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HomeMy WebLinkAboutE-6 Staff Report - ENA Spectrum PropertiesCONSENT ITEM E-6 TO: HONORABLE CHAIRMAN AND MEMBERS OF THE SUCCESSOR AGENCY BOARD TO THE FORMER REDEVELOMENT AGENCY OF THE CITY OF AZUSA VIA: SERGIO GONZALEZ, CITY MANAGER FROM: MATT MARQUEZ, ECONOMIC AND COMMUNITY DEVELOPMENT DIRECTOR DATE: APRIL 4, 2022 SUBJECT: CONSIDERATION OF AN EXCLUSIVE NEGOTIATING AGREEMENT WITH SPECTRUM PROPERTIES FOR THE DEVELOPMENT OF A NEW POST OFFICE WITH AN ADDITIONAL USE OR USES AT 975 WEST FOOTHILL BOULEVARD (APNS: 8605-019-906 AND 907) BACKGROUND: The Successor Agency to the Former Redevelopment Agency owns parcels located at 975 West Foothill Boulevard. The City received a proposal from Spectrum Properties to develop the site with a new United States Post Office and an additional use or uses. Staff recommends that the City Council enter into an Exclusive Negotiating Agreement (ENA) with Spectrum Properties to allow the parties to establish the negotiating parameters, terms, and conditions for the development. This action would approve an ENA for a period of one hundred twenty (120) 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 Spectrum Properties, which allows for a period of exclusive negotiations between the City and Spectrum Properties 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, on behalf of the City, execute the ENA in a form acceptable to the City Attorney, including any additional non-substantive changes. APPROVED CITY COUNCIL 4/4/2022 ENA – Spectrum Properties April 4, 2022 Page 2 of 4 ANALYSIS: There are two (2) parcels that together constitute the project site. The total land area of the parcels measures approximately 1.56 acres, and it is situated at the northeast corner of West Foothill Boulevard and North Miller Avenue. Immediately to its east is an automotive repair business. To the west is a strip commercial center that houses a variety of businesses, including a heating and air contractor, a trophy fabricator, a woodworking operation, and others. To the site’s north are light industrial operations, and across West Foothill Boulevard are several businesses that include, but are not limited to, a sign manufacturer and auto body repair operation. The subject property is shown on the map below: The site is located within the City’s West End Light Industrial District (DWL) and has a General Plan land use designation of Light Industrial. The DWL designation is applied to areas of the City appropriate for a variety of manufacturing, industrial, and heavy commercial activities. The building fabric includes predominantly one to four-story retail, office and industrial buildings of steel construction or tilt-up concrete construction. Many buildings are located behind surface parking lots, except at Irwindale Avenue, where buildings have a zero setback from the property line and all of the parking is either on the street or behind, accessed by an alley. ENA – Spectrum Properties April 4, 2022 Page 3 of 4 The City’s existing Post Office is located on property at 110 West 6th Street. This property is owned by Spectrum Properties, who lease the location to the Post Office. The development contemplated as part of this ENA process would include the Post Office moving from its current location, to a newly constructed building at 975 West Foothill Boulevard. General ENA Terms To enable the parties to better define the project’s scope and to negotiate the sale of the parcels, an ENA has been drafted. A copy of the draft is attached. The proposed ENA provides a process for the parties to negotiate a possible disposition and development agreement (or similar mechanism) for, among other things, the possible conveyance to and development by Spectrum Properties of the proposed project site. It should be noted that the ENA does not commit the City to such conveyance or development, nor does it commit Spectrum Properties to develop the project. The ENA only commits the parties to negotiate in good faith to attempt to reach an agreement over the next 120 days. The ENA can be extended administratively for two additional 90-day periods. The general terms of the ENA are as follows: • Spectrum Properties to provide City with an initial deposit of $25,000. Said Initial deposit is 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 during the Negotiation Period (120 days) undertaken 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). • The negotiation period may be extended upon mutual written agreement of the City Manager and Developer for no more than two (2) additional consecutive ninety (90) day periods subject to payment of an extension deposit of $10,000 for each extension. • Spectrum Properties will prepare a conceptual development plan for the project that describes and depicts: (1) the location and placement of proposed buildings; (2) the architectural style, design and elevations of the proposed buildings; and, (3) any offsite improvements. Such conceptual development plan shall be submitted for Preliminary Plan Review to the City’s Planning Division. • Spectrum Properties will provide the City with an initial pro forma demonstrating the costs and benefits to the City, as well