Loading...
HomeMy WebLinkAboutE-8 Staff Report - ENA Block 3745635.01000\42735738.2 CONSENT ITEM E-8 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: SERGIO GONZALEZ, CITY MANAGER FROM: JOSE D. JIMENEZ, DIRECTOR OF ECONOMIC & COMMUNITY DEVELOPMENT DATE: FEBRUARY 18, 2025 SUBJECT: CONSIDERATION OF AN EXCLUSIVE NEGOTIATING AGREEMENT WITH CONGREGATION ALEHOUSE LLC FOR THE PROPERTY LOCATED AT 622- 624 NORTH SAN GABRIEL AVENUE, AND FINDING THAT SUCH DECLARATION IS NOT A PROJECT SUBJECT TO THE CALIFORNIA ENVIRONMENTAL QUALITY ACT BACKGROUND: The City of Azusa owns the parcel located at 622-624 North San Gabriel Avenue. The City received interest from the Ownership team of the Congregation Alehouse, currently located along Azusa Avenue, just east of the subject site in order to allow for a new restaurant concept. In order to proceed, approval of an Exclusive Negotiating Agreement (“ENA”) must be executed. Staff recommends that the City Council enter into an ENA with Congregation Alehouse, LLC to allow the parties to establish the negotiating parameters, terms, and conditions for the development. RECOMMENDATIONS: Staff recommends that the City Council take the following action: 1.Approve an Exclusive Negotiating Agreement (“ENA”) with Congregation Alehouse, LLC, which allows for a period of exclusive negotiations between the City and Congregation Alehouse, LLC; and 2. Authorize the Mayor to, on behalf of the City, to execute the ENA in a form acceptable to the City Attorney, including any additional non-substantive changes; and Approved City Council February 18, 2025 Exclusive Negotiating Agreement – 622-624 North San Gabriel Avenue February 18, 2025 Page 2 3. Determine that this action does not qualify as a “project” as defined in Section 15378 of the California Environmental Quality Act (“CEQA”). ANALYSIS: Also known as the Block 37, the subject site is located on east side of North San Gabriel Avenue, just south of West Foothill Boulevard. The property measures 14,000 square feet and contains a building measuring approximately 8,000 square feet. The site is located within the City’s Downtown Expansion District (DED), which is intended to provide an extension of, and is complementary to, the adjacent Downtown District. Uses such as shops, restaurants, and pedestrian-oriented uses are encouraged. The subject property is shown on the map below: During the past year, the owner and operator of Congregation Ale House, located at 619 North Azusa Avenue approached the City about purchasing the property in question to allow to expand his operations and allow for a Brewery with Restaurant Concept, which would include an ancillary canning facility intended to bottle the unique Beers that are currently being brewed by the owner of Congregation Ale House. In order to consider the disposal of the subject site, an Exclusive Negotiating Agreement between the City and Owner of the Congregational Ale House LLC is first required. An Exclusive Negotiating Agreement is a legal contract between a city (or local government) and a private Exclusive Negotiating Agreement – 622-624 North San Gabriel Avenue February 18, 2025 Page 3 developer or entity that grants the developer exclusive rights to negotiate certain terms for a potential development project within the Block 37 building. The purpose of an ENA is to allow the parties to enter into discussions and work out the details of the project before any formal agreements are made, ensuring a focused and organized process. General ENA Terms To enable the parties to better define the project’s scope and to negotiate the sale of the parcel, an ENA has been drafted and is included as an attachment to this report. The proposed ENA provides a process for the parties to negotiate a possible disposition and development agreement (or similar mechanism.) It should be noted that the ENA does not commit the City to such conveyance or development, nor does it commit Congregational Alehouse LLC 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: • Congregational Alehouse LLC is to provide the 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. • Congregational Alehouse LLC will prepare a conceptual development plan for the project that describes and depicts the extent of their proposal. Such conceptual development plan shall be submitted for Preliminary Plan Review to the City’s Planning Division. • Congregational Alehouse LLC 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 an initial lender letter for project financing. 