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HomeMy WebLinkAboutD-3 Charles Company ENAJOINT CITY COUNCIL AND SUCCESSOR AGENCY ITEM D-3 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: TROY L. BUTZLAFF, ICMA-CM, CITY MANAGER FROM: KURT CHRISTIANSEN, FAICP, DIRECTOR OF COMMUNITY AND ECONOMIC DEVELOPMENT DATE: DECEMBER 5, 2016 SUBJECT: CONSIDERATION OF AN EXCLUSIVE NEGOTIATING AGREEMENT BETWEEN THE CITY OF AZUSA, THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA WITH CHARLES COMPANY, FOR DEVELOPMENT OF A FOUR STORY MIXED USE PROJECT CONSISTING OF SIXTY-SIX (66) RESIDENTIAL UNITS AND APPROXIMATELY 10,800 SQUARE FEET OF RETAIL DEVELOPMENT LOCATED AT 604, 622 and 624-630 NORTH SAN GABRIEL, AZUSA. SUMMARY: The City and the Successor Agency to the former Redevelopment Agency are owners of several parcels located at 604, 622, and 624-630 North San Gabriel, Azusa (“Property”). Pursuant to the Long Range Property Management Plan the Successor Agency has listed the property for sale and has received a proposal from Charles Company (“Developer”) for the development of mixed use residential/commercial project. Staff is recommending that the City Council and Successor Agency enter into an Exclusive Negotiating Agreement (“ENA”) with Developer, to allow the parties to establish the negotiating parameters, terms and conditions for the development of the Property. RECOMMENDATION: Staff recommends that the City Council take the following actions: 1)Approve an Exclusive Negotiating Agreement (“ENA”) with Charles Company providing time for the parties to negotiate an agreement for the sale and development of the Property; and 2) Authorize the Mayor and Chair of the Successor Agency to execute the ENA, in a form acceptable to the City Attorney, on behalf of the City and the Successor Agency. APPROVED COUNCIL MEETING 12/5/2016 Consideration of ENA with Charles Company December 5, 2016 Page 2 DISCUSSION: The City and Successor Agency are interested in developing the Property as a mixed use residential/commercial project. The Developer has proposed the redevelopment of the Property with a four story mixed use project consisting of sixty-six (66) residential units and approximately 10,800 square feet of commercial space. The commercial space shall include a 2,200 square foot bank with associated drive thru and 8,600 of general service retail (“Project”). The proposed residential mix includes studio units 5%, one bedroom units 34%, two bedroom units 47% and three bedroom units 14%. By entering into the ENA, the City, the Successor Agency and the Developer intend to establish a specific, limited period of time to identify potential development sites and negotiate an agreement between them governing the potential acquisition of the Property and development of the Project, all subject to mutually agreeable terms, conditions, covenants, restrictions and agreements to be negotiated and documented in a future disposition and development agreement or Purchase and Sale Agreement. The future agreement for the sale and development of the Property is anticipated to cause the Successor Agency to sell the Successor Agency land to Developer and the City to sell the City land subject to development obligations. The City shall enforce all rights and obligations associated with the development of the Successor Agency land after the close of escrow to Developer. The parties will have 180 days to review the proposed project and bring forward for the Successor Agency board and City Council, consideration of an agreement for the sale and development of the Property. The ENA includes the potential for two 90-day extensions, for a total maximum term of 360 days. During that term, the Developer shall proceed diligently and in good faith to develop and present to the City and Successor Agency staff and, subsequently, to the City and Successor Agency governing bodies, for review, all of the following:  A proposed complete conceptual development plan for the Project on the Property that describes and depicts: (1) the location and placement of proposed buildings and (2) the architecture and elevations of the proposed buildings;  Proposed zoning change or changes to the City’s General Plan, if any, necessary to accommodate the Project on the Property;  A list of potential users or tenants and anticipated lease rates for the Property, as developed with the Project;  A proposed time schedule and cost estimates for the development of the Project on the Property;  A proposed financing plan identifying financing sources for all private and public improvements proposed for the Project; and  A preliminary financial analysis demonstrating the costs and benefits to the City and the City regarding all construction, maintenance and operations of all proposed public improvements, the costs of additional or increased levels of public services and any new public revenues anticipated to be generated by the Project. This project is exempt from the California Environmental Quality Act (CEQA), Section 15061(3), based on the general rule that CEQA applies only to projects which have the potential for causing a significant impact on the environment. The City is entering into