HomeMy WebLinkAbout2002 CON CDC Investment Dev. Services - MOU Pacific Steel PropertyMemorandum of Understanding
By and Between
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The Community Development Commission of the City of National City
And
Investment Development Services, Inc.
September 24, 2002
This Memorandum of Understanding (hereinafter "MOU") is entered into by and
between the Community Development Commission of the City of National City (hereinafter
"CDC") and Investment Development Services, Inc., a California Corporation (hereinafter
"IDS") on September 24, 2002 based upon the following recitals, terms and conditions.
RECITALS
A. On May 7, 2002 the CDC and IDS entercd into an Exclusive Right to
Negotiate Agreement (hereinafter "ERN") whereby IDS proposes to redevelop certain real
property otherwise known as the Pacific Steel, Inc. ("PSI") property (hereinafter " Project Site"),
which is further described on Exhibit "A", Project Site Map, attached hereto, within the Harbor
District Redevelopment Area (hereinafter "Harbor Area") of the National City Redevelopment
Project Area (hereinafter "Project Area").
B. IDS desires to develop the Project Site as a multi -tenant medium/heavy
manufacturing business park (hereinafter "Project").
C. Pursuant to the ERN the CDC has indicated a willingness to assist IDS by
facilitating the property assemblage, environmental remediation, and California Environmental
Quality Act (hereinafter "CEQA") and entitlement activities required to develop the Project.
D. IDS has agreed to provide the funds necessary for the CDC to initiate the
property assemblage activities required to acquire Parcels 1 and 2 (and a portion of Parcel 3) of
the Project Site ("Phase I") while at the same time IDS negotiates with PSI for the direct
acquisition of Phase I (the "Direct Sale").
E. 1'he parties anticipate that the balance of Parcel 3, along with Parcels 4, 5
and 6 of the Project ("Phase 11") may be redeveloped pursuant to an Owner Participation
Agreement with PSI (the "OPA") involving IDS as the Project developer.
F. Pursuant to the ERN the CDC and IDS desire to set forth the initial duties
and responsibilities of the parties as they relate to implementing the Project, with the complete
duties and responsibilities of the parties to be set forth in one or more Disposition and
Development Agreements to be negotiated in the near future, which the parties intend to be
consistent with this MOU.
ORIGINAL
TERMS AND CONDITIONS
In consideration of the foregoing Recitals and the covenants and promises
hereinafter contained, the parties hereto agree as follows:
1. Advance of Funds. On or before September 19, 2002 (or as soon as the funds are
received from the San Diego County Treasurer in connection with Superior Court Case No.
GIC-792725-1) IDS shall deposit with the CDC by wire transfer or by Cashiers' check, Two
Million One Hundred Thousand Dollars ($2,100,000) (the "Cash Advance") which the CDC
shall deposit into the Local Agency Investment Fund and which the CDC shall use to pursue the
voluntary sale of Phase I by PSI to CDC (the "Negotiated Sale"). Interest earned shall be added
to and shall constitute a part of the Cash Advance. If neither the Direct Sale is agreed upon by
IDS and PSI, nor the Negotiated Sale is agreed upon by the CDC and PSI, the Cash Advance
could he used to fund a deposit into court in order to secure immediate possession of Phase I in
connection with an eminent domain action for the acquisition of the entire Project Site (the
"Condemnation Action") should CDC pursue the Condemnation Action in CDC's discretion
pursuant to Section 14 below. Subject to the right of IDS to require the abandonment of the
Condemnation Action as set forth in Section 12 below, IDS shall be responsible for all
reasonable costs and expenses, settlement agreements approved in writing by IDS (said approval
not to he unreasonably withheld, conditioned or delayed) and judicial awards to PSI in
connection with the Condemnation Action in excess of the Cash Advance (the "Condemnation
Amount") including all costs, expenses and damages judicially determined to be due to PSI as a
result of the abandonment of the condemnation action.
2. Phase I DDA. The CDC and IDS shall use commercially reasonable efforts to
negotiate a Disposition and Development Agreement that will identify the scope of development,
implementation schedule, and funding responsibilities for Phase I, including a cap upon the
maximum amount of the Condemnation Amount for which IDS shall be responsible (the "Phase
I DDA"). In the event the CDC and IDS do not agree upon the terms and provisions of the Phase
I DDA, this MOU shall terminate and neither party shall have any rights or obligations hereunder
except for the indemnification obligations of IDS pursuant to Section 13 below, and the Cash
Advance shall be promptly returned to IDS subject to the provisions of Section 16 below.
