03-1007_MERCY HOUSING CALIFORNIA_Exclusive Negotiation Agreementi
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EXCLUSIVE NEGOTIATION AGREEMENT
PITTS PROPERTY
By and Between the
SAN JUAN CAPISTRANO COMMUNITY
REDEVELOPMENT AGENCY
and
THE CITY OF SAN JUAN CAPISTRANO
and
MERCY HOUSING CALIFORNIA
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Exclusive Negotiation Agreement
PITTS PROPERTY
(APN: 668-421-03 & 668-421-04)
This EXCLUSIVE NEGOTIATION AGREEMENT (PITTS PROPERTY) (this
"Agreement"), dated for purposes of identification only as of October 7, 2003 (the "Date
of Agreement"), is hereby entered into by and between the CITY OF SAN JUAN
CAPISTRANO, a public body, corporate and politic, (the "City"), the SAN JUAN
CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate
and politic, (the "Agency") and MERCY HOUSING CALIFORNIA, a California non-profit
corporation, (the "Developer").
RECITALS
A. The Agency and the City desire to assist with the redevelopment of that
approximately two and seven tenths (2.7) acres generally located on the
terminus of Calle Rolando in the City of San Juan Capistrano (the "Site"). The
Site consists of two parcels, Assessor's Parcel Numbers 668-421-03 and 668-
421-04. The Site is depicted on the Map which is attached hereto as Exhibit A
and incorporated herein by this reference.
B. The City intends to take title to the site from SunCal, a private developer who is
under contract to purchase the property to satisfy their housing in -lieu obligations
imposed by the San Juan Municipal Code.
C. The Developer is interested in developing the Site and operating thereon a multi-
family affordable housing project consisting of at least sixty (60) units to be made
available to low income households at affordable rents (the "Multi -Family
Affordable Housing Project").
D. The Developer desires to explore the feasibility of acquiring title to the Site from
the City for the purpose of constructing and operating the Multi -Family Affordable
Housing Project.
E. The Agency, the City, and the Developer (each, a "Party" and jointly, the
"Parties") desire to jointly explore the feasibility of the Multi -Family Affordable
Housing Project and negotiate an agreement or agreements to provide for the
Multi -Family Affordable Housing Project (a "Disposition and Development
Agreement").
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F. The Agency by separate Exclusive Negotiation Agreement ("ENA") dated
January 6, 2003, is obligated to assist the Developer in locating a site and
providing funds for pre-acquisition due diligence in accordance with the terms of
the ENA.
G. The primary purpose of this Agreement is to establish a period during which the
Parties shall negotiate the terms of a Disposition and Development Agreement.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
Section 1. Negotiating Period. The Parties agree to negotiate diligently and in good
faith with one another for a one hundred twenty (120) day period
commencing upon the Effective Date of this Agreement (as hereinafter
defined in Section 18) (the "Negotiating Period"), in order to agree upon a
mutually acceptable Disposition and Development Agreement ("DDA").
If a Disposition and Development Agreement is negotiated and executed by the
Developer within the Negotiating Period, then the term of the Negotiating Period and
this Agreement shall automatically be extended for a period of forty-five (45) days from
the date of such submittal to enable the City's staff to take and coordinate the actions
necessary to bring the Disposition and Development Agreement before the City Council
and Agency for consideration, action, and authorization to execute, if such are approved
by City in its sole and absolute discretion.
Section 2. Certain Parameters for Negotiations. The following nonexclusive list of
items related to the Multi -Family Affordable Housing Project shall be the
subject of negotiations during the Negotiation Period:
(A) site plan (depicting building locations, elevations, building square
footages and unit mix, parking access points, landscaped areas,
and pedestrian and vehicular circulation);
(B) pro forma (addressing detailed development and operational costs,
anticipated rents for each unit, estimated profit and appropriate
return measurements);
(C) financing plan (addressing the proposed methods of construction
and permanent financing and amounts and sources of equity and
debt capital); and
(D) development schedule.
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Section 3. Developer's Submission of Documents for Agency Review and
Comment. Within sixty (60) days of the Effective Date of this Agreement,
the Developer shall submit the following information to the Agency or its
agents:
(A) a conceptual site plan; and
(B) a pro forma; and
(C) a financing plan; and
(D) a development schedule; and
(E) Environmental site assessment .
In the event that the Agency requests that changes be made, the Developer shall, within
twenty (20) days of a request by Agency, submit a revised site plan, pro forma,
financing plan, and/or development schedule to the Agency in response to the Agency's
comments on the initial version of each submission
The Developer acknowledges and agrees that design and architectural review by the
Agency and its consultants will be required at each stage of the development of the
Multi -Family Affordable Housing Project and that sketches, plans, and ultimately
working drawings, specifications and similar documents will be required to be submitted
for review and approval pursuant to the Disposition and Development Agreement. The
Developer further acknowledges and agrees that the City of San Juan Capistrano (the
"City"), acting under its general police powers as a municipal corporation, may conduct
a similar review and that building design including, but not limited to, the selection of
building elevations, construction material, parking layout and landscaping will not be
final until approved by City. The Developer further acknowledges and agrees that rights
exercisable by the Agency are distinct and separate from those additional rights which
the City may exercise under its general police powers as a municipal corporation.
Section 4. Agency Evaluation of Developer's Proposal and Drafting of
Disposition and Development Agreement. Upon the Agency's receipt of
the last of Developer's submissions as provided in Section 3 hereof,
Agency shall conduct or cause to be conducted a complete economic
evaluation of Developer's submittals and proposed Multi -Family Affordable
Housing Project; within thirty (30) days of the date on which the Agency
receives the last such submittal, Agency shall elect to either (i) terminate
this Agreement in accordance with Section 9.3 hereof, or (ii) continue
negotiating hereunder in order to consummate the drafting of a Disposition
and Development Agreement.
