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HomeMy WebLinkAboutD-2 Staff Report - Olson Urban Housing ENASCHEDULED ITEM D-2 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 OLSON URBAN HOUSING, LLC., FOR A THREE-STORY, 27 UNIT TOWNHOME DEVELOPMENT AT 805, 803 AND 809 NORTH DALTON AVENUE (APNS 8608-027-905, 906, AND 908) AND 810 NORTH ALAMEDA AVENUE, AZUSA (APN 8608-027-907). SUMMARY: The Successor Agency to the former Redevelopment Agency is the owner of several parcels located at 805, 803 and 809 N. Dalton avenue (APNS 8608-027-905, 906, and 908) and 810 North Alameda Avenue, Azusa (APN 8608-027-907). 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 Olson Urban Housing, LLC., to allow the parties to establish the negotiating parameters, terms and conditions for the development of a three-story townhouse development on the property. This action approves an ENA with Olson Urban Housing, 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 Olson Urban Housing, LLC., which allows for a period of exclusive negotiations between the City and Olson Urban Housing 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 805, 803 and 809 N. Dalton avenue (APNS 8608-027-905, 906, and 908) and 810 North Alameda Avenue, Azusa (APN APPROVED COUNCIL MEETING 3/7/16 Consideration of an ENA with Olson Urban Housing March 7, 2016 Page 2 8608-027-907). There are four (4) parcels in total. The Successor Agency owns all (4) parcels. The total area of the four (4) parcels is 59,080 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 Olson Urban Housing LLC., to allow the parties to establish the negotiating parameters, terms and conditions for the development of a 27 unit townhouse development. 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 Olson Urban Housing 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 Olson Urban Housing 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 • Olson Urban Housing to purchase the parcels for $1,700,000. • Olson Urban Housing 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 Olson Urban Housing for the development of the project are to be negotiated during the exclusive negotiating period. • Olson Urban Housing is required to provide a $10,000 non-refundable 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 Olson Urban Housing if the City fails to deliver the project. If Olson Urban Housing 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 Olson Urban Housing 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 Consideration of an ENA with Olson Urban Housing March 7, 2016 Page 3 Reviewed and Approved: Troy L. Butzlaff, ICMA-CM City Manager Attachments: 1) Draft ENA ATTACHMENT 1 DRAFT CITY OF AZUSA EXCLUSIVE NEGOTIATION AGREEMENT (Olson Company/A-3 Property) THIS EXCLUSIVE NEGOTIATION AGREEMENT (“Agreement”) is dated as of _______, 2016, for reference purposes only, and is entered into by and between the City of Azusa, a municipal corporation (“City”) and Olson Urban Housing, LLC, a Delaware limited liability company (“Developer”), to provide a specified period of time to attempt to negotiate a disposition and development agreement. The City and the Developer are sometimes referred to in this Agreement, individually, as a “Party” and, collectively, as the “Parties. A. Recitals. (i). City is the owner of those certain parcels of real property located at 805, 803 and 809 N. Dalton Avenue (APNs 8608-027-905, 906, and 908) and 810 North Alameda Avenue, Azusa (APN 8608-027-907) each as more specifically described in Exhibit A (“Property”). (ii). City heretofore issued a Notice of Development Opportunity for the Property. (iii). Developer has proposed the redevelopment of the Property with a high density, for-sale, residential development consisting of 27 three-story townhomes, as generally depicted in the conceptual site plan and elevations attached to this Agreement as Exhibit “B” and incorporated into this Agreement by this reference (“Project”). (iv). The intent of both City and Developer in entering into this Agreement is to establish a specific, limited period of time to negotiate regarding a future agreement between them governing the potential acquisition of the Property and development of the Project on the Property, all subject to mutually agreeable terms, conditions, covenants, restrictions and agreements to be negotiated and documented in a future disposition and development agreement (“DDA”). (v). All legal prerequisites to the making of this Agreement have occurred. NOW, THEREFORE, in view of the goals and objectives of City relating to the sale and development of the Property, and in consideration of the mutual covenants and conditions set forth herein, it is agreed by and between City and Developer as follows: B. Agreement. 