3. Phase II. It is anticipated by both parties that after the execution of the Phase I
DDA, either (i) Phase II will be redeveloped pursuant to the OPA, or (ii) the CDC and IDS will
attempt to negotiate an additional DDA for Phase II (or amend the Phase I DDA) pursuant to
which IDS will advance additional funds to acquire Phase II and to pay for associated
improvements and to fund relocation expenses and goodwill loss claims associated with Phase II.
IDS understands, acknowledges and agrees that if no OPA is entered into with PSI for Phase II
and if the Condemnation Action is abandoned for Phase II IDS shall be responsible for all costs,
expenses and damages judicially determined to be due to PSI as a result of the abandonment or
agreed to be due to PSI pursuant to a settlement agreement approved in writing by IDS (said
approval not to be unreasonably withheld conditioned or delayed), if any, and IDS shall be
obligated to indemnify the CDC pursuant to Section 13 below. Except as expressly stated in this
MOU, and accept for communications in connection with the OPA and/or Condemnation Action,
2
CDC shall not communicate with any third parties any activities as to Phase II without the
express written approval of IDS.
4. Schedule of Performance. The Schedule of Performance presented in Exhibit
"B", Schedule of Performance, attached hereto, details the actions, responsible parties and the
schedule to implement the actions contemplated by this MOU. The actions, responsible parties
and the schedule presented in Exhibit "B" shall be modified and supplanted by a schedule of
performance that shall be developed in conjunction with the Phase I DDA.
5. Permits. The Phase I DDA will provide that the CDC will obtain "no further
action" letters or certificates of completion from the appropriate environmental agencies
regarding Project Site remediation activities, and will assist IDS in obtaining required permits
from the City of National City (hereinafter "City"). The CDC shall fully coordinate with IDS in
conjunction with all of the foregoing. The CDC will not assist IDS with obtaining Air Quality
Management District (hereinafter "AQMD") permits. Exhibit "B" presents the schedule that
both parties will pursue to process the required non-AQMD permits.
6. Off Site Improvements. The Phase I DDA shall provide that the CDC is not
obligated to pay for any utility, conduit or sidewalk replacement costs associated with Project
Site improvements or Project development. IDS will only be required to pay for offsite
improvements, which are required to facilitate Project Site improvements or Project
development.
7. Railroad Spur. The Phase I DDA shall provide that the CDC will assist IDS, to
the extent reasonably possible, in obtaining a railroad spur for the Phase I Project Site at the most
competitive rate and in a reasonably prompt manner.
8. Future Project Area Development Opportunities. The CDC desires to
redevelop other properties within the Harbor Area and IDS is interested in pursuing additional
redevelopment opportunities within the Harbor Area. As the CDC identifies properties that may
be designated for future redevelopment initiatives, or as IDS identifies properties whose
redevelopment may complement the Project, and provided that IDS completes the Project to the
satisfaction of the CDC, subject to any restrictions and requirements of applicable law and any
other requirements or restrictions imposed by the Redevelopment Plan and Owner Participation
Guidelines for the Project Area, the CDC will offer IDS an opportunity to participate in these
future redevelopment activities. Subject to applicable legal restrictions and requirements, the
CDC will offer IDS a first right of refusal to participate in future redevelopment activities in
which IDS has a legal interest in property which is the subject of a proposed redevelopment
project.
9. Design Criteria. The Phase I DDA shall provide that the CDC will consult with
IDS to jointly formulate design guidelines and development standards for the future
rehabilitation and/or redevelopment of properties adjacent to the Project Site.
10. Financing Options. The Phase I DDA shall provide that the CDC will, to the
extent reasonably possible, assist IDS in identifying and obtaining financing for the Project. The
3
CDC will further assist IDS in obtaining Industrial Development Bond financing should IDS
desire to pursue the same.
11. Environmental Requirements. The CDC has prepared and approved a Master
Environmental Impact Report (EIR) for the Harbor Area, which is capable of being amended to
include the Project Site. IDS shall prepare all necessary environmental documents as required by
CEQA and local regulations, for certification by the City/CDC. IDS agrees to cooperate with the
CDC and the City, as requested, to help identify the environmental impacts associated with the
Project, and to prepare any additional documents as may be needed to complete the
environmental review for Project development.
