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HomeMy WebLinkAbout2006 CON CDC Constellatioin Property Group - DDA AgreementRESOLUTION NO. 2006 — 218 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY APPROVING AMENDMENT NO. 2 TO THE DISPOSITION AND DEVELOPMENT AGREEMENT WITH CONSTELLATION PROPERTY GROUP ("A" AVENUE) LP, AND APPROVING AN OPTION AGREEMENT WITH CONSTELLATION PROPERTY GROUP (NAT CITY 12TH) LP, PERTAINING TO THE CENTRO AND R-2 PROJECTS WHEREAS, Constellation Property Group ("A" Avenue) LP, ("'A' Avenue") entered into a Disposition and Development Agreement ("DDA") dated August 30, 2005, pursuant to which "A" Avenue agreed to develop a real estate project in National City known as "Centro". Pursuant to the DDA, "A" Avenue further agreed to build Office Space and four parking spaces for the CDC in the Centro project, and a Trolley Transit Center; and WHEREAS, Constellation Property Group (Nat City 12th) ("Nat City 12th") is an affiliate of "A" Avenue and the developer of the Revolution 2 project located adjacent to Centro; and WHEREAS, on October 21, 2005, "A" Avenue and Nat City 12th entered into an Assignment and Assumption Agreement pursuant to which "A" Avenue assigned all of its rights under the DDA to Nat City 12th, and Nat City 12th agreed to assume the obligations under the DDA; and WHEREAS, in connection with the October 21, 2005 assignment, the CDC and Nat City 12th entered into Amendment No. 1 to the DDA on October 25, 2005, pursuant to which Nat City 12th agreed to construct the Office Space and Trolley Transit Center; and WHEREAS, "A" Avenue and Nat City 12th are entering into an Assignment and Assumption Agreement pursuant to which Nat City 12th will assign back to "A" Avenue the rights and obligations under the DDA; and WHEREAS, it has been proposed by "A" Avenue that the CDC agree to enter into Amendment No. 2 to the DDA, pursuant to which "A" Avenue's obligation to provide the Office Space to the CDC would be replaced with an obligation to provide a residential Condominium Unit in the Centro project, which Condominium Unit shall have a fair market value of at least $500,000; and WHEREAS, Amendment No. 2 would further provide that in consideration for the removal of the blanket mortgage from the Centro and Revolution 2 projects, the CDC would remove the Second Mortgage from both projects, and that the liquidated damages provision contained in Amendment No. 1 to the DDA would be eliminated; and WHEREAS, it has been proposed by "A" Avenue that concurrently with entering into Amendment No. 2 to the DDA, the CDC enter into an Option Agreement with Nat City 12th, pursuant to which Nat City 12th would construct the Office Space in the Revolution 2 project, and pursuant to which the CDC would be granted an option to exchange the Condominium. Unit in the Centro project for the Office Space in the Revolution 2 project. Resolution No. 2006 — 218 October 3, 2006 Page 2 NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission of the City of National City hereby approves Amendment No. 2 to the Disposition and Development Agreement with Constellation Property Group ("A" Avenue) LP, approves an Option Agreement with Constellation Property Group (Nat City 12th) LP, and authorizes the Chairman to execute said documents. Said Amendment No. 2 to the Disposition and Development Agreement and Option Agreement are on file in the office of the City Clerk. PASSED and ADOPTED this 3rd day of October, 2006. Nick Inzunza,Chairman ATTEST: Chris Zapata, Secretary APPROVED AS TO FORM: George H. Eiser, III Legal Counsel Resolution No. 2006 — 218 October 3, 2006 Page 2 NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission of the City of National City hereby approves Amendment No. 2 to the Disposition and Development Agreement with Constellation Property Group ("A" Avenue) LP, approves an Option Agreement with Constellation Property Group (Nat City 12th) LP, and authorizes the Chairman to execute said documents. Said Amendment No. 2 to the Disposition and Development Agreement and Option Agreement are on file in the office of the City Clerk. PASSED and ADOPTED this 3rd day of October, 2006. Nick Inzunza,Chairman ATTEST: Chris Zapata, Secretary APPROVED AS TO FORM: George H. Eiser, III Legal Counsel City of National City, California COMMUNITY DEVELOPMENT COMMISSION