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HomeMy WebLinkAbout2016 CON PA CarMax Auto Superstores - Option to Purchase - Sweetwater and Bonita Center Way - Amendment #3THIRD AMENDMENT TO OPTION AGREEMENT This THIRD AMENDMENT TO OPTION AGREEMENT (this "Amendment") is entered into as of January 26, 2017 , • by and between THE PARKING AUTHORITY OF THE CITY OF NATIONAL CITY, a public body corporate and politic (the "Authority") and CARMAX AUTO SUPERSTORES CALIFORNIA, LLC, a Virginia limited liability company (the "Optionee"). RECITALS A. The Authority and the Optionee are parties to that certain Option Agreement (CarMax, National City, California) dated as of August 18, 2015, as amended by that certain First Amendment to Option Agreement dated as of May 3, 2016 and that certain Second Amendment to Option Agreement dated as of August 26, 2016 (collectively, the "Original Agreement"), relating to certain real property in National City, California (the "Property"). B. Optionee has been in the process of reviewing the feasibility of the Property for its intended use. C. The parties desire to amend the Original Agreement as hereinafter provided. D. Capitalized terms not otherwise defined in this Amendment shall have the meanings set forth in the Original Agreement. The Original Agreement, as modified by this Amendment, shall be referred to herein as the "Agreement." NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Definitions. (a) The term "Additional Acreage" in Section 5 of the Original Agreement is hereby deleted in its entirety. (b) The term "Minimum Acreage" in Section 5 of the Original Agreement is hereby deleted in its entirety. (c) The term "Property" in Section 5 of the Original Agreement is hereby amended by deleting the initial sentence thereof and inserting the following in lieu thereof: "Property" means that certain real property located at the southwest corner of Sweetwater Road and Bonita Center Road, in the City of National City, California as generally depicted on Exhibit `B" attached hereto (provided that the final size and dimensions of the Property shall be determined pursuant to Section 7(h) of the Agreement), and the Improvements, if any, located thereon. -1- 2. Purchase Price. Section 6(a) of the Original Agreement is hereby amended by deleting said paragraph in its entirety and inserting the following in lieu thereof: (a) Total Purchase Price. Subject to satisfaction of the County Contingency (defined below), the purchase price to be paid by the Optionee for the Property (the "Purchase Price") shall be the greater of (i) One Million Five Hundred Thousand Dollars ($1,500,000.00), or (ii) Four and 40/100 Dollars ($4.40) per square foot. By way of illustration, if the Property is comprised of 7.7 acres, then the Purchase Price for the Property shall be One Million Five Hundred Thousand Dollars ($1,500,000.00). As used herein, the "County Contingency" shall mean that the Authority shall have entered into an amendment with the County of San Diego (the "County") with respect to the Option to Purchase Agreement (as defined in the Section 5 of the Original Agreement), as previously amended, most recently by that certain Ninth Amendment to Option to Purchase Agreement dated as of December 28, 2015, to reduce the purchase price payable by the Authority to the County to release the Easement (as defined in the Section 5 of the Original Agreement), to an amount as determined by the Authority in its discretion. The date for satisfaction of the County Contingency shall be on or before March 1, 2017. The Authority shall promptly notify Optionee if and when such amendment has been executed and the County Contingency has been satisfied. If the County Contingency has not been satisfied on or before March 1, 2017, then unless agreed upon by the parties hereto in writing, the change to the Purchase Price contemplated hereby shall be deemed to have become null and void and of no further force or effect, and Section 6(a) of the Original Agreement shall be deemed to remain and continue in full force and effect. (a) Size and Dimensions of the Property. Section 7(h) of the Original Agreement is hereby amended by deleting the third sentence thereof and inserting the following in lieu thereof: The size and dimensions of the Property