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HomeMy WebLinkAbout2019 CON PA CarMax Auto Superstores - Sweetwater and Plaza Bonita Center Way - Amendment #6SIXTH AMENDMENT TO OPTION AGREEMENT This SIXTH AMENDMENT TO OPTION AGREEMENT (this "Amendment") is entered into as of February 19, 2019, 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 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, that certain Second Amendment to Option Agreement dated as of August 26, 2016, that certain Third Amendment to Option Agreement dated as of January 26, 2017, that certain Fourth Amendment to Option Agreement dated as of September 5, 2017, and that certain Fifth Amendment to Option Agreement dated as of December 6, 2018 (collectively, the "Original Agreement"), relating to certain real property in National City, California (the "Property"). B. Optionee has been in the process of obtaining all necessary Permits, Approvals, and the Tentative Parcel Map for its intended use. C. The parties desire to amend the Original Agreement as hereinafter provided to extend the Optionee's Permitting Period. 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. Extension of Permitting Period. Section 8(a) of the Original Agreement is hereby amended by deleting the first sentence thereof and inserting the following in lieu thereof: "Optionee shall have until December 4, 2019 to obtain all necessary Permits, Approvals, and the Tentative Parcel Map." 2. Closing. Section 10 of the Original Agreement is hereby amended by deleting the first sentence thereof and inserting the following in lieu thereof: "Notwithstanding anything set forth in this Agreement to the contrary, Closing shall occur two (2) weeks after the expiration of the Permitting Period." 3. 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 CarMax Confidential 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. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written. AUTHORITY: PARKING AUTHORITY OF THE OF NATIONA CITY By: Alejandra Sotelo-Solis, Chairwoman Approved as to Form: By: r Le rris-Jones ounsel for the City of National City OPTIONEE: city CARMAX AUTO SUPERSTORES CALIFORNIA, LLC, a Virginia limited liability company By: K. Doug oyers, Vice President -2- 4828-5721-1269, v. 1 CarMax Confidential RESOLUTION NO. 2019 — 1 RESOLUTION OF THE PARKING AUTHORITY OF THE CITY OF NATIONAL CITY AUTHORIZING THE CHAIRWOMAN TO EXECUTE THE SIXTH AMENDMENT TO THE OPTION TO PURCHASE AGREEMENT BETWEEN THE CITY OF NATIONAL CITY AND CARMAX AUTO SUPERSTORES CALIFORNIA, LLC, A VIRGINIA LIMITED LIABILITY COMPANY, EXTENDING THE PERMITTING PERIOD FROM FEBRUARY 25, 2019 TO DECEMBER 4, 2019, AND HAVING THE ESCROW CLOSING OCCUR TWO WEEKS AFTER THE EXPIRATION OF THE PERMITTING PERIOD WHEREAS, the Parking Authority of the City of National City (the "Authority") owns a 15.08-acre parcel located at the southwest corner of Sweetwater Road and Plaza Bonita Center Way (APN 564-471-11); and WHEREAS, the Authority entered into an Option to Purchase Agreement ("Original Agreement") with CarMax Auto Superstores California, LLC, ("CarMax") on August 18, 2015; and WHEREAS, CarMax intended to use part of the Property to build a CarMax Superstore ("Project"), provide for on -site mitigation, and create a remnant parcel to be used for future development by the Authority; and WHEREAS, the total purchase price in the Original Agreement was not to be less than $3,500,000 for 9.5 acres; and WHEREAS, on May 3, 2016, the Authority adopted Resolution No. 2016-1 entering into a First Amendment to the Option Agreement to extend the Feasibility Period through August 15, 2016, and WHEREAS, the Second Amendment to the Option Agreement was approved and executed in August 2016 to extend CarMax's Feasibility Period; and WHEREAS, on December 6, 2016, the Parking Authority adopted Resolution No. 2016-3 approving the Third Amendment to the Option Agreement amending the total purchase price 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; and WHEREAS, on September 5, 2017, the Parking Authority adopted Resolution No. 2017-2 approving the Fourth Amendment to the Option Agreement, which reduced the sales price to $1,500,000 for 7.63 acres, giving CarMax until September 14, 2018 to obtain all necessary permits, approvals, and the tentative parcel map, and CarMax would have the right to extend the Permitting Period by up to three (3) successive one (1) month periods, upon prior written notice to the Authority; and WHEREAS, on December 6, 2018, the City Manager executed the Fifth Amendment, as authorized by the Fourth Amendment, to extend the Permitting Period to February 25, 2019; and PASSED and ADOPTED this 19th day of February, 2019. Alejandr'a Soteld-Solis, Chairwoman Resolution 2019 — 1 Page Two WHEREAS, the parties desire to enter into a Sixth Amendment to the Option Agreement to extend the Permitting Period from February 25, 2019 to December 4, 2019 with the close of escrow occurring two (2) weeks after the expiration of the Permitting Period, or December 28, 2019. NOW, THEREFORE, BE IT RESOLVED that the Parking Authority of the City of National City approves and authorizing the Chairman to execute a Sixth Amendment to the Option to Purchase Agreement between the Parking Authority of the City of National City and CarMax Auto Superstores California, LLC, a Virginia limited liability company, extending the permitting period from February 25, 2019 to December 4, 2019, and having the Escrow closing occur two weeks after the expiration of the permitting period. The Sixth Amendment to the Option Agreement is on file in the Office of the City Clerk. ATTEST: �uQ Leslie Deese, Secretary APPROVED AS TO FORM: Passed and adopted by the Parking Authority of the City of National City, California, on February 19, 2019 by the following vote, to -wit: Ayes: Boardmembers Cano, Morrison, Quintero, Rios, Sotelo-Solis. Nays: None. Absent: None. Abstain: None. AUTHENTICATED BY: ALEJANDRA SOTELO-SOLIS By: Chairwoman, Parking Authority LESLIE DEESE Secretary, Parking Authority Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2019-1 of the Parking Authority of the City of National City, California, passed and adopted on February 19, 2019 c1...