AGENDA STATEMENT MEETING DATE October 3, 2006 AGENDA ITEM NO. 31 (TEM TITLE RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY APPROVING AMENDMENT NO. 2 TO THE DISPOSITION AND DEVELOPMENT AGREEMENT WITH CONSTELLATION PROPERTY GROUP ("A" AVENUE) LP, AND APPROVING AN OPTION AGREEMENT WITH CONSTELLATION PROPERTY GROUP (NAT CITY 12TH) PERTAINING TO THE CENTRO AND R-2 PROJECTS PREPARED BY Raymond Pe (Ext. 4421) DEPARTMENT Community(''..Development Commission EXPLANATION Constellation Property Group LP has formed two separate entities to develop the `Centro' condominium project and the `Revolution 2' condominium project. Constellation Property Group ("A" Avenue) LP is the entity developing the "Centro" condominium project (4-stories, 61 residential units), and Constellation Property Group (Nat City 12t) LP is the entity developing the "Revolution 2" condominium project (22-stories, 347 residential units, two commercial units). On October 25, 2005, the Community Development Commission approved Amendment No. 1 to the DDA, which assigned the obligation to construct a trolley transit center and convey office space to the CDC from the "A" Avenue entity to the Nat City 12th entity. Amendment No. 2 would re -assign the obligation back to the "A" Avenue entity from the Nat City 12th entity. The developer has requested this second amendment to the DDA in order to secure financing for the "Revolution 2" project. The amendment would also replace the obligation of the developer to convey office space, and instead require a residential condominium unit to be conveyed to the CDC. The "Centro" project consists of residential condominiums only. The amendment would also eliminate liquidated damages and financing provisions contained in Amendment No. 1 upon release of a blanket mortgage held by the developer on the site. An Option Agreement would allow the CDC to exercise an option to exchange the residential condominium unit for office space in the \ "Revolution 2" project after its completion. Environmental Review .\% NIA Financial Statement N/A Approved By: Finance Director Account No. STAFF RECOMMENDATION Adopt resolution. BOARD / COMMISSION RECOMMENDATION N/A ATTACHMENTS Listed Below ( ) Resolution No. ,Z06,1 (o • ,� I Resolution Amendment No. 2 to Disposition and Development Agreement Option Agreement o A-200 (9/99) RESOLUTION NO. 2006 — RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY APPROVING AMENDMENT NO. 2 TO THE DISPOSITION AND DEVELOPMENT AGREEMENT WITH CONSTELLATION PROPERTY GROUP ("A" AVENUE) LP, AND APPROVING AN OPTION AGREEMENT WITH CONSTELLATION PROPERTY GROUP (NAT CITY 12TH) LP, PERTAINING TO THE CENTRO AND R-2 PROJECTS WHEREAS, Constellation Property Group ("A" Avenue) LP, ("`A' Avenue") entered into a Disposition and Development Agreement ("DDA") dated August 30, 2005, pursuant to which "A" Avenue agreed to develop a real estate project in National City known as "Centro". Pursuant to the DDA, "A" Avenue further agreed to build Office Space and four parking spaces for the CDC in the Centro project, and a Trolley Transit Center; and WHEREAS, Constellation Property Group (Nat City 12th) ("Nat City 12th") is an affiliate of "A" Avenue and the developer of the Revolution 2 project located adjacent to Centro; and WHEREAS, on October 21, 2005, "A" Avenue and Nat City 12th entered into an Assignment and Assumption Agreement pursuant to which "A" Avenue assigned all of its rights under the DDA to Nat City 12th, and Nat City 12th agreed to assume the obligations under the DDA; and WHEREAS, in connection with the October 21, 2005 assignment, the CDC and Nat City 12th entered into Amendment No. 1 to the DDA on October 25, 2005, pursuant to which Nat City 12th agreed to construct the Office Space and Trolley Transit Center; and WHEREAS, "A" Avenue and Nat City 12th are entering into an Assignment and Assumption Agreement pursuant to which Nat City 12th will assign back to "A" Avenue the rights and obligations under the DDA; and WHEREAS, it has been proposed by "A" Avenue that the CDC agree to enter into Amendment No. 2 to the DDA, pursuant to which "A" Avenue's obligation to provide the Office Space to the CDC would be replaced with an obligation to provide a residential Condominium Unit in the Centro project, which Condominium Unit shall have a fair market value of at least $500,000; and