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HomeMy WebLinkAboutCC Resolution 13994 (Lennar ENRA)RESOLUTION NO. 13994 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL APPROVING AN EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT WITH LENNAR MULTIFAMILY COMMUNITIES REGARDING POTENTIAL REDEVELOPMENT OF 1001 FOURTH STREET, 926 THIRD STREET AND THE THIRD AND LOOTENS PARKING GARAGE WHEREAS, the City of San Rafael ("City") owns the real property and parking garage known as the Third-Lootens Parking Garage ("City Parking Garage"); and WHEREAS, the City adopted a goal to "provide a vibrant Downtown" in "our Vision of Downtown" in 1993, which was later incorporated into the goals of the General Plan as Goal 6. General Plan Goal 6 includes the following implementation policies: NH 16 to substantially expand Downtown's economic success and increase opportunities for retail, office and residential development; NH 22 to create a popular and attractive residential environment that contributes to the activity and sense of community in Downtown; and NH 34 to encourage activities that will promote the Fourth Street Retail Core as being "Alive after Five"; and WHEREAS, one of the City Council goals is to provide neighborhood and economic vitality by supporting the development of key Downtown sites, and the City Council's Economic Development Committee has adopted "support development of key sites such as 1001-1009 Fourth Street" as one of its eight priorities"; and WHEREAS, Lennar Multifamily Communities ("Developer") has proposed redeveloping the City Parking Garage and adjoining privately -owned properties on which Developer holds an option to purchase, including the property located at 1001 Fourth Street and 926 Third Street, into a mixed-use development, including new multi- family housing and related amenities, private parking and replacement public parking ("Project"); and WHEREAS, staff engaged Seifel Consulting to evaluate the preliminary economic feasibility of the proposed Project and the preliminary analysis indicates that the current proposal provides adequate financial consideration for the City to consider further negotiations regarding the potential Project; and WHEREAS, funds have been appropriated in the Economic Development Department budget for the current Seifel Consulting contract; and WHEREAS, pursuant to direction from the City Council on July 20, 2015, staff has caused preparation of an Exclusive Negotiating Rights Agreement ("ENRA") between the City and the Developer for consideration by the City Council; and 1220\12\1740501.2 WHEREAS, this Resolution is not intended to and does not commit the City to grant any land use approvals for the Project or to approve any agreement with the Developer; and WHEREAS, the staff report accompanying this Resolution provides additional information about the potential project. NOW THEREFORE, BE IT RESOLVED by the City Council of the City of San Rafael as follows: 1. The City Council hereby finds and determines that the above recitals are true, correct and incorporated herein. 2. The City Council hereby approves the ENRA and authorizes the City Manager to execute on behalf of the City the ENRA in substantially the form submitted to the City Council in connection with the consideration of this Resolution, subject to such minor changes as the City Manager and City Attorney may approve, provided, however, that nothing in this Resolution, the preparation of the ENRA or the conduct of the negotiations pursuant to the ENRA commits the City to approve any land use approvals for the Project or to approve any agreement with the Developer. 3. The City Council authorizes and directs the City Manager and his designees to take such steps as are reasonable and necessary to performance of the City's obligations under the ENRA and to carry out the terms and conditions of the ENRA. 4. This Resolution shall take immediate effect upon adoption. I, ESTHER C. BEIRNE, Clerk of the City of San Rafael, herby certify that the foregoing resolution was duly and regularly introduced and adopted at a regular meeting of the City Council of the City of San Rafael held on the seventeenth day of August, 2015, by the following vote: AYES: COUNCILMEMBERS: Colin, Gamblin, McCullough & Mayor Phillips NOES: COUNCILMEMBERS: None ABSENT: COUNCILMEMBERS: Bushey ,-5 WJGE- ,a c ..e ESTHER C. BEIRNE, City Clerk 2 1220\12\1740501.2 EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT (Third & Lootens Parking Garage) This Exclusive Negotiating Rights Agreement (this "Agreement") is entered into as of August 18, 2015 (the "Effective Date") by and between the City of San Rafael, a charter city (the "City") and Lennar Multifamily Communities, LLC, a Delaware limited liability company (the "Developer"), on the basis of the following facts: RECITALS A. The City owns certain real property, described on the attached Exhibit A (the "Site") on which a 171 -space public parking garage is located (the "Garage"). B. The parties desire to negotiate an agreement under which the Developer would acquire the Site for fair market value consideration and develop the Site with an approximately 162 apartment homes, including 15% affordable units, with 3,200 square feet of ground floor retail and an approximately 210 of residential parking spaces and the replacement of approximately 171 public parking spaces in the Garage with new public parking to be dedicated to the City. The City acknowledges that Developer is not requiring any City financing with regard to the acquisition of the Site or the construction on the replacement public parking. C. The purpose of this Agreement is to determine what additional steps should be taken to: (1) enable the City to convey the Site to the Developer at an agreed-upon consideration; (2) evaluate the feasibility of constructing the public parking with the remainder of the Developer's proposed development; and (3) allow the City and the Developer to determine the financial feasibility of developing the Site. As more fully set forth in Section 3. 