1. Incorporation of Recitals. The Recitals set forth in Part A., above, are true and correct and are incorporated into this Agreement, in their entirety, by this reference. DRAFT 20586.001-2759490v4 S01064\050641\ 516-002 Olson ENA 2 2. Deposits. (a). Concurrent with Developer’s execution of this Agreement, Developer shall pay to City a deposit in the amount of Ten Thousand Dollars ($10,000.00) in immediately available funds (“Initial Deposit”) to ensure that Developer will proceed diligently and in good faith to fulfill its obligations under this Agreement during the Negotiation Period (as defined in § 3.(a)), as part of the consideration for the City’s agreement not to negotiate with other persons during the Negotiation Period, and to defray certain costs of the City in pursuing the contemplated negotiations with the Developer during the Negotiation Period, pursuant to this Agreement. The Initial Deposit shall be fully earned by the City upon City approval, execution and return of this Agreement to Developer, and shall thereafter be non-refundable to the Developer except as provided herein; provided, that, in the event this Agreement expires or terminates for a reason other than Developer's uncured default, then, notwithstanding anything herein to the contrary, any portion of the Initial Deposit that has not been applied to City costs will be promptly returned to the Developer. (b). Upon each extension of the Negotiation Period occurring pursuant to the provisions of § 3, if any, Developer shall deposit an additional Five Thousand Dollars ($5,000.00) in immediately available funds with City on the first day of any extension of the Negotiation Period occurring pursuant to the provisions of § 3 (each, an “Extension Deposit” and collectively the "Extension Deposits"). Each Extension Deposit is intended to ensure that 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 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 Developer during any such extension of the Negotiation Period, pursuant to this Agreement. Each Extension Deposit shall be fully earned by the City when made, and shall be non-refundable to the Developer except as provided herein; provided, that, in the event this Agreement expires or terminates for a reason other than Developer's uncured default, then, notwithstanding anything herein to the contrary, any portion of the Extension Deposits that has not been applied to City costs will be promptly returned to the Developer . 3. Term of Agreement. (a). The rights and duties of City and Developer established by this Agreement shall commence on the first date on which all of the following have occurred (“Effective Date”): (1) execution of this Agreement by the authorized representative(s) of Developer and delivery of such executed Agreement to the City, (2) payment of the Initial Deposit to City by Developer, in accordance with § 2, and (3) approval of this Agreement by City’s governing body and execution of this Agreement by the authorized representative(s) of City and delivery of such executed Agreement to Developer. City shall deliver a fully executed counterpart original of this Agreement to Developer, within ten (10) calendar days following City’s governing body approval of this Agreement, if approved, and the execution of this Agreement by the authorized representative(s) of the City. This Agreement shall continue in effect for the period of one hundred eighty (180) consecutive calendar days immediately following the Effective Date (“Negotiation Period”), subject to possible further extension pursuant to § 3(b) below. DRAFT 20586.001-2759490v4 S01064\050641\ 516-002 Olson ENA 3 (b). The Negotiation Period may be extended upon the mutual written agreement of City’s City Manager and Developer’s authorized representative for no more than two (2) additional consecutive ninety (90) calendar day periods. Except as expressly provided in subsections (c) and (d) below, in no event shall the Negotiation Period exceed three hundred and 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, as the same may be extended hereunder, unless, prior to that time, both City staff and Developer have agreed upon a form of DDA acceptable to both City staff and Developer, in their respective sole and absolute discretion, which City staff is willing to recommend to the City for approval. If City staff and Developer have agreed upon a proposed form of DDA prior to expiration