The Project Site requires hazardous materials remediation due to prior uses that
resulted in the generation, release or disposal of hazardous substances. The CDC and IDS arc
conducting preliminary environmental investigation activities to identify the scope and extent of
Project Site contamination. In order to define the obligations of the CDC and IDS regarding
hazardous materials abatement and liability for hazardous materials found on the Project Site
pursuant to this MOU, the CDC and IDS hereby approve the terms and conditions presented in
Exhibit "C", Environmental Terms, attached hereto, and further agree to incorporate these terms
and conditions into the appropriate sections of the Phase I DDA.
12. Project Abandonment. Subject to IDS' indemnification obligations pursuant to
Section 13 below, IDS shall have the right to abandon (i.e., terminate its development activities)
Phase I and/or Phase II of the Project at any time prior to settlement of (or a judgment in) the
Condemnation Action as to that particular Phase. If either Phase I or Phase II of the Project is
abandoned by IDS for whatever reason (including, but not limited to, the failure of PSI to agree
upon the Direct Sale, Negotiated Sale or the failure of CDC and IDS to agree upon the terms and
provisions of the Phase i DDA or abandonment of Phase I of the Project by IDS either prior to or
after the filing of the Condemnation Action) the CDC shall not be obligated (as to the abandoned
Phase) to reimburse IDS for any costs incurred in connection with the Project, Project Site, or
this MOU, including, but not limited to, out of pocket expenses or consequential losses/damages
(to the extent the foregoing apply solely to the abandoned Phase). In the event IDS does not end
up redeveloping the Project Site for any reason, the CDC will reimburse IDS (or cause a new
developer to reimburse IDS) for the out of pocket costs of the Phase 1 Environmental Survey, the
Real Property Appraisal, and the Fixtures and Equipment Appraisal (said appraisals are dated
June 21, 2002) if these documents and materials are used to facilitate a redevelopment of the
entire Project Site by someone other than IDS. The CDC will not be responsible for any
reimbursement for the above -identified costs after June 30, 2003.
13. Hold Harmless/Indemnification. IDS shall indemnify, defend and hold CDC
harmless from and against any and all losses, costs, damages, expenses, claims, liabilities,
actions, and causes of actions (including reasonable attorneys' fees and costs), which CDC may
sustain or incur in connection with both IDS' and CDC's actions or omissions in connection with
the Direct Sale, the Negotiated Sale, the Condemnation Action, and the carrying out of the terms
and provisions of this MOU, including, but not limited to, claims by PSI for inverse
condemnation, breach of contract, damages in the event the Condemnation Action is abandoned,
or any other cause of action. Notwithstanding the foregoing, IDS shall have no indemnification
4
obligations to the CDC in connection with matters arising from CDC's gross negligence or
willful misconduct.
14. Eminent Domain. By executing this MOU the CDC is not committing itself or
agreeing to use eminent domain to acquire the Project Site or any portion thereof as a result of
the ERN, this MOU or the Phase I DDA except as the CDC deems consistent with the
requirements of the law, and the CDC shall retain its full and unfettered discretion to reject the
use of eminent domain to acquire the Project Site or any portion thereof. IDS shall not have any
claim against CDC for damages or otherwise if the CDC abandons the acquisition of Parcels 1
and/or 2 or any other parcels of the Project Site because it does not elect to acquire these
properties through eminent domain.
15. Disposition and Development Agreement (DDA). This MOU is supplemental
to the ERN. Additional terms and conditions will be developed during subsequent negotiations
between the CDC and IDS, which negotiations shall be conducted in a reasonable manner, and
will be incorporated into the Phase i DDA. Neither party will be obligated to go forward with
the Project until both the CDC and IDS approve the Phase I DDA. If there is a conflict by and
between the terms and conditions of the ERN and/or a subsequently executed DDA and this
MOU, the approved DDA shall take precedent and prevail over the terms and conditions of the
ERN and this MOU. If the parties have not agreed upon the Phase I DDA prior to the expiration
of the Term of the ERN, this MOU shall lapse and neither party shall have any further rights or
obligations pursuant to this MOU except for IDS' obligations pursuant to Section 13 and 16
hereof.
16. Security for Indemnification Obligations. In the event that either the
Negotiated Sale or Condemnation Action does not go forward, and/or IDS and the CDC do not
agree upon a Phase I DDA to acquire Phase 1, the Cash Advance shall be promptly returned to
IDS, provided arrangements are made to the reasonable satisfaction of the CDC and its counsel
to secure the obligations of IDS to indemnify CDC pursuant to Section 13 above (e.g., issuance
of a policy of insurance, bond, letter of credit, personal guaranty, escrow holdback of a portion of
the Cash Advance, etc.).