as a market study, a letter identifying investment partners, and initial lender letter for project financing. • Any future sale of the subject property is contingent upon relocation of the United States Post Office facility to the subject site. A complete list of the ENA’s terms and a listing of associated timelines and milestones can be found in the attachment to this staff report. Staff believes it would be appropriate for the City Council to approve the proposed ENA with Spectrum Properties to provide both parties the necessary time to prepare additional information regarding the proposed project. Ultimately, this information will help determine the viability and benefits of the project. ENA – Spectrum Properties April 4, 2022 Page 4 of 4 ENVIRONMENTAL DETERMINATION: This action does not constitute a “project” as defined by the California Environmental Quality Act, as the activity involves entering into an agreement for exclusive negotiations on a prospective project, but does not create a commitment to a specific project (Public Resources § 21065; Guidelines § 15378). Future development of the project site would require review pursuant to the California Environmental Quality Act. FISCAL IMPACT: There is no fiscal impact associated with the approval of the subject ENA. Prepared by: Fiscal Impact Reviewed By: Matt Marquez Talika M. Johnson Director of Economic & Community Development Director of Administrative Services Reviewed by: Reviewed and Approved by: Marco Martinez Sergio Gonzalez City Attorney City Manager Attachments: 1) Draft Exclusive Negotiating Agreement 45635.01860\33961913.8 ATTACHMENT 1 THE CITY OF AZUSA EXCLUSIVE NEGOTIATION AGREEMENT (975 W. Foothill Blvd.) THIS EXCLUSIVE NEGOTIATION AGREEMENT (“Agreement”) is dated as of _____________________, 2022, and is entered into by and between the Successor Agency to the Redevelopment Agency to the City of Azusa, a public body corporate and politic (the, “City”) and Spectrum Properties, a California corporation (“Developer”), to provide a specified period of time within which to negotiate a disposition and development agreement (DDA), or purchase and sale agreement (PSA) for the property identified below. The City 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 975 W. Foothill Blvd, Azusa (APNS: 8605-019-906 and 8605-019-907) as more specifically described in Exhibit A (the, “City Property”), which is attached hereto and incorporated herein by this reference; B. Developer has submitted a proposal to redevelop the Property with a commercial building for the United States Post Office and an additional building/s for an additional use/s, as generally described in Exhibit “B” and incorporated herein by this reference (the “Project”). The Parties acknowledge the Project is conceptual and that the final iteration of it may include additional uses. C. The intent of both the City and the Developer in entering into this Agreement is to establish a specific, limited period of time to negotiate a future agreement between them for the acquisition of the City’s Property, the development of the Project on the City’s Property, all subject to mutually agreeable terms, conditions, covenants, and restrictions to be negotiated and documented in a future DDA, PSA, or such other agreement(s) as deemed appropriate by the City and Developer (“DDA” or “PSA”). NOW, THEREFORE, IN VIEW OF THE GOALS AND OBJECTIVES OF THE PARTIES RELATING TO THE SALE AND DEVELOPMENT OF THE CITY’S PROPERTY AND THE PROMISES OF THE CITY AND THE DEVELOPER SET FORTH IN THIS AGREEMENT, THE CITY AND THE DEVELOPER HEREBY 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. 45635.01860\33961913.8 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 Twenty-Five Thousand Dollars ($25,000) 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)). Said Initial deposit is 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 during the Negotiation Period undertaken 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 or PSA) against the Initial Deposit (and Extension Deposit pursuant to Section 2(b) below, and Reimbursement Deposit pursuant to Section 2(c) 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 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, or other required entitlement or project processing costs. 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 not to negotiate with other persons during the Negotiation Period. (b) If the Negotiation Period is extended pursuant to the provisions of Section 3(b) below, Developer shall provide the City with an additional deposit of Ten Thousand Dollars ($10,000) in immediately available funds on the first day of the extended Negotiation Period (the “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. 