of the Negotiation Period, the Negotiating Period shall be extended for a further period of forty-five (45) days in order to allow for presentation of the DDA to the City Council for approval. (d). Notwithstanding anything herein to the contrary, the term of this Agreement and the Negotiation Period shall be further extended for such period as necessary to complete CEQA clearance for the Project if a proposed form of DDA has been timely negotiated by Developer and City staff during the Negotiation Period. (e). City and Developer agree that, for the period set forth in this § 3, they will negotiate exclusively, diligently, and in good faith regarding the proposed development of the Project and the terms of the DDA. Except to the extent otherwise required by the law, City agrees that it will not negotiate with any other person or entity regarding development or sale of the Property or any portion thereof. (f). The Parties acknowledge that this ENA does not establish the essential terms of the property transfer contemplated by this ENA, the terms of the DDA or such conditions thereto as the Parties may mutually agree (collectively, the “Transaction”). Although the ENA sets forth a framework for negotiation of essential terms of the Transaction (a) this ENA, except as set forth in § 5.(a), does not set forth nor does it contain the agreed upon essential terms of the Transaction, including, but not limited to, price, terms, and timing of any transfer of the Site, or completion of environmental and planning studies, (b) the ENA does not include Developer’s proposal for the development of the Site nor is this ENA a statement of all of the essential terms of the Transaction; and (c) the essential terms of the Transaction, if agreed to by the Parties, shall be set forth, if at all, in the DDA approved and executed on behalf of Developer and the City Council of the City. In this regard, the DDA shall not exist and shall not be binding unless and until it is fully executed by the City and Developer, approved by counsel to each such Party as to form, and approved by the City Council of the City and by the authorized member(s) or managing member(s) of Developer. (g). Each Party assumes the risk that, notwithstanding this ENA and good faith and diligent negotiations, the Parties may not enter into a DDA due to the Parties’ inability or failure to agree upon essential terms of the Transaction. DRAFT 20586.001-2759490v4 S01064\050641\ 516-002 Olson ENA 4 (h). Developer specifically agrees that it shall have no right to specifically enforce this ENA and expressly waives any rights it may have to file a notice of lis pendens against the Site, or any portion thereof, owned or controlled by City due to the inability or failure of the Parties to agree upon the essential terms of the Transaction or a DDA notwithstanding the Parties’ good faith negotiations. 4. Obligations of Developer. During the Negotiation Period, Developer shall proceed diligently and in good faith to develop and present to City staff and, subsequently, to City’s governing body, 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 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 and resale land prices 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 proposed financing sources for all private and public improvements proposed for the Project; and (f). A preliminary financial analysis estimating the costs and benefits to 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, City and Developer shall proceed diligently and in good faith to negotiate a DDA between them. City and Developer shall generally cooperate with each other and supply such documents and information as may be reasonably requested by the other to facilitate the conduct of the negotiations. Both City and Developer shall exercise reasonable efforts to complete discussions relating to the terms and conditions of a DDA and such other matters, as may be mutually acceptable to both City and Developer, in their respective sole discretion. The exact terms and conditions of a DDA, if 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 City or 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 DRAFT 20586.001-2759490v4 S01064\050641\ 516-002 Olson ENA 5 shall be interpreted or construed to be a guaranty, warranty or representation that any proposed DDA that may be negotiated by City staff and Developer will be approved by City’s governing body. Developer acknowledges and agrees that City’s consideration of any DDA is subject to the sole and absolute discretion of City’s governing body and all legally required