an exclusive negotiation agreement with the developer to discuss the potential development of the Block 37 site. There are no rights to development given to the developer. It can be seen with certainty that there will be no possibility that the agreement may have a significant effect on the environment. Consideration of ENA with Charles Company December 5, 2016 Page 3 FISCAL IMPACT: It is anticipated that there will be limited financial impact to the City and Successor Agency as a result of entering into the ENA. The Developer shall make a thirty thousand dollar ($30,000) deposit with the City to cover Staff and consultant time associated with the ENA. Prepared by: Reviewed and Approved: Kurt E. Christiansen, AICP Louie F. Lacasella Economic and Community Development Director Management Analyst Reviewed and Approved: Troy L. Butzlaff, ICMA-CM City Manager Attachments: 1) Exclusive Negotiating Agreement with Charles Company 45635.01000\29283536.2 THE CITY OF AZUSA DEVELOPMENT COOPERATION AGREEMENT (Charles Company – Block 37) THIS DEVELOPMENT COOPERATION AGREEMENT (“Agreement”) is dated as of _______, 2016, for reference purposes only, and is entered into by and between the City of Azusa, a public body corporate and politic (“City”), the Successor Agency to the Redevelopment Agency of the City of Azusa (“Successor Agency”) and Charles Company, a California corporation (“Developer”), to provide a specified period of time to identify specific parcels for potential development within the City of Azusa. The City, Successor Agency and the Developer are sometimes referred to in this Agreement individually, as a “Party” and, collectively, as the “Parties.” This Agreement is entered into by the Parties with reference to the following recited facts (each, a “Recital”): RECITALS A. The City is the owner of that certain real property located at 604 and 622 North San Gabriel, Azusa (APN 8611-004-907, 912, 913) and more specifically described in Exhibit A-1 (“City Land”). The Successor Agency is the owner of that certain real property located at 624-630 North San Gabriel, Azusa (APN 8611-004-914) and more specifically described in Exhibit A-2 (Successor Agency Land”). The City Land and Successor Agency Land are collectively referred to as the “Property”; and B. Developer has presented the City with a proposed Project (as defined below) that the City and Successor Agency are interested in exploring as the potential development of within the City; and C. The Developer has proposed the redevelopment of the Property with a four story mixed use projecting consisting of sixty-six (66) residential units and approximately 10,800 square feet of commercial space. The commercial space shall include a 2,200 square foot bank with associated drive thru and 8,600 of general service retail, as generally depicted in the conceptual site plan attached to this Agreement as Exhibit “B” and incorporated into this Agreement by this reference (“Project”). The proposed residential mix includes studio units 5%, one bedroom units 34%, two bedroom units 47% and three bedroom units 14%. D. The intent of the City, the Successor Agency and the Developer in entering into this Agreement is to establish a specific, limited period of time to identify potential development sites and negotiate an agreement between them governing the potential acquisition of the Property and development of the Project, all subject to mutually agreeable terms, conditions, covenants, restrictions and agreements to be negotiated and documented in a future disposition and development agreement or Purchase and Sale Agreement (collectively “DDA”); and E. The DDA is anticipated to cause the Successor Agency to sell the Successor Agency Land to Developer and the City to sell the City Land subject to development obligations. The City shall enforce all rights and obligations associated with the development of the Successor Agency Land after the close of escrow to Developer. . NOW, THEREFORE, IN VIEW OF THE GOALS AND OBJECTIVES OF THE CITY AND SUCCESSOR AGENCY RELATING TO THE SALE AND DEVELOPMENT OF PROPERTY AND THE PROMISES OF THE CITY, SUCCESSOR AGENCY AND THE DEVELOPER SET FORTH IN 45635.01000\29283536.2 THIS AGREEMENT, THE CITY, SUCCESSOR AGENCY AND THE DEVELOPER AGREE, AS FOLLOWS: 1. Incorporation of Recitals. The Recitals of fact set forth above are true and correct and are incorporated into this Agreement, in their entirety, by this reference. 