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Home My WebLink About2005 08-30 CC ADJ AGENDA PKTCity of National City Joint Meeting Agenda Adjourned Regular Meeting of the City Council Adjourned Regular Meeting of the Community Development Commission City Council Chambers Civic Center 1243 National City Boulevard National City, California Tuesday — August 30, 2005 - 6:00 P.M. Open To The Public Please complete a request to speak form prior to the commencement of the meeting and submit it to the City Clerk. It is the intention of your City Council to be receptive to your concerns in this community. Your participation in local government will assure a responsible and efficient City of National City. We invite you to bring to the attention of the City Manager any matter that you desire the City Council to consider. We thank you for your presence and wish you to know that we appreciate your involvement. Pledge of Allegiance to the Flag by Mayor Nick lnzunza Public Oral Communications (Three -Minute Time Limit) NOTE: Pursuant to state law, items requiring Council action must be brought back on a subsequent Council Agenda unless they are of a demonstrated emergency or urgent nature. Upon request, this agenda can be made available in appropriate alternative formats to persons with a disability in compliance with the Americans with Disabilities Act. Please contact the City Clerk's Office at 336-4228 to request a disability -related modification or accommodation. Notification 24 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. Spanish audio interpretation is provided during Council Meetings. Audio headphones are available in the lobby at the beginning of the meetings. Audio interpretacion en espanol se proporciona durante sesiones del Consejo Municipal. Los audiofonos estan disponibles en el pasillo al principio de la junta. I l„f Council Requests That All Cell Phones And Pagers Be Turned Off During City Council Meetings COPIES OF THE CITY COUNCIL MEETING AGENDAS AND MINUTES MAY BE OBTAINED THROUGH OUR WEBSITE AT www.ci.national-city.ca.us Council and CDC AGENDA 8/30/05 PAGE 2 JOINT PUBLIC HEARING 1. JOINT PUBLIC HEARING: of the City Council and the Community Development Commission of the City of National City on the proposed Disposition and Development Agreement by and between the Community Development Commission and Constellation Property Group ("A" Avenue) LP, for development of the Centro Project Community Development Commission 2. RESOLUTION NO. 2005-87 Approving the Health and Safety Code Section 33433 Report; authorizing the transmittal of said report to the City Council; approving the Disposition and Development Agreement by and between the Community Development Commission and Constellation Property Group ("A" Avenue), LP, for the development of the Centro Project; approving the Project Basic Concept Drawings; and making certain finding in connection therewith City Council 3. RESOLUTION NO. 2005-186: of the City Council of the City of National City approving the Health and Safety Code Section 33433 Report; approving the Disposition and Development Agreement by and between the Community Development Commission and Constellation Property Group ("A" Avenue), LP for development of the Centro Project; approving the Project Basic Concept Drawings; and making certain findings in connection therewith CLOSED SESSION: Conference with Legal Counsel - Anticipated Litigation Significant Exposure to Litigation Pursuant to Government Code Section 54956.9(b) One Potential Case CLOSED SESSION: Public Employee Performance Evaluation Government Code Section 54957 Title: Executive Director STAFF: MAYOR/CHAIRMAN: COUNCILMEMBERS/COMMISSIONERS: ADJOURNMENT: Next Regular City Council Meeting — Tuesday — September 6, 2005 - 6:00 p.m. — Council Chambers, Civic Center Next Regular CDC Meeting — Tuesday — September 13, 2005 - 6:00 p.m. — Council Chambers, Civic Center 2 Council and CDC AGENDA 8/30/05 PAGE 3 TAPE RECORDINGS OF EACH CITY COUNCIL MEETING ARE AVAILABLE FOR SALE IN THE CITY CLERK'S OFFICE CITY COUNCIL AND COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY August 30, 2005 AGENDA ITEM NO. 1 TO: CHAIRMAN AND BOARD MEMBERS FROM: BENJAMIN MARTINEZ, EXECUTIVE DIRECTO VIA: BYRON ESTES, DEPUTY DIRECTOR OF REDEVELOPMENT SUBJECT: JOINT PUBLIC HEARING: ON THE PROPOSED DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE COMMUNITY DEVELOPMENT COMMISSION AND CONSTELLATION PROPERTY GROUP ("A" AVENUE), LP FOR DEVELOPMENT OF THE CENTRO PROJECT Recommendation: Community Development Commission staff recommends that the City Council and the Community Development Commission of the City of National City: CONDUCT the Joint Public Hearing. Fiscal Impact: The Disposition and Development Agreement includes the following provisions: 1) sale of Commission -owned property for the nominal amount of $10; 2) construction by the Developer of a minimum of 2500 square feet of unfinished public use flexible office space to be gifted to the Commission; and 3) expenditure by the Commission of up to $500,000 for a Downtown Trolley Shuttle station. Funding sources for the Shuttle station component may come from future tax increment revenues, bonded debt, or other sources, such as SANDAG. The Project is expected to generate approximately $100,000 in net tax increment and $10,000 in net low -moderate income housing set - aside on an annual basis beginning in fiscal year 2007-2008, equating to annual revenues to the Community Development Commission and the City of National City in the amount of $110,000. City Council and Community Development Commission Agenda Item No. 1 August 30, 2005 Page 1 of 3 Environmental Impact: A Program Environmental Impact Report has been adopted for the Downtown Specific Plan, in accordance with CEQA Guidelines. The project has been determined to be consistent with the Downtown Specific Plan. Pursuant to Section 15182(a) of the California Environmental Quality Act, the project is deemed exempt from further CEQA review. Background: The Commission, at their meeting of March 8, 2005, selected Constellation Property Group to redevelop the Community Development Commission Parking Lot site, located at 41-43 12th Street across from the Martin Luther King Community Center. The selection followed a Request for Proposals process. Constellation Property Group ("A" Avenue) LP has proposed the Centro Project, an attached 40-unit residential condominium project with a mixed -use office component as well as a Downtown Trolley Shuttle station. The project will be built as market -rate for - sale units. The development represents a total developer investment of approximately $12 Million and is envisioned as a catalyst to the revitalized downtown district. As a catalyst project, Community Development Commission staff is not recommending the inclusion of subsidized very -low or low-income housing units in this particular development proposal. The Commission has a major role in this particular development by providing up to $500,000 for development of the Downtown Trolley Shuttle station along a revitalized "A" Avenue connector. The funding and design of this component will be implemented during per the timeframe in the proposed Disposition and Development Agreement (DDA). Assistance for the catalyst project also comes in the form of a "land for office space" trade, in which the Commission would sell to the Developer the fee interest in the Community Development Commission Parking Lot for $10, in exchange for which a flex - space office facility of one or two stories will be constructed for the Community Development Commission and leased for $10/year for the next 50 years. Timing of Development: The acquisition process is scheduled to take place as soon as possible. Construction plans could be submitted for building permits by Fall of 2005. Building permits are expected to be issued later this year with construction planned to commence shortly thereafter. Building completion and occupancy is slated for Spring 2007. Community City Council and Community Development Commission Agenda Item No. 1 August 30, 2005 Page 2 of 3 Development Commission staff will actively work to expedite all phases of the project. A more detailed listing of projected dates is included in the Schedule of Performance (Attachment No. 4 to the Disposition and Development Agreement). With this, Community Development Commission staff recommends that the City Council and the Community Development Commission Board conduct the Public Hearing on the proposed Disposition and Development Agreement by and between the Community Development Commission and Constellation Property Group ("A" Avenue) LP for development of the Centro Project. ATTACHMENTS: EXHIBIT 1 EXHIBIT 2 EXHIBIT 3 EXHIBIT 4 EXHIBIT 5 Staff member: Estes — Draft Disposition and Development Agreement — Health and Safety Code Section 33433 Report — Site Map — Notice of Joint Public Hearing — Architectural Renderings City Council and Community Development Commission Agenda Item No. 1 August 30, 2005 Page 3 of 3 DISPOSITION AND DEVELOPMENT AGREEMENT By and Between the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, and CONSTELLATION PROPERTY GROUP (A AVENUE) LP EXHIBIT 1 F:WRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc Table of Contents 100. DEFINITIONS 2 200. FINANCIAL ASSISTANCE 6 300. CONVEYANCE OF THE SI1E 6 301. Disposition of the Site 6 302. Escrow 6 302.1. Costs of Escrow. 6 302.2. Escrow Instructions 7 302.3. Authority of Escrow Holder 7 302.4. Closing. 8 302.5. Termination 8 302.6. Closing Procedure 8 303. Title and Survey Review 9 304. Title Insurance. 9 305. Conditions of Closing. 10 305.1. CDC's Conditions of Closing. 10 305.2. Developer's Conditions of Closing 10 306. Representations and Warranties 11 306.1. CDC Representations 11 306.2. Developer' s Representations. 12 307. Studies and Reports 13 308. Condition of the Site. 13 308.1. Investigation of Site. 13 400. DEVELOPMENT OF THE SITE 13 401. Scope of Development. 13 401.1. Developer's Obligation to Construct Improvements. 14 402. Design Review. 14 402.1. Basic Concept Drawings. 14 402.2. Site Plan Drawings 14 402.3. CDC Review and Approval. 14 402.4. Standards for Disapproval 15 402.5. Consultation and Coordination. 15 402.6. Revisions 15 402.7. Defects in Plans 16 403. Land Use Approvals. 16 404. Schedule of Performance. 17 405. Cost of Construction. 17 406. Insurance Requirements 17 407. Rights of Access. 18 408. Compliance with Laws. 18 408.1. Nondiscrimination in Employment. 18 i F:URS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc 408.2. Prevailing Wages. 18 408.3. Taxes and Assessments 19 409. Release of Construction Covenants. 19 410. Financing of the Improvements. 20 410.1. Approval of Financing. 20 410.2. No Encumbrances Except Mortgages and Deeds of Trust. 20 410.3. Holder Not Obligated to Construct Improvements 21 410.4. Notice of Default to Mortgagee or Deed of Trust Holders; Right to Cure. 21 500. COVENANTS AND RESTRICTIONS 21 501. Use in Accordance with Redevelopment Plan 21 502. Use Covenants. 22 503. Maintenance Covenants and CC&Rs 22 504. Nondiscrimination Covenants 22 504.2. Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction. 23 600. DEFAULTS AND REMEDIES 24 601. Default Remedies 24 602. Institution of Legal Actions. 24 603. Termination by the Developer Prior to the Conveyance. 24 604. Termination by the CDC Prior to the Conveyance. 25 604.1. Reentry and Revesting of Title in the CDC After the Closing and Prior to Completion of Construction 25 605. Acceptance of Service of Process. 27 606. Rights and Remedies Are Cumulative. 27 607. Inaction Not a Waiver of Default 27 608. Applicable Law. 27 609. Non -Liability of Officials and Employees of the CDC and City 27 610. Attorneys' Fees. 28 700. GENERAL PROVISIONS 28 701. Notices, Demands and Communications Between the Parties. 28 702. Extended Delay; Extension of Times of Performance 28 703. Transfers of Interest in Site or Agreement 29 703.1. Permitted Transfers. 29 703.2. Successors and Assigns 30 703.3. Assignment by CDC. 30 704. Relationship Between CDC and Developer 30 705. CDC Approvals and Actions. 30 706. Counterparts. 31 707. Integration. 31 708. Real Estate Brokerage Commission 31 709. Titles and Captions. 31 710. Interpretation. 31 711. No Waiver 31 ii F:VRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc 712. Modifications. 31 713. Severability. 32 714. Computation of Time. 32 715. Legal Advice. 32 716. Time of Essence. 32 717. Cooperation 32 718. Conflicts of Interest 32 719. Time for Acceptance of Agreement by CDC. 33 Attachment No. 1 Attachment No. 2 Attachment No. 3 Attachment No. 4 Attachment No. 5 Attachment No. 6 Attachment No. 7 Site Map Site Legal Description Grant Deed Schedule of Performance Scope of Development Release of Construction Covenants CDC Environmental Reports iii F:VRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc DISPOSITION AND DEVELOPMENT AGREEMENT THIS DISPOSITION AND DEVELOPMENT AGREEMENT (this "Agreement") is entered into as of August 30, 2005, by and among the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic (the "CDC"), and CONSTELLATION PROPERTY GROUP (A AVENUE) LP, a Delaware limited partnership (the "Developer"). RECITALS The following recitals are a substantive part of this Agreement: A. In furtherance of the objectives of the California Community Redevelopment Law, the CDC desires the redevelopment of certain real property within the National City Redevelopment Project (the "Redevelopment Project"), consisting of approximately 1.2 acres, mid -block between National City Boulevard on the west and `B" Avenue on the east, and between 1 lth Street on the north and 12th Street on the south (the "Site") as shown on the Site Map (defined below) for a residential and commercial/office mixed -use project consistent with the terms of this Agreement. B. The CDC and the Developer desire by this Agreement, among other things, for the Developer to purchase the Site from the CDC, and for the Developer to construct on the Site approximately 40 condominium residential units (the "Residential Units"), approximately 2,700 sq. ft. of commercial/office space (the "Office Space"), associated parking for the Residential Units and the Office Space, and a new A Avenue trolley shuttle interchange (the "Trolley Transit Center") linking the development with the San Diego Trolley system (collectively, the "Project"). C. On February 1, 2005 the City adopted a Downtown Specific Plan, an amendment to its General Plan and an amendment to its Zoning Code, and the City also certified an Environmental Impact Report (the "EIR") in connection with these actions, which entitle the owner of the Site to construct and operate on the Site multi -family residential units and commercial/retail and associated onsite parking. D. The City Council for the City (the "City Council") and the CDC have duly adopted the Downtown Redevelopment Plan (the "Redevelopment Plan") which permits and encourages each of the proposed uses, and the construction of the Improvements (defined below) which the Developer will undertake under this Agreement. E. The Developer's acquisition of the Site and its development of the Site as a mixed -use, condominium and commercial/office project, with associated parking and public transportation facilities in accordance with this Agreement will promote the City's goals of revitalizing its downtown core, expanding housing opportunities for its residents, providing centrally located commercial/office space, incorporating a much -needed public transportation element, and catalyzing investment in and the redevelopment of this area, all as set forth in the Downtown Redevelopment Plan and the Downtown Specific Plan. 1 F:VRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc F. The CDC's disposition of the Site to the Developer, and the Developer's acquisition of the Site and construction and completion of the Improvements pursuant to the terms of this Agreement, are in the vital and best interest of the City and the health, safety, morals and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements under which the redevelopment of the Redevelopment Project Area has been undertaken. NOW, THEREFORE, the CDC and the Developer hereby agree as follows: 100. DEFINITIONS "Actual Knowledge" means the actual knowledge of the CDC and Developer and their respective officers, managers, employees and agents. "Agreement" means this Disposition and Development Agreement between the CDC and the Developer. "Association" means the property owner's association for the Residential Units, as set forth in Section 503 hereof. "Association CC&Rs" means the Declaration of Covenants, Conditions and Restrictions for the Residential Units, as set forth in Section 503 hereof. "Basic Concept Drawings" means the plans and drawings to be submitted by the Developer and approved by the CDC, as set forth in Section 402.1 hereof. "CDC" means the Community Development Commission of The City of National City, a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California, Health and Safety Code, Section 33000, et seq., and any assignee of or successor to its rights, powers and responsibilities. "CDC's Conditions Precedent" means the conditions precedent to the Closing to the benefit of the CDC, as set forth in Section 305.1 hereof. "CDC Financial Assistance" is defined in Section 203. "City" means the City of City of National City, a California municipal corporation. "Closing" means the close of Escrow for the Conveyance of the Site from the CDC to the Developer, as set forth in Section 302.4 hereof. "Closing Date" means the date of the Closing, as set forth in Section 302.4 hereof. "Condition of Title" is defined in Section 303 hereof. "Consideration to CDC" is defined in Section 301. 2 F:V RS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc "Construction Drawings" means the detailed construction drawings and plans to be prepared and used with respect to constructing the Improvements, which are stamped by a licensed and/or registered engineer as set forth hereafter. "Conveyance" means the conveyance of the Site by the CDC to the Developer on the Closing Date. "Date of Agreement" means the date set forth in the first paragraph hereof. "Default" means the failure of a party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and opportunity to cure, as set forth in Section 601 hereof. "Developer" means Constellation Property Group (A Avenue) LP, a Delaware limited partnership, and its successors and assigns. "Developer's Conditions Precedent" means the conditions precedent to the Closing to the benefit of the Developer, as set forth in Section 305.2. "Developer's Environmental Consultant" means the environmental consultant that may be employed by the Developer pursuant to Section 308.1 hereof. "Developer's Environmental Report" means the environmental investigation of the Site, which may be conducted for the Developer by Developer's Environmental Consultant, as set forth in Section 308.2 hereof. "Environmental Laws" shall mean any and all federal, state and local statutes, ordinances, orders, rules, regulations, guidance documents, judgments, governmental authorizations, or any other requirements of governmental authorities presently relating to the release, generation, use, handling, treatment, storage, transportation or disposal of Hazardous Materials, or the protection of the environment or human, plant or animal health. "Environmental Laws" include, without limitation, (i) the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601 et seq.), (ii) the Hazardous Materials Transportation Act (94 U.S.C. § 1801 et seq.), (iii) the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), (iv) the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.), (v) the Clean Air Act (42 U.S.C. § 7401 et seq.), (vi) the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), (vii) the Oil Pollution Act (33 U.S.C. § 2701 et seq.), (viii) the Emergency Planning and Community Right -To -Know Act (U.S.C. § 11001 et seq.), (ix) the Porter -Cologne Water Quality Control Act (Cal. Water Code § 13020 et seq.), (x) the Safe Drinking Water and Toxic Enforcement Act of 1986 (Cal. Health & Safety Code § 25300 et seq.), (xi) the Hazardous Waste Control Act (Cal. Health & Safety Code § 25100 et seq.), (xii) the Carpenter -Presley -Tanner Hazardous Substance Account Act (Cal. Health and Safety Code § 25316 et seq.), (xiii) the Hazardous Materials Release Response Plans and Inventory (Cal. Health & Safety Code § 25501 et seq.), (xiv) Cal. Health and Safety Code § 25281 (Underground Storage of Hazardous Substances), (xv) Article 9 or Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, and other applicable provisions of the California Health and Safety Code, Water Code, and Government Code as amended or supplemented and 3 F1.JRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc any analogous present federal, state or local statutes, ordinances or laws, and any regulations promulgated pursuant to any of the foregoing. "Environmental Reports" means the collective environmental investigations of the Site as reported in the Developer's Environmental Report and any investigations conducted by or for the CDC or in its files for the Site. "Escrow" is defined in Section 302 hereof. "Escrow Holder" is defined in Section 302 hereof. "Escrow Costs" are defined in Section 302.1 hereof. "Exceptions" is defined in Section 303 hereof. "Extended Delay" is defined in Section 702 hereof. "Governmental Requirements" means all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state, the county, the City, or any other political subdivision in which the Site is located, and of any other political subdivision, CDC or instrumentality exercising jurisdiction over the CDC, the Developer or the Site. "Grant Deed" means any grant deed for the conveyance of the Site from the CDC to the Developer, in the form of Attachment No. 3 hereto which is incorporated herein. "Hazardous Materials" means any substance, material, or waste which is or becomes, regulated by any local governmental authority, the State of California, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous substance," "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Environmental Laws, (ii) petroleum, (iii) friable asbestos, (iv) polychlorinated byphenyls, (v) methyl tertiary butyl ether, or (vi) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any Governmental Requirements either requires special handling in its use, transportation, generation, collection, storage, handling, treatment or disposal, or is defined as "hazardous" or harmful to human health or the environment. "Lender" is defined in Section 410 hereof. "Improvements" means the new improvements to be constructed by the Developer upon the Site, all more particularly described in Section 401.1 hereof and in the Scope of Development. "Notice" shall mean a notice in the form prescribed by Section 701 hereof. "Outside Date" shall mean the last date the Closing shall occur, as set forth in Section 302.4 hereof. "Prevailing Wage Laws" is defined in Section 408.2. 