public hearings, public meetings, notices, factual findings and other determinations required by law. (i). Based upon Developer’s proposal the Parties have come to a tentative agreement on the following terms, subject to future negotiation during the Negotiation Period: (ii). Price: One Million Seven Hundred Thousand Dollars ($1,700,000); (iii). Deposit at opening of escrow: Fifty Thousand Dollars ($50,000). The Initial Deposit and Extension Deposits provided to the City under this Agreement shall be applicable to and credited against the DDA deposit and the purchase price under the DDA; (iv). Due Diligence Period Ninety (90) days from effective date of the DDA; (v). Escrow Closing following entitlement of the proposed Project. 6. Restrictions Against Change in Ownership, Management and Control of Developer and Assignment of Agreement. (a). The qualifications and identity of Developer and its principals are of particular concern to City. It is because of these qualifications and identity that City has entered into this Agreement with Developer. During the Negotiation Period, no voluntary or involuntary successor-in-interest of Developer shall acquire any rights or powers under this Agreement, except as provided in this § 6, below. (b). Developer shall promptly notify City in writing of any and all changes whatsoever in the identity of the business entities or individuals in Control (as defined in § 6(d), below) of Developer, as well as any and all material changes in the interest or the degree of Control of Developer by any such person, of which information 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 Control of Developer (other than such changes occasioned by the death or incapacity of any individual) that has not been approved by City, City may terminate this Agreement, without liability to Developer or any other person, by sending written notice of termination to Developer, referencing this § 6(b). (c). Developer may assign its rights under this Agreement to an Affiliate (as defined in § 6(d), below), on the condition that such Affiliate expressly assumes all of the obligations of Developer under this Agreement in a writing reasonably satisfactory to City, and further provided that Olson Urban Housing, LLC, or the parties in Control thereof, shall, at all times, Control any such Affiliate and the assigning Developer shall be and remain responsible and obligated directly to City for performance of the successor Developer’s obligations under this Agreement. DRAFT 20586.001-2759490v4 S01064\050641\ 516-002 Olson ENA 6 (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 Developer or the member(s) exercising Control over Developer, whether 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. Developer Obligations to Review Draft Agreements and Attend Meetings. (a). During the Negotiation Period, Developer shall diligently review and comment on drafts of a DDA prepared by City’s legal counsel and, if the terms and conditions of such a DDA are agreed upon between City staff and Developer, submit the DDA fully executed by the authorized representative(s) of Developer to City’s City Manager for submission to City’s governing body for review and approval or disapproval. Any future DDA shall consist of terms and conditions acceptable to both Developer and City governing body, in their respective sole and absolute discretion. (b). During the Negotiation Period, Developer shall also keep City staff advised on the progress of 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 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) regular meetings with City staff, as reasonably scheduled by City staff during the Negotiation Period (each, a “Regular Meeting”), and (2) meetings of City’s governing body, when reasonably requested to do so by City 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 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 Developer during the Negotiation Period, pursuant to or in reliance upon this Agreement or in 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 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 City. Developer shall also pay all customary fees, charges and costs, make all deposits and provide all bonds or other security required in connection with the submission to and processing by City of any and all land use applications and other like documents and information to be submitted to City by Developer pursuant to this Agreement or otherwise associated with the processing of the Project. City shall not be obligated to pay or reimburse any expenses, fees, charges or costs incurred by 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 DRAFT 20586.001-2759490v4 S01064\050641\ 516-002 Olson ENA 7 DDA that may be undertaken by Developer during the Negotiation Period, whether or not this Agreement is eventually terminated or extended, or a DDA is entered into between City and Developer, in the future. 