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HomeMy WebLinkAbout2007 CON CDC Pacific Steel PSI - Remediation AgreementCOOPERATIVE REMEDIATION AGREEMENT BY AND BETWEEN THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL, CITY AND PACIFIC STEEL,, INC., A CALIFORNIA CORPORATION This Cooperative Remediation Agreement ("Agreement") is entered into as of March , 2007 by and between the Community Development Commission of the City of National City ("CDC") and Pacific Steel, Inc., a California corporation ("PSI"), with reference to the following facts and objectives: RECITALS A. This Agreement concerns two areas of real property. The first set of properties are those commonly known and numbered as portions of 1500 and 1600 Cleveland Avenue, National City, California, and generally described as Assessor Parcel Numbers 559-051-09, -1.1, and -12, 559-056-03, 559-071-04, and 559-076- 01, -02, -03, -06, -09, -10 (plus applicable portions of closed streets, 16`h Street, Harrison Avenue and the closed alley). PSI is the current owner and operator of these properties, hereinafter referred to as the "PSI Property." The second set of properties which are the subject of this Agreement are properties directly to the west of the PSI Property which are generally described as Assessor Parcel Number 559-040-46 and portions of 559-040-47 and 559-040-52. These properties are owned by Burlington Northern Santa Fe Railroad and are hereinafter referred to as the "BNSF Property." PSI has conducted business operations on and is a current Lessee, on a holdover basis, of the BNSF Property. The PSI Property and the BNSF Property are sometimes jointly referred to in this Agreement as the "Properties." B. The Properties are located within the Harbor District Redevelopment Area of the City of National City (the "City") for which arca the City has adopted a Redevelopment Plan that is administered by the CDC. C. The PSI Property and the BNSF Property arc now subject to a Corrective Action Consent Agreement, Docket IIWCA 20020016 (the "Consent Order" or the "DTSC Consent Order") issued by the California Department of Toxic Substances Control ("DTSC"), which was agreed to by PSI in August of 2004. In addition, the PSI Property is subject to a Clean Up and Abatement Order (No. 87 — 109, as amended) that the San Diego Regional Water Quality Control Board ("RWQCB") issued in 1987. D. The Properties are impacted with hazardous substances, as that term is defined in the Polanco Redevelopment Act, California Health & Safety Code §§ 33459 et seq. (the "Polanco Act). SI)582902.1 E. CDC and PSI (jointly referred to hereinafter as the "Parties") recognize that the PSI Property and the BNSF Property are planned to be the site of a future redevelopment project. F. Consistent with the goal of redeveloping the Properties, PSI, CDC and I -Tome Depot, Inc. ("HD") entered into an Exclusive Negotiating Agreement ("ENA"), dated November 21, 2006, which allows for the negotiation of a possible redevelopment plan for the Properties and other adjacent parcels of land. G. CDC also has entered into negotiations with BNSF for the purchase of the BNSF Property, which acquisition would be conditional on CDC's getting assurances from the DISC that the ultimate remedy for the Properties will be one that emphasizes the re -use of materials on site to minimize the extraordinary costs that would be involved in the export, transportation and disposal of a substantial quantity of soils off site, and upon PSI's agreement to pay the costs and expenses to remediatc the BNSF Property. Acquisition of the BNSF Property is necessary for the possible redevelopment plan described in the ENA. H. As a result of the DTSC Consent Order, the Properties must be remediated and a plan for the ultimate remediation of environmental conditions at the Properties will be required. The Parties agree that a cooperative approach to this task is in their mutual hest interests and on the terms and conditions set forth in this Agreement agree to cooperate in connection with the remediation of the Properties as necessary to support a future redevelopment project, including the redevelopment plan described in the ENA, and to address the D1'SC Consent Order for the PSi Property. TIIEREFORE, in consideration of the mutual promises and covenants contained herein, the Parties agree as follows: 1. Regulatory Oversight 1.1 The Parties agree that it would be advantageous to have DTSC act as the lead regulatory agency providing oversight for all remediation activities relating to the Properties (the "Cleanup Project"). The Parties will approach the remediation of the Properties in the context of a "brownfields" project, and CDC and PSI will work cooperatively in negotiating with DTSC for the development and approval of ultimate remediation strategies for the Properties (the "Conceptual Plan"). The Parties agree that the Conceptual Plan shall accommodate the possible redevelopment plan described in the ENA. 1.2 The Parties agree that each will share any correspondence in connection with the Properties received from DTSC or any other environmental regulatory agency within five (5) business days of its receipt. In addition, the Parties agree that they shall jointly approve of any submittal to the DTSC concerning the Conceptual Plan. 2. Preparation of a Remedial Action Plan for the Properties 2.1 As stated above, PSI has been conducting business operations on the Properties. As a result, the DTSC Consent Order has required the further assessment and treatment of soils from the Properties, some of which are currently stockpiled on the PSI 2 SIY5s2902 Property. Approval for the treatment equipment to accomplish these tasks has been obtained from DTSC and the treatment process has commenced. 