1, the Developer acknowledges and agrees that this Agreement in itself does not obligate any party to acquire or convey any property, does not grant the Developer the right to develop, and does not obligate the Developer to any activities or costs to develop, except for the preliminary analysis and negotiations contemplated by this Agreement. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties mutually agree as follows: ARTICLE 1. EXCLUSIVE NEGOTIATIONS RIGHT Section 1.1 Good Faith Negotiations. The City and the Developer shall negotiate diligently -and in good faith, during the Negotiating Period. During the Negotiating Period, the parties shall use good faith efforts to accomplish the respective tasks outlined in Article 2 to 141\01\1732744.4 1 ORILAL facilitate the negotiation of a mutually satisfactory transfer and development documentation (the "TD Agreement"). Section 1.2 Neaotiatina Period. (a) Subject to early termination in accordance with the provisions of subsection (b) below, the negotiating period (the "Negotiating Period") under this Agreement shall be ninety (90) days, commencing on the Effective Date, subject to extension by mutual agreement of the parties in writing. The Negotiating Period may be extended from time to time on the City's behalf by the City Manager if, in his or her judgment, sufficient progress toward mutually accd-ptable TD Agreement has been made during the initial ninety (90) day Negotiating Period (or previously extended Negotiating Period) to merit such extension. However, the extensions granted by the City Manager shall not cumulatively exceed one hundred eighty (180) days. (b) If mutually acceptable TD Agreement has not been executed by the City and the Developer by the expiration of the Negotiating Period (as the Negotiating Period may be extended by operation of subsection (a) above), then this Agreement shall terminate and neither party shall have any further rights or obligations under this Agreement except as set forth in Section 1.4 and except that the provisions of Sections 3.4, 3.5(d), 3.6 and 3.7 shall survive such termination. If a TD Agreement is executed by the City and the Developer then, upon such execution, this Agreement shall terminate, and all rights and obligations of the parties shall be as set forth in the executed TD Agreement. Section 1.3 Exclusive Neaotiations. During the Negotiating Period (as such Negotiating Period may be extended by operation of Section 1.2(a)), the City shall not negotiate with any entity, other than the Developer, regarding the acquisition and development of the Site, or solicit or entertain bids or proposals to do so, except to the extent required by City municipal code provisions. The foregoing shall not prevent the City from providing information, if required by law, regarding the Site and development thereof to persons or entities other than Developer. ARTICLE 2. NEGOTIATION TASKS Section 2.1 Overview. To facilitate negotiation of the TD Agreement, the parties shall use reasonable good faith efforts to accomplish the tasks set forth in this Article 2 in a timeframe that will support negotiation and execution of a mutually acceptable TD Agreement prior to the expiration of the Negotiating Period. Any TD Agreement is subject to City Council approval pursuant to applicable City charter provisions and property disposition rules of the City. Section 2.2 Citv Costs Reimbursement. In consideration for this Agreement, the Developer and City will negotiate an agreement regarding the Developer's reimbursement, subject to a mutually agreeable cap, of the City's third party costs reasonably and necessarily 2 141\01\1732744.4 incurred in connection with this Agreement and the TD Agreement, such as without limitation, costs incurred for appraisers, consultants, and special counsel. The parties acknowledge and agree that the City will not reimburse the Developer for any costs whatsoever with regard to this Agreement, the TD Agreement, the Site or the development. Section 2.3 Appraisal. Within thirty (3 0) days following the Effective Date, the City shall commission a third -party appraisal of the Site, by a MAI appraiser mutually acceptable to the parties to this Agreement. The cost of the appraisal may be reimbursed by the Developer if covered by the agreement to be negotiated pursuant to Section 2.2 but otherwise will be borne by the City. Section 2.4 Reports. The Developer shall provide the City with copies of all reports, studies, analyses, correspondence, and similar documents, prepared or commissioned by the Developer with respect to this Agreement, promptly upon their completion. The City shall provide the Developer with copies of all reports, studies, analyses, correspondence, and