WHEREAS, Amendment No. 2 would further provide that in consideration for the removal of the blanket mortgage from the Centro and Revolution 2 projects, the CDC would remove the Second Mortgage from both projects, and that the liquidated damages provision contained in Amendment No. 1 to the DDA would be eliminated; and WHEREAS, it has been proposed by "A" Avenue that concurrently with entering into Amendment No. 2 to the DDA, the CDC enter into an Option Agreement with Nat City 12th, pursuant to which Nat City 12th would construct the Office Space in the Revolution 2 project, and pursuant to which the CDC would be granted an option to exchange the Condominium Unit in the Centro project for the Office Space in the Revolution 2 project. Resolution No. 2006 — September 19; 2006 Page 2 NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission of the City of National City hereby approves Amendment No. 2 to the Disposition and Development Agreement with Constellation Property Group ("A" Avenue) LP, approves an Option Agreement with Constellation Property Group (Nat City 12th) LP, and authorizes the Chairman to execute said documents. Said Amendment No. 2 to the Disposition and Development Agreement and Option Agreement are on file in the office of the City Clerk. PASSED and ADOPTED this 19th day of September, 2006. Nick Inzunza,Chairman ATTEST: Chris Zapata, Secretary APPROVED AS TO FORM: George H. Eiser, Ill Legal Counsel OPTION AGREEMENT This Option Agreement (the "Agreement") is executed between Constellation Property Group (NatCity 12`h) LP, a Delaware limited partnership ("Optionor"), and the Community Development Commission of the City of National City, a public body, corporate and politic ("Optionee"), to be effective on September 19, 2006 (the "Effective Date"). Background A. Optionor is the developer of a real estate project in the City of National City, California, commonly known as "Revolution 2" ("R2") to be located on the real property described on Exhibit "A" attached hereto and incorporated herein. B. Constellation Property Group (A Avenue), LP ("A Avenue") an affiliate of Optionor is the developer of a real estate project in the City of National City commonly known as "Centro," adjacent to the R2 project. C. A Avenue and Optionee entered into that certain Disposition and Development Agreement dated August 30, 2005 (the "DDA") that provided for, among other things, that A Avenue build office space for Optionee containing not less than approximately 2,700 sq. ft. and four parking spaces in the Centro project (the "Office Space"). On October 21, 2005, A Avenue assigned its rights under the DDA to Optionor. D. On October 25,2005, Optionor entered into an amendment to the DDA with Optionee (the "First Amendment"), thereby transferring the obligations set forth in the DDA to Optionor, including the obligation to build the Office Space in R2 (the "R2 Office Space") as opposed to the Centro project. E. Optionor has assigned all of its right, title and interest in and to th.e DDA back to A Avenue pursuant to that certain Assignment and Assumption Agreement dated of even date herewith (the "Assignment") and A Avenue and Optionee have agreed to a new amendment to the DDA (the "Second Amendment"). As a result of the Second Amendment, Optionee now has a right under the DDA to receive a residential unit in Centro valued at not less than $500,000 (the "Centro Unit") in place of the R2 Office Space. F. But for Optionor's agreement to enter into this Agreement, Optionee would not have agreed to the Second Amendment. Optionee desires the option to trade/exchange the Centro Unit for the R2 Office Space. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Optionor and Optionee agree as follows: SECTION 1 GRANT OF OPTION Subject to the terms and conditions hereof, Optionor hereby agrees to construct the Office Space on the R2 project and hereby grants to Optionee the option (the "Option") to SDCA_292948.2 exchange with Optionor the R2 Office Space for the Centro Unit upon the completion of construction of both the Centro Unit and the Office Space. SECTION 2 OPTION CONSIDERATION Upon the execution and delivery of this Option Agreement, Optionee shall pay to Optionor, in immediately available funds, the sum of ten dollars ($10) as consideration for granting the Option. The Option consideration