17. Good Faith. The parties shall act in good faith with respect to this MOU and in
negotiating any documents contemplated herein.
5
IN WITNESS WHEREOF, the CDC and IDS have executed this MOU on the
respective dates set forth below.
COMMUNITY DEVELO ENT COMMISSION
OF THE CITY OFCiIpNA CITY
By:
Paul 1Ssrokliers . Exkcutive Director
Dated:
INVESTMENT DEVELOPMENT SERVICES, INC.
BY:
Mark E. Hoekstra, Principal
Dated:
APPROVED AS To FORM:
Attorney for Community Development they for Squires -Belt Material Company
Commission of the City of National City
6
EXHIBIT "A"
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7
BTO2 Sheet 2 of 2
douglas e. barnhart, Inc.
Early Bar
Aiiir Progress Ber
tun Date 1BSEP0215:48i
0 PHn a ea Syoo m Inc
Critical Activity
IDS / SQUIRES -BELT PROJECT
d.40,...1...,1...a.hw.
EXHIBIT C
CONDITION OF THE SITE AND REMEDIAL. WORK
1.1 Disclosure. The CDC and the Developer acknowledge and agree that past
uses made of portions of the Site have included an oil refinery, an automobile recycling facility
and other uses which have resulted in the generation, disposal, or release of Hazardous
Substances, (as that term is used in the Polanco Redevelopment Act) on, in, under, or about the
Site. As a result of some of these releases of Hazardous Substances, the Regional Water Quality
Control Board for the San Diego region ("RWQCB") has requested some investigation by the
Site owner, including investigation relating to leased property which is adjacent to the Site,
owned by the Burlington Northern Santa Fe railroad. The RWQCB issued Cleanup and
Abatement Order No. 87-109 to require Pacific Steel, Inc., the owners of the Site and the named
dischargers, to halt off site discharges and report on Site conditions. However, the RWQCB is
unable to accept additional sites into their oversight program at this time, so it is the intent of the
CDC to apply to the Site Designation Committee of Cal -EPA (Health and Safety Code Section
25260 et seq.) to seek appointment of the County of San Diego's Department of Environmental
Health (DEH) as "administering agency" to determine whether investigations or remedial work
are adequate and whether they comply with federal, state and local laws, ordinances, regulations
and standards.
1.2 Property Mitigation Plan. The CDC has retained an Environmental
Consultant, Environmental Business Solutions, to prepare a Property Mitigation Plan ("PMP")
for submittal to the DEH. Prior to submittal, the PMP will be submitted in draft form to the
Developer (and may be submitted in draft form to the current Property Owner) for comment at
least five business days prior to submittal to DEH. The objectives of the PMP shall include the
following:
1.2.1 To establish and clarify the relationship and policies between the CDC and
the DEH for current and future decisions about investigation and assessment leading to remedial
and removal activity at the Site.
1.2.2 To clarify and establish cleanup guidelines, standards, and procedures for
risk based corrective action to accomplish any necessary remedial and/or removal activity at the
Site.
1.2.3 To inform the public, project participants, and other regulatory agencies
about these policies, procedures, and other decisions that either have been made or will be made
about these activities.
1.2.4 To secure the DEH approvals and determinations necessary for the
cleanup activity to proceed consistent with the Polanco Redevelopment Act, other federal and
state laws, and DEH policies.
The Developer shall be afforded a meaningful opportunity to participate in
the development of the PMP including the future land uses, construction methods and proposed
project goals. This shall include notice and ability to attend and participate in all meetings with
017.202621.6
Exhibit C - Page 1
RWQCB, DEH and/or other involved regulatory agencies. In addition to participation, the
Developer will also be allowed to review drafts and provide comments, which can be
incorporated into the final PMP.
1.3 Site Development Information. In order to assist the development of
this PMP, Developer shall provide plans no later than October 10, 2002, showing the location
and depth of all proposed excavations for future Site redevelopment, identifying the locations
and types of future Site uses. It is understood that such plans arc subject to change and
flexibility is necessary in the overall project plan. All investigations conducted in support of the
PMP will acknowledge such flexibility and allow for certain "tolerances" in the project planning.