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Section 5. Agency Assistance. The Agency shall reimburse Developer for pre -
development soft costs (such as engineering, architectural, and
administrative costs) incurred by Developer during the Negotiation Period
with respect to the design of the Project (collectively, "Reimbursable
Costs") in amount not to exceed Fifty Thousand Dollars ($50,000) as set
forth in Exhibit A attached and incorporated herein (the "Agency
Assistance"). Developer shall not incur any Reimbursable Costs without
first obtaining the written reasonable approval of the Agency. The Agency
shall reimburse Developer for Agency -approved Reimbursable Costs
promptly upon the Agency's receipt of reasonable detailed invoices related
to such costs.
In consideration for the Agency's provision of the Agency Assistance,
Developer shall deliver to the Agency all of the documents and materials
produced by those professionals for which Developer seeks
reimbursement under this Section and all such documents and materials
shall become the property of the Agency at such time as this Agreement is
terminated or terminates, unless the Parties subsequently enter into a
Disposition and Development Agreement.
Section 6. Environmental Requirements. Certain state and local environmental
requirements (including, without limitations, the California Environmental
Quality Act, Public Resources Code Sections 21000, et seq.)may be
applicable to the proposed Multi -Family Affordable Housing Project.
Pursuant to such requirements, certain environmental documents may be
required to be prepared for the proposed Multi -Family Affordable Housing
Project. The Developer agrees to cooperate with the Agency in obtaining
information to determine the environmental impact of the proposed Multi -
Family Affordable Housing Project (collectively, "CEQA Documentation").
Agency agrees to cooperate with the Developer to act as lead agency, if
practical.
Section 7. Hazardous Materials Assessment. The Developer will initiate or have
conducted environmental assessments, audits and/or testing on the Site
within the first 30 days, provided that the Developer has the approval of
the owner of the Site or other legal entitlement to conduct such testing. In
the event Developer conducts or has conducted such assessments, such
assessments shall be referred to as the "Developer's Environmental
Assessments."
The Developer shall have the right to terminate this Agreement if the
Developer is not satisfied with the findings and the recommendations
made in the Developer's Environmental Assessments. However, the
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Parties acknowledge and agree that the Site will be leased "as is" and that
if and to the extent the Agency holds title to any portion of the Site prior to
conveying such property interests to the Developer, then Developer shall
release, defend, indemnify and hold Agency harmless with respect to the
environmental and soils condition of the Site.
Section 8. Cooperation. The Parties agree to cooperate with each other in promptly
supplying information and analyses relating to the Multi -Family Affordable
Housing Project.
Section 9. Effect of this Agreement; Termination.
9.1 Nature of Agreement. This Agreement is not intended to constitute
a binding agreement by the Agency to convey all or any portion of
the Site, to financially participate with the Developer in the
assembly or acquisition of the Site for the Multi -Family Affordable
Housing Project, or to construct or operate the Multi -Family
Affordable Housing Project, nor is it intended to constitute a binding
agreement to enter into a Disposition and Development Agreement
or any other contract. Except as set forth in the Disposition and
Development Agreement, no Party shall be legally bound to
consummate the construction and operation of the Multi -Family
Affordable Housing Project as outlined herein unless and until a
Disposition and Development Agreement or other contract has
been executed and delivered by the Parties. Notwithstanding any
other provision hereof, neither the Developer nor the Agency shall
be under any obligation to approve or execute any Disposition and
Development Agreement at its sole and absolute discretion, with or
without cause; however, the parties agree to negotiate the
Disposition and Development Agreement in good faith. In the event
that a Disposition and Development Agreement is approved and
executed by the Parties, this Agreement shall be superseded by
such Disposition and Development Agreement.
9.2 Exclusive Nature of Negotiations. The Parties intend that certain
aspects of the negotiations conducted pursuant to this Agreement
be negotiated exclusively between the Parties. Accordingly, during
the Negotiating Period the Agency shall negotiate exclusively with
the Developer with respect to the development of the Site.
9.3 Termination of this Agreement. Each Party reserves the right to
terminate this Agreement, with or without cause, upon ten (10) days
prior written notice to the other Party, thereby withdrawing from
such negotiations without any liability to the other Party, except that
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each Party shall be obligated to promptly return to the other Party
all information and materials which such Party has received from
the other Party pursuant to this Agreement, and the Agency shall
be obligated to reimburse Developer for any Reimbursable Costs in
accordance with Section 5 hereof. The Parties, by their respective
execution hereof, knowingly agree, notwithstanding anything herein
to the contrary, that neither of them shall have any right to specific
performance of this Agreement, nor any other equitable or damage
remedies under the law. Each Party makes such release with full
knowledge of Civil Code Section under the law. Each Party makes
such release with full knowledge of Civil Code Section 1542 and
hereby waive any and all rights thereunder to the extent of this
release, if such Section 1542 is applicable. Section 1542 of the Civil
Code provides as follows:
"A general release does not extend to claims which
the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if
known by him must have materially affected his
settlement with the debtor."
9.4 Mutual Confidentiality. To the extent permitted by applicable law,
the Parties shall maintain all information concerning this Agreement
and any pending or subsequent negotiations between the Parties
as confidential, disclosing information only to those individuals and
representatives as designated by the other Party, provided that
such individuals acknowledge and agree to maintain the
confidentiality of such information.
Section 10. Notices. Any notices, requests or approvals given under this Agreement
from one Party to another may be personally delivered, transmitted by
facsimile (FAX) transmission, or deposit with the United States Postal
Service for mailing, postage prepaid, to the address of the other Party as
stated in this paragraph, and shall be deemed to have been give at the
time of personal delivery or FAX transmission or, if mailed, on the third
day following the date of deposit in the course of transmission with the
United States Postal Service. Notices shall be sent as follows:
If to Agency: San Juan Capistrano Community Redevelopment
Agency
Attn: Executive Director
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Fax # (949) 493-1053
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If to City: City of San Juan Capistrano
Attn: City Manager
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Fax # (949) 493-1053
If to Developer: Mercy Housing California
Attn: Dara Kovel, Regional Director
500 South Main Street, Suite 110
Orange, CA 92868
Fax # (714) 550-5085
Gubb and Barshay, LLP
Attn: Natalie Gubb
Fifty California Street, Suite 3155
San Francisco, CA 94111
Fax: ( 415) 781-6967
Section 11. Governing Law. This Agreement shall be governed by the laws of the
State of California. Any legal action brought under this Agreement must be
instituted in the Superior Court of Orange County, State of California, in an
appropriate court in that county, or in the Federal District Court in the
Central District of California.