similar documents prepared or commissioned by the City with respect to this Agreement, promptly upon their completion. Nothing in this Section 2.4 obligates the City to undertake any studies or analyses, other than an appraisal of the Property as described in Section 2.3. Section 2.5 Purchase Price or Other Consideration for the Site. The City and the Developer shall seek to agree upon the purchase price or other consideration for the Site. Section 2.6 Organizational Documents. Within thirty (30) days following the Effective Date, the Developer shall provide the City with copies of its organizational documents evidencing that the Developer exists, is qualified to conduct business in the State of California and is in good standing to perform its obligations hereunder along with a listing of its current member(s) and manager(s) and a copy of its published credit information that is provided to Dunn and Bradstreet. Section 2.7 Due Diligence. Within thirty (30) days following the Effective Date, the City shall use good faith efforts to provide Developer the information it has in its possession, related to the following items to the extent filed in a manner readily findable with the Site's property address, and thereafter the Developer shall, during the Negotiating Period, conduct the following due diligence activities: (a) Phvsical Adeauacv Determination. The Developer shall determine whether the Site is suitable for development consistent with current zoning, taking into account the geotechnical and soils conditions, the presence or absence of toxic or other hazardous materials, the massing of the proposed improvements and the parking requirements imposed on developments of this type and the other environmental and regulatory factors that the Developer deems relevant. (b) Title AdeLivacv Determination. Within thirty (30) days following the Effective Date, the City shall cause a reputable title company to issue a Preliminary Title Report (the "PTR") on the Site to the Developer. Within thirty (30) days following receipt of the PTR, 141\01\1732744.4 3 Developer shall notify the City in writing of any title exceptions that Developer considers unacceptable. (c) Utilities. The Developer shall consult with the utility companies serving the Site to determine if existing utility facilities require expansion, relocation or undergrowiding in connection with the development of the Site. The City shall assist and cooperate with the Developer in such consultations. Section 2.8 Zoning Consistency. During the Negotiating Period, the Developer shall provide the City with a conceptual drawing, and sufficient details on a future project to determine its consistency with current zoning prior to the end of the Negotiating Period. Section 2.9 Financial Feasibility. Within forty-five (45) days following the Effective Date, the Developer shall provide the City with an updated detailed financial analysis for the proposed development on the Site containing, among other matters, a development budget proforma setting forth the costs and revenues associated with acquiring and developing the Site, including the replacement public parking and affordable residential units, taking into account all impact fees, construction costs, market conditions and financing. The detailed financial analysis to be submitted by the Developer will be used to evaluate the financial feasibility of the development on the Site prior to entry into the TD Agreement. Nothing in this Agreement commits any party to a particular purchase price or ground rent or any level of financial contribution for the development on the Site. Section 2.10 Schedule of Performance. Within sixty (60) days following the Effective Date, the Developer shall provide the City with a proposed detailed schedule of performance which shall include, but not be limited to: the proposed dates for conveyance of the Site, schedule for submission of all necessary applications for development of the Site, the proposed date for completion of working drawings, construction plans, and the proposed dates for the commencement and completion of construction of the Site improvements. Section 2.11 Planning and CEQA Review. Developer acknowledges that it may be necessary to undertake environmental review and that any sale or other disposition of the Site and development of the Site will need to comply with the California Environmental Quality Act ("CEQA"). The Developer will pay all costs charged by the City in conjunction with the applications for City permits and approvals including all costs associated with appropriate environmental review and documentation. Section 2.12 Tenant Commitments. As the Site improvements are better defined during the entitlement process, the Developer shall provide regular and at least quarterly status updates on retail prospective tenants. Section 2.13 Progress Renorts. From time to time as reasonably agreed upon by the parties, the Developer shall make written progress reports advising the City on studies being made and matters being evaluated by the Developer with respect to this Agreement and the Site improvements. 