2.2 The DTSC Consent Order identifies various stages for completion of tasks that generally expand the assessment of environmental conditions at the site to include all of the Properties. The Consent Order anticipates that PSI will propose an ultimate remedial plan (the Corrective Measures Implementation ("CMI")) after this assessment process is complete. 2.3 The Parties agree that CDC's environmental consultant, the firm of Geosyntec, Inc., along with Upper & Varco, LLP, and CDC staff will work jointly with representatives of PSI to prepare the Conceptual Plan that shall be submitted for approval by the DTSC. The Conceptual Plan will be submitted to the DTSC on behalf of the CDC and PSI as soon as commercially reasonable. CDC's costs in this regard are recoverable costs under the Polanco Redevelopment Act, and shall be reimbursed as provided herein in Scction 4.2. 2.4 The Conceptual Plan to be submitted to D"I'SC shall be designed to maximize the efficient re -use of soils at the site, shall propose the use of institutional controls as a result, shall be prepared based on data from the operation of the PSI treatment equipment, and shall accommodate the possible redevelopment plan described in thc ENA. The Parties agree that the goal is to have the DTSC approve the CMI for the Cleanup Project based on thc Conceptual Plan. The Conceptual Plan will put DTSC on notice that the CDC is proceeding using the Polanco Act in order to try and secure as much regulatory flexibility as possible and to enhance the usefulness of the Properties in their "after remediation" condition by the attachment of the immunities available pursuant to the Polanco Act. 2.5 Once the Conceptual Plan is approved by thc DTSC, provided that the CDC has received assurances and security acceptable to the CDC in its sole discretion that PSI will pay for all costs and expenses of the Cleanup Project, the CDC staff will use its best efforts to complete its planned purchase of the BNSF Property so that the Cleanup Project can be implemented for the Properties as a whole in an efficient manner. 3. Immunity Pursuant to the Polanco Redevelopment Act The Parties agree that if the CDC is involved, and the Properties are mitigated as a "brownfields" project with the oversight from the DTSC, the plan preparation and implementation process described above will occur in a method not inconsistent with the Polanco Act. Accordingly, once the DISC has concurred that no further action is required at the Properties, and a Certificate of Completion has been issued, the CDC will receive the immunities granted by the Polanco Act. At that point, PSI may seek to have some portion of the DTSC Consent Order rescinded. PSI will work directly with the DISC to address, and ultimately rescind, the DTSC Consent Order. The CDC will have no obligation under this Agreement to resolve any of the issues presented by thc DTSC Consent Order. 4. Payment of Costs 4.1 The Parties recognize that the CDC has incurred substantial costs and expenses since the issuance of its 60-Day Notice pursuant to thc Polanco Act, including but 3 SD`582902. not limited to, costs to investigate the Properties, to prepare a Property Mitigation Plan for the Properties, as well as legal costs (the "Polanco Past Costs"). In an effort to avoid any additional expenses associated with verifying the amount of the Polanco Past Costs, the Parties agree that the amount of the Polanco Past Costs shall be $180,000, provided, however, that if the redevelopment of the Property contemplated in the ENA occurs, the Polanco Past Costs shall be reduced to $100,000. The Parties agree that the Polanco Past Costs shall be a deduction from the purchase price of the PSI Property at such time as a final agreement between the Parties is reached as contemplated in the ENA, and tither paid to CDC out of the proceeds being paid to PSI from Ilome Depot, or an offset to CDC's own acquisition costs. 4.2 PSI agrees to reimburse the CDC for the consulting costs to develop the Conceptual Plan on the same basis as Polanco Past Costs in an amount not to exceed $35,000. The Parties may mutually agree to increase the not to exceed amount stated in this Agreement. The CDC reserves the right to seek reimbursement from PSI for other costs that it incurs subsequent to the effective date of this Agreement that it may be entitled to recover from PSI pursuant to the Polanco Act. 5. Future Redevelopment of the PSI Property and Valuation Date Agreement It is agreed between the Parties that any future redevelopment of the Properties will be designed to an industrial/commercial standard, as is contemplated in the ENA, so that the clean-up requirements for the Properties will be those appropriate to a commercial or industrial