Section 12. Attorney's Fees. If any legal action is brought to enforce, construe,
interpret or invalidate the terms of this Agreement, the prevailing party
shall be entitled to all costs and expenses incurred in any such action,
including court costs and reasonable attorney's fees, in addition to any
other relief to which such party may be entitled.
Section 13. Interpretation. This Agreement shall be interpreted as a whole and in
accordance with its fair meaning and as if each Party participated equally
in its drafting. Captions are for reference only and are not to be used tin
construing meaning. The recitals are deemed incorporated into this
Agreement.
Section 14. Real Estate Commissions. Each of the Parties represents and warrants
to the other Party that no real estate commission, broker's fees, or finder's
fees which may accrue by means of the acquisition of an interest in the
Site is due to any person, firm or entity except as set forth above; each
Party agrees to defend, indemnify and hold the other Party harmless with
respect to any judgment, damages, legal fees, court costs, and any and all
liabilities of any nature whatsoever arising from a breach of such
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representation.
Section 15. Amendment of Agreement. No modification, rescission, waiver, release
or amendment of any provision of the Agreement shall be made except by
a written agreement executed by each of the Parties.
Section 16. Entire Agreement. This Agreement constitutes the entire understanding
and agreement of the Parties concerning this subject. This Agreement
integrates all of the terms and conditions mentioned herein or incidental
thereto, and supersedes all prior negotiations, discussions and previous
agreements between the Parties concerning all or any part of the subject
matter in this Agreement.
Section 17. Implementation of Agreement. The City and Agency shall maintain
authority to implement this Agreement through its City Manager and
Executive Director, respectively. The Executive Director shall have the
authority to issue interpretations, waive provisions, and/or enter into
certain amendments of this Agreement on behalf of Agency so long as
such actions do not materially or substantially change the uses or
development contemplated hereunder, or add to the costs incurred or to
be incurred by the Agency as specified herein, and such interpretations
and/or substantive interpretations, waivers, or amendments shall not
require the consideration, action and written consent of the San Juan
Capistrano Community Redevelopment Agency Board of Directors.
Section 18. Effective Date of this Agreement. This Agreement shall take effect
immediately upon the execution of this Agreement by the Agency and the
City (the "Effective Date").
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IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS AGREEMENT AS
OF THE RESPECTIVE DATES SET FORTH BELOW.
"AGENCY"
SAN JUAN CAPISTRANO COMMUNITY
REDEVELOPMENT AGENCY
A Public body, corporate and politic
Dated: (U 2003 By: ( ✓�
Pamela Gibson
Interim Executive Director
ATTEST:
q&aretMonahafn
APPROVED AS RM:
By:
Thomas P. C Jr.
Agency Counsel
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"CITr,
CITY OF SAN JUAN CAPISTRANO
A Public body, corporate and politic
Dated: IZ2 — 7 2003 By:
Pamela Gibson
Interim City Manager
ATTEST:
APPROVED AS TO FORM:
�.Wriaw
ttorney
Dated: Srf p1r vV1V V- 2-1 2003
Em
"DEVELOPER"
MERCY HOUSING CALIFORNIA
A California nonprofit c rporation
�-
ara Kovel
Vice -President
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Exhibit A
Reimbursable Costs to Mercy Housing Corporation
Due Diligence on Pitts Property
7777777,
Architect's cost to prepare a massing study, site plan and residential
conceptual elevations: (Based on estimate from architect.)
$30,000
Nuffiffiff "k,
Administrative time to prepare a development budget, operating budget,
15 vear cash flow, sources & uses, and to determine proposed financing
sources including the gap needed from local sources.
$4,500
Architect's cost to prepare a feasibility study evaluating the site in relation
to the City's land use requirements such as density, setbacks, open space ,
parking, etc., as well as determining need for any variances. (Based on
$7,500
estimate from architect.)
Due diligence reports and administrative time to evaluate need and prepare
initial application for general plan amendments, rezone and entitlements.
$7,500
4011N 2;1141 W,
Administrative costs to prepare timeline covering the following phases of
development: site control/acquistion; financing; entitlements/design/
community outreach; construction; marketing/rent-up
500
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32400 PASEO AD6L.ANT0
SAN JUAN CAPISTRANO, CA 92675
(949) 493-1171
(949) 493-1053 (FAX)
www. sanjuancapistrano. org
TRANSMITTAL
MEMBERS OF THE CITY COUNCIL
DIANE L. BATHGATE
JOHNS. GELFF
MATT HART
JOESOTO
DAVID M. SWERDLIN
INTERIM CITY MANAGER
PAMELAGIBSON
TO: Mercy Housing California, Attn: Dara Kovel, Regional Director, 500 South
Main Street, Ste 110, Orange, CA 92868; and
Gubb & Barshay, LLP, Attn: Natalie Gubb, Fifty Calfironia Street, Ste
3155, San Francisco, CA 94111
FROM: Meg Monahan, CMC, City Clerk V
RE: Exclusive Negotiation Agreement — Pi s Prope y
City of San Juan Capistrano & Commu 'ty Re velopment Agency
DATE: October 9, 2003
Enclosed, please find enclosed
(1) original, executed agreement, approved by the City Council of the City of San Juan
Capistrano & Community Redevelopment Agency at their meeting of October 7, 2003.
You may reach me at (949) 443-6308, should you have any questions.