9. City Not To Negotiate With Others. During the Negotiation Period, City and City staff shall not market the Property or 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 other than the Developer, regardless of how initiated, with respect to that person’s acquisition or redevelopment of the Property to the total or partial exclusion of Developer from redeveloping the Property, without Developer’s written consent. Developer acknowledges that City may receive and retain unsolicited offers regarding redevelopment of the Property, but shall not negotiate with the proponent of any such offer during the Negotiation Period; provided, however, that City may discuss the fact that City is a party to this Agreement. 10. Acknowledgments and Reservations. (a). City and Developer agree that, if this Agreement expires or is properly terminated without execution of a DDA, or a future DDA is not approved and executed by both City and Developer, for any reason, neither City nor 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 following such expiration or termination. (b). Developer acknowledges and agrees that no provision of this Agreement shall be deemed to be an offer by City, nor an acceptance by City of any offer or proposal from Developer for City to convey any estate or interest in the Property to Developer, or for City to provide any financial or other assistance to Developer for redevelopment of the Project or the Property. (c). Developer acknowledges and agrees that 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 City. (d). Certain development standards and design controls for the Project may be established between Developer and City, but it is understood and agreed between City and 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 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 City in its municipal capacity. (e). City reserves the right to reasonably obtain further information, data and commitments to ascertain the ability and capacity of Developer to acquire or lease, develop and operate the Property and/or the Project. Developer acknowledges that it may be requested to DRAFT 20586.001-2759490v4 S01064\050641\ 516-002 Olson ENA 8 make certain financial disclosures to City, its staff, legal counsel or other consultants, as part of the financial due diligence investigations of City relating to the potential sale of the Property and redevelopment of the Project on the Property by Developer and that any such disclosures may become public records. City shall maintain the confidentiality of financial information of Developer to the extent allowed by law, as determined by the City Attorney. 11. Covenants Against Discrimination. (a). Obligation to Refrain From Discrimination. Developer covenants by and for itself, and any successors in interest, that there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, race, color, creed national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor shall Developer or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the Site. The foregoing covenants shall run with the land. (b). Form of Nondiscrimination and Nonsegregation Clauses. Developer shall refrain from restricting the rental, sale or lease of the Site on the basis of sex, race, color, creed, ancestry or national origin of any person. All such deeds, leases or contracts for the use of the Site shall contain or be subject to substantially the following nondiscrimination clauses: (i). In deeds: “The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group or persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sub lessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land.” (ii). In leases: “The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: “That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, or enjoyment of the premises herein leased nor shall the lessee himself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub lessees, subtenants or vendees in the land herein leased. DRAFT 20586.001-2759490v4 S01064\050641\ 516-002 Olson ENA 9 (iii). In contracts: “There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sub lessees or vendees of the land.” 12. Limitation on Damages and Remedies. (a). DEVELOPER AND CITY ACKNOWLEDGE THAT IT IS EXTREMELY DIFFICULT AND IMPRACTICAL