set forth in this section, as well as any other consideration deemed to have been received by Optionor under this Option Agreement, is and shall be deemed consideration solely for the granting of the Option by Optionor. On expiration of the Option Term (as defined below), Optionor shall retain all Option consideration. SECTION 3 OPTION TERM 3.1 The term of the Option shall begin on the date hereof and shall terminate on that date that is the later of (i) two (2) years from the date hereof, or (ii) sixty (60) days after written notice from Optionor to Optionee of the completion of construction of both the Centro Unit and the R2 Office Space and the receipt of certificates of occupancy for both (the "COOs"), but in no event later than (iii) ten (10) years from the date hereof (the "Option Term"). Optionor shall give Optionee prompt written notice of the issuance of the COOs. SECTION 4 OPTION PROPERTY EXCHANGE VALUE In the event that Optionee exercises the Option herein granted, at the Exercise (defined below), Optionee shall have the right to exchange with Optionor the Centro Unit for the R2 Office Space (the "Exchange Value") SECTION 5 REPRESENTATIONS 5.1 Representations of Optionor. Optionor makes the following representations to Optionee, which are true and correct as of the date Optionor executes this Agreement and which shall be true and correct as of Exercise: 5.1.1. Optionor has full power and authority to enter into this Agreement and perform its obligations hereunder and shall, as of the Exercise, have full right, power and authority to convey to Optionee good and indefeasible title to the R2 Office Space, free and clear of any liens, encumbrances or adverse claims. 5.1.2. To the best of Optionor's knowledge, Optionor has not received any notice, and Optionor has no actual knowledge, of any pending or threatened litigation or pending or threatened condemnation proceeding that could affect the R2 Office Space. 5.1.3. To the best of Optionor's knowledge, there are and shall at Exercise be no mechanic's liens or unrecorded liens against the R2 Office Space. 2 SDCA_292948.2 5.2 Representations of Optionee. Optionee makes the following representations to Optionor, which are true and correct as of the date Optionee executes this Agreement and which shall be true and correct at Exercise: 5.2.1. Optionee has full power and authority to enter into this Agreement, to consummate the exchange of the Centro Unit for the R2 Office Space and to perform all obligations of Optionee hereunder. 5.2.2. Optionee acknowledges and agrees that the provisions of this Section 5 have been negotiated by the parties, have been reviewed by Optionee and its counsel and that Optionee fully understands and accepts all of the terms and provisions of this Agreement. 5.3 Survival. The representations and warranties of the parties in this Section 5 shall survive Exercise or any termination of this Agreement. SECTION 6 EXERCISE 6.1 Exercise. If Optionee is not in default under this Agreement and all conditions to the exercise of the Option for the benefit of Optionor are satisfied or are waived in writing by Optionor, Optionee may exercise the Option in accordance with this section. The Option shall be exercised by delivering written notice from Optionee to Optionor before the expiration of the Option Term •and in accordance with the notice provisions in Section 9.1 of this Agreement ("Exercise Notice"). The Exercise Notice shall affirmatively state that the Optionee exercises the Option pursuant to this Agreement (the "Exercise"). Within ten (10) business days after the Exercise, the parties shall execute and deliver such reasonable standard form purchase agreement used for the sale of units in R2 (the "Purchase Agreement") and deposit any funds and documents in escrow (the "Escrow") that the Purchase Agreement requires to be deposited. 