Thank you,
Cc: Douglas Dumhart, Principal Management Analyst;
San Juan Capistrano: Preserving the Past to Enhance the Future
COMMUNITY REDEVELOPMENT AGENCY
AGENDA ITEM
TO: Pamela Gibson, Interim Executive DIrecLor
FROM: Douglas Dumhart, Principal Management Analyst
CRA 10/712003
C1
SUBJECT: Consideration of Exclusive Negotiating Agreement with Mercy Housing
for the Pitts Property (APN 668-4211-03/04)
RECOMMENDATION:
By motion, approve the Exclusive Negotiating Agreement by and between the Agency,
the City and Mercy Housing for the Pitts Property and authorize the Executive Director
to execute the Agreement.
SUMMARY:
Based upon the projected housing needs contained in the General Plan, the City issued
a Request for Qualifications (RFQ) in January 2002 from non-profit developers
interested in partnering with the City for affordable housing. As a result of the RFQ, the
San Juan Capistrano Community Redevelopment Agency (Agency) entered into an
Agreement with Mercy Housing California (MHC) to identify proposed sites that are
suitable for the development of a multi -family rental housing project.
Potential Site
Per the agreement, MHC has been actively pursuing numerous potential sites to
develop as new affordable family rental projects. A 2.7acre vacant parcel located at the
terminus of Calle Rolando (APN: 668-421-03/04) has been identified as a favorable site
for an affordable family rental project. The property owner, Roger Pitts, has expressed
an interest in selling to MHC.
SunCal Dedication
On September 2, 2003, the City Council adopted an ordinance requiring SunCal
(Pacifica San Juan), a market rate developer, to fulfill their exclusionary housing
requirement with the City by acquiring and dedicating this site to the City in -lieu of
remitting Housing In -Lieu fees. SunCal would acquire the property from Pitts and
dedicate the property to the City upon the close of escrow. The City would then
calculate the In -Lieu fees owed and credit this amount against the cost of the property.
AOR CITY COUNCIL AGENDA
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Agenda Item -2- October 7, 2003
As a result, on September 11, 2003, SunCal, dba as SJD Partners, LTD, entered into a
Letter of Agreement with Roger Pitts, the property owner. The Letter of Agreement is
provided as Attachment 1 to this report. The key elements of the agreement are as
follows:
• Purchase Price of $2,000,000
• Buyer to pay 3% for Buyer's brokerage commission ($60,000)
• Feasibility Period of 60 days
• City to provide a threat of friendly condemnation to Seller
• Closing date of no later than January 7, 2004
Due Diligence
MHC has submitted an Exclusive Negotiating Agreement (ENA) in the amount of
$50,000 for Agency approval to cover the costs associated with the due diligence. Upon
commencing with the opening of SunCal's escrow with Mr. Pitts, MHC will begin its due
diligence on the property on behalf of the Agency. The ENA with MHC is provided as
Attachment #2 to this report. MHC has 60 days to complete due diligence.
If it is determined from MHC's due diligence that the property is developable as
affordable rental housing, the City will begin negotiating a Disposition and Development
Agreement for the MHC to acquire, develop and operate a multi -family affordable
housing project. If the City and MHC find the property is not suitable for affordable
housing it will sell the property and deposit the proceeds into the housing fund.
NOTIFICATION:
Dara Koval, Mercy Housing*
Holly Benson, Mercy Housing*
Brad Gates, SunCal,*
Roger Pitts, Property Owner-*
Tom Clark, Straddling, Yocca, Carlson & Rauth*
COMMISSION/BOARD CONSIDERATIONS:
N/A
FINANCIAL CONSIDERATIONS:
Funds for due diligence have been budgeted in FY 03/04 in Account # 21-62134-4110.
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Agenda Item -3- October 7, 2003
ALTERNATIVE ACTIONS:
1. By motion, approve the Exclusive Negotiating Agreement by and between Mercy
Housing for the Pitts Property and authorize the Executive Director to execute
the Agreement.
2. By motion, approve the Exclusive Negotiating Agreement by and between Mercy
Housing for the Pitts Property and authorize the Executive Director to execute
the Agreement; subject to modifications.
3. Refer to staff for additional information.
RECOMMENDATION:
By motion, approve the Exclusive Negotiating Agreement by and between Mercy
Housing for the Pitts Property and authorize the Executive Director to execute the
Agreement.
Rene/ullybmitt • "0�
Douglas . Dumhart
Principal Management Analyst
Attachment 1. SunCal Letter of Agreement
2. Exclusive Negotiating Agreement with Mercy Housing Corporation
29111�� 1,2Cie3 05:03 94146540 .
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PAGE 01/03
y 06/11/2003 18:38 17,41 714 895 6731 .� sIINCAL _ rdoo2
S°JO Partners, LTD
5109 E, La Palma Avenue, Suite D
Analmim, CA 97807
7141693-6700 Fax 714/693-6730
September 11, 2003
Roger R Pitts
P 0 Box 3633
Whittier, California 90605
Ra: 2.7 -Acre Property at enol of Calle Rolando Cul De Sac
San Juan Capistrano, California (APN= 665-421-03104)
Dear Mr. Pitts,
SJD Partners Ltd_ (the "Buycs") hereby offers to purchase that certain property (the "Property")
)orated at Calle Rolando, San Juan Capistnmo, California (APN. 668-421-03/04) on dee teams
and conditions set forth herein (the "Letter Agmutent").
I. Purchase Price: Buyer will pease the Property from Seller for the purchase price off
Two Million Dollars ($2,000,000) (the "Purchase Price"), payable all cash at closing.