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. (c) Upon the depletion of available Initial Deposit and any Extension Deposits, Developer shall provide to the City a “Reimbursement Deposit” of Ten Thousand Dollars ($10,000) in immediately available funds within 10 business days to defray certain costs of the City in pursuing the contemplated negotiations with the Developer during the Negotiation Period, pursuant to this Agreement (each, an “Extension Deposit”). At the termination of this Agreement, any remaining funds from a Reimbursement 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 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 45635.01860\33961913.8 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 and delivery of such fully executed Agreement to the Developer. The City shall deliver a fully executed counterpart original of this Agreement to the Developer, within ten (10) calendar days following the City governing body’s 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 Twenty (120) 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’s City Manager and the Developer for no more than two (2) additional consecutive Ninety (90) calendar day periods subject to its payment of the Extension Deposit set- forth in Section 2(b) above (the Extension Options). Notwithstanding the immediately preceding sentence or any other part of this Agreement, in no event shall the Negotiation Period exceed Three Hundred (300) 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, both the City and Developer approve and execute a DDA or PSA acceptable to both the City and Developer, in their respective sole and absolute discretion, in which case this Agreement will terminate on the effective date of such DDA or PSA. 4. Obligations of Developer. During the Negotiation Period, pursuant to the attached Milestone Schedule (Exhibit C), Developer shall proceed diligently and in good faith to develop and present to City staff and, subsequently, to the City governing body, for review, all of the following: (a) A proposed complete conceptual development plan for the Project that describes and depicts: (1) the location and placement of proposed buildings; (2) the architecture style, design and elevations of the proposed buildings; and, (3) any offsite improvements. Such conceptual development plan shall be submitted for Preliminary Plan Review to the City’s Planning Division. (b) Any proposed zoning change or changes to the City’s General Plan, if necessary, to accommodate the Project; (c) A proposed time schedule and cost estimates for the development of the Project ; (d) A proposed financing plan identifying financing sources for all private and public improvements proposed for the Project; and City and Developer acknowledge and agree that all submittals required by this Section shall be made pursuant to the schedule attached hereto as Exhibit “C.” However, Exhibit “C” may be amended administratively by City Manager with the concurrence of Developer; provided that the timeline does not exceed the entire Negotiation Period, i.e., initial and any extensions. 45635.01860\33961913.8 5. Due Diligence Investigations. During the first sixty (60) days of the Negotiation Period, Developer may conduct Due Diligence Investigations at its sole cost and expense into any or all of the following: (a) The City licenses, permits and authorizes the Developer to enter the Property for the sole purpose of conducting: the Due Diligence Investigations, at Developer’s sole cost and subject to all of the terms and conditions of this Agreement. The Developer shall not conduct any intrusive or destructive testing of any portion of the Property, other than low volume soil samples, geotechnical testing and environmental testing. Following the conduct of any Due Diligence Investigations on the Property, the Developer shall restore the Property to substantially its condition prior to the conduct of such Due Diligence Investigations. Due Diligence Investigations may include: (i) Inspection of the physical condition of the Development Property; (ii) Environmental investigations and studies, which may include, a Phase I Environmental Assessment and/or a Phase II Environmental Assessment; (iii) Geotechnical investigations which may include, geotechnical, seismic, and both surface and subsurface soil conditions; and (iv) Civil engineering studies which may include survey, topographical grading, drainage and utility studies. (b) Any Due Diligence Investigations by the Developer shall not unreasonably disrupt any existing use or occupancy of the City’s Property or the operations of the City. Developer shall notify the City at least five (5) calendar days prior to such Due Diligence Investigations and shall provide City with a certificate of insurance and endorsement naming the City and Successor Agency as additional insured from a carrier licensed in the State of California with a Best's rating of "A:VIII" or better naming the City as an additional insured and evidencing the existence of liability coverage in an amount not less than ONE MILLION DOLLARS 1,000,000.00 insuring against any and all liability or damage for injury to persons and damage to property that might arise out of or be related to any work done by Developer. (c) The Developer shall defend, protect, indemnify and hold harmless the City, the Successor Agency to the Azusa Redevelopment Agency, against any and all claims associated with or related to Developer or Developer’s agents Due Diligence Investigations or presence on the Property, including but not limited to any accident, injury or damage whatsoever caused to any Person in or on the Property; provided, however, such indemnification shall not extend to Developer's mere discovery of pre-existing conditions at the Property or arising from the gross negligence or willful misconduct of the City and its employees, representatives and agents. 