2. Deposits. (a) Concurrent with the Developer’s execution of this Agreement, the Developer shall provide to the City a deposit in the amount of Thirty Thousand Dollars ($30,000) in immediately available funds (“Initial Deposit”) to ensure that the Developer will proceed diligently and in good faith to fulfill its obligations under this Agreement during the Negotiation Period (as defined in Section 3(a)), to defray certain costs of the City in pursuing the contemplated negotiations with the Developer during the Negotiation Period, pursuant to this Agreement. The City shall charge all costs (including staff time, consultant fees and attorney fees associated with review and implementation of this Agreement or preparing the DDA) against the Initial Deposit (and Extension Deposit pursuant to Section 2(b) below, as applicable). At the termination of this Agreement, any remaining funds shall, at the Developer’s option, either be applied to the purchase price of the identified property or returned to the Developer. Developer acknowledges that the Initial Deposit (and any Extension Deposit, pursuant to Section 2(b) below) shall be in addition to those fees and expenses required by the City for any permit, other required entitlement or Project processing. A portion of the Initial Deposit in an amount equal to One Hundred Dollars ($100) shall immediately become non-refundable upon Developer’s transfer of the Initial Deposit to the City under this Agreement as consideration for the City’s agreement to dedicate resources to identifying potential development property. Upon each extension of the Negotiation Period occurring pursuant to the provisions of Section 3(b), if any, the Developer shall provide to the City an additional deposit of Ten Thousand Dollars ($10,000) in immediately available funds on the first day of any extension of the Negotiation Period occurring pursuant to the provisions of Section 3(b) (each, an “Extension Deposit”). Each Extension Deposit is intended to ensure that the Developer will proceed diligently and in good faith to fulfill its obligations under this Agreement during any extension of the Negotiation Period, as part of the consideration for the City’s agreement not to negotiate with other persons during any such extension of the Negotiation Period, and to defray certain costs of the City in pursuing the contemplated negotiations with the Developer during any such extension of the Negotiation Period, pursuant to this Agreement. At the termination of this Agreement, any remaining funds from an Extension Deposit shall be refundable to the Developer as provided in Section 2(a), above. 3. Term of Agreement. (a) The rights and duties of the City, Successor Agency and the Developer established by this Agreement shall commence on the first date on which all of the following have occurred (the “Effective Date”): (1) execution of this Agreement by the authorized representative(s) of the Developer and delivery of such executed Agreement to the City, (2) payment of the Initial Deposit to the City by the Developer, in accordance with Section 2(a), (3) approval of this Agreement by the City governing body and execution of this Agreement by the authorized representative(s) of the City (4) approval of this Agreement by the Successor Agency governing body and execution of this Agreement by the authorized representative(s) of the Successor Agency and (5) delivery of such fully executed Agreement to the Developer, the exact date of which shall be mutually agreed to by the Parties promptly after Developer’s receipt of the fully executed Agreement from the City as evidenced in writing signed by their respective authorized representatives. The City shall deliver a fully executed counterpart original of this Agreement to the Developer, within ten (10) calendar days following the City and Successor Agency governing body’s approval of this Agreement, if approved, and the execution of this Agreement by the authorized representative(s) of the City and Successor Agency. This Agreement shall continue in effect 45635.01000\29283536.2 for the period of one hundred eighty (180) consecutive calendar days immediately following the Effective Date (“Negotiation Period”), subject to the limitations of Sections 3(b). (b) The Negotiation Period may be extended upon the mutual written agreement of the City Manager and the Developer for no more than two (2) additional consecutive ninety (90) calendar day periods. Notwithstanding the immediately preceding sentence or any other part of this Agreement, in no event shall the Negotiation Period exceed three hundred sixty (360) consecutive calendar days from the Effective Date. (c) This Agreement shall automatically expire and be of no further force or effect at the end of the Negotiation Period, unless, prior to that time, the City, Successor Agency and the Developer approve and execute a DDA acceptable to the City, Successor Agency and the Developer, in their respective sole and absolute discretion, in which case this Agreement will terminate on the effective date of such DDA. 4. Obligations of Developer. During the Negotiation Period following the identification of the Property, the Developer shall proceed diligently and in good faith to develop and present to City and Successor Agency staff and, subsequently, to the City and Successor Agency governing bodies, for review, all of the following: (a) A proposed complete conceptual development plan for the Project on the Property that describes and depicts: (1) the location and placement of proposed buildings and (2) the architecture and elevations of the proposed buildings; (b) Proposed zoning change or changes to the City’s General Plan, if any, necessary to accommodate the Project on the Property; (c) A list of potential users or tenants and anticipated lease rates for the Property, as developed with the Project; (d) A proposed time schedule and cost estimates for the development of the Project on the Property; (e) A proposed financing plan identifying financing sources for all private and public improvements proposed for the Project; and (f) A preliminary financial analysis demonstrating the costs and benefits to the City and the City regarding all construction, maintenance and operations of all proposed public improvements, the costs of additional or increased levels of public services and any new public revenues anticipated to be generated by the Project. 