6.2 Termination: At any time during the Option Term, Optionee may terminate this Agreement for any reason, by providing Optionor with thirty (30) days written notice. Upon such termination of this Agreement, neither party shall have any further obligations under this Agreement. SECTION 7 OBLIGATIONS 7.1 Optionor's Obligations: 7.1.1. Optionor shall work in a diligent and expedient manner to construct the R2 Office Space and finalize and record the final R2 Condominium Map within two (2) years of the Effective Date. 7.1.2. Within ten (10) business days after the Exercise, Optionor shall enter into the Purchase Agreement with Optionee for the R2 Office Space for the Exchange Value. SDCA_292948.2 7.1.3. Within ten (10) business days after the Exercise, Optionor shall deliver to Escrow a standard California grant deed duly executed and acknowledged by Optionor, in recordable form, conveying to Optionee good and indefeasible fee simple title to the R2 Office Space. 7.2 Optionee's Obligations: 7.2.1. Within ten (10) business days after the Exercise, Optionee shall deliver or cause to be delivered to Escrow a standard California grant deed duly executed and acknowledged by Optionee, in recordable form, conveying to Optionor good and indefeasible fee simple title to the Centro Unit. SECTION 8 EXCLUSIVE REMEDIES 8.1 Remedies of Optionee. If any of Optionor's representations are inaccurate as of the Exercise or if Optionor fails to perform any of its obligations hereunder and such inaccuracy or failure is not cured within ten (10) days after Optionee notifies Optionor in writing of such inaccuracy or failure, then Optionee shall be entitled to recover any and all actual damages suffered by Optionee as a result of such default, and in addition, Optionee shall be entitled either: (a) to terminate this Agreement, (b) if the R2 Condominium Map has been recorded, to receive specific performance of this Agreement, or (3) require Optionor to purchase the Centro Unit for five hundred thousand dollars ($500,000) cash. 8.2 Remedies of Optionor: If any of Optionee's representations are inaccurate as of the Exercise, or if Optionee fails to perform any of its obligations hereunder and such failure is not cured within ten (10) days after Optionor notifies Optionee in writing of such inaccuracy or failure, then Optionor shall be entitled to terminate this Agreement. 8.3 Further Limitations. The remedies set out above in this Section 8 shall be the sole and exclusive remedies of the parties with respect to any breach or default occurring under this"Agreement. Upon any termination of this Agreement, neither party shall have any further obligation, right or remedy under this Agreement except as set forth above. Without expanding any of the limitations of remedies set out above in this Section 8, each of the parties further hereby specifically waives any and all rights to consequential, special, incidental or punitive damages. SECTION 9 MISCELLANEOUS 9.1 Notices. Any notice or other communication required or permitted under this Agreement shall be in writing and shall be deemed delivered on the earlier of (i) three business days after being deposited in the United States Mail, postage prepaid, registered or certified mail, return receipt requested, (ii) upon machine -generated confirmation of transmission by facsimile, if followed by a hard copy sent by certified mail return receipt requested the same day, or (iii) when actually delivered (as evidenced by a return receipt). Notice given in any other manner shall be deemed delivered when actually received. The addresses and facsimile numbers of the parties are: 4 SDCA_292948.2 OPTIONOR: OPTIONEE: with a copy to: Constellation Property Management, Inc. 1133 Columbia St. Suite 101 San Diego, CA 92101 Attn: Andrew Zlotnik Fax: 619 234-3544 Community Development Commission of the City of National City 140 East 12th St. Suite B National City, CA 91950 Attn: Raymond Pe Fax: 619 336-4286 Foley & Lardner LLP 402 West Broadway, Suite 2300 San Diego, CA 92101 Attn: Richard L. Moskitis Fax: 619 234-3510 Any of the notice persons above may change its address or facsimile number by giving the other party five days' advance written notice of such change. 9.2 Time Periods. Unless otherwise specified, any time period or deadline provided in this Agreement shall be measured in calendar days. If any such time period or deadline expires on a Saturday, Sunday, or legal holiday recognized by the State of California, such time period or deadline shall be extended to the first business day thereafter. 9.3 Attorneys Fees. If Optionor or Optionee employs an attorney to enforce any rights or remedies hereunder, the prevailing party shall be entitled to recover from the other party reasonable attorneys' fees and court costs. The obligations of the parties set forth in this section shall survive Closing or any termination of this Agreement. 