6. Negotiation of DDA or PSA. (a) During the Negotiation Period, the City and the Developer shall proceed diligently and in good faith to negotiate a DDA or PSA between them. The City and the Developer shall generally cooperate with each other and supply such available documents and 45635.01860\33961913.8 information as may be reasonably requested by the other to facilitate the conduct of the negotiations. Both the City and the Developer shall exercise commercially reasonable efforts to complete discussions relating to the terms and conditions of a DDA or PSA and such other matters, as may be mutually acceptable to both the City and the Developer, in their respective sole discretion. The exact terms and conditions of a DDA or PSA, 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 the City or the Developer that a mutually acceptable DDA or PSA 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 or PSA in the future. Nothing in this Agreement shall be interpreted or construed to be a guaranty, warranty or representation that any proposed DDA or PSA that may be negotiated by City staff and the Developer will be approved by the City governing body. The Developer acknowledges and agrees that the City’s consideration of any DDA or PSA is subject to the sole and absolute discretion of the City governing body and all legally required public hearings, public meetings, notices, factual findings and other determinations required by law. (b) 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 and any other additional terms developed during the Negotiation Period: (i) Any future sale is contingent upon relocation of the USPS facility to this site; (ii) Developer shall pursue and obtain entitlements for its proposed project at 975 West Foothill Boulevard prior to the close of escrow. 7. 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 form one of the basis for the City entering into this Agreement with the Developer for the development of the City’s Property. During the Negotiation Period, no voluntary or involuntary successor-in-interest of the Developer shall acquire any rights or powers under this Agreement with regard to the City’s Property, except as provided in Section 7(c). (b) With regard to the City’s Property, Developer shall promptly notify the City 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 7(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 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 Developer (other than such changes occasioned by the death or incapacity of any individual) that has not been approved by the City, prior to the time of such change, the City may terminate this Agreement, without liability to Developer or any other person and refund any remaining deposit funds provided by Developer to the pursuant to 45635.01860\33961913.8 Section 2(a), above, by sending written notice of termination to Developer, referencing this Section 7(b). (c) Developer may assign its rights under this Agreement relating to the City’s Property to an Affiliate (as defined in Section 7(d)), on the condition that such Affiliate expressly assumes all of the obligations of the Developer under this Agreement in a writing reasonably satisfactor y to the City, and further provided that Spectrum Properties, a California corporation, shall, at all times, Control any such Affiliate and be responsible and obligated directly to the City 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 or any partner, 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. 8. Obligations to Review Draft Agreements and Attend Meetings. (a) During the Negotiation Period, each Party shall diligently and promptly review and comment on draft versions of a DDA or PSA provided by the other Party and, if the terms and conditions of such a DDA or PSA are agreed upon between City staff and the Developer, the Developer shall submit the DDA or PSA fully executed by the authorized representative(s) of the Developer to the City Manager for submission to the City governing body for review and approval or disapproval. Any future DDA or PSA shall consist of terms and conditions acceptable to both the Developer and the City governing body, in their respective sole and absolute discretion. (b) During the Negotiation Period, the Developer shall also keep City 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 or PSA, 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 or PSA, attend both: (1) periodic meetings with City staff, as reasonably scheduled and requested by City staff during the Negotiation Period, and (2) meetings of the City governing body, when reasonably requested to do so by City staff. 9. 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 or PSA 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 or PSA, the Property or the Project, shall be the sole responsibility of and undertaken at the sole cost and expense of the 45635.01860\33961913.8 Developer and no such activity or matter shall be deemed to be undertaken for the benefit of or, at the expense of or in reliance upon the City. 