=.11.<_ Secretary, Parking Authority By: Deputy CITY OF NATIONAL CITY, CALIFORNIA PARKING AUTHORITY AGENDA STATEMENT MEETING DATE: February 19, 2019 AGENDA ITEM NO. 2 ITEM TITLE: Resolution of the Parking Authority of the City of National City approving and authorizing the Chairwoman to execute a Sixth Amendment to the Option to Purchase Agreement between the Parking Authority and CarMax Auto Superstores California, LLC, a Virginia limited liability company, extending the permitting period from February 25, 2019 to December 4, 2019, and having the Escrow closing occur two weeks after the expiration of the permitting period. DEPARTMENT: Housing & Economic PREPARED BY: Gregory Rose, Property Agent D e ment APPROVE 'eY: PHONE: i(619) 336-4266 EXPLANATION: See Attachment No. 1 Background Report. FINANCIAL STATEMENT: ACCOUNT NO. N/APPROVED: MIS See Attachment No. 1 for Financial Explanation APPROVED: Zg4( Finance ENVIRONMENTAL REVIEW: A Sixth Amendment to the Option Agreement 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 propert only upon the City certifying compliance with CEQA. ORDINANCE: INTRODUCTION: FINAL ADOPTION: STAFF RECOMMENDATION: Adopt the Resolution. BOARD / COMMISSION RECOMMENDATION: Not Applicable ATTACHMENTS: 1: Background Report 2: Sixth Amendment to the Option Agreement Attachment No. 1 PARKING AUTHORITY OF THE CITY OF NATIONAL CITY CarMax Sixth 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). The Authority entered into an Option to Purchase Agreement ("Original Agreement") with CarMax Auto Superstores California, LLC, ("CarMax") on August 18, 2015. CarMax intended to use part of the Property to build a CarMax Superstore ("Project"), provide for on -site mitigation, and create a remnant parcel to be used for future development by the Authority. The total purchase price in the Original 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. The Original Agreement was amended based on an updated appraisal ("Appraisal"), to a Purchase Price ("Purchase Price") of $1,500,000 for 7.63 acres ("Property"). A review of the Appraisal confirmed that the adjusted Purchase Price 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 were the main factor in CarMax's adjustment to the purchase price and size for the development of the Project. Under the Agreement, the Parking Authority would deliver the property free and clear of any encumbrances. At closing the Parking Authority will make immediately available funds in an amount equal to $1,500,000 (i.e., that amount, when added to the Purchase Price, permitting the Authority to purchase the Easement from the County). An Open Space Easement ("Easement") granted to the County of San Diego ("County") encumbers and prevents development of the Property. Over 11 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 $1,500,000 proceeds from the sale of the Property would go towards purchase of the Easement. There is a 3.05 acre residual parcel ("Residual Parcel") created from the CarMax development that can be sold by the Authority. Staff is currently working with a hotel developer to purchase the Residual Parcel in order to make up the $1,500,000 (plus $125,000 for closing costs & broker fees) difference needed to purchase the Easement. In case the Residual Parcel is not sold concurrently to a third party by the close of escrow with CarMax, the Parking Authority could consider temporarily committing $1,500,000 plus closing costs (estimated at $125,000) to close escrow with CarMax and remove the Easement if the sale of the Residual Parcel did not happen concurrently with the sale of the CarMax Property. Staff would return to the Authority with a request for the appropriation at least three months before the close of Escrow with CarMax if the residual parcel remains unsold. The Parking Authority would then be reimbursed the expense with the sale of the Residual Parcel which has an estimated value of $1,800,000. CarMax Proposes Changes to the Permitting Period and Closing CarMax is currently working with the Water Quality Control Board to obtain their approval, but it will probably take most of 2019 to get their approval. All other regulatory agency approvals have been obtained. The Sixth Amendment would extend the permitting period from February 25, 2019 until December 4, 2019 giving CarMax time to obtain all necessary Permits, Approvals, and the Tentative Parcel Map. Closing shall occur two (2) weeks after the expiration of the Permitting Period. Attachment No. 2 SIXTH AMENDMENT TO OPTION AGREEMENT This SIXTH AMENDMENT TO OPTION AGREEMENT (this "Amendment") is entered into as of February 19, 2019, 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 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, that certain Second Amendment to Option Agreement dated as of August 26, 2016, that certain Third Amendment to Option Agreement dated as of January 26, 2017, that certain Fourth Amendment to Option Agreement dated as of September 5, 2017, and that certain Fifth Amendment to Option Agreement dated as of December 6, 2018 (collectively, the "Original Agreement"), relating to certain real property in National City, California (the "Property"). B. Optionee has been in the process of obtaining all necessary Permits, Approvals, and the Tentative Parcel Map for its intended use. C. The parties desire to amend the Original Agreement as hereinafter provided to extend the Optionee's Permitting Period. 