HomeMy WebLinkAboutTower 999, LLC - Exclusive Negotiating Agreement - 2023EXCLUSIVE NEGOTIATING AGREEMENT
{Tower 999, LLC)
This Exclusive Negotiating Agreement " greement" is dated as of the 1. "' day of January, 2023,
by and between the City of National City ("City"and Tower 999, LLC, a Nevada limited liability
company "De eloper" .
RECITALS
A. The Cityis the owner of certain real property generally located at 921, 925 and 929
National City Boulevard PN's -4 71- 3 and -1- (collectively, the "City Property").
B. Developer is the owner of certain real property generally located at 999 National
City Boulevard (APN -4 1-1 "Developer Property'). The Developer Property is adjacent
to the City Property. The Developer Property and City Property are collectively referred to herein
as.. the "Project Property."'
C. Developer desires to acquire the City Property from the City and thereafter develop
seven -story, mixed -use building with approximately 9,294 square feet of ground floor
retail/commercial space and 127 residential dwelling units (collectively, the "Project') on the
Project Property.
D. The City and Developer are interested in negotiating an agreement "Project
Agreement" pursuant to which the City would sell the City Property to the Developer and the
Developer would construct the Project on the Project Property.
E. The purpose of this Agreement is to establish a period during which Developer and
the City shall exclusively negotiate with one another with respect to: i the Developer's
acquisition o the pity Property from the City; and ii establishment of the terms of a Project
Agreement.
NOW, THEREFORE, Developer and the City, hereby agree as follows:
1. Exclusive Negotiating Period. "Exclusive Negotiating Period" means the period of time
commencing; on the date first set above and ending on July 17, 2023. Notwithstanding the
foregoing, upon the written request of the Developer, the City Manager may, in the sole discretion
of the City Manager, agree to extend the ten of the Exclusive Negotiating otiating Period to October 16,
2023. During the Exclusive Negotiating Period, the City agrees to exclusively negotiate with
Developer and Developer agrees to exclusively negotiate with the City regarding: i the
Developer's potential acquisition of the City Property from the City; and li establishment of the
tens of the Project Agreement. The City and Developer salt negotiate diligently and in good
faith to earn out the obligations of this Agreement dying the Exclusive Negotiating Period. .
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. City Fro.
(a) Negotiation of the Price and Tens of Sale', During the Exclusive Negotiating
Period, the City and Developer shall negotiate the terms of theDeveloper's potential acquisition
of the City Property ftom the City, including without limitation, establishment of the purchase
price payable by the Developer for the City Property. Closing costs, escrow fees, transfer taxes,
and all other costs .shall be paid -by Developer,
(b) Appraisal.. The City's entry into the Project Agreement is contingent upon an
appraisal to determine the fair market value of the City Property, i.e., the amount which a buyer
would pay for the City Property in an arms -length transaction. The appraisal shall be perforrned
during the Exclusive Negotiating Period by an appraiserjointly selected by the City and Developer,
which appraiser shall hold an MI designation from the Appraisal Institute and have at least five
(5) years of experience in appraising commercial properties in San Diego County. The Developer
shall Pay all costs of the appraiser and appraisal. The City and Developer acknowledge that the
sales price payable by the Developer for the City Property may or may not be equal to the appraised
fair market value of the City Property.
(c) Sale - Contingent on Approvals From All Taxing Entities. Any sale of the 'City
Property requires approvals from all of the various taxing entities. Dung the Exclusive
Negotiating Period, Developer shall be responsible for obtaining such approvals from the various
taxing entities.