shall be determined by the Optionee based upon its good faith determination of the total size of the property needed to accommodate and support the Project which it intends to construct on the Property (including without limitation, any property required for detention or retention ponds), but without including any additional or surplus property which would not be needed for the Project; provided however that the Planning Commission, as the sole decision -making body for the Tentative Parcel Map, has complete discretion to make modifications to, or to disapprove, the Tentative Parcel Map. -2- 3. Obligations of Optionee as to the Residual Parcel. Section 11(g) of the Agreement provides in part that following the Closing Date, Optionee would assume the obligation of the Authority "to install a vegetated buffer along the north side of the trail/walkway pursuant to Section 7 of the Option to Purchase Agreement..." with respect to the Property. Optionee hereby further agrees that following the Closing Date, Optionee would also assume the obligations of the Authority to install the vegetated buffer as required by Section 7.A. of the Option to Purchase Agreement with respect to the Residual Parcel as well as the Property. Such work shall be completed prior to the date on which Optionee has procured a certificate of occupancy for the improvements to be constructed by Optionee on the Property. 4. Exhibit "B". Exhibit "B" of the Original Agreement is hereby revised by deleting Exhibit `B" attached to the Original Agreement and inserting in lieu thereof Exhibit `B" attached hereto. 5. General. Except as expressly amended hereby, the terms and conditions of the Original Agreement shall remain unmodified and in full force and effect. This Amendment may be executed in counterparts, all of which evidence only one agreement, binding on all parties, even though they are not signatories to the same counterpart. If any term, covenant or condition of this Amendment or its application to any person or circumstances shall be held to be invalid or unenforceable, the remainder of this Amendment and the application of such term or provision to other persons or circumstances shall not be affected, and each term hereof shall be valid and enforceable to the fullest extent permitted by law. The terms of this Amendment are binding upon and shall inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns. This Amendment shall be governed by the laws of the State of California. [Signatures continued on next page] -3- IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written. AUTHORITY: PARKING AUTHORITY OF THE CITY OF NATIONAL CLTY By: Ron Morrison Chairman, Parking Authority Approved as to Form: By: l n Str George H. Eiser, III Legal Counsel for the Parking Authority of the City of National City OPTIONEE: CARMAX AUTO SUPERSTORES CALIFORNIA, LLC, a Virginia limited liability company By: K. Dougl oyers, Vice President 1. -4- EXHIBIT "B" GENERAL SITE MAP OF THE PROPERTY See Attached -5- EXHIBIT B PROPERTY AREA = +/- 7.73 AC NTS CARMAX NATIONAL CITY PRELIMINARY SITE PLAN b // RESOLUTION NO. 2016 — 3 RESOLUTION OF THE PARKING AUTHORITY OF THE CITY OF NATIONAL CITY AUTHORIZING THE CHAIRMAN TO EXECUTE THE THIRD AMENDMENT TO THE OPTION AGREEMENT WITH CARMAX AUTO SUPERSTORES CALIFORNIA, LLC, A VIRGINIA LIMITED LIABILITY COMPANY, AMENDING THE TOTAL PURCHASE PRICE TO BE PAID TO $1,500,000 FOR 7.7 ACRES OR $4.40 PER SQUARE FOOT CONTINGENT ON A REDUCTION OF THE SALES PRICE FOR THE COUNTY OF SAN DIEGO OPEN SPACE EASEMENT AND ALLOWING THE SIZE AND DIMENSION OF THE PROPERTY TO BE DETERMINED BY CARMAX BASED UPON THE TOTAL SIZE NEEDED FOR THE CARMAX PROJECT WHEREAS, the Parking Authority of the City of National City ("Authority") and Carmax Auto Superstores California, LLC ("Optionee") are parties to that certain Option Agreement dated as of August 18, 2015, as amended by that certain First Amendment to Option Agreement dated as of May 3, 2016 and that certain Second Amendment to Option Agreement dated as of August 26, 2016 (collectively, the "Original Agreement"), relating to certain real property in National City, California (the "Property"); and WHEREAS, Optionee has been in the process of reviewing the feasibility of the Property for its intended use; and WHEREAS, the parties desire