3.4 Compliance with Laws. In any construction of the Public Improvements, Best Buy shall and shall cause its contractors, subcontractors and materialpersons to comply with all applicable government regulations, laws, ordinances, rules or policies. Section 3.5 Indemnity. Best Buy shall indemnify, defend, and hold the City, its officers, agents, and employees, harmless against all claims, demands, damages, losses, costs, expenses, including without limitation, attorneys' fees and costs of litigation, or liabilities made against them which arise out of, or in connection with, the construction of the Public Improvements; provided, however, that this indemnity shall not extend to any claim arising solely from the City's negligence, intentional misconduct or the City's negligent failure to perform its obligations under this Agreement. ARTICLE 4. FEE CREDITS Section 4.1 Amount of Credits. If, despite its diligent and good faith efforts, Best Buy is unable to obtain City approval of the Construction Plans or the Construction Budget pursuant to Section 1.3 above, then Best Buy shall receive credit against payment of the traffic mitigations fee payable in connection with the development of the Property in accordance with the Environmental and Design Review Permit, for the reasonable amount Best Buy has expended for preparing the Construction Plans for the Street Improvements and for preparing the description of the Acquisition Parcel. When the City has certified completion of the Public Improvements pursuant to Section 2.8 above, Best Buy shall receive credit against payment of the traffic mitigations fee payable in connection with the development of the Property in accordance with the Environmental and Design Review Permit in the amount of the approved Construction Budget for the Street Improvements but excluding any amount included in the Construction Budget for the remediation, mitigation or removal of any Hazardous Materials. Notwithstanding anything to the contrary set forth in the foregoing, in the event Best Buy is required to pay the full amount of the traffic mitigation fee prior to completing construction of the Public Improvements or being issued a permit therefor, then the City hereby represents and warrants that no later than fifteen (15) days after the City has issued a certificate of completion pursuant to subsection (b) of Section 2.8 above, the City shall reimburse Best Buy for the full amount of the credit against the traffic mitigation fee that Best Buy is entitled to receive under the terms and conditions of this Agreement. ARTICLE 5. MISCELLANEOUS Section 5.1 Waiver. (1951 MP2 15212158.6 11 No provision, requirement, default, or breach of this Agreement shall be deemed waived by any party except in writing. Section 5.2 Notices. Formal notices, demands, and communications between the City and Best Buy shall be sufficiently given if dispatched by certified or registered mail, facsimile transmission, or reputable overnight delivery service, or delivered personally, to the principal offices of the City and Best Buy as set forth below. Courier service, including but not limited to, Federal Express, shall be considered personal delivery. City: City of San Rafael 1400 Fifth Avenue San Rafael, CA 94901 Attn: Public Works Director Best Buy: Best Buy Stores, L.P. 7601 Penn Avenue South Richfield, MN 55423 Attn: Legal Department - Real Estate Any notice shall be deemed to have been given on the date of delivery or the date that delivery is refused by the addressee, as shown on the return receipt. Such written notices, demands, and communications may be sent in the same manner to such other addresses as the affected party may from time to time designate by mail as provided in this Section 5.2. Section 5.3 Governing Law. This Agreement shall be governed by the laws of the State of California. Section 5.4 Assignment. Best Buy shall not assign this Agreement. In no event shall any assignment by Best Buy release it from its obligations under this Agreement. This section shall in no way prevent or limit Best Buy from entering into contracts with the contractor, subcontractors, or materialpersons that may be necessary or desirable in the performance of Best Buy's responsibilities under this Agreement. Section 5.5 Captions. (1951) MP2 15212158.6 12 The captions used in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit, or describe the scope or the intent of any section of this Agreement. Section 5.6 Ille1?ality. If this Agreement contains any unlawful provisions, the same shall be deemed of no effect and shall, upon the application of either party, be deemed stricken from this Agreement without affecting the binding force of the remaining provisions of this Agreement. Section 5.7 No Third -Party Rights. Nothing in this Agreement shall create or shall give to third parties any claim or right of action against the City or Best Buy beyond such as may legally exist, irrespective of this Agreement. Section 5.8 Waiver of Remedies. Best Buy agrees that no default, act, or omission on the part of the City, shall constitute a material breach of contract entitling Best Buy to cancel or rescind this Agreement, or to suspend or abandon performance thereof. Section 5.9 Modification of Agreement. No change or modification, termination or discharge of this Agreement in any form whatsoever shall be valid or enforceable unless it is in writing and signed by the party to be charged therewith or its duly authorized representative; provided, however, that any change in, or modification, termination, or discharge of, this Agreement expressly provided for in this Agreement shall be effective as so provided. Section 5.10 Entire Aareement. This Agreement and the Acquisition Agreement constitute the entire agreement between the parties with regard to the subject matters of this Agreement and incorporates all prior understandings in connection with the subject matters of this Agreement. Section 5.11 Unavoidable Delays. In addition to specific provisions of this Agreement, performance by either party shall not be deemed to be in default where delays or defaults are due to strikes, lockouts, acts of war, terrorism or civil disobedience, insurrection, riots, floods, earthquakes, fires, casualties, Acts of God, acts of the public enemy, epidemics, quarantines, embargoes, litigation, unusually severe weather or similar cause beyond the control of, and without fault of, the party claiming an extension of time to perform. An extension of time for any cause will be deemed granted if notice by the party claiming such extension is sent to the other within ten (10) days from the commencement of the cause and such extension of time is not rejected in writing by the other (1951) MP2 15212158.6 13 party within ten (10) days following receipt of the notice. Times for the performance under this Agreement may also be extended by written agreement of the City and Best Buy. (1951) MP2 15212158.6 [SIGNATURES ON NEXT PAGE.] 14 IN WITNESS WHEREOF, the parties executed this Agreement on or as of the date first written above. APPROVED,",TO FORM: CITY: ACityAtto City of San Rafael y By: kahRQthA. Nordhoff, City M a er ATTEST: /%► -��i - >ty Clerk (1951) MP2 15212158.6 BEST BUY: BEST BUY STORES, L.P., a Virginia limited partnership By: BBC Property Co., a Minnesota corporation Its: General Partner By: Name: Title: 15 IN WITNESS WHEREOF, the parties executed this Agreement on or as of the date first written above. APPROVED AS TO FORM: CITY: City of San Rafael City Attorney By: ATTEST: City Clerk (1951) MP2 15212158.6 Kenneth A. Nordhoff, City Manager BEST BUY: BEST BUY STORES, L.P., a Virginia limited partnership By: BBC Property Co., a Minnesota corporation Its: G eral P By: Nam Title: 2-ro�D� is EXHIBIT A (Map Showing Property and Acquisition Parcel) [See attached.] A-1 (1951) MP2 15212158.6 v