5. Negotiation of DDA. (a) During the Negotiation Period, the City, Successor Agency and the Developer shall proceed diligently and in good faith to negotiate a DDA between them. The City, Successor Agency and the Developer shall generally cooperate with each other and supply such available documents and information as may be reasonably requested by the other to facilitate the conduct of the negotiations. The City, Successor Agency and the Developer shall exercise commercially reasonable efforts to complete discussions relating to the terms and conditions of a DDA and such other matters, as may be mutually acceptable to the Parties, in their respective sole discretion. The exact terms and conditions of a DDA, if 45635.01000\29283536.2 any, shall be determined during the course of these negotiations. Nothing in this Agreement shall be interpreted or construed to be a representation or agreement by either the City, the Successor Agency or the Developer that a mutually acceptable DDA will be produced from negotiations under this Agreement. Nothing in this Agreement shall impose any obligation on either Party to agree to a definitive DDA in the future. Nothing in this Agreement shall be interpreted or construed to be a guaranty, warranty or representation that any proposed DDA that may be negotiated by City and Successor Agency staff and the Developer will be approved by the City or Successor Agency governing body. The Developer acknowledges and agrees that the City’s and the Successor Agency’s consideration of any DDA is subject to the sole and absolute discretion of the City and Successor Agency governing body and all legally required public hearings, public meetings, notices, factual findings and other determinations required by law. (b) Developer acknowledges that the City is considering the creation of a Community Facilities District which may result in an assessment against residential properties if adopted by the City Council following all legally required proceedings. If applicable, upon agreement of the terms of the assessment, Developer shall support the creation of a Community Facilities District (CFD). The creation of the CFD shall be at no cost to Developer. 6. Restrictions Against Change in Ownership, Management and Control of Developer and Assignment of Agreement. (a) The qualifications and identity of the Developer and its principals are of particular concern to the City and Successor Agency. It is because of these qualifications and identity that the City and Successor Agency have entered into this Agreement with the Developer. During the Negotiation Period, no voluntary or involuntary successor-in-interest of the Developer shall acquire any rights or powers under this Agreement, except as provided in Section 6(c). (b) The Developer shall promptly notify the City and Successor Agency in writing of any and all changes whatsoever in the identity of the business entities or individuals either comprising or in Control (as defined in Section 6(d)) of the Developer, as well as any and all changes in the interest or the degree of Control of the Developer by any such person, of which information the Developer or any of its shareholders, partners, members, directors, managers or officers are notified or may otherwise have knowledge or information. Upon the occurrence of any significant or material change, whether voluntary or involuntary, in ownership, management or Control of the Developer (other than such changes occasioned by the death or incapacity of any individual) that has not been approved by the City and the Successor Agency, prior to the time of such change, the City or the Successor Agency may terminate this Agreement, without liability to the Developer or any other person and refund any remaining deposit funds provided by the Developer to the pursuant to Section 2(a), above, by sending written notice of termination to the Developer, referencing this Section 6(b). (c) The Developer may assign its rights under this Agreement to an Affiliate (as defined in Section 6(d)), on the condition that such Affiliate expressly assumes all of the obligations of the Developer under this Agreement in a writing reasonably satisfactory to the City, and further provided that ________, an individual, shall, at all times, Control any such Affiliate and be responsible and obligated directly to the City and Successor Agency for performance of the Developer’s obligations under this Agreement. (d) For the purposes of this Agreement, the term “Affiliate” means any person, directly or indirectly, controlling or controlled by or under common control with the Developer, whether 45635.01000\29283536.2 by direct or indirect ownership of equity interests, by contract, or otherwise. For the purposes of this agreement, “Control” means possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether by ownership of equity interests, by contract, or otherwise. 