4 F:VRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc "Redevelopment Plan" means the Redevelopment Plan for the Redevelopment Project, adopted by Ordinance No. 95 - 2095 of the City Council of the City of National City, and incorporated herein by reference. "Redevelopment Project" means the National City Redevelopment Project, adopted by the City pursuant to the Redevelopment Plan. "Release of Construction Covenants" means the document, which evidences the Developer's satisfactory completion of the Improvements, as set forth in Section 409 hereof, in the form of Attachment No. 6 hereto which is incorporated herein. "Report" means the preliminary title report, as described in Section 303 hereof. "Residential Units" means the condominium residential units to be constructed on the Site. "Schedule of Performance" means the Schedule of Performance attached hereto as Attachment No. 4 and incorporated herein, setting out the dates and/or time periods by which certain obligations set forth in this Agreement must be accomplished. The Schedule of Performance is subject to revision from time to time as mutually agreed upon in writing between the Developer and the CDC's Director. Unless otherwise specified herein, the CDC's Director is authorized to make such revisions, as he or she deems reasonably necessary. "Scope of Development" means the Scope of Development attached hereto as Attachment No. 5 and incorporated herein, which describes the scope, amount and quality of development of the Improvements to be constructed by the Developer pursuant to the terms and conditions of this Agreement. "Site" means that certain area within the Project Area, consisting of approximately 1.2 acres, mid -block between National City Boulevard on the west and "B" Avenue on the east, and between l lth Street on the north and 12th Street on the south in the City of National City. The Site is legally described in the Site Legal Description set forth on Attachment No. 2 and depicted on the Site Map set forth in Attachment No. 1. "Site Legal Description" means the description of the Site, which is attached hereto as Attachment No. 2 and incorporated herein. "Site Map" means the map of the Site, which is attached hereto as Attachment No. 1 and incorporated herein. "Site Plan Drawings" means the plans and drawings to be submitted by the Developer and approved by the CDC, as set forth in Section 402.2 hereof. "Title Company" shall mean Old Republic Title Company or other title insurance company mutually agreed upon by the parties. "Title Policy" is defined in Section 304 hereof. 5 FURS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc "Transfer" is described in Section 703 hereof. "Trolley Transit Center" is a public -use facility designed to accommodate pedestrian and vehicle ingress and egress, common areas and related amenities, to support a centrally - located linkage between the City's trolley shuttle service and the San Diego Trolley system, all more particularly described in Section 401.1 hereof and in the Scope of Development. 200. FINANCIAL ASSISTANCE [This provision is intentionally deleted.] 300. CONVEYANCE OF THE SITE 301. Disposition of the Site. The Developer agrees to purchase, and the CDC agrees to sell, the Site for consideration equal to the following items: (i) Ten Dollars ($10.00); (ii) the agreement and obligation of Developer to construct and pay for all costs and expenses of the Trolley Transit Center; (iii) the agreement and obligation of the Developer to construct and pay for all costs and expenses of the Office Space., (iv) the agreement and obligation of the Developer to convey to the CDC for Ten Dollars ($10.00) a fee interest in the real property associated with the Trolley Transit Center and all improvements constructed thereon (the "Trolley Parcel"), and (v) the agreement and obligation of the Developer to convey to the CDC for Ten Dollars ($10.00) a condominium interest in the Office Space with exclusive rights to use the four (4) parking spaces associated with the Office Space (collectively, the "Consideration to CDC"). The Trolley Parcel shall be conveyed by the Developer to the CDC promptly following substantial completion of the Trolley Transit Center. The Office Space shall be conveyed by the Developer to the CDC promptly following substantial completion thereof, which shall be substantially complete no more than ninety (90) days following substantial completion of the Residential Units. At the time of conveyance of the Trolley Parcel and the Office Space to the CDC, the Trolley Parcel and the Office Space shall be free from monetary liens, but may be subject to reciprocal easements, CC&Rs and other liens and encumbrances consistent with a mixed -use project adjacent to a public transportation center. 302. Escrow. The parties shall cause an escrow to be opened ("Escrow") with the escrow division of Old Republic Title Company in its San Diego office, or another escrow company mutually satisfactory to both parties (the "Escrow Holder"). 302.1. Costs of Escrow. The Developer shall pay the premium for the Title Policy and the documentary transfer taxes, if any, due with respect to the conveyance of the Site from the CDC to the Developer. The Developer and the CDC shall each pay one-half of all other usual fees, charges, and costs that arise from Escrow (the "Escrow Costs") with respect to the conveyance of the site from the CDC to the Developer. The CDC shall pay the premium for any title policy, ALTA 6 FURS\EMAIL\#550280 v3. - Centro DDA 8-18-05.doc survey, documentary transfer taxes and escrow fees with respect to the conveyance of the Trolley Parcel and the Office Space from the Developer to the CDC. 302.2. Escrow Instructions. This Agreement constitutes the joint escrow instructions of Developer and the CDC and the Escrow Holder to whom these instructions are delivered is hereby empowered to act under this Agreement. The parties hereto agree to do all acts reasonably necessary to close this Escrow in the shortest possible time. Insurance policies for fire or casualty are not to be transferred, and CDC will cancel its own policies after the Closing. All funds received in the Escrow shall be deposited with other escrow funds in a general escrow account(s) and may be transferred to any other such escrow trust account in any State or National Bank doing business in the State of California. All disbursements shall be made by check from such account. However, if Escrow does not close within one (1) business day from deposit of the Purchase Price, the funds shall be deposited into an interest bearing account with such interest accruing to the benefit of the Developer. If in the opinion of either party or the Escrow Holder it is necessary or convenient in order to accomplish the Closing of this transaction, such party may require that the parties sign supplemental escrow instructions within fifteen (15) days of notice thereof; provided that if there is any inconsistency between this Agreement and the supplemental escrow instructions, then the provisions of this Agreement shall control. The parties agree to execute such other and further documents as may be reasonably necessary, helpful or appropriate to effectuate the provisions of this Agreement. 302.3. Authority of Escrow Holder. Escrow Holder is authorized to, and shall: (a) Pay and charge Developer and CDC for their respective shares of the Escrow Costs payable under Section 302.1 of this Agreement, any endorsements to the premium of the Title Policy thereto as set forth in Section 304, and any amount necessary to place title in the condition necessary to satisfy Section 303 of this Agreement. (b) Pay and charge Developer and CDC for their respective shares of any escrow fees, charges, and costs. (c) Disburse funds and deliver and record the Grant Deed when both the Developer's Conditions Precedent and the CDC's Conditions Precedent have been fulfilled or waived by Developer and CDC. (d) Do such other actions as necessary, including obtaining the Title Policy, to fulfill its obligations under this Agreement. (e) Within the discretion of Escrow Holder, direct CDC and Developer to execute and deliver any instrument, affidavit, and statement, and to perform any act reasonably necessary to comply with the provisions of r'1RPTA and any similar state act and regulation promulgated hereunder. CDC agrees to execute a Certificate of Non -Foreign Status by 7 F:\JRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc individual transferor and/or a Certification of Compliance with Real Estate Reporting Requirement of the 1986 Tax Reform Act as may be required by Escrow Holder, on the form to be supplied by Escrow Holder. (f) Prepare and file with all appropriate governmental or taxing authorities a uniform settlement statement, closing statement, tax withholding forms including an IRS 1099-S form, and be responsible for withholding taxes, if any such forms are provided for or required by law. 302.4. Closing. The Conveyance of the Site shall close ("Closing") within thirty (30) days of the parties' satisfaction of all of the CDC's and the Developer's Conditions Precedent to Closing as set forth in Section 305 hereof, but in no event later than September 1, 2005 (the "Outside Date"). The Closing shall occur at a location within San Diego County at a time and place reasonably agreed on by the parties. The "Closing" shall mean the time and day the Grant Deed is filed for record with the San Diego County Recorder. The "Closing Date" shall mean the day on which the Closing occurs. 302.5. Termination. If Escrow is not in condition to close by the Outside Date, then both parties shall continue to use their best efforts to close as soon as possible after the Outside Date. If either party makes a written demand for return of documents or properties no earlier than forty-five (45) days after the Outside Date, the Escrow shall not terminate until fifteen (15) days after Escrow Holder shall have delivered copies of such demand to all other parties at the respective addresses shown in this Agreement. If any objections are raised within said fifteen (15) day period, Escrow Holder is authorized to hold all papers and documents until instructed by a court of competent jurisdiction or by mutual written instructions of the parties. Termination of the Escrow shall be without prejudice as to whatever legal rights either party may have against the other arising from this Agreement. If no demands are made, the parties and the Escrow Holder shall proceed with the Closing as soon as possible. 302.6. Closing Procedure. Escrow Holder shall close Escrow for the Site as follows: (a) Record the Grant Deed with instructions for the Recorder of San Diego County, California to deliver the Grant Deed to Developer; (b) Instruct the Title Company to deliver the Title Policy to Developer; (c) File any informational reports required by Internal Revenue Code Section 6045(e), as amended, and any other applicable requirements; (d) Deliver the FIRPTA Certificate, if any, to Developer; and 8 F:WRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc (e) Forward to both Developer and CDC a separate accounting of all funds received and disbursed for each party and copies of all executed and recorded or filed documents deposited into Escrow, with such recording and filing date and information endorsed thereon. 303. Title and Survey Review. Developer hereby acknowledges receipt of a standard preliminary title report (the "Report") with respect to the title to the Site, together with best available copies of the documents (the "Documents") underlying the exceptions ("Exceptions") set forth in the Report. The Developer shall have the right to approve or disapprove the Exceptions in its sole and absolute discretion; provided, however, that the Developer hereby approves the following Exceptions: (a) The Redevelopment Plan. (b) The lien of any non -delinquent property taxes and assessments (to be prorated at close of Escrow). Developer shall have until the Closing to give written notice to CDC and Escrow Holder of Developer's approval or disapproval of any of such Exceptions. If Developer notifies CDC of its disapproval of any Exceptions in the Report, CDC shall have the right, but not the obligation, to remove any disapproved Exceptions within five (5) business days after receiving written notice of Developer's disapproval or provide written notice to Developer with assurances satisfactory to Developer in Developer's sole and absolute discretion that such Exception(s) will be removed on or before the Closing. If CDC cannot or does not remove any of the disapproved Exceptions or provide assurances satisfactory to Developer that such Exception(s) will be removed on or before the Closing within that period, Developer shall have three (3) business days after receipt of written notice of CDC to either give the CDC written notice that Developer elects to proceed with the purchase of the Site subject to the disapproved Exceptions or to give the CDC written notice that the Developer elects to terminate this Agreement. The Exceptions to title approved by Developer as provided herein shall hereinafter be referred to as the "Condition of Title." Developer shall have the right to approve or disapprove in its sole and absolute discretion any further Exceptions reported by the Title Company after Developer has approved the Condition of Title for the Site (which are not created by Developer). CDC shall not voluntarily create any new exceptions to title following the date of this Agreement. 304. Title Insurance. Concurrently with recordation of the Grant Deed conveying title to the Site, there shall be issued to Developer an ALTA Form B (1970, amended 10/17/70, or if the 1970, amended 10/17/70, form is not available, the 1970 form with 1984 amendment and, if that is not available, 1992 form with no creditors' rights exclusion) extended coverage owner's title insurance policy ("Title Policy"), or equivalent form acceptable to Developer, without a creditor's rights exclusion or arbitration provision, as applicable, or including an endorsement eliminating the creditor's rights exclusion and arbitration provision, with coverage in the amount of the appraised value of the Site (or such greater amount, up to the total anticipated cost of acquisition, development and construction of the Property, as Developer may elect) and dated as of the date 9 F:WRS\EMAIL\#550280 V3 - Centro DDA 8-16-05.doc and time the Grant Deed is recorded, indicating title to the Site (including any easements for the benefit of the Site) and Improvements to be vested of record in Developer, subject solely to the Exceptions to Title and including such title endorsements as Developer may have requested during the review period providing in Section 203.1 hereof. The Title Company shall provide the CDC with a copy of the Title Policy. The CDC agrees to remove on or before the Closing any deeds of trust or other monetary liens against the Site. The Escrow Costs shall include and Developer shall pay the cost of any surveys necessary to issue the Title Policy. 305. Conditions of Closing. The Closing is conditioned upon the satisfaction of the following terms and conditions within the times designated below: 305.1. CDC's Conditions of Closing. CDC's obligation to proceed with the Closing of the sale of the Site is subject to the fulfillment or waiver by CDC of each and all of the conditions precedent (a) through (h), inclusive, described below ("CDC's Conditions Precedent"), which are solely for the benefit of CDC, and which shall be fulfilled or waived by the time periods provided for herein: (a) No Default. Prior to the Close of Escrow, Developer shall not be in default in any of its obligations under the terms of this Agreement and all representations and warranties of Developer contained herein shall be true and correct in all material respects. (b) Execution of Documents. The Developer shall have executed any other documents required hereunder and delivered such documents into Escrow. (c) Payment of Funds. Prior to the Close of Escrow, Developer shall have paid the cash portion of the Consideration to CDC and all required costs of Closing into Escrow in accordance with Section 301 and 302 hereof. 305.2. Developer's Conditions of Closing. Developer's obligation to proceed with the Closing is subject to the fulfillment or waiver by the Developer of each and all of the conditions precedent (a) through (h), inclusive, described below (the "Developer's Conditions Precedent"), which are solely for the benefit of Developer, and which shall be fulfilled or waived by the time periods provided for herein: (a) No Default. Prior to the Close of Escrow, the CDC shall not be in default in any of its obligations under the terms of this Agreement and all representations and warranties of the CDC contained herein shall be true and correct in all material respects. (b) Execution of Documents. The CDC shall have executed the Grant Deed and any other documents required hereunder, and delivered such documents into Escrow. (c) Review and Approval of Title. The Developer shall have reviewed and approved the condition of title of the Site, as provided in Section 303 hereof. 10 F:41RS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc (d) Title Policy. The Title Company shall, upon payment of Title Company's regularly scheduled premium, have irrevocably and unconditionally agreed to provide to the Developer the Title Policy for the Site upon the Close of Escrow, in accordance with Section 304 hereof. (e) Environmental. The Developer shall have approved the environmental condition of the Site, the Developer's review of the Site, and the Developer's approval of the Site's conditions. 306. Representations and Warranties. 306.1. CDC Representations. The CDC represents and warrants to Developer as follows: (a) Authority. The CDC is a public body, corporate and politic, existing pursuant to the California Community Redevelopment Law (California Health and Safety Code Section 33000), which has been authorized to enter into and perform its obligations under this Agreement. This Agreement and all agreements, instruments and documents herein provided to be executed or to be caused to be executed by the CDC are and on the Closing Date will be duly authorized, executed and delivered by and are binding upon the CDC. The CDC has the capacity and authority to enter into this Agreement and consummate the transactions herein provided without the consent or joinder of any other party. (b) FIRPTA. The CDC is not a "foreign person" within the parameters of FIRPTA or any similar state statute, or is exempt from the provisions of FIRPTA or any similar state statute, or that the CDC has complied and will comply with all the requirements under FIRPTA or any similar state statute. (c) No Conflict. To the best of the CDC's knowledge, the CDC's execution, delivery and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which the CDC is a party or by which it is bound. (d) Litigation. There are no claims, causes of action or other litigation or proceedings, including condemnation, pending or, to the Actual Knowledge of the CDC, threatened with respect to the ownership, operation or environmental condition of the Site or any part thereof or the Developer's intended use of the Site (including disputes with mortgagees, governmental authorities, utility companies, contractors, adjoining landowners or suppliers of goods and services). (e) Violation. To the Actual Knowledge of the CDC, there are no violations of any health, safety, pollution, zoning, Environmental Laws or other laws, ordinances, rules or regulations with respect to the Site, which have not heretofore been entirely corrected, and the CDC has received no notices of any such violations. In the event the CDC becomes aware of any such violations, CDC shall (i) immediately provide Developer with copies of all documents evidencing such violation, and (ii) cure any such violation prior to Closing unless the Developer causes the violation. 11 F:VRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc (f) Hazardous Materials. To the Actual Knowledge of the CDC, except as may be disclosed by the Environmental Reports, no Hazardous Materials exist on the Site except typical automotive fluids that have leaked on the surface of the parking lot on the Site from parked vehicles. (g) proceeding. No CDC Bankruptcy. The CDC is not the subject of a bankruptcy (h) Leases and Service Agreements. There are no leases of space at the Site which will be in force on the Closing Date. The CDC has not entered into any service agreements, equipment leasing contracts or other contracts relating to the Site that will be in force after the Closing Date. (i) Consents; No Conflict. The CDC has obtained all consents and permissions related to the transactions herein contemplated and required under any covenant, agreement, encumbrance, or applicable laws. Neither this Agreement nor any agreement, document or instrument executed or to be executed in connection with the same, nor anything provided in or contemplated by this Agreement or any such other agreement, document or instrument, does now or shall hereafter breach, invalidate, cancel, make inoperative or interfere with, or result in the acceleration or maturity of, any agreement, document, instrument, right or interest, affecting or relating to the CDC and/or the Site. Until the Closing, the CDC shall, upon the change of any fact or condition which would cause any of the warranties and representations in this Section 306.1 not to be true as of Closing, immediately give written notice of such changed fact or condition to Developer. Such exception(s) to a representation shall not be deemed a breach by the CDC hereunder, but shall constitute an exception which Developer shall have a right to approve or disapprove if such exception would have an effect on the value and/or operation of the Site. If Developer elects to close Escrow following disclosure of such information, the CDC's representations and warranties contained herein shall be deemed to have been made as of the Closing, subject to such exception(s). If, following the disclosure of such information, Developer elects to not close Escrow, then this Agreement and the Escrow shall automatically terminate, and neither party shall have any further rights, obligations or liabilities hereunder. The representations and warranties set forth in this Section 306.1 shall survive the Closing. 