end -user of the Properties. If the anticipated redevelopment project with Home Depot does not materialize, the CDC reserves its rights to consider the commencement of proceedings in eminent domain to acquire the PSI lands directly. In the event that the anticipated redevelopment project with Home Depot does not materialize and the CDC seeks to acquire the PSI property under eminent domain, it is agreed by CDC and the Owner that this Agreement shall serve as a Second Amendment to the Agreement Concerning the Valuation Date for Real Property dated June 15, 2005, between the parties hereto, and that Section 1 of that Agreement entitled "VALUATION DATE" is deleted and replaced in its entirety with the following: VALUATION DATE. PSI and CDC agree that the date of valuation for the Property in either a negotiated sale or condemnation/eminent domain proceeding shall be May 1, 2005. This agreement concerning the date of valuation for the Property shall remain in effect for ninety (90) days after Ilome Depot notifies the City that it is no longer pursuing redevelopment of the Property in cooperation with PSI. 4 SD\S82902.1 6. Revocation and Survival of Claims Either Party may terminate this Agreement upon fifteen (15) days written notice to the other Party. Upon termination of this Agreement, each Party retains all rights it may have under the law, including the Polanco Act, to assert any claims such Party may have against the other. If this Agreement is terminated, the Parties agree that each shall retain all of its rights (and reserve its defenses) to litigate its claims regarding future Polanco Costs, but that, in such an instance, the status of PSI in the event of such a dispute shall be tolled, and its liabilities and obligations shall be determined as though it were a current "owner" as that term is used in the Polanco Act, even if title to the PSI Property has been transferred prior to that time. Agreement for the payment, by Owner to Agency, for the costs identified in Section 4 of this Agreement will survive any such termination, and will be continuing and surviving obligations due and payable on sale of Owners property or as offsets to the Agency's cost for acquisition under eminent domain or the threat thereof. 7. Further Documents The Parties agree to execute such further documents and take such other action as may be reasonably necessary to implement the terms of this Agreement. 8. Effective Dates This Agreement shall he effective as of the first date written above. Unless terminated as provided above, this Agreement will remain effective until the CDC has confirmed in writing to PSI that PSI has completed its obligations under this Agreement or the Agreement is revoked pursuant to Section 6 above. 9. Benefits of Agreement This Agreement shall inure only to the benefit of the Parties to this Agreement. No third parties are intended or unintended beneficiaries of this Agreement unless expressly provided herein. Nothing in this Agreement shall in any way diminish the rights either Party may have to seek to recover its costs associated with the Agreement from any other third parties. 10. No Assignment Neither Party shall assign its rights or benefits under this Agreement without the prior written consent of the other Party. 11. Time Time is of the essence as to all dates and periods of performance contemplated by this Agreement. 5 S0'682902.1 12. Notice Notice shall be provided by mail and facsimile to: CDC: PSI: Mr. Brad Raulston Executive Director, CDC 1243 National City Blvd. National City, CA 91950 And to: Richard Opper, Esq. Opper & Varco, LLP 225 Broadway, Suite 1900 San Diego, CA 92101 Facsimile: (619) 231-5853 Pacific Steel, Inc. 1700 Cleveland Avenue National City, CA 91950 Attention: President Facsimile: 619-477-1222 And to: Allen Haynie, Esq. Latham & Watkins 600 West Broadway, Suite 1800 San Diego, CA 92101 Facsimile: (619) 236-1234 13. No Construction Against Authorship The rule that any ambiguity shall be construed against the author shall not apply to this Agreement. 14. Complete Agreement This Agreement represents the complete Agreement between the Parties with regard to their responsibilities for the remediationhnitigation of hazardous substances at the Properties and cannot be modified except by written amendment. 15. Governing Law This Agreement shall be governed by the law of the State of California. 6 S1Y 5R2902.1 16. Severability Should any part of this Agreement be deemed illegal by a court of competent jurisdiction, that portion of the Agreement shall be severed from the Agreement and shall not affect the legality of the remaining portions of the Agreement. 