to further amend the agreement; and WHEREAS, a current Appraisal completed by the Dore Group ("Appraisal") on September 19, 2016 confirms that site preparation, mitigation and construction costs are much higher than originally estimated and have an impact on the value of the Property; and WHEREAS, based on the updated Appraisal, CarMax proposes to offer an adjusted purchase price of $1,500,000 for at least 7.7 acres or $4.40 per square foot; and WHEREAS, the Optionee would also like to determine the size and dimensions of the Property purchased upon a good faith determination of the total size of the Property needed to accommodate and support the Project. NOW, THEREFORE, BE IT RESOLVED, that the Parking Authority of the City of National City hereby authorizes the Chairman to execute the Third Amendment with CarMax Auto Superstores California, LLC, a Virginia limited liability company, amending the Total Purchase Price to be paid to $1,500,000 for 7.7 acres or $4.40 per square foot contingent on a reduction of the sales price for the County of San Diego Open Space Easement and allowing the size and dimension of the Property to be determined by CarMax based upon the total size needed for the CarMax Project. The Third Amendment is on file in the office of the City Clerk. [Signature Page to Follow] Resolution No. 2016 — 3 Page Two PASSED and ADOPTED this 6th day of December, 2016. Morrison, Chairman ATTEST: ZIP Leslie Deese, Secretary APPROVED AS TO FORM: George Eiser Interim Legal Counsel Passed and adopted by the Parking Authority of the City of National City, California, on December 6, 2016 by the following vote, to -wit: Ayes: Boardmembers Cano, Mendivil, Morrison, Rios, Sotelo-Solis. Nays: None. Absent: None. Abstain: None. AUTHENTICATED BY: RON MORRISON Chairman, Parking Authority Secretary, Parking Authority By: Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2016-3 of the Parking Authority of the City of National City, California, passed and adopted on December 6, 2016. Secretary, Parking Authority By: Deputy CITY OF NATIONAL CITY, CALIFORNIA PARKING AUTHORITY AGENDA STATEMENT MEETING DATE: December 6, 2016 AGENDA ITEM NO. 2 ITEM TITLE: Resolution of the Parking Authority of the City of National City authorizing the Chairman to execute the Third Amendment to the Option Agreement with CarMax Auto Superstores California, LLC, a Virginia limited liability company, amending the Total Purchase Price to be paid to $1,500,000 for 7.7 acres or $4.40 per square foot contingent on a reduction of the sales price for the County of San Diego Open Space Easement and allowing the size and dimension of the Property to be determined by CarMax based upon the total size needed for the CarMax Project. PREPARED BY: Gregory Rose, Property Agent PHONE: (619) 336-4266 EXPLANATION: See Attachment No. 1 Background Report. APPROVE DEPARTMENT: Development Ha"sing & Economic FINANCIAL STATEMENT: ACCOUNT NO. N/A APPROVED: APPROVED: Finance MIS ENVIRONMENTAL REVIEW: This action is not considered a project as defined by the California Environmental Quality Act (CEQA), and is therefore not subject to CEQA. The Optionee may exercise the option to purchase the property only upon the City certifying compliance with CEQA. ORDINANCE: INTRODUCTION: 1 FINAL ADOPTION: STAFF RECOMMENDATION: Adoption of the Resolution BOARD / COMMISSION RECOMMENDATION: Not Applicable ATTACHMENTS: Attachment No. 1: Background Report Attachment No. 2: Third Amendment to the Option Agreement J\�%o'0 NO aM6-� Attachment No. 1 PARKING AUTHORITY OF THE CITY OF NATIONAL CITY CarMax Third Amendment to the Option Agreement Option Agreement with CarMax The Parking Authority of the City of National City ("Authority") owns a 15.08-acre parcel located at the southwest corner of Sweetwater Road and Plaza Bonita Center Way (APN 564-471-11) ("Property"). The Authority entered into an Option to Purchase Agreement ("Agreement") with CarMax Auto Superstores California, LLC, ("CarMax") on August 18, 2015. CarMax intends to use the Property to build a CarMax Superstore ("Project"), provide for on -site mitigation, and create a remnant parcel of one to two acres to be used for future development by the Authority. The total purchase price in the Original Option Agreement is not to be less than $3,500,000 for 9.5 