4 141\01\1732744.4 ARTICLE 3. GENERAL PROVISIONS Section 3.1 Limitation on Effect of Agreement. This Agreement (and any extension of the Negotiating Period) shall not obligate any of the City or the Developer to enter into any agreement or enter into an agreement containing any particular terms. By execution of this Agreement (and any extension of the Negotiating Period), the City is not committing itself to or agreeing to approve any land use entitlements, undertake disposition or lease of the Site or any part thereof, undertake construction or undertake any other acts or activities relating to the subsequent independent exercise of discretion by the City. Execution of this Agreement by the City is merely an agreement to conduct a period of negotiations in accordance with the terms hereof, reserving for subsequent City action the final discretion and approval regarding the execution of any -TD Agreement and all proceedings and decisions in connection therewith. Any TD Agreement resulting from negotiations pursuant to this Agreement shall become effective only if and after such TD Agreement has been considered and approved by the City Council, following conduct of all legally required procedures, and executed by duly authorized representatives of the City and the Developer. Until and unless the TD Agreement is signed by the Developer, approved by the City. Council, and executed by the City, no agreement drafts, actions, term sheets, outlines, deliverables, memoranda or communications arising from the performance of this Agreement shall impose any legally binding obligation on any party to enter into or support entering into any TD Agreement or be used as evidence of any oral or implied agreement by any party to enter into any other legally binding document. As such, the City retains the absolute discretion before the execution of all TD Agreement to determine not to proceed with the transfer or lease and any proposed development on the Site. Section 3.2 Notices. Formal notices, demands and communications between the City and the Developer shall be sufficiently given if, and shall not be deemed given unless, dispatched by certified mail, postage prepaid, return receipt requested, or sent by express delivery or overnight courier service, to the office of the parties shown as follows, or such other address as the parties may designate in writing from time to time: City: City of San Rafael 1400 Fifth Avenue, Room 203 PO Box 151560 San Rafael, CA 94915-1560 Attention: City Manager With a copy to: City Attorney City of San Rafael 1400 Fifth Avenue, Room 202 PO Box 151560 San Rafael, CA 94915-1560 141\01\1732744.4 5 Developer: Lennar Multifamily Communities, LLC 429 Ninth Street Suite 300 Oakland, Ca 94607 Attention: Alex Waterbury With copy to: Such written notices, demands and communications shall be effective on the date shown on the delivery receipt as the date delivered or the date on which delivery was refused. Section 3.3 WAJ.. ,,,er of Lis Pendens. It is expressly understood and agreed by the parties that no lis pendens shall be filed against any portion of the Site with respect to this Agreement or any dispute or act arising from it. Section 3.4 Richt of Entry. The Developer shall have the right to enter the Site during normal business hours to conduct investigations in accordance with this Agreement. In connection with such entry and investigation, the Developer shall: (a) give the City reasonable advance notice; (b) not interfere with the on-going parking operation of the Garage; (c) repair and restore any damage it or its agents may cause; (d) deliver to the City, within ten (10) days of receipt thereof, a complete copy of any investigation, test, report or study which the Developer conducts, or causes to be conducted, with respect to the Site; and (e) indemnify, defend and hold the City and its council members, officers, employees and agents harmless from any and all claims, liabilities, damages, losses, expenses, costs and fees (including attorneys' fees and costs) which may proximately arise out of the Developer's entry upon the Site or the investigation(s) and test(s) which the Developer may conduct; provided, however, that this indemnity shall not apply to matters arising from the results of the Developer's investigations, tests and inspections (e.g., this indemnity shall not apply to any diminution in value or remediation costs incurred by the City if the Developer's investigations were to discover an environmental condition that required remediation). Section 3.5 Costs and Expenses. Except as otherwise expressly provided in this Agreement or agreed to in the TD Agreement, each party shall be responsible for its owns costs and expenses in connection with any activities and negotiations undertaken in connection with this Agreement, and the performance of each party's obligations under this Agreement. 