17. Counterparts This Agreement may he executed in counterparts. A copy of this Agreement bearing the original signature of some parties and the photocopied signatures of other parties shall he enforceable in the same manner as a lolly executed original document. Remainder of Page Intentionally Left Blank 7 SD'582902.I 4.1 IN WITNESS WHEREOF, the undersigned parties have executed this Agreement as of the dates indicated below: COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY Dated: June 5, 2007 By: B Executive Director Dated: PACIFIC STEEL, INC. 1 By: Fernando S Ry Marisela Martinez CFO APPROVED AS TO FORM: Richard G. Opper, Esq. Opper & Varco, I,I.P Counsel for the Community Development Commission of the City of National City Allen D. Haynie, Esq. Latham & Watkins Counsel for Pacific Steel, Inc. Signature Page to Cooperative Remediation Agreement 8 SD\582902.1 RESOLUTION NO. 2007 — 122 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE A COOPERATIVE REMEDIATION AGREEMENT BETWEEN THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY AND PACIFIC STEEL, INC. FOR THE PREPARATION AND REVIEW OF A CONCEPTUAL HAZARDOUS REMEDIATION PLAN WHEREAS, the Community Development Commission of the City of National City (CDC) is implementing the National City Redevelopment Plan; and WHEREAS, on November 21, 2006, the CDC entered into an Exclusive Negotiating Agreement with Home Depot USA, Inc. and Pacific Steel, Inc to consider the feasibility of a redevelopment project on the western side of Cleveland Avenue between Civic Center Drive and 18th Street; and WHEREAS, due diligence activities relating to the proposed project require the preparation and review of a conceptual hazardous remediation plan; and WHEREAS, Pacific Steel, Inc. has agreed to cooperate with the CDC regarding these due diligence efforts related to hazardous materials at the company's expense, not to exceed $35,000; and WHEREAS, Pacific Steel, Inc. has agreed to reimburse the CDC for past costs associated with environmental investigations related to the redevelopment of the property. NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission of National City hereby authorizes the Executive Director to execute a Cooperative Remediation Agreement with Pacific Steel, Inc. for the preparation and review of a conceptual hazardous remediation plan. Said Agreement is on file in the office of the City Clerk. PASSED and ADOPTED this 5th day of June, 2007 APPROVED AS TO FORM: George H. Eiser, 1I1 Legal Counsel on Morrison, Chairman Passed and adopted by the Community Development Commission of the City of National City, California, on June 5, 2007, by the following vote, to -wit: Ayes: Commissioners Natividad, Parra, Ungab, Zarate. Nays: None. Absent: Commissioner Morrison. Abstain: None. AUTHENTICATED BY: RON MORRISON Chairman, Community Development Commission Secretary, Community Development Commission By: Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2007-122 of the Community Development Commission of the City of National City, Califomia, passed and adopted on June 5, 2007. Secretary, Community Development Commission By: Deputy City of National City, California COMMUNITY DEVELOPMENT COMMISSION AGENDA STATEMENT MEETING DATE June 5, 2007 30 AGENDA ITEM NO ITEM TITLE A resolution approving a Cooperative Remediation Agreement with Pacific Steel, Inc. PREPARED BY Patricia Beard - ' Redevelopment Manager DEPARTMENT Community Development Commission EXPLANATION On November 21, 2006 the Community Development Commission ("CDC") approved an Exclusive Negotiating Agreement ("ENA") with Home Depot USA, Inc. and Pacific Steel, Inc. ("PSI"). The conceptual proposal is to develop two retail stores (one being Home Depot) and an office building, plus to redevelop PSI on 15 acres between Civic Drive and 18th Street on the west side of Cleveland Avenue. Currently PSI owns or operates on 9.65 acres within the site. This agreement will allow the CDC, at PSI's expense, to develop a conceptual remediation strategy as part of due diligence for the Home Depot project. CDC staff believes that an advance acceptance of such a conceptual strategy by state regulators at the Department of Toxic Substances Control is key to successful redevelopment. The Agreement also provides for PSI to repay CDC's prior costs of environmental investigation, incurred over the many years during which CDC has pursued remediation and redevelopment of this site. As an incentive, a reduction of said prior costs is allowed in the event the Home Depot project is actually developed. Environmental Review Not applicable. Financial Statement As part of this Agreement (Sections 4.1 and 4.2) PSI agrees to pay past costs of $180,000 spent in environmental investigations on the site. The amount would be reduced to $100,000 should the Home Depot project be developed. CDC agrees to limit the cost of the currently proposed environmental work to $35,000, also to be paid by PSI. Account No 9 STAFF RECOMMENDATION Adopt the resolution. BOARD / COMMISSION RECOMMENDATION Not applicable. ( ATTACHMENTS 1. Proposed Cooperative Amendment Resolution No. City of National City Office of the City Clerk 1243 National City Boulevard, National City, CA 91950-4397 Michael R. Della, CMC - City Clerk (619) 336-4228 Fax: (619) 336-4229 July 11, 2007 Mr. Fernando Solorzano President Pacific Steel, Inc. 1700 Cleveland Avenue National City, CA 91950 Dear Mr. Solorzano, On June 5, 2007, Resolution No. 2007-122 was passed and adopted by the Community Development Commission of National City, authorizing execution of a cooperative remediation agreement with Pacific Steel, Inc. We are enclosing for your records a certified copy of the above Resolution and a fully executed original cooperative remediation agreement. Michael R. Dalla, CMC City Clerk Enclosure cc: Community Development Commission ® Recycled Paper