7. Obligations to Review Draft Agreements and Attend Meetings. (a) During the Negotiation Period, each Party shall diligently review and comment on draft versions of a DDA provided by the other Party and, if the terms and conditions of such a DDA are agreed upon between City staff, Successor Agency staff and the Developer, the Developer shall submit the DDA fully executed by the authorized representative(s) of the Developer to the City Manager for submission to the City and Successor Agency governing bodies for review and approval or disapproval. Any future DDA shall consist of terms and conditions acceptable to the Developer, the City governing body, and the Successor Agency governing body in their respective sole and absolute discretion. (b) During the Negotiation Period, the Developer shall also keep City and Successor Agency staff advised on the progress of the Developer in performing its obligations under this Agreement, on a regular basis or as requested by City staff, including, without limitation, having one or more of the Developer’s employees or consultants who are knowledgeable regarding this Agreement, the design and planning of the Project and the progress of negotiation of a DDA, such that such person(s) can meaningfully respond to City and/or City staff questions regarding the progress of the design and planning of the Project or the negotiation of a DDA, attend both: (1) periodic meetings with City and Successor Agency staff, as reasonably scheduled and requested by City or Successor Agency staff during the Negotiation Period, and (2) meetings of the City and Successor Agency governing bodies, when reasonably requested to do so by staff. 8. Developer to Pay All Costs and Expenses. All fees or expenses of engineers, architects, financial consultants, legal, planning or other consultants or contractors, retained by the Developer for any study, analysis, evaluation, report, schedule, estimate, environmental review, planning and/or design activities, drawings, specifications or other activity or matter relating to the Property or the Project or negotiation of a DDA that may be undertaken by the Developer during the Negotiation Period, pursuant to or in reliance upon this Agreement or in the Developer's discretion, regarding any matter relating to a DDA, the Property or the Project, shall be the sole responsibility of and undertaken at the sole cost and expense of the Developer and no such activity or matter shall be deemed to be undertaken for the benefit of, at the expense of or in reliance upon the City or Successor Agency. The Developer shall also pay all fees, charges and costs, make all deposits and provide all bonds or other security associated with the submission to and processing by the City and/or the City of any and all applications and other documents and information to be submitted to the City and/or the City by the Developer pursuant to this Agreement or otherwise associated with the Project. The City or Successor Agency shall not be obligated to pay or reimburse any expenses, fees, charges or costs incurred by the Developer in pursuit of any study, analysis, evaluation, report, schedule, estimate, environmental review, planning and/or design activities, drawings, specifications or other activity or matter relating to the Property or the Project or negotiation of a DDA that may be undertaken by the Developer during the Negotiation Period, whether or not this Agreement is, eventually, terminated or extended or a DDA is entered into between the City, Successor Agency and the Developer, in the future 9. City And Successor Agency Not To Negotiate With Others. During the Negotiation Period following the identification of the Property, the City, Successor Agency, and staff shall not negotiate with any other person regarding the sale or redevelopment of the Property. The term “negotiate,” as used in this Agreement, means and refers to engaging in any discussions with a person 45635.01000\29283536.2 other than the Developer, regardless of how initiated, with respect to the availability of the Property or that person’s redevelopment of the Property, without the Developer’s prior written consent. Developer acknowledges that City or Successor Agency may receive and retain unsolicited offers regarding redevelopment of the Property, but shall not entertain any offer or negotiate with the proponent of any such offer during the Negotiation Period; provided, however, that the City or Successor Agency may notify such proponent that it is a party to this Agreement. Developer acknowledges that the City and Successor Agency are public agencies and subject to the provisions of the California Public Records Act, Government Code Section 6254, et. seq. (the “Act”). The City and Successor Agency shall use its best efforts to inform Developer of any request for information received pursuant to the Act. If Developer believes the information requested is confidential, Developer may pursuant a court order preventing the release of the requested information. 