acres. If the Optionee elected to purchase more than 9.5 acres, the Agreement further describes how the purchase price for additional acreage would be calculated. Carmax Proposes Adjustment to Purchase Price and Size based on Current Appraisal Based on an updated appraisal ("Appraisal"), CarMax recently proposed to offer an adjusted Purchase Price ("Purchase Price") of $1,500,000 for at least 7.7 acres or $4.40 per square foot. A review of the Appraisal confirms that the adjusted Purchase Price being offered by CarMax is consistent with the fair market value of the property. Extensive analysis has been conducted with consultants, the City, Caltrans, and other regulatory agencies to determine that site preparation, mitigation and construction costs are much higher than originally estimated. The higher costs are the main factor in Carmax's proposed adjustment to the purchase price and size for the development of the Project. Purchase of Open Space Easement from the County of San Diego An Open Space Easement ("Easement") granted to the County of San Diego ("County") encumbers and prevents development of the Property. Over 10 years ago, the City negotiated an Option to Purchase the Easement from the County. The Option Price ("Option Price") was negotiated at $3,000,000. The Authority is currently negotiating with the County to lower the Option Price for the Easement to reflect the Easement's current market value as indicated by CarMax's recent Appraisal and to make it feasible for the Authority to consider CarMax's adjusted Purchase Price. The County was presented with an offer of $603,000 for the entire Easement and considered the offer in closed session on November 15, 2016. County staff responded to the Authority with a request for additional time to consider the offer for the Easement. The 10th Amendment to the Easement Option between the Authority and the County, also under consideration by the Authority Board on December 6, 2016, will provide for the additional time needed by the County to consider the Authority's offer. The Purchase Price for CarMax, under the Third Amendment, is contingent on a reduction to the price for the Easement payable to the County ("County's Contingency"). If the County's Contingency has not been satisfied on or before March 1, 2017, the change to the Purchase Price shall be deemed to have become null and void and of no further force or effect, and the purchase price agreed to under Section 6(a) of the Original Agreement shall remain and continue in full force and effect. The Third Amendment would also allow the size and dimension of Project to be determined by CarMax as needed by the Project. Attachment No. 2 THIRD AMENDMENT TO OPTION AGREEMENT This THIRD AMENDMENT TO OPTION AGREEMENT (this "Amendment") is entered into as of , 2016, by and between THE PARKING AUTHORITY OF THE CITY OF NATIONAL CITY, a public body corporate and politic (the "Authority") and CARMAX AUTO SUPERSTORES CALIFORNIA, LLC, a Virginia limited liability company (the "Optionee"). RECITALS A. The Authority and the Optionee are parties to that certain Option Agreement (CarMax, National City, California) dated as of August 18, 2015, as amended by that certain First Amendment to Option Agreement dated as of May 3, 2016 and that certain Second Amendment to Option Agreement dated as of August 26, 2016 (collectively, the "Original Agreement"), relating to certain real property in National City, California (the "Property"). B. Optionee has been in the process of reviewing the feasibility of the Property for its intended use. C. The parties desire to amend the Original Agreement as hereinafter provided. D. Capitalized terms not otherwise defined in this Amendment shall have the meanings set forth in the Original Agreement. The Original Agreement, as modified by this Amendment, shall be referred to herein as the "Agreement." NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Definitions. (a) The term "Additional Acreage" in Section 5 of the Original Agreement is hereby deleted in its entirety. (b) The term "Minimum Acreage" in Section 5 of the Original Agreement is hereby deleted in its entirety. (c) The term "Property" in Section 5 of the Original Agreement is hereby amended by deleting the initial sentence thereof and inserting the following