306.2. Developer's Representations. Developer represents and warrants to the CDC as follows: (a) Authority. Developer is a limited partnership formed in and in good standing under the laws of the State of Delaware, and is qualified to do business within the State of California. Developer has full right, power and lawful authority to purchase and accept the conveyance of the Site and undertake all obligations as provided herein and the execution, performance and delivery of this Agreement by Developer has been fully authorized by all requisite actions on the part of the Developer. (b) No Conflict. To the best of Developer's knowledge, Developer's execution, delivery and performance of its obligations under this Agreement will not constitute a 12 F:URS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc default or a breach under any contract, agreement or order to which the Developer is a party or by which it is bound. (c) No Developer Bankruptcy. Developer is not the subject of a bankruptcy proceeding. Until the Closing, Developer shall, upon the change of any fact or condition which would cause any of the warranties and representations in this Section 306.2 not to be true as of Closing, immediately give written notice of such changed fact or condition to CDC. Such exception(s) to a representation shall not be deemed a breach by Developer hereunder, but shall constitute an exception which CDC shall have a right to approve or disapprove if such exception would have an effect on the value and/or operation of the Site. If CDC elects to close Escrow following disclosure of such information, Developer's representations and warranties contained herein shall be deemed to have been made as of the Closing, subject to such exception(s). If, following the disclosure of such information, the CDC elects to not close Escrow, then this Agreement and the Escrow shall automatically terminate, and neither party shall have any further rights, obligations or liabilities hereunder. The representations and warranties set forth in this Section 306.2 shall survive the Closing. (d) Not Subject of an Investigation. Neither the Developer nor any of its principals is the subject or target of any investigation by any municipal, state or local agency. 307. Studies and Reports. Prior to the Closing, representatives of Developer shall have the right of access to all portions of the Site for the purpose of obtaining data and making surveys and tests necessary to carry out this Agreement, including the investigation of the environmental condition of the Site pursuant to Section 308 hereof. Any preliminary work undertaken on the Site by Developer prior to the Closing shall be done at the sole expense of the Developer, and the Developer's execution of a right of entry agreement to be provided by the CDC. Any preliminary work shall be undertaken only after securing any necessary permits from the appropriate governmental agencies. 308. Condition of the Site. 308.1. Investigation of Site. In addition to conducting a physical assessment of the Site, Developer shall have the right, at its sole cost and expense, to engage its own environmental consultant ("Developer's Environmental Consultant") to conduct an environmental assessment and make such investigations as Developer deems necessary, including "Phase r' and/or "Phase II" investigations of the Site (including soil, vapor, and groundwater sampling and monitoring), and shall promptly provide CDC a copy of all final reports and test results (not including drafts) provided by Developer's Environmental Consultant ("Developer's Environmental Reports"). 400. DEVELOPMENT OF THE SITE 401. Scope of Development. 13 F:\JRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc 401.1. Developer's Obligation to Construct Improvements. Following the Closing on the Site, the Developer shall develop or cause the development of the Improvements in accordance with the Scope of Development, the City Municipal Code, and the plans, drawings and documents submitted by the Developer and approved by the CDC as set forth herein. The Project's improvements shall generally be comprised of approximately forty (40) condominium residential units (the "Residential Units"), approximately two thousand, seven hundred (2,700) square feet of commercial/office space, approximately seventy (70) parking spaces, of which four (4) spaces shall be reserved for the Project's commercial/office use, and the Trolley Transit Center (collectively, the "Improvements"). The Developer shall construct (i) all public improvements required as a condition of project approval which are located outside of the face of the curbs surrounding the improvements and (ii) the curbs and all other on -site improvements located inside of the face of the curbs surrounding the Improvements, as required through the City's Design Review process described herein. 402. Design Review. 402.1. Basic Concept Drawings.. Within the time set forth in the Schedule of Performance, the Developer shall submit to the CDC's Executive Director or his/her designee conceptual drawings for the Improvements, including materials, color board, elevations of all four sides of the Improvements, preliminary landscape plans, the traffic and circulation plans, and a rendered perspective (collectively, the "Basic Concept Drawings"). Within the time set forth in the Schedule of Performance, but subject to the standards stated in Section 402.4 hereof, the CDC shall either approve the Basic Concept Drawings or set forth the reasons for its disapproval in writing. In the event that the CDC fails to act within the time set forth in the Schedule of Performance, the Basic Concept Drawings shall be deemed to have been approved by the CDC. 402.2. Site Plan Drawings. After the CDC's approval (or deemed approval) of the Basic Concept Drawings, and within the time set forth in the Schedule of Performance, the Developer shall submit to the CDC and City plans and drawings with respect to the Improvements (the "Site Plan Drawings"), which shall include all documents, plans and drawings, including any application materials required by the City Planning Services Division, which are necessary to obtain all City approvals for the construction of the Improvements. Within the time set forth in the Schedule of Performance, but subject to the standards stated in Section 402.4 hereof, the CDC shall either approve the Site Plan Drawings or set forth the reasons for its disapproval in writing. In the event that the CDC fails to act within the time set forth in the Schedule of Performance, the Site Plan Drawings shall be deemed to have been approved by the CDC. 402.3. CDC Review and Approval. The CDC shall have the right to review and reasonably approve Basic Concept Drawings and Site Plan Drawings. The CDC shall reasonably approve logical evolutions and/or extensions of drawings that it has previously approved. The CDC may review any and all 14 F:\JRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc aspects of the Basic Concept Drawings and Site Plan Drawings. The Developer acknowledges and agrees that the CDC is entitled to approve or disapprove the Basic Concept Drawings and Site Plan Drawings in order to satisfy the CDC's obligation to promote the sound development and redevelopment of land within the Redevelopment Project, to promote a high level of design which will impact the surrounding development, and to provide an environment for the social, economic and psychological growth and well-being of the citizens of the City and the Redevelopment Project. 402.4. Standards for Disapproval. The CDC shall have the right to disapprove the Basic Concept Drawings in its reasonable discretion. The CDC shall have the right to disapprove in its reasonable discretion any of the Site Plan Drawings if (a) the Site Plan Drawings do not conform to the approved Basic Concept Drawings, or (b) the Site Plan Drawings do not conform to the Scope of Development or this Agreement, or (c) the Site Plan Drawings are incomplete; provided, however, that the CDC shall reasonably approve logical evolutions and/or extensions of drawings which it has previously approved. The CDC shall state in writing the reasons for disapproval within fifteen (15) days of such disapproval as stated herein, and in the event that the CDC fails to do so, the drawings shall be deemed approved. The Developer, upon receipt of a disapproval based upon powers reserved by the CDC hereunder, shall revise such portions and resubmit to the CDC by the time established therefor in the Schedule of Performance. 402.5. Consultation and Coordination. During the preparation of the Basic Concept Drawings, Site Plan Drawings and Construction Drawings, staff of the CDC and the Developer shall hold regular progress meetings twice each month or as agreed upon by the parties from time to time to coordinate the preparation of, submission to, and review of the Basic Concept Drawings, Site Plan Drawings and Construction Drawings by the CDC. The staff of the CDC and the Developer shall communicate and consult as frequently as is necessary to ensure that the formal submittal of any documents to the CDC can receive prompt and thorough consideration. The CDC shall designate a CDC employee to serve as the project manager who is responsible for the coordination of the CDC's activities under this Agreement and for expediting the land use approval and permitting process. 402.6. Revisions. If the Developer desires to propose any material revisions to the CDC -approved Basic Concept Drawings, Site Plan Drawings or Construction Drawings, it shall submit such proposed changes to the CDC, and shall also proceed in accordance with any and all State and local laws and regulations regarding such revisions, within the time frame set forth in the Schedule of Performance. At the sole discretion of the CDC, if any material change in the basic uses of the Site is proposed in the Basic Concept Drawings, Site Plan Drawings or Construction Drawings from the basic uses of the Site as provided for in this Agreement, then this Agreement is subject to re -negotiation of all teens and conditions, including without limitation, the economic terms of the Agreement. If the Basic Concept Drawings, Site Plan Drawings or Construction Drawings, as modified by the proposed change, generally and substantially 15 F:URS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc conform to the requirements of this Section 402 of this Agreement and the Scope of Development, the CDC Director shall review the proposed change and notify the Developer in writing within fifteen (15) days after submission to the CDC as to whether the proposed change is approved or disapproved. In the event that the CDC fails to act within the fifteen (15) day time period set forth above, the proposed change or changes shall be deemed approved by the CDC. The CDC's Director is authorized to approve changes to the CDC -approved Basic Concept Drawings, Site Plan Drawings and Construction Drawings provided such changes: 1) do not materially reduce the quality of materials to be used; and 2) do not reduce the imaginative and unique qualities of the project design. Any and all change orders or revisions required by the City and its inspectors which are required under the Municipal Code and all other applicable Uniform Codes (e.g. Building, Plumbing, Fire, Electrical, etc.) and under other applicable laws and regulations shall be included by the Developer in its Basic Concept Drawings, Site Plan Drawings and Construction Drawings, shall be deemed approved by the CDC, and shall be completed during the construction of the Improvements. 402.7. Defects in Plans. Neither the CDC nor the City shall be responsible either to the Developer or to third parties in any way for any defects in the Basic Concept Drawings, the Site Plan Drawings or the Construction Drawings, nor for any structural or other defects in any work done according to the approved Basic Concept Drawings, Site Plan Drawings or Construction Drawings, nor for any delays reasonably caused by the review and approval processes established by this Section 402. 403. Land Use Approvals. Before commencement of construction of the Improvements or other works of improvement upon the Site, the Developer shall, at its own expense, secure or cause to be secured any and all required land use and other entitlements, permits and approvals which may be required for the Improvements by the City or any other governmental agency affected by such construction or work, except for obtaining a specific plan amendment (if necessary). If it is determined by the CDC's independent architect that a specific plan amendment is necessary prior to commencement of construction of the Improvements, then: (i) the Developer shall, at its own expense, provide all studies and analyses necessary to apply for and process a specific plan amendment, and (ii) the CDC shall apply for, pay all application fees and process the specific amendment through to completion. Notwithstanding the generality of the foregoing, the Developer shall apply for and secure the following, and pay all costs, charges and fees associated therewith: (a) Site Plan. (b) All other permits and fees required by the City, County of San Diego, and other governmental agencies with jurisdiction over the Improvements, except any specific plan amendment. The CDC shall cooperate diligently and good faith with the Developer in connection with the Developer's efforts to seek and obtain such permits and approvals. 16 F:URS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc (c) Any environmental studies and documents required pursuant to the California Environmental Quality Act ("CEQA") with regard to any specific plan amendment, and other documents required to be considered and certified by the City under CEQA which may pertain to the Site in any manner. The execution of this Agreement does not constitute the granting of any required land use permits, entitlements or approvals required by the CDC or the City except as otherwise provided in this Agreement. 404. Schedule of Performance. Subject to extension due to Extended Delays (as defined in Section 702 hereof), any failure of the CDC timely to perform its obligations hereunder or delays caused by any failure by third parties timely to respond to Developer's timely submissions, the Developer shall submit all Basic Concept Drawings, Site Plan Drawings and Construction Drawings, commence and complete construction of all of the Improvements, and satisfy all other obligations and conditions of the Developer under this Agreement, within the times established in the Schedule of Performance. 405. Cost of Construction. Except to the extent otherwise expressly set forth in this Agreement, all of the cost of planning, designing, developing and constructing the Improvements, site preparation and grading shall be borne solely by the Developer. 406. Insurance Requirements. The Developer shall take out and maintain or shall cause its contractor, tenant, or another third party to take out and maintain until the issuance of the Release of Construction Covenants pursuant to Section 410 of this Agreement, a comprehensive general liability policy in the amount of Two Million Dollars ($2,000,000.00) combined single limit policy, which policy shall be issued by a `B+" rated insurance carrier. Such policy or policies shall be written on an occurrence form. The Developer shall also furnish or cause to be furnished to the CDC evidence satisfactory to the CDC that any contractor with whom it has contracted for the performance of work on the Site or otherwise pursuant to this Agreement carries workers' compensation insurance as required by law. The Developer shall furnish a certificate of insurance countersigned by an authorized agent of the insurance carrier on a form reasonably approved by the CDC setting forth the general provisions of the insurance coverage. This countersigned certificate shall name the City, the City and the CDC and their respective officers, agents, and employees as additionally insured parties under the policy, and the certificate shall be accompanied by a duly executed endorsement evidencing such additional insured status. The certificate and endorsement by the insurance carrier shall contain, if commercially available at no material additional cost, a statement of obligation on the part of the carrier to notify City and the CDC of any material change, cancellation or termination of the coverage at least thirty (30) days in advance of the effective date of any such material change, cancellation or termination. Coverage provided hereunder by the Developer shall be primary insurance and not be contributing with any insurance maintained by the CDC or City, and the policy shall contain 17 F:'JRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc such an endorsement. The insurance policy or the endorsement shall contain a waiver of subrogation for the benefit of the City and the CDC. The Developer shall furnish the required certificate prior to the Closing as a CDC Condition Precedent to the Closing. 407. Rights of Access. Prior to the issuance of a Release of Construction Covenants (as specified in Section 410 of this Agreement), for purposes of assuring compliance with this Agreement, representatives of the CDC shall have the right of access to the Site, without charges or fees, at normal construction hours during the period of construction for the purposes of this Agreement, including but not limited to, the inspection of the work being performed in constructing the Improvements so long as CDC representatives comply with all safety rules. The CDC (or its representatives) shall, except in emergency situations, notify the Developer at least forty-eight (48) hours prior to exercising its rights pursuant to this Section 407. 408. Compliance with Laws. The Developer shall carry out the design, construction and operation of the Improvements in conformity with all applicable laws, including all applicable state labor standards, the City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq. 408.1. Nondiscrimination in Employment. Developer agrees that all persons employed or applying for employment by it, its affiliates, subsidiaries, or holding companies, and all subcontractors, bidders and vendors, are and will be treated equally by it without regard to, or because of race, color, religion, ancestry, national origin, sex, sexual orientation, age, pregnancy, childbirth or related medical condition, medical condition (cancer related) or physical or mental disability, and in compliance with Title VII of the Civil Rights Act of 1964, 42 U.S.C. Section 2000, et seq., the Federal Equal Pay Act of 1963, 29 U.S.C. Section 206(d), the Age Discrimination in Employment Act of 1967, 29 U.S.C. Section 621, et seq., the Immigration Reform and Control Act of 1986, 8 U.S.C. Section 1324b, et seq., 42 U.S.C. Section 1981, the California Fair Employment and Housing Act, Cal. Government Code Section 12900, et seq., the California Equal Pay Law, Cal. Labor Code Section 1197.5, Cal. Government Code Section 11135, the Americans with Disabilities Act, 42 U.S.C. Section 12101, et seq., and all other anti -discrimination laws and regulations of the United States and the State of California as they now exist or may hereafter be amended. 408.2. Prevailing Wages. The Developer shall construct the Improvements in accordance with all applicable federal and state labor standards, including, but not limited to, the "Prevailing Wage Laws" defined below, if applicable. Developer is aware of Sections 33423 — 33426 of the California Health and Safety Code and Sections 1770 — 1780 of the California Labor Code and is aware of 18 F:WRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc the requirements of California Labor Code Sections 1720 et. seq. and 1770 et seq. as well as California Code of Regulations, Title 8, §16000 et. seq. ("Prevailing Wage Laws"), which require the payment of prevailing wage rates, maintenance of certain accounting and other records concerning wages, and the performance of other requirements on certain "public works" and "maintenance" projects. It is the belief and understanding of the CDC and Developer that this Agreement does not involve a "public work" or "maintenance" project, as defined by the Prevailing Wage Laws because the Consideration to CDC is equal or greater than the fair market value of the Site. Notwithstanding the foregoing, Developer hereby expressly acknowledges and agrees that the CDC has not represented to Developer that the Project will not be a "public work." In the event that a determination should ever be made that the Project does involve a "public work" or "maintenance project" or is otherwise subject to the Prevailing Wage Laws, Developer agrees to fully comply with such Prevailing Wage Laws. Developer shall defend, indemnify and hold the CDC, its elected officials, officers, employees and agents free and harmless from any and all claims, liabilities, costs, penalties or interest arising out of any failure or allege failure of Developer to comply with the Prevailing Wage Laws in connection with this Agreement. If the CDC or any of the indemnified parties are named as a party in any dispute arising from the failure of Developer or its subcontractors to pay prevailing wages, the CDC and the other indemnified parties may appoint their own independent counsel to monitor such proceedings at their own cost and expense; provided, however, Developer will be responsible, in addition to all other damages, fines, penalties and losses incurred by the CDC and the other indemnified parties as a result of the action for which indemnification is provided, to pay the reasonable attorneys' fees and defense costs of the CDC and the other indemnified parties' independent counsel in the event (i) Developer fails to undertake to defend the CDC and the other indemnified parties against an indemnified claim, (ii) such counsel becomes necessary due to a conflict of interest, or (iii) the Developer agrees to pay such costs. 