10. Acknowledgments and Reservations. (a) The City, Successor Agency and the Developer agree that, if this Agreement expires or is terminated for any reason, or a future DDA is not approved and executed by the City, Successor Agency and the Developer, for any reason, the City, Successor Agency, nor the Developer shall be under any obligation, nor have any liability to each other or any other person regarding the sale or other disposition of the Property or the redevelopment of the Project or the Property; provided, however, that in the event this Agreement terminates, the City shall return to the Developer within ten (10) business days of such termination any and all deposits due to be refunded pursuant to Section 2(a) of this Agreement. (b) The Developer acknowledges and agrees that no provision of this Agreement shall be deemed to be an offer by the City or Successor Agency, nor an acceptance by the City or the Successor Agency of any offer or proposal from the Developer for the City or Successor Agency to convey any estate or interest in the Property to the Developer or for the City or Successor Agency to provide any financial or other assistance to the Developer for redevelopment of the Project or the Property. City acknowledges and agrees that no provision of this Agreement shall be deemed to be a commitment by Developer to proceed with development in the City. (c) The Developer acknowledges and agrees that the Developer has not acquired, nor will acquire, by virtue of the terms of this Agreement, any legal or equitable interest in real or personal property from the City or Successor Agency. (d) Certain development standards and design controls for the Project may be established between the Developer and the City, but it is understood and agreed between the City and the Developer that the Project and the redevelopment of the Property must conform to all City and other applicable governmental development, land use and architectural regulations and standards. Drawings, plans and specifications for the Project shall be subject to the approval of the City through the standard development application process for projects of this nature. Nothing in this Agreement shall be considered approval of any plans or specifications for the Project or of the Project itself by the City. (e) The City and Successor Agency reserve the right to reasonably obtain further available information and data to ascertain the ability and capacity of the Developer to acquire or lease, develop and operate the Property and/or the Project. The Developer acknowledges that it may be requested to make certain financial disclosures to the City, Successor Agency, staff, legal counsel or other consultants, as part of the financial due diligence investigations of the City and Successor Agency relating to the potential sale of the Property and redevelopment of the Project on the Property by the Developer and that any such disclosures may become public records. The City and Successor Agency 45635.01000\29283536.2 shall maintain the confidentiality of financial information of the Developer to the extent allowed by law, as determined by the City Attorney. 11. Nondiscrimination. The Developer shall not discriminate against nor segregate any person, or group of persons on account of race, color, creed, religion, sex, marital status, handicap, national origin or ancestry in undertaking its obligations under this Agreement. 12. Limitation on Damages and Remedies. (a) THE DEVELOPER, THE SUCCESSOR AGENCY AND THE CITY ACKNOWLEDGE THAT IT IS EXTREMELY DIFFICULT AND IMPRACTICAL TO ASCERTAIN THE AMOUNT OF DAMAGES THAT WOULD BE SUFFERED BY THE DEVELOPER UPON THE BREACH OF THIS AGREEMENT BY THE CITY OR SUCCESSOR AGENCY. HAVING MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL DAMAGES THE DEVELOPER WOULD SUFFER UPON THE BREACH OF THIS AGREEMENT BY THE CITY OR SUCCESSOR AGENCY, THE DEVELOPER, SUCCESSOR AGENCY AND THE CITY AGREE THAT A REASONABLE ESTIMATE OF THE DEVELOPER’S DAMAGES IN SUCH EVENT IS THIRTY THOUSAND DOLLARS ($30,000) (THE “LIQUIDATED DAMAGES AMOUNT”). THEREFORE, UPON THE BREACH OF THIS AGREEMENT BY THE CITY OR SUCCESSOR AGENCY, THE CITY SHALL PAY THE LIQUIDATED DAMAGES AMOUNT TO THE DEVELOPER AND THIS AGREEMENT SHALL TERMINATE. RECEIPT OF THE LIQUIDATED DAMAGES AMOUNT SHALL BE THE DEVELOPER’S SOLE AND EXCLUSIVE REMEDY ARISING FROM ANY BREACH OF THIS AGREEMENT BY THE CITY OR SUCCESSOR AGENCY. ________________ Initials of Authorized Representative of Successor Agency ____________________ Initials of Authorized Representative of City ____________________ Initials of Authorized Representative of Developer (b) THE CITY, THE SUCCESSOR AGENCY AND THE DEVELOPER EACH ACKNOWLEDGE AND AGREE THAT THE CITY AND THE SUCCESSOR AGENCY WOULD NOT HAVE ENTERED INTO THIS AGREEMENT, IF IT WERE TO BE LIABLE TO THE DEVELOPER FOR ANY MONETARY DAMAGES, MONETARY RECOVERY OR ANY REMEDY OTHER THAN TERMINATION OF THIS AGREEMENT AND PAYMENT OF THE LIQUIDATED DAMAGES AMOUNT. ACCORDINGLY, THE CITY, THE SUCCESSOR AGENCY AND THE DEVELOPER AGREE THAT THE DEVELOPER’S SOLE AND EXCLUSIVE RIGHT AND REMEDY UPON THE BREACH OF THIS AGREEMENT BY THE CITY IS TO TERMINATE THIS AGREEMENT AND