HomeMy WebLinkAboutCD Option to Lease (Centertown Project)DocuSign Envelope ID: 64284353-C3E8-4C7A-A2B1-1448EAE1C932
OPTION TO LEASE
(CENTERTOWN PROJECT)
This Option to Lease ("Agreement") is entered into as of AugustCJ4, 202O ("Effective
Date"), by and between the City of San Rafael, a municipal corporation, in its capacity as
successor in interest to the housing assets of the former Redevelopment Agency of the City of San
Rafael ("Owner"), and Centertown Il, LLC, a California limited liability company ("Optionee").
Owner and Optionee may individually be referred to as "Party" and collectively referred to as
"Parties".
RECITALS
A. Owner, as successor housing agency to the former Redevelopment Agency of the
City of San Rafael, owns that certain real property located at 855 C Street, in the City of San
Rafael, as more particularly described in Exhibit A attached hereto and incorporated herein by this
reference ("Property").
B. Centertown Associates Ltd., a California limited partnership ("Centertown Ltd.")
acquired a leasehold interest in the Property ("Leasehold Estate") from Owner's predecessor -in -
interest, the former Redevelopment Agency of the City of San Rafael, pursuant to that certain
Ground Lease Centertown Project dated November 6, 1989, as amended by that certain First
Amended and Restated Ground Lease dated August 20, 1990, that certain Second Amendment to
the First Amended and Restated Ground Lease dated May 6, 1991, and that certain Third
Amendment to First Amended and Restated Ground Lease Centertown Project dated April 1, 1993,
and as may be further amended (collectively, "Existing Ground Lease"). The term of the Existing
Ground Lease is seventy-five (75) years, which term expires November 6th, 2064
C. Pursuant to the terms of the Existing Ground Lease, Centertown Ltd. developed,
constricted, owns and operates a residential development consisting of sixty (60) units rented to
and occupied by low income households and commonly known as Centertown Apartments
("Project") on the Property.
D. The Project is in need of rehabilitation. In order to finance the rehabilitation, a new
allocation of low-income housing tax credits pursuant to Internal Revenue Code Section 42
("LIHTC") will be obtained, which requires that (i) the Project be owned by a new, to be formed
limited partnership (the "Partnership") and (ii) the term of the ground lease for the Property be
ninety-nine (99) years. As such, (i) Optionee will enter into a purchase and sale agreement with
Centertown Ltd. to purchase the Project (the "PSA") and (ii) the Existing Ground Lease will be
terminated and Optionee will enter into a new ground lease with Owner to lease the Property
pursuant to this Agreement. Both the PSA and this Agreement will be assigned to, and assumed
by, the Partnership. Optionee will be the general partner of the Partnership.
E. The parties desire to enter into this Agreement to set forth the terms of the
option from Owner to Optionee to lease the Property.
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AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, which are hereby
incorporated into this Agreement by this reference, and the mutual benefits accruing to the
parties hereto and other valuable consideration, the receipt and sufficiency of which consideration
is hereby acknowledged, it is hereby declared, understood and agreed as follows:
Section 1. Grant of Option and Consideration. For consideration of One Hundred
Dollars ($100.00), Owner grants to Optionee an option ("Option") to ground lease the Property
on the terms and conditions set forth in this Agreement.
Section 2. Term of Option. The term of the Option shall commence on the Effective
Date of this Agreement and shall expire at 12:01 a.m. on the date that is three (3) years from the
Effective Date, unless such date is extended by a written amendment to this Agreement executed
by Owner and Optionee (as may be extended, the "Option Term"). If the expiration date of the
Option Term falls on a Saturday, Sunday, or legal holiday in the State of California, then the
Option may be exercised on, and shall expire at midnight on, the next following business day.
Optionee may request an extension of the Option Term for an additional two (2) years by giving
written notice to Owner no later than thirty (30) days prior to the expiration of the initial Option
Term ("Extension"), which Extension shall be subject to approval by the City Council.
Section 3. Exercise of Option. Optionee may exercise the Option by delivering to
Owner, during the Option Term, a written notice of the exercise of the Option ("Option Notice").
Section 4. Lease of the Property. Following execution and delivery of the Option
Notice, the Parties shall negotiate in good faith a new ground lease for the Property ("Ground
Lease"). The Parties agree to use the Existing Ground Lease as the model for the Ground Lease
with the Material Lease Term changes set forth in Exhibit B hereto. Any new Ground Lease shall
be subject to approval by Optionee's board and the City Council.