408.3. Taxes and Assessments. Upon and after the Closing, at all times during which the Developer owns the Site, the Developer shall pay prior to delinquency all ad valorem real estate taxes and assessments on the Site, subject to the Developer's right to contest in good faith any such taxes. The Developer agrees that during all times the CDC is permitted to receive property tax increment from the Redevelopment Project pursuant to Health and Safety Code Section 33670, as it may be amended or substituted from time to time. 409. Release of Construction Covenants. Promptly after completion of the Improvements in conformity with this Agreement and delivery of the Trolley Parcel and the Office Space to the CDC, the CDC shall furnish the Developer with a "Release of Construction Covenants," in the form of Attachment No. 6 hereto which is incorporated herein by reference. The CDC shall not unreasonably withhold such Release of Construction Covenants. The Release of Construction Covenants shall be a conclusive determination of satisfactory completion of the Improvements and delivery of the Office Lease and the Release of Construction Covenants shall so state. Any party then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Site shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement except for those continuing covenants as described in the Grant Deed. 19 F:WRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc If the CDC refuses or fails to furnish the Release of Construction Covenants, after written request from the Developer, the CDC shall, within fifteen (15) days of written request thereof, provide the Developer with a written statement of the reasons the CDC refused or failed to furnish the Release of Construction Covenants. The statement shall also contain the CDC's opinion of the actions the Developer must take to obtain the Release of Construction Covenants. The Release of Construction Covenants shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of any mortgage, or any insurer of a mortgage securing money loaned to finance the Improvements, or any part thereof. The Release of Construction Covenants is not a notice of completion as referred to in Section 3093 of the California Civil Code. 410. Financing of the Improvements. 410.1. Approval of Financing. Prior to the commencement of construction of the Improvements, Developer shall submit to CDC evidence that Developer has obtained sufficient commitments for construction financing necessary to undertake the development of the Site and the construction of the Improvements in accordance with this Agreement. The CDC shall approve or disapprove such evidence of financing commitments within fifteen (15) days of receipt of a complete submission. Approval shall not be unreasonably withheld or conditioned. If the CDC disapproves of the evidence of financing, CDC shall do so by a notice to Developer stating the reasons for such disapproval and Developer shall promptly obtain and submit to CDC new evidence of financing. CDC shall approve or disapprove such new evidence of financing in the same manner and within the same times established in this Section 410.1 for the approval or disapproval of the evidence of financing as initially submitted to CDC. Such evidence of financing shall include the following: (a) a copy of letter of interest(s) obtained by Developer from one or more financial institutions for the mortgage loan or loans for financing to fund the construction and completion of the Improvements, subject to such lenders' reasonable, customary and normal conditions and terms, and/or (b) evidence that Developer has sufficient funds for such construction, and that such funds have been committed to such construction, and/or other documentation reasonably satisfactory to the CDC as evidence of other sources of capital sufficient to demonstrate that Developer has adequate funds to cover the difference between the total cost of the construction and completion of the Improvements, less financing authorized by those loans set forth in subparagraph (a) above. 410.2. No Encumbrances Except Mortgages and Deeds of Trust. Mortgages and deeds of trust shall be permitted for the purpose of securing loans of funds to be used for financing the construction of the Improvements (including architecture, engineering, legal, and related direct costs as well as indirect costs) (collectively, the "Construction Costs") on or in connection with the Site, permanent financing, and any other purposes necessary and appropriate in connection with development under this Agreement. The Developer shall notify the CDC in advance of any mortgage or deed of trust financing, if the Developer proposes to enter into the same before completion of the construction of the Improvements. Developer shall be allowed to place a deed of trust upon the Site in an amount 20 F:\JRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc greater than Construction Costs, provided such deed of trust contains a "partial release clause" which provides that in the event the CDC exercises its right of reentry and revesting of title in the CDC pursuant to Section 604.1 below, a partial release from the lien of the deed of trust shall be given by the lender in return for a payment by the CDC or its nominee of Construction Costs advanced plus non -default interest to and including the date upon which the partial release is requested by the CDC. 410.3. Holder Not Obligated to Construct Improvements. The holder of any mortgage or deed of trust authorized by this Agreement shall not be obligated by the provisions of this Agreement to construct or complete the Improvements or any portion thereof, or to guarantee such construction or completion; nor shall any covenant or any other provision in this Agreement be construed so to obligate such holder. Nothing in this Agreement shall be deemed to construe, permit or authorize any such holder to devote the Site to any uses or to construct any improvements thereon, other than those uses or improvements provided for or authorized by this Agreement. Cure. 410.4. Notice of Default to Mortgagee or Deed of Trust Holders; Right to With respect to any mortgage or deed of trust granted by Developer as provided herein, whenever the CDC may deliver any notice or demand to Developer with respect to any breach or default by the Developer in completion of construction of the Improvements, the CDC shall at the same time deliver to each holder of record of any mortgage or deed of trust authorized by this Agreement a copy of such notice or demand. Each such holder shall (insofar as the rights granted by the CDC are concerned) have the right, at its option, within sixty (60) days after the receipt of the notice, to cure or remedy or commence to cure or remedy and thereafter to pursue with due diligence the cure or remedy of any such default and to add the cost thereof to the mortgage debt and the lien of its mortgage. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction or completion of the Improvements, or any portion thereof (beyond the extent necessary to conserve or protect the improvements or construction already made) without first having expressly assumed the Developer's obligations to the CDC by written agreement reasonably satisfactory to the CDC. The holder, in that event, must agree to complete, in the manner provided in this Agreement, the improvements to which the lien or title of such holder relates. Any such holder properly completing such improvement shall be entitled, upon compliance with the requirements of Section 409 of this Agreement, to a Release of Construction Covenants. It is understood that a holder shall be deemed to have satisfied the sixty (60) day time limit set forth above for commencing to cure or remedy a Developer default which requires title and/or possession of the Site (or portion thereof) if and to the extent any such holder has within such sixty (60) day period commenced proceedings to obtain title and/or possession and thereafter the holder diligently pursues such proceedings to completion and cures or remedies the default. 500. COVENANTS AND RESTRICTIONS 501. Use in Accordance with Redevelopment Plan. 21 F:URS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc The Developer covenants and agrees for itself, its successors, assigns, and every successor in interest to the Site or any part thereof, that upon the Closing and during construction and thereafter, the Developer shall devote the Site to the uses specified in this Agreement and in accordance with the Redevelopment Plan for the periods of time specified therein. All uses conducted on the Site, including, without limitation, all activities undertaken by the Developer pursuant to this Agreement, shall conform to the Redevelopment Plan and all applicable provisions of the City Municipal Code. The foregoing covenants shall run with the land. 502. Use Covenants. For a term commencing upon the Conveyance and ending upon the expiration of the effectiveness of the current Redevelopment Plan, excluding any extensions of the Redevelopment Plan, the Developer hereby covenants and agrees for itself, its successors, its assigns and all voluntary and involuntary successors in interest to the Site, or any part thereof, that the Residential Units of the Site will only be used for residential housing purposes. 503. Maintenance Covenants and CC&Rs. The Developer shall maintain the Site and all improvements thereon, including all landscaping, in compliance with the terms of the Redevelopment Plan and with all applicable provisions of the National City Municipal Code, during the period of the Developer's ownership of the Site or portions thereof. The Developer shall prepare and submit to the CDC's legal counsel for its reasonable approval a Declaration of Covenants, Conditions and Restrictions for the Residential Units (the "Association CC&Rs"), which establishes a property owners' association for the Residential Units (the "Association"). The Association CC&Rs shall require the owners of all Residential Units constructed on the Site to be members of the Association. The Association CC&Rs shall entitle each owner to use of the common areas and facilities to be constructed on the Site and shall set forth an equitable apportionment of the costs of maintaining and operating such common areas and facilities. The Association CC&Rs shall require the maintenance of the improvements and the Site in accordance with the standards of this Section 503 and the standards of similar residential developments within the City. The Association CC&Rs shall be enforceable by the CDC, and any substantive amendments to such Association CC&Rs shall require the consent of the CDC, which consent shall not unreasonably be withheld. The Association CC&Rs shall be recorded against those portions of the Site which shall contain Residential Units before the sale of any Residential Units. The Association CC&Rs shall specifically state that the CDC is an intended third party beneficiary of the Association CC&Rs with the ability to enforce all the obligations set forth therein, including, without limitation, the ability to cause any and all maintenance and repair obligations to be performed. 504. Nondiscrimination Covenants. The Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor shall the Developer itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, 22 F:\JRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site. The foregoing covenants shall run with the land. The Developer shall refrain from restricting the rental, sale or lease of the Site on the basis of race, color, religion, sex, sexual orientation, marital status, ancestry or national origin of any person. All such deeds, leases or contracts, including the CC&Rs, shall contain or be subject to substantially the following nondiscrimination or non -segregation clauses: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin, or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." (c) In contracts: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises." 504.2. Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction. The CDC is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own right and for the purposes of 23 FURS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided, without regard to whether the CDC has been, remains or is an owner of any land or interest therein in the Site or in the Redevelopment Project. The CDC shall have the right, if the Agreement or covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches and to avail itself of the rights granted herein to which it or any other beneficiaries of this Agreement and covenants may be entitled. The covenants contained in this Agreement shall remain in effect for the periods described herein, specifically including, without limitation, the following: (a) The covenants pertaining to use of the Site that are set forth in Sections 501, 502 and 503 of this Agreement shall remain in effect for the term of the Redevelopment Plan. (b) The covenants against discrimination, as set forth in Section 504 of this Agreement, shall remain in effect in perpetuity. 600. DEFAULTS AND REMEDIES 601. Default Remedies. Subject to any Extended Delays as set forth in Section 702 of this Agreement, failure by any party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and failure to cure as described hereafter, constitutes a "Default" under this Agreement. A party claiming a Default shall give written notice of Default to the other party specifying the Default complained of. Except as otherwise expressly provided in this Agreement, the claimant shall not institute any proceeding against any other party, and the other party shall not be in Default if such party within thirty (30) days from receipt of such notice immediately, with due diligence, commences to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with diligence. 602. Institution of Legal Actions. In addition to any other rights or remedies and subject to the restrictions otherwise set forth in this Agreement, any party may institute an action at law or equity to seek specific performance of the terms of this Agreement, or to cure, correct or remedy any Default, to recover damages for any Default, or to obtain any other remedy available at law or in equity. Such legal actions must be instituted in the Superior Court of the County of San Diego, State of California. 603. Termination by the Developer Prior to the Conveyance. In addition to the rights provided the Developer in Section 602 hereof, in the event that (a) the CDC does not tender title to the Site pursuant to the Grant Deed in the manner and condition and by the date provided in this Agreement and Developer is not then in Default under this Agreement, or (b) one or more of the Developer's Conditions Precedent to the Closing is not fulfilled on or before the time set forth in the Schedule of Performance and such failure is not caused by the Developer, or (c) any default of the CDC prior to the Closing is not cured within 24 F:WRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc the time set forth in Section 601 hereof, after written demand by the Developer, or (d) the Developer timely disapproves the environmental condition of the Site pursuant to Section 308 hereof, then this Agreement may, at the option of the Developer, be terminated by written Notice thereof to the CDC (the "Notice of Termination"). From the date of the written Notice of Termination of this Agreement by the Developer to the CDC and thereafter this Agreement shall be deemed terminated and there shall be no further rights or obligations between the parties with respect to the Site by virtue of or with respect to this Agreement. 604. Termination by the CDC Prior to the Conveyance. In the event that prior to the Conveyance the CDC are not in Default under this Agreement and (a) the Developer (or any successor in interest) assigns or attempts to assign the Agreement or any rights therein or in the Site in violation of this Agreement; or (b) one or more of the CDC's Conditions Precedent to the Closing is not fulfilled on or before the time set forth in the Schedule of Performance and such failure is not caused by the CDC; or (c) the Developer is otherwise in Default of this Agreement and fails to cure such default within the time set forth in Section 601 hereof; then this Agreement and any rights of the Developer or any assignee or transferee with respect to or arising out of the Agreement or the Site, shall, at the option of the CDC, be terminated by the CDC by written Notice thereof to the Developer. From the date of the written Notice of Termination of this Agreement by the CDC to the Developer and thereafter this Agreement shall be deemed terminated and there shall be no further rights or obligations between the parties. 604.1. Reentry and Revesting of Title in the CDC After the Closing and Prior to Completion of Construction. The CDC shall have the right, at its election, to reenter and take possession of the Site, with all Improvements thereon, and terminate and revest in the CDC the estate conveyed to the Developer if after the Closing and prior to the issuance of the Release of Construction Covenants, the Developer (or its successors in interest) shall, unless due to an Enforced Delay as described in Section 702 hereof: (a) Fails to start the construction of the Improvements as required by this Agreement for a period of ninety (90) days after written notice thereof from the CDC; or (b) Abandon or substantially suspend construction of the Improvements required by this Agreement for a period of sixty (60) days after written notice thereof from the CDC; or (c) Contrary to the provisions of Section 703 Transfer or suffer any involuntary Transfer in violation of this Agreement, and such transfer has not been approved by the CDC or rescinded within thirty (30) days of notice thereof from CDC to Developer; or (d) Fails to deliver the Office Space and the Trolley Parcel to the CDC. Such right to reenter, terminate and revest shall be subject to and be limited by and shall not defeat, render invalid or limit: 25 FURS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc 1. Any mortgage or deed of trust permitted by this Agreement; 2. Any rights or interests provided in this Agreement for the protection of the holders of such mortgages or deeds of trust; or 3. Any rights or interests held by a lessee in and to any portion of the Site. Notwithstanding the above, however, the CDC shall have no right to retake possession of Residential Units and portions of the Site sold to individual homebuyers in the ordinary course of business. The Grant Deed shall contain appropriate reference and provision to give effect to the CDC's right as set forth in this Section 604.1, under specified circumstances prior to recordation of the Release of Construction Covenants, to reenter and take possession of the Site, with all Improvements thereon, and to terminate and revest in the CDC the estate conveyed to the Developer. Upon the revesting in the CDC of title to the Site as provided in this Section 604.1, the CDC shall, pursuant to its responsibilities under State law, use its reasonable efforts to resell the Site as soon and in such manner as the CDC shall find feasible and consistent with the objectives of such law and of the Redevelopment Plan, as it exists or may be amended, to a qualified and responsible party or parties (as determined by the CDC) who will assume the obligation of making or completing the Improvements, or such improvements in their stead as shall be satisfactory to the CDC and in accordance with the uses specified for such Site or part thereof in the Redevelopment Plan. Upon such resale of the Site, the net proceeds thereof after repayment of any mortgage or deed of trust encumbering the Site (or portion thereof in order to obtain a partial release from said mortgage or deed of trust) which is permitted by this Agreement, shall be applied: (i) First, to reimburse the CDC all costs and expenses incurred by the CDC, excluding CDC staff costs, but specifically, including, but not limited to, any expenditures by the CDC in connection with the recapture, management and resale of the Site or part thereof (but less any income derived by the CDC from the Site or part thereof in connection with such management); all taxes, assessments and water or sewer charges with respect to the Site or part thereof which the Developer has not paid (or, in the event that Site is exempt from taxation or assessment of such charges during the period of ownership thereof by the CDC, an amount, if paid, equal to such taxes, assessments, or charges as would have been payable if the Site were not so exempt); any payments made or necessary to be made to discharge any encumbrances or liens existing on the Site or part thereof at the time or revesting of title thereto in the CDC, or to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults or acts of the Developer, its successors or transferees; any expenditures made or obligations incurred by the CDC with respect to the making or completion of the Improvements or any part thereof on the Site, or part thereof; and any amounts otherwise owing the CDC by the Developer, and in the event additional proceeds are thereafter available, then 26 FAJRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc (ii) Second, to the extent available, to reimburse the Developer, its successor or transferee, up to the amount equal to the sum of the costs incurred for the acquisition and development of the Site and for the improvements existing on the Site at the time of the reentry and possession. Any balance remaining after such reimbursements shall be retained by the CDC as its property. The rights established in this Section 604.1 are not intended to be exclusive of any other right, power or remedy, but each and every such right, power, and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy authorized herein or now or hereafter existing at law or in equity. These rights are to be interpreted in light of the fact that the CDC will have conveyed the Site to the Developer for redevelopment purposes and not for speculation in undeveloped land. 605. Acceptance of Service of Process. In the event that the Developer commences legal action against the CDC, service of process on the CDC shall be made by personal service upon the Director of the CDC or in such other manner as may be provided by law. In the event that the CDC commences legal action against the Developer, service of process on the Developer shall be made by personal service on the Developer, whether made within or outside the State of California, or in such other manner as may be provided by law. 606. Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. 607. Inaction Not a Waiver of Default. Any failures or delays by either party in asserting any of its rights and remedies as to any Default shall not operate as a waiver of any Default or of any such rights or remedies, or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 608. Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 609. Non -Liability of Officials and Employees of the CDC and City. No member, official or employee of the CDC or the City shall be personally liable to the Developer, or any successor in interest, in the event of any Default or breach by the CDC or the City or for any amount which may become due to the Developer or its successors, or on any obligations under the terms of this Agreement. 27 F:\JRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc 610. Attorneys' Fees. In any action between the parties to interpret, enforce, reform, modify, rescind, or otherwise in connection with any of the terms or provisions of this Agreement, the prevailing party in the action shall be entitled, in addition to damages, injunctive relief, or any other relief to which it might be entitled, reasonable costs and expenses including, without limitation, litigation costs and reasonable attorneys' fees. 700. GENERAL PROVISIONS 701. Notices, Demands and Communications Between the Parties. Any approval, disapproval, demand, document or other notice ("Notice") which either party may desire to give to the other party under this Agreement must be in writing and may be given by any commercially acceptable means to the party to whom the Notice is directed at the address of the party as set forth below, or at any other address as that party may later designate by Notice. To CDC: Copies to: To Developer: Copies to: Community Development Commission of the City of National City 140 E. 12th Street, Suite B National City, CA 91950-3312 Attention: Executive Director Foley & Lardner LLP 402 West Broadway, Suite 2300 San Diego, CA 92101 Attention: Richard L. Moskitis, Esq. Constellation Property Group (A Avenue) LP 1133 Columbia Street, Suite 101 San Diego, CA 92101 Attention: Wayne Hann Procopio, Cory, Hargreaves & Savitch LLP 535 B Street, Suite 2100 San Diego, CA 92101 Attention: Jeffrey R. Stoke, Esq. Any written notice, demand or communication shall be deemed received immediately if delivered by hand and shall be deemed received on the third day from the date it is postmarked if delivered by registered or certified mail. 702. Extended Delay; Extension of Times of Performance. 28 F:WRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc In addition to specific provisions of this Agreement, performance by any party hereunder shall not be deemed to be in Default, and all performance and other dates specified in this Agreement shall be extended, where delays or Defaults are due to causes beyond the reasonable control or without the fault of the party claiming an extension of time to perform (an "Extended Delay"), which may include the following: war; acts of terrorism, insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplier; acts or omissions of the other party; acts or failures to act of the City or any other public or governmental agency or entity (other than the acts or failures to act of the CDC which shall not excuse performance by the CDC). Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the mutual agreement of CDC and Developer. Notwithstanding any provision of this Agreement to the contrary, the lack of funding to complete the Improvements shall not constitute grounds for an Enforced Delay pursuant to this Section 702. 703. Transfers of Interest in Site or Agreement. The qualifications and identity of the Developer as the developer of high quality residential development are of particular concern to the CDC and City. Furthermore, the parties acknowledge that the CDC has negotiated the terms of this Agreement in contemplation of the development of the Improvements as described in the Scope of Development of this Agreement by this particular developer. Except as provided in Section 703.1 below, the Developer may not assign or otherwise transfer its interests and rights under this Agreement or its interests in the Site (a "Transfer"), except with the CDC's prior written approval, which approval may be withheld in the sole discretion of the CDC. The CDC's approval, prior or otherwise, shall not be required for Permitted Transfers as defined in Section 703.1 hereof. 703.1. Permitted Transfers. Notwithstanding any other provision of this Agreement to the contrary, the CDC approval of a Transfer shall not be required in connection with any of the following: (a) Any Transfer to a limited liability company, partnership, corporation, or other entity or entities in which Developer retains a portion of the ownership or beneficial interest and retains management and control of the transferee entity or entities. (b) The conveyance or dedication of any portion of the Site to the City or other appropriate governmental agency, or the granting of easements or permits to facilitate construction of the Improvements. (c) Any requested assignment for financing purposes (subject to such financing being considered and approved by the CDC pursuant to Section 410 herein), including the grant of a deed of trust to secure the funds necessary for construction of the Improvements. 29 FURS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc (d) Any conveyance of completed Residential Units to individual homebuyers in the ordinary course of business. (e) Any leaseback to the Developer of model Residential Units for the period of the marketing of the Residential Units. In the event of a transfer by the Developer under subparagraph (a) above not requiring the CDC's prior approval, Developer nevertheless agrees that at least thirty (30) days before such transfer it shall give written notice to the CDC of such assignment and satisfactory evidence that the assignee has assumed in writing through an assignment and assumption agreement of all of the obligations of this Agreement. Such an assignment shall release the assigning Developer from any obligations to the CDC hereunder. 703.2. Successors and Assigns. All of the terms, covenants and conditions of this Agreement shall be binding upon the Developer and its permitted successors and assigns. Whenever the term "Developer" is used in this Agreement, such term shall include any other permitted successors and assigns as herein provided. 703.3. Assignment by CDC. The CDC may assign or transfer any of its rights or obligations under this Agreement without the approval of the Developer, provided, however, that such an assignment shall not release the CDC from any of its obligations hereunder. 704. Relationship Between CDC and Developer. It is hereby acknowledged that the relationship between the CDC and the Developer is not that of a partnership or joint venture and that the CDC and the Developer shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided herein or in the Attachments hereto, the CDC shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Improvements. 705. CDC Approvals and Actions. The CDC shall maintain authority of this Agreement and the authority to implement this Agreement through the CDC Executive Director (or his duly authorized representative). The CDC Executive Director shall have the authority to make approvals, issue interpretations, waive provisions, and/or enter into certain amendments of this Agreement on behalf of the CDC so long as such actions do not materially or substantially change the uses or development permitted on the Site, or add to the costs incurred or to be incurred by the CDC as specified herein, and such approvals, interpretations, waivers and/or amendments may include extensions of time to perform as specified in the Schedule of Performance. All other material and/or substantive interpretations, waivers, or amendments shall require the consideration, action and written consent of the CDC Boards. 30 FURS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc 706. Counterparts. This Agreement may be signed in multiple counterparts which, when signed by all parties, shall constitute a binding agreement. This Agreement is executed in three (3) originals, each of which is deemed to be an original. 707. Integration. This Agreement contains the entire understanding between the parties relating to the transaction contemplated by this Agreement, notwithstanding any previous negotiations or agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. All prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged in this Agreement and shall be of no further force or effect. Each party is entering this Agreement based solely upon the representations set forth herein and upon each party's own independent investigation of any and all facts such party deems material. This Agreement includes Attachment Nos. 1 through 6, which are incorporated herein. 708. Real Estate Brokerage Commission. The CDC and the Developer each represent and warrant to the other that no broker or finder is entitled to any commission or finder's fee in connection with the Developer's acquisition of the Site. The parties agree to defend and hold harmless the other parties from any claim to any such commission or fee from any other broker, agent or finder with respect to this Agreement which is payable by such party. 709. Titles and Captions. Titles and captions are for convenience of reference only and do not define, describe or limit the scope or the intent of this Agreement or of any of its terms. Reference to section numbers is to sections in this Agreement, unless expressly stated otherwise. 710. Interpretation. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word "including" shall be construed as if followed by the words "without limitation." This Agreement shall be interpreted as though prepared jointly by both parties. 711. No Waiver. A waiver by either party of a breach of any of the covenants, conditions or agreements under this Agreement to be performed by the other party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Agreement. 712. Modifications. 31 F:V RS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party. 713. Severability. If any term, provision, condition or covenant of this Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law. 714. Computation of Time. The time in which any act is to be done under this Agreement is computed by excluding the first day (such as the day escrow opens), and including the last day, unless the last day is a holiday or Saturday or Sunday, and then that day is also excluded. The term "holiday" shall mean all holidays as specified in Section 6700 and 6701 of the California Government Code. If any act is to be done by a particular time during a day, that time shall be Pacific Time Zone time. 715. Legal Advice. Each party represents and warrants to the other the following: they have carefully read this Agreement, and in signing this Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement; and, they have freely signed this Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in this Agreement, and without duress or coercion, whether economic or otherwise. 716. Time of Essence. Time is expressly made of the essence with respect to the performance by the CDC and Developer of each and every obligation and condition of this Agreement. 717. Cooperation. Each party agrees to cooperate with the other in this transaction and, in that regard, to sign any and all documents which may be reasonably necessary, helpful, or appropriate to carry out the purposes and intent of this Agreement including, but not limited to, releases or additional agreements. 718. Conflicts of Interest. No member, official or employee of the CDC or City shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or employee participate 32 F:V RS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. 719. Time for Acceptance of Agreement by CDC. This Agreement must be authorized, executed and delivered by the CDC on or before August 30, 2005, except to the extent that the Developer shall consent in writing to a further extension of time for the authorization, execution and delivery of this Agreement. IN WITNESS WHEREOF, the CDC and the Developer have executed this Disposition and Development Agreement as of the date set forth above. CDC: COMMUNITY DEVELOPMENT COMMISSION OF THE OF THE CITY OF NATIONAL CITY, a public body, corporate and politic By: Nick Inzunza, Chairman ATTEST: , CDC Secretary APPROVED AS TO FORM: Foley & Lardner LLP Special Counsel to the CDC By: Richard L. Moskitis, Esq. DEVELOPER: CONSTELLATION PROPERTY GROUP (A AVENUE) LP, a Delaware limited partnership By: Constellation Property Management, Inc., a Delaware Corporation, its General Partner By: Eugene Marchese, President 33 F:V RS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc ATTACHMENT NO. 1 SITE MAP Attachment No. 1-1 F:V RS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc Attachment No. 1-2 F:VRS\EMAIL_\#550280 v3 - Centro DDA 8-16-05.doc ATTACHMENT NO. 2 SITE LEGAL DESCRIPTION PARCEL 2 OF PARCEL MAP NO. 10377, IN THE CITY OF NATIONAL CITY, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, AUGUST 27, 1980 AS FILE NO. 80-275023 OF THE OFFICIAL RECORDS. APN: 556-554-16 Attachment No. 2-1 F:WRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc ATTACHMENT NO. 3 GRANT DEED RECORDING REQUESTED BY, MAIL TAX STATEMENTS TO, AND WHEN RECORDED MAIL TO: This document is exempt from payment of a recording fee pursuant to Government Code Section 27383 GRANT DEED For valuable consideration, receipt of which is hereby acknowledged, the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic (the "CDC"), acting to carry out the Redevelopment Plan ("Redevelopment Plan") for the National City Redevelopment Project (the "Project"), under the Community Redevelopment Law of California, as of , 2005, hereby grants to CONSTELLATION PROPERTY GROUP (A AVENUE) LP, a Delaware limited partnership ("Developer"), the real property hereinafter referred to as the "Site," described in Exhibit A attached hereto and incorporated herein, subject to the existing easements, restrictions and covenants of record described there. 1. Reservation of Mineral Rights. The CDC excepts and reserves from the conveyance herein described all interest of the CDC in oil, gas, hydrocarbon substances and minerals of every kind and character lying more than five hundred (500) feet below the surface, together with the right to drill into, through, and to use and occupy all parts of the Site lying more than five hundred (500) feet below the surface thereof for any and all purposes incidental to the exploration for and production of oil, gas, hydrocarbon substances or minerals from said Site or other lands, but without, however, any right to use either the surface of the Site or any portion thereof within five hundred (500) feet of the surface for any purpose or purposes whatsoever, or to use the Site in such a manner as to create a disturbance to the use or enjoyment of the Site. 2. Conveyance in Accordance With Redevelopment Plan, Disposition and Development Agreement. The Site is conveyed in accordance with and subject to the Redevelopment Plan which was approved and adopted by Ordinance No. 95-2095 of the City Council of the City of National City, and a Disposition and Development Agreement entered into between the CDC and Developer dated August 30, 2005 (the "DDA"), a copy of which is on file with the CDC at its offices as a public record and which is incorporated herein by reference. The DDA generally requires the Developer to construct a mixed -use residential and commercial/office development on the Site. All terms used herein shall have the same meaning as those used in the DDA. Attachment No. 3-1 FURS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc 3. Restrictions on Transfer. The Developer further agrees as follows: (a) For the period commencing upon the date of this Grant Deed and until the CDC's issuance of the Release of Construction Covenants as set forth in Section 409 of the DDA, no voluntary or involuntary successor in interest of the Developer shall acquire any rights or powers under the DDA or this Grant Deed, nor shall the Developer make any total or partial sale, transfer, conveyance, assignment, subdivision, without the prior written approval of the CDC or as otherwise permitted pursuant to Section 703 of the DDA. (b) The Developer shall not place or suffer to be placed on the Site any lien or encumbrance other than mortgages or deeds of trust permitted by Section 410.2 of the DDA. (c) All of the terms, covenants and conditions of this Grant Deed shall be binding upon the Developer and the permitted successors and assigns of the Developer. Whenever the term "Developer" is used in this Grant Deed, such term shall include any other successors and assigns as herein provided. 4. Nondiscrimination. The Developer herein covenants by and for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the Developer itself or any person claiming under or through Developer, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sub lessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land. The Developer shall refrain from restricting the rental, sale or lease of the Site on the basis of race, color, religion, sex, marital status, ancestry or national origin of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sub lessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: Attachment No. 3-2 FURS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc "That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin, or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, sub lessees, subtenants, or vendees in the premises herein leased." (c) In contracts: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sub lessees or vendees of the premises." 5. CDC Right of Reentry. The CDC has the right, at its election, to reenter and take possession of the Site, with all improvements thereon, and terminate and revest in the CDC the estate conveyed to the Developer if after the Closing and prior to the issuance of the Release of Construction Covenants, the Developer (or its successors in interest) shall: a. fail to start the construction of the Improvements as required by the DDA for a period of ninety (90) days after written notice thereof from the CDC; or b. abandon or substantially suspend construction of the Improvements required by the DDA for a period of sixty (60) days after written notice thereof from the CDC; or c. contrary to the provisions of Section 703 of the DDA transfer or suffer any involuntary Transfer in violation of the DDA, and such transfer has not been approved by the CDC or rescinded within thirty (30) days of notice thereof from CDC to Developer; or d. fails to timely deliver the Office Space and the Trolley Parcel to the CDC. Such right to reenter, terminate and revest shall be subject to and be limited by and shall not defeat, render invalid or limit: 1. Any mortgage or deed of trust permitted by the DDA; or 2. Any rights or interests provided in the DDA for the protection of the holders of such mortgages or deeds of trust. 3. Any rights or interests held by a lessee in and to the property. Notwithstanding the above, however, the CDC shall have no right to retake possession of Residential Units and portions of the Site sold to individual homebuyers in the ordinary course of Attachment No. 3-3 F:\JRSTMAILV550280 v3 - Centro DDA 8-16-05.doc business. Upon the revesting in the CDC of title to the Site as provided in this Section 5, the CDC shall, pursuant to its responsibilities under state law, use its reasonable efforts to resell the Site as soon and in such manner as the CDC shall find feasible and consistent with the objectives of such law and of the Redevelopment Plan, as it exists or may be amended, to a qualified and responsible party or parties (as determined by the CDC) who will assume the obligation of making or completing the Improvements, or such improvements in their stead as shall be satisfactory to the CDC and in accordance with the uses specified for the Site or part thereof in the Redevelopment Plan. Upon such resale of the Site, the net proceeds thereof after repayment of (or partial release from) any mortgage or deed of trust encumbering the Site which is permitted by the DDA, shall be applied: i. First, to reimburse the CDC all costs and expenses incurred by the CDC, excluding CDC staff costs, but specifically, including, but not limited to, any expenditures by the CDC in connection with the recapture, management and resale of the Site or part thereof (but less any income derived by the CDC from the Site or part thereof in connection with such management); all taxes, assessments and water or sewer charges with respect to the Site or part thereof which the Developer has not paid (or, in the event that Site is exempt from taxation or assessment of such charges during the period of ownership thereof by the CDC, an amount, if paid, equal to such taxes, assessments, or charges as would have been payable if the Site were not so exempt); any payments made or necessary to be made to discharge any encumbrances or liens existing on the Site or part thereof at the time or revesting of title thereto in the CDC, or to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults or acts of the Developer, its successors or transferees; any expenditures made or obligations incurred with respect to the making or completion of the Improvements or any part thereof on the Site, or part thereof; and any amounts otherwise owing the CDC, and in the event additional proceeds are thereafter available, then ii. Second, to the extent available, to reimburse the Developer, its successor or transferee, up to the amount equal to the sum of (a) the costs incurred for the acquisition and development of the Site and for the Improvements existing on the Site at the time of the reentry and possession. Any balance remaining after such reimbursements shall be retained by the CDC as its property. The rights established in this Section 5 are not intended to be exclusive of any other right, power or remedy, but each and every such right, power, and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy authorized herein or now or hereafter existing at law or in equity. These rights are to be interpreted in light of the fact that the CDC will have conveyed the Site to the Developer for redevelopment purposes. 6. Violations Do Not Impair Liens. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Grant Deed shall defeat or render invalid or in any way impair the lien or charge of any mortgage or deed of trust or security interest permitted by Section 410.2 of the DDA; provided, however, that any subsequent owner of the Site shall be bound by such remaining covenants, conditions, restrictions, limitations and provisions, whether such owner's title was acquired by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. Attachment No. 3-4 F:\JRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc 7. Covenants Run With Land. All covenants contained in this Grant Deed shall be covenants running with the land. All of Developer's obligations hereunder except as provided hereunder shall terminate and shall become null and void upon the expiration of the Redevelopment Plan. Every covenant contained in this Grant Deed against discrimination contained in paragraph 4 of this Grant Deed shall remain in effect in perpetuity. 8. Covenants For Benefit of CDC. All covenants without regard to technical classification or designation shall be binding for the benefit of the CDC, and such covenants shall run in favor of the CDC for the entire period during which such covenants shall be in force and effect, without regard to whether the CDC is or remains an owner of any land or interest therein to which such covenants relate. The CDC, in the event of any breach of any such covenants, shall have the right to exercise all the rights and remedies and to maintain any actions at law or suits in equity or other proper proceedings to enforce the curing of such breach. 9. Revisions to Grant Deed. Both CDC, its successors and assigns, and Developer and the successors and assigns of Developer in and to all or any part of the fee title to the Site shall have the right with the mutual consent of the CDC to consent and agree to changes in, or to eliminate in whole or in part, any of the covenants, easements or restrictions contained in this Grant Deed without the consent of any tenant, lessee, easement holder, licensee, mortgagee, trustee, beneficiary under a deed of trust or any other person or entity having any interest less than a fee in the Site. However, Developer and CDC are obligated to give written notice to and obtain the consent of any first mortgagee prior to consent or agreement between the parties concerning such changes to this Grant Deed. The covenants contained in this Grant Deed, without regard to technical classification, shall not benefit or be enforceable by any owner of any other real property within or outside the Project Area, or any person or entity having any interest in any other such realty. No amendment to the Redevelopment Plan shall require the consent of the Developer. 10. Enforced Delay; Extension of Times of Performance. In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in Default, and all performance and other dates specified in this Agreement shall be extended, where delays or Defaults are due to causes beyond the reasonable control or without the fault of the party claiming an extension of time to perform, which may include the following: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplier; acts or omissions of the other party; acts or failures to act of the City or any other public or governmental entity (other than the acts or failures to act of the CDC which shall not excuse performance by the CDC). Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the mutual agreement of CDC and Developer. Notwithstanding any provision of this Agreement to the contrary, the lack of funding to complete the Improvements shall not constitute grounds of enforced delay pursuant to this Section 10. Attachment No. 3-5 F:WRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc ATTEST: CDC Secretary APPROVED AS TO FORM: Foley & Lardner LLP, Special Counsel to the CDC By: Richard L. Moskitis, Esq. CDC: COMMUNITY DEVELOPMENT COMMISSION OF THE OF THE CITY OF NATIONAL CITY, a public body, corporate and politic By: Nick Inzunza, Chairman DEVELOPER: CONSTELLATION PROPERTY GROUP (A AVENUE) LP, a Delaware limited liability partnership By: Constellation Property Management, Inc., a Delaware Corporation, its General Partner By: Eugene Marchese, President Attachment No. 3-6 FURS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc ATTACHMENT NO. 4 SCHEDULE OF PERFORMANCE I. GENERAL PROVISIONS 1. Execution of DDA by the Agency. The Agency No later than September 1st 2005. and City Council shall hold a joint public hearing on the DDA, and, subject to making the requisite findings, authorize execution and execute and deliver the DDA to the Developer. 2. Submission — Architect, Landscape Architect and Not later than execution of Agreement by the Agency. Civil Engineer. The Developer shall submit to the Agency for approval the name and qualifications of its Architect, Landscape Architect and Civil Engineer. 3. Approval — Architect, Landscape Architect and Concurrently with execution of Agreement by Agency. Civil Engineer. The Agency shall approve or disapprove the Architect, Landscape Architect and Civil Engineer. 4. Submission — Basic Concept/Schematic Submitted prior to execution of the agreement. Drawings. The Developer shall submit to the Agency's designee for approval the Basic Concept/Schematic Drawings and related documents. 5. Approval — Basic Concept/Schematic Drawings. Concurrently with execution of Agreement by Agency. The Agency shall approve or disapprove the Basic Concept/Schematic Drawings and related documents. 6. Approval - Application for Consistency Review Ninety (90) days from submittal. of Improvements under the Downtown Specific Plan. H. CLOSING AND CONSTRUCTION 1. Submittal of Final Schematic Drawings. Within thirty (30) days of CDC's Approval of Basic Concept/ Schematic Drawings. 2. Approval — Final Schematic Drawings. Within thirty (30) days of submittal. Attachment No. 4-1 F:VRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc 3. Submission - 50% Complete Drawings and Within one hundred and twenty (120) days after CDC approval of the Basic Concept/Schematic Design Drawings. Specifications. The Developer shall prepare and submit to the Agency for approval the 50% Complete Drawings and Specifications. Note: These drawings will be submitted in normal increments as they are completed. 4. Approval - 50% Complete Drawings and Within thirty (30) days after submittal. Specifications. The Agency shall approve or disapprove the 50% Complete Drawings and Specifications. Note: These drawings will be approved in increments as they are submitted. 5. Submission - Final Construction Drawings and Within one hundred and twenty (120) days after CDC approval of the 50% Complete Drawings. Specifications. The Developer shall prepare and submit to the Agency for approval the Final Construction Drawings and Specifications. Note: These drawings will be submitted in normal increments as they are completed. 6. Approval - Final Construction Drawings and Within thirty (30) days after submittal. Specifications. The Agency shall approve or disapprove the Final Construction Drawings and Specifications. Note: These drawings will be approved in increments as they are submitted. 8. Recording Final Subdivision Map. Developer Not later than forty-five (45) days following the City Council's approval of the final subdivision map for the Project. shall record the final subdivision map subdividing the ownership interests for the Project's condominium units. 9. Commencement of Construction. The issuance Improvements. Within sixty (60) days after the City Building Department's approval and of valid building permits for the Developer shall commence construction of the Improvements on the Site. 10. Completion of Construction. The Developer construction. Within five hundred and thirty days (530) days after the commencement of shall complete construction of the Improvements on the Site. Attachment No. 4-2 FURS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc 11. Construction of Public Improvements. The No later than the City's issuance of a certificate of occupancy. Developer shall commence and complete the construction of public improvement work referred to in the Scope of Development to be performed by the Developer with respect to the Site. Attachment No. 4-3 F:\JRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc ATTACHMENT NO. 5 SCOPE OF DEVELOPMENT The Project's improvements shall generally be comprised of approximately forty (40) condominium residential units (the "Residential Units"), approximately two thousand seven hundred (2,700) square feet of commercial/office space, approximately seventy (70) parking spaces, of which four (4) spaces shall be reserved for the commercial/office space, and the Trolley Transit Center (collectively, the "Improvements"). The Developer shall construct (i) all public improvements required as a condition of project approval which are located outside of the face of the curbs surrounding the improvements and (ii) the curbs and all other on -site improvements located inside of the face of the curbs surrounding the Improvements, as required through the City's Design Review Attachment No. 5-1 F:URS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc EXHIBIT 1 TO ATTACHMENT NO. 5 SITE PLAN 14TfNI'lI 1.11 I ry ryry FN Ir • JJ wtl .:WWMYi111W1` IWR.IMiiRNWWkIWI H"■. �- �yMW 11111i111111111 ii11i111i1111i111i1111111111111 t_ 1i111111/i111j111111 t1uyJ d,,,lil INNIN MIMEO A AVENUE 0 6=3 0 O DIM Attachment No. 5-2 FfJRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc ATTACHMENT NO. 6 RELEASE OF CONSTRUCTION COVENANTS RECORDING REQUESTED BY, MAIL TAX STATEMENTS TO, AND WHEN RECORDED MAIL TO: This document is exempt from payment of a recording fee pursuant to Government Code Section 27383 RELEASE OF CONSTRUCTION COVENANTS THIS RELEASE OF CONSTRUCTION COVENANTS (the "Release") is made by the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic (the "CDC"), in favor of CONSTELLATION PROPERTY GROUP (A AVENUE) LP, a Delaware limited partnership (the "Developer"), as of the date set forth below. RECITALS A. The CDC and the Developer have entered into that certain Disposition and Development Agreement (the "DDA") dated August 30, 2005, concerning the redevelopment of certain real property situated in the City of National City, California as more fully described in Exhibit "A" attached hereto and made a part hereof. B. As referenced in Section 409 of the DDA, the CDC is required to furnish the Developer or its successors with a Release of Construction Covenants upon completion of construction of the Improvements and delivery of the Office Space and Trolley Parcel to the CDC (as defined in the DDA), which Release is required to be in such form as to permit it to be recorded in the Recorder's office of San Diego County. This Release is conclusive determination of satisfactory completion of the construction and development required by the DDA and delivery of the Office Lease. C. The CDC has conclusively determined that such construction and development and delivery of the Office Lease has been satisfactorily completed. NOW, THEREFORE, the CDC hereby certifies as follows: 1. The Improvements to be constructed by the Developer have been fully and satisfactorily completed in conformance with the DDA and the Office Lease delivered. Any operating requirements and all use, maintenance or nondiscrimination covenants contained in the Attachment No. 6-1 F:\JRS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc DDA and other documents executed and recorded pursuant to the DDA shall remain in effect and enforceable according to their terms. 2. Nothing contained in this instrument shall modify in any other way any other provisions of the DDA. IN WITNESS WHEREOF, the CDC has executed this Release this ._ day of 2005. ATTEST: CDC Secretary APPROVED AS TO FORM: Foley & Lardner LLP, Special Counsel to the CDC By: Richard L. Moskitis, Esq. CDC: COMMUNITY DEVELOPMENT COMMISSION OF THE OF THE CITY OF NATIONAL CITY, a public body, corporate and politic By: Nick Inzunza, Chairman DEVELOPER: CONSTELLATION PROPERTY GROUP (A AVENUE) LP, a Delaware limited liability company By: Constellation Property Management, Inc., a Delaware Corporation, its General Partner By: Stephen Scotchmer, Vice President Attachment No. 6-2 FURS\EMAIL\#550280 v3 - Centro DDA 8-16-05.doc DRAFT SUMMARY REPORT PERTAINING TO THE SALE OF REAL PROPERTY (California Community Redevelopment Law Section 33433) PURSUANT TO A PROPOSED DISPOSITION AND DEVELOPMENT AGREEMENT Between: COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY And CONSTELLATION PROPERTY GROUP Prepared by: KEYSER MARSTON ASSOCIATES, INC. For: COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY Date: August 16, 2005 EXHIBIT 2 DRAFT SUMMARY REPORT PERTAINING TO THE PROPOSED SALE OF REAL PROPERTY I. INTRODUCTION The Community Development Commission of the City of National City (Commission) is considering the sale of real property to Constellation Property Group (Developer) pursuant to a Disposition and Development Agreement (DDA). The draft DDA was not available for KMA review as of August 15, 2005. This Summary Report is prepared in accord ce i Sec on 33433 of the Califomia Community Redevelopment Law. T ur ry nsists f six additional sections, as follows: • Section II, Description old Proposed Project • Section III, Estimated Costs to be Incurred by the Commission under the Proposed DDA • Section IV, Estimated Value of the Site at the Highest and Best Use • Section V, Estimated Fair Re -Use Value of the Interest to be Conveyed • Section VI, Purchase Price the Developer will be Required to Pay • Section VII, Explanation Why the Sale of the Property will Assist in Elimination of Blight Summary Report Metro August 16, 2005 Page 2 05141ndh 15104.002.028 DRAFT 1I. DESCRIPTION OF THE PROPOSED PROJECT A. Proposed Transaction The Developer intends to build a for -sale residential development with 40 condominiums and a subterranean parking garage with 70 parking spaces (Project). The Project will be constructed on an approximate 0.82-acre site (Site) located on the western half of the block bounded by 11th and 12th Streets and A and B Avenues in Downtown National City. The salient aspects of the proposed business terms, based on KMA's understanding of the transaction as of August 15, 2005, are summarized below. B. Commission Responsibilities • The Commission will conve th= tD eloper an as -is condition for $356,000. o • The Commission will be ponsible for the reconstruction of A Avenue and creation of a shuttle stop, for a maximum contribution of $500,000. The Developer will be responsible for all costs of off -site improvements, demolition, and on -site improvements beyond this contribution. C. Developer Responsibilities • It is the responsibility of the Developer to ensure that applicable City zoning and land use requirements will permit development of the Project. • The Developer will be responsible for all development costs, including demolition of the existing parking lot and construction of the Project. • The Developer will build a three-story, 40-unit building with 26,480 square feet (SF) of subterranean parking. • The Developer will construct the Project utilizing State prevailing wage rates. • The Developer will build 2,771 SF of office space and convey it to the City at no cost. Summary Report August 16, 2005 Metro Page 3 05141ndh 16104.002.028 DRAFT III. ESTIMATED COST TO BE INCURRED BY THE COMMISSION UNDER THE PROPOSED AGREEMENT Costs to the Commission related directly to development of the Site are itemized below. They consist of the following: (1) Commission Costs Acquisition Costs (2) Development of A Avenue right-of-way and shuttle stop Legal, Economic, and Appraisal Consultants (3) Total Commission Costs $1,779,000 $500,000 $25.000 $2,304,000 (1) AO figures provided by the Community Development Commission of National City, except as noted. (2) The Commission acquired the Site from the City through a partial repayment of bonded indebtedness for various City facilities constructed with Commission debt. The acquisition basis shown here represents KMA's current estimate of fair market value of the Site at its highest and best use. (3) Gross estimate. Summary Report August 16, 2005 Metro Page 4 O5l4lndh 16104.002.025 DRAFT IV. ESTIMATED VALUE OF THE SITE AT THE HIGHEST AND BEST USE This section presents an analysis of the fair market value of the Site at its highest and best use. In appraisal terminology, the highest and best use is that use of the Site that generates the highest property value and is physically possible, financially feasible, and legally permitted. Therefore, value at the highest and best use is based solely on the value created and not on whether or not that use carries out the redevelopment goals of the City of National City. The Downtown Specific Plan governs the Site and regulates the zoning and land uses for the Site. The Site is zoned for medium density residential over ground floor pedestrian -oriented retail, and a maximum Floor Area Ratio (FAR) of 3.0. The Project as proposed does not achieve the maximum allowab due to a combination of factors such as design constraints imposed th n Specific Plan and the cost impact associated with subterraneafkin KMA separately reported th.= Sie,,oered on the open market, could yield a value of approximately $50 per S say $1,779,000. This figure significantly exceeds the proposed purchase price to be paid by the Developer. This difference reflects the higher -density development program — inclusive of structured parking and office space to be donated to the City — proposed by the Developer. Therefore, KMA concludes that the fair market value of the Site at its highest and best use is $1,779,000. Summary Report August 16, 2005 Metro Page 5 05141ndh 16104.002.028 DRAFT V. ESTIMATED FAIR RE -USE VALUE OF THE INTEREST TO BE CONVEYED This section presents an analysis of the fair re -use value of the interest to be conveyed to the Developer subject to conditions, covenants, and restrictions contained in the proposed DDA. In estimating the fair re -use value of the Site, KMA has reviewed the requirements that set specific conditions with respect to scope of development, the schedule of performance, and method of financing. It is the KMA conclusion that analysis of comparable transactions does not provide a useful or valid approach for valuating this development opportunity due to extensive adjustments that would be required in respect to the strength of the development opportunity, location and configuration, and other factors. T erefore, reliance has been placed upon the income, or the residual land valu r h, which is a recognized method for valuing real property. Analysis of the developmen Commission by KMA, indic the Site will be conveyed, th $1, 743,000. Summary Report Metro ct, reported separately to the atur'9vant to the terms and conditions under which it re -use value of the Site is estimated to be negative August 16, 2005 Page 6 05141ntlh 16104.002.028 DRAFT VI. PURCHASE PRICE WHICH THE DEVELOPER WILL BE REQUIRED TO PAY Under California Community Redevelopment Law, the Commission is obligated to publicly disclose information sufficient for a comparison of the purchase price contained in the proposed DDA with the estimated fair re -use value as described below. The Developer will pay a purchase price of $356,000, or $10 per SF of land, for the Site. DRAFT Summary Report August 16, 2005 Metro Page 7 05141ndh 16104.002.028 Y DRAFT VII. EXPLANATION WHY SALE OF THE PROPERTY WILL ASSIST IN THE ELIMINATION OF BLIGHT The Project Area is characterized by an array of blighting factors, including: • The subdividing and sale of lots of irregular form and shape, and inadequate size, for proper usefulness and development. • A prevalence of depreciated values and impaired investments, and social and economic maladjustment. Not all of these conditions are present throughout the Pro'e Area. The Commission's redevelopment efforts have successfully alleviate • , a.h conditions in some portions of the Project Area. However, many of thes = : on «; ' ns a still apparent in the area surrounding the subject Site. ple=+ati•aaf t prop ed development can be expected to assist in the allditions through the following: • Improve the City's housi stock. • Improve public facilities and public infrastructure. • Expansion, renovation, and relocation of businesses within the Project Area. Summary Report Metro August 16, 2005 Page 8 05141ndh 16104.002.028 ADVISORS IN: REAL MATE REDEVELAPMENT AFFORDABLE HOUSING ECONOMIC DEVELOPMENT F1 KEYSER MARSTON ASSOCIATES ADVISORS IN PUBLIC/PRIVATE REAL ESTATE DEVELOPMENT DRAFT MEMORANDUM To: Byron Estes, Deputy Director of Redevelopment Community Development Commission of the City of National City SAN FRANCISCO A. gm KErSER From: TIMOTHY C. KELLY KATE EARLE FUNK DEAME M. KERN ROBERT j. WETMORE Los ANGELES CALVIN E. HOWS. II KATHLEEN H. HEAD jAMES A RABE PAUL C ANDERSON GREGORY D. SOO-HOo SAN DIEGO GERALD M. TRIMBLE PAUL C. MARRA Date: Subject: KEYSER MARSTON ASSOCIATES, INC. August 16, 2005 Metro — DRAFT Estimate of Re -Use Value A. Introduction Keyser Marston Associates, Inc. (KMA) has been requested to review the proposed development transaction between the Community Development Commission of the City of National City (Commission) and Constellation Property Group (Developer). The Developer intends to build a for -sale residential development with 40 condominiums and a subterranean parking garage with 70 parking spaces (Project). The Project will be constructed on an approximate 0.82-acre site (Site) located on the western half of the block bounded by 11th and 12th Streets and A and B Avenues in Downtown National City. The Commission currently owns the Site. The draft Disposition and Development Agreement (DDA) was not available for KMA review as of August 15, 2005. B. Summary of Findings KMA's principal conclusions are summarized as follows: • The estimated value of the compensation to be received by the Commission is $356,000. • The estimated re -use value of the interest to be conveyed is negative $1,743,000. • The estimated fair market value of the Site at its highest and best use is $1,779,000. 