2. Earnest Money Deposit W9ybin five (5) days after the execution of this letter
Agreement, Buyer shall deposit with F)dc* National Title Company ("Title company ")
as escrow agent, a deposit of Cash in the amount of Twenty Five Thousand Dollars
($25.000) (the "Deposit"). Upon determination of the suitability of the Property for its
intended purposes by Buyer pursuant to Paragraph 7 hereof, the Deposit shall become
nonaetimdable. Until released tbo Deposit shall be held by Tide Company in an interest
bearing account with interest accruing in favor of Buyer at the Closing or in favor of
Seller if Seller is entitled to the Deposit hereunder, The Det crit including artereu shall
be fully credited to rte Purchase Price at The Close of Fseraw,
3. Title. Seller at Closing shall convey to Buyer good, marketable and indefeasible fee
simple title to the Property by grant deed. Said title shall be free and clear of all liens and
encumbrances. Subject only to such exceptions as may be approved by Buyer, and any
taxes not yet due and payable. After the feasibility Period, Seller agrees to not wise any
new exceptions to be created. Prior to the close of escrow, should the tide report contain
any exceptions not approved by Buyer during the Feasibility Period, Buyer shalt have ten
00) business days to review such new exceptions to title, Buyer shall not have the right
to disapprove any new We exocptions that do not materially affr+et the intended
development oftho Property. Seller shall pay the cost associated -with the CLIA portion
of the polity, and B uyer shall pay the cost associated with any extended coverage.
d. We ImurAnce: Within tea (10) days after the execution of ibis Letter Agreement,
Seller shall deliver to Buyer a preliminary title report with supporting doamntents issmed
by the Title Company. Said commitment shall be reviewed and approved by Buyer
during the Feasibility Period, and shall, contain the expressed commitment of the Title
Company to issue an ALTA owner's title insurance policy subject only to those
exceptions approved by Buyer.
Attachment 1
09/11/2003 05:03 941465• •
R KITTS PAGE 02/03
09/11/2009 16;98 FAX 714 899 8781 51iNCAL ROOD
Roger R_ Pitts
September 11, 2003
Page 2
5. survey: % ida forty-five (45) days atter'the execution of this Letter Agreement, Buyer
shall secure, at Buyer's sole cost and expense, a current topographic, boundary, survey of
the Property, in form and content acceptable to Buyer and Title Company, with a full
plotting of easements, if any, (the "Survey") so as to permit the Title Company to remova
the survey exception from the title pol icy.
6. Property Information: To the extent reasonably available to the Seller, Seller shall
provide Buyer widen copies of the following due dOlgeaco items concerning the Property
as soon as possible after the executinn of this Letter Agreement, but no event later than
ten (10) days after the execution of this Leiter Agreement:
• Any plans relating to grading, erosion control, water, sewer, storm dram, street
improvement, landacape, and parks
• Am, relevant correspondence with government jurisdictions
■ The most current real property tax bills and value renditions
• information on any applicable Community Facilities DistrictAssessmants ("CPD's')
• Favuonmcatal, biological and archaeological reports
• ]Boundary survey, topographic maps
• Covenatm, Conditions and Restrictions ("CC&R'S")
• Information regarding utility availability and locations
■ An soils an engineering mports/studies
• Notifications by any municipal authority regarding condemnation of Property of a
portion thereof
• Dry mility plans
7. Feasibility Period: Buyer shall have a period (time "Feasibility Period") of sixty (60)
days following receipt of the last to be received of the items referred to in paragraphs 4
and 6 above to determine, in. its sole and absolute discretion, the suitability of the
Property for its intended purpose. in this regard, immediateby after mutual execution, of
this Letter Agreranent, Seller shall gram Boyer and its agents a right of entry on the
Property to obtain appraisals mud to perform engineering and environmental tests and
such other studies necessary in connection with Buyer's evaluation of the Property and
Buyer will agree to promptly restore the Property to its condition prior to such testa.
Buyer shalt hold Seller harmless from any damage or injury relating to or resulting from
Buyer's or Buyer's agent's entry on the property. In addition, buyer shall review zoning
and otter governmental regulations affecting the Property. In the event Buyer deiraminrs
Ilia Property is not suitable for its intended we and notifies the Seller in writing, in its.
sole and absolute discretion, this Letter Agreement will terminate, the Deposit plus
accrued interest will be returned w Buyer and the parties will bane no further obligations
to one anotmer.
a. aosiago Provided the Contract of Sale is not teaninated as stipulated in Paragraph 7, the,
"Closing" or "Close of Esorow" of the purchase shall occur within ten (10) businesses
days following completion of the Fea Nlity Period, but in no event later than January 1,
2004, unless mutually extended by both partes.
9. ]Brokerage Commission/Bee: providing the Closing occurs, Buyer to pay Arlan It:.
Murata a commission of three percent (3%) of the sales price through escrow at the closo
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Rogn R Pitts
SepwraPage WPI
of escrow_ Buyer and Scllor shall warrant to one another meY W not d'aab`9 ommissionor ft for
with and
throoeh any real estate broker or real estate company ng
services of any kind for this transaction except for Arlan K Murata Both Seller end
Buyer agree to defeod. indemnify and hold harmless the other with respect to any and all
claims made througb the indemnifying party of anv kind relating to further fees and/or
real estate commissions or fees_
10. Notices: SSD Parmors Ltd.
Attention: 13mee Blieff
S3D Partners Ltd.
5109 East IA Palma, Suite D
Anaheim, CA 92807
If the foregoing is aooaptable, please sign the enclosed counterpart of this letter and return it to
the undersignod on or before 5 days after the date of this Letter Agreement
Tbankyou for yoUrcansideration_
Sincerely,
37D P r3, Lid.
Its:
Accepted and Atireed to this /J��i of 2
nSefler"
By:
PAGE 03/03
41004
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EXCLUSIVE NEGOTIATION AGREEMENT
PITTS PROPERTY
By and Between the
SAN JUAN CAPISTRANO COMMUNITY
REDEVELOPMENT AGENCY
and
THE CITY OF SAN JUAN CAPISTRANO
two
MERCY HOUSING CALIFORNIA
Attachment 2
Exclusive Negotiation Agreement
PITTS PROPERTY
(APN: 668-421-03 & 668-421-04)
This EXCLUSIVE NEGOTIATION AGREEMENT (PITTS PROPERTY) (this
"Agreement"), dated for purposes of identification only as of October 7, 2003 (the "Date
of Agreement"), is hereby entered into by and between the CITY OF SAN JUAN
CAPISTRANO, a public body, corporate and politic, (the "City"), the SAN JUAN
CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate
and politic, (the "Agency") and MERCY HOUSING CALIFORNIA, a California non-profit
corporation, (the "Developer").