TO ASCERTAIN THE AMOUNT OF DAMAGES THAT WOULD BE SUFFERED BY DEVELOPER UPON THE BREACH OF THIS AGREEMENT BY CITY. HAVING MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL DAMAGES DEVELOPER WOULD SUFFER UPON THE BREACH OF THIS AGREEMENT BY CITY, DEVELOPER AND CITY AGREE THAT A REASONABLE ESTIMATE OF DEVELOPER’S DAMAGES IN SUCH EVENT WOULD BE THE RETURN TO DEVELOPER OF ALL OF ITS INITIAL DEPOSIT AND ANY EXTENSION DEPOSITS PREVIOUSLY MADE BY DEVELOPER TO CITY (THE “LIQUIDATED DAMAGES AMOUNT”). THEREFORE, UPON A TERMINATION OF THIS AGREEMENT DUE TO A BREACH OF THIS AGREEMENT BY CITY, CITY SHALL PAY THE LIQUIDATED DAMAGES AMOUNT TO DEVELOPER AND THIS AGREEMENT SHALL TERMINATE. RECEIPT OF THE LIQUIDATED DAMAGES AMOUNT SHALL BE DEVELOPER’S SOLE AND EXCLUSIVE MONETARY REMEDY ARISING FROM ANY BREACH OF THIS AGREEMENT BY CITY. ____________________ Initials of Authorized Representative of City ____________________ Initials of Authorized Representative of Developer (b). DEVELOPER AND CITY FURTHER ACKNOWLEDGE THAT IT IS EXTREMELY DIFFICULT AND IMPRACTICAL TO ASCERTAIN THE AMOUNT OF DAMAGES THAT WOULD BE SUFFERED BY CITY UPON A TERMINATION OF THIS AGREEMENT AS A RESULT OF A BREACH OF THIS AGREEMENT BY DEVELOPER WHICH IS NOT CURED WITHIN THE APPLICABLE CURE PERIOD. HAVING MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL DAMAGES CITY WOULD SUFFER UPON THE UNCURED BREACH OF THIS AGREEMENT BY DEVELOPER, DEVELOPER AND CITY AGREE THAT A REASONABLE ESTIMATE OF CITY’S DAMAGES IN SUCH EVENT WOULD BE THE RETENTION OF ALL OF THE INITIAL DEPOSIT PLUS ANY EXTENSION DEPOSITS DELIVERED BY DEVELOPER TO CITY WHICH HAS NOT YET BEEN APPLIED TO CITY COSTS (THE “LIQUIDATED DAMAGES AMOUNT”). THEREFORE, UPON A TERMINATION OF THIS AGREEMENT DUE TO AN UNCURED BREACH OF THIS AGREEMENT BY DEVELOPER, CITY SHALL RETAIN THE LIQUIDATED DAMAGES AMOUNT AND THIS AGREEMENT SHALL TERMINATE. RECEIPT OF THE DRAFT 20586.001-2759490v4 S01064\050641\ 516-002 Olson ENA 10 LIQUIDATED DAMAGES AMOUNT SHALL BE CITY’S SOLE AND EXCLUSIVE MONETARY REMEDY ARISING FROM ANY BREACH OF THIS AGREEMENT BY DEVELOPER. ____________________ Initials of Authorized Representative of City ____________________ Initials of Authorized Representative of Developer (c). CITY AND DEVELOPER EACH ACKNOWLEDGE AND AGREE THAT THE OTHER PARTY WOULD NOT HAVE ENTERED INTO THIS AGREEMENT, IF IT WERE TO BE LIABLE FOR ANY MONETARY DAMAGES, MONETARY RECOVERY OR ANY MONETARY REMEDY OTHER THAN TERMINATION OF THIS AGREEMENT AND PAYMENT OF THE RESPECTIVE LIQUIDATED DAMAGES AMOUNTS SET FORTH ABOVE. ACCORDINGLY, CITY AND DEVELOPER AGREE THAT THE OTHER’S SOLE AND EXCLUSIVE MONETARY RIGHT AND REMEDY UPON THE BREACH OF THIS AGREEMENT BY THE OTHER WHICH IS NOT CURED WITHIN THE APPLICABLE CURE PERIOD IS TO TERMINATE THIS AGREEMENT AND RECEIVE THE LIQUIDATED DAMAGES AMOUNT. (d). DEVELOPER AND CITY EACH ACKNOWLEDGE THAT IT IS AWARE OF THE MEANING AND LEGAL EFFECT OF CALIFORNIA CIVIL CODE § 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 OR HER SETTLEMENT WITH THE DEBTOR. (e). CALIFORNIA CIVIL CODE § 1542 NOTWITHSTANDING, IT IS THE INTENTION OF DEVELOPER AND CITY TO BE BOUND BY THE LIMITATION ON DAMAGES, RECOVERY AND REMEDIES SET FORTH IN THIS § 12, AND DEVELOPER AND CITY HEREBY RELEASE ANY AND ALL CLAIMS AGAINST THE OTHER FOR MONETARY DAMAGES, MONETARY RECOVERY OR OTHER LEGAL OR EQUITABLE MONETARY 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 OR CITY, AS APPLICABLE, AS OF THE EFFECTIVE DATE OF THIS AGREEMENT. DEVELOPER AND CITY SPECIFICALLY WAIVE THE BENEFITS OF CALIFORNIA CIVIL CODE § 1542 AND ALL OTHER STATUTES AND JUDICIAL DECISIONS (WHETHER STATE OR FEDERAL) OF SIMILAR EFFECT WITH REGARD TO THE LIMITATIONS ON DRAFT 20586.001-2759490v4 S01064\050641\ 516-002 Olson ENA 11 DAMAGES AND REMEDIES AND WAIVERS OF ANY SUCH DAMAGES AND REMEDIES CONTAINED IN THIS § 12. ____________________ Initials of Authorized Representative of City ____________________ Initials of Authorized Representative of Developer 13. Default. (a). Failure or delay by either Party to perform any material term or provision of this Agreement shall constitute a default under this Agreement. If the Party who is claimed to be in default by the other Party cures, corrects or remedies the alleged default within thirty (30) calendar days after receipt of written notice 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 thirty (30) days remaining in the Negotiation Period, the cure period allowed pursuant to this § 13 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. (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 thirty (30) 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 such a breach of this Agreement, the sole and exclusive monetary 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 recovery of the Liquidated Damages Amount to which it is entitled under § 12 above. 