(d) ]due Dili. During the Exclusive Negotiating Period, the developer and its
representatives, consultants and attorneys shall have access to the City -Property. Developer shall
indemnify and defend the City, and shall hold the City, the City's agents and employees and the
City Property harmless from, any and all actions, losses, costs, damages, claims and/or liabilities,
including but not limited . to, mechanics' and rnaterialinen's liens and attorney fees, proximately
caused by the actions of Developer and/or its consultants, contractors, Subcontractors or agents
upon the Property. The Developer shall not permit any mechanics" liens, m to ial en's liens,
contractors' liens, subcontractors' liens or any other liens 'arising from any acts, omissions or work
done by the Developer or its agents to stand against the City Property. -If any such lien shall be
filed against the City Property, the Developer shall cause the same to be discharged or bonded -by
payment, deposit, bond or otherwise within thirty 3 days after actual notice of such filing, The
Developer's obligations -under this Section 2d shall sturvive the termination or expiration of this
Agreement. The Developer shall not perform any invasive testing at the City Property without the
City's written consent, which consent may be withheld or granted on conditions in the City
Manager's sole discretion. The Developer shall promptly restore the City Property to the condition
the City Property was in immediately prior to any tests or inspections conducted pursuant to this
Section 2c, at the Developer's sole cost and expense. The Developer shall provide the City with
a com lete set of plans, drawings and specifications (`Invasive Testing Plans") that define,- to the
sole satisfaction of the City Manager, the invasive testing to . be performed on the City Property
and the names -of all- environmental and other consultants, contractors, subs ntractors and agents
who will be performing such invasive testing (collectively "Developer's Consultants"). The
Developer shall deliver the names of the Developer's Consultants and the Invasive Testing Plans
to the City concurrently with its request to the City to perform invasive testing. Before Developer
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or any Developer's Consultants enter onto the City Property, Developer shall furnish to City with
evidence of commercial general liability insurance from an insurer authorized to do business in
the State of California, which is reasonably acceptable to the City, insuring against claims for
bodily injtw , death or damage to property in the amount of not less than $4,000,000 and not less
than $2,000,000 in a single occurrence, endorsed to name the City as an additional insured.
Conceptual De elo n ent Proposal.
(a) Anticipated Project Desig . The Project is currently envisioned as a sever. -story,
mixed -use building with approximately 9,294 square feet of ground door retail commercial space
and 127 residential dwelling units. The 127 residential dwelling units are anticipated to be
comprised of sixty-three studio dwelling units, fifty-six one -bedroom dwelling units and
eight two -bedroom dwelling units. Any changes to the Project from what is currently
envisioned,, shall be subject to the City Manager's reasonable discretion.
(b) Affordability. Twenty percent 20% of the dwelling units in the Project shall be
restricted as affordable to households with incomes at or below fifty percent 0% of the area
median income. An additional twenty percent 20% of the dwelling units in the Project shall be
restricted as affordable to households with incomes at or below sixty percent 0% of the area
median income. The size, bedroom counts and quality of finishes and appliances of the affordable
units shall be the sane as the market -rate units and the affordable units shall be distributed evenly
throughout the Project. Sub j eet to change based on the Developer's forthcoming agreement with
Southwestern College to allocate units for student housing, provided, however, any such change
shall be subject to the approval of the City Manager in the City Manager's reasonable discretion.
The affordable units shall be restricted for 55 years via affordability covenants in favor of the City,
which shall be recorded against fee title to the Project Property senior to all monetary liens. The
affordability covenants shall be secured by a deed of trust Made by Developer in favor of the City
recorded against fee title to the Project Property subordinate to all monetary liens. To. the extent
the Project Property is transferred to the Developer and. the Project has not obtained a certificate
of occupancy within two gears from the date of transfer, the City shall have -the right to foreclose
on the .deed of trust.
(c) Developer Deliveries. During the Exclusive Negotiating Period, the Developer
shall provide to the City:
(1) A proposed schedule for development of the Project.
(2) financial pro Forma which contains: i a projected development budget
for the Project, ii a. projected sources and uses analysis, lil a. - rear cash flow analysis,(iv) a
proposed rent schedule and utility allowance schedule, and a projected operating budget for the
Project.
(3) Preliminary evidence (meaning letters of intents from investors and/or
lenders, as applicable) that the Developer is financially viable with proposed sources of equity and
financing required to complete the development of the Project.