9.4 Venue; Governing Law. Venue for any action relating to this Agreement shall be in San Diego County, California. This Agreement shall be construed and interpreted in accordance with the laws of the State of California. 9.5 Entire Agreement; Modification or Waiver. This Agreement constitutes the entire agreement between Optionor and Optionee regarding the Option and supersedes all prior agreements relating thereto. This Agreement may not be amended, modified or supplemented or otherwise varied orally, by any course of conduct or otherwise except by a written instrument signed by the party against whom enforcement is sought. No waiver by either party of any of its rights or remedies hereunder shall be effective unless in a formal writing, and no waiver shall be construed as a waiver of any other or subsequent right or remedy. 9.6 Interpretation. Where needed for proper interpretation, words in the singular shall include the plural, and words of any gender shall include all genders. The SDCA_292948.2 5 headings in this Agreement are for convenience only and shall not affect or be considered in construing or interpreting the text hereof. 9.7 Severability. If any provision of this Agreement is held to be invalid, illegal, or otherwise unenforceable, the unenforceable provision shall automatically be deemed replaced with another provision as similar in effect to the unenforceable provision as possible while still being enforceable, and the remainder of this Agreement shall not be affected except to the extent necessary in order to harmonize it with such replacement provision. 9.8 Like -Kind Exchange. Upon request of Optionor, Optionee agrees to cooperate with Optionor in effecting an I.R.C. § 1031 exchange, including executing and delivering any and all such writings as may be required by the exchange trustee or intermediary, provided, however, that such cooperation shall be at no cost or liability to Optionee, and Optionee shall not be obligated to take title to any property other than the R2 Office Space. 9.9 Memorandum of Agreement. Optionor and Optionee shall execute, have notarized and record the Memorandum of Option attached hereto as Exhibit "B" within five (5) business days of the Effective Date. IN WITNESS WHEREOF, Optionor and Optionee have executed this Agreement as of the Effective Date. Attested: OPTIONEE: CDC Secretary Community Development Commission of the City of National City, a public body, corporate and politic By: Name: Its: OPTIONOR: Constellation Property Group (NatCity 12'') LP, a Delaware limited partnership By: Constellation Property Management, Inc., a Delaware corporation, Its General Partner By: Name: Eugene Marchese Its: President 6 SDCA_292948.2 EXHIBIT A LEGAL DESCRIPTION PARCEL 1 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: 556-554-17 SDCA_292948.2 A-1 EXHIBIT B MEMORANDUM OF OPTION Recording Requested By: When Recorded Return To: FOLEY & LARDNER LLP Attn: Richard L. Moskitis, Esq. 402 West Broadway, Suite 2300 San Diego, California 92101 THE AREA ABOVE IS RESERVED FOR RECORDER'S USE APN: 556-554-17 MEMORANDUM OF OPTION This Memorandum of Option ("Memorandum") is made and entered into as of , 2006, by and between the Community Development Commission of the City of National City, a public body, corporate and politic ("Optionee") and Constellation Property Group (NatCity 12th) LP, a Delaware limited partnership ("Optionor"), in connection with that certain real property located in the City of National City, County of San Diego, State of California described on Exhibit "A" attached hereto and incorporated herein by reference (the "Property"). Pursuant to that certain unrecorded Option Agreement by and between Optionor and Optionee dated September 19, 2006 (the "Option Agreement"), Optionor has granted to Optionee the option to acquire a portion of the Property referred to by the parties as the R2 Office Space (the "Option"). Optionee's exercise of the Option is subject to the terms and conditions of the Option Agreement which are incorporated herein by reference. This memorandum is solely for recording purposes and shall not be construed to supplement or modify the terms and conditions contained in the Option Agreement. Remainder of Page Intentionally Left