14 Compliance with Law. Developer acknowledges that any future DDA, if approved by the governing body of City, will require Developer (among other things) 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. 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 prior to DDA approval relating to the lease or redevelopment of the Property or negotiation of a DDA with City, prior to publication. DRAFT 20586.001-2759490v4 S01064\050641\ 516-002 Olson ENA 12 16. Notice. All notices required under this Agreement shall be presented in person, by nationally recognized overnight delivery service or by facsimile or electronic mail (provided such facsimile or electronic notice is confirmed by first class certified or registered United States Mail, with return receipt requested) to the address and/or fax number/email address for the Party set forth in this § 16. Notice confirmed by United States Mail shall be deemed 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: Olson Urban Housing, LLC 3010 Old Ranch Parkway, Suite 100 Seal Beach, California 90740 Attention: Todd Olson Tel: (562) 596-4770 Fax: (562) 596-4703 E-Mail: tolson@theolsonco.com COPY TO: Olson Urban Housing, LLC 3010 Old Ranch Parkway, Suite 100 Seal Beach, California 90740 Attention: Katherine M. Chandler Tel: (562) 370-2270 Fax: (562) 598-9853 E-Mail: kchandler@theolsonco.com TO CITY: The City of Azusa 213 East Foothill Boulevard Azusa, California 91702 Attention: City Manager Tel: (___) Fax: (626) 334-6358 E-Mail: COPY TO: Andrew V. Arczynski 141 W. Wilshire Ave, Suite B Fullerton, California 92832 Tel: (714) 578-8838 Fax: (714) 578-9322 E-Mail: andrew@arczynskilaw.com 17. Warranty Against Payment of Consideration for Agreement. Developer warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Agreement other than customary fees paid for professional services rendered by attorneys, financial consultants, accountants, engineers, architects and other consultants. DRAFT 20586.001-2759490v4 S01064\050641\ 516-002 Olson ENA 13 18. Acceptance of Agreement by Developer. Developer shall acknowledge its acceptance of this Agreement by delivering to 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 City and 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 or the Developer. 21. Governing Law. City and Developer acknowledge and agree that this Agreement was negotiated, entered into and is to be fully performed in the City of Azusa, California. City and 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 City or Developer, unless made in writing and executed by both City and Developer. 23. Construction. Headings at the beginning of each section and sub-section of this Agreement are solely for the convenience of reference of City and 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 City or Developer, but rather as if both City and 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 City or Developer is required to take any action pursuant to the terms of this Agreement is not a business day of City, the action shall be taken on the next succeeding business day of City. 24. Attorneys’ Fees. If either Party hereto files any action or brings any action or proceeding against the other 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 employed by a Party (allocated on an hourly basis) who may provide legal services to such Party in connection with the representation of such Party in any such matter. DRAFT 20586.001-2759490v4 S01064\050641\ 516-002 Olson ENA 14 IN WITNESS WHEREOF, the City and the Developer have executed this Negotiation Agreement on the dates indicated next to each of the signatures of their authorized representatives, as appear below. Dated: Dated: DEVELOPER: OLSON URBAN HOUSING, LLC a Delaware limited liability company, doing business as The Olson Company By: In Town Living, Inc., a Delaware corporation Its Managing Member By: Name: Its: By: Name: Its: Dated: CITY: THE CITY OF AZUSA By: ATTEST: By: City Clerk Approved as to form: Andrew V. Arczynski By: Special Counsel DRAFT 20586.001-2759490v4 S01064\050641\ 516-002 Olson ENA 15 DRAFT 20586.001-2759490v4 EXHIBIT A 45635.01000\22746225.2 EXHIBIT “A” TO NEGOTIATION AGREEMENT Property Legal Description 20586.001-2759490v4 EXHIBIT B 45635.01000\22746225.2 EXHIBIT “B” TO NEGOTIATION AGREEMENT Project Description [To Be Attached Behind This Cover Page] EXHIBIT A