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. As part of the disposition process, the project was subject to the Surplus Land Act Process with the California Department of Housing and Community Development (“HCD”). Following a filing with HCD, and on November 27, 2024, HCD determined that the sale of this property is exempt from the SLA process, since the lot measures less than a one-half acre in size. Staff believes it would be appropriate for the City Council to approve the proposed ENA with Congregational Alehouse LLC 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. Exclusive Negotiating Agreement – 622-624 North San Gabriel Avenue February 18, 2025 Page 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 a request to approve an Exclusive Negotiation Agreement. In the event that the City sells said land, the process will be subject to its own Fiscal Analysis Impact at said time. Prepared and Approved by: Jose D. Jimenez Director of Economic & Community Development Reviewed and Approved: Sergio Gonzalez City Manager Attachments: 1) Draft Exclusive Negotiating Agreement 45635.01860\33961913.4 THE CITY OF AZUSA EXCLUSIVE NEGOTIATION AGREEMENT (Assessor Parcel No. APN 8611-004-914, 622-624 North San Gabriel Avenue, 624 N San Gabriel LLC) THIS EXCLUSIVE NEGOTIATION AGREEMENT (“Agreement”) is dated as of February ____, 2025, and is entered into by and between the City of Azusa, a public body corporate and politic (the, “City”) and 624 N San Gabriel LLC 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 properties 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 622-624 North San Gabriel Avenue, Azusa (APN: 8611-004-914) 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 subject site to allow for a two-story restaurant concept that will support the Developer’s current operation adjacent to the subject site, and along Azusa Avenue. More specifically, the Developer is proposing to establish a full-functioning brewery, with ancillary canning. The use will make sure of a new kitchen for dining with indoor and outdoor seating. 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, and the development of the Developer’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. 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 45635.01860\33961913.4 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 provide Developer with a budget for all costs (including staff time, consultant fees and attorney fees associated with review and implementation of this Agreement or preparing the DDA or PSA) estimated to be charged against the Initial Deposit (and Extension Deposit pursuant to Section 2(b) below, and Reimbursement Deposit pursuant to Section 2(c) below, as applicable), as well as an estimated timeline for fulfilling its obligations under this Agreement, which shall be subject to Developer’s written approval. At the termination of this Agreement, any remaining funds shall, at the Developer’s option, either be applied to the purchase price, DDA or PSA, or returned to the Developer. Developer acknowledges that the Initial Deposit (and any Extension Deposit, pursuant to Section 2(b) below and Reimbursement Deposits pursuant to Section 2(c)) shall be in addition to those fees and expenses required by the City after execution of the DDA, PSA or other such agreement 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. Toward that end, like the Initial Deposit, the City shall provide Developer with a budget for all costs to be charged against the Extension Deposit and an estimated timelines for fulfilling its obligations under this Agreement, which shall be subject to Developer’s written approval. At the termination of this Agreement, any remaining funds from an Extension Deposit shall be refundable to the Developer as provided in Section 2(a), above. 3. Term of Agreement. (a) The rights and duties of the City and the Developer established by this Agreement shall commence on the first date on which all of the following have occurred (the “Effective Date”): (1) execution of this Agreement by the authorized representative(s) of the Developer and delivery of such executed Agreement to the City, (2) payment of the Initial Deposit to the City by the Developer, in accordance with Section 2(a), (3) approval of this Agreement by the City governing body and execution of this Agreement by the authorized representative(s) of the City 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. 45635.01860\33961913.4 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 the limitations of Sections 3(b). (b) The Negotiation Period may be extended by 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). After the second extension option is exercised by Developer, the Negotiation Period may be extended only by the mutual written agreement of the Parties. (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 execute and approve 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 plans for the Project and the Mixed-Use 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 agreed upon by the Parties. Such conceptual development plans for both the City’s Property and the Developer’s Property 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. 