Blank B-1 SDCA_292948.2 IN WITNESS WHEREOF, Optionee and Optionor have executed this Memorandum of Option as of the date first above written. Attested: OPTIONEE: CDC Secretary SDCA_292948.2 Community Development Commission of the City of National City, a public body, corporate and politic By: Name: Its: OPTIONOR: Constellation Property Group (NatCity 12`") LP, a Delaware limited partnership By: Constellation Property Management, Inc., a Delaware corporation, Its General Partner By: Name: Eugene Marchese Its: President [Signature Page of Memorandum of Option] B-2 EXHIBIT A LEGAL DESCRIPTION PARCEL 1 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: 556-554-17 B-3 SDCA_292948.2 AMENDMENT NO. 2 TO DISPOSITION AND DEVELOPMENT AGREEMENT This Amendment No. 2 to Disposition and Development Agreement (this "Amendment") is made and entered into as of September , 2006 (the "Effective Date"), by and between 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, as successor in interest to Constellation Property Group (NatCity 12th) LP, a Delaware limited partnership (the "Developer"). Recitals A. The CDC and Developer entered into that certain Disposition and Development Agreement dated August 30, 2005 (the "Original DDA"). B. On October 21, 2005, Developer and Constellation Property Group (NatCity 12th) LP, a Delaware limited partnership (the "Original Assignee"), entered into that certain Assignment and Assumption Agreement (the "Original Assignment"), pursuant to which Developer assigned all of its right, title and interest in and to the Original DDA to Original Assignee. C. In connection with the Original Assignment, Original Assignee and CDC entered into that certain Amendment No. 1 to Disposition and Development Agreement dated as of October 25, 2005 ("Amendment No. 1" and, together with the Original DDA, the "DDA"), pursuant to which the Original Assignee agreed to construct the Office Space and Trolley Transit Center in accordance with the terms and conditions of Amendment No. 1. D. Concurrently herewith, Original Assignee and Developer are entering into that certain Assignment and Assumption Agreement (the "Re -Assignment"), pursuant to which Original Assignee is assigning all of its right, title and interest in and to the DDA back to Developer, and Developer is assuming all of the Original Assignee's duties, obligations and liabilities under the DDA (the "Obligations"). E. The CDC and Developer now wish to further amend the DDA to replace the obligation of Developer to provide the Office Space with the obligation to provide a residential condominium in the Project developed on the Site and to eliminate the liquidated damages and financing provisions contained in Amendment No. 1 on the terns and conditions set forth below. All capitalized terms used in this Amendment but not defined herein shall have the meanings ascribed to them in the DDA. NOW, THEREFORE, in consideration of the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the CDC and Developer agree as follows: SDCA_292939.2 Agreement 1. Project. All references to the "Project" or the "Centro Project" in the DDA are revised to mean an approximately 91,199 sq. ft., four (4) story residential condominium project consisting of approximately 61 Residential Units and approximately 108 parking spaces; with a structure height not to exceed 50 feet. 2. Condominium Unit. Section 2 of Amendment No. 1 is hereby amended and restated in its entirety as follows: "Condominium Unit. In place of the Office Space, Developer shall cause a residential condominium unit and two parking spaces (the "Condo Unit") to be constructed as part of the Centro Project on the Site, which shall be deeded to the CDC upon completion of same. The Condo Unit shall be of such size and location in the Centro Project to have a fair market value at the date of completion of at least Five Hundred Thousand Dollars ($500,000). At the time of conveyance, the Condo Unit shall be free from monetary liens and encumbrances, but may be subject to reciprocal easements, CC&Rs and other non -monetary liens and encumbrances consistent with a residential condominium project." 