RECEIVE THE LIQUIDATED DAMAGES AMOUNT. (c) .THE DEVELOPER ACKNOWLEDGES THAT IT IS AWARE OF THE MEANING AND LEGAL EFFECT OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER WOULD HAVE MATERIALLY AFFECTED HIS 45635.01000\29283536.2 OR HER SETTLEMENT WITH THE DEBTOR. (d) CALIFORNIA CIVIL CODE SECTION 1542 NOTWITHSTANDING, IT IS THE INTENTION OF THE DEVELOPER TO BE BOUND BY THE LIMITATION ON DAMAGES, RECOVERY AND REMEDIES SET FORTH IN THIS SECTION 12, AND THE DEVELOPER HEREBY RELEASES ANY AND ALL CLAIMS AGAINST THE CITY FOR MONETARY DAMAGES, MONETARY RECOVERY OR OTHER LEGAL OR EQUITABLE RELIEF RELATED TO ANY BREACH OF THIS AGREEMENT, EXCEPT RECEIPT OF THE LIQUIDATED DAMAGES AMOUNT, WHETHER OR NOT ANY SUCH RELEASED CLAIMS WERE KNOWN OR UNKNOWN TO THE DEVELOPER AS OF THE EFFECTIVE DATE OF THIS AGREEMENT. THE DEVELOPER SPECIFICALLY WAIVES THE BENEFITS OF CALIFORNIA CIVIL CODE SECTION 1542 AND ALL OTHER STATUTES AND JUDICIAL DECISIONS (WHETHER STATE OR FEDERAL) OF SIMILAR EFFECT WITH REGARD TO THE LIMITATIONS ON DAMAGES AND REMEDIES AND WAIVERS OF ANY SUCH DAMAGES AND REMEDIES CONTAINED IN THIS SECTION 12. ____________________ Initials of Authorized Representative of City ____________________ Initials of Authorized Representative of Developer 13. Default. (a) Failure or delay by a Party to perform any material term or provision of this Agreement shall constitute a default under this Agreement. If the Party who is receives notice of a default from another Party cures, corrects or remedies the alleged default within fifteen (15) calendar days after receipt of written notice by the other Party specifying such default, such Party shall not be in default under this Agreement. The notice and cure period provided in the immediately preceding sentence shall not, under any circumstances, extend the Negotiation Period. If there are less than fifteen (15) days remaining in the Negotiation Period, the cure period allowed pursuant to this Section 13(a) shall be automatically reduced to the number of days remaining in the Negotiation Period. (b) The Party claiming that a default has occurred shall give written notice of default to the Party claimed to be in default, specifying the alleged default. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. However, the injured Party shall have no right to exercise any remedy for a default under this Agreement, without first delivering written notice of the default and allowing the applicable period to cure any such default as set forth in Section 13(a). (c) Any failure or delay by a Party in asserting any of its rights or remedies as to any default shall not operate as a waiver of any default or of any rights or remedies associated with a default. (d) If a default of either Party remains uncured for more than fifteen (15) calendar days following receipt of written notice of such default, a “breach” of this Agreement by the defaulting Party shall be deemed to have occurred. In the event of a breach of this Agreement, the sole and exclusive remedy of the Party who is not in default shall be to terminate this Agreement by serving written notice of termination on the Party in breach and, in the case of a breach by the City or Successor Agency, the Developer shall also be entitled to receive the Liquidated Damages Amount. 14. Compliance with Law. The Developer acknowledges that any future DDA, if approved by the governing body of the City and Successor Agency, will require the Developer (among other things) 45635.01000\29283536.2 to carry out the development of the Project in conformity with all applicable laws, including all applicable building, planning and zoning laws, environmental laws, safety laws and federal and state labor and wage laws. 15. Press Releases. The Developer agrees to obtain the approval of the City Manager or his or her designee or successor in function of any press releases Developer may propose relating to the lease or redevelopment of the Property or negotiation of a DDA with the City or Successor Agency, prior to publication. The rights and obligations in this provision shall not apply to leasing and marketing brochures and/or information distributed by email or placed online on a brokerage website or real estate website such as LoopNet.com. 16. Notice. All notices required under this Agreement shall be presented in person, by nationally recognized overnight delivery service or by facsimile and confirmed by first class certified or registered United States Mail, with return receipt requested, to the address and/or fax number for the Party set forth in this Section 16. Notice shall be deemed confirmed by United States Mail effective the third (3rd) business day after deposit with the United States Postal Service. Notice by personal service or nationally recognized overnight delivery service shall be effective upon delivery. Either Party may change its address for receipt of notices by notifying the other Party in writing. Delivery of notices to courtesy copy recipients shall not be required for valid notice to a Party TO DEVELOPER: Developer Entity 9034 W. Sunset Blvd. West Hollywood, CA 90069 T: 310 247-0900 F: F 310 247-1525 Attn: Arman Gabay TO CITY: COPY TO: The City of