Section 5. Closing.
(a) Close of Escrow. The Parties' execution and delivery of a new Ground
Lease as contemplated herein shall be effectuated through an escrow with an escrow
holder mutually acceptable to the Parties. The escrow shall close within ninety (90) days
after the Option is exercised ("Close of Escrow"), which date may be extended by Optionee in
its reasonable discretion for up to an additional thirty (30) days upon notice to Owner of such
intent by Optionee.
(b) Closing Expenses. If the Option is exercised, Optionee shall pay any
documentary transfer tax, revenue tax or excise tax (and any surtax thereon) due in connection
with the consummation of this transaction, the premium for Optionee's title policy, Owner's
title policy premium and all other escrow and closing costs. Optionee shall be responsible for its
own attorneys' fees and Optionee shall also reimburse Owner for Owner's attorneys' fees, not
to exceed $10,000. Owner shall be responsible for any of Owner's attorneys' fees in excess of
$10,000.
Section 6. Option Not to Be Recorded. This Agreement will not be recorded.
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Section 7. Notice. Any notice or other communication given or made pursuant to
this Agreement shall be in writing and shall be deemed given if. (a) delivered personally or by
courier, (b) sent by overnight express delivery, (c) mailed by registered or certified mail
(return receipt requested), postage prepaid, or (d) sent by email in PDF format ("Email
Notification") provided that (i) any Email Notification received after 5:00 p.m. on a business day
shall be deemed received on the next business day and (ii) the sender also delivers the
communication by one of the methods listed in (a) -(c) (the "Secondary Notice") provided that if the
recipient of the Email Notification responds with an email acknowledgement of receipt (an
automatic "read receipt" does not constitute acknowledgement), such Secondary Notice is not
required, to a party at its respective address set forth below (or at such other address as shall
be specified by the party by like notice given to the other party):
If to Owner:
City of San Rafael
1400 Fifth Avenue, Room 203
San Rafael, CA 94901
Attn: Jim Schutz, City Manager
jim.schutz@cityofsanrafacl.org
With a copy to:
And:
City of San Rafael
1400 Fifth Avenue, Room 202
San Rafael, CA 94901
Attn: Robert Epstein, City Attorney
rob. epstein@cityofsanrafael.org
Burke, Williams & Sorensen, LLP
1901 Harrison St., Suite 900
Oakland, CA 94612
Attn: Gerald J. Ramiza
jramiza@bwslaw.com
If to Optionee:
Centertown II, LLC
c/o BRIDGE Housing Corporation
600 California Street, Suite 600
San Francisco, CA 94108
Attn: Rebecca V. Hlebasko and Sarah White
rhlebasko@bridgehousing.com
swhite@bridgehousing.com
And:
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Centertown II, LLC
c/o EAH, Inc.
22 Pelican Way
San Rafael, CA 94901
Attn: Welton Jordan
Welton.Jordan@eahhousing.org
With a copy to:
Goldfarb & Lipman LLP
1300 Clay Street, 11th Floor
City Center Plaza
Oakland, CA 94612
Attn: Erica Williams Orcharton
ewilliams@goldfarblipman.com
Any notice provided in accordance with this Section shall be deemed to have been
given on the delivery date or the date that delivery is refused by the addressee, as shown on
the return receipt.
Section 8. Miscellaneous.
(a) Captions. The captions used herein are for convenience of reference only
and are not part of this Agreement and do not in any way limit or amplify the terms and
provisions hereof.
(b) Severability. If any portion of this Agreement is declared by a court of
competent jurisdiction to be invalid or unenforceable, such portion shall be deemed severed from
this Agreement and the remaining parts shall continue in full force as though such invalid or
unenforceable provision had not been part of this Agreement.
(c) Time. Time is of the essence of each and all of the obligations,
covenants and conditions of this Agreement.
(d) Further Documentation. Upon the reasonable request of the other party, each
party will execute, acknowledge, and deliver or cause to be executed, acknowledged and delivered,
such further instruments and documents as may be reasonably necessary in order to carry out the
intent and purpose of this Agreement, including, but not limited to escrow instructions.
(e) Default. Failure by any party to perform its obligations as provided in this
Agreement shall constitute an event of default hereunder. 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, or for such longer period of time as may be reasonably necessary to
effect cure (in no event to exceed sixty (60) days), so long as the defaulting party has commenced
cure within such fifteen (15) day period and is diligently proceeding to completion, the non -
defaulting party may exercise the remedies set forth below.