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(4) The name and qualifications of the architect which Developer proposes t
use. The City Manager will approve or disapprove the proposed architect. in the sole and absolute
discretion of the City Manager.
(d) Project Refinement. prior to entry into the Project Agreement, the Developer shall
(1) deliver to the City a refined concept schematic design and site plan including elevations; ii
deliver to the City a detailed project proforma; iii deliver to the City proof of the Developer's
financial capacity to complete the Project; and iv provide the City with detailed descriptions of
the responsibilities, schedule, and financial parameters for the design and development of the
pr j et.
(e) Limitation on City Approvals Hereunder. It is anticipated that the project will be
presented to the City Council for approval. The Developer understands, acknowledges and agrees
that the City reserves the right to exercise its sole and absolute discretion as to all matters with
respect to project approval, inclu' ding, but not be limited to the following:
(1) The City has the complete and unfettered discretion to reject the Project or
Project Agreement without explanation or cause.
(2) The City shall not have any duty to convey the City property without at
minimum making all necessary findings and conclusions which the City may be required to make,
including all necessary findings and determinations required under CEQA and all applicable State
and local land use provisions. As to any ratter which the City or City Manager may be required
to exercise its unfettered discretion in advancing the project to completion, neither anything
contained in this Agreement, nor to be contained in the project Agreement shall obligate the City
to exercise its discretion in any particular manner, and any exercise of discretion reserved
hereunder or required by law, shall not be deemed to constitute a breach of the City's duties under
this Agreement.
(3) y its execution of this Agreement, the City is not committing itself to, or
agreeing to undertake, any activity requiring the subsequent exercise of discretion by the City, or
any department thereof including, but not limited to: i approval of the Project or execution of the
Project Agreement; ii the proposal, ainendment, or approval ofan land use regulation goveming
the Project property; iii the -provision of any financial assistance for the development of any
public or private interest in real property; iv the acquisition or disposition of any real property;
or v any other such activity.
(4) This Agreement does not constitute a disposition of property or exercise of
control over property by the City. The City's execution of this Agreement is merely an agreement
to enter into a period of exclusive negotiations according to the terms hereof, reserving final
discretion and approval by the City as to the Project, any proposed use of the Project property, the
Project Agreement and all proceedings and decisions in connection therewith.
4. Costs and Expenses. The Developer shall be responsible for all -costs and expenses in
connection with all activities and negotiations undertaken by the Developer and/or City in
connection with this Agreement. At the time of execution of this Agreement., Developer shall
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deposit $25,000.00 with the City ("Reimbursement Fund"). The initial $25,000.00 deposit to the
Reimbursement Fund shall not be refundable, Upon City's request, the Developer shall make
additional deposits to the Reimbursement Fund to maintain a $25,000.00 balance in the
Reimbursement Fund. Any portion of the Reimbursement Fund above the initial $25,000 which
is not utilized by the City shall be refundable to the Developer. City shall have the right to use the
Reimbursement Fund to pay for City's actual costs, including internal costs and third -party costs,
incurred during the ENA and Project Agreement terms until the transfer of the City Property to the
Developer.
. Approval and Negotiation. of Project Agreement. If both the City and Developer are
satisfied with the design and financial feasibility of the Project, the City and Developer shall seek
in good faith to negotiate and draft a mutually acceptable Project Agreement for the development
of the Project. However, by entering into this Agreement, neither the City, nor the Developer, is
contractually bound to enter into .a Project Agreement.
6. . T`rin.tiniron ome t. Except s this Agreement i extended or amended
atig ee _.._....._.
by mutual Mitten agreement of the parties, if at the end of the Exclusive Negotiating Period, the
City and Developer have not agreed upon a mutually acceptable Project Agreement, then this
Agreement shall terminate, except for any obligations of the Developer set forth herein which
specifically survive terrination of this Agreement.