RECITALS
A. The Agency and the City desire to assist with the redevelopment of that
approximately two and seven tenths (2.7) acres generally located on the
terminus of Calle Rolando in the City of San Juan Capistrano (the "Site'). The
Site consists of two parcels, Assessor's Parcel Numbers 668-421-03 and 668-
421-04. The Site is depicted on the Map which is attached hereto as Exhibit A
and incorporated herein by this reference.
B. The City intends to take title to the site from SunCal, a private developer who is
under contract to purchase the property to satisfy their housing in -lieu obligations
imposed by the San Juan Municipal Code.
C. The Developer is interested in developing the Site and operating thereon a multi-
family affordable housing project consisting of at least sixty (60) units to be made
available to low income households at affordable rents (the "Multi -Family
Affordable Housing Project").
D. The Developer desires to explore the feasibility of acquiring title to the Site from
the City for the purpose of constructing and operating the Multi -Family Affordable
Housing Project.
E. The Agency, the City, and the Developer (each, a "Party" and jointly, the
"Parties") desire to jointly explore the feasibility of the Multi -Family Affordable
Housing Project and negotiate an agreement or agreements to provide for the
Multi -Family Affordable Housing Project (a "Disposition and Development
Agreement").
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F. The Agency by separate Exclusive Negotiation Agreement ("ENA") dated
January 6, 2003, is obligated to assist the Developer in locating a site and
providing funds for pre-acquisition due diligence in accordance with the terms of
the ENA.
G. The primary purpose of this Agreement is to establish a period during which the
Parties shall negotiate the terms of a Disposition and Development Agreement.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
Section 1. Negotiating Period. The Parties agree to negotiate diligently and in good
faith with one another for a one hundred twenty (120) day period
commencing upon the Effective Date of this Agreement (as hereinafter
defined in Section 18) (the "Negotiating Period"), in order to agree upon a
mutually acceptable Disposition and Development Agreement ("DDA").
If a Disposition and Development Agreement is negotiated and executed by the
Developer within the Negotiating Period, then the term of the Negotiating Period and
this Agreement shall automatically be extended for a period of forty-five (45) days from
the date of such submittal to enable the City's staff to take and coordinate the actions
necessary to bring the Disposition and Development Agreement before the City Council
and Agency for consideration, action, and authorization to execute, if such are approved
by City in its sole and absolute discretion.
Section 2. Certain Parameters for Negotiations. The following nonexclusive list of
items related to the Multi -Family Affordable Housing Project shall be the
subject of negotiations during the Negotiation Period:
(A) site plan (depicting building locations, elevations, building square
footages and unit mix, parking access points, landscaped areas,
and pedestrian and vehicular circulation);
(B) pro forma (addressing detailed development and operational costs,
anticipated rents for each unit, estimated profit and appropriate
return measurements);
(C) financing plan (addressing the proposed methods of construction
and permanent financing and amounts and sources of equity and
debt capital); and
(D) development schedule.
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Section 3. Developer's Submission of Documents for Agency Review and
Comment. Within sixty (60) days of the Effective Date of this Agreement,
the Developer shall submit the following information to the Agency or its
agents:
(A)
a conceptual site plan; and
(B)
a pro forma; and
(C)
a financing plan; and
(D)
a development schedule; and
(E)
Environmental site assessment.
In the event that the Agency requests that changes be made, the Developer shall, within
twenty (20) days of a request by Agency, submit a revised site plan, pro forma,
financing plan, and/or development schedule to the Agency in response to the Agency's
comments on the initial version of each submission
The Developer acknowledges and agrees that design and architectural review by the
Agency and its consultants will be required at each stage of the development of the
Multi -Family Affordable Housing Project and that sketches, plans, and ultimately
working drawings, specifications and similar documents will be required to be submitted
for review and approval pursuant to the Disposition and Development Agreement. The
Developer further acknowledges and agrees that the City of San Juan Capistrano (the
"City"), acting under its general police powers as a municipal corporation, may conduct
a similar review and that building design including, but not limited to, the selection of
building elevations, construction material, parking layout and landscaping will not be
final until approved by City. The Developer further acknowledges and agrees that rights
exercisable by the Agency are distinct and separate from those additional rights which
the City may exercise under its general police powers as a municipal corporation.
Section 4. Agency Evaluation of Developer's Proposal and Drafting of
Disposition and Development Agreement. Upon the Agency's receipt of
the last of Developer's submissions as provided in Section 3 hereof,
Agency shall conduct or cause to be conducted a complete economic
evaluation of Developer's submittals and proposed Multi -Family Affordable
Housing Project; within thirty (30) days of the date on which the Agency
receives the last such submittal, Agency shall elect to either (i) terminate
this Agreement in accordance with Section 9.3 hereof, or (ii) continue
negotiating hereunder in order to consummate the drafting of a Disposition
and Development Agreement.
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Section 5. Agency Assistance. The Agency shall reimburse Developer for pre -
development soft costs (such as engineering, architectural, and
administrative costs) incurred by Developer during the Negotiation Period
with respect to the design of the Project (collectively, "Reimbursable
Costs") in amount not to exceed Fifty Thousand Dollars ($50,000) as set
forth in Exhibit A attached and incorporated herein (the "Agency
Assistance"). Developer shall not incur any Reimbursable Costs without
first obtaining the written reasonable approval of the Agency. The Agency
shall reimburse Developer for Agency -approved Reimbursable Costs
promptly upon the Agency's receipt of reasonable detailed invoices related
to such costs.