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(f) Remedies; No Damages. In no event shall a Party be liable in damages for
any default under this Agreement, it being expressly understood and agreed that the sole legal
remedy available to a Party for a breach or violation of this Agreement by the other Party shall be an
action in specific performance, or other injunctive or declaratory relief to enforce the provisions of
this Agreement by the other Party, or to terminate this Agreement.
(g) Governing Law. This Agreement shall be interpreted in accordance
with and governed by the laws of the State of California.
(h) Assignment by Optionee. Optionee may assign this Agreement to the
Partnership without the need for consent from Owner. Any other assignment shall require the prior
written consent of the Owner.
(i) Authorization; Binding Effect. The execution, delivery and performance by
the Optionee of this Agreement and any related documents and actions have been duly
authorized by all requisite action of the Optionee and create legally binding obligations for the
Optionee. The rights and obligations of the Owner and Optionee under this Agreement shall
inure to the benefit of, and bind, their respective successors and assigns.
0) Commission. Each party to this Agreement represents to the other Party that
is has not engaged or used the services of any person, firm, or corporation that may claim a broker's
commission or finder's fee upon execution or exercise of the Option, and each Party to this
Agreement agrees to hold the other Party harmless from any loss, damage, expense, or liability,
including attorney's fees, resulting from any claim by any person, firm, or corporation based upon
its having acted as broker or finder on behalf of said indemnifying Party.
(k) Entire Agreement. This Agreement constitutes the entire agreement
between Owner and Optionee with respect to the subject matter hereof and supersedes all prior
offers and negotiations, oral and written. This Agreement may not be amended or modified in any
respect whatsoever except by an instrument in writing signed by Owner and Optionee.
(1) Counterparts. This Agreement may be executed in counterparts, each of
which will be deemed an original, but all of which together will be deemed to be a single
document.
(m) No Joint Venture or Partnership. Owner and Optionee hereby renounce
the existence of any form of agency relationship, joint venture, or partnership between Owner
and Optionee and agree that nothing contained herein or in any new Ground Lease executed in
connection herewith shall be construed as creating any such relationship between Owner and
Optionee other than landlord and tenant.
(n) Facsimile and Electronic Signatures. Facsimile or electronic signatures
may be used in place of original signatures on this Agreement. Each party intends to be bound
by the signatures on the facsimile or electronic document, is aware that the other parties will rely
on the facsimile or electronic signatures, and hereby waives any defenses to the enforcement of
the terms of this Agreement based on the use of a facsimile or electronic signature.
S
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IN WITNESS WHEREOF, Owner and Optionee have executed this Agreement as of the
Effective Date.
ATTEST:
L
f� Lin say Lara�o, City Clerk
APPROVED AS TO FORM:
L-4. 6
bj Robert Epstein, City Attorney
[1111/0i�l a�
CITY OF S N RAFA , a muni ipal corporation
By: ' k
Name: JikR4Ht7
�.�
Title: City Manager
OPTIONEE:
CENTERTOWN II, LLC, a California limited liability
company
By: BRIDGE HOUSING CORPORATION, a
California nonprofit public benefit
corporation, its managing member
By: �DocuSigned by:
.`.
Name: Eilm'i a ge'shadri
Its: vice President
By: EAH, Inc., a California nonprofit
public benefit corporation, its
member
Welton Jordan,,,, 12aoe20120648- 700
By:
Name: _Welton Jordan
Its: Assistant Secretary
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EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
LEGAL
DESCRIPTION
Parcel A
All that certain real property situated in the City of San
Rafael, County of Marin, State of California, described as
follows:
"Map of Centertown an Air -space Condominium. Also Being a
reversion to acreage being the Lands of U.F. Service Corp., a
California Corporation, as described by Deed recorded under
Recorder's Serial No. 83-16358, Marin county Records and a
portion of the lands described by the Record of survey filed
in Book 18 of Surveys, at Page 47, Marin County Records",
filed for record December 13, 1983 in Volume 18 of Maps, at
Page 98, Marin County Records.