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’s Property for the sole purpose of conducting: 45635.01860\33961913.4 (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, 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 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 45635.01860\33961913.4 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) Developer shall pursue and obtain entitlements for its proposed Mixed-Use Project concurrently with the entitlements for the Project and with the goal of being approved 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 bases 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). This Section shall have no force nor effect on the Developer’s Property. (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 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 satisfactory to the City, and further provided that 624 N San Gabriel LLC, a California Liability Company, 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 45635.01860\33961913.4 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 Developer and no such activity or matter shall be deemed to be undertaken for the benefit of or at the expense of 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. 45635.01860\33961913.4 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. In such cases, the city agrees to withhold the confidential information while Developer seeks such court orders. 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. (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) 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 45635.01860\33961913.4 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 and counsel for Developer. 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. 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 any rights or remedies associated with a default. (d) If a default of either Party remains uncured for more than fifteen (15) calendar days following receipt of written notice of such default, a “breach” of this Agreement by the defaulting Party shall be deemed to have occurred. In the event of a breach of this Agreement, the sole and exclusive remedy of the Party who is not in default shall be to terminate this Agreement by serving written notice of termination on the Party in breach. 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 45635.01860\33961913.4 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 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: 624 N San Gabriel LLC 621 North Azusa Avenue, Suite C Azusa CA 91702 Attention : Luis Alfonso Nieblas (T) (626) 334-2337 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. 45635.01860\33961913.4 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. 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 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. 45635.01860\33961913.4 [Signatures on following page] 45635.01860\33961913.4 THE CITY OF AZUSA EXCLUSIVE NEGOTIATION AGREEMENT (622-624 North San Gabriel Avenue) 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: 624 N San Gabriel, LLC. By: Luis Nieblas 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\33961913.4 EXHIBIT A EXHIBIT “A” Property Legal Description AZUSA LOTS 17,18,19 AND 20 BLK 37 45635.01860\33961913.4 EXHIBIT “B” Project Letter of Intent [To Be Attached Behind This Cover Page] 45635.01860\33961913.4 Luis Niebla 621 N Azusa Ave Unit C Azusa California 91702 December 22, 2024 Jose D. Jimenez Director of Economic Development City of Azusa 213 East Foothill Blvd Azusa, CA 91702 Subject: Letter of Intent for the Purchase of 624 N. San Gabriel Ave, Azusa, California Dear Mr. Jimenez, I am writing to formally express my intent to purchase the City-owned property located at 624 N. San Gabriel Ave, Azusa, California. This property represents an exciting opportunity for redevelopment, and I am eager to partner with the City of Azusa to bring a transformative project to the community. My vision for this property includes: 1. Establishing a full-functioning brewery with a canning line. 2. Creating a full liquor bar complemented by a new kitchen for dining with indoor and outdoor patio service and entertainment areas on the first floor. 3. Adding an elevator for accessibility to the second floor, which will feature a second full liquor bar, a new kitchen, open dining areas, and additional entertainment spaces. The initial phase of my due diligence will involve an evaluation of the existing structure to determine the scope of work and establish a budget for the remodel. Request for Preliminary Access: To facilitate this process, I kindly request immediate temporary access to the building. During this time, I will: • Bring in my architect and necessary tradespeople to assess the current condition of the building. 45635.01860\33961913.4 • Measure and drill into the concrete to inspect the footing size (with all holes to be repaired at my expense). The information gathered will allow me to propose a fair value for the property in its current state and prepare a detailed budget for the project. Proposed Purchase Terms: • I will submit a formal valuation for the property once my assessments are complete. • Close of escrow will be requested upon approval of construction documents. I believe this project will add significant value to the City of Azusa, enhancing economic development and community engagement. I am committed to adhering to all City guidelines and ensuring a smooth and transparent process. I will have my team create a visual and lay out as soon as we have all needs from all trades involved. I appreciate your consideration of this proposal and look forward to discussing it further. Please feel free to