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 of any and all applications and other documents and information to be submitted to the City pursuant to this Agreement or otherwise associated with the Project. The City 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 or PSA that may be undertaken by the Developer during the Negotiation Period, whether or not this Agreement is, eventually, terminated or extended or a DDA or PSA is entered into between the City and the Developer, in the future. 10. City Not To Negotiate With Others. During the Negotiation Period, the City and City 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 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 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 may notify such proponent that it is a party to this Agreement. Developer acknowledges that the City is a public agency and subject to the provisions of the California Public Records Act, Government Code Section 6254, et. seq. (the “Act”). The City 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 pursue a court order preventing the release of the requested information. 11. Acknowledgments and Reservations. (a) The City and the Developer agree that, if this Agreement expires or is terminated for any reason, or a future DDA or PSA is not approved and executed by both the City and Developer, for any reason, neither the City 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, nor an acceptance by the City of any offer or proposal from the Developer for the City to convey any estate or interest in the Property to the Developer or for the City to provide any financial or other assistance to the Developer for redevelopment of the Project or the Property. 45635.01860\33961913.8 (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 until a DDA or PSA is executed and approved. (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, 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 reserves 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, its staff, legal counsel or other consultants, as part of the financial due diligence investigations of the City 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 shall maintain the confidentiality of financial information of the Developer to the extent allowed by law, as determined by the City Attorney. 12. Nondiscrimination. 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. 13. Limitation on Damages and Remedies. (a) DEVELOPER 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. HAVING MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL DAMAGES THE DEVELOPER WOULD SUFFER UPON THE BREACH OF THIS AGREEMENT BY THE CITY, THE DEVELOPER AND THE CITY AGREE THAT A REASONABLE ESTIMATE OF THE DEVELOPER’S DAMAGES IN SUCH EVENT IS TEN THOUSAND DOLLARS ($10,000) (THE “LIQUIDATED DAMAGES AMOUNT”). THEREFORE, UPON THE BREACH OF THIS AGREEMENT BY THE CITY, 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. ____________________ Initials of Authorized ____________________ Initials of Authorized 45635.01860\33961913.8 Representative of City Representative of Developer (b) THE CITY AND THE DEVELOPER EACH ACKNOWLEDGE AND AGREE THAT THE CITY 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 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 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 45635.01860\33961913.8 14. 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 receives notice of a default from the other 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 14(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 an y 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, the Developer shall also be entitled to receive the Liquidated Damages Amount. 15. Compliance with Law. The Developer acknowledges that any future DDA or PSA, if approved by the governing body of the City, will require the 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. 16. 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 or PSA with the City, 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. 17. 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 45635.01860\33961913.8 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: COPY TO: Spectrum Properties, Inc. 145 N. Sierra Madre Blvd., Ste. 9 Pasadena, CA 91107 Attention: Al Cabraloff (T) (626) 578-1580 (F) (626) 486-2300 ______ ______ ______ TO CITY: COPY TO: City of Azusa 213 East Foothill Boulevard Azusa, CA 91702 Attention: City Manager (T) (626) 812-5238 (F) (626) Best Best & Krieger, LLP 18101 Von Karman Ave., Suite 1000 Irvine, CA 92612 Attention: Elizabeth Hull (T) (949) 263-2603 (F) (949) 260-0972 18. 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 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. 19. 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. 45635.01860\33961913.8 20. Counterpart Originals. This Agreement may be executed by the City and the Developer in multiple counterpart originals, all of which together shall constitute a single agreement. 21. No Third-Party Beneficiaries. Nothing in this Agreement is intended to benefit any person or entity other than the City or the Developer. 