3. Release of Obligations of Original Assignee. As the Obligations have been assumed by the Developer via the Re -Assignment, the CDC hereby releases the Original Assignee from any and all obligations to construct the Office Space, Trolley Transit Center and four parking spaces. All references to "Office Space" in the DDA are hereby deleted in their entirety. Developer shall be responsible for all of the Obligations as amended by this Amendment, including, but not limited to, all obligations in connection with the Trolley Transit Center. 4. Second Mortgage. Conditioned upon the release of the Blanket Mortgage from the Site, the CDC hereby agrees to remove the Second Mortgage in accordance with Section 8 of Amendment No. 1. 5. Financing. Conditioned upon the release of the Blanket Mortgage from the Site, Section 6 of Amendment No. 1 is hereby deleted in its entirety and replaced with "Intentionally Deleted." 6. Liquidated Damages. Conditioned upon the release of the Blanket Mortgage from the Site, Section 7 of Amendment No. 1 is hereby deleted in its entirety and replaced with "Intentionally Deleted." 7. Consent. The CDC hereby consents to Original Assignee transferring all of its right, title and interest in the Site and the Project back to Developer. 8. Grant Deed. Developer agrees to cause that certain Grant Deed, substantially in the form of Exhibit A attached hereto, to be recorded with the County Recorder of the County of San Diego, California, no later than September 30, 2006. 9. Miscellaneous. Except to the extent expressly modified by this Amendment, the DDA remains in full force and effect. To the extent of any inconsistency between this Amendment and the DDA, the terms and conditions of this Amendment shall control. This 2 SDCA_292939.2 Amendment may be executed in multiple counterparts, all of which, taken together, shall constitute one and the same document. IN WITNESS WHEREOF, the CDC and Developer have executed this Amendment as of the Effective Date first set forth above. Attested: CDC Secretary 3 SDCA_292939.2 CDC: Community Development Commission of the City of National City, a public body, corporate and politic By: Name: Its: 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 EXHIBIT A RECORDING REQUESTED BY, MAIL TAX STATEMENTS TO, AND WHEN RECORDED MAIL TO: Constellation Property Group (A Avenue) LP 1133 Columbia Street, Suite 101 San Diego, CA 92101 Attn. Mr. Wayne Hann GRANT DEED In accordance with Section 11932 of the California Revenue and Taxation Code, Grantor has declared the amount of the transfer tax that is due by a separate statement that is not being recorded with this Grant Deed. For valuable consideration, receipt of which is hereby acknowledged, CONSTELLATION PROPERTY GROUP (NATCITY 12TH) LP, a Delaware limited partnership ("Grantor"), hereby grants to CONSTELLATION PROPERTY GROUP (A AVENUE) LP, a Delaware limited partnership ("Grantee"), 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. This Grant Deed is subject to: (a) non -delinquent real and personal property taxes assessments and bonds for the current fiscal year; (b) the lien of supplemental taxes, if any, assessed pursuant to Chapter 3.5 of the California Revenue and Taxation Code; and (c) all covenants, conditions,. restrictions, easements, liens, encumbrances, claims, rights and other matters recorded as a matter of public record, including that certain Grant Deed entered into by and between Grantor, as grantee, and the Community Development Commission of the City of National City, a public body, corporate and politic, as grantor, and recorded on October 26, 2005, as Document No. 2005-0930606, in the County Recorder's Office of the County of San Diego, California. The Grantee herein covenants by and for itself and its successors, 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. [Signature Page Follows] A-1 SDCA_292939.2 IN WITNESS WHEREOF, Grantor and Grantee have executed this Grant Deed this day of , 2006. GRANTOR: CONSTELLATION PROPERTY GROUP (NATCITY 12T11) LP, a Delaware limited liability partnership By: Constellation Property Management, Inc., a Delaware Corporation, its General Partner By: Eugene Marchese, President GRANTEE: CONSTELLATION PROPERTY GROUP (A AVENUE) LP, a Delaware limited liability partnership By: Constellation Property Management, Inc., a Delaware Corporation, its General Partner A-2 By: Eugene Marchese, President SDCA_292939.2 Exhibit A to Grant Deed LEGAL DESCRIPTION OF SITE 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 SDCA_292939.2 A-3