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. Extension of Permitting Period. Section 8(a) of the Original Agreement is hereby amended by deleting the first sentence thereof and inserting the following in lieu thereof: "Optionee shall have until December 4, 2019 to obtain all necessary Permits, Approvals, and the Tentative Parcel Map." 2. Closing. Section 10 of the Original Agreement is hereby amended by deleting the first sentence thereof and inserting the following in lieu thereof: "Notwithstanding anything set forth in this Agreement to the contrary, Closing shall occur two (2) weeks after the expiration of the Permitting Period." 3. 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 CarMax Confidential Attachment No. 2 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. 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: Alejandra Sotelo-Solis, Chairwoman Approved as to Form: By: Angil P. Morris -Jones 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. Doug S oyers, Vice President 4828-5721-1269, v. 1 CarMax Confidential RESOLUTION NO. 2019 — RESOLUTION OF THE PARKING AUTHORITY OF THE CITY OF NATIONAL CITY AUTHORIZING THE CHAIRWOMAN TO EXECUTE THE SIXTH AMENDMENT TO THE OPTION TO PURCHASE AGREEMENT BETWEEN THE CITY OF NATIONAL CITY AND CARMAX AUTO SUPERSTORES CALIFORNIA, LLC, A VIRGINIA LIMITED LIABILITY COMPANY, EXTENDING THE PERMITTING PERIOD FROM FEBRUARY 25, 2019 TO DECEMBER 4, 2019, AND HAVING THE ESCROW CLOSING OCCUR TWO WEEKS AFTER THE EXPIRATION OF THE PERMITTING PERIOD WHEREAS, the Parking Authority of the City of National City (the "Authority") owns a 15.08-acre parcel located at the southwest corner of Sweetwater Road and Plaza Bonita Center Way (APN 564-471-11); and WHEREAS, the Authority entered into an Option to Purchase Agreement ("Original Agreement") with CarMax Auto Superstores California, LLC, ("CarMax") on August 18, 2015; and WHEREAS, CarMax intended to use part of the Property to build a CarMax Superstore ("Project"), provide for on -site mitigation, and create a remnant parcel to be used for future development by the Authority; and WHEREAS, the total purchase price in the Original Agreement was not to be less than $3,500,000 for 9.5 acres; and WHEREAS, on May 3, 2016, the Authority adopted Resolution No. 2016-1 entering into a First Amendment to the Option Agreement to extend the Feasibility Period through August 15, 2016, and WHEREAS, the Second Amendment to the Option Agreement was approved and executed in August 2016 to extend CarMax's Feasibility Period; and WHEREAS, on December 6, 2016, the Parking Authority adopted Resolution No. 2016-3 approving the Third Amendment to the Option Agreement amending the total purchase price 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; and WHEREAS, on September 5, 2017, the Parking Authority adopted Resolution No. 2017-2 approving the Fourth Amendment to the Option Agreement, which reduced the sales price to $1,500,000 for 7.63 acres, giving CarMax until September 14, 2018 to obtain all necessary permits, approvals, and the tentative parcel map, and CarMax would have the right to extend the Permitting Period by up to three (3) successive one (1) month periods, upon prior written notice to the Authority; and WHEREAS, on December 6, 2018, the City Manager executed the Fifth Amendment, as authorized by the Fourth Amendment, to extend the Permitting Period to February 25, 2019; and Resolution 2019 — Page Two WHEREAS, the parties desire to enter into a Sixth Amendment to the Option Agreement to extend the Permitting Period from February 25, 2019 to December 4, 2019 with the close of escrow occurring two (2) weeks after the expiration of the Permitting Period, or December 28, 2019. NOW, THEREFORE, BE IT RESOLVED that the Parking Authority of the City of National City approves and authorizing the Chairman to execute a Sixth Amendment to the Option to Purchase Agreement between the Parking Authority of the City of National City and CarMax Auto Superstores California, LLC, a Virginia limited liability company, extending the permitting period from February 25, 2019 to December 4, 2019, and having the Escrow closing occur two weeks after the expiration of the permitting period. The Sixth Amendment to the Option Agreement is on file in the Office of the City Clerk. PASSED and ADOPTED this 19th day of February, 2019. Alejandra Sotelo-Solis, Chairwoman ATTEST: Leslie Deese, Secretary APPROVED AS TO FORM: Angil P. Morris -Jones 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 Option to Purchase Sweetwater Road and Bonita Center Way, APN No. 564-471-11 Amendment #6 Greg Rose (Housing & Economic Development) forwarded a duplicate original Agreement to CarMax Auto Superstores.