in lieu thereof: "Property" means that certain real property located at the southwest corner of Sweetwater Road and Bonita Center Road, in the City of National City, California as generally depicted on Exhibit `B" attached hereto (provided that the final size and dimensions of the Property shall be determined pursuant to Section 7(h) of the Agreement), and the Improvements, if any, located thereon. -1- Attachment No. 2 2. Purchase Price. Section 6(a) of the Original Agreement is hereby amended by deleting said paragraph in its entirety and inserting the following in lieu thereof: (a) Total Purchase Price. Subject to satisfaction of the County Contingency (defined below), the purchase price to be paid by the Optionee for the Property (the "Purchase Price") shall be the greater of (i) One Million Five Hundred Thousand Dollars ($1,500,000.00), or (ii) Four and 40/100 Dollars ($4.40) per square foot. By way of illustration, if the Property is comprised of 7.7 acres, then the Purchase Price for the Property shall be One Million Five Hundred Thousand Dollars ($1,500,000.00). As used herein, the "County Contingency" shall mean that the Authority shall have entered into an amendment with the County of San Diego (the "County") with respect to the Option to Purchase Agreement (as defined in the Section 5 of the Original Agreement), as previously amended, most recently by that certain Ninth Amendment to Option to Purchase Agreement dated as of December 28, 2015, to reduce the purchase price payable by the Authority to the County to release the Easement (as defined in the Section 5 of the Original Agreement), to an amount as determined by the Authority in its discretion. The date for satisfaction of the County Contingency shall be on or before March 1, 2017. The Authority shall promptly notify Optionee if and when such amendment has been executed and the County Contingency has been satisfied. If the County Contingency has not been satisfied on or before March 1, 2017, then unless agreed upon by the parties hereto in writing, the change to the Purchase Price contemplated hereby shall be deemed to have become null and void and of no further force or effect, and Section 6(a) of the Original Agreement shall be deemed to remain and continue in full force and effect. (a) Size and Dimensions of the Property. Section 7(h) of the Original Agreement is hereby amended by deleting the third sentence thereof and inserting the following in lieu thereof: The size and dimensions of the Property shall be determined by the Optionee based upon its good faith determination of the total size of the property needed to accommodate and support the Project which it intends to construct on the Property (including without limitation, any property required for detention or retention ponds), but without including any additional or surplus property which would not be needed for the Project; provided however that the Planning Commission, as the sole decision -making body for the Tentative Parcel Map, has complete discretion to make modifications to, or to disapprove, the Tentative Parcel Map. -2- Attachment No. 2 3. Obligations of Optionee as to the Residual Parcel. Section 11(g) of the Agreement provides in part that following the Closing Date, Optionee would assume the obligation of the Authority "to install a vegetated buffer along the north side of the trail/walkway pursuant to Section 7 of the Option to Purchase Agreement..." with respect to the Property. Optionee hereby further agrees that following the Closing Date, Optionee would also assume the obligations of the Authority to install the vegetated buffer as required by Section 7.A. of the Option to Purchase Agreement with respect to the Residual Parcel as well as the Property. Such work shall be completed prior to the date on which Optionee has procured a certificate of occupancy for the improvements to be constructed by Optionee on the Property. 4. Exhibit "B". Exhibit "B" of the Original Agreement is hereby revised by deleting Exhibit "B" attached to the Original Agreement and inserting in lieu thereof Exhibit `B" attached hereto. 