contact me at 626-705-8668 or Luis4pvt@gmail.com for any additional information or clarification. Thank you in advance for your consideration. Sincerely, Luis Niebla 45635.01860\33961913.4 EXHIBIT “C” EXCLUSIVE NEGOTIATING AGREEMENT TIMELINE AND MILESTONES Milestone Description Within 60 - 90 Days of the Effective Date of ENA Due Diligence Provide a written determination of the City’s Property's and Developer’s Property’s 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 City. Preliminary Plan Submittal Submit site plans and elevations for Preliminary Plan Review, along with all relevant applications and fees, for both the Project and the Mixed-Use Project. Time Schedule and Cost Estimates Submit a proposed time schedule and cost estimates for the development of the Project and the Mixed-Use Project. Within 90 – 120 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 any formal entitlement applications along with the projected construction schedules for the Project and the Mixed-Use Project. Market Study Submit any market studies containing a forecast of regional and local real estate market conditions and anticipated performance of proposed product types for both the Project and Mixed-Use 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 both projects. Within 120 - 180 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. City Hearings Present development proposal and DDA or PSA to for final review and approval by City Council. 45635.01860\33961913.4 EXHIBIT “D” RIGHT OF ENTRY 1) From and after the date of the Agreement, Developer may enter upon the Site until the termination of this Agreement to conduct any investigation, test, study or analysis related to the development thereof. Developer shall exercise due care, follow best commercial practices in connection with such entry and testing, and shall comply with all laws, ordinances, rules, regulations, orders and the like in connection with any entry onto or testing of the Site. 2) Prior to any entry onto the Site, Developer shall obtain and maintain, and shall require that its agents, consultants, contractors and representatives (collectively, the “Agents”) to obtain and maintain in full force during the term of this Agreement, at Developer’s sole cost and expense, a policy of comprehensive liability insurance, including Site damage, which will insure City, City and their respective officers, members, employees and agents against liability for injury to persons, damage to Site, and death of any person arising in connection with Developer or its Agents entry upon the Site and/or conducting of tests or studies thereon. The policy shall be approved as to form and insurance (including approval of the insurance company) by the City, and shall be in an amount not less than One Million Dollars ($1,000,000). 3) Developer shall provide City with a certificate for any insurance policy required hereunder, including an endorsement, if reasonably available, that states that the policy will not be cancelled except after thirty (30) days' notice in writing to City and names the additional insureds as required herein. Developer shall provide City with evidence of such insurance coverage prior to any entry onto the Site by Developer or its Agents. 4) Following any such tests or studies, Developer shall leave the Site in substantially similar condition as of the date of this Agreement, and Developer shall indemnify, defend and hold harmless City and their respective officers, members, employees and agents from and against any liabilities, claims, damages (including injury or damage to person or Site), losses, costs, expenses and fees (including reasonable attorneys’ and experts’ fees and costs) to the extent resulting from the entry, inspections and studies conducted by Developer and its Agents on, under, or about the Site, except that Developer shall have no liability , and no obligation to remedy, any liabilities, claims, damages, costs, expenses, fees, conditions or defects on or under the Site to the extent (i) not caused by Developer or its Agents, (ii) resulting from any conditions or defects discovered during Developer’s investigations and inspections, including the discovery of any Hazardous Materials and the results or findings of any tests, or (iii) to the extent resulting from the acts or omissions of City, or City’s agents, engineers, contractors, consultants and representatives. Without limiting the foregoing, Developer shall have no liability for any diminution in the value of the Site resulting from the activities excluded in (ii) above, provided in the event Developer or its Agents discover any toxic or Hazardous Materials on or under the Site, Developer and its Agents shall cease any further investigation in that area of the Site, notify City by phone and email within twenty forty-eight (48) hours of that discovery, exercise reasonable due care so as not to exacerbate that condition and properly dispose of any soils samples which contain such toxic or Hazardous Materials. The foregoing indemnity shall survive beyond the Closing, or, if the sale is not consummated, beyond the termination of this Agreement.