1660 HOTEL CIRCLE NORTH. SUITE 716 > SAN DIEGO, CALIFORNIA 92108 > PHONE: 619 718 9500 > FAX: 619 718 9508 Www.KEYSERMARSTON.COM 05140ndh 16104.002.028 To: Byron Estes, Deputy Director of Redevelopment August 16, 2005 Subject: Metro — DRAFT Estimate of Re -Use Value Page 2 C. Background Community Overview Downtown National City, roughly bound by Division Street, National City Boulevard, 7th Street, D Avenue, Plaza Boulevard, Kimball Park, and Interstate 5, is a compact and intense district featuring several significant assets. Downtown National City has a diverse residential population of families and seniors; numerous civic, educational, and recreational amenities; a broad variety of established businesses; and a strong employment base. In addition, it is located close to many regional assets such as Downtown San Diego and Lindbergh Field to the north, Mexico to the south, and the newly developing suburban communities of the South Bay. The National City Redevelopment Plan was adopted in 1995 with the general goal of revitalizing the National City Redevelopment Project Area. Since the adoption of the Plan, numerous redevelopment ventures have been, and continue to be, carried out by public agencies, non-profit institutions, and private developers in Downtown National City. The Commission continues its efforts to revitalize the Project Area with projects such as: the National City Fire Station and Police Center, the City Library, Education Village, and Town Square Rowhomes. Currently, National City is experiencing unprecedented development interest with local, national, and international developers planning new mixed -use developments in Downtown. Proposed Development The Site is located on the northeast corner of 12th Street and A Avenue, in the National City Redevelopment Project Area. The Commission acquired the Site from the City of National City in early 2005. The Site is located directly north of the City's Martin Luther King Community Center and Kimball Park. The existing use of the Site, and the adjoining A Avenue right-of-way, is a parking lot. As shown in Table 1, the Developer plans to construct a three-story building with a total of 40 condominiums comprised of one, two, and three -bedroom units averaging 908 square feet (SF), and 2,771 SF of office space. The Project will also have a 26,480-SF subterranean parking garage with 70 parking spaces. 05140ndh 16104.002.028 To: Byron Estes, Deputy Director of Redevelopment August 16, 2005 Subject: Metro — DRAFT Estimate of Re -Use Value Page 3 D. Proposed Transaction Terms This section summarizes the salient aspects of the proposed business terms, based on KMA's understanding of the transaction as of August 15, 2005. • It is the responsibility of the Developer to ensure that applicable City zoning and land use requirements will permit development of the Project. • The Developer will be responsible for all development costs, including demolition of the existing parking lot and construction of the Project. • The Developer will construct the Project utilizing State prevailing wage rates. • The Commission will convey the land to the Developer for $356,000, or $10 per SF of Site area. • The Commission will be responsible for the reconstruction of A Avenue and creation of a shuttle stop, for a maximum contribution of $500,000. The Developer will be responsible for all costs of off -site improvements, demolition, and on -site improvements beyond this contribution. • The Developer will build 2,771 SF of office space and convey it to the City at no cost. E. Estimate of Fair Re -Use Value Re -use value is defined as the highest price in terms of cash or its equivalent which a property or development right is expected to bring for a specified use in a competitive open market, subject to the covenants, conditions, and restrictions imposed by the DDA. There are two fundamental approaches to establish re -use value: • The first is an analysis based on the sale of comparable properties or development rights. When comparable transactions exist and when relatively few adjustments are required to adjust the comparables to the subject, the approach based on comparable transactions can yield the most reliable indicator of value. 05140ndh 16104.002.028 To: Byron Estes, Deputy Director of Redevelopment August 16, 2005 Subject: Metro — DRAFT Estimate of Re -Use Value Page 4 • The second method is an analysis based on the anticipated income characteristics for a specific project. Often the income approach, also termed the residual value approach, proves more useful than the comparable sales approach due to the unique market setting, project characteristics, and specific requirements of the Commission which make the approach based on comparable transactions difficult or unfeasible to implement. With this approach, the residual value is established as the amount that a developer can feasibly afford to pay for a property or development right, after taking into account the development costs funded by the developer, the quantity and quality of the income stream from the project, and the market -based return on invested capital. Comparable Sales Approach The comparable sales approach to valuation is not applicable for establishing fair re -use value due to the following factors affecting the Project: • Extraordinary costs of off -site improvements, demolition, and on -site improvements associated with the Project and reconstruction of A Avenue. • Construction and conveyance of office space, at no cost, to the City. • Increased construction costs associated with the payment of prevailing wages. Residual Value Approach Tables 2 to 4 present KMA's residual value estimate for the Site. Development Costs The Developer provided cost estimates for the construction of the Project. KMA reviewed and modified these estimates in light of KMA's experience with similar residential projects in Southern California. As shown in Table 2, total development costs for the Project, excluding land, are estimated to be $14,371,000, or $255 per SF of gross building area (GBA), which equates to approximately $359,000 per dwelling unit. Total development costs consist of the following: 05140ndh 16104.002.028 To: Byron Estes, Deputy Director of Redevelopment August 16, 2005 Subject: Metro — DRAFT Estimate of Re -Use Value Page 5 • Direct construction costs, such as site work, parking, shell construction, FF&E, and contingency. Total direct costs, inclusive of the payment of prevailing wages, are estimated to be $11,129,000, or $198 per SF GBA. • Indirect costs, such as architecture and engineering, permits and fees, legal and accounting, taxes and insurance, developer fee, marketing, and contingency. These are estimated to be $2,458,000, or 22.1% of direct costs. • Financing costs, including loan fees, interest during construction and sales, and HOA dues on unsold units. These costs are estimated to total $784,000, or 7.0% of direct costs. Gross Sales Proceeds - Condominiums Table 3 presents an estimate of the Gross Sales Proceeds for the condominium portion of the Project. KMA reviewed the Developer's revenue projection in comparison to other projects currently planned or under construction in National City and neighboring communities. On this basis, KMA estimates an average unit price of approximately $363,000, or $400 per SF. Based on the foregoing, KMA estimates total condominium sales proceeds of $14,514,000. Gross Sales Proceeds — Office Table 3 also presents KMA's estimate of Gross Sales Proceeds for the office portion of the Project. The Developer will convey the office space to the City at no cost. Residual Land Value KMA estimated factors for cost of sale and target profit in light of KMA's experience with similar developments in California and San Diego. As shown in Table 4, KMA assumed a cost of sale of 3.0% of value, or $435,000, and a target Developer profit of 10.0% of value, or $1,451,000. On this basis, then, the net sales proceeds for the Project are estimated at $12,628,000, after the cost of sale and profit are deducted from the gross sales proceeds. The difference between the net sales proceeds of $12,628,000 and development costs of $14,371,000 represents a residual value attributable to the Site of negative $1,743,000, or negative $49 per SF land, as shown below: 05140ndh 16104.002.028 To: Byron Estes, Deputy Director of Redevelopment August 16, 2005 Subject: Metro — DRAFT Estimate of Re -Use Value Page 6 Total Gross Sales Proceeds $14,514,000 (Less) Cost of Sale ($435,000) (Less) Developer Profit ($1,451,000) Net Sales Proceeds $12,628,000 (Less) Development Costs ($14,371,000) Residual Land Value ($1,743,000) Per SF Land ($49) Conclusion Based on the foregoing analysis, KMA concludes that the fair re -use value of the Site is negative $1,743,000. F. Fair Market Value at Highest and Best Use Section 33433 of California Redevelopment Law requires that prior to selling or leasing real property, redevelopment agencies estimate the fair market value of the interest to be conveyed at its highest and best (most profitable) use. Typically, the analysis of the fair market value at highest and best use does not consider the specific Commission/Developer transaction or development concept, but rather the most profitable use that is consistent with the Redevelopment Plan or other governing land use regulations. The purpose of the analysis is to estimate the maximum compensation that the Commission could achieve if it were to offer the subject property or development right on the open market. The highest and best use of the Site is the use that generates the highest property value. By definition, the highest and best use is that use which is physically possible, financially feasible, and legally permitted. The Downtown Specific Plan governs the Site and regulates the zoning and land uses for the Site. The Site is zoned for medium density residential over ground floor pedestrian -oriented retail, and a maximum Floor Area Ratio (FAR) of 3.0. The Project as proposed does not achieve the maximum allowable FAR due to a combination of market and design factors. 05140ndh 16104.002.028 To: Byron Estes, Deputy Director of Redevelopment August 16, 2005 Subject: Metro — DRAFT Estimate of Re -Use Value Page 7 Based on these considerations, KMA finds that the highest and best use of the Site is a residential development of for -sale townhomes. In order to determine the fair market value of the Site, KMA prepared financial pro formas assuming the development of a hypothetical project yielding 20 units per acre, each with tuck -under private garages. KMA tested a low and high scenario, resulting in land values of approximately $100,000 to $120,000 per unit, or $46 to $55 per SF. On this basis, then, KMA concludes that the Site, if offered on the open market, could yield a value of approximately $50 per SF, or say $1,779,000. In sum, KMA concludes that the fair market value of the Site at its highest and best use is $1,779,000, or $50 per SF. This figure significantly exceeds the proposed purchase price to be paid by the Developer. This difference reflects the higher -density development program — inclusive of structured parking and office space to be donated to the City — proposed by the Developer. G. Limiting Conditions The estimates of re -use value and fair market value at the highest and best use contained in this memorandum assume compliance with the following assumptions: 1. There are no soil or subsoil problems, including toxic or hazardous conditions, on the Site that need to be remediated in order to develop the Site. 2. The ultimate development will not vary significantly from that assumed in this Re -Use Analysis. 3. The title of the property is good and marketable; no title search has been made, nor have we attempted to determine the ownership of the property. The value estimates are given without regard to any questions of title, boundaries, encumbrances, liens or encroachments. It is assumed that all assessments, if any, are paid. 4. The Site will be in conformance with the applicable zoning and building ordinances. 5. Information provided by such local sources as governmental agencies, financial institutions, realtors, buyers, sellers, and others was considered in light of its source, and checked by secondary means. 05140ndh 16104.002.028 To: Byron Estes, Deputy Director of Redevelopment August 16, 2005 Subject: Metro — DRAFT Estimate of Re -Use Value Page 8 6. Neither the local nor national economy will experience a major recession. If an unforeseen change occurs in the economy, the conclusions contained herein may no longer be valid. 7. The Project will adhere to the schedule of performance described in the DDA. 8. Both parties are well informed and well advised and each is acting prudently in what he/she considers his/her own best interest. attachments 05140ndh 16104.002.028 DRAFT TABLE 1 PROJECT DESCRIPTION METRO COMMUNITY DEVELOPMENT COMMISSION OF NATIONAL CITY I. Site Area Net Development Site Area A Avenue right-of-way 35,578 SF 16.694 SF Total Land Area (APN# 556-554-16) 52,272 SF 0.82 Acres 0.38 Acres 1.20 Acres II. Gross Building Area Residential Area 36,313 SF 64% Common Area 9,152 SF 16% Office Area 2.771 SF 5% Subtotal Gross Building Area (GBA) 48,236 SF 86% Residential Balconies 8.090 SF 14% Grand Total GBA 56,326 SF 100% FAR (1) 1.58 HI. Unit Mix One Bedroom Two Bedroom Three Bedroom Total Units IV. Number of Stories V. Construction Type VI. Density (1) VII. Parking Subterranean Parking Garage Residential Spaces Commercial Spaces Total Spaces # of Units 3 Units 34 Units 3 Units 40 Units Unit Size 624 SF 901 SF 1.269 SF 908 SF 3 Stories over parking Type V with Steel Frame 49 Units/Acre 26,480 SF 66 Spaces 4 Spaces 70 Spaces Average SF/Space 378 SF/Space Parking Ratio - Residential 1.65 Spaces/Unit Parking Ratio - Commercial 1.44 Spaces/1,000 SF GBA (1) Based on net development site area. Prepared by: Keyser Marston Associates, Inc. Filename: i:National City\Constellation_Re-Use;8/16/2005;rks TABLE 2 DEVELOPMENT COSTS METRO COMMUNITY DEVELOPMENT COMMISSION OF NATIONAL CITY I. Direct Costs (1) Off -Sites (2) Demolition (2) On-Sites/Landscaping Parking Shell Construction Residential Balconies Tenant Improvements Amenities/FF&E Contingency Subtotal Direct Costs (3) Add: Prevailing Wage Impact (2) Total Direct Costs II. Indirect Costs Architecture & Engineering Permits & Fees (2) Legal & Accounting Taxes & Insurance Developer Fee Marketing/Sales Contingency Total Indirect Costs III. Financing Costs Loan Fees Interest During Construction Interest During Sales HOA Dues on Unsold Units Total Financing Costs IV. Total Development Costs Or Say (Rounded) (1) Assumes payment of prevailing wages. (2) Estimates; not verified by KMA or the City. (3) Direct costs before prevailing wage impact. Prepared by: Keyser Marston Associates, Inc. Filename: i:National City\Constellation_Re-Use;a/16/2005;rks Totals Per Unit $90,000 $2,250 $180,000 $4,500 $360,000 $9,000 $1,325,000 $33,125 $7,605,000 $190,125 $0 $0 $0 $0 $75,000 $1,875 $482,000 $12.050 $10,117,000 $252,925 $1,012,000 $25.300 $11,129,000 $278,225 $506,000 $12,650 $560,000 $14,000 $100,000 $2,500 $435,000 $10,875 $305,000 $7,625 $435,000 $10,875 $117,000 $2,925 $2,458,000 $61,450 Comments $3 Per SF Net Site $5 Per SF Net Site $10 Per SF Net Site $50 Per SF Parking $135 Per SF GBA Included above $0 Per SF - Office Allowance 5.0% of Directs (3) $180 Per SF GBA 10.0% of Directs $198 Per SF GBA 5.0% of Directs (3) $10 Per SF GBA 1.0% of Directs (3) 3.0% of Value 3.0% of Directs (3) 3.0% of Value 5.0% of Indirects 22.1% of Directs $183,000 $4,575 See WorksheetA $476,000 $11,900 See Worksheet A $106,000 $2,650 See Worksheet A $19,000 $475 See Worksheet A $784,000 $19,600 7.0% of Directs $14,371,000 $359,275 $255 Per SF GBA $14,371,000 DRAFT DRAFT WORKSHEET A ESTIMATE OF FINANCING COSTS METRO COMMUNITY DEVELOPMENT COMMISSION OF NATIONAL CITY 1. Loan Fees Total Development Costs $14,371,000 Loan to Cost Ratio (LTC) 85.0% Construction Loan Amount $12,215,000 Points 1.5 Loan Fees $183,000 II. Interest During Construction Construction Loan Amount $12,215,000 Interest Rate 6.5% Average Balance Out 60.0% Term (Months) 12 Interest During Construction $476,000 III. Interest During Sales Construction Loan Amount $12,215,000 Interest Rate 6.5% Average Balance Out 40.0% Term (Months) 4 Interest During Sales $106,000 IV. HOA Dues on Unsold Units Monthly Dues $300 Number of Units 40 Term (Months) 4 Average Balance Out 40.0% Dues on Unsold Units $19,000 Prepared by: Keyser Marston Associates, Inc. Filename: i:National City\Constellation_Re-Use;8/16/2005;rks DRAFT TABLE 3 GROSS SALES PROCEEDS METRO COMMUNITY DEVELOPMENT COMMISSION OF NATIONAL CITY # of Price Price Unit Size Units Per SF Per Unit Total Sales I. Gross Sales Proceeds - Residential One Bedroom 624 SF 3 $400 $250,000 $750,000 Two Bedroom 901 SF 34 $400 $360,000 $12,240,000 Three Bedroom 1.269 SF 3 $400 $508,000 $1,524.000 Total/Average 908 SF 40 $400 $362,850 $14,514,000 Total Gross Sales Proceeds - Residential $14,514,000 11. Gross Sales Proceeds - Office $0 Prepared by: Keyser Marston Associates, Inc. Filename: i:National City\Constellation_Re-Use;8/16/2005;rks DRAFT TABLE 4 RESIDUAL LAND VALUE METRO COMMUNITY DEVELOPMENT COMMISSION OF NATIONAL CITY 1. Gross Sales Proceeds Gross Sales Proceeds - Residential $14,514,000 Gross Sales Proceeds - Office Total Gross Sales Proceeds $14,514,000 (Less) Cost of Sale @ 3.0% of Value ($435,000) (Less) Developer Profit @ 10.0% of Value ($1,451.000) Net Sales Proceeds $12,628,000 II. Supportable Investment Total Net Sales Proceeds $12,628,000 (Less) Total Development Costs ($14,371.000) III. Residual Land Value ($1,743,000) Or Say (Rounded) ($1,743,000) Per Unit ($44,000) Per SF Net Site ($49) Prepared by: Keyser Marston Associates, Inc. Filename: (:National City\Constellation Re-Use;8/16/2005;rks £ .LIMHXa '. ■� �{,.� frl F— ii �ip' �L' +i �fi"�h7 h"i �� III tli 1 1 Lail—�i •k ", r ul, l i i I t° Ili ' �• IIIIIIII".11111111111i11111111111111111`111111111� iilf-• 1 1rt-� .� i 'I �A,, ,f f i .1 1 [ �dr Yrf � A AVENUE 0 OLIMD 0 0 s. NOTICE OF A JOINT PUBLIC HEARING OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY AND THE COMMUNITY DEVELOPMENT COMMISSION ON THE PROPOSED CENTRO PROJECT The City Council of the City of National City and the National City Community Development Commission (CDC) will hold a Joint Public Hearing after the hour of 6:00 p.m. Tuesday, August 30, 2005, in the City Council Chambers, Civic Center, 1243 National City Boulevard, National City, on the proposed Disposition & Development Agreement (DDA) for the proposed Centro project. Any person interested in this matter may appear at the above time and place and be heard. Constellation Property Group (A Avenue) LP, is proposing the development of a new market rate approximately 40 unit condominium project on 1.2 acres located at 41 — 43 East 12th Street (CDC Parking Lot Site) within the National City Redevelopment Project Area. The Project will include approximately 40 condominium units in a three-story contemporary design with associated parking and amenities, as well as a Trolley Shuttle stop for the proposed Downtown National City Trolley Shuttle. The purpose of the Joint Public Hearing is to provide for public comment, in accordance with Sections 33433 and 33445 of the California Health & Safety Code, regarding the proposed terms and conditions for the sale of land proposed in a Disposition & Development Agreement (DDA) by and between the CDC and Constellation Property Group, LLC, for the real property located at 41- 43 East 12th Street (CDC Parking Lot Site). Said land is proposed to be sold for the development of the Centro project and associated amenities. A copy of the proposed DDA, a summary report pertaining to the sale of real property pursuant to the proposed Agreement, and other documentation required by Section 33445 of the California Health & Safety Code for the proposed Centro project may be reviewed at the office of the Community Development Commission, at 140 East 12th Street, Suite B, National City, and the City Clerk's Office, 1243 National City Blvd., National City as of August 16, 2005. Members of the public are invited to comment. Written comments should be received by the Community Development Commission on or before 3:00 p.m., August 25, 2005. Any questions regarding this matter should be directed to Byron Estes at (619) 336-4250. If you challenge the nature of the proposed action in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the public hearing entity conducting the hearing at, or prior to, the public hearing. MICHAEL DALLA City Clerk PUBLISHED IN THE SAN DIEGO DAILY TRANSCRIPT, Tuesday, August 16 and August 23, 2005 AND IN THE NATIONAL CITY STAR NEWS, Friday, August 19 and August 26, 2005 I:\Metro PUBLIC HEARING NOTICE FOR DDA.doc EXHIBIT 4 IMPORTAIr NOTES.. EXHIBIT 5 waa. e♦s.m.s.3.n r. 1a11senv� 1 N▪ •aa* *...,r Parpt4faaYo.6 ea *Ilona top Tyra .V1 wpgtarewvnrow..a ,...a..11....1.....r.. Millwfxs• RUMENS r1 _m • Olt .s6 caumlaavwaos w arnsrr11.7 Ixarwrnon marchese + partners international aaadew 11239gIT4a WeN. WI* 101 o n *1102101 619 fr *1 23'2032 t,r *1619231354 af6M7 IwN T, 107 marl Woe ealn 1Y6eeY row2050 plc .610290224375 it .611129929SM moth winx.marchasapoinors.ccm ▪ l 1 Ho@muUaepr✓pName WENT CONSTELLATION PROPERTY GROUP (NAT CITY 12TH) LP PKASE CONSISTENCY REVIEW PROJECT CENTRO, NATIONAL CITY, CALIFORNIA OWIWIN6 TITLE WEST + SOUTH ELEVATIONS SHEET 7 OF 8 141r= 14 041E 6WM,1 JU1 Y 2105 I KK. SIK c IR S1 04070 A 3.01 WEST ELEVATION (not to scale) VICINITY PLAN (not to scale) ,77 PM Mee. IMPORTANT NO169: a▪ y...bY4W T,Y W mAr rr w!—.psbewail. r MreYmpelrru Y 1.srr*fl Yau.nrer�...s 1Yw..a Y woke. Mona, 1 JrT4lyalYe.,r r .w,r, rY1 a be rr Y..••• .r.4awoeo.nre,oe .16.MlelrL o: CENTRO - NATIONAL CITY, CALIFORNIA for the constellation property group Development Proposal JULY 2005 PROJECT TEAM: OWNERS REPRESENTATIVE - Con.- Cannella,. Papal* Group (NAT CITY 12TH) LP 1133 Columba St SWe 101 Set OY90 CA92101 Ph:+ 18192343032 Ft • 1 6192349541 Combat Wgae Han ARCHITECT - Mageme+PMInlemetioel 1133 CMelr5t us St Bulb 10101 Son Diego CA92101 Pk+16192343032 Fx+18192943644 Canter MMIMr Cumming STRUCTURAL ENGINEER - NPFF Canew9g Egineedn 3131 Cann DM Rio Noth, SON 1080 San D ego CA92106 Ph: +1 6195218800 cm .i 0195218691 Cortina Eno LaYmYa1 ENVIRONMENTAL & GEOTECH - CmeNlc6an Teeing Engineering (CIE) 2414 WOpN AvMne, SV4e 0 Esmndd0 CA92029 Phr +1 7807484955 Ft +1 7607489106 Cmnrct Gen MON CIVIL ENGINEER 8 SURVEYOR - Fa1e1 Design Gmp 7533 Cur Sky Rd San 0ie90 CA92120 Ph: +16195480644 Outwit Tiro Fyabldah LANDSCAPE ARCHITECTS - M4CJh,gh Loan4p0 AMit8hYs Ino 383 FMh Ave, WY 201 San Diego CA92101 Ph: ♦1819296 3150 Fs +1 8195017726 Confect David MW Wgl1 SHEET INDEX ARCHITECTURAL A1.01 COVER SHEET* VICINITY PLAN 82.01 BASEMENT LEVEL 1 PLAN A2.02 A2.03 A2.04 A2A8 A3.01 43.02 LEVEL PLAN LEVEL 2 PLAN LEVEL. 3 PLAN ROOF PLAN WEST +SOUTH ELEVATION EAST * NORTH ELEVATION SECTION AA . am m..sIFICTO OPP PO ram, are marchese + partners International o nPrge 1193 mlumbo Prom one 101 son 6e1e0119191 pc+16192343002 e[ N 019234 3544 1.6 1. 107,rom3PrY men Brener m.e3010 ph: +610299224373 Oc H10209295791 war rrv.naoer_Nen.eom aui1 infoOnagehmegulners.eae OMIT CONSTELLATION PROPERTY GROUP, (NAT CITY 12TH) LP PHASE CONSISTENCY REVIEW PROJECT CENTRO, NATIONAL CITY, CALIFORNIA DRAWING TIRE COVER SHEET + VICINITY PLAN SHEET 1 OF 8 orme N.T.S. 