Also, such proposed development plans and resulting incorporation into the PMP will allow the
reasonable minor modifications to the site plan after development consistent with the overall site
plan. Developer shall coordinate and consult with Environmental Consultants toward the goal
that all necessary information shall be supplied so that the PMP can be completed and submitted
for DEH review by November 15t, 2002, sufficiently in advance of redevelopment activities to
allow for agency review, comment, and approval by December 31, 2002.
1.4 Remedial Investigations. CDC shall undertake and complete
investigations of releases of Hazardous Substances sufficient to satisfy the DEH that the goals
and objectives of the PMP have been or can be accomplished. All information received or
generated by either the Developer or the CDC as a result of these investigations at this site shall
be shared between those two parties.
1.5 Remedial Work. The PMP shall propose remedial work that can be
implemented efficiently, and coordinated, where appropriate, with planned future redevelopment
activities in order to assure that conditions at the Site can support all intended future land uses, as
well as abate any nuisance that may have been caused by a release of Hazardous Substances (as
that term is defined within the Polanco Redevelopment Act) that may impact the project, or
redevelopment construction activities. Such remedial work will be premised on a risk -based
corrective action approach, consistent with reasonable expectations as to future uses, and
Developer agrees to cooperate with CDC and structure construction contracts for redevelopment
activities to provide for coordinated schedules and allow for progress of work at the Site in a
manner that allows completion of the remedial work as defined in the PMP. It is currently
anticipated that CDC will conduct such necessary work to achieve the goals of the PMP
including both rough grading of the project as well as trenching for future utilities and
importation or development of appropriate "buffer zones" between final grade and any residual
contamination left in place as part of the PMP. CDC will hold the Developer harmless from the
additional incremental costs such grading, trenching and other activities may incur as a result of
the site contamination issues.
1.6 Approval of Remedial Work. The CDC will provide, in the PMP, that a
No Further Action letter is obtained for the Site following completion of grading and excavation
activities, including such preparation for future excavation activities as may be required, and
provided that releases of hazardous waste have been remediated as necessary and appropriate
under the PMP.
Exhibit C - Page 2
017.202621.6
1.7 Immunities. It is the intent of the CDC that once the No Further Action
letter has been approved for issuance pursuant to the PMP, all benefits and immunities
established under State law pursuant to the Polanco Redevelopment Act (Health & Safety Codes
§§ 33459.1, et seq.) shall attach and inure to the benefit of the Developer, their lenders,
successors and assigns as provided by State law.
1.8 Limit of RDA Liability. Developer acknowledges that not all
contamination will be removed from the Site following completion of activities described in the
PMP, even after issuance of the No Further Action letter. Developer understands that although
the Site will be prepared to a condition in which impacts have been mitigated to a level where the
Site meets human health risk assessment criteria, and construction -related nuisance impacts have
been abated (or will be abated simultaneous with construction activities), that some substances
may remain at the Site, at or below concentrations consistent with regulatory guidelines. As a
result of the immunities and protections described above in § 1.7, Developer, its lender,
successors and assigns will have no liability for future remediation of these substances, and they
will be held harmless and immune from such liability by operation of State law. The proposed
Project Mitigation Plans will incorporate the likely and reasonably foreseeable modifications that
could arise on the site. However, should Developer, its successors or assigns determine or desire
to undertake additional redevelopment activities at the Site, any increased costs related to
redevelopment by reason of residual impacts shall be borne by Developer, its successors and
assigns, and CDC will assume no responsibility therefor. In addition, Developer, and its
successors and assigns, accept that the immunities described in § 1.7 do not shield or protect
against liability as a result of new releases of hazardous materials that may occur during or after
the redevelopment process. CDC will accept no responsibility for such new releases, and
Developer waives and abandons any such claims for liability against CDC for such new releases,
except to the extent that CDC was an active discharger or actively participated in such post -
redevelopment discharge or release of hazardous substance.
1.9 Cost Sharing Obligations. It is the intent of the CDC to pursue cost recovery for
those activities described in this Exhibit using its authority under the Polanco Redevelopment
Act. The CDC agrees that it will not seek reimbursement for its costs for environmental
investigations or mitigation activities from the Developer, nor Developer's successors or assigns.
The CDC bears no responsibility, however, for reimbursement of any expense the Developer
may independently undertake, whether for consulting, contractual or legal fees.
1.10 Squires/Trust. CDC acknowledges that Squires -Belt Material Company and
the John Bensen trust are intended beneficiaries of al benefits and rights afforded to IDS.
Exhibit C - Page 3
017.202621.6