Parcel B
All that certain real property situated in the City of San
Rafael, county of Marin, State of California, described as
follows:
BEGINNING at a point on the Westerly line of C Street
distant thereon log feet 8 inches Northerly from the
intersection of said Westerly line of C Street and the
Northerly line of Second Street said point of beginning
being the Southeast corner of that lot conveyed by Loretta
Ceaser to John Mirata by Deed recorded in
Book 165 of Deeds, page 269, running thence Westerly at a
right angle to C street and along the Southerly line of the
Lot so conveyed by Ceaser to Mireta 150 feet; thence
Southerly at a right angle 42 feet; thence Easterly at a
right angle 150 feet to the Westerly line of C Street thence
Northerly along the said line of C Street 42 feet to the
point of beginning.
BEING a portion of Block 15 of the Townsite of the Town of
San Rafael.
EXCEPTING from Parcel A and Parcel B above described, all
buildings, structures and improvements of every kind, now
existing or to be constructed on or under the surface of
the above described property, for a term of years equal to
and to run concurrently with the term of the Ground Lease.
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EXHIBIT B
MATERIAL LEASE TERMS
Term
99 years from the effective date of the new Ground Lease
Rent
$83,000, paid at closing (when Ground Lease is executed) through a
capitalized lease payment. ($83,000 is the value of the land based on an
appraisal.)
Use
Use same language from Section 2.4 of Existing Lease (60 units of
housing; up to 28% affordable to low income households (80% AMI))
Taxes and
Optionee/Lessee shall pay taxes and assessments and will apply for
Assessments
property tax exemption.
Ownership of
Optionee/Lessee owns improvements until lease termination/end of term at
Improvements
which time the ownership of the improvements will vest in the
Owner/Lessor
Construction
Ground Lease to contain language reflecting rehabilitation scope and
Provisions
schedule
As -Is
Use same language from Section 3.6 and 3.7 of the Existing Lease
Mortgagee
Use language from Articles IV -VI of Existing Lease with agreed upon
Protection;
modifications to reflect reasonable current lender/investor requirements
Insurance, Casualty
and current Owner/Lessor insurance standards.
and Condemnation
Optionee/Lessee shall have right of first refusal if Owner/Lessor sells land
Right of First
Refusal
(Use same language from Section 7.4 of Existing Lease)
Transfer and
Use language from Section 10.16 of Existing Lease but add pre -approval
Assignment
of (a) Optionee's/Lessee's (or its members) (i) option to purchase the
Project or limited partner's interest in the Partnership and (ii) Section 42
right of first refusal, (b) removal of general partner of the Partnership by
the limited partner pursuant to the to be entered into partnership agreement
of the Partnership.
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P,t.x RAFj
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CONTRACT ROUTING FORM
INSTRUCTIONS: Use this cover sheet to circulate all contracts for review and approval in the order shown below.
TO BE COMPLETED BY INITIATING DEPARTMENT PROJECT MANAGER:
Contracting Department: Community Development
Project Manager: Ethan Guy
Extension: x2392
Contractor Name: BRIDGE Housing
Contractor's Contact: Sarah White
Contact's Email: swhite@bridgehousing.com
❑ FPPC: Check if Contractor/Consultant must file Form 700
Step
RESPONSIBLE
DESCRIPTION
COMPLETED
REVIEWER
DEPARTMENT
DATE
Check/Initial
1
Project Manager
a. Email PINS Introductory Notice to Contractor
N/A
❑x
8/19/2020
EBG
b. Email contract (in Word) & attachments to City
Atty c/o Laraine.Gittens@cityofsanrafael.org
EBG
2
City Attorney
a. Review, revise, and comment on draft agreement
8/19/2020
❑X JR
and return to Project Manager
❑ N/A
b. Confirm insurance requirements, create Job on
N/A
PINS, send PINS insurance notice to contractor
3
Project Manager
Forward three (3) originals of final agreement to
8/19/2020 ®JR
contractor for their signature
4
Project Manager
When necessary, * contractor -signed agreement
❑x N/A
agendized for Council approval
*PSA > $75,000; or Purchase > $75,000; or
Or ®EBG
Public Works Contract > $175,000
Date of Council approval
8/17/2020
PRINT
CONTINUE ROUTING PROCESS WITH HARD COPY
5
Project Manager
Forward signed original agreements to City
8/25/2020
EBG
Attorney with printed copy of this routing form
6
City Attorney
Review and approve hard copy of signed
4-
agreement
7
City Attorney
Review and approve insurance in PINS, and bonds
Q'
��
�4)
(for Public Works Contracts)
Jf-5
8
City Manager/ Mayor
City Clerk
Agreement executed by Council authorized official
NO,
9
Attest signatures, retains original agreement and
e
�1
Ar
a—]forwards
copies to Project Manager