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JK Gm3m6 IR,81 Am E. 04070 OMw..3 W A 3.02 >.£ COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY August 30, 2005 AGENDA ITEM NO. 2 TO: CHAIRMAN AND BOARD MEMBERS FROM: BENJAMIN MARTINEZ, EXECUTIVE DIRECTO VIA: BYRON ESTES, DEPUTY DIRECTOR OF REDEVELOPMENT SUBJECT: RESOLUTION NO. 2005-87: APPROVING THE HEALTH AND SAFETY CODE SECTION 33433 REPORT; AUTHORIZING THE TRANSMITTAL OF SAID REPORT TO THE CITY COUNCIL; APPROVING THE DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE COMMUNITY DEVELOPMENT COMMISSION AND CONSTELLATION PROPERTY GROUP ("A" AVENUE), LP FOR DEVELOPMENT OF THE CENTRO PROJECT; APPROVING THE PROJECT BASIC CONCEPT DRAWINGS; AND MAKING CERTAIN FINDINGS IN CONNECTION THEREWITH Recommendation: Community Development Commission staff recommends that the City of National City and the Community Development Commission of the City of National City: APPROVE the Health and Safety Code Section 33433 Report. AUTHORIZE the transmittal of said report to the City Council. APPROVE the Disposition and Development Agreement by and between the Community Development Commission and Constellation Property Group ("A" Avenue) LP, for development of the Centro Project. APPROVE the Project Basic Concept Drawings. MAKE certain findings in connection therewith. Community Development Commission Agenda Item No. 2 August 30, 2005 Page 1 of 3 Fiscal Impact: The Disposition and Development Agreement includes the following provisions: 1) sale of Commission -owned property for the nominal amount of $10; 2) construction by the Developer of a minimum of 2500 square feet of unfinished public use flexible office space to be gifted to the Commission; and 3) expenditure by the Commission of up to $500,000 for a Downtown Trolley Shuttle station. Funding sources for the Shuttle station component may come from future tax increment revenues, bonded debt, or other sources, such as SANDAG. The Project is expected to generate approximately $100,000 in net tax increment and $10,000 in net low -moderate income housing set - aside on an annual basis beginning in fiscal year 2007-2008, equating to annual revenues to the Community Development Commission and the City of National City in the amount of $110,000. Environmental Impact: A Program Environmental Impact Report has been adopted for the Downtown Specific Plan, in accordance with CEQA Guidelines. The project has been determined to be consistent with the Downtown Specific Plan. Pursuant to Section 15182(a) of the California Environmental Quality Act, the project is deemed exempt from further CEQA review. Background: The Commission, at their meeting of March 8, 2005, selected Constellation Property Group to redevelop the Community Development Commission Parking Lot site, located at 41-43 12th Street across from the Martin Luther King Community Center. The selection followed a Request for Proposals process. Constellation Property Group ("A" Avenue) LP has proposed the Centro Project, an attached 40-unit residential condominium project with a mixed -use office component as well as a Downtown Trolley Shuttle station. The project will be market -rate for -sale units. The development represents a total developer investment of approximately $12 Million and is envisioned as a catalyst to the revitalized downtown district. As a catalyst project, Community Development Commission staff is not recommending the inclusion of subsidized very -low or low-income housing units in this particular development proposal. The Community Development Commission has a major role in this particular development by providing up to $500,000 for development of the Downtown Trolley Shuttle station along a revitalized "A" Avenue connector. The funding and design of this Community Development Commission August 30, 2005 Page 2 of 3 Agenda Item No. 2 component will be implemented during per the timeframe in the proposed Disposition and Development Agreement (DDA). Assistance for the catalyst project also comes in the form of a "land for office space" trade, in which the Community Development Commission would sell to the Developer the fee interest in the Community Development Commission Parking Lot for $10, in exchange for which a flex -space office facility of one or two stories will be constructed for the Community Development Commission and leased for $10/year for the next 50 years. Timing of Development: The acquisition process is scheduled to take place as soon as possible. Construction plans could be submitted for building permits by Fall of 2005. Building permits are expected to be issued later this year with construction planned to commence shortly thereafter. Building completion and occupancy is slated for Spring 2007. Community Development Commission staff will actively work to expedite all phases of the project. A more detailed listing of projected dates is included in the Schedule of Performance (Attachment No. 4 to the Disposition and Development Agreement). With this, Community Development Commission staff recommends that the Community Development Commission Board approve the Health and Safety Code Section 33433 Report, authorize the transmittal of said report to the City Council, approve the Disposition and Development Agreement by and between the Community Development Commission and Constellation Property Group ("A" Avenue), LP for development of the Centro Project, approve the Project Basic Concept Drawings, and make certain findings in connection therewith. ATTACHMENTS: EXHIBIT 1 - Resolution No. 2005-87 Staff member: Estes Community Development Commission Agenda Item No. 2 August 30, 2005 Page 3 of 3 RESOLUTION NO. 2005-87 A RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY (CDC) APPROVING THE HEALTH AND SAFETY CODE SECTION 33433 REPORT; AUTHORIZING THE TRANSMITTAL OF SAID REPORT TO THE CITY COUNCIL; APPROVING THE DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE COMMUNITY DEVELOPMENT COMMISSION AND CONSTELLATION PROPERTY GROUP ("A" AVENUE), LP FOR DEVELOPMENT OF THE CENTRO PROJECT; APPROVING THE PROJECT BASIC CONCEPT DRAWINGS; AND MAKING CERTAIN FINDINGS IN CONNECTION THEREWITH WHEREAS, the Community Development Commission of the City of National City ("CDC") is a public body, corporate and politic, organized and existing under the California Community Redevelopment Law (Health & Safety Code Section 33000 et seq.); and, WHEREAS, pursuant to the Community Redevelopment Law, on July 18, 1995, pursuant to Ordinance No. 95-2095 the City Council of the City of National City (the "City" or "City Council") approved and adopted the Redevelopment Plan for the National City Redevelopment Project; and, WHEREAS, pursuant to the Community Redevelopment Law, on February 1, 2005, the City Council approved and adopted the Downtown Specific Plan ("Specific Plan") for Downtown National City ("Project Area"); and, WHEREAS, the Specific Plan calls for a consistency review process to ensure that development within the Project Area is in conformance with the goals established by City; and, WHEREAS, the CDC is engaged in activities necessary to execute and implement the Redevelopment Plan (the "Redevelopment Plan") for the National City Redevelopment Project (the "Redevelopment Project"); and, WHEREAS, the Implementation Plan adopted by the CDC with respect to the Redevelopment Project Area calls for the CDC's objective to "increase private investment wherever possible, to promote jobs and improve the property and sales tax base of the City"; and, WHEREAS, in furtherance of the objectives of the Community Redevelopment Law, the CDC desires the redevelopment of certain real property within the Redevelopment Project Area, consisting of approximately 1.2 acres, mid -block 1 between National City Boulevard on the west and "B" Avenue on the east, and between 11th Street on the north and 12th Street on the south (the "Site") for a residential, office mixed -use and public transit center project (the "Project"); and, WHEREAS, the development contemplated is consistent with the Program Environmental Impact Report for the Downtown Specific Plan, and therefore is exempt from further California Environmental Quality Act ("CEQA") review under Section 15182(a) of the CEQA Guidelines; and, WHEREAS, the Constellation Property Group ("A" Avenue) LP, a Delaware limited partnership ("Constellation") desires to acquire the Site in order to construct the Project; and, WHEREAS, the CDC owns in fee the Site; and, WHEREAS, CDC staff has negotiated a Disposition and Development Agreement including attachments thereto (collectively, the "DDA") with Constellation, for the CDC's disposition of the Site to Constellation; and, WHEREAS, pursuant to the terms of the DDA, Constellation shall construct approximately forty (40) condominium residential units (the "Residential Units"), approximately two thousand seven hundred (2,700) square feet of commerciaVoffice space, approximately seventy (70) parking spaces, of which four (4) spaces shall be reserved for the Project's commercial/office use, and a trolley transit center; and, WHEREAS, CDC and staff have presented the draft DDA to the CDC Board and City Council for consideration; and, WHEREAS, the Community Redevelopment Law, at Health and Safety Code Section 33433, requires that (i) the CDC prepare a Summary Report concerning the CDC's proposed disposition of the Site as set forth in the DDA, (ii) the CDC Board and the City Council conduct a noticed joint public hearing with respect to the DDA, and (iii) the approval of the DDA be set forth in a resolution making certain findings and determinations as set forth herein below; and, WHEREAS, pursuant to the requirements of the Community Redevelopment Law, a Summary Report for the DDA has been prepared by the CDC's economic consultant Keyser Marston Associates, Inc.; and, WHEREAS, a joint public hearing of the CDC Board and City Council has been noticed and conducted in accordance with applicable requirements of law; and, WHEREAS, at the joint public hearing the CDC and City Council each considered all of the information, testimony, and evidence presented, including but not limited to the draft DDA, in the form presented by CDC staff concurrent 2 with consideration of the Resolution, the CDC staff report, the Summary Report, the basic concept drawings for the Project, and the oral and written testimony received from persons wishing to appear and be heard concerning the proposed DDA. NOW, THEREFORE, BE IT RESOLVED THAT: 1. Based on all the information, testimony, and evidence presented at the joint public hearing, including but not limited to the draft DDA and the information and evidence set forth in the CDC staff report, the Summary Report, and the oral and written testimony received, the CDC finds and determines as follows: a. That the above Recitals are true and correct and are incorporated herein. b. That the DDA effectuates the purposes of the Community Redevelopment Law (Health & Safety Code Section 33000 et seq.), and of the Redevelopment Plan, and is in the best interests of the citizens of National City. c. That the CDC disposition of the Site pursuant to the DDA will assist in the elimination of blight. d. That the CDC disposition of the Site pursuant to the DDA is consistent with the Specific Plan and subject to the consistency review process. e. That the DDA is consistent with the Implementation Plan for the Redevelopment Plan. f. That any consideration Constellation will pay for the Site is not less than the fair reuse value of the Site at the use and with the covenants and conditions and development costs authorized by the disposition. 2. That the Summary Report for the DDA required by Health and Safety Code Section 33433 is hereby approved and the Executive Director of the CDC is directed to transmit the Summary Report for the DDA to the City Council as required by Health and Safety Code § 33433. 3. The DDA, a true and correct copy of which is on file with the City Clerk/CDC Secretary, and the basic concept drawings for the Project presented at the public hearing are hereby approved. 4. The CDC (i) authorizes and directs its Executive Director and CDC Counsel to make final modifications to the DDA that are consistent with the substantive terms of the DDA approved hereby, (ii) authorizes and directs the CDC Chairperson to sign the DDA on behalf of the CDC, and (iii) authorizes and directs its Executive Director to take such other and further actions as may be necessary and proper to carry out the terms of the DDA and the purpose of this Resolution, including, but not limited to, signing such other and further documents, including the documents attached as exhibits to the DDA. 3 5. The Executive Director of the CDC is directed to file a Notice of Exemption with the County Clerk confirming the project is exempt from further CEQA review. PASSED AND ADOPTED this 30th day of August 2005. ATTEST: Benjamin Martinez, Secretary APPROVED AS TO FORM: George Eiser, III, CDC - City Attorney Nick Inzunza, Chairman 4 City of National City COUNCIL AGENDA STATEMENT .dEETING DATE: AUGUST 30, 2005 AGENDA ITEM NO. 3 ITEM TITLE: RESOLUTION NO. 2005-186: APPROVING THE HEALTH AND SAFETY CODE SECTION 33433 REPORT; APPROVING THE DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE COMMUNITY DEVELOPMENT COMMISSION AND CONSTELLATION PROP- ERTY GROUP ("A" AVENUE), LP FOR DEVELOPMENT OF THE CENTRO PROJECT; APPROV- ING THE PROJECT BASIC CONCEPT DRAWINGS; AND MAKING CERTAIN FINDINGS IN CON- NECTION THEREWITH PREPARED BY: Benjamin Martin Executive Directo EXPLANATION: DEPARTMENT Community Development Commission Constellation Property Group ("A" Avenue) LP has proposed the Centro Project, an attached 40-unit residential condominium project with a mixed -use office component as well as a Downtown Trolley Shuttle station. The Project will be built as market -rate for -sale units. The subject site is comprised of 1.2 acres and is bounded by A Avenue, 12th Street, and private properties to the east and north. To facilitate development of this proposed project, a Disposition and Development Agreement and Section 33433 Report have been prepared, which is being processed pursuant to the requirements of the Cali- fornia Redevelopment Law (California Health and Safety Code Section 33000 et seq.) A Supplemental Staff Report has been prepared and attached to the companion Public Hearing item to provide more information on the proposed Centro Project. A Public Notice was published in the San Diego Daily Transcript on August 16 and 23, 2005 and in the National City Star News on August 19 and August 26, 2005. Environmental Review N/A A Program Environmental Impact Report has been adopted for the Downtown Specific Plan, in accor- dance with CEQA Guidelines. The project has been determined to be consistent with the Downtown Specific Plan. Pursuant to Section 15182(a) of the California Environmental Quality Act Guidelines, the project is deemed exempt from further CEQA review. Financial Statement Fiscal Impact is described in the Supplemental Staff Report , attached to the Public Hearing Agenda items. STAFF RECOMMENDATION Adopt the Resolution. BOARD/COMMISSION RECOMMENDATION None. ATTACHMENTS (Listed Below) Resolution No. See Public Hearing Staff Report Packet for Attachments RESOLUTION NO. 2005 —186 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY APPROVING THE HEALTH AND SAFETY CODE SECTION 33433 REPORT; APPROVING THE DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE COMMUNITY DEVELOPMENT COMMISSION AND CONSTELLATION PROPERTY GROUP ("A" AVENUE) LP FOR DEVELOPMENT OF THE CENTRO PROJECT; APPROVING THE PROJECT BASIC CONCEPT DRAWINGS; AND MAKING CERTAIN FINDINGS IN CONNECTION THEREWITH WHEREAS, the Community Development Commission of the City of National City ("CDC") is a public body, corporate and politic, organized and existing under the California Community Redevelopment Law (Health & Safety Code Section 33000 et seq.); and WHEREAS, pursuant to the Community Redevelopment Law, on July 18, 1995, pursuant to Ordinance No. 95-2095 the City Council approved and adopted the Redevelopment Plan for the National City Redevelopment Project; and WHEREAS, pursuant to the Community Redevelopment Law, on February 1, 2005, the City Council approved and adopted the Downtown Specific Plan ("Specific Plan") for Downtown National City ("Project Area"); and WHEREAS, the Specific Plan calls for a consistency review process to ensure that development within the Project Area is in conformance with the goals established by the City of National City; and WHEREAS, the CDC is engaged in activities necessary to execute and implement the Redevelopment Plan (the "Redevelopment Plan") for the National City Redevelopment Project (the "Redevelopment Project"); and WHEREAS, the Implementation Plan adopted by the CDC with respect to the Redevelopment Project Area calls for the CDC's objective to "increase private investment wherever possible, to promote jobs and improve the property and sales tax base of the City"; and WHEREAS, in furtherance of the objectives of the Community Redevelopment Law, the CDC desires the redevelopment of certain real property within the Redevelopment Project Area, consisting of approximately 1.2 acres, mid -block between National City Boulevard on the west and "B" Avenue on the east, and between 11 m Street on the north and 12th Street on the south (the "Site") for a residential, office mixed -use and public transit center project (the "Project"); and WHEREAS, the development contemplated is consistent with the Program Environmental Impact Report for the Downtown Specific Plan, and therefore is exempt from further California Environmental Quality Act ("CEQA") review under Section 15182(a) of the CEQA Guidelines; and Resolution No. 2005 —186 August 30, 2005 Page 2 WHEREAS, the Constellation Property Group ("A" Avenue) LP, a Delaware limited partnership ("Constellation") desires to acquire the Site in order to construct the Project; and WHEREAS, the CDC owns in fee the Site; and WHEREAS, CDC staff has negotiated a Disposition and Development Agreement including attachments thereto (collectively, the "DDA") with Constellation for the CDC's disposition of the Site to Constellation; and WHEREAS, pursuant to the terms of the DDA, Constellation shall construct approximately forty (40) condominium residential units (the "Residential Units"), approximately two thousand seven hundred square feet (2,700 sq. ft.) of commercial/office space, approximately seventy (70) parking spaces, of which four (4) spaces shall be reserved for the Project's commerciaVoffice use, and a trolley transit center; and WHEREAS, CDC and staff have presented the draft DDA to the CDC Board and City Council for consideration; and WHEREAS, the Community Redevelopment Law, at Health and Safety Code Section 33433, requires that (i) the CDC prepare a Summary Report concerning the CDC's proposed disposition of the Site as set forth in the DDA, (ii) the CDC Board and the City Council conduct a noticed joint public hearing with respect to the DDA, and (iii) the approval of the DDA be set forth in a resolution making certain findings and determinations as set forth herein below; and WHEREAS, pursuant to the requirements of the Community Redevelopment Law, a Summary Report for the DDA has been prepared by the CDC's economic consultant Keyser Marston Associates, Inc.; and WHEREAS, a joint public hearing of the CDC Board and City Council has been noticed and conducted in accordance with applicable requirements of law; and WHEREAS, at the joint public hearing the CDC and City Council each considered all of the information, testimony, and evidence presented, including but not limited to the draft DDA, in the form presented by CDC staff concurrent with consideration of the Resolution, the CDC staff report, the Summary Report, the basic concept drawings for the Project, and the oral and written testimony received from persons wishing to appear and be heard concerning the proposed DDA. NOW, THEREFORE, THE CITY COUNCIL OF NATIONAL CITY HEREBY RESOLVES AS FOLLOWS: Resolution No. 2005 —186 August 30, 2005 Page 3 1. Based on all the information, testimony, and evidence presented at the joint public hearing, including but not limited to the draft DDA and the information and evidence set forth in the CDC staff report, the Summary Report, and the oral and written testimony received, the City Council finds and determines as follows: herein. a. That the above Recitals are true and correct and are incorporated b. That the DDA effectuates the purposes of the Community Redevelopment Law (Health & Safety Code Section 33000 et seq.), and of the Redevelopment Plan, and is in the best interests of the citizens of National City. c. That the CDC disposition of the Site pursuant to the DDA will assist in the elimination of blight. d. That the CDC disposition of the Site pursuant to the DDA is consistent with the Specific Plan and subject to the consistency review process. e. That the DDA is consistent with the Implementation Plan for the Redevelopment Plan. f. That any consideration Constellation will pay for the Site is not less than the fair reuse value of the Site at the use and with the covenants and conditions and development costs authorized by the disposition. 2. That the Summary Report for the DDA required by Health and Safety Code Section 33433 is hereby approved. 3. The DDA, a true and correct copy of which is on file with the City Clerk/CDC Secretary, and the basic concept drawings for the Project presented at the public hearing are hereby approved. 4. The City Council consents to (i) the authorization and direction given by the CDC to its Executive Director and CDC Counsel to make final modifications to the DDA that are consistent with the substantive terms of the DDA approved hereby, (ii) the authorization and direction given to the CDC Chairperson to thereafter sign the DDA on behalf of the CDC, and (iii) the authorization and direction given by the CDC to its Executive Director to take such other and further actions as may be necessary and proper to carry out the terms of the DDA and the purpose of this Resolution, including, but not limited to, signing such other and further documents, including the documents attached as exhibits to the DDA. Resolution No. 2005 — 186 August 30, 2005 Page 4 5. The Executive Director of the CDC is directed to file a Notice of Exemption with the County Clerk confirming the project is exempt from further CEQA review. PASSED AND ADOPTED this 30th day of August 2005. Nick Inzunza, Mayor ATTEST: Michael Dalla, City Clerk APPROVED AS TO FORM: George H. Eiser, III City Attorney