Azusa 213 East Foothill Boulevard Azusa, California 91702 Attention: City Manager T: (626) 812-5238 F: (626) 334-6358 Best Best & Krieger, LLP 18101 Von Karman Ave, Suite 1000 Irvine, CA 92614 Attention: Marco Martinez T: (949)-263-2600 F: (949)-260-0972 TO SUCCESSOR AGENCY: Successor Agency to the Redevelopment Agency of the City of Azusa 213 East Foothill Boulevard Azusa, California 91702 Attention: Executive Director T: (626) 812-5238 F: (626) 334-6358 17. Warranty Against Payment of Consideration for Agreement. The Developer warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for 45635.01000\29283536.2 obtaining this Agreement. Third parties, for the purposes of this Section 17, shall not include persons to whom fees are paid for professional services, if rendered by attorneys, financial consultants, accountants, engineers, architects, brokers and other consultants, when such fees are considered necessary by the Developer. 18. Acceptance of Agreement by Developer. The Developer shall acknowledge its acceptance of this Agreement by delivering to the City three (3) original counterpart executed copies of this Agreement signed by the authorized representative(s) of the Developer. 19. Counterpart Originals. This Agreement may be executed by the City, the Successor Agency and the Developer in multiple counterpart originals, all of which together shall constitute a single agreement. 20. No Third-Party Beneficiaries. Nothing in this Agreement is intended to benefit any person or entity other than the City, Successor Agency or the Developer. 21. Governing Law. The City, Successor Agency and the Developer acknowledge and agree that this Agreement was negotiated, entered into and is to be fully performed in the City of Azusa, California. The City, Successor Agency and the Developer agree that this Agreement shall be governed by, interpreted under, and construed and enforced in accordance with the laws of the State of California, without application of such laws’ conflicts of laws principles. 22. Waivers. No waiver of any breach of any term or condition contained in this Agreement shall be deemed a waiver of any preceding or succeeding breach of such term or condition, or of any other term or condition contained in this Agreement. No extension of the time for performance of any obligation or act, no waiver of any term or condition of this Agreement, nor any modification of this Agreement shall be enforceable against the City, Successor Agency or the Developer, unless made in writing and executed by the City, Successor Agency and the Developer. 23. Construction. Headings at the beginning of each section and sub-section of this Agreement are solely for the convenience of reference of the City, Successor Agency and the Developer and are not a part of this Agreement. Whenever required by the context of this Agreement, the singular shall include the plural and the masculine shall include the feminine and vice versa. This Agreement shall not be construed as if it had been prepared by one or the other of the City, Successor Agency or the Developer, but rather as if the City, Successor Agency and the Developer prepared this Agreement. Unless otherwise indicated, all references to sections are to this Agreement. All exhibits referred to in this Agreement are attached to this Agreement and incorporated into this Agreement by this reference. If the date on which the City, Successor Agency or the Developer is required to take any action pursuant to the terms of this Agreement is not a business day of the City, the action shall be taken on the next succeeding business day of the City. 24. Attorneys’ Fees. If a Party hereto files any action or brings any action or proceeding against another arising out of this Agreement, then the prevailing Party shall be entitled to recover as an element of its costs of suit, and not as damages, its reasonable attorneys’ fees as fixed by the court, in such action or proceeding or in a separate action or proceeding brought to recover such attorneys’ fees. For the purposes hereof the words “reasonable attorneys’ fees” mean and include salaries and expenses of the lawyers working for or employed by such Party (allocated on an hourly basis) to the extent they provide legal services to such Party in connection with the representation of that Party in any such matter. [Signatures on following page] 45635.01000\29283536.2 THE CITY OF AZUSA DEVELOPMENT COOPERATION AGREEMENT (Charles Company) IN WITNESS WHEREOF, the City and the Developer have executed this Development Cooperation Agreement on the dates indicated next to each of the signatures of their authorized representatives, as appear below. Dated: Dated: DEVELOPER: Charles Company, a ____________ By: By: Dated: CITY: THE CITY OF AZUSA By: ATTEST: By: City Clerk APPROVED AS TO FORM: BEST BEST & KRIEGER, LLP By: City Attorney SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF : 45635.01000\29283536.2 Dated: THE CITY OF AZUSA By: ATTEST: By: Secretary APPROVED AS TO FORM: BEST BEST & KRIEGER, LLP By: Agency Counsel 45635.01000\29283536.2 EXHIBIT “A” TO NEGOTIATION AGREEMENT Project Description [To Be Attached Behind This Cover Page] 45635.01000\29283536.2