In consideration for the Agency's provision of the Agency Assistance,
Developer shall deliver to the Agency all of the documents and materials
produced by those professionals for which Developer seeks
reimbursement under this Section and all such documents and materials
shall become the property of the Agency at such time as this Agreement is
terminated or terminates, unless the Parties subsequently enter into a
Disposition and Development Agreement.
Section 6. Environmental Requirements. Certain state and local environmental
requirements (including, without limitations, the California Environmental
Quality Act, Public Resources Code Sections 21000, et seq.)may be
applicable to the proposed Multi -Family Affordable Housing Project.
Pursuant to such requirements, certain environmental documents may be
required to be prepared for the proposed Multi -Family Affordable Housing
Project. The Developer agrees to cooperate with the Agency in obtaining
information to determine the environmental impact of the proposed Multi -
Family Affordable Housing Project (collectively, "CEQA Documentation").
Agency agrees to cooperate with the Developer to act as lead agency, if
practical.
Section 7. Hazardous Materials Assessment. The Developer will initiate or have
conducted environmental assessments, audits and/or testing on the Site
within the first 30 days, provided that the Developer has the approval of
the owner of the Site or other legal entitlement to conduct such testing. In
the event Developer conducts or has conducted such assessments, such
assessments shall be referred to as the "Developer's Environmental
Assessments."
The Developer shall have the right to terminate this Agreement if the
Developer is not satisfied with the findings and the recommendations
made in the Developer's Environmental Assessments. However, the
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Parties acknowledge and agree that the Site will be leased "as is" and that
if and to the extent the Agency holds title to any portion of the Site prior to
conveying such property interests to the Developer, then Developer shall
release, defend, indemnify and hold Agency harmless with respect to the
environmental and soils condition of the Site.
Section 8. Cooperation. The Parties agree to cooperate with each other in promptly
supplying information and analyses relating to the Multi -Family Affordable
Housing Project.
Section 9. Effect of this Agreement; Termination.
9.1 Nature of Agreement. This Agreement is not intended to constitute
a binding agreement by the Agency to convey all or any portion of
the Site, to financially participate with the Developer in the
assembly or acquisition of the Site for the Multi -Family Affordable
Housing Project, or to construct or operate the Multi -Family
Affordable Housing Project, nor is it intended to constitute a binding
agreement to enter into a Disposition and Development Agreement
or any other contract. Except as set forth in the Disposition and
Development Agreement, no Party shall be legally bound to
consummate the construction and operation of the Multi -Family
Affordable Housing Project as outlined herein unless and until a
Disposition and Development Agreement or other contract has
been executed and delivered by the Parties. Notwithstanding any
other provision hereof, neither the Developer nor the Agency shall
be under any obligation to approve or execute any Disposition and
Development Agreement at its sole and absolute discretion, with or
without cause; however, the parties agree to negotiate the
Disposition and Development Agreement in good faith. In the event
that a Disposition and Development Agreement is approved and
executed by the Parties, this Agreement shall be superseded by
such Disposition and Development Agreement.
9.2 Exclusive Nature of Negotiations. The Parties intend that certain
aspects of the negotiations conducted pursuant to this Agreement
be negotiated exclusively between the Parties. Accordingly, during
the Negotiating Period the Agency shall negotiate exclusively with
the Developer with respect to the development of the Site.
9.3 Termination of this Agreement. Each Party reserves the right to
terminate this Agreement, with or without cause, upon ten (10) days
prior written notice to the other Party, thereby withdrawing from
such negotiations without any liability to the other Party, except that
6
each Party shall be obligated to promptly return to the other Party
all information and materials which such Party has received from
the other Party pursuant to this Agreement, and the Agency shall
be obligated to reimburse Developer for any Reimbursable Costs in
accordance with Section 5 hereof. The Parties, by their respective
execution hereof, knowingly agree, notwithstanding anything herein
to the contrary, that neither of them shall have any right to specific
performance of this Agreement, nor any other equitable or damage
remedies under the law. Each Party makes such release with full
knowledge of Civil Code Section under the law. Each Party makes
such release with full knowledge of Civil Code Section 1542 and
hereby waive any and all rights thereunder to the extent of this
release, if such Section 1542 is applicable. Section 1542 of the Civil
Code provides as follows:
"A general release does not extend to claims which
the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if
known by him must have materially affected his
settlement with the debtor."
9.4 Mutual Confidentiality. To the extent permitted by applicable law,
the Parties shall maintain all information concerning this Agreement
and any pending or subsequent negotiations between the Parties
as confidential, disclosing information only to those individuals and
representatives as designated by the other Party, provided that
such individuals acknowledge and agree to maintain the
confidentiality of such information.
Section 10. Notices. Any notices, requests or approvals given under this Agreement
from one Party to another may be personally delivered, transmitted by
facsimile (FAX) transmission, or deposit with the United States Postal
Service for mailing, postage prepaid, to the address of the other Party as
stated in this paragraph, and shall be deemed to have been give at the
time of personal delivery or FAX transmission or, if mailed, on the third
day following the date of deposit in the course of transmission with the
United States Postal Service. Notices shall be sent as follows:
If to Agency: San Juan Capistrano Community Redevelopment
Agency
Attn: Executive Director
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Fax # (949) 493-1053
7
11
•
If to City: City of San Juan Capistrano
Attn: City Manager
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Fax # (949) 493-1053
If to Developer: Mercy Housing California
Attn: Dara Kovel, Regional Director
500 South Main Street, Suite 110
Orange, CA 92868
Fax # (714) 550-5085
Gubb and Barshay, LLP
Attn: Natalie Gubb
Fifty California Street, Suite 3155
San Francisco, CA 94111
Fax: (415) 781-6967
Section 11. Governing Law. This Agreement shall be governed by the laws of the
State of California. Any legal action brought under this Agreement must be
instituted in the Superior Court of Orange County, State of California, in an
appropriate court in that county, or in the Federal District Court in the
Central District of California.
Section 12. Attorney's Fees. If any legal action is brought to enforce, construe,
interpret or invalidate the terms of this Agreement, the prevailing party
shall be entitled to all costs and expenses incurred in any such action,
including court costs and reasonable attorney's fees, in addition to any
other relief to which such party may be entitled.
Section 13. Interpretation. This Agreement shall be interpreted as a whole and in
accordance with its fair meaning and as if each Party participated equally
in its drafting. Captions are for reference only and are not to be used tin
construing meaning. The recitals are deemed incorporated into this
Agreement.
Section 14. Real Estate Commissions. Each of the Parties represents and warrants
to the other Party that no real estate commission, broker's fees, or finder's
fees which may accrue by means of the acquisition of an interest in the
Site is due to any person, firm or entity except as set forth above; each
Party agrees to defend, indemnify and hold the other Party harmless with
respect to any judgment, damages, legal fees, court costs, and any and all
liabilities of any nature whatsoever arising from a breach of such
representation.
Section 15. Amendment of Agreement. No modification, rescission, waiver, release
or amendment of any provision of the Agreement shall be made except by
a written agreement executed by each of the Parties.
Section 16. Entire Agreement. This Agreement constitutes the entire understanding
and agreement of the Parties concerning this subject. This Agreement
integrates all of the terms and conditions mentioned herein or incidental
thereto, and supersedes all prior negotiations, discussions and previous
agreements between the Parties concerning all or any part of the subject
matter in this Agreement.
Section 17. Implementation of Agreement. The City and Agency shall maintain
authority to implement this Agreement through its City Manager and
Executive Director, respectively. The Executive Director shall have the
authority to issue interpretations, waive provisions, and/or enter into
certain amendments of this Agreement on behalf of Agency so long as
such actions do not materially or substantially change the uses or
development contemplated hereunder, or add to the costs incurred or to
be incurred by the Agency as specified herein, and such interpretations
and/or substantive interpretations, waivers, or amendments shall not
require the consideration, action and written consent of the San Juan
Capistrano Community Redevelopment Agency Board of Directors.
Section 18. Effective Date of this Agreement. This Agreement shall take effect
immediately upon the execution of this Agreement by the Agency and the
City (the "Effective Date").
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IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS AGREEMENT AS
OF THE RESPECTIVE DATES SET FORTH BELOW.
"AGENCY"
SAN JUAN CAPISTRANO COMMUNITY
REDEVELOPMENT AGENCY
A Public body, corporate and politic
Dated: 2003 By:
Pamela Gibson
Interim Executive Director
ATTEST:
M
Margaret Monahan
Agency Secretary
APPROVED AS TO FORM:
Tom Clark
Agency Counsel
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"CITY"
CITY OF SAN JUAN CAPISTRANO
A Public body, corporate and politic
Dated: 2003 By:
ATTEST:
By:
Margaret Monahan
City Clerk
APPROVED AS TO FORINT
By -
John Shaw
City Attorney
Dated: �nCp�CtMl�� �"j 2003
Pamefa Gibson
Interim City Manager
"DEVELOPER"
MERCY HOUSING CALIFORNIA
A California nonprofit c rporation
By.
ara Kovel
Vice -President
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Exhibit A
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Reimbursable Costs to Mercy Housing Corporation
Due Diligence on Pitts Property
p W
Architect's cost to prepare a massingstudy, site Ian and residential
conceptual elevations. (Based on estimate from architect.)
$30,000
Administrative time to prepare a development budget, operating budget,
15 year cash flow, sources & uses, and to determine proposed financing
sources including the gap needed from local sources.
$4,500
. r
Architect's cost to prepare a feasibility study evaluating the site in relation
to the City's land use requirements such as density, setbacks, open space,
parking, etc., as well as determining need for any variances. (Based on
$7,500
estimate from architect.)
Due diligence reports and administrative time to evaluate need and prepare
initial application for general plan amendments, rezone and entitlements.
$7,500
Administrative costs to prepare timeline covering the following phases of
development: site control/acquistion; financing; entitlements/design/
community outreach; construction; marketing/rent-up
$500
San Juan Capistrano
Community
Redevelopment
Agency
C,
C�
NOTIFICATION OF MEETING OF POTENTIAL INTEREST
SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY
The Board of Directors of San Juan Capistrano Community Redevelopment Agency will
meet at 7:00 p.m. on October 7, 2003, in the City Council Chamber in City Hall, to
consider: "Consideration of Exclusive Negotiating Agreement with Mercy Housing
for Pitts Property (APN 668-4211-03/04)" — Item No. C1
If you have specific thoughts or concerns regarding this item, you are encouraged to
participate in this decision making process. You can communicate with the Board of
Directors through correspondence addressed to the Board and/or by attending the
meeting and speaking to the Board during the public meeting.
Correspondence related to this item must be received at City Hall by 5:00 p.m. on
Monday, October 6, 2003 to allow time for the Board to consider its content.
If you would like to speak at the meeting, please complete a blue "Request to Speak"
form found inside the entrance to the Council Chamber. This form is turned in at the
staff table, just in front of the Council dais. You will be called to speak by the Chairman
when the item is considered.
You have received this notice at the request of the City staff member Douglas D.
Dumhart, Principal Management Analyst. You may contact that staff member at (949)
(949) 443-6316 with any questions.
The Community Redevelopment Agency agenda is available to you on the City's web
site: www.sanjuancapistrano.org.
Thank you for your inter—est,
eg,Mnah n, CMC
City Jerk
cc: Dara Kovell, Mercy Housing*; Holly Benson, Mercy Housing*; Brad Gates,
SunCal*; Roger Pitts, Property Owner*; Tom Clark, Straddling, Yocca, Carlson &
Rauth*; Douglas D. Dumhart, Principal Management Analyst
* Received staff report
32400 Paseo Adelant
San Juan Capistrano
California 92675
949-493-1171