6 141\01\1732744.4 Section 3.6 No Commissions. Each parry represents and warrants that it has not entered into any agreement, and has no obligation, to pay any real estate commission in connection with the transaction contemplated by this Agreement and any resulting TD Agreement. If a real estate commission is claimed through either party in connection with the transaction contemplated by this Agreement or any resulting TD Agreement, then the parry through whom the commission is claimed shall indemnify, defend and hold the other parties harmless from any liability related to such commission. The provisions of this section shall survive termination of this Agreement. Section 3.7 - Defaults and Remedies. (a) Default. Failure by any party to negotiate in good faith as provided in this Agreement shall constitute an event of default hereunder. A non -defaulting party shall give written notice of a default to the defaulting party and the other party, specifying the nature of the default and the required action to cure the default. If a default remains uncured ten (10) days after receipt by the defaulting party of such notice, the non -defaulting party may exercise the remedies set forth in subsection (b). (b) Remedies. In the event of an uncured default by the City, the Developer's sole remedy shall be to terminate this Agreement in writing effective five (5) days after delivery, upon which termination no party shall have any further right, remedy or obligation under this Agreement; provided, however, that the Developer's obligations pursuant to Sections 3.3, 3.4(d), 3.5, 3.6 and 3.9 shall survive such termination. In the event of an uncured default by the Developer, the City's sole remedy shall be to terminate this Agreement in writing effective five (5) days after delivery. Following such termination, no party shall have any further right, remedy or obligation under this Agreement; provided, however, that the Developer's obligations pursuant to Sections 3.3, 3.4(d), 3.5, 3.6 and 3.9 shall survive such termination. Except as expressly provided above, no party shall have any liability to the others for damages or otherwise for any default, nor shall any parry have any other claims with respect to performance under this Agreement. Each party specifically waives and releases any such rights or claims they may otherwise have at law or in equity. Section 3.8 Attorneys' Fees. In the event of any action or proceeding brought by any party against another party under this Agreement, the prevailing party shall be entitled to recover all costs and expenses including its attorneys' fees in such action or proceeding in such amount as the court may adjudge reasonable. Attorneys' fees for in-house City Attorney staff, if awarded, shall be calculated at the market rate. The provisions of this Section shall survive the termination of this Agreement. Venue shall be in the Superior Court of the County of Marin. Section 3.9 Confidentiality of Information. While desiring to preserve its rights with respect to treatment of certain information on a confidential or proprietary basis, the Developer acknowledges that the City will need sufficient, detailed information about the proposed development of the Site to make informed decisions about the content and approval of the TD 7 141\01\1732744.4 Agreement. The City will use its best efforts to maintain the confidentiality of proprietary information subject to the requirements imposed on the City by the Public Records Act (Govermnent Code Section 6253 et seq.). The Developer acknowledges that the City may share information provided by the Developer of a financial and potential proprietary nature with third party consultants who have been contractually engaged to advise the City concerning matters related to this Agreement and to City Council as part of the negotiation and decision making process. If this Agreement is terminated without the execution of TD Agreement, the City shall return to the Developer any confidential inforination submitted by the Developer under this Agreement. If any litigation is filed seeking to make public any information Developer submitted to the City in confidence, the City shall cooperate in defending the litigation. The Developer shall pay the City's reasonable costs of defending such litigation and shall indemnify the City against all costs and attorney's fees awarded to the plaintiff in any such litigation. Section 3.10 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Section 3.11 Entire Agreement. This Agreement constitutes the entire agreement of the parties regarding the subject matters of this Agreement. Section 3.12 Countemarts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same agreement. Section 3.13 Assignment. The Developer may not transfer or assign any or all of its rights or obligations under this Agreement except with the prior written consent of the City, which consent shall be granted or withheld in the City's sole discretion, and any such attempted transfer or assignment without the prior written consent of the City shall be void. Section 3.14 No Third Party Beneficiaries. This Agreement is made and entered into solely for the benefit of the City and the Developer and no other person shall have any right of action under or by reason of this Agreement. Section 3.15 Actions by the City. Whenever this Agreement calls for or permits the approval, consent, authorization or waiver of the City, the approval, consent, authorization, or waiver of the City Manager shall constitute the approval, consent, authorization or waiver of the City without further action of the City Council. Signatures on Following Page 8 141\01\1732744.4 IN WITNESS WHEREOF, this Agreement has been executed, in triplicate, by the parties on the date first above written. APPROVED AS TO FORM: By: Lisa A. Goldfien, Assista:ro.t City Attorney 141\01\1732744.4 CITY: CITY OF SAN RAFAEL, a charter city and municipal corporation f 1 yy � By: J r lutz, city I agO RW -X X2-" erg eLC—�r� . DEVELOPER: Lennar Multifamily Communities, LLC, a Delaware limited liability company By: Name: Alex Waterbury V1 '&q- Its: President 0 EXHIBIT A SITE MAP A-1 141\01\1732744.4