HomeMy WebLinkAboutD-1 Staff Report - Costanzo Exclusive Negotiating AgreementSCHEDULED ITEM
D-1
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
VIA: TROY L. BUTZLAFF, ICMA-CM, CITY MANAGER
FROM: KURT CHRISTIANSEN, AICP, ECONOMIC & COMMUNUTY DEVELOPMENT
DIRECTOR
DATE: MARCH 7, 2016
SUBJECT: CONSIDERATION OF AN EXCLUSIVE NEGOTIATING AGREEMENT WITH
CONSTANZO INVESTMENTS, LLC., FOR A MULTI-STORY MIXED USE
DEVELOPMENT AT THE SOUTHEAST CORNER OF AZUSA AVENUE AND 9TH STREET
SUMMARY:
The Successor Agency to the former Redevelopment Agency is the owner of several parcels located at the
southeast corner of Azusa Avenue and 9th Street. Last year, the City retained CBRE, Inc. (CBRE) to market the
parcels for development. The City received development proposals from two different developers on the
property. After reviewing both proposals and evaluating the proposed development concepts for the site, Staff is
recommending that the City Council consider entering into an Exclusive Negotiating Agreement (“ENA”) with
Constanzo Investments, LLC., to allow the parties to establish the negotiating parameters, terms and conditions
for the development of a multi-story mixed-use development on the property. This action approves an ENA with
Constanzo Investments, LLC., for a period of one hundred and eighty days (180) days with the ability to extend
the term, administratively, for two additional ninety (90) day periods if needed.
RECOMMENDATION:
Staff recommends that the City Council take the following actions:
1)Approve an Exclusive Negotiating Agreement (“ENA”) with Constanzo Investments, LLC., which allows
for a period of exclusive negotiations between the City and Constanzo Investments for the purpose of
preparing major elements of the proposed development including, but not limited to: a site plan; design
schematics; technical and economic studies; and, the pre-development obligations of all parties.
2)Authorize the Mayor to execute the ENA, in a form acceptable to the City Attorney, on behalf of the City.
DISCUSSION:
The Successor Agency to the former Redevelopment Agency is the owner of several parcels located at the
southeast corner of Azusa Avenue and 9th Street. There are five (5) parcels in total. The Successor Agency owns
all (5) parcels. The total area of the five (5) parcels is 41,870 square feet.
Last year, the City hired CBRE to market the parcels for development. The City received development proposals
from several different developers on the property. After reviewing the proposals and evaluating the proposed
development concepts for the site, Staff is recommending that the City Council consider entering into an
Exclusive Negotiating Agreement (“ENA”) with Constanzo Investments, LLC., to allow the parties to establish
CONTINUED TO
MEETING OF
3/12/16
Consideration of an ENA with Constanzo Investments
March 7, 2016
Page 2
the negotiating parameters, terms and conditions for the development of a multi-story, mixed-use development
consisting of 13,000 to 15,000 square feet of ground floor commercial space and 60,000 to 70,000 square feet of
residential space above the commercial.
To enable the parties to better define the scope of the project and to negotiate the sale of the parcels, an ENA has
been drafted. A copy of the draft ENA is attached. The proposed ENA provides a process for the parties to
negotiate a possible disposition and development agreement (DDA) for, among other things, the possible
conveyance to and development by Constanzo Investments of the proposed project sites. It should be noted that
the ENA does not commit the City to such conveyance or development, nor does it commit Constanzo
Investments to develop the project. The ENA only commits the parties to negotiate in good faith to attempt to
reach an agreement over the next 180 days. The ENA can be extended, administratively, for two additional 90
day periods. The general terms of the ENA are as follows:
General ENA Terms
• Constanzo Investments to purchase the parcels for $1,200,000.
• Constanzo Investments to prepare a conceptual development plan for the project that describes and
depicts: (1) the location and placement of proposed buildings and (2) the architecture and elevations of
the proposed building.
• Terms of any potential Disposition and Development Agreement between the City and Constanzo
Investments for the development of the project are to be negotiated during the exclusive negotiating
period.
• Constanzo Investments is required to provide a $40,000 deposit which will be used to reimburse the City
for certain costs related to the ENA and the evaluation of the development of the project. This deposit is
refundable, less costs incurred, to Constanzo Investments if the City fails to deliver the project. If
Constanzo Investments should fail to perform under this agreement the deposit is forfeited.
• The ENA shall terminate for the following reasons: if the agreement expires; in the event of material
default by either party; failure to make substantial progress per the proposed schedule set forth in the
ENA; failure of the parties to reach agreement on a potential Development Agreement; and if either party
is determined to not be negotiating in good faith.
Staff believes that it would be appropriate for the City Council to approve the proposed ENA with Constanzo
Investments in order to provide both parties the necessary time to prepare additional information about the
proposed project, including a more detailed site plan, a fiscal impact analysis and financing plan. Ultimately, this
information will help determine the viability and economic benefits of the project so the City Council can decide
whether to enter into a Disposition and Development Agreement with the developer to develop the project.
FISCAL IMPACT:
There is no fiscal impact associated with the approval of 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) Draft ENA