. Nondiscrimination. Developer shall not discriminate against nor egregate, any person, or
group or persons on account of race, age, sexual orientation., sexual identity,, marital status, color,
religion, sex, handicap, or national origin in the sale, lease, sublease, transfer, use, occupancy,
tenure or enjoyment of the project, nor shall Developer establish or pernnit any such practice or
practices of discrimination or segregation in the selection, location, number, use or occupancy of
tenants, lessees, subtenants, sublessees or vendees of the Project,
. Environmental Requirements. Certain state and local environmental requirements
(including, but without limitation, the Callfomia Environmental Quality Act of .1970, Public
Resources Code Section 21000, et seq.) may be applicable to the proposed Project. Pursuant to
such requirements, certain environmental documents may be required to be prepared and certified
for the proposed Project.
. Notices. All notices under this Agreement shall be in wliting and sent a by certified or
registered. U.S. mail, return receipt requested, (b) ovemight by a nationally recognized overnight
courier such as LAPS overnight or FedEx, or c by personal delivery. All notices shall be effective
upon receipt r' refasal to accept delivery). All notices shall be delivered to the Following
addresses or such other addresses as changed by any party from time to time by written notice to
the other parties hereto;
o City: City of National City
1243 National City Boulevard
National City, CA 91950
Attn: City Manager
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Copy to: Christensen & Spath LLF
401 West A Street, Suite 2250
San Diego, CA 92101
Attu. Walter F . Spath, Esq.
To Developer:. Tower 999,11C
10717 Canino R-Ldz Suite 24
San Diego, CA 92126
10. Entire Agreement, This Agreement constitutes the entire understanding and agreement of
the parties, integrates all of the terns and conditions mentioned herein or incidental hereto, and
supersedes all negotiations or previous agreements between the parties or their predecessors in
interest with respect to all or any part of the subject matter hereof.
11. Amendment of Agreement. No modification, rescission, waiver, release or amendr ent of
any provision of this Agreement shall be made except by a written agreement executed by the City
and Developer.
12. Proiect Agreement to SLipersede this Ageement. To the extent provided in the Project
.Agreement, this Agreement will be superseded by the Project Agreement, if and when the
proposed Project Agreement is executed by Developer and approved and executed by the City in
a manner required by law,
13. Assigriment Prohibited. In no event shall Developer assign or transfer any portion of
Developer's rights or obligations under this Agreement without the prior express written consent
of the City 1 ana.ger, . which consent may be withheld in the City Manager's sole and absolute
discretion.
14. Time of Essence. Time is of the essence of every portion of this Agreement in which tilne
is a material part:
15. Governing Law; Attorne '.,.�Fees. This Agreement shall be construed in accordance with
the laws of the State of California, In' the event of a dispute between the parties arising out of or
in connection with this Agreement, whether or not such dispute results in arbitration or litigation,
the prevailing ply (whether resulting from settlement before or after arbitration or litigation is
commenced) shall he entitled to have .and recover from the losing party reasonable attorneys' fees
and costs of suit incurred by the prevailing party.
16. Limited Confidentialit . The Developer acknowledges vledges and agrees,that the City is a public
entity with a responsibility and., in many cases, legal obligation to conduct its business in a manner
open and available to the public. Accordingly, any information provided by the De eloper to the
City may he disclosed to the public either purposely, inadvertently, or as a result of a public
demand or order
17. Signatures and Counterparts. This Agreement may be executed in .counterparts, each of
which, after all the parties hereto have signed this Agreement, shall he deemed original and such
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counterparts shall constitute the sal e instrument. All individuals signing this Agreement for a
paw which is a corporation, limited liability company, ..uy, partnership or other legal entity, or sigxili
under a power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity,
covenant to the City that they have the necessary capacity and authority to act for, sign and bind
the respective entity or principal on whose behalfthey are signing,
IN WITNESS WHEREOF, the parties hereto have executed this Agreement of the date
first set forth above.
vLoP:
Tower 999, LLC, a Nevada limited liability company
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Its:
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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Attachment A
CITY:
City of National
By:
Brad won, City Manager
APPROVED AS TO FORM:
By:
City Attorney