22. Governing Law. The City 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 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. 23. 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 or the Developer, unless made in writing and executed by both the City and the Developer. 24. Construction. Headings at the beginning of each section and sub-section of this Agreement are solely for the convenience of reference of the City 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 or the Developer, but rather as if both the City 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 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. 25. 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, in the case of either Party, 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. 26. Timeline and Amendments. City and Developer acknowledge and agree that all submittals required by this Agreement shall be made pursuant to the schedule attached hereto as Exhibit “C.” Exhibit “C” may be amended administratively by City Manager with the concurrence of Developer; provided that the timeline does not exceed the Negotiation Period. 45635.01860\33961913.8 [Signatures on following page] 45635.01860\33961913.8 THE CITY OF AZUSA EXCLUSIVE NEGOTIATION AGREEMENT (975 W. Foothill Blvd.) 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. DEVELOPER Dated: Dated: SPECTRUM PROPERTIES, INC. By: Al Cabraloff, President By: Its: __________________________________ CITY Dated: CITY OF AZUSA By: Sergio Gonzalez, City Manager Dated: Dated: __________________________ ATTEST: By: City Clerk APPROVED AS TO FORM: BEST BEST & KRIEGER, LLP By: City Attorney 45635.01860\33961913.8 EXHIBIT A EXHIBIT “A” TO EXCLUSIVE NEGOTIATION AGREEMENT Property Legal Description ALL THAT CERTAIN REAL PROPERTY IS SITUATED IN THE CITY OF AZUSA, THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: PARCELS 1 AND 2 OF PARCEL MAP, IN THE CITY OF AZUSA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 2 PAGE 9 OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. ASSESSOR’S PARCEL NUMBER(S): 8605-019-906 AND 8605-019-907 [Platt To Be Attached Behind This Page] 45635.01860\33961913.8 EXHIBIT “B” TO EXCLUSIVE NEGOTIATION AGREEMENT Project Description The proposed project (to be further refined as part of the related land use entitlement process) will consist of the following: (i) An approximate 11,050 square foot, single story Post Office building with required parking for patrons and employees. This new post office would be a state of the art facility serving the community at large. The building structure could be located either up front, abutting Foothill Blvd, or slightly set back to allow parking in front. Either case would provide for a very prominent presence on Foothill Blvd. Exact layout and size of the building will be further defined in future discussions with USPS. (ii) Possible additional structure/s on the property that could be complimentary use/s. This would be to take advantage of the additional land on the property which not be needed by the post office. The developer and City would investigate this possibility during the design process and mutually agree on possible uses. 45635.01860\33961913.8 EXHIBIT “C” TO EXCLUSIVE NEGOTIATION AGREEMENT Timeline and Milestones Milestone Description Within 30 Days of Effective Date ( , 2022) of ENA Preliminary Plan Submittal Submit site plans and elevations for Preliminary Plan Review, along with all relevant applications and fees. Within 45 Days of Effective Date of ENA Initial Pro Forma Submit initial pro forma for the proposed development demonstrating the costs and benefits to the City regarding all construction, maintenance and operations of all proposed public improvements. Due Diligence Provide a written determination of the City’s Property and physical suitability for development, taking into account relevant regulatory and environmental conditions, conduct such tests, investigations, inspections and examinations as it deems necessary. Provide copies of the reports to the City. Time Schedule and Cost Estimates Submit a proposed time schedule and cost estimates for the development of the Project. Within 60 Days of Effective Date of ENA Plan Review Staff reviews Preliminary Plan Review application for compliance with applicable codes and regulations; letter prepared by Project Manager summarizing staff comments is sent to developer. Project Development Schedule Submit projected construction schedule for the proposed development Market Study Submit market study containing a forecast of regional and local real estate market conditions and anticipated performance of proposed product types for the Project. Development Partners and Structure Submit preliminary letter identifying investment partners for all private and public improvements and initial lender letter for project financing for the Project. Within 90 Days of Effective Date of ENA Draft DDA or PSA Complete negotiations and draft DDA or PSA. Final Revisions Finalize revisions to development proposal and all relevant materials. 45635.01860\33961913.8 Within 120 Days of Effective Date of ENA City Hearings Present development proposal and DDA or PSA to for final review and approval by City Council.