5. General. Except as expressly amended hereby, the terms and conditions of the Original Agreement shall remain unmodified and in full force and effect. This Amendment may be executed in counterparts, all of which evidence only one agreement, binding on all parties, even though they are not signatories to the same counterpart. If any term, covenant or condition of this Amendment or its application to any person or circumstances shall be held to be invalid or unenforceable, the remainder of this Amendment and the application of such term or provision to other persons or circumstances shall not be affected, and each term hereof shall be valid and enforceable to the fullest extent permitted by law. The terms of this Amendment are binding upon and shall inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns. This Amendment shall be governed by the laws of the State of California. [Signatures continued on next page] -3- Attachment No. 2 IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written. AUTHORITY: PARKING AUTHORITY OF THE CITY OF NATIONAL CITY By: Ron Morrison, Chairman Approved as to Form: By: George Eiser Interim Legal Counsel for the Parking Authority of the City of National City OPTIONEE: CARMAX AUTO SUPERSTORES CALIFORNIA, LLC, a Virginia limited liability company By: K. Douglass Moyers, Vice President -4- Attachment No. 2 EXHIBIT "B" GENERAL SITE MAP OF THE PROPERTY See Attached -5- NTS CARMAX NATIONAL CITY PRELIMINARY SITE PLAN RESOLUTION NO. 2016 — RESOLUTION OF THE PARKING AUTHORITY OF THE CITY OF NATIONAL CITY AUTHORIZING THE CHAIRMAN TO EXECUTE THE THIRD AMENDMENT TO THE OPTION AGREEMENT WITH CARMAX AUTO SUPERSTORES CALIFORNIA, LLC, A VIRGINIA LIMITED LIABILITY COMPANY, AMENDING THE TOTAL PURCHASE PRICE TO BE PAID TO $1,500,000 FOR 7.7 ACRES OR $4.40 PER SQUARE FOOT CONTINGENT ON A REDUCTION OF THE SALES PRICE FOR THE COUNTY OF SAN DIEGO OPEN SPACE EASEMENT AND ALLOWING THE SIZE AND DIMENSION OF THE PROPERTY TO BE DETERMINED BY CARMAX BASED UPON THE TOTAL SIZE NEEDED FOR THE CARMAX PROJECT WHEREAS, the Parking Authority of the City of National City ("Authority") and Carmax Auto Superstores California, LLC ("Optionee") are parties to that certain Option Agreement dated as of August 18, 2015, as amended by that certain First Amendment to Option Agreement dated as of May 3, 2016 and that certain Second Amendment to Option Agreement dated as of August 26, 2016 (collectively, the "Original Agreement"), relating to certain real property in National City, California (the "Property"); and WHEREAS, Optionee has been in the process of reviewing the feasibility of the Property for its intended use; and WHEREAS, the parties desire to further amend the agreement; and WHEREAS, a current Appraisal completed by the Dore Group ("Appraisal") on September 19, 2016 confirms that site preparation, mitigation and construction costs are much higher than originally estimated and have an impact on the value of the Property; and WHEREAS, based on the updated Appraisal, CarMax proposes to offer an adjusted purchase price of $1,500,000 for at least 7.7 acres or $4.40 per square foot; and WHEREAS, the Optionee would also like to determine the size and dimensions of the Property purchased upon a good faith determination of the total size of the Property needed to accommodate and support the Project. NOW, THEREFORE, BE IT RESOLVED, that the Parking Authority of the City of National City hereby authorizes the Chairman to execute the Third Amendment with CarMax Auto Superstores California, LLC, a Virginia limited liability company, amending the Total Purchase Price to be paid to $1,500,000 for 7.7 acres or $4.40 per square foot contingent on a reduction of the sales price for the County of San Diego Open Space Easement and allowing the size and dimension of the Property to be determined by CarMax based upon the total size needed for the CarMax Project. The Third Amendment is on file in the office of the City Clerk. [Signature Page to Follow] Resolution No. 2016 — Page Two PASSED and ADOPTED this 6th day of December, 2016. Ron Morrison, Chairman ATTEST: Leslie Deese, Secretary APPROVED AS TO FORM: George Eiser Interim Legal Counsel CITY OF NATIONAL CITY Office of the City Clerk 1243 National City Blvd., National City, California 91950-4397 619-336-4228 Michael R. Dalla, CMC - City Clerk CARMAX AUTO SUPERSTORES Amendment #3 